Industrial output grows 4.7 pct in May y/y

NEW DELHI (Reuters) - India's industrial production grew an annual 4.7 percent in May, the highest since October 2012, providing welcome positive news for Prime Minister Narendra Modi's new government as manufacturing activity and electricity generation increased.

Finance Minister Arun Jaitley unveiled his first annual budget on Thursday, promising to revive the Indian economy from the longest slowdown in a quarter of a century with a mix of structural reforms and fiscal consolidation.

Output from mines, utilities and factories, grew for the second straight month after a contraction of 0.5 percent in March, government data showed.

Industrial output growth beat expectations of a 3.8 percent rise in a Reuters poll of economists, and April's outturn of 3.4 percent.

India's economy has grown by less than 5 percent for two years, dragged down by weak industrial output and investment. Growth needs to be faster to create jobs for the 1 million people who enter the workforce every month.

Modi, who took office in May with the strongest parliamentary majority in 30 years, has vowed to engineer a turnaround by stepping up investment and clearing regulatory hurdles for businesses.

"It shows that things have started improving," said Rupa Rege Nitsure, chief economist at Bank of Baroda.

She cautioned, however, that weak monsoon rains could deal a blow to any economic recovery.

"Just going by this data one cannot say the trend will necessarily be improving henceforth, given the risks of a deficient monsoon and its impact on the whole consumption side of the economy," she said.

(Reporting by Manoj Kumar; Editing by Malini Menon)