Bangalore: India's industrial output probably edged higher in January but remained subdued as an increase in production of consumer goods was offset by declines in the capital goods and mining sectors, a Reuters poll showed.

A survey of 25 economists this week showed they expected Indian industrial production (IIP) to have grown by a median 2.1 percent in January from a year earlier, compared with 1.8 percent in the previous month.

Forecasts in the poll ranged from a decline of 1.2 percent to an increase of 4.6 percent, with only one contributor expecting a contraction.

Industrial production growth has been slowing for two years on a sequential basis, the 3-month moving average of the data has shown. That momentum is now at its slowest since mid-2009.

"The fifth consecutive decline in the mining sector and the fourth consecutive decline in the capital goods sector is a cause of concern and calls for some concrete measures by the government to improve the investment activity in the economy," said Arun Singh, senior economist at Dun & Bradstreet.

Worryingly, the production of capital goods, an indicator of investment in the economy, shrank for the fourth straight month in December, contracting 16.5 percent from a year earlier while mining fell 3.7 percent in the same period.

Consumer goods output, on the other hand, grew by a solid 10 percent but infrastructure sector output, which accounts for almost 40 percent of industrial production, grew a meagre 0.5 percent in January.

However, the expected weakness in the reading would seem to contradict findings in the manufacturing Purchasing Managers' Index (PMI), which jumped to an 8-month high of 57.5 in January.

The February PMI survey showed continued healthy expansion. Though the headline pace slowed slightly to 56.6, new orders touched a 10-month high.

"The infrastructure number has been low and the PMI has been high so we are getting confusing signals as far as these two things are concerned," said Madan Sabnavis, chief economist at CARE Ratings.

"I don't think there is too much buoyancy expected in this quarter for industries. Overall, conditions in the industry are going to be fairly depressed for the entire year."

Factory output in Asia's third-largest economy accounts for roughly 15 percent of GDP and averaged just 1 percent growth in the final three months of 2011.

India's economy grew 6.1 percent in the quarter to December, its weakest annual pace in almost three years, as rampant inflation and tight monetary policy by the Reserve Bank of India hampered growth.

Government estimates show GDP will average 6.9 percent growth this fiscal year. That is a far cry from the heady 9.5 percent growth India averaged in the three fiscal years between 2005-2008.

The RBI ended its 20-month interest rate tightening cycle in October last year and has asked the government to cut its fiscal deficit to help rein in inflation as it prepares to ease monetary policy. It cut the reserve requirement for banks in January.

Finance Minister Pranab Mukherjee will present the annual budget on March 16 and is expected to address the worsening deficit from slowing economic growth and the rising subsidies for fuel and food.

To rein in the fiscal deficit, he may raise taxes on a number of manufactured items as well as consider increasing factory gate duty on many items, a government adviser said last week.

Sabnavis said there could be a 2 percent increase in excise as an additional revenue earning measure but that everything depended on higher growth taking place.