Following the contraction in December in the wake of Chennai floods, January saw the Indian manufacturing sector rebound into expansion territory, as production and new orders recovered, the report said.

The Nikkei India Manufacturing PMI, a composite monthly indicator of manufacturing performance, stood at 51.1 in January, up from 49.1 in December.

A figure above 50 represents expansion while a reading below this level means contraction.

Though the trends in the growth rates are relatively weak in comparison with the long-run series averages, January's PMI data paints a brighter picture of the Indian economy, Lima said.

On inflation, the report said price pressure remained on the upside in January, with input costs and output charges both rising during the month.

According to official figures, WPI as well as retail inflation has been on a rising trend. In December, WPI-based inflation stood at (-)0.73 percent, while retail inflation was at 5.61 percent.

The Apex bank will announce its sixth Bimonthly Monetary Policy Review tomorrow, the last before presentation of the Budget amid clamour for rate cut to give a boost to the economy.

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