India's power generation rises for the first time in seven months

By Sudarshan Varadhan

CHENNAI (Reuters) - India's electricity generation rose for the first time in seven months in September, government data showed, as the removal of most coronavirus-related restrictions boosted power demand in three-quarters of the country's states.

Activity in India's factories expanded at its fastest pace in over eight years in September as a relaxation in lockdowns drove a surge in demand and output, a survey showed on Thursday.

Industries and offices account for half the annual electricity consumption and Prime Minister Narendra Modi has been citing power consumption data to point to the emergence of "green shoots" in Asia's third-largest economy.

A Reuters analysis of daily load despatch data from federal grid operator POSOCO showed that power generation rose 4.9% in September, the first monthly increase since February.

Still, India's economy is forecast to contract by up to 10% in the fiscal year that began in April, which would be its weakest performance since 1979, and analysts expect annual power demand to fall for the first time in almost four decades.

The economy contracted at the steepest pace on record in the three months to the end of June as the government imposed strict coronavirus lockdown measures.

India's infrastructure output index, which comprises eight sectors including coal, crude oil and electricity and accounts for nearly 40% of industrial output, contracted 8.5% in August, government data released on Wednesday showed.

Renewable energy output rose for the second straight month in September, driven by a higher solar-powered generation.

The contribution of coal - India's primary source of electricity - to overall power generation in September was 65.1%, up from 60.9% in August.

(Reporting by Sudarshan Varadhan; Editing by David Clarke)