MUMBAI: India's March industrial output fell 3.5 per cent from a year ago, the government said Friday, worse than expected on weak manufacturing and investment.

Manufacturing activity fell 4.4 per cent and capital goods production - a sign of crucial investment activity - plunged by 21 per cent, burying hopes of a quick recovery for Asia's third-largest economy.

For the year ending in March, industrial output grew 2.8 per cent, sharply lower than 8.2 percent during the prior fiscal year.

The weak growth complicates matters for India's central bank, which faces enormous political pressure to stoke growth, despite persistent inflation and soaring deficits.

''It is very disappointing,'' Chakravarthy Rangarajan, chairman of the Prime Minister's Economic Advisory Council, told reporters. ''One had not expected such a sharp decline.''

A CNBC-TV18 poll had forecast March industrial output growth of 1.5 per cent.

Disappointed investors drove the benchmark Sensex index down over 1 per cent on the news.