India's frontrunner for prime minister Narendra Modi.

New Delhi - India's industrial production shrank by a smaller-than-expected 0.5 percent in March, data showed Monday, but analysts said the incoming government still faces a huge challenge to revive the economy.

The right-wing Bharatiya Janata Party (BJP) led by Narendra Modi is expected to win the most number of seats in the national election that wrapped up on Monday, and form the next government.

The BJP has promised measures to lift economic growth from a decade low, but analysts say there is little chance of a swift turnaround.

Official election results will be announced on Friday.

Output in March from India's mines, factories and utilities contracted 0.5 percent from the same month a year earlier, better than market forecasts of a shrinkage of around 1.5 percent.

Still, the new government “faces enormous economic and social challenges and a plethora of stalled (economic) reforms”, Deepak Lalwani, head of India-focused investment consultancy Lalcap, told AFP ahead of the data.

Manufacturing output, accounting for over three-quarters of the Index of Industrial Production, slid by 1.2 percent in March.

Despite months of weak economic data, investors have been racing to put their money in India.

They are betting voters will elect the Hindu nationalist BJP, seen as more investor-friendly than the ruling left-leaning Congress. - Sapa-AFP