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Nihat
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Govt cuts excise, service tax to boost economy
New Delhi: The Central Government has come out with the latest stimulus package to revive the economy. In the latest move on Tuesday, excise duties and service tax have been cut by two per cent each.
After leaving tax rates unchanged in the Interim Budget, the government has gone for cuts in excise and service tax, in what is being seen as a final measure to perk up the economy before the election code of conduct comes into effect next week.
Stand-in Finance Minister Pranab Mukherjee on Tuesday announced further cuts in indirect taxes while replying to the debate on the Interim Budget in Parliament.
The reductions do not require parliamentary approval or amendment to the Finance Bill, unlike changes in income tax.
"It is another stimulus. I do hope it will have its desired impact because we have given some concession for the export sectors," Pranab Mukherjee later said.
The cut in service tax is across the board and should benefit exporters and software companies.
As for excise duty, only the 10 per cent rate that applies to most products has been cut to eight per cent. The four, 12 and 20 per cent rates are unchanged.
Truck makers will gain, but not car makers or two wheeler manufacturers as they are already in the eight per cent bracket.
"The cut which has been announced today was some thing new which will have to be factored into the Budget estimates as we go along. That was not factored in. What was factored in was the fact that four per cent reduction made earlier would continue," said Economic Affairs Secretary Ashok Chawla.
Cement manufacturers said there could be a reduction of Rs 3.50 per bag of 50 kgs.
The government has also specifically given incentive for reduction in bulk cement prices, to boost the construction sector.
Steel maker JSW said it would cut prices.
"The reduction of two per cent in excise duty and two per cent in service tax, if it is passed to the consumer and I believe that it can be passed to the consumer, will stimulate demand," hoped Home Minister P Chidambaram.
There is unlikely to be an across the board cut in prices. Fast moving consumer goods companies, for instance, might prefer to retain some of the gain, as there is strong rural demand.
But the government message is clear - cut prices, stimulate demand, operate at higher capacity and save jobs.
Govt cuts excise, service tax to boost economy
New Delhi: The Central Government has come out with the latest stimulus package to revive the economy. In the latest move on Tuesday, excise duties and service tax have been cut by two per cent each.
After leaving tax rates unchanged in the Interim Budget, the government has gone for cuts in excise and service tax, in what is being seen as a final measure to perk up the economy before the election code of conduct comes into effect next week.
Stand-in Finance Minister Pranab Mukherjee on Tuesday announced further cuts in indirect taxes while replying to the debate on the Interim Budget in Parliament.
The reductions do not require parliamentary approval or amendment to the Finance Bill, unlike changes in income tax.
"It is another stimulus. I do hope it will have its desired impact because we have given some concession for the export sectors," Pranab Mukherjee later said.
The cut in service tax is across the board and should benefit exporters and software companies.
As for excise duty, only the 10 per cent rate that applies to most products has been cut to eight per cent. The four, 12 and 20 per cent rates are unchanged.
Truck makers will gain, but not car makers or two wheeler manufacturers as they are already in the eight per cent bracket.
"The cut which has been announced today was some thing new which will have to be factored into the Budget estimates as we go along. That was not factored in. What was factored in was the fact that four per cent reduction made earlier would continue," said Economic Affairs Secretary Ashok Chawla.
Cement manufacturers said there could be a reduction of Rs 3.50 per bag of 50 kgs.
The government has also specifically given incentive for reduction in bulk cement prices, to boost the construction sector.
Steel maker JSW said it would cut prices.
"The reduction of two per cent in excise duty and two per cent in service tax, if it is passed to the consumer and I believe that it can be passed to the consumer, will stimulate demand," hoped Home Minister P Chidambaram.
There is unlikely to be an across the board cut in prices. Fast moving consumer goods companies, for instance, might prefer to retain some of the gain, as there is strong rural demand.
But the government message is clear - cut prices, stimulate demand, operate at higher capacity and save jobs.
Govt cuts excise, service tax to boost economy
Nihat
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Tata Nano to be launched on March 23
Tata Motors has announced that the much-awaited Tata Nano will be launched at a function in Mumbai on March 23, 2009.
The cars will be on display at Tata Motors dealerships from the first week of April 2009 and bookings will commence from the second week of April 2009.
Journey from Singur to Gujrat
The Nano' was unveiled in January 2008 and was scheduled to go on sale last October, but problems with the main plant location at Singur delayed the launch.
Nano exits Singur: What happens to Tata's WB land?
After the much debated exit from Singur, Tata Motors entered the state of Gujarat and identified site at Charodi in Sanand, near Ahmedabad.
Nano finds new home in Gujarat; Ratan Tata, Guj CM ink pact
Miracle on wheels
Since its unveiling on January 10, 2008, the Tata Nano has evoked an unprecedented interest in the country, with its website having recorded over 30 million hits in the past one year and the creation of over 6,000 interest groups and communities.
Tata's Nano also made waves beyond Indian shores. It' was quite a rage in London, hogging the headlines in the British media, which has called it no less than a miracle.
Theres been few occasions when even swanky sports cars and sedans have been splashed on the front page of newspapers in the UK but it's a different story with Nano. Tata's small car is getting big publicity and it's being called a miracle on wheels, a car a generation ahead of its' predecessors which is a revolution in the small car market.
Tata Motors is making arrangements for the widest possible network to book the car, so that prospective customers can conveniently avail of booking facilities at their locations, across the length and breadth of India. The booking process and other details will be announced on March 23, 2009.
Tata Nano to be launched on March 23
Tata Motors has announced that the much-awaited Tata Nano will be launched at a function in Mumbai on March 23, 2009.
The cars will be on display at Tata Motors dealerships from the first week of April 2009 and bookings will commence from the second week of April 2009.
Journey from Singur to Gujrat
The Nano' was unveiled in January 2008 and was scheduled to go on sale last October, but problems with the main plant location at Singur delayed the launch.
Nano exits Singur: What happens to Tata's WB land?
After the much debated exit from Singur, Tata Motors entered the state of Gujarat and identified site at Charodi in Sanand, near Ahmedabad.
Nano finds new home in Gujarat; Ratan Tata, Guj CM ink pact
Miracle on wheels
Since its unveiling on January 10, 2008, the Tata Nano has evoked an unprecedented interest in the country, with its website having recorded over 30 million hits in the past one year and the creation of over 6,000 interest groups and communities.
Tata's Nano also made waves beyond Indian shores. It' was quite a rage in London, hogging the headlines in the British media, which has called it no less than a miracle.
Theres been few occasions when even swanky sports cars and sedans have been splashed on the front page of newspapers in the UK but it's a different story with Nano. Tata's small car is getting big publicity and it's being called a miracle on wheels, a car a generation ahead of its' predecessors which is a revolution in the small car market.
Tata Motors is making arrangements for the widest possible network to book the car, so that prospective customers can conveniently avail of booking facilities at their locations, across the length and breadth of India. The booking process and other details will be announced on March 23, 2009.
Tata Nano to be launched on March 23
Nihat
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Economy is hurting, nation may feel pain
New Delhi: India's economy grew at its slowest annual pace in almost six years in the December quarter, throwing into doubt growth estimates for the full fiscal year and raising expectations the central bank would soon cut rates.
The slower-than-expected growth in Asia's third-largest economy saw a weak sharemarket extend losses to more than 2 percent, and analysts said the central bank could cut rates as early as Saturday.
The economy grew 5.3 percent in the December quarter from a year earlier, below forecasts of 6.2 percent and the previous quarter's 7.6 percent as the global economic crisis cut demand and exports. It was the slowest growth since the March quarter of 2003.
"We have been calling for significant rate cuts for a long time. We are looking for a 100 basis points cut as soon as probably tomorrow in the repo rate and reverse repo rate," said Sailesh Jha, senior regional economist at Barclays Capital.
"After seeing this number, I think the market is now pricing in a 100 basis points cut." The central bank cut its main lending rate, the repo rate, by 350 basis points to 5.50 percent in four moves between October 20 and January 2, but held rates steady at a review in late January, saying banks were yet to pass on its rate cuts.
The rupee, which hit a record low of 50.78 in morning trade, was supported by buying from state-run banks, which traders said was likely to have been on behalf of the central bank.
Losing altitude
India's economy has lost altitude from growth rates of 9.0 percent or higher in the past three fiscal years, and economists said the government's forecast of 7.1 percent growth in the 2008/09 fiscal year ending March 31 was now too optimistic.
Economy is hurting, nation may feel pain
New Delhi: India's economy grew at its slowest annual pace in almost six years in the December quarter, throwing into doubt growth estimates for the full fiscal year and raising expectations the central bank would soon cut rates.
The slower-than-expected growth in Asia's third-largest economy saw a weak sharemarket extend losses to more than 2 percent, and analysts said the central bank could cut rates as early as Saturday.
The economy grew 5.3 percent in the December quarter from a year earlier, below forecasts of 6.2 percent and the previous quarter's 7.6 percent as the global economic crisis cut demand and exports. It was the slowest growth since the March quarter of 2003.
"We have been calling for significant rate cuts for a long time. We are looking for a 100 basis points cut as soon as probably tomorrow in the repo rate and reverse repo rate," said Sailesh Jha, senior regional economist at Barclays Capital.
"After seeing this number, I think the market is now pricing in a 100 basis points cut." The central bank cut its main lending rate, the repo rate, by 350 basis points to 5.50 percent in four moves between October 20 and January 2, but held rates steady at a review in late January, saying banks were yet to pass on its rate cuts.
The rupee, which hit a record low of 50.78 in morning trade, was supported by buying from state-run banks, which traders said was likely to have been on behalf of the central bank.
Losing altitude
India's economy has lost altitude from growth rates of 9.0 percent or higher in the past three fiscal years, and economists said the government's forecast of 7.1 percent growth in the 2008/09 fiscal year ending March 31 was now too optimistic.
Economy is hurting, nation may feel pain
rubyjackass
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Rupee hits record low of 51.12 against dollar
27 Feb 2009, 2000 hrs IST, PTI
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MUMBAI: Sliding for the fifth day in a row, the Indian rupee on Friday breached the 51-mark for the first time ever against the greenback as the
local currency lost 66 paise on sustained strong demand for the US dollar from foreign banks and oil importers amid weak stock markets.
The US dollar ended sharply higher against the rupee at Rs.51.12/14 per dollar and the Pound Sterling also finished higher at Rs.72.49/51 per pound at the close of the Interbank Foreign Exchange (Forex) market on Friday.
Dealers in foreign exchange said that the stronger dollar abroad gave an opportunity to the foreign banks to buy American currency in the local market and sell it in offshore non-deliverable forward contracts for immediate profits.
In the overseas market, the dollar gained against its major rival euro but slipped against Asian competitor yen.
The rupee on Thursday only set a fresh low record of 50.46 on sudden surge in demand for dollar. The previous low record of the domestic currency was recorded on last December 2 when it touched the intra-day high of 50.60. Including today's fall of 66 paise, the rupee had slumped by a whopping 151 paise or 3.04 per cent in the straight past five sessions.
Continued selling by Foreign Institutional Investors (FIIs) in equity markets also weighed against the rupee. They have pulled out nearly USD 1.6 billion in the current calender year so far, dealers said. Weakness in equity markets also put pressure on domestic unit, they added.
27 Feb 2009, 2000 hrs IST, PTI
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MUMBAI: Sliding for the fifth day in a row, the Indian rupee on Friday breached the 51-mark for the first time ever against the greenback as the
local currency lost 66 paise on sustained strong demand for the US dollar from foreign banks and oil importers amid weak stock markets.
The US dollar ended sharply higher against the rupee at Rs.51.12/14 per dollar and the Pound Sterling also finished higher at Rs.72.49/51 per pound at the close of the Interbank Foreign Exchange (Forex) market on Friday.
Dealers in foreign exchange said that the stronger dollar abroad gave an opportunity to the foreign banks to buy American currency in the local market and sell it in offshore non-deliverable forward contracts for immediate profits.
In the overseas market, the dollar gained against its major rival euro but slipped against Asian competitor yen.
The rupee on Thursday only set a fresh low record of 50.46 on sudden surge in demand for dollar. The previous low record of the domestic currency was recorded on last December 2 when it touched the intra-day high of 50.60. Including today's fall of 66 paise, the rupee had slumped by a whopping 151 paise or 3.04 per cent in the straight past five sessions.
Continued selling by Foreign Institutional Investors (FIIs) in equity markets also weighed against the rupee. They have pulled out nearly USD 1.6 billion in the current calender year so far, dealers said. Weakness in equity markets also put pressure on domestic unit, they added.
rubyjackass
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Slowdown pulls down India's growth to 5.3%
27 Feb 2009, 1616 hrs IST, PTI
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NEW DELHI: Impacted by the global economic meltdown, the Indian economy has clocked slowest quarterly growth in over five years, at 5.3 per
cent, in October-December of this fiscal as agriculture and manufacturing contracted, despite a stimulus package.
Against the whopping 8.9 per cent growth in the same period a year ago, economists said it is now the Reserve Bank's turn to provide stimulus to the economy by cutting rates, as inflation is already down to 3.36 per cent.
While the fall in manufacturing, by 0.2 per cent, in the third quarter was expected, as was evident in negative industrial production numbers for October and December, contraction in farm output by 2.2 per cent was a bit surprising.
"What has come as a surprise is agriculture. There is a turnaround but we can be optimistic that the figures will improve," Chief Statistician Pronab Sen said.
For the nine months of this fiscal, the economy grew by 6.9 per cent against nine per cent a year ago, which may make it difficult to attain the 7.1 per cent growth this fiscal, as was pegged officially.
The Government put up a brave front, saying the third quarterly growth is not much off the mark.
"We had maintained seven per cent with a downward bias. That much has been said, but (there is) still a quarter to go. Even with 5.3 per cent, it still comes around seven per cent, maybe a shade below that," Minister of State for Finance P K Bansal said here.
However, others are not as sure about the possibility of attaining 7.1 per cent growth this fiscal. "It is unlikely that the growth is going to be 7.1 per cent (for the entire 2008-09)," Sen said.
In December, the Government provided the first stimulus package, cutting excise duty by four per cent across the board and increasing planned expenditure by Rs 20,000 crore among other things.
However, stimulus packages, also provided in January, and then the interim Budget, would take some time to work their way through the system, economists said.
"(The) Government will not be able to achieve over 7 per cent growth. The stimulus packages will take 6-8 months (to lift the economy) and (it will take) 8-9 months to get about 7 per cent (growth)," Crisil Principal Economist D K Joshi said.
It was only services that provided a sliver lining to the otherwise gloomy situation on the growth front.
27 Feb 2009, 1616 hrs IST, PTI
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NEW DELHI: Impacted by the global economic meltdown, the Indian economy has clocked slowest quarterly growth in over five years, at 5.3 per
cent, in October-December of this fiscal as agriculture and manufacturing contracted, despite a stimulus package.
Against the whopping 8.9 per cent growth in the same period a year ago, economists said it is now the Reserve Bank's turn to provide stimulus to the economy by cutting rates, as inflation is already down to 3.36 per cent.
While the fall in manufacturing, by 0.2 per cent, in the third quarter was expected, as was evident in negative industrial production numbers for October and December, contraction in farm output by 2.2 per cent was a bit surprising.
"What has come as a surprise is agriculture. There is a turnaround but we can be optimistic that the figures will improve," Chief Statistician Pronab Sen said.
For the nine months of this fiscal, the economy grew by 6.9 per cent against nine per cent a year ago, which may make it difficult to attain the 7.1 per cent growth this fiscal, as was pegged officially.
The Government put up a brave front, saying the third quarterly growth is not much off the mark.
"We had maintained seven per cent with a downward bias. That much has been said, but (there is) still a quarter to go. Even with 5.3 per cent, it still comes around seven per cent, maybe a shade below that," Minister of State for Finance P K Bansal said here.
However, others are not as sure about the possibility of attaining 7.1 per cent growth this fiscal. "It is unlikely that the growth is going to be 7.1 per cent (for the entire 2008-09)," Sen said.
In December, the Government provided the first stimulus package, cutting excise duty by four per cent across the board and increasing planned expenditure by Rs 20,000 crore among other things.
However, stimulus packages, also provided in January, and then the interim Budget, would take some time to work their way through the system, economists said.
"(The) Government will not be able to achieve over 7 per cent growth. The stimulus packages will take 6-8 months (to lift the economy) and (it will take) 8-9 months to get about 7 per cent (growth)," Crisil Principal Economist D K Joshi said.
It was only services that provided a sliver lining to the otherwise gloomy situation on the growth front.
Nihat
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Tata Nano's European version to be unveiled at Geneva
Geneva: Largest Indian auto maker Tata Motors, which is gearing up for the commercial launch of Nano in India this month, will be unveiling the European version of the small car -- touted as cheapest in the world in Geneva on Tuesday.
According to industry sources, the company would showcase the car at the Geneva Motor Show.
"The version for the European market will be more fuel efficient, better emission compliance and will be technologically superior," they added.
Further, the sources said the car, which would be showcased at the Geneva Auto Show, will comply with Euro-V emission norms.
However, Tata Motors spokesperson was unavailable for comment.
Last year, the auto maker had displayed the luxury version of the Indian Nano at the Geneva Motor Show. Following the event, many car makers across the world came up with plans for similar low-cost small cars.
Tata Motors would commercially launch Nano in India on March 23.
UK-daily The Times has reported that there is no confirmed launch date for Europe and Nano is likely to have to undergo a comprehensive redesign to meet European safety standards.
Tata Nano's European version to be unveiled at Geneva
Geneva: Largest Indian auto maker Tata Motors, which is gearing up for the commercial launch of Nano in India this month, will be unveiling the European version of the small car -- touted as cheapest in the world in Geneva on Tuesday.
According to industry sources, the company would showcase the car at the Geneva Motor Show.
"The version for the European market will be more fuel efficient, better emission compliance and will be technologically superior," they added.
Further, the sources said the car, which would be showcased at the Geneva Auto Show, will comply with Euro-V emission norms.
However, Tata Motors spokesperson was unavailable for comment.
Last year, the auto maker had displayed the luxury version of the Indian Nano at the Geneva Motor Show. Following the event, many car makers across the world came up with plans for similar low-cost small cars.
Tata Motors would commercially launch Nano in India on March 23.
UK-daily The Times has reported that there is no confirmed launch date for Europe and Nano is likely to have to undergo a comprehensive redesign to meet European safety standards.
Tata Nano's European version to be unveiled at Geneva
Tuesday, March 03, 2009
MUMBAI: Indian manufacturing activity shrank for a fourth straight month in February and exports fell again in January, showing the economy remained under pressure in early 2009 and bolstering expectations of a rate cut.
The data followed figures last week showing economic growth at its slowest in nearly six years at the end of 2008, and analysts said that the worst may not have passed despite a number of government stimulus packages and Reserve Bank policy easings.
Essentially we dont think the economy has bottomed out yet, said Nomura economist Sonal Varma, who expects the economy to hit a trough of 4.5 per cent annual growth in the June quarter.
We clearly feel both room and need for further rate cuts with economic activity having deteriorated much faster than what was earlier expected, she said. Manufacturing, which accounts for about 16 per cent of Asias third-largest economy, showed some improvement in February from January, but still contracted and the fall in new orders from local and foreign clients picked up pace.
The ABN AMRO Bank purchasing managers index (PMI), based on a survey of 500 companies, rose to a seasonally adjusted 47.0 in February from Januarys 46.7. A reading below 50 signals economic contraction.
The series correlates reasonably well with exports and offers a crumb of comfort in what remains a generally depressing environment, said Rober Prior-Wandesforde, senior Asian economist at HSBC. Exports fell 15.9 per cent in January from year earlier, a fourth straight fall as the global downturn weakened demand, government data showed.
Still, the trade deficit narrowed to $6.1 billion in January from $7.6 billion in December as import values dropped 18.2 per cent, mainly due to the sharp fall in oil prices. For April to January, the first 10 months of the fiscal year, exports rose 13.2 per cent to $144.3 billion from a year earlier, but the trade deficit grew to $99.1 billion from $66.8 billion.
Indias economy grew an annual 5.3 per cent in the December quarter. Full-year growth in the 2008/09 fiscal year ending on March 31 is expected to be around 7 per cent, well below rates of 9 per cent or more in the previous three fiscal years.
In terms of domestic economic activity, I think we are probably going to see some downside on the private sector side, said Atsi Sheth, chief economist at Reliance Equities.I think what is going happen this quarter and the next quarter is that the government spending is going to be so strong, that it will partly compensate for it, but not fully, she said.
Policy makers have responded to the slowdown with a slew of steps aimed at shoring up faltering demand. The central bank has aggressively cut its policy rates since mid-October, and expectations of further cuts are growing. The government has cut factory gate taxes and stepped up spending to stimulate the economy.
Nihat
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Latest casualty of recession: IIM placements
CNN-IBN
New Delhi: The latest casualty of the global economic gloom are IIM students who are struggling to get placements.
The IIM-Bangalore has extended its campus recruitment process till every student is placed. Placements had begun on February 27. Last year the process was over in two-and-a-half days.
IIM Ahmedabad however says the number of offers were adequate for the students, though there was a reduction in the participation of foreign companies. Out of 109 firms which came, most were domestic companies.
In tough times, however, IIM-A alumni are pitching in with help to keep the show going.
I think it is the economic slowdown which has created this problem that the compensation package has come down, says Sameer Barua from IIM A.
This is a much longer process than earlier which just reflects the current market condition. Many of the regular recruiter has refused to participate because they are undergoing recruitment freeze, says Sourav Mukherjee of IIMB.
Off record, IIMs say that they are advising graduates to take government jobs, which are seen to be secure. some nationalized banks have offered to create special posts for IIM students.
The faculty is also advising students to go for job security rather than chase fat pay packets and that's a reality which IIM grads will have to learn to deal with quickly.
The institute has a huge active alumni network with more than 32,000 members and a large number of them are actively associated with the institute through various programmes.
The flagship PGP programme alone has 8,000 alumni and a large chunk holds senior-level positions in both domestic and multinational firms.
Latest casualty of recession: IIM placements
CNN-IBN
New Delhi: The latest casualty of the global economic gloom are IIM students who are struggling to get placements.
The IIM-Bangalore has extended its campus recruitment process till every student is placed. Placements had begun on February 27. Last year the process was over in two-and-a-half days.
IIM Ahmedabad however says the number of offers were adequate for the students, though there was a reduction in the participation of foreign companies. Out of 109 firms which came, most were domestic companies.
In tough times, however, IIM-A alumni are pitching in with help to keep the show going.
I think it is the economic slowdown which has created this problem that the compensation package has come down, says Sameer Barua from IIM A.
This is a much longer process than earlier which just reflects the current market condition. Many of the regular recruiter has refused to participate because they are undergoing recruitment freeze, says Sourav Mukherjee of IIMB.
Off record, IIMs say that they are advising graduates to take government jobs, which are seen to be secure. some nationalized banks have offered to create special posts for IIM students.
The faculty is also advising students to go for job security rather than chase fat pay packets and that's a reality which IIM grads will have to learn to deal with quickly.
The institute has a huge active alumni network with more than 32,000 members and a large number of them are actively associated with the institute through various programmes.
The flagship PGP programme alone has 8,000 alumni and a large chunk holds senior-level positions in both domestic and multinational firms.
Latest casualty of recession: IIM placements
MUMBAI: Indias central bank appears close to the end of a rate cut cycle, having slashed key short-term interest rates five times since September to boost growth in a weakening economy, economists say.
On Wednesday, the Reserve Bank of India (RBI) cut the repo the rate at which it lends to commercial banks by 50 basis points to five percent, its fifth in five months from a high of 9.0 percent. It also lowered the rate at which it borrows money from banks, the reverse repo, by 50 basis points to 3.5 percent.
Economists believe the RBI is near its end of a rate cut cycle, and a small 50 basis points cut in its scheduled April monetary policy review is expected to be the last for some time. The RBI has done enough... The response from the banking sector (to lower lending and deposit rates) is awaited, Rupa Rege Nitsure, an economist with state-run Bank of Baroda, told AFP.
To a great extent, the rate cut cycle appears to be near its end, said an analyst with a local brokerage firm, on condition of anonymity. Economists said the RBI would wait for the full effects from financial stimulus packages announced by the government this year, before deciding to cut rates again.
Last week, the Congress-led government cut factory levies and service taxes. In January, India eased foreign borrowing for real estate and certain other companies and allowed more liquidity for non-banking financial firms.
The package also allowed state administrations to borrow up to 300 billion rupees ($6.2 billion) to meet extra expenditure and fund infrastructure projects. But the decelerating growth scenario may not improve because of the easing of rates. Business confidence remains low and financial intermediaries are still not keen to lend, said Siddhartha Sanyal, an economist with brokerage Edelweiss Securities. The scenario is improving, but slowly. There is no timeframe, he said.
Indias exports slid nearly 16 percent in January, the steepest drop in more than a decade, figures showed Monday, adding to a grim stream of economic data as officials announced general elections in April. The country is beginning to feel the full impact of the global slump, as official data last week showed the economy grew at its slowest pace in six years at 5.3 percent in the third quarter to December, down from 8.9 percent in the same period a year earlier.
Indias economy is estimated to grow by 5.2 to 5.6 percent in the fourth quarter ending March, and near 6.5 percent for the full year, after expanding by a solid nine percent in previous years. Some of Indias carmakers have seen record sales in the first two months of the year and cement and steel prices are beginning to firm up, economists said. Demand for construction is picking up slowly, Rege said. afp
Thursday, March 12, 2009
NEW DELHI: It was less than a year ago that Indians watched inflation shoot to dizzying 13-year highs but now they are worried about deflation as growth slackens in Asias third-largest economy.
Deflation, in which falling prices prompt consumers to delay buying, deepening a downturn, has become a growing concern across the globe as demand for goods sinks.
Indias weakening inflation is the symptom of a deeper malaise with an adverse environment for jobs, salaries and business prompting a fall in prices, HDFC Bank Chief Economist Abheek Barua said. Inflation has tumbled from 12.91 per cent last August to 3.03 per cent, partly due to a precipitous slide in the global price of oil and other commodities. Now a slowing domestic economy is kicking in as the global financial crisis hammers exports.
Inflation will reach zero by the end of this fiscal year in March, according to Axis Bank economist Saugata Bhattacharya. Some economists forecast deflation could then set in and last until at least October. It would mark Indias first bout of deflation since March 1976, according to central bank records.
Wholesale price levels are showing absolute declines unprecedented since the start of the (inflation data) series in 1988, Goldman Sachs economist Tushar Poddar said. India uses the Wholesale Price Index to measure inflation because it has a broader basket of goods.
We think deflation will be a much bigger risk for the economy in the rest of 2009, due to ongoing demand destruction and commodity price collapses, Poddar said in a recent research note.
notsuperstitious
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India car sales beat global slump
Sales of passenger cars in India have risen for the first time in five months, but analysts say it is too early to see recovery in the sector.
Sales jumped 22 per cent in February, compared with the same month in 2008, the Society of Indian Automobile Manufacturers said.
Experts said the spurt was driven by easing bank credit after lenders cut auto-loan rates from about 13 per cent to 10 per cent.
However, sales of commercial vehicles fell by more than 50 per cent.
Analysts said the two factors which had the most impact on February's figures - lower auto-loan rates and government tax cuts - would not necessarily lead to a long-term recovery.
Ten out of 13 carmakers in India saw a rise in sales during February.
Maruti Suzuki, the country's largest carmaker, said it had been a record month both for sales and exports.
Vaishali Jajoo, auto analyst at Angel Broking in Mumbai, said Maruti Suzuki's exports were helped by a growing appetite in Europe for small, fuel-efficient cars.
However, Ms Jajoo was cautious about how long the growth would last.
"Turnaround is a strong word. Sequential spurt would be better," she said.
The rise in vehicle sales in India contrasts with a slump in demand for cars in Europe, the US and Japan.
But India's carmakers were keen to play down the significance of February's figures.
Last week, Hyundai Motor India announced a 45 per cent rise in domestic sales in February, and an 18 per cent increase in exports.
"The overall market situation continues to be challenging and not much should be read into the February growth," Hyundai spokesman Arvind Saxena said
Sales of passenger cars in India have risen for the first time in five months, but analysts say it is too early to see recovery in the sector.
Sales jumped 22 per cent in February, compared with the same month in 2008, the Society of Indian Automobile Manufacturers said.
Experts said the spurt was driven by easing bank credit after lenders cut auto-loan rates from about 13 per cent to 10 per cent.
However, sales of commercial vehicles fell by more than 50 per cent.
Analysts said the two factors which had the most impact on February's figures - lower auto-loan rates and government tax cuts - would not necessarily lead to a long-term recovery.
Ten out of 13 carmakers in India saw a rise in sales during February.
Maruti Suzuki, the country's largest carmaker, said it had been a record month both for sales and exports.
Vaishali Jajoo, auto analyst at Angel Broking in Mumbai, said Maruti Suzuki's exports were helped by a growing appetite in Europe for small, fuel-efficient cars.
However, Ms Jajoo was cautious about how long the growth would last.
"Turnaround is a strong word. Sequential spurt would be better," she said.
The rise in vehicle sales in India contrasts with a slump in demand for cars in Europe, the US and Japan.
But India's carmakers were keen to play down the significance of February's figures.
Last week, Hyundai Motor India announced a 45 per cent rise in domestic sales in February, and an 18 per cent increase in exports.
"The overall market situation continues to be challenging and not much should be read into the February growth," Hyundai spokesman Arvind Saxena said
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