India’s Economy Facing Downturn

[M.D. Holloway]

India’s Economy Facing Downturn
By Erika Kinetz, AP Business Writer
Manufacturing.Net - August 01, 2008


NEW DELHI, India (AP) -- India's central bank has released a report predicting an economic slowdown, rising inflation and dwindling corporate profit growth over the next nine months.

Twenty forecasters surveyed by the bank expected that annual gross domestic product growth, now running at 9 percent, would slide to 7.9 percent over the next nine months, according to the report released late Thursday by the Reserve Bank of India.

GDP growth driven by industry and services, the forecasters predicted, would total 7.5 percent and 9.5 percent, respectively, this year, down from last quarter's predictions of 8.1 percent and 9.7 percent. Agricultural growth expectations remained flat, at 3 percent.

They expected corporate profit after tax to grow at 16 percent in fiscal year 2008-09, down from 25 percent tallied in the bank's last quarterly survey. Corporate profit after tax would then bounce to growth of 20 percent for fiscal year 2009-2010.

The survey also revealed a consensus that the government would maintain its tight stance on money supply, predicting that the central bank would keep its key interest rate -- or repurchase rate, at which the central bank makes short-term loans to commercial banks -- near 9 percent through the current fiscal year ending March 31.

The forecasters expected inflation to be 11.7 percent this quarter, before falling off to 11.4 percent and 9.2 percent in the subsequent two quarters.

Inflation, driven largely by the high price of oil on global markets, hit a new high of 11.98 percent in the week to July 19.

The bank said its quarterly forecasting survey, dated July 31, represents the views of the forecasters and not the bank itself.

In a bid to tame rampant inflation, the central bank this week raised its key interest rate 50 basis points, more than expected, to 9 percent, the third such hike in two months. It also further tightened money supply by increasing the cash reserve ratio -- the amount of cash banks must keep on hand -- to 9 percent, up from 8.75 percent.

Last week, the Federation of Indian Chambers of Commerce and Industry, or FICCI, which says it represents over 250,000 enterprises across the country, urged Prime Minister Manmohan Singh and other top government officials to create better conditions for growth and bolster waning business confidence.

In its "100 Day Agenda for the Government" the FICCI argued that the bank's monetary policy has exacerbated the nation's fiscal woes. Raising interest rates, it said, will do little to tamp down supply-side inflationary pressure, which must be attacked by rapid investment to boost capacity.

"The current monetary policy efforts aimed at controlling inflation are having the exact opposite effect with capacity expansion being deferred and have the real risk of causing stagflation," the group wrote.

The FICCI urged the government to stimulate investment, especially in agriculture, financial services, telecom and infrastructure; reduce transaction costs; improve governance; and fight a growing perception that the nation is on the edge of a "looming fiscal crisis." It also advocated for deeper foreign investment in the retail sector and for opening up education and defense to greater private investment.

[M.D. Holloway]

India's Economy Expected To Slow This Year

Manufacturing.Net - August 13, 2008


NEW DELHI (AP) -- India's economic growth is likely to slow to 7.7 percent for the fiscal year that started April 1, due to the drag of higher food and oil prices and tightening in credit and equity markets after the U.S. subprime crisis, a government report said Wednesday.

Growth in agriculture is likely to be at 2 percent, sharply lower than 4.5 percent growth in the last fiscal year, the report from the Economic Advisory Council to India's prime minister said. Growth in industry and services will also slow to 7.5 percent and 9.6 percent, respectively, compared with 8.5 percent and 10.8 percent a piece in the last year, it said.

India's economy grew 9 percent in the fiscal year through March. And it grew at an annual average of 8.8 percent over the past five years, the report said, but it added that "a number of factors inimical to growth have intensified in 2008."

The report specifically cited higher oil prices, tightening in credit and equity markets and a global slowdown in growth.

"Overall, economic growth will slow down," the report said.

The report said that while "expected losses from U.S. sub-prime exposures have by now been mostly acknowledged ... it is too early to assess whether the worst of the turmoil and loss of asset values is behind us."

"There may be further setbacks in the months to come, but broadly financial conditions are not likely to stabilize before early 2009," the report said.

[Mule]

If I read you correctly, the point is, manbearpig can bite me?

[The Gaijin]

Now is the time to jump in. With two feet. I have been looking at budgets and business plans.

When things turn around, it will be too late. It takes time to build business relationships in Asia.

This is good news. Over the next few years and into the future, India is a good bet.

[HardDrive]

wife and I are looking at property in India

[Sunroof]

Funny!

My buddy just pulled a an 8-inch tapeworm out his arss after a month in India. Delightful place!!!!!!!!!!!!!!!!

[M.D. Holloway]

so many jokes - all not appropriate!

[Sunroof]

Sorry Lube,

But the trapeworm was no joke and my friend did'nt think it was either! He never wants to go back. One mans experience.