India’s industrial production grew at the slowest pace in 18 months in November, a deceleration that may not prevent the central bank from raising interest rates this month as surging food prices drive up inflation.
Output at factories, utilities and mines rose 2.7 percent from a year earlier, the government said in a statement in New Delhi today, less than the revised 11.3 percent jump in October when the Hindu festivals of Dussehra and Diwali boosted demand for goods. The median estimate of 30 economists in a Bloomberg News survey was for a 6.6 percent gain.
Reserve Bank of India Governor Duvvuri Subbarao, facing inflationary pressures, said Jan. 7 that there are “doubts” whether the factory output data show the strength in consumption. Food prices including those of onions and milk have surged, prompting the top economic adviser to Prime Minister Manmohan Singh to call for higher borrowing costs.
“There is no reason for worry due to this data because the growth momentum is strong,” said Indranil Pan, chief economist at Kotak Mahindra Bank Ltd. in Mumbai. “Price pressures are building up and we expect the RBI to raise rates this month.”
Bond Yields
The benchmark nine-year government bond yield fell one basis point to 8.19 percent at 11:06 a.m. in Mumbai. The yield has gained 29 basis points this month on speculation Subbarao may increase rates at the Jan. 25 monetary policy announcement. That would be the seventh move in a year, the most by any central bank in Asia. The RBI’s benchmark repurchase rate is 6.25 percent.
The Bombay Stock Exchange’s Sensitive Index lost 0.3 percent in Mumbai while the rupee was little changed at 45.19 against the dollar.
“The industrial production data has been fluctuating in recent months, bewildering analysts about the underlying trend and even raising doubts about the quality of the data itself,” Subbarao said in New Delhi on Jan. 7.
India’s industrial output has vacillated since May, when it registered a 12.2 percent expansion. The growth dropped to 7.2 percent in June, rebounded to 15.1 percent in July, slid to 4.4 percent in September and then recovered in October, according to government data.
Consumer Demand
Manufacturing grew 2.3 percent in November after an 11.9 percent gain in October, today’s report showed. Consumer goods production fell 3.1 percent compared with a 9.6 percent increase in the previous month. Mining output advanced 6 percent while electricity production rose 4.6 percent.
“We wouldn’t view such a correction in the December industrial production as worrying since it is likely to largely reflect an unwinding of the sharp one-off Diwali festival jump in October plus base effects,” Robert Prior-Wandesforde, the Singapore-based head of India and Southeast Asia economics at Credit Suisse Group AG, said in a note before the release.
Finance Minister Pranab Mukherjee on Dec. 30 said India’s growth prospects are strong and raised his inflation forecast for the year through March. The inflation rate may be “around” 6.5 percent by March 31, Mukherjee said, more than the 6 percent prediction he made on Dec. 14. The rate was 7.5 percent in November.
Food Inflation
Food inflation accelerated to 18.32 percent in the week ended Dec. 25, the highest rate since July, the commerce ministry said on Jan. 6. Prices of onions, a key ingredient in the nation’s cuisine, soared 80 percent during the week and milk by 20 percent.
On Dec. 7, the finance ministry lifted its growth forecast for the current financial year to as much as 9.1 percent from a range of 8.25 percent to 8.75 percent it predicted earlier, on strengthening local demand.
Growing automobile sales and bank credit provide evidence of rising consumption in the South Asian nation.
Loans extended by lenders including ICICI Bank Ltd. gained 23.71 percent in the week to Dec. 17, the most since January 2009, according to central bank data.
Sales at Tata Motors Ltd., the nation’s biggest truckmaker and producer of the world’s cheapest car, rose 30.6 percent in December, the fastest pace in four months, the company said Jan. 4. Hero Honda Motors Ltd., which makes half the motorcycles sold in India, reported a 33.3 percent increase in sales last month from a year earlier.
Rate Forecast
Prior-Wandesforde said there are chances of the central bank boosting rates by half a point in the Jan. 25 meeting, raising his earlier forecast of a quarter-point increase.
India and China, the world’s fastest-growing major economies, are tightening their monetary policy to counter price gains. China’s central bank raised rates twice in the fourth quarter, ratcheted up banks’ reserve requirements and allowed gains by the yuan against the dollar.
Inflation has emerged as a top political issue in India.
The main opposition Bharatiya Janata Party, or BJP, will hold demonstrations and stage sit-ins in India’s major towns for a month starting Jan. 20, party spokesman Ravi Shankar Prasad said in New Delhi yesterday.
Montek Singh Ahluwalia, deputy chairman of India’s Planning Commission, said Prime Minister Singh yesterday discussed steps to curb prices with cabinet colleagues. He didn’t elaborate. More deliberations may be held today, the Press Trust of India reported, without saying where it got the information.
“The Reserve Bank of India should watch the behavior of the prices,” Chakravarthy Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, said in a Jan. 7 interview in Gurgaon, near New Delhi. “If prices continue to remain sticky, then probably some action will be required.”
Output at factories, utilities and mines rose 2.7 percent from a year earlier, the government said in a statement in New Delhi today, less than the revised 11.3 percent jump in October when the Hindu festivals of Dussehra and Diwali boosted demand for goods. The median estimate of 30 economists in a Bloomberg News survey was for a 6.6 percent gain.
Reserve Bank of India Governor Duvvuri Subbarao, facing inflationary pressures, said Jan. 7 that there are “doubts” whether the factory output data show the strength in consumption. Food prices including those of onions and milk have surged, prompting the top economic adviser to Prime Minister Manmohan Singh to call for higher borrowing costs.
“There is no reason for worry due to this data because the growth momentum is strong,” said Indranil Pan, chief economist at Kotak Mahindra Bank Ltd. in Mumbai. “Price pressures are building up and we expect the RBI to raise rates this month.”
Bond Yields
The benchmark nine-year government bond yield fell one basis point to 8.19 percent at 11:06 a.m. in Mumbai. The yield has gained 29 basis points this month on speculation Subbarao may increase rates at the Jan. 25 monetary policy announcement. That would be the seventh move in a year, the most by any central bank in Asia. The RBI’s benchmark repurchase rate is 6.25 percent.
The Bombay Stock Exchange’s Sensitive Index lost 0.3 percent in Mumbai while the rupee was little changed at 45.19 against the dollar.
“The industrial production data has been fluctuating in recent months, bewildering analysts about the underlying trend and even raising doubts about the quality of the data itself,” Subbarao said in New Delhi on Jan. 7.
India’s industrial output has vacillated since May, when it registered a 12.2 percent expansion. The growth dropped to 7.2 percent in June, rebounded to 15.1 percent in July, slid to 4.4 percent in September and then recovered in October, according to government data.
Consumer Demand
Manufacturing grew 2.3 percent in November after an 11.9 percent gain in October, today’s report showed. Consumer goods production fell 3.1 percent compared with a 9.6 percent increase in the previous month. Mining output advanced 6 percent while electricity production rose 4.6 percent.
“We wouldn’t view such a correction in the December industrial production as worrying since it is likely to largely reflect an unwinding of the sharp one-off Diwali festival jump in October plus base effects,” Robert Prior-Wandesforde, the Singapore-based head of India and Southeast Asia economics at Credit Suisse Group AG, said in a note before the release.
Finance Minister Pranab Mukherjee on Dec. 30 said India’s growth prospects are strong and raised his inflation forecast for the year through March. The inflation rate may be “around” 6.5 percent by March 31, Mukherjee said, more than the 6 percent prediction he made on Dec. 14. The rate was 7.5 percent in November.
Food Inflation
Food inflation accelerated to 18.32 percent in the week ended Dec. 25, the highest rate since July, the commerce ministry said on Jan. 6. Prices of onions, a key ingredient in the nation’s cuisine, soared 80 percent during the week and milk by 20 percent.
On Dec. 7, the finance ministry lifted its growth forecast for the current financial year to as much as 9.1 percent from a range of 8.25 percent to 8.75 percent it predicted earlier, on strengthening local demand.
Growing automobile sales and bank credit provide evidence of rising consumption in the South Asian nation.
Loans extended by lenders including ICICI Bank Ltd. gained 23.71 percent in the week to Dec. 17, the most since January 2009, according to central bank data.
Sales at Tata Motors Ltd., the nation’s biggest truckmaker and producer of the world’s cheapest car, rose 30.6 percent in December, the fastest pace in four months, the company said Jan. 4. Hero Honda Motors Ltd., which makes half the motorcycles sold in India, reported a 33.3 percent increase in sales last month from a year earlier.
Rate Forecast
Prior-Wandesforde said there are chances of the central bank boosting rates by half a point in the Jan. 25 meeting, raising his earlier forecast of a quarter-point increase.
India and China, the world’s fastest-growing major economies, are tightening their monetary policy to counter price gains. China’s central bank raised rates twice in the fourth quarter, ratcheted up banks’ reserve requirements and allowed gains by the yuan against the dollar.
Inflation has emerged as a top political issue in India.
The main opposition Bharatiya Janata Party, or BJP, will hold demonstrations and stage sit-ins in India’s major towns for a month starting Jan. 20, party spokesman Ravi Shankar Prasad said in New Delhi yesterday.
Montek Singh Ahluwalia, deputy chairman of India’s Planning Commission, said Prime Minister Singh yesterday discussed steps to curb prices with cabinet colleagues. He didn’t elaborate. More deliberations may be held today, the Press Trust of India reported, without saying where it got the information.
“The Reserve Bank of India should watch the behavior of the prices,” Chakravarthy Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, said in a Jan. 7 interview in Gurgaon, near New Delhi. “If prices continue to remain sticky, then probably some action will be required.”
South Africa vs India, 1st ODI starts 18:00 IST | 12:30 GMT | 14:30 local
India takes on South Africa in the first one-day international (ODI) at Durban today and it may just have done enough to put themselves ahead of the Proteas.
Having thrashed the Proteas handsomely in the lone T20 match, MS Dhoni and his boys, or men if you prefer(as Sachin Tendulkar no longer qualifies as one!), should be eyeing a win.
This is applicable despite Praveen Kumar pulling up injured and being replaced by India's error-prone fast bowling 'mean machine' in the form of Ishant Sharma.
However, India has always been dependent on its batsmen to win matches and this should apply today too – remember, the World Cup triumph in 1983 by Kapil Dev & co (remember again, Jimmy Amarnath, Balwinder Sandhu, Roger Binny?) was never repeated!
LUCKNOW, India -- Police say near-freezing temperatures and Himalayan winds killed at least 13 homeless people in northern India, raising the death toll from a severe cold spell to 129.
Temperatures dipped below 33 degrees Fahrenheit (1 degree Celsius) in parts of Uttar Pradesh this week, and plunged to 33 F (0.6 C) in Agra, the city where the Taj Mahal is located.
Thirteen people died in Uttar Pradesh overnight Wednesday despite welfare authorities distributing blankets and firewood, said police spokesman Surendra Srivastava.
At least 26 other people have died in neighboring Bihar and Jharkhand states and in the capital, New Delhi, during the three-week long cold snap.
Poor visibility also disrupted rail schedules across northern India, stranding thousands of people.
Flaws in flight preparation and poor pilot training led to the plane crash that killed Polish President Lech Kaczynski and 95 other top officials in April 2010, Russian investigators said in a new report released on Wednesday.
"The technical commission has established that serious organizational flaws, poor pilot training and preparation of this particularly important flight at a special [Polish] air regiment base led to the catastrophe," said Tatyana Anodina, the head of Russia's Interstate Aviation Committee (MAK).
She also said the presence of Kaczynski and other high-ranking state officials on board the Tu-154 plane influenced the pilot's decision to attempt a landing in poor weather conditions and low visibility.
Investigators dismissed the poor condition of infrastructure and landing equipment at the airfield, as well as actions by air traffic controllers, as factors that could have contributed to the tragedy.
Head of the MAK technical commission Alexei Morozov said on Wednesday that air traffic controllers did not give the plane permission to land at a critical altitude of 100 meters (328 feet).
The crew was allowed to descend to 100 meters, and in line with the international rules had to make a decision whether to land or go for a second landing attempt.
"However, no reports came from [the crew], and the plane continued descending on its own," Morozov said.
In essence, the new report does not change much the conclusions of the first report released by Russian investigators in October of last year.
The first MAK report was first presented to the Polish authorities on October 20, and blamed pilot error for the crash in heavy fog, but in mid-December Poland sent it back to Moscow with 150 comments and queries. Prime Minister Tusk said that parts of the report were "unacceptable."
Polish experts said they were dissatisfied with the documents provided by Russia. Most of the complaints concerned a lack of technical details about the Severny airport in Smolensk at which the plane was due to land.
Afghan officials say a suicide bomber on a motorbike killed four people in an attack close to the country's parliament Wednesday.
Afghanistan's Interior Minister Zemarai Bashary said the blast in the capital Kabul took place near a minibus carrying Afghan intelligence personnel.
The Taliban claimed responsibility for the attack, which wounded some 30 people.
Afghan President Hamid Karzai, coalition officials and the U.S. Embassy in Kabul separately condemned the attack.
Meanwhile, a roadside bomb in eastern Afghanistan killed a senior Afghan intelligence officer.
The attacks came as U.S. Vice President Joe Biden completed a two-day visit to the country.
Biden was on an unannounced fact-finding mission to assess progress in Afghanistan. He said he believed U.S. troops with local security forces are breaking the momentum of Taliban insurgents.
Biden also assured President Karzai that the United States will not abandon his country after 2014 when, under an agreement reached last year, coalition forces plan to hand over control of security to the Afghans.
NATO officials have said they expect levels of violence to remain high through Afghanistan's winter months when fighting traditionally eases as a sign that the coalition and Afghan forces are putting pressure on Taliban strongholds.
Mahinda Rajapaksa had to cancel his helicopter trip from Polonnaruwa in the east to the badly affected coastal city of Batticaloa 120km (75 miles) away.
The downpour is continuing after two weeks of rain in the centre and east.
The floods have inundated farmland and destroyed rice fields.
Emergency
The eastern cities of Ampara and Batticaloa have been worst affected by the deluge, which has left some stretches of railway line under nearly a metre of water.
Officials in Ampara say the rainfall there since Saturday has been the highest ever recorded in such a short time.
A number of big reservoirs have burst their banks, destroying paddy fields in a major rice-growing area.
People in some areas have told the BBC they have seen no sign of aid agencies or government relief, and that some people in makeshift camps have been missing out on meals.
The air force has helped evacuate people and drop food supplies to some cut-off communities.
The government has made an emergency appeal for ordinary people's help in sending dry rations, mattresses and bottled water.
Clean water and food supplies have been sent by official and international agencies to the worst-hit areas.
But the deputy disaster management minister Duleep Wijesekara said some places, such as Mutur, have been difficult to reach.
"I boarded a high-speed navy boat to get there [to Mutur], but due to the huge waves we had to turn back after sailing for about 15km. After that we had to send food in by air," he added.
The floods bring a risk of disease, including the mosquito-borne dengue fever, which even in normal times is a severe problem in the country.
