Filed under by chirag on April 9, 2009 at 3:15 am
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Did the stock markets smell it ahead of others? The Indian economy is close to bottoming out, says leading research outfit Nomura.
After four quarters of consecutive declines, the index which measures real M2 money supply, non-oil imports, equity returns, repo rate, real bank credit, industrial output and tourists rose in first quarter (Q1) of fiscal 2009-10 suggesting pick-up in economic activity.
Nomura uses a composite leading index (CLI) to identify turning points in the growth rate cycle. The index which had fallen from near 102 levels in September 2007 to 99, shows a breakout from current levels and seems to be rising upwards.
Since the CLI has a lead of two quarters over non-agricultural GDP growth rate-the pick up in Q1 suggests some pick-up in economic activity from the third quarter, feels Nomura economist Sonal Varma.
“Export and production data in several Asian countries (including India) have continued the improvement seen in previous months,” chief analyst Allan Von Mehren of Dankse Bank, Denmark’s largest bank.
Purchasing managers’ index for new orders show that after falling in mid-2008, the index for India has recovered significantly.
However, the recovery for the economy may not be very quick. Nomura says the decline in real GDP growth (the latest data available are Q4 of fiscal 2008-2009 ) will continue in first six months of 2009.
“We forecast real GDP growth to trough in the second quarter of FY09 at 4.5% year-on-year, led by inventory de-stocking and a further weakening of output in the services sector.”
But it maintains that overall, the turnaround in the leading index is positive . “We interpret it as a sign that the Indian economy is now close to bottoming out,” the Japanese outfit said.
Meanwhile, Citigroup economists feel that consumer price index could fall from 9.6% levels in Feb 09 to 5-6 % range soon as good monsoons could see new crop coming in. While latest inflation data pegs the WPI at 0.3% for the week ended 14 Mar, however the consumer price index (CPI) – released on a monthly basis – remained at neardouble-digit levels, up 9.6% in Februray 09.
“Given the base effect and new crop coming in, it is now consensus that normal monsoons will result in the CPI moderating to 5-6 % levels. Importantly , food articles comprise 14% of the wholesale price index but 57% of the CPI,” Citigroup economists Rohini Malkani and Anushka Shah said. – ET
Filed under by chirag on March 21, 2009 at 1:39 pm
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Economic Times in an article today reported that the based on the lower the expected Inflation numbers (0.44% ) the Reserve Bank of India must further cut its Repo, Reverse Repo and may be CRR rates to provide necessary stimulus to the economy. We all remember that RBI already has cut its rates to record minimum, the latest cut being announced on March 4th, which led to repo rate being brought down from 5.5 to 5%, and the reverse-repo down to 3.5% from 4%.
What do the rate cuts serve to achieve? – Encourage banks to ease consumer and business borrowing by offering lower lending rates.
Well this makes sense in theroy, but is the consumer ready to borrow? Is he or she ready to invest in a car or home or decide to increase their discretionary spending? I do not think so.
The consumer has retreated in to a shell, from where it is difficult to spend money. But why are they consumers so wary of spending? The underlying problem is the fear of uncertainty about tomorrow. If we take a back in to the past 6-8 months, the words slowdown and/or recession were being mocked at in India. The so-called pundits helped build a wall around peoples minds telling them that India will remain more or less unaffected by the ills of the credit crisis plaguing US and much of the major economies. This mis-information shrouded us for taking precaution and preparing ourselves for the upcoming misery. And when the truth dawned up on it was too late to take any evasive action and because it was so sudden the impact has been far more worse.
But who is to blame for all of this. The pundits, the media, the newspapers, TV programs? The onus lies on each and every one of us. If it is our hard earned money we are investing in the market, then we cannot blame someone else for our losses. We had to stay more informed and follow information without verifying and applying logic to it. In one way we cannot even trust the government. If you remember the speech in Feb-08 from P Chidambaram he was very confident of India continuing on the pace of 8-9% fiscal growth. Even 6 months in to 08 the finance ministry did not forewarn or raise flags of possible reactions to the credit crisis of US and Europe.
Today the condition is so bad that business big or small, individuals rich or poor, in one way or other are feeling the pinch. The Elections provide another reason for the consumer to push oneself further deep in the shell. The announcement of the Third Front, Mayawati being projected as the prime ministerial candidate, Congress and BJP not being strong enough to win a majority leads to many investors to believe that the economic stimulus, change in fiscal policy needed to fight the downturn may not be able to come till July-August time frame.
So should the RBI cut rates again? Will this have a big impact on the current state of the economy? Will bank easing borrowing rates encourage people to buy new homes or new cars?
It is the weekend, definitely something for all us to think about !
You can find me at Stockezy.com – or tushar@stockezy.com
Filed under by chirag on January 16, 2009 at 6:23 am
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India is projected to witness a growth between 7-7.5% during the current financial year, after remaining in high growth path constantly for the last four years, said Ashok Chawla, secretary, department of economic affairs.
Whereas, the pace of growth next year is dependent upon how long the global recession lasts and how quickly capital flows return to normal, he added. With the presence of strong domestic demand stimulus, he added further that the India expected to maintain a strong pace of economic growth despite continuation of global recession.
India has taken a number of steps to inject liquidity into the financial systems, recapitalized banks and other systemically important institutions to tide over the crisis, he said.
Chawla identified banking sectors and capital markets as areas where the expert teams of India and China to jointly work and evolve a time-bound strategy for closer engagement.
Financial sector reform process would play as a key to improve productivity, efficiency, profitability and coverage of the system, he emphasized. – MyIRIS.
Filed under by chirag on December 2, 2008 at 6:45 am
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Global coffee exports have declined by 2.9% to 95.11 million bags during the 2007-08 crop year, reports agency sources.
According to the International Coffee Organization (ICO), in 2006-07, global coffee exports stood at 97.96 million bags. During 2007-08 (the coffee year runs from November to October), world arabica and robusta exports totaled 62.5 million bags and 32.6 million bags, respectively.
India, which is at the fourth position in the list of coffee-exporting countries, shipped 1.7 million bags of robusta and 740,000 bags of other milds during November-October 2007-08, ICO data showed.
The world`s largest exporter, Brazil, witnessed a 4.17% fall at 24.54 million bags, Tanzania by 7.82% at 742,608 bags and Cameroon by 23.13% at 566,383 bags, it said.
For the 2008-09 crop year, the ICO has projected 11% increase in global coffee production at 131 million bags as compared with 118.2 million bags in a year-ago period. Meanwhile, the coffee demand in 2008 is estimated to be 128 million bags, it said, adding that consumption levels in traditional markets are likely to be maintained despite the current financial crisis. – MyIRIS
Filed under by chirag on December 1, 2008 at 5:34 pm
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Prime minister (PM), Manmohan Singh has said that despite economic recession and the difficult situation in western countries, India`s growth rate would be maintained at around 7.5% in 2008-09. India recorded 7.6% growth in the last quarter of the current financial year.
Economic crisis was looming all over the world due to the recession that started in the US and Europe, and India was not an exception to it, the PM said, adding `we are not untouched by the economic crisis`.
Some western countries` economic growth rate was negative and recession was hovering there, Singh said, adding the Central government had taken measures to face the crisis.
“Our export, industry and credit availability would bear the minimum effect due to the Centre`s steps to face the economic challenge and recover from it“, he added.
This is the first time that growth in four consecutive years has been 9%, he said, adding industries and businesses were given a boost, new jobs were created, and stagnant agriculture got great momentum.
The UPA government considered that the farmer was the backbone of the country and hence the National Agriculture Development Yojna and Food Security Mission were redrawn with priorities in the past four years, he added further. – IRIS
Filed under by chirag on November 28, 2008 at 12:01 am
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Indian GDP stands at 7.6% v/s 7.9% in last quater.
India’s economy grew at the slowest pace since 2004 last quarter, increasing pressure on the central bank to cut interest rates.
Asia’s third-largest economy expanded 7.6 percent in the three months to Sept. 30 from a year earlier, after a 7.9 percent gain in the previous quarter, the statistics office said in a statement in New Delhi today. The median forecast of 16 economists in a Bloomberg News survey was for 7.2 percent growth.
Governor Duvvuri Subbarao may have to deepen the rate cuts he started last month to support growth in India’s $1.2 trillion economy as the world sinks into recession. Reducing borrowing costs would also shore up investor confidence after terrorist attacks since Nov. 26 killed at least 121 people in Mumbai, the nation’s financial hub.-Blomberg
Filed under by chirag on November 27, 2008 at 7:50 pm
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The annual Wholesale Price Index-based inflation rose 8.84 per cent for the week ended November 15, marginally down from the previous week’s yearly rise of 8.90 per cent. The latest WPI inflation rate was the lowest reading since May 17 and well below early August’s peak of 12.91 per cent.
The official WPI for ‘All Commodities’ for the latest reported week rose by 0.04 per cent to 235.1 points, up from 235 points for the previous week. The annual rate of inflation, calculated on point-to-point basis, stood at 3.35 per cent during the corresponding week of the previous year.
Fish-Marine cheaper
The Primary Articles Group rose 0.1 per cent as the index for ‘Food Articles’ group rose by 0.1 per cent due to higher prices of moong, rice and bajra (3 per cent each), ragi (2 per cent) and masur, maize and fruits and vegetables (1 per cent each). However, the prices of fish-marine (12 per cent) and gram and tea (2 per cent each) declined.
Soyabean dearer
The index for ‘Non-Food Articles’ group rose marginally due to higher prices of soyabean (11 per cent), gingelly seed and castor seed (2 per cent each) and linseed (1 per cent). However, the prices of raw rubber (4 per cent), cotton seed groundnut seed and raw cotton (2 per cent each) and raw silk (1 per cent) declined.
The fuel, power, light and lubricants group index remained unchanged at its previous week’s level of 353.3 points. The Manufactured Products group rose by 0.05 per cent as the index for the ‘Food Products’ group declined by 0.1 per cent due to lower prices of cotton seed oil (5 per cent), imported edible oil (4 per cent), rice bran oil (3 per cent) and gur (2 per cent).
However, the prices of bran (all kinds) (5 per cent), gingelly oil (4 per cent), sooji (rawa) (2 per cent) and salt and atta (1 per cent each) moved up. The index for the ‘Textiles’ group rose by 1.0 per cent due to higher prices of cotton yarn-cones and hessian and sacking bags (4 per cent each), texturised yarn (2 per cent) and hessian cloth and cotton yarn-hanks (1 per cent each). However, the prices of synthetic yarn (2 per cent) declined.
The index for ‘Rubber and Plastic Products’ group declined by 0.2 per cent due to lower prices of PVC fitting and accessories (12 per cent). The index for ‘Chemicals and Chemical Products’ group rose by 0.3 per cent due to higher prices of acetylene (70 per cent) and oxygen (8 per cent). However, the prices of vitamin liquids (4 per cent) declined.
The index for the ‘Base Metals Alloys and Metal Products’ group declined by 0.6 per cent due to lower prices of ferro silicon (24 per cent), steel ingots (plain carbon) (16 per cent), basic pig iron and foundry pig iron (7 per cent each), zinc (3 per cent), steel sheets, plates and strips (2 per cent) and ms bars and rounds (1 per cent). However, the prices of joist and rolls and other iron steel (3 per cent each) moved up. – TheHinduBusinessLine