Here's a Bloomberg report on shrinking of industrial output in India:
Indias industrial production shrank in October for the first time in more than two years, adding pressure on the central bank to pause this week after a record run of interest-rate increases.
Output at factories, utilities and mines fell 5.1 percent from a year earlier after a revised 2 percent gain in September, the Central Statistical Office said in a statement in New Delhi today. Thats the first decline since 2009 and compares with the median estimate for a 0.7 percent drop in a Bloomberg News survey of 24 economists.
Manufacturing has moderated in nations from China to Brazil as Europes debt crisis saps global growth, prompting officials to hold or lower borrowing costs. Prime Minister Manmohan Singhs efforts to bolster the Indian economy have been hampered by corruption scandals, inflation and the decision last week to stall the easing of investment rules for foreign retailers.
The only policy authority that we are going to see responding to boost growth will be the central bank, Robert Prior-Wandesforde, a Singapore-based economist at Credit Suisse Group AG, said before the report. Once the RBI is content with inflation and is sufficiently worried about growth, we will see it cut interest rates.
Prior-Wandesforde expects the Reserve Bank to keep the repurchase rate at 8.5 percent in the Dec. 16 policy meeting.
Indias inflation rate has exceeded 9 percent every month this year as the rupees 14 percent slump against the U.S. dollar during the period, Asias worst performance, adds to the cost of imported goods. The BSE India Sensitive Index has lost a fifth of its value in 2011.
Slowing Inflation
Indias benchmark wholesale-price inflation probably eased to 9.04 percent in November from 9.73 percent in October, according to the median of 24 estimates in another Bloomberg News survey. That would still be higher than the levels in Brazil, Russia and China, which including India make up the so- called BRIC nations. Indias commerce ministry will unveil the data on Dec. 14.
Consumer prices rose 6.6 percent in Brazil, 6.8 percent in Russia and 4.2 percent in China last month.
Reserve Bank Governor Duvvuri Subbarao has raised the repurchase rate by 375 basis points since the start of 2010. Thats the fastest round of increases since the central bank was established in 1935, Bloomberg data show.
Consumer demand has begun to wane as a result of higher borrowing costs.
The Society of Indian Automobile Manufacturers may cut its annual domestic passenger-car sales target as costlier loans and fuel prices sap demand for Maruti Suzuki India Ltd. and Honda Motor Co. vehicles, Sugato Sen, a senior director for the group, said last week.
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Singh, halfway through his second term, is under pressure to revive a legislative agenda derailed by graft allegations in the award of telephone licenses and street protests against inflation. His government faces at least five regional elections next year, including one in Uttar Pradesh, Indias most populous state.
The government on Dec. 7 was forced to suspend a decision to allow overseas retailers including Wal-Mart Stores Inc. to open supermarkets amid protests by the opposition and its allies that forced repeated adjournments of parliament for two weeks.
This confirms the perception of policy paralysis and that hits investor sentiment which will ultimately hit growth, said Leif Eskesen, a Singapore-based economist at HSBC Holdings Plc. It can have implications for medium term growth outlook.
India Factory Output Falls for First Time in More Than Two Years - Businessweek
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