From SFGate and Bloomberg:
"India's industrial production shrank in October for the first time in more than two years, sending the rupee and bond yields lower.
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. That's 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.
Today's data may add pressure on the central bank to pause this week after a record run of interest-rate increases as Europe's debt crisis saps global growth. Prime Minister Manmohan Singh's 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.
Bonds, Rupee
The yield on the 8.79 percent government note due November 2021 was 8.51 percent as of 11:09 a.m. in Mumbai, compared with 8.53 percent earlier. The rupee weakened 0.7 percent to 52.41 per dollar. The BSE India Sensitive Index dropped 0.3 percent.
India's inflation rate has exceeded 9 percent every month this year as the rupee's 14 percent slump against the U.S. dollar during the period, Asia's worst performance, adds to the cost of imported goods. The BSE India Sensitive Index has lost a fifth of its value in 2011.
India's 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. India's 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.
Record Increases
Reserve Bank Governor Duvvuri Subbarao has raised the repurchase rate by 375 basis points since the start of 2010. That's 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.
The central bank said on Oct. 25 that its monetary tightening will help curb inflation and that the likelihood of a rate action in the December policy meeting is "relatively low."
The Reserve Bank predicted India's economy will expand 7.6 percent in the year ending March 31, lower than the 8 percent it estimated earlier. It expects inflation to ease to 7 percent by March 31.
Asian central banks including South Korea and Indonesia kept rates unchanged in recent days, seeking to balance the threat to growth from Europe's debt crisis and price pressures.
Political Opposition
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, India's 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 Industrial Production Falls for First Time Since 2009
"India's industrial production shrank in October for the first time in more than two years, sending the rupee and bond yields lower.
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. That's 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.
Today's data may add pressure on the central bank to pause this week after a record run of interest-rate increases as Europe's debt crisis saps global growth. Prime Minister Manmohan Singh's 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.
Bonds, Rupee
The yield on the 8.79 percent government note due November 2021 was 8.51 percent as of 11:09 a.m. in Mumbai, compared with 8.53 percent earlier. The rupee weakened 0.7 percent to 52.41 per dollar. The BSE India Sensitive Index dropped 0.3 percent.
India's inflation rate has exceeded 9 percent every month this year as the rupee's 14 percent slump against the U.S. dollar during the period, Asia's worst performance, adds to the cost of imported goods. The BSE India Sensitive Index has lost a fifth of its value in 2011.
India's 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. India's 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.
Record Increases
Reserve Bank Governor Duvvuri Subbarao has raised the repurchase rate by 375 basis points since the start of 2010. That's 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.
The central bank said on Oct. 25 that its monetary tightening will help curb inflation and that the likelihood of a rate action in the December policy meeting is "relatively low."
The Reserve Bank predicted India's economy will expand 7.6 percent in the year ending March 31, lower than the 8 percent it estimated earlier. It expects inflation to ease to 7 percent by March 31.
Asian central banks including South Korea and Indonesia kept rates unchanged in recent days, seeking to balance the threat to growth from Europe's debt crisis and price pressures.
Political Opposition
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, India's 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 Industrial Production Falls for First Time Since 2009
