Indian Economy - News & Updates - Archive

[Flintlock]

In a first, Gujarat to connect all villages via satellite

Each panchayat will have its own e-mail address and more than 13,000 of them will be hosted on the state-owned data centre. The project will be connected through very small aperture terminals, which bounce data from one location to another via satellites

Regina Anthony
New Delhi, May19

Gujarat will be the first state in India to provide high-speed connectivity through satellite-based data connections to all its 13,693 gram panchayats, as village administrative councils are commonly called, by July this year, enabling video, voice and data offerings in the areas of e-governance, distance education, tele-medicine, agriculture and interactive advisory and counselling services.

Each panchayat will have its own e-mail address and more than 13,000 of them will be hosted on the state-owned data centre. The project will be connected through so-called very small aperture terminals or VSATs, which bounce data signals from one location to another via satellites, routing these signals through small dish antennas.

The project will cost Rs 200-300 crore, a senior Gujarat government official said. "While a majority of the funds come from the state government, some capacity of between Rs 20 crore to Rs 25 crore comes from the Central government," said Varesh Sinha, principal secretary of panchayats in the state.

The build-operate-transfer project, announced by the state government in September, has India's largest mobile phone services firm, Bharti Airtel Ltd, which also runs a broadband business, as the implementing agency. Bharti Airtel, which began work on the project in January, plans to connect the with panchayats broadband connectivity at speeds of 2mbps.

"One of the best things about Gujarat is that there is a lot of great digitisation that has happened in the state than anywhere else. This will be further fuelled by the panchayat connectivity," said T.R. Madan Mohan, managing partner at management consultancy firm Browne and Mohan.

Chris Tobit, Bharti Airtel's director, sales and operations for enterprise services, said the project was on track for completion in July. The New Delhi based firm won the contract in October.

Gujarat is moving fast in taking information technology or IT to the village level, said an expert overseeing the Centre's common services centres project that aims to roll out some 100,000 computer kiosks countrywide.


(Hindustan Times)

 

[Bushroda]

The Rise of the Indian Traveller
by Bryan Palmer
Global Visas, UK
22/05/2008

The Indian economy is booming and the fact that Indians are becoming avid international travellers highlights this. Various countries are now wooing the Indian traveller in order to attract this lucrative Indian market.

For many years India has been an extremely popular destination for travel, particularly due to its affordability, ancient cultural heritage and tropical climate. However as more tourists go to India, so more Indians travel abroad seeking exciting and exotic travel opportunities.

Wealthy Indians have always been common travellers, however now more middle class Indian citizen also have the opportunity to go places. This is driven by disposable income, more affordable holiday packages and cheap air travel carriers such as SpiceJet and Go Air.

According to Euromonitor International, a marketing research company, the number of Indian tourists is bound to double in the next five years. They believe that by 2011 the United States will be the holiday destination of choice for Indians, particularly as more Indian citizens have family living in the US.

Global Visas in India deal with visa and permit applications for a variety of global destinations on a daily basis. "For most countries Indian citizens need a tourist visa in order to enter," says Ajay Hasija of US Visas, Australia Immigration, Canada, Visa UK, Work Permit UK, Immigration Services. "The amount of Indians looking for holiday visas has grown greatly in the past few years and there is no doubt that the Indian economy is the core reason for this," he adds.

Countries, like Britain, are trying hard to tap into this growing market through attractive and affordable campaigns such as the current UK tourism promotion entitled, "Britain, Be Inspired". Britain is a popular tourist destination, with thousands of foreigners visiting each year. Indians are believed to be the second highest spenders in the UK, spending over £300 million on holidays in 2006.

In the past few years India has become a financial powerhouse, particularly due to their international competitiveness in the technology and IT industry, as well as becoming a tourist destination of choice. This economic progress has put more money in the pockets of the working man, enabling them to travel abroad.

Indians are looking at exotic international locations such as Thailand and Malaysia, with overseas travel sometimes being more affordable than regions within India itself.

 

[Bushroda]

For Indian Tech Entrepreneurs, Downturn Still Offers Opportunities
The head of The Indus Entrepreneurs, a tech networking group that mentors immigrant talent, says now is a good time to start new companies.

By Charles Babcock
InformationWeek, NY
May 22, 2008 08:50 AM

Four companies are formed, each funded with an average $7.5 million, every day of the week in the Silicon Valley in California, according to Vish Mishra, a venture capitalist and president-elect of TiE, a group that mentors immigrant talent for startups.

Mishra is president-elect of The Indus Entrepreneurs (TiE), a technology professional networking group that is sometimes cited by researchers, such as the University of California at Berkeley Professor AnnaLee Saxenian, as one of the secrets of the Silicon Valley's success.

"I started as a hands-on entrepreneur," said Mishra, who came to the U.S. with a degree in electrical engineering from the Institute of Technology at Banaras Hindu University in India. He got a master's degree in engineering from North Dakota State University, founded Telera, a networking firm sold to Alcatel (NYSE: ALU), and was co-founder with Kanwal Rekhi of Excelan, a networking company acquired by Novell (NSDQ: NOVL) in 1989 for more than $100 million.

Both Rekhi and Mishra, along with other successful Indian entrepreneurs, enjoyed good fortune and wanted to give back to the community. Together they helped found The Indus Entrepreneurs, the group that stages TiECon each year to bring would-be entrepreneurs into contact with potential staff and financiers and to coach members on how to succeed as an embryonic Silicon Valley firm. Rekhi, for example, has invested $17 million of his money in 53 startups.

Peter Thiel, co-founder of PayPal, was the lead-off speaker at TieCon 2008 on May 16.

TiE members help newcomers find executive jobs, move from one job to another, and lay plans for their own companies. TiECon 2008 was held May 16 and 17, with about 3,500 of Indian, Malaysian, Singaporean, and others of South Asian descent gathering at the Santa Clara Convention Center to talk about starting their own companies.

Saxenian concluded in studies several years ago that TiE functioned as much as a social integrator of foreign talent into the Silicon Valley startup culture as it did as an economic force. It cuts across corporate boundaries and keeps talent moving around, including maintaining ties with firms and talent back home.

TiE's inital purpose 16 years ago was to circumvent venture capitalists' bias against technically-skilled Indians starting and running their own companies. Indians were considered good at following instructions and writing software, Mishra explained. Now their talents are frequently sought in management roles in start-ups.

Now is a good time to pursue a startup role, despite a shaky stock market and possible recession. "People don't become super smart just because the economy is good," he said. Likewise, "they don't become stupid when the economy is bad." By getting to work on a new product today, it will be ready when the upturn comes, he predicted.

"If you have the talent and skills and good attitude, this country will reward you," he said in an interview just published in The Indian American, a Highland Park, N.J., magazine addressing U.S. residents of Indian descent.

TiE keeps establishing new chapters around the world and casting a wider net. It now has 50 chapters in 11 countries, including India, Australia, Malaysia, and the U.K., instead of being just Silicon Valley based. It's established two chapters in Pakistan. Anyone who pays $100 in dues can join, Mishra said.

But there's no question that the unique opportunities of the Silicon Valley are going to be hard to duplicate elsewhere, he said. "[The valley] is not just about place. It's about state of mind and ability to take risks. It's the most innovative place on the face of the earth," he said.

 

[Flintlock]

ISRO pitching for commercial launches
Press Trust of India / Kolkata May 22, 2008, 17:22 IST

Riding on the recent success of its PSLV-C9 launch, the Indian Space Research Organisation (ISRO) is now pitching to increase its commercial launches to earn revenue and is negotiating with countries that restrict use of Indian launch vehicles.

"Our domestic requirement is four to five launches per year and we are trying to increase commercial launches. Our costs are about 80 per cent of international launching costs. But some coutries have restrictions about launching their satellites with Indian launch vehicles," ISRO chairman G Madhavan Nair told reporters here after receiving the Ramomohan Puraskar, 2008.

Isro, which last month launched the PSLV C-9 with two satellites CARTOSAT-2A and IMS-1 with eight nanosatellites, has become the world's second country after Russia to launch multi-satellites with Polar Satellite Launch Vehicles.

According to Nair, some advanced countries were wary of using Indian launch vehicles on the plea that those were of 'dual use' nature. They were, therefore, not willing to provide information regarding payload and other related matters.

He said Isro was negotiating with various agencies and governments for removal of the restriction. "If this can be done it will certainly bring in more revenue."

To a question, he said preparations of Chandrayan-1, India's first unmanned mission to the Moon, was well proceeding on schedule and its launch was expected in the third quarter of this year.

Stating that the satellite would be in orbit for two years, Nair said that during its orbit it would take pictures in phases of the lunar surface and look for the possibility of the existence of water and special elements like Helium-3.

ISRO to launch moon mission by December - Sify.com

 

[Flintlock]

Mizoram to set up northeast India's first SEZ

Mizoram will set up northeast India's first Special Economic Zone (SEZ).

"We have already started the process to establish the SEZ at Khawnuam village in Champhai district bordering Myanmar," said Chief Minister Zoramthanga.

"We have urged the North Eastern Council (NEC) to sanction Rs.91.3 million to build the necessary infrastructure to set up the SEZ in the eastern part of the state, which shares borders with Bangladesh besides Myanmar," Zoramthanga told IANS.

He has discussed the matter with Minister for Development of the North Eastern Region (DoNER) Mani Shankar Aiyar.

"The DoNER minister gave us a positive response and he would take up the matter with the union finance and industry ministries too," he added.

He said: "The proposed SEZ, for which a detailed project report (DPR) has already been submitted to the NEC, would go a long way in boosting employment, trade and economy and to use the state's vast agricultural and horticultural resources effectively."

"The main purpose of setting up the SEZ is to attract foreign direct investment (FDI) and boost the economy. Moreover, it is expected to generate additional employment opportunities.

"We are extremely hopeful of investment from Thailand, Bangladesh, South Korea and Malaysia for industrial and commercial projects on this SEZ," the chief minister added.

"Although Mizoram's literacy rate is high (88.49 percent of the state's 900,000 population are literate according to the 2001 census), it was the lack of adequate finance and suitable opportunity that slowed down the economic growth," the militant leader turned politician said.

Bamboo-based industries are expected to play a big role in the proposed SEZ. The Confederation of Indian Industry (CII) has estimated that Mizoram, with an area of 21,090 sq. km, has 20 bamboo species in groves covering 1,254,400 ha, contributing 14 percent of all the bamboo produced in India.

The state government had earlier signed an agreement with a Bangladeshi paper manufacturer (Nitoy-Niloy paper and pulp industry near Dhaka) to supply bamboo chips for their factory. These bamboo chips would be exported through the Sutarkandhi areas of Karimganj in southern Assam.
HindustanTimes-Print
© Copyright 2007 Hindustan Times

 

[Neo]

messy battle against inflation​

By Anand Kumar

FOR months the Indian government has been battling the phantom of inflation, launching a series of measures – including trying to suck liquidity out of the system by raising the cash reserve ratio (CRR), jacking interest rates, curbing forward trading in several commodities and forcing steelmakers to cut-back on price hikes – moves that, however, failed to tame inflation.

Despite unveiling a series of measures, inflation has been rising steadily; India’s headline inflation rate – as measured by the wholesale price index (WPI) – rose to a record high of 7.83 per cent for the week ended May 3.

And now, in the midst of this messy battle, actual inflation (as against fears of inflation and scare mongering) is finally raising its ugly head, leaving the government bereft of crucial weapons, already spent fighting the phantom.

Last week, when international oil prices topped the $135-mark (for a barrel), saw one of the most formidable threats on the price front: the Indian rupee breached the 43 (to the dollar) mark for the first time in 13 months, plunging to 43.21. The currency has in recent weeks abruptly reversed its year-long northward journey, and started tumbling against the dollar.

The weakening Indian currency threatens to upset the government’s plans and could trigger off a nasty round of sharp price hikes. Analysts worry that inflation will soon touch the eight per cent mark, and there could be the possibility of it touching double-digits later this year.

For the United Progressive Alliance (UPA) government, which has just completed four years in office, nothing could be more tragic. Elections to several important states – including Madhya Pradesh, Rajasthan, Delhi and Chhattisgarh – will he held over the coming weeks and general elections are less than a year away.

The Reserve Bank of India (RBI), the country’s central bank, under pressure from the government, has been raising interest rates over the past two years, tightening liquidity, though prices were ruling modestly. Now with wholesale and consumer prices heading northwards, the limitations of fiscal measures are becoming apparent.

The UPA government has also stubbornly refused to raise the retail price of petrol, diesel, kerosene and LPG (liquefied petroleum gas), for fear of alienating the electorate and triggering off inflation. But now with oil prices topping $135, the state-owned oil marketing companies are in dire straits.

If they are not allowed to raise the retail price over the next few months, the oil companies have warned the government, the country may have to go in for drastic measures, including rationing of petroleum products.

But with crucial elections staring it in the face, the last thing the government would want to do now is to raise petroleum prices. Bankers expect the RBI to further tighten liquidity, by going for a 25 to 50 basis points hike in the CRR.

* * * * *

WITH international oil prices showing no signs of cooling, the rupee will continue to remain under acute pressure. According to market analysts, if oil prices touch $150 a barrel, the rupee will fall to 44 against the dollar.

Combined with the spurt in international food and commodity prices, the currency is set to lose all the gains of the previous year. The Indian rupee gained 12 per cent against the dollar in 2007, hurting Indian exporters. But it has already lost nearly nine per cent against the dollar this year – it fell by six per cent in May – and has emerged as the second-worst performing currency in Asia after the South Korean won.

The Indian currency peaked in November, touching 39 to the dollar, as foreign institutional investors (FIIs) poured money into the stock markets. Last year, FIIs net investments into the stock markets added up to a record $17.4 billion. But this year, with hardening interest rates in the US, many FIIs have been pulling out funds from India. They have so far sold a net $3 billion this year, adding to the plight of the rupee.

The RBI has for over two years maintained a hands-off policy in the foreign exchange market; it has not intervened significantly by selling dollars to ease pressures on the rupee. India’s foreign exchange reserves add up to nearly $313 billion; more than $100 billion were added to the kitty in 2007 alone.

The biggest buyers of dollars in the market are oil companies, who use it to fund their crude acquisitions. India imported nearly $72 billion of oil last year, which was about 25 per cent more than in the previous year. The country imports 70 per cent of its oil requirements.

The escalating oil bill is widening the trade deficit, which has already jumped from $59 billion in 2006-07 to $80 billion in 2007-08. The current account deficit also widened to $5.4 billion for the October-December quarter, from $4.7 billion in the previous quarter. With oil prices having shot up by 40 per cent so far in 2008, the current account deficit will balloon further.

Soaring international prices for fuel, food and fertilisers means that the deficit will continue to grow. The government pays international market prices for fuel, food and fertiliser, but populist policies – and pressures from its Leftist supporters – prevent it from realising the same from consumers back home.

The result: the deficit keeps widening and threatens to upset the government’s finances. According to estimates, a one per cent fall in the value of the rupee adds Rs70 billion (about 0.15 per cent of the GDP) to the government’s fiscal deficit, as it is forced to sell expensive imported oil, food grains and fertilisers at ridiculously low prices to consumers and farmers.

Rising inflation and a weakening rupee will discourage FII inflows. The Indian economy is also expected to slow down this fiscal to around eight to 8.5 per cent. For the financial year ended March 31, 2008, gross domestic product (GDP) grew by 8.7 per cent, as against 9.6 per cent in the previous year.

* * * * *

THE RBI is expected to ease restrictions on overseas corporate borrowings, to lessen the burden on the rupee. These restrictions were imposed when the rupee was gaining strength against the dollar.

Companies that went in for overseas borrowings of more than $20 million could not repatriate it to India, while those borrowing less than that sum had to get the central bank’s permission.

With domestic interest rates on the rise last year, many companies were borrowing cheap abroad and repatriating the funds. This resulted in increased forex flows, adding to the kitty, but not helping the economy in any way.

But the sharp about-turn in the direction of the rupee has taken most exporters and corporates by surprise. Many companies had hedged their foreign exchange cash flows for periods ranging from 12 months to 18 months, and the falling rupee has caught them unawares.

Jewellery exporters had hedged raw materials such as diamonds and gold at Rs40-40.5 to the dollar, expecting the rupee to strengthen to 38. But with the weakening currency, they are having to book losses.

Some exporters had taken pre-shipment dollar-loans, attracted by the lower interest rates, and converted them into rupees. Now they will have to pay more for the dollars needed to repay their loans.

The RBI, in a bid to prevent corporates from shifting to other centres like the Dubai Gold and Commodities Exchange – which last year launched a rupee futures contract - plans to unveil rules for exchange-traded futures for currencies and interest rates, later this month. Trading could begin later this year.

Once the rules are in place, eligible exchanges will be allowed to deal in currency futures. Importers, exporters and companies with forex exposures can buy hedges through exchanges. The currency future will allow the participant to buy or sell a currency at a future date on the basis of an exchange rate fixed on the last trading day.

Exchange-traded currency futures will hopefully bring greater transparency in the pricing of hedges, and will also help in their price discovery. The Indian rupee is a partially convertible currency. The government is keen to go in for full convertibility, but opposition from its Left supporters has prevented it from exercising this option.

The messy battle against inflation -DAWN - Business; May 26, 2008

 

[Bushroda]

Five mn tourists visited India in 2007
Press Trust of India / Puducherry
May 27, 2008, 19:19 IST

Around five million foreign tourists had visited India in 2007 which was a big jump from the 3.92 million tourists during the previous year, Union Tourism and Culture Minister Ambika Soni said today.

Around 400 million domestic tourists had also travelled across different parts of the country during 2007, she said.

She was speaking after declaring open the Rs 35 crore 'Zest Big Beach-Puducherry' a project of the Mahindra Holidays and Resorts India Limited (MHRIL) at Manapet coastal village near here.

Puducherry will emerge in the near future as a major centre for cruise tourism and efforts to promote this project would be intensified in collaboration with the Union Shipping Ministry, she said.

"We should work together to make Puducherry as a major destination as was done in respect of Sikkim and Goa and other destinations. In the near future Puducherry would emerge as a centre for cruise tourism", she said. Around 74 heritage sites had been identified in Puducherry and "we should look at the best of them for promotion and restoration for the benefit of the people here", she said.

The Auroville International Project and Sri Aurobindo Ashram here were adding to richness, the legacy and also full-fledged projection of Puducherry as a destination.

"There had been lot of questions and eager enquiries about Auroville in different parts of the world from information seekers as they want to visit Auroville to have a new experiment in India", she said.

 

[Mohammed Azizuddin]

India top trade destination for Dubai

India has emerged as Dubai's top trade partner, with the country heading the list of import and export destinations from the latter in the first quarter of 2008.

India had a share of 13.14 per cent of the total imports from the emirate worth AED 12.6 billion (1 AED = .272 USD) while 45.7 per cent of the total exports worth AED 4.7 billion 0during the period.

It also emerged as the top re-exports destination with 31.8 per cent (AED 11.9 billion) out of the total re-exports in the first four months of the year.

In list of top imports destination, China came second with a total figure of AED 10.7 billion, followed by Switzerland at AED 7.2 billion.

India, China and Switzerland together accounted for 31.8 per cent of Dubai's total imports.

Dubai's non-oil foreign trade jumped 46 per cent in the first quarter of 2008, reaching AED 214 billion, against AED 146.5 billion registered during the same period in 2007.

During the period under review, Dubai's exports recorded a phenomenal growth, soaring by 79 per cent, while re-exports went up by 73.5 per cent and imports grew by 49.7 per cent, said figures from Dubai World's Statistics Department.

"The figures underscore the buoyant commercial growth of the emirate, reinforcing Dubai's reputation as a major commercial hub, Sultan Ahmed Bin Sulayem, Chairman, Dubai World, said.

"The growth is fuelled by the government's relentless efforts to upgrade the existing modern infrastructure of ports, airports and land transportation network, connecting Dubai to the world," he added.

 

[Mohammed Azizuddin]

Being global without India impossible: Airbus CEO

Berlin, May 28: Acknowledging that it cannot be truly global without being present in India, French aircraft maker Airbus Industrie has drawn plans to expand market share and strengthen research capabilities in the country.

"India is one of our strategic partners. You can't be global without being in India -- with its large number of highly skilled, motivated and knowledgeable people," Airbus CEO and President Tom Enders told reporters at air show in Berlin.

Noting that Airbus Industrie would have to think beyond its "European Box" and become global, he said by increasing our global footprint "we can take advantage of the best the world can offer in terms of resources, people and skills.

Referring to India, the head of the aviation major said: "We are capitalising on the incredible energy and entrepreneurial spirit in this country. We have initiated Research and Training cooperation with some of the most respected Indian universities and laboratories."

While terming the opening of its Centre in Bangalore as a "small step", he, however, made it clear that the company had "big" plans in store. "Last year we opened our first Airbus engineering centre in Bangalore."

At this high-tech centre, Indian engineers are responsible for developing advanced modeling and simulation, covering crucial factors in the design and production of high performance aircraft such as A380 and A350.

 

[Bushroda]

Indian economy grew 9.0 pct in year to March 2008

NEW DELHI (AFP) — India's economy grew nine percent in the last fiscal year, second only to China among the world's major economies, helped by unexpectedly high fourth-quarter expansion, data showed Friday.

The annual gross domestic product (GDP) growth to March 2008 was down from the previous year's 9.6 percent but above a government projection in February of 8.7 percent.

The figure marked the third straight year that the economy grew nine percent or more. It came despite aggressive monetary tightening to tame inflation running at nearly eight percent.

Inflation is causing acute concern to the Congress-led government ahead of general elections due within a year.

Economic growth was 8.8 percent in the fourth quarter to March as interest rates at six-year highs hit consumer demand and investment. But the figure was still far better than analysts' forecasts of 8.1 percent.

"One Asian country where we didn't expect to see GDP surprise the consensus on the upside" in the final quarter was India, said JP Morgan analyst Rajeev Malik, who rated the performance was "not bad by any standards."

But he raised the possibility the economy's strength might prompt India's central bank to move sooner than expected to further tighten monetary policy.

"The risk is that it comes early and is more aggressive than we assumed," said Malik.

Most private analysts expect the economy to slow in the current financial year to around seven to eight percent growth.

They cite a central bank wrestling to contain inflation, climbing global commodity prices and mounting investor risk aversion amid worldwide financial turbulence.

India's growth is still turbo-charged by anaemic Western standards, but the figure is well shy of the double-digit levels economists say is needed to rescue hundreds of millions of Indians from crushing poverty.

Pessimism about growth this year was fed by data earlier showing annual industrial output in March grew by three percent -- its smallest rise in six years.

 

[Bushroda]

Forex reserves of India crossed USD 341 billion in 2007-08

Mr Ashwani Kumar union minister of state for commerce & industry, while addressing at India Investors’ Summit, said that foreign direct investment inflow has risen to over SD 25 billion in 2007-08 and the foreign exchange reserve crossed USD 341 billion.

Around 500 of the world’s leading boardroom executives and steering industry professionals had gathered in London to map out the core areas of investment and discuss the opportunities and challenges presented by India at the investors’ summit.

Mr Kumar highlighted the union government initiatives that had made growth more inclusive. He added that the next wave would be in the skill based manufacturing sector. He gave a background to the reform process and explained the key drivers of economic growth.

He stressed that domestic demand and investment were the key drivers of growth and, therefore, they insulated the economy to a large extent from the sub prime crisis. He calculated the growth potential of the services sector to be USD 200 billion, that would offer employment to 40 million.

Mr Kumar was confident about the sustainability of growth, as no reform measure had been reversed so far. He said that "Despite an imported inflation arising from high oil and food prices, we have been able to handle the global pressure well. We have managed the political economy."

 

[Flintlock]

India's food inflation lowest among 15 developing nations

New Delhi (PTI): India has been better off in managing food inflation compared to several other developing countries in 2007-08, even as the government faces public and political anguish over sharp rise in prices.

Prices of food articles rose by 5.8 per cent in India, the lowest increase among 15 developing countries for the period ending February 2007-08, a joint report of the Organisation for Economic Cooperation and Development (OECD) and Food and Agriculture Organisation (FAO) has said.

Food prices showed the highest increase at 25.6 per cent in Sri Lanka, followed by Kenya at 24.6 per cent and China 23.3 per cent, the report entitled 'Agriculture Outlook 2008' said.

A record foodgrain production estimates at 227.32 million tons during 2007-08, against 217.28 million tons last year has helped India keep food inflation under control, experts said.

However, recent negative yield shocks in key food commodities like pulses and oilseeds have contributed to the price increase, they said, adding that global price rise had a spill-over affect on domestic rates as well.

However, India's food inflation still remains higher than the developed countries like the US and Japan during the review period, the report said.

Rate of rise in food prices stood at 1.4 per cent in Japan, at 5.1 per cent in the US and at 5 per cent in France, it noted.

For developed countries, where the price rise in food items is moderate and the share of food in the total consumer basket is small, the contribution of food price inflation to overall inflation is correspondingly moderate.

But as would be expected, the impact of food price inflation on overall inflation in developing countries is much larger, the report added.

The Hindu News Update Service

 

[Mohammed Azizuddin]

Indian economy grew 9.0 pct in year to March 2008

NEW DELHI (AFP) — India's economy grew nine percent in the last fiscal year, second only to China among the world's major economies, helped by unexpectedly high fourth-quarter expansion, data showed Friday.

The annual gross domestic product (GDP) growth to March 2008 was down from the previous year's 9.6 percent but above a government projection in February of 8.7 percent.

The figure marked the third straight year that the economy grew nine percent or more. It came despite aggressive monetary tightening to tame inflation running at nearly eight percent.

Inflation is causing acute concern to the Congress-led government ahead of general elections due within a year.

Economic growth was 8.8 percent in the fourth quarter to March as interest rates at six-year highs hit consumer demand and investment. But the figure was still far better than analysts' forecasts of 8.1 percent.

"One Asian country where we didn't expect to see GDP surprise the consensus on the upside" in the final quarter was India, said JP Morgan analyst Rajeev Malik, who rated the performance was "not bad by any standards."

But he raised the possibility the economy's strength might prompt India's central bank to move sooner than expected to further tighten monetary policy.

"The risk is that it comes early and is more aggressive than we assumed," said Malik.

Most private analysts expect the economy to slow in the current financial year to around seven to eight percent growth.

They cite a central bank wrestling to contain inflation, climbing global commodity prices and mounting investor risk aversion amid worldwide financial turbulence.

India's growth is still turbo-charged by anaemic Western standards, but the figure is well shy of the double-digit levels economists say is needed to rescue hundreds of millions of Indians from crushing poverty.

Pessimism about growth this year was fed by data earlier showing annual industrial output in March grew by three percent -- its smallest rise in six years.

Thats the greatest news....this had a resounding effect on the stock exchange as well...profits!!!

I really doubted if we could grow at 8% considering the massive credit crunch and slowdown in the US economy....now this should prove that we are indipendent of foreign factors.....great news really!!!

 

[Bushroda]

Thats the greatest news....this had a resounding effect on the stock exchange as well...profits!!!

I really doubted if we could grow at 8% considering the massive credit crunch and slowdown in the US economy....now this should prove that we are indipendent of foreign factors.....great news really!!!

We just got lucky in the last quarter. There is no way that 9% growth would follow in this fiscal year. Even 8% would be accetable. The problem is once you slow down you lose momentum & then it becomes tough to gain it back. Say good bye to 10%+ growth rate. It is not hapenning atleast till 2012 (that too if the cost of oil moderates).

 

[Mohammed Azizuddin]

We just got lucky in the last quarter. There is no way that 9% growth would follow in this fiscal year. Even 8% would be accetable. The problem is once you slow down you lose momentum & then it becomes tough to gain it back. Say good bye to 10%+ growth rate. It is not hapenning atleast till 2012 (that too if the cost of oil moderates).

At least take a look at the positive side of the story, the biggest economy in the world is slowing down, Britan's economy is slowing down, Spain,Frace all of them are feeling the heat of recession, the pirce of crude oil is hitting the roof, the food prices are hitting the roof, inflation is causing a headache for developing countries, and then you have our economy growing at 9%, which is the second highest growth rate in the world...maan...thats quite an achievement.

Get ready for more FDI into India and china.