In­dia’s econ­omy ex­pands faster-than-es­ti­mated 8.9 per­cent

The Pak Banker - - Front Page -

NEW DELHI: Im­proved in­fra­struc­ture will prove crit­i­cal to sus­tain­ing In­dia's ex­pan­sion rate, Prime Min­is­ter Man­mo­han Singh said this month as in­fla­tion runs al­most dou­ble what the govern­ment re­gards as "ideal."

In­dia's econ­omy grew more than econ­o­mists es­ti­mated last quar­ter, adding to ev­i­dence of a strength­en­ing in do­mes­tic de­mand that's stoked in­fla­tion by plac­ing strains on the nation's trans­port and power sys­tems.

Gross do­mes­tic prod­uct rose 8.9 per­cent in the three months through Septem­ber from a year ear­lier, match­ing the re­vised pace of growth in the pre­vi­ous quar­ter, the Cen­tral Sta­tis­ti­cal Or­gan­i­sa­tion said in a state­ment in New Delhi to­day.

That was above the 8.2 per­cent me­dian es­ti­mate of 30 econ­o­mists in a Bloomberg News sur­vey.

Im­proved in­fra­struc­ture will prove crit­i­cal to sus­tain­ing In­dia's ex­pan­sion rate, Prime Min­is­ter Man­mo­han Singh said this month as in­fla­tion runs al­most dou­ble what the govern­ment re­gards as "ideal." The Re­serve Bank of In­dia may need to re­sume rais­ing in­ter­est rates in the com­ing months af­ter lift­ing bor­row­ing costs six times this year.

"In­fla­tion­ary pres­sures re­main high as strong growth fu­els con­sumer de­mand amid ris­ing ca­pac­ity con­straints," said Vishnu Varathan, a Singapore-based econ­o­mist at Cap­i­tal Eco­nom­ics Ltd. "The Re­serve Bank will have to come back and prob­a­bly raise rates fur­ther early next quar­ter to en­sure in­fla­tion re­mains un­der con­trol."

Cen­tral bank Gover­nor Duvvuri Sub­barao on Nov. 2 raised the bench­mark re­pur­chase rate and the re­verse re­pur­chase rate by a quar­ter-point each to 6.25 per­cent and 5.25 per­cent, say­ing in­fla­tion con­tin­ues to hold above the "com­fort zone."

The whole­sale-price in­fla­tion rate was 8.58 per­cent in Oc­to­ber, com­pared with the "ideal" level of 4 per­cent to 5 per­cent, ac­cord­ing to Fi­nance Min­is­ter Pranab Mukher­jee. Con­sumer prices are ris­ing at a pace near 10 per­cent, the fastest in the Group of 20 na­tions af­ter Ar­gentina.

In­dia's GDP gain last quar­ter com­pares with an ex­pan­sion of 1.9 per­cent in the 16-nation Euro area, 2.5 per­cent in the U.S. and 9.6 per­cent in China.

The Or­ga­ni­za­tion for Eco­nomic Co­op­er­a­tion and Devel­op­ment on Nov. 18 said high lev­els of un­em­ploy­ment in the U.S., Europe's sov­er­eign-debt cri­sis and grow­ing trade im­bal­ances around the world pose risks to the global re­cov­ery.

Faster growth is boost­ing rev­enue for Prime Min­is­ter Singh's govern­ment, giv­ing him room to cut the bud­get deficit to a tar­geted 5.5 per­cent of GDP from a 16-year high of 6.9 per­cent last year, even as spend­ing on oil and fer­til­izer sub­si­dies rises. -PB News

VI­ENNA: Fed­eral Min­is­ter for Wa­ter and Power, Raja Pervez Ashraf shak­ing hand with Aus­trian Min­is­ter for Econ­omy, Rein­hold Mit­ter­lehner prior to a meet­ing. -App

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.