Inflation lowers but food items prices skyrocket

Annual inflation fell to a three- decade low of 0.26 per cent, although prices of essential food items rose by up to 17 per cent, shows data released just days ahead of the country going to general elections.

Wholesale prices-based inflation declined by 0.05 percentage points for the week ended March 28 from 0.31 per cent in the previous week.

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Even as the point-to-point inflation is near zero level, the average rate of price rise works out to be 8.4 per cent for the fiscal 2008-09 against 4.7 per cent in 2007-08.

Edible items like salt, sugar, milk, cereals, pulses, manufactured food products, spices and fruits were selling at higher rates for the week under review than a year ago.

In the backdrop of fall in sugarcane production, sugar prices soared by 17 per cent leaving a bitter taste. Inflation has become a key election issue, with political parties promising cheap rations for the poor.

Salt prices too went up by 10.68 per cent, milk by 6.22 per cent, cereals by 9.61 per cent, pulses 8.46 per cent and fruits by 8.02 per cent. However, drop in prices of minerals, metals, fuel, power and lubricants helped pull down the over all inflation to a three decade low.

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With the inflation dropping to such a low, analysts feel that the Reserve Bank of India may signal further cut in interest rates. RBI Governor D Subbarao reviewed the interest rate scenario with the heads of commercial banks in Mumbai yesterday.

"Inflation is low due to crisis in demand and crisis of confidence. It is low (also) due to base effect," said economic research body, RIS' Director-General Nagesh Kumar.

The Finance Ministry described the year-on-year price rise as "stable". It said the inflation of primary articles declined for the week ended March 28, 2009 from the previous week.

However, there was 3.46 per cent point-to-point annualised price rise for these articles. Further disaggregation of food articles shows that several items were selling at higher prices.

posted under - Inflation, Indian inflation updates, April inflation updates, Inflation at all time low, indian economy updates, economy of india, india and inflation
source - www.economictimes.com

Oil export earnings rise 17 per in 2009

April 8/09 - Despite facing a downturn in demand and consequently in prices since October 2008, India’s earning from oilmeal exports increased 17% to Rs 8,341 crore in 2008-09 even on a lower export volume. A firm trend in global markets during the first half of the FY09 has helped India beat the impact of recession on oilmeal exports.

Riding on substantial gains in price realisation in the first half of 2008-09, oilmeal continues to remain the highest export earner in the agri-commodity segment. During the year, it fetched about Rs 8,341 crore on an export volume of 5,421,607 tonne compared to Rs 7,109 crore against a volume export of 5,442,132 tonne in 2007-08.

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According to the Solvent Extractors’ Association of India (SEA), oilmeal exports in the first two quarters of 2008-09 jumped due to excellent demand and higher realisation of FOB prices. However, it stagnated in the third quarter. Exports declined heavily in the fourth quarter faced with a decline in meat and poultry production in its prime markets in South-east Asia, which happened due to dip in consumer demand for livestock products in the recession-hit countries.

posted under - Oilmeal earnings, oil exports, indian economy updates, economy of india, indian oil exports news, indian economy news, oilmeal in india, oilmeal exports

Economy Updates - Exports down 18% to $12 bn in March 2009

April 7/09(India Economy Updates) - The country seems all set to miss the pared down export target for 2008-09 with exports recording a fall in March 2009, for the sixth time in a row. Quick estimates made by the commerce department reveal that exports fell by 18% in March 2009 to $12 billion.

The aggregate export figure for the entire fiscal is, therefore, at $168.59 billion, which is more than a billion dollar short of the lower range of the revised target of $170-175 billion set by the government. The unofficial quick estimates, however, are sometimes quite different from the revised estimates officially issued at the end of the month.

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While desegregated figures are not available, a government official said that sectors such as textiles, handicrafts, carpets, leather, gems & jewellery and marine products continued to do badly. While demand for some of these products, especially textiles, has started picking up slightly in the EU market, demand from the US continues to be sluggish, the official added.

India exported goods worth $162 billion in 2008-09 registering a healthy growth over the previous fiscal. The 2008-09 fiscal began on a robust note with exports growing by more than 30% in the first six months. While the effects of the global demand slowdown started appearing in September with export growth slowing down to 10% in September 2008, the downslide started in October 2008 with exports entering the negative territory with a fall of 12.8% over October 2007.

Exports have not managed to get out of the negative zone ever since. Commerce and industry minister Kamal Nath, who had initially fixed the export target for 2008-2009 at $200 billion, brought it down to $170 billion-$175 billion in the last quarter of the fiscal year.

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With demand in key markets including the US, the EU and Japan slowing down, exports in most countries have been hit.

posted under - Exports , indian export news, Indian exports updates, economy of india, indian economy updates, indian economic news, economic news of india

India ranks second in industrial production among developing countries

India ranks among the top five developing countries in production of six major industrial items, including textiles, motor vehicles, chemicals and basic metals, according to a UN agency UNIDO.

In four out of the six industrial products - textiles, chemicals and chemical products, basic metals and electrical machinery and apparatus - India figures at number two only behind China.

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India's annual growth rate of manufacturing value added (MVA) has risen from 6.9 per cent in the period 2000-2005 to 12.3 per cent between 2005 and 2007, according to the year book of the United Nations Industrial Development Organisation (UNIDO).

It found that the share of MVA in India's gross domestic product (GDP) has risen to 14.8 per cent in 2006 from 13.8 per cent in 2001.

UNIDO found that the developing countries now produced almost 30 per cent of the world MVA compared to 16 per cent in 1990.

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"The increasing share of developing world vis-a-vis industrialised countries is also explained by the shift of location of manufacturing, especially assembling of final products from industrialised countries to developing countries," the UNIDO said.

posted under - industrial production, indian economy, economy of india, indian industrial output, output updates, indian economy updates, economy of india

FDI to remain robust - Goldman Sachs

The global economic slowdown will not affect the foreign direct investment (FDI) flow to India as the domestic demand remains "resilient", investment banker Goldman sachs said on Monday.

"FDI is showing positive signals," Tushar Poddar, an economist with Goldman Sachs said, adding: "We expect FDI inflows to remain significant in 2009-10, given India's relatively resilient domestic demand momentum."

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According to the bank, the FDI flow to India during September-January - the months when the credit crisis was at its peak - amounted to $9.2 billion, higher than $7.9 billion in the corresponding period last year.

Pranjul Bhandari, another economist at Goldman, said: "India's balance of payments (BOP) may have had its worst quarter in October-December 2009, when it showed a deficit of $18 billion."

"NRI deposits showed an uptick last fiscal, but we expect it to remain flat in 2009-10. We expect NRI deposits coming due in the next year ($32 billion) to get rolled over to a large extent, but do not expect large fresh inflows," he added.

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External commercial borrowings (ECBs) are expected to moderate in in the current fiscal. Although ECBs have slowed to $9.1 billion during September-February from $11.8 billion in the previous six months.

"In 2009-10, we expect ECBs to remain positive due to higher growth and yields in India, notwithstanding the $7 billion of outstanding commercial loans coming due," Bhandari said.

Private remittances from Indians working abroad slowed to $4.3 billion in the October-December quarter from $7.9 billion in the July-September quarter.

"We expect this to remain weak, but do not expect much further weakness from current levels," she said.

Bhandari added that the merchandise trade deficit had fallen to $5 billion in February from a peak of $14 billion in August.

Posted under - FDI in india, indian economy updates, economy of india, recession and indian economy, Indian FDI, foreign direct investment in india, India FDI, FDI updates
source - www.economictimes.com