World Bank to lend $ 3 billion to India

The World Bank has agreed to help India with $3 billion of increased investment as the global financial crisis undermines private
financing for the country's much-needed infrastructure agenda, the bank announced on Thursday.

"Part of the additional financing include a line of credit to the India Infrastructure Finance Company Limited (IIFCL) to help finance private-public partnerships in infrastructure; funding for the Small Industries Development Bank of India (SIDBI) to provide credit to small and medium enterprises, and assistance to PowerGrid to expand its transmission network," the World Bank said in a written statement.

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The development institution has provisioned this additional amount as part of the total financing envelope of $14 billion proposed in the India Country Strategy over 2009-2011.

India had requested an additional $5.6 billion over the next two years. Having provisioned the $3 billion, the World Bank said it would need to examine the balance $2.6 billion and work with the Indian government over the coming weeks to clarify details.

The strategy, which is geared to help India propel infrastructure development, support the country's seven poorest states, and respond to the financial crisis, was discussed by the World Bank board last week in Washington DC.

"Other areas which could receive support from additional financing include the National Housing Bank and the recapitalisation of state banks, the details of which are yet to be discussed with the government of India," the statement said.

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The statement said that India was the largest borrower from the World Bank's International Development Association (IDA) and second largest borrower from its International Bank for Reconstruction and Development (IBRD) in fiscal 2008.

The World Bank's $15.1 billion-portfolio in the country covers 61 active investment projects.

In the current financial year, the World Bank's oard approved $2.7 billion in funding for nine new projects for India spanning a range of sectors including infrastructure, education, health and rural development. Of this, $1.3 billion came from IBRD and $1.4 billion came as interest-free credits from IDA.

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Economies | Countries hit by recession 2008

1. Denmark - Denmark becomes the first European economy to confirm it is in recession since the global credit crunch began. Its GDP shrinks 0.6 percent in the first quarter after an 0.2 percent contraction in the fourth quarter of 2007.

2. ESTONIA - The Baltic state slides into recession with a 0.9 percent fall in second-quarter GDP after a drop of 0.5 percent in the first quarter.

3. LATVIA - Latvia joins its northern neighbor Estonia in recession as GDP falls 0.2 percent in the second quarter from the first quarter, when it fell 0.3 percent. Property markets and construction have suffered in both Baltic states.

4. IRELAND - The "Celtic Tiger" becomes the first country in the euro zone to slide into recession, with a 0.5 percent fall in second quarter GDP, following a 0.3 percent decline in the first quarter. Its last recession in 1983 saw thousands of people leave Ireland to seek work overseas.

5. NEW ZEALAND - New Zealand falls into a recession for the first time in more than a decade, with a 0.2 percent fall in seasonally adjusted GDP for the second quarter. First-quarter GDP dropped 0.3 percent.

6. SINGAPORE - First Asian country to slip into a recession since the credit crisis began. Singapore's export-dependent economy shrinks annualized rate of 6.8 percent in the third quarter after a 6.0 percent contraction in the second quarter, its first recession since 2002.

7. GERMANY - Europe's largest economy contracted by 0.5 percent in the third quarter after GDP fell 0.4 percent in the second quarter, putting it in recession for the first time in five years.

8. HONG KONG - Hong Kong becomes the second Asian economy to tip into recession, it's exports hit by weakening global demand. Third-quarter GDP drops a seasonally adjusted 0.5 percent after a 1.4 percent fall in the previous quarter.

9. ITALY - Italy plunges into recession, its first since the start of 2005, after GDP contracts a steeper-than-expected 0.5 percent in the third quarter. Second quarter GDP dropped 0.3 percent.

10. EURO COUNTRIES - The 15-country euro zone officially slips under, pushed down by recessions in Germany and Italy for its first recession since its creation in 1999.

11. JAPAN - World's second largest economy also went into recession due to dwindling sales in USA

12. SWEDEN - The Nordic nation announces it is in recession after GDP shrinks 0.1 percent in both the second and third quarters.

14. RUSSIA - Russia has also declared that it's economy is already into recession

13. USA - United States of America is already into recession from december 2007 , what looked like just mortagage crises broadened and engulfed all the above economies into it and still is in growing phase and will continue for another year 2009 for sure.

RBI - Finances to deteriorate further

With the government coming out with financial incentives for the industry, the Reserve Bank has said central finances will further deteriorate during the second-half of the year on account of the impact of financial turmoil on the Indian economy.

"While expenditure is slated to increase in the coming months, growth of tax revenue is likely to decelerate with the expected moderation in real economic activities following the global financial meltdown," RBI said in its monthly bulletin.

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"Finances in the first-half indicate deterioration in all key deficit indicators, both in the absolute term as well as per centage of GDP," it said, adding the "pressure" on deficit indicators would continue during the remaining part of 2008-09.

The government has come out with a fiscal stimulus package of over Rs 30,000 crore which will have an adverse bearing on central finances. This will be an addition to over Rs 1 lakh crore the government has sought during the first batch of supplementary demands for grants raising the government expenditures.

With the industrial production as well as exports recording a negative growth of 0.4 per cent and 12.1 per cent respectively in October, the government may come out with the second stimulus package increasing further pressure on finances.

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Referring to the performance of the first half, the RBI report said, "As per cent of the Budget estimates, both revenue deficits and fiscal deficits were higher mainly due to rise in revenue expenditure, both non-plan and plan."

RBI has already indicated that it would review the economic growth estimate at its quarterly monetary policy to be announced on January 27.

posted under - dwindling indian economy, economy of india, indian economy updates, indian finance updates, RBI updates, recession updates

with extracts from www.economictimes.com

Threat of Deflation rises for the world

Developing countries, including China and India, are showing signs of economic cooling on account of the cascading effect of the globaldownturn.

India's industrial growth unexpectedly turning negative in October, shrinking by 0.4 percent after expanding by 12.2 per cent in the same month a year earlier, hint at the worsening conditions for the economy.

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Given the deepening global recession, the threat of deflationary spiral is mounting which may fix the global economy in similar lines of the great depression in 1930s. Even as analysts and economists feel that the governments have managed to rescue the global economy from a deflationary spiral by extending deposit guarantees and recapitalizing banks who suffered losses, attempts to artificially reducing interest rates to support prices are extremely ephemeral measures.

"They may appeal as a quick fix, defending banks from further losses. Artificially supporting prices removes the stimulatory effect that lower prices have on new investment. Instead of a V-shaped bottom followed by a speedy recovery, you may end up with an L-shaped depression," said Bred Jonathan, consulting partner at Kreg and Bordan Economic Advisory.

We often hear economists or analysts refer to the threat of deflation. Deflation is a natural function of the market to correct excesses from a boom. The boom normally ends when the central bank stops new money creation, which was used to synthetically stimulate the economy.

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Source www.economictimes.com - read full article

published under - deflation in world economy, deflation threat, economy of india, global recession updates, indian economy updates, world economy updates

india's economy growth to be among strongest

India's economic growth would be one of the strongest in the world despite the the global meltdown, RBI Deputy Governor Usha Thorat said on Thursday. "Although the International Monetary Fund(IMF) had scaled down growth forecasts of nations, India's growth would be one of the strongest in the world," Thorat said at an interactive session organised by ICC here.

She said that the although incremental growth rate would be lower, the actual growth this fiscal which India would achieve would be nothing to scoff at.

"India had recorded a growth of three per cent for many years. It is only for the last few years the rate had touched nine per cent," she said.

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deflation in world economy, deflation threat, economy of india, global recession updates, indian economy updates, world economy updates

On foreign exchange volatility, she said that India's exchange rate policy had served well and ruled out going back to the fixed exchange rate regime.

She said that the cost of funds would come down, but it would take some time. "It all depends on the inflationary expectations of the bankers."


published under - Indian economy, economy of india, indian economy updates, Indian rupee updates, economy india

Indian Foreign trade policy to continue as same

The five-year foreign trade policy that lays ground rules along with incentives and disincentives for conducting imports and exports has been extended beyond March 2009 to enable the new government to give its policy direction to the country's external engagement.

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The Foreign Trade Policy (FTP), which was unveiled by the UPA government on September 2004, was to expire on March 31, 2009. India's foreign trade has seen a sharp growth in the last five years. Exports during 2007-08 grew by 22.9 per cent from 126 billion dollars in the previous fiscal, while Imports went up from 185.7 billion dollar in 2006-07 to 235.7 billion in the last fiscal.

Indian Economy Updates for december 2008

Indian economy consistes of various sectors including finance sector, Agricultural sector, Policy sector(includes government policy updates), Foreign trade sector, Infrastructure updates. So i have tried to put all of the sectors together under particular date of the month of December in this post.

Following are the main economic updates for indian economy:
(click on the link to read full story)

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December 2008 India Economic Updates :

Govt plans Rs 350-cr export package
PC, PM’s panel favour more interest rate cuts
Vaghela seeks sops for textile industry
Sharad Yadav meets PM, seeks Rs 14,800 crore package for Bihar
Bill to raise capital of LIC to Rs 100 crore introduced in LS
Rise in donations abroad raises fresh questions
Swinging Re adds to woes of slowdown-hit exporters
GCC suspends EU free-trade talks
Textiles exports may fall short of target
Tatas, GMR, L&T in race for 60 NHDP projects
Reliance Infra bags Haryana road projects
Farmers fancy blue berries, to grow fruit here
Foreign trade policy to continue beyond March 2009
WTO chief postpones meeting on global trade deal
Govt approves 21 road projects: Finance Ministry

December 8, 2008 India Economic updates :

Infra cos say more funds needed to boost growth
RBI may further cut repo rate by 150 bps: Goldman
Power gear bidding must be wired to global tenders
Govt announces package including tax cuts to boost economy
RBI rate cuts unlikely to stem slowdown - Citi
Govt's stimulus may not be effective: JPMorgan
Fiscal package positive for market sentiment
WTO releases revised blueprints for Doha free trade talks
Oct tea exports fall 5 pc as demand dips
Rs 2,000-cr boost fails to cheer exporters
Infra cos say more funds needed to boost growth
Proposals to set up industrial units worth Rs 90,480 crore
NHDP's road stretches likely to be built on annuity model
Agricultural scientist stresses need for food security
Govt weighs sops for cotton sector
Spending on agriculture up 80 percent: Government


For knowing previous month's Indian economic updates (click here)

RBI cuts repo rate by 100 bps

The Reserve Bank of India on Saturday cut the repo rate - the rate at which RBI lends to banks - by 100 basis points to 6.5 per cent from 7.5 per cent and reverse repo - the rate at which banks park excess funds with RBI - by 100 basis points to 5 per cent from 6 per cent, effective from December 8.

However it has kept cash reserve ration (CRR) - the proportion of deposits banks must keep with the central bank - unchanged at 5.5 per cent. The 6.5 per cent repo rate is the lowest rate in 2-1/2 years, while the 5 per cent reverse repo rate is its lowest in more than three years.

The RBI has taken the steps to boost growth and shore up investor confidence amid signs of economic slowdown and in the wake of deadly attacks in Mumbai.

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"Industrial activity, particularly in the manufacturing and infrastructure sectors, is decelerating," RBI Governor Duvvuri Subbarao told a news conference.

Subbarao said the central bank would closely monitor developments in global and domestic financial markets and would take swift and effective action as appropriate.

"The Reserve Bank's policy endeavour will be to minimise the negative impact of the crisis and to ensure an orderly adjustment," he said.

Saturday's decision was the first change in the reverse repo rate since July 2006.

The cash reserve ratio, the proportion of deposits banks must keep with the central bank, was left unchanged at 5.5 per cent.

Expectations of rate reductions have mounted ever since last week's attacks in Mumbai in which gunmen brought the business district to a standstill as they holed up in two luxury hotels and a Jewish centre, killing 171 people.

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The benchmark 10-year bond yield fell 8 basis points to 6.76 per cent on Friday ahead of the central bank's decision, which had been well flagged by government officials, and the rupee gained against the dollar.

The government is also expected to announce fiscal measures to give impetus to the economy, which data show may be decelerating more rapidly than anticipated from an annual rate of 9 per cent in the fiscal year which ended last March.

Fiscal deficit set to sharply deteriorate from now on

India’s budget deficit for April-September 2008 may not compare very badly with the same period a year ago, but it threatens to deteriorate in the months ahead as the government may have to step up spending to stimulate the economy even while tax revenue growth is slackening amid slowing corporate activity.

The fiscal deficit for the six months to September 2008 was an estimated 4.1% of the nominal GDP compared to 3.8% at the end of the same period last year. Likewise, revenue deficit for the same period was 3.1% at the end of first half of the current fiscal compared to 2.9%, a year ago. These numbers will likely worsen as the arrears of the Sixth Pay Commission awards due to be paid this year are fully disbursed.

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Already, data made public by the Controller General of Accounts (CGA) on November 28 point to further deterioration of the fiscal position. The fiscal deficit for the seven months to October was higher by 42% compared to a year ago, while it was only 26% higher at the end of September.
read full post (click here)

Economy of India to grow slower this year

"Companies across sectors have begun announcing plant shutdowns and delays in project implementation. The negative factors appear to more than offset the possible lagged impact of aggressive monetary easing and lower commodity
prices," Citi said in a report.

It said reduced domestic investment on the back of tighter credit standards and external weaknesses should slow GDP growth to 6.8 per cent in the current fiscal and 5.5 per cent in the next fiscal.

In its report on Financial Markets prospects in 2009, Citi said its forecasts factor in a further 200 basis point reduction in policy rates by the RBI.

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With inflation down to 8.40 per cent, the Reserve Bank is expected to cut policy rates, repo and reverse repo, along with a fiscal stimulus package by the Government, to spur economic growth.

The Indian economy grew by 7.8 per cent in the first half of the fiscal from 9.3 per cent a year ago, and analysts predict further slowdown in the remaining period of this fiscal.

According to official sources, over 65,000 employees have lost jobs during the three-month period ending October in India on account of the economic slowdown.

"A sample survey of 21 companies found that 65,507 jobs were lost in the country in various sectors between August and October," a source said.

Besides, exporters have lost orders worth Rs 1,792 crore on account of the slowdown in global trade and lack of demand from the US and European markets, the main destinations of Indian products.

Citi further said that due the global recession, India's export growth would slow to 5.9 per cent in the next fiscal.

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However, lower oil prices, coupled with new oil and natural gas discoveries, will likely result in an improvement in the trade and current account deficits in that year, it added.

India's exports declined by over 12 per cent to $12.8 billion in October against $14.5 billion a year ago.

As such, the export target for this year is expected to be cut to USD 175 billion this fiscal against the earlier projection of $200 billion.

- source www.economictimes.com

- posted under economy of india, india economy updates, india economy growth, economy of india 2008-09

RS v/s US $ - December updates - India economy

Indian economy trends are very important for those who are into economic analysis in India, Indian National rupee popularly known as INR in international market is following a downward trend due to global financial turbulance. As volume of US dollars (USD) in international markets is on a decline so the value of US $ is growing up, well indian IT industrycan feel better to some extent and is the only industry which would be getting a plus from current market scenario.

The post would include (US$ v/$ rupee) daily trends the rate shown of Indian rupee would be as displayed at time of stock markets closure(mainly BSE and NSE) you can also see daily Stock market live rates and closing rates.

INR(Indian National rupee) v/s US$ November trends/updates are as follows:

format for display of rs v/s $ would be in following order:

(date | RS v/s $ rate Daily trends updates | Remarks with respect to US $)

31/12/2008 | 48.50 | Up^0.26 | Rupee (INR) grew stronger by 26 paise wrto US $

30/12/2008 | 48.76 | Down(-0.87) | Rupee fell by 87 paise wrto US $

29/12/2008 | 47.89 | Up^1.10 | Rupee (INR) grew stronger by 110 paise wrto US $

17/12/2008 | 47.33 | Up^0.49 | Rupee (INR) grew stronger by 49 paise wrto US $

16/12/2008 | 47.98 | Up^0.58 | Rupee (INR) grew stronger by 58 paise wrto US $

15/12/2008 | 48.52 | Up^0.19 | Rupee (INR) grew stronger by 19 paise wrto US $

12/12/2008 | 48.52 | Up^0.60 | Rupee (INR) grew stronger by 60 paise wrto US $

10/12/2008 | 49.22 | Up^0.47 | Rupee (INR) grew stronger by 47 paise wrto US $

8/12/2008 | 49.69 | Up^0.10 | Rupee (INR) grew stronger by 10 paise wrto US $

6/12/2008 and 7/12/2008 saturday and sunday resp (8/12/2008 rates are wrto 7/12/2008)

5/12/2008 | 49.69 | Up^0.21 | Rupee (INR) grew stronger by 21 paise wrto US $

4/12/2008 | 49.90 | Up^0.62 | Rupee (INR) grew stronger by 62 paise wrto US $

3/12/2008 | 50.52 | Down(-0.43) | Rupee fell by 43 paise wrto US $

Mumbai Terrorist Attack - Do we need more for awakening our government??

It started with Bangalore Terrorist attack, Ahmadabad Terrorist attack, Delhi terrorist attack, Assam terrorist attack and the latest to the list is Mumbai Terrorist attack in which the encounter is still going on at iconic landmarks of Mumbai!! that's ridiculous , the question arises that are Indian intelligence agencies like RAW and other regional intelligence agencies of India sleeping?? the answer in present day context is that they are not sleeping but have died! so many terrorist attacks apart from Jammu and Kashmir (that comes as a default) along with such incidents, all happening in one year actually even less then that, i can say that Indian intelligence agencies have died.

Mumbai witnessed worst ever terrorist attack of the decade and all on major iconic tourist points which represented growing India, Mumbai which is also financial capital of Indian subcontinent witnessed terrorist operations for well over 48 hours (26th November 2008 - 29th morning in TAJ PALACE HOTEL) and government is unable to give any logical explanation for whole episode isn't it ? actually politicians, Cm do not actually know what the CM position, intelligence agencies are all about they are such an illiterate in knowing what does CM actually means , according to major CM's of all india majority knows only money making and giving some stupid condolence message after such episode every time , i have become sick of hearing such messages from PM, CM's of that state this year because i have already heard such nonsense for more then four times this year alone.

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In a country where you don't know whether person standing next to you is from India itself or some illegal immigrant, no id's anything isn't that bullshit on government's face, one thing is worth mentioning is that in any of such terrorist attacks none of the minister has died(either of center government or state government) has died! so is life of stupid common man of no importance to this country, the casualities just becomes statistics for government and then the file is kept in some dark corner of government office and is opened after one year just to recall the episode and give one condolence message again (what a bullshit is it all around) .

So where stupid common man go from here? that's a big question which requires immediate answer from within ourselves because it's only that we'll will suffer the most from such inhuman acts, Taj Mahal palace hotel was considered one of the best hotel in whole world ( i saw it's episode on discovery channel series " Great hotel's of world") and the whole Marine Drive road is high profile road, and terrorist opted for the sea route this time, but how could a boat enter Indian shores laden with Ak 47's, rifles , hand grenades and tonnes of ammunition, other sophisticated arms , the whole operation continued for more then 48 hours with Indian Army, National Security Guards(NSG), Maharashtra police losing their top police brass. It's too ridiculous on part of Indian intelligence agencies and Indian government who had a clue that this time terrorists could use Indian coast line for attacking but didn't want to do anything for safety of common man, they are busy gathering money, bribes and all other stuff Icould write another post on bribe too but that will deviate me from this post.

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I can't take it any more, Government can't repeat dialogues like " It's worst act by terrorists, but Indians will not be affected and will face it like they have shown it many times before and BLAH BLAH BLAH" I have become sick of listening to such dialogues on TV channels after such incident. These sentences have become a habit for government officials in media over and again. One political party said " Time has come to go above politics and their party will play no blame games this time" YUCK!! what a crap! let's see how they go against their this statement in few days, Left parties have always remained against Indian development with their anti US policies as seen in Indian US Nuclear deal which i have already mentioned in one of my previous post ( READ POST NOW) and still their blame game is on, I read in news they were saying "RR patil should resign", according to me they are the worst regional pary of whole india.

I know fight against terrorism will still move at snail's pace even after the whole Mumbai Terorist attack episode, Indian Government simply sucks all politicians are here for making fast bucks and giving condolence messages but not doing any thing to correct the system and make an independent anti terrorist front. After winning in elections the first work which a MP or MLA performs is collecting back the money which He/She has paid for getting ticket in the elections and you think that government does not know this then you are very wrong, Government knows everything but "ghar saaf karne mein haath kaun gande kare".

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My friend who is from Maharashtra itself told to me that Indian Custom's Department in Mumbai has reserved area on Bombay coast which is used only for allowing smuggling of goods, i mean that good's are not checked at all, Making it more clear Indian Custom's Department takes bribe and allows the ship to go to the port on Indian shore and portion of this bribe goes to all the politicians with minister's getting their share, terrorists might have taken advantage of the fact and their ammunition entered Mumbai and what happened after that is in front of all of us.

During whole Mumbai terror operation around 150 people lost their life's (that's government figure actual casualties would be actually double)One militant was captured alive so do you think some thing will come out of his mouth or government will get any clue, actually nothing will happen a case will open and would run for at least 10 years and before that one more such attack and terrorist will demand to free him. and we can expect lot of cases in future.

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So in my opinion and history it is very clear that Indian intelligence agencies whether at national level or at state level have died, they simply sucks and custom's department is busy in filling their pocket's by taking bribe from smuggler's on Mumbai coast, i wonder why don't they kill the terrorists which are inside the indian jails, if they do then Human Rights Activists come after a long sleep, So if we see from government's eyes we can expect such sentences in future too like " PEOPLE OF INDIA WOULD OVERCOME SUCH ATTACKS", "SUCH ATTACKS WOULD NOT CHANGE INDIAN SPIRITS" politicians around the country would never be able to go 2 steps ahead of terrorist activities.

The mob has to do something on their behalf without expecting anything from politicians this anything can be similar to one shown in movie "A WEDNESDAY" awesome movies a must watch for every true Indian, Rang De Basanti showed a very correct image of Indian politicians. One thing is sure that Indian politicians suck and ind India Common man is the m0st foolish of the whole lot.

- Himanshu Sharma
published under - Mumbai terrorist attack 2008, attack on mumbai, Taj palace hotel attack, Indian intelligence failure, Mumbai terror updates

Indian Economic Summit - Updates

Indian Economic summit being held at New Delhi has clearly reflected unease due to current economic crises which all started as mortgage crises in mid of this year when US financial institutions failed and became bankrupt especially Investment banks of USA. However Indian finance minister P. Chitambaram was hopeful for a revival of economic situation prevalent in world and would have more affect on Indian economy in 2009 as told by earlier post (read post now).

the highlights of Indian Economic Summit(24th edition) can be summed as below:

The ill-effects of a recession in the US and an overall global economic downturn weighed heavily in the minds of corporate leaders, even though many felt that India, with its high growth rate, even if slowing, was better equipped than many others to tide over the situation.

“This recession threatens to be a longer and deeper recession affecting most industrialised countries and we in India are experiencing the spill-over effects of what is happening in advanced countries,” Finance Minister said.

“While world output will decline - and to that extent affect our exports, affect some capital inflows, affect external credits - we must be able to quickly substitute or compensate for that by stimulating domestic demand and providing liquidity in the domestic market” Chidambaram said.

“Let us assume that for another month or two there will be further bad news, but even then we will grow at a satisfactory growth rate. Next year we will bounce back to a much better growth rate.”

The Indian economy is predicted by various think tanks and the central bank to grow at between 7-8 percent this year.

But the corporate sector remained apprehensive, having to contend with a demand slowdown, mounting inventories, higher input costs, rising cost of borrowings, depreciating rupee, volatile capital markets, lower profits if not losses, and resisting the unpleasant task of job cuts.

“There is a crisis of confidence,” said K.V. Kamath, president of the event's co-host, the Confederation of Indian Industry, and managing director of ICICI Bank, India's largest in the private sector.

“There is an urgent need to boost public confidence in the fundamentals of the economy for a recovery to take place,” said Kamath, adding: “I am also the first to concede that there is a change of mood to the other end of the spectrum."

Last year, the mood was entirely different. The Indian economy was racing ahead with the nine-percent-plus growth, exports were booming, inflation was moderate, the markets were on an upswing and corporate India was rolling in profits.

As a result, this year's event saw few participants talk about the need for the government to push ahead with reforms, the need to spruce up infrastructure or the need to liberalise foreign direct investment regime further.

Their focus was clear: The US economy was in recession, which had spilled over to some European counties as well, and that Japan, the world's second largest economy, was now adding to the depressing news with a confirmed recession.

Yet, not all participants agreed with the gloom and doom theory being propagated by some stakeholders, especially in the backdrop of a 50-percent-plus fall in a key equity market index and falling corporate profits.

“I'm hearing concern expressed here about six percent growth. In the West, that growth would be considered quite fantastic," said James Quigley, chief executive of the US-based accounting giant Deloitte, among an estimated 700 delegates from 35 countries.

From the managing director of Asian Development Bank Rajat M. Nag to World Economic Forum founder Klaus Schwab, and from Gujarat Chief Minister Narendra Modi to India's Commerce Minister Kamal Nath, all maintained that the Indian economy was resilient enough to tide over the crisis.

And it was this underlying sentiment that Chidambaram sought to highlight while asking India Inc not to panic and assuring that the United Progressive Alliance (UPA) government and the central bank would take all necessary steps to minimise the impact of global crisis on India.

"The classic response to demand slowdown is to cut prices for the short-term," he told participating industrialists, while calling specifically upon airlines, realtors, automobile makers and consumer durables companies to lower prices to stimulate demand.

“All I ask is, there are enough people to spread gloom and doom. Just have your chin up, and in six-nine months, or maybe 12, we will be back to normal growth rates that we are used to.”

- source Economictimes.com

Cheers!! Inflation down to single digit - November 2008

The inflation rate fell sharply to a near six-month low of 8.98% for the week ended November 1, a drop of almost 4% from its August peak.

The decline is due to less demand in the market for the commodities.The decline, helped by a steep drop in prices of some petroleum products and metals, will provide a welcome relief to the central government reeling under a raft of bad news on the economic front from falling exports and a drop in tax collections. Politically, this could help the government ahead of key state elections later this month.

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Inflation as measured by the wholesale price index (WPI) — the most watched inflation measure — dropped 1.74% from 10.72% in the preceding week, official data from the Office of the Economic Advisor in the ministry of commerce and industry showed. It hit a peak of 12.91% in early August, but still remains more than double the 3.35% inflation seen in the same week last year.

“I was surprised by the quantum of fall in the fuel index. After consolidating around this level for coming weeks, I expect the inflation number to drop to the 8% territory by end-November,” said ICRA economist Saumitra Chaudhari and a member of the prime minister’s economic advisory council.

The fall in fuel prices, especially those which are not government-controlled, is expected to have a positive impact for the manufacturing sector, going forward since fuel is a key input cost for industry. For instance, the cost of jet fuel comprises almost 40% of the operational cost of an airline.

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Food prices inched up marginally during the period, rising 0.1%, but analysts expected the food articles index to move down in coming weeks, given the forecasts for a robust winter harvest.

Crisil principal economist DK Joshi said that the slowdown in the economy meant that both demand-supply side pressures were easing and inflation would not emerge as a major concern until the overall economic growth revived.

We can also get a cut in fuel prices as government is thinking about a fuel price cut. It may be noted that Crude oil prices have come down to US$ 58 level when compared to $ 147 levels few months back. so more drop in inflation is predicted by me in coming future due to possible fuel price cut by indian government.

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- with extracts from economictimes.com

India Economy would be hit more in 2009 - thanks to Global crises

The global downturn will pressurise the Indian economy more next year and the government has to speed up reforms and boost investment to sustain high growth rates.

The report jointly prepared by World Economic Forum and Confederation of Indian Industry also said India could see a sharp outflow of capital, and a fall in share and asset prices due to the global financial crises. The report was released ahead of the annual India Economic Summit starting Nov. 16 in New Delhi, where top government officials are expected to interact with heads of global firms.

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"India's dependence on capital flows to finance its current account deficit is a macroeconomic risk and the global crisis could generate a sharp increase in capital outflows and a reduction in the availability of finance,Clearly, the global economic picture will be harsher next year and there will be greater pressures on Indian economy." it said

"It (global crisis) could also weaken the balance sheets of the financial institutions, cause a further fall in share and asset prices, and challenge the macroeconomic situation due to shrinking global growth," WEF said.

Indian policymakers expect a moderation in economic growth to less than 8 percent in the year to March 2009, compared with 9 percent recorded in 2007/08 fiscal year.

Earlier this month, Prime Minister Manmohan Singh cautioned that the global financial crisis could be more severe and prolonged, and the government would take all necessary steps monetary and fiscal to protect growth.

"A tighter environment may also help speed reforms and encourage greater efficiency," WEF said, adding a great deal of political will and dialogue with

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different stakeholders would be required to take reforms forward.

However India economy will be less affected when compared to global economies. The growth of Indian economy would be strong for coming decade that's for sure.