News Analysis India

Tag: India economy

  • Inflation eases, but India’s economy not out of woods yet, feel experts

    By Express News Service

    NEW DELHI:  After staying above the Reserve Bank of India’s upper tolerance limit of 6% in May and June, retail inflation returned to the central bank’s comfort zone, registering 5.59% in July, thanks to cooling of food prices.

    According to data released by the Ministry of Statistics and Programme Implementation on Thursday, food inflation fell to 3.96% last month from a high of 5.15% in June. 

    “The decline in prices suggests that inflation was largely a function of supply chain disruptions. We believe that inflation may ease in the coming months assuming no rise in infections. However, high oil and commodity prices will keep the pressure on prices,” said Rumki Majumdar, economist, Deloitte India. 

    However, economists warn that service inflation could harden in the coming months.

    “As states ease (Covid-related) restrictions, there is likely to be a shift away from goods to services-led inflation, with firmer demand to also encourage producers to increasingly pass on higher input prices,” said Radhika Rao, economist at DBS Group Research.

    In its latest monetary policy review, RBI has kept the rates and stance unchanged and pledged to remain accommodative in the near future, while raising its inflation forecast to 5.7% for FY22 and 5.9% in the second quarter. 

    Meanwhile, industrial output for June rose 13.6% due to low base. Factory output measured by the Index of Industrial Production had contracted 16.6% in the year-ago period. 

    In June, the manufacturing sector saw output increase by 13%. Economists, however, point out that  production is yet to reach pre-Covid levels. 

    According to Aditi Nayar, Chief Economist, ICRA, it’s too early to term it a recovery.  

    “The production of consumer non-durables contracted by 4.5% in June, while capital goods and consumer durables continued to clock the worst performance relative to pre-pandemic levels,” she said. 

    3.96% The overall food inflation softened in July from 5.15% in June.

  • People hit by ‘double whammy’ of low growth, high inflation: Congress on third quarter data

    By PTI
    NEW DELHI: Attacking the government over the state of the economy, the Congress on Friday said the people have been hit by the double whammy of low growth and high inflation for which the Modi government’s “gross mismanagement” is responsible.

    The attack came after the Indian economy, which had been contracting for two quarters in a row, recorded a positive growth of 0.4 per cent in the October-December quarter, mainly due to good performance by farm, services and construction sectors, official data showed on Friday.

    Congress’ chief spokesperson Randeep Surjewala said the third quarter GDP data proves yet again that fault lines in the Indian economy are more visible than ever before.

    The economy has grown by a mere 0.4 per cent in the third quarter of financial year 2020-21, which is far below estimation, he said.

    “What continues to be an area of concern, however, is the advance estimates for the entire financial year. Central Statistics Office (CSO) has lowered GDP growth rate for FY2020-21 from its previous estimated minus 7.7% to now minus 8%,” Surjewala said.

    It is also important to point out that Q1 GDP has now been revised lower to minus 24.4 per cent from the previous reported contraction of minus 23.9 per cent, he said in a statement.

    “Clearly, the ill planned and poorly executed lockdown took a huge toll on the economy, which was already suffering from the twin body-blows of demonetisation and the ill-conceived GST,” the Congress spokesperson alleged.

    A detailed analysis of the GDP numbers also proves the misplaced and irrational exuberance in India’s stock markets, he said.

    Pointing out that private consumption expenditure at Rs 21.2 lakh crore is down by 2.4 per cent on a year-on-year basis, Surjewala claimed that it is clear that while demand for goods is picking up, the demand for services, which is the biggest contributor to the GDP, is trailing and is unlikely to revive for a few quarters in the future.

    “Contrary to claims, the Modi government has spent a lot less than what is needed to revive the Indian economy. Public administration in Q3 has contracted by minus 1.5 per cent,” he said.

    “Q3 GDP growth numbers carry a big lesson for the insensitive Modi government. Agriculture, which has grown at 3.9 per cent in Q3, has continued to hold steady and which is why the government should stop treating the farmers so cruelly and insensitively,” the Congress leader said It should listen to the woes of millions of farmers agitating for justice and resolve their plight by rolling back the three “anti-agriculture black laws”, Surjewala said.

    “We have truly been hit by the double whammy of low growth and high inflation for which gross mismanagement and the unpardonable failure of leadership of Modi government is solely responsible. Let us hope that an ignorant PM and FM finally realise the truth,” he added.

  • Pandemic slowed speed, but India will certainly become USD 5 trillion economy: Amit Shah

    By ANI
    NEW DELHI: Though the ongoing pandemic has slowed down the pace of realising USD 5 trillion economy, but India will certainly achieve it, said said Union Home Minister Amit Shah on Monday.

    “Reforms have been done in many sectors including the pharma, infrastructure and space sectors during COVID-19. The pandemic may slow down the speed to realise the dream of becoming a USD 5 trillion economy but we will certainly achieve it,” Shah said.

    The Union Minister was speaking here during the launch of the ‘Single Window Clearance System’, an online platform to obtain clearances for smooth operationalisation of coal mines.

    He said the coal sector of the country needed transparency and utilisation of its full potential and under Prime Minister Narendra Modi-led government the much-needed push was given to the sector.

    “The coal sector of the country needed transparency and utilisation of its maximum potential. Looking at the coal sector from a distance, there used to be a feeling that the contribution of the coal sector to the country’s economy is not getting even a third of its contribution.

    There were many hurdles, but policy changes started from the time the government was formed under the leadership of Prime Minister Modi, which gave momentum to the sector,” Shah said.

    He explained that removing inconsistency in the coal sector and bringing transparency was the aim of PM Modi.

    Union Minister of Coal Pralhad Joshi was also present on the occasion.