Indian Economy This Week - 10th Jan 2005

By: EconomyWatch   Date: 30 June 2010

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IMF STICKS TO 6-6.5% GROWTH FORECAST FOR INDIA DESPITE TSUNAMI

IMF chief economist, Raghuram Rajan, said Tsunami disaster would not impact 6-6.5 per cent growth projections for India this fiscal, but the country's high fiscal deficit was a cause for concern. However, he stressed that the need for more radical reforms, particularly in the labour sector like introduction of 'hire and fire' system.

He also stressed on agricultural growth and said that despite deficient monsoon, Indian economy has shown resilience and is poised for high growth. Rajan said that India couldn't become a financial hub unless it has full capital account convertibility (CAC), and to achieve this, he said, the country needs to reduce its fiscal deficit significantly and also releases public sector banks from having to finance the government debt.

Referring to the FRBM Act, he said that once the revenue deficit is wiped out and fiscal deficit becomes manageable the country could target implementing full CAC from 2009.

FRESH PLAN FOR INVESTMENT LESS LIKELY IN BUDGET

The government may find it difficult to come up with a fresh plan to boost infrastructure investment in the next budget, as the two significant ongoing initiatives for the sector have not found many takers. Response to Rs 40,000-Cr IIG Fund established in budget 2004-05 and Rs 2000-Cr viability Gap Fund established in 2003-04 was poor. According to sources, fresh plan to boost infrastructure investment is unlikely in this Budget but picture may change once airport modernization takes off.

KALAM FOR NRI-FUNDED RESEARCH
President A.P.J. Abdul Kalam exhorted overseas Indians to pool in their intellectual and financial resources to help fund research to mitigate the effects of natural calamities like earthquakes.

Addressing the concluding function of the Pravasi Bharatiya Divas here today, Dr Kalam called upon the establishment of Overseas Indian Research Foundation with a seed capital of $ 100 million.

The President felt that the foundation could identify institutions of excellence and obtain the services of top scientists. He added that they should be provided with the environment and resources to do research on this subject.

"The results sometime may take long but it will make the whole planet a better place to live in," he remarked. The President felt that overseas Indians could do a lot in lifting the country's 260 million people above the poverty line. Dr Kalam identified five focus areas - education and healthcare, agriculture and agro-food processing, development of infrastructure, information and communication technology and critical technologies and strategic industries. Dr Kalam called for connecting village clusters through quality transport, telecommunication systems and education networks.

ENERGY FUTURE PROJECTIONS
India, a fast-growing economy, is targeting ambitious growth rates of 7%-8% over the next two decades. Economic growth coupled with an increasing population necessitates a rise in energy consumption. Presently ranked sixth in the world in terms of energy consumption and accounting for 3.5% of the world's primary energy (commercially traded fuels only) consumption in 2002, India's energy demand is expected to grow considerably.

FRANCE SEES ROBUST DEMAND FOR INDIAN COFFEE
A visiting French coffee roasters' mission is interested in sourcing both Arabica and Robusta beans from India, the delegation leader Florence Rossillion told ET: "Our interest in Indian coffee is not short-term or motivated by any recent difficulty vis-a-vis sourcing Robusta coffee beans from the Cote d'Ivoire (Ivory Coast) which can be substituted with cheaper Vietnamese coffee", she said. Ms Rossillion is the general secretary of the French Roasters' Association.

WEEKLY INFLATION WENT DOWN TO 5.8% FOR THE WEEK ENDED JANUARY 1.
The Wholesale Price Index (WPI)-based general inflation rate had last slipped below the 6% mark seven months ago in mid-June '04. The inflation rate was 6.39% in the previous week, despite the rise in prices of manufactured products. Latest figures released by the ministry of commerce and industry show the fall is mainly due to easing of upward pressure in the critical fuel group, along with several food items including vegetables, fruits and edible oils.

GDP, INFLATION TARGETS WELL WITHIN REACH- YY REDDY
The Reserve Bank of India governor YV Reddy has reiterated that the GDP target of 6-6.5% as well as the inflation target of 6.5% for '04-05 would be realised.

Though he expressed concerns about the deteriorating current account in the second quarter, he said the overall balance of payments would end in a surplus for the year 2004-05.

INDIA'S EXPORTS TO CHINA UP
India's exports touched $53 billion during the first three quarters of 2004-05, showing strong growth of 24%

For the first time, India's exports to China have outstripped its imports from across the Great Wall by twice as much. And that's not all. In another first, India has started exporting more food to China than it buys from it. In the last 12 months, India's farm exports to China have leapfrogged by 40%. From being in deficit till now, the country is now totting up a record overall trade surplus, especially in agriculture, with China.
 

 


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