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Country's growth of 5.3 pc intensifies rate cut demands
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SME Times News Bureau | 29 Nov, 2014
The Indian economy logged 5.3
percent growth in the second quarter of this fiscal, against 5.7 percent
in the first quarter, making ground for the central bank to ease
interest rates and the government to push for reforms.
Even
though the 5.3-percent growth came as a pleasant surprise to some
stakeholders who were anticipating a slightly lower rate of expansion,
the manufacturing growth of a mere 0.1 percent came as a disappointment,
as per Central Statistics Office (CSO) data.
The government has
been nudging the Reserve Bank of India (RBI) to cut interest rates and
ease the flow of money to the industry -- an advise that is expected to
be taken seriously when Governor Raghuram Rajan reviews the monetary
policy Tuesday.
This is also because the country's annual retail
inflation has eased to a record low of 5.52 percent in October, from
10.17 percent during the like month of last year, even as the wholesale
inflation dipped to 1.77 percent from 2.38 percent.
At the same
time, factory output, measured by the Index of Industrial Production
(IIP), grew by just 2.5 percent during September over the corresponding
month of the previous year, pointing towards the persistent weakness in
spurring manufacturing activity.
Finance Minister Arun Jaitley is
scheduled to meet with Rajan a day ahead of the policy review, in what
is widely anticipated as an opportunity for the government to push the
case of India Inc that has been asking for more funds at lower costs.
Confederation
of Indian Industry (CII) said it was hopeful that further
government-backed reforms and new a impetus by the central bank will
allow the industry to gain financial strength to come back to a robust
growth driven expansion mode. "The RBI should review its status
quoist approach and move towards paring interest rates in its
forthcoming monetary policy to give a fillip to recovery, both through
higher consumption spending and opening up channels for investment," CII
director general Chandrajit Banerjee said. As per data on gross
domestic product (GDP) released Friday, the economic growth during the
second quarter was led by the output of social services (up 9.6
percent), financial sector (up 9.5 percent) and utilities like
electricity and water (up 8.7 percent).
The farm sector also registered an impressive growth of 3.2 percent.
While
lamenting on a lower economic expansion for the second quarter from the
first, industry body Ficci (Federation of Indian Chambers of Commerce
and Industry) cited the subdued growth in manufacturing as a major cause
of concern.
“Important element of the cost structure for
manufacturing is interest rates and given the current inflation
situation RBI should ease the monetary policy stance as this would give a
boost to investment sentiment," said Ficci president Sidharth Birla.
"We
look forward to further action on all the pending reforms including
early introduction of goods and services tax, changes to the land
acquisition act and further reforms in labour laws."
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
|
66.20
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64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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