Inflation climbs to 6.58%
Defying all efforts from the Government and the Reserve Bank of India (RBI) to bring prices down, inflation, based on the Wholesale Price Index (WPI) surged to 6.58% in the week ended January 27. This is the highest inflation since week ended Dec 11, 2004. In the previous week inflation was 6.11%. It was at 4.04% in the comparable period last year. The rise in inflation was mainly on account of a low base and rise in prices of primary articles. In the week to Jan 27, index for all commodities rose 0.1% to 208.8 from 208.5 a week earlier. In the corresponding period last year, the index had fallen 0.3% to 195.9 from 196.5. The current level of inflation is way above the RBI's target of 5-5.5% for the current fiscal year and is sure to set alarm bells ringing in the Government establishment amid a growing public outcry against rising prices, especially of essential food items. As a result, a few more measures could be in the offing from the Government and perhaps from the central bank as well. A financial daily reports that as part of the efforts to reign in inflation, the Government is letting the rupee to appreciate. The paper also says that the RBI may go for another hike in the CRR as well.
FY07 GDP seen at 9.2%
The 'India Shining' story keeps getting better by the day notwithstanding the high base and a slew of monetary tightening measures announced by the Reserve Bank of India (RBI). The Government said that the Gross Domestic Product (GDP) will grow by 9.2% in the current fiscal year ending in March as against 9% in the previous financial year. According to advanced estimates by the Central Statistical Organisation (CSO), manufacturing is estimated to expand by 11.3% versus 9.1% in the year ended March 2006. The financing, insurance, real estate and business services are projected to clock a 11.1% growth as against 10.9% in FY06. However, agriculture growth in is likely to dip from 6% last fiscal to just 2.7% in 2006-07. The construction sector is estimated to witness a decline from 14.2% in FY06 to 9.4% while there will be a marginal improvement in mining and quarry to 4.5% from 3.6% in the year ended March 2006.