rediff.com

NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News 
Rediff.com  » Business » Why RBI should cut key rates

Why RBI should cut key rates

Last updated on: June 13, 2012 09:31 IST

Why RBI should cut key rates

     Next

Next
BS Reporter in New Delhi

A day after global rating agency Standard & Poor's cautioned India could lose its investment-grade credit rating due to political inaction, official data on Tuesday showed industrial expansion in April had barely managed to be in the positive zone, growing just 0.1 per cent in the first month of the financial year, despite a not-so-high base of 5.3 per cent growth in April 2011.

Click NEXT to read further. . .


Photographs: Danish Siddiqui/Reuters

     Next

Why RBI should cut key rates

Prev     Next
Prev

Next

In March, industrial output had contracted 3.15 per cent year on year.

Policy makers, bankers and economists expect the Reserve Bank of India may now cut policy rates and cash reserve ratio in its review next week.

Finance Minister Pranab Mukherjee, who has been criticised for scaring off foreign investors with badly-timed tax reforms, promised action to restore confidence in the economy.

Click NEXT to read further. . .


Photographs: Mukesh Gupta/Reuters

Prev     Next

Why RBI should cut key rates

Prev     Next
Prev

Next

Need for support

"The data clearly point to industrial growth being extremely weak, and it is in clear need of monetary as well as fiscal support," said HDFC Bank chief economist Abheek Barua.

Capital goods, which include items like factory machinery, fell 16.3 per cent in April from a year earlier, while the mining sector output, another key economic driver, fell 3.1 per cent year on year in April.

These two categories contracted after briefly expanding in February 2012.

Within mining, natural gas contracted 11.3 per cent in the month, even as coal production rose 3.8 per cent.

Click NEXT to read further. . .


Photographs: Mukesh Gupta/Reuters

Prev     Next

Why RBI should cut key rates

Prev     Next
Prev

Next

Within capital goods, electric machinery and apparatus showed a negative growth of 49.2 per cent.

Manufacturing, which dominates industry with a weight of 75 per cent in IIP, remained more or less stagnant, posting 0.1 per cent growth.

In the broad category, only electricity showed some resilience, growing 4.6 per cent, though lower than the 6.5 per cent in April 2011.

Some see silver lining in consumer goods expanding by 5.2 per cent.

Click NEXT to read further. . .


Image: RBI governor Duvvuri Subbarao.
Photographs: Raj Patidar/Reuters
Tags: IIP , RBI

Prev     Next

Why RBI should cut key rates

Prev     More
Prev

More

This category included interest-rate-sensitive consumer durables, which rose five per cent.

But, economists did not seem to be enthused.

Icra economist Aditi Nayar said: "The improvement in growth of consumer goods benefits greatly from an easing base effect and is not indicative of a broad-based pick-up in consumer sentiments."

 


Photographs: Stringer/Reuters
Tags: Aditi Nayar , RBI , Icra

Prev     More
Source: