GDP to grow by 9.2% in 2010-11: CMIE

The Indian economy is expected to grow by 9.2 percent in 2010-11 following impressive growth in the manufacturing and services sectors, Centre for Monitoring Indian Economy (CMIE) said here.

"We maintain that the Indian economy will grow by 9.2 percent in 2010-11, as we expect impressive growth in the manufacturing and services sectors as well," CMIE said in a statement.

The Index of Industrial Production (IIP) dropped dramatically to 5.6 percent in August, after growing by 13.8 percent in July. It had recorded a growth of 11.2 percent in the June quarter, but we believe that the growth was much higher than 11.2 percent, CMIE said.

This is because sales revenues of the manufacturing companies rose by 23.8 percent, while the rate of inflation in manufactured products (including petroleum products) was 8.2 percent, implying that sales volumes grew by about 14.4 percent.

The IIP has a very old base year (1993-94), outdated weights and a fixed frame of products and companies, and had miscalculated industrial growth for the preceding two years (2008-09 and 2009-10) as well. It is therefore imperative that the index is corrected at the earliest to enable meaningful analysis, CMIE said.
In August, the rate of inflation touched a six-month low of 8.5 percent. It was calculated as per the new series released on 14 September with 2004-05 as the base year. A moderation in the prices of primary food articles, manufactured food products and paper & paper products helped keep inflation in check.

We expect WPI-based inflation to moderate to 7.9 percent in 2010-11, as compared to our earlier projection of 8.5 percent based on the old series, it said.

CMIE expects that the agricultural production to grow by 7.2 percent pc in 2010-11.

The withdrawal of the southwest monsoon has been delayed this year, and the plentiful rain across large parts of the country has encouraged farmers to bring more land under cultivation.

As of October 7, kharif sowing was completed across 1,022 lakh hectares, which was 64 lakh hectares more than the acreage reported in the corresponding period of 2009.

Cumulative rainfall for the season (June-September) is 102 percent of the long period average, according to the India Meteorological Department's end-of-season report.

Agricultural production is therefore expected to grow by a healthy 7.2 percent in 2010-11, after recording a 6.6 percent decline in the preceding fiscal, CMIE said.

Chances of double dip recession in US raised: Roubini

Economist Nouriel Roubini has come out with yet another chilling prediction. Roubini warns that the chances of a double dip recession in the US have increased as the second half of the year is expected to be even worse, reports ONE OF THE NATIONAL NEWS CHANNEL.

“Compared to six months ago when the probability of double dip was very low, right now, I expect it to be very high,” Roubini warned.

“Growth in Q2 has been revised downwards from 2.4% to 1.6%, given the construction numbers will be revised down to 1.2%,” he added.

He reasoned that based on the data the second half of the year is going to be worse than the first half 2 because all the tailwinds will become headwinds. He is concerned that if we finish Q2 with 1.2% then the second half will be worse.

“Once the growth rate is 1%, you are already in a growth recession, and then the risk is that the financial markets are going to have a downturn,” Roubini said.

India to become fastest growing economy by 2015: Morgan Stanley

Favourable demographics, structural reforms and the effects of globalisation will help India to get past China to become world’s fastest growing economy by 2013-15, Morgan Stanley has said.

“Over the next two years, India should start matching China’s GDP growth of around 8.5-9.5%, barring another global financial crisis.

More importantly, we think that by 2013-15, India will start outpacing China’s GDP growth notably,” Morgan Stanley economists Chetan Ahya and Tanvee Gupta reportedly concluded in a research paper.

While China’s growth rate will likely to slow down to 8 percent from about 10 percent by 2015, they added.

China has maintained an average growth rate of ten percent over 30 years.

However, China economy and its per-capita income will be well ahead of India, it added. India will need another 10-11 years to match the per-capita income of China’s 2009 levels of USD 3,750, the research paper said.

Notably, China has recently overtaken Japan as the second-biggest economy in the second quarter.

India is the eleventh largest economy in the world by nominal GDP and the fourth largest by purchasing power parity (PPP) while China is now the second largest economy in the world with a nominal GDP of USD 4.99 trillion.

India’s nominal GDP stands at USD 1.250 trillion.