With crude oil prices in the international market ruling above $100 a barrel and the crisis worsening in Libya and other Middle East countries, finance minister Pranab Mukherjee said, "We are already confronting (the situation)"
New Delhi: Grappling with a high rate of price rice, the government today expressed concern that increasing prices of crude and other commodities in global markets could add to inflationary pressure in the country, reports PTI.
"The possibility of the global commodity inflation adding to domestic inflationary pressures cannot be ruled out," finance minister Pranab Mukherjee said at the 83rd Annual General Meeting of industry chamber Federation of Indian Chambers of Commerce and Industry (Ficci) here.
Noting that the steady increase of international crude oil and other commodity prices is a reality, the minister said, "We are already confronting (the situation)."
He made these comments a day after presentation of Budget proposals for 2011-12 that seek to raise the economic growth rate to about 9% from 8.6% in the current fiscal.
Crude oil prices in the international market are ruling above $100 a barrel and with the crisis worsening in Libya and other Middle East countries, they may go up further.
Although food inflation declined from 20.2% in February 2010, to 9.3% in January 2011, it still remains a concern for the government.
Headline inflation in January, at 8.23%, is above the comfort level of around 5%-6%.
The challenge before the government and the monetary authority (Reserve Bank of India), Mr Mukherjee said, has been to support the recovery process without compromising stability. "The task has not been easy, but we are making progress," he added.
With a view to control inflation, the RBI has increased key policy rates seven times since March 2010.
The finance minister said there is a need to improve the supply response of agriculture to expanding domestic demand and significantly enhance investment in the sector by the private and public sector.
He further said that as government spending comes down as a part of the fiscal consolidation process, India needs to effect adjustments in the composition of growth on the demand and supply side.
"We have to ensure that the revival in private investment is sustained and goes back close to pre-crisis growth rates.
This requires a stronger fiscal consolidation to enlarge the resource space for private enterprises," he said.
He further said that India's growth story is comforting, but there are several challenges that the economy faces in the external and domestic context.
He said the global recovery is fragile, with advanced economies exhibiting a large fiscal deficit, high public debt and unemployment, and there is a danger of the sovereign crisis in some Euro zone countries spilling over to other financial markets.
Panellists attributed the latest rise in new business to ongoing improvements in market conditions, increased marketing and good quality goods
The seasonally adjusted HSBC Purchasing Managers' Index (PMI)-a headline index to measure the overall health of the manufacturing sector-posted 57.9 in February, up from 56.8 in the previous month. The latest reading indicates a marked expansion of the Indian manufacturing sector, which is the strongest in three months and above the long-run series average (56.1).
The index is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 500 manufacturing companies.
New orders received by manufacturers increased substantially in February. Besides, the rate of growth has been on the uptick for a second month in a row. Panellists attributed the latest rise in new business to ongoing improvements in market conditions, increased marketing and good quality goods. New export orders also grew in February and regained momentum following January's three-month growth low.
However, a further rise in backlogs of work suggested that pressure on production capacity remained. While the extent to which outstanding business accumulated weakened, the period of growth now stretches to eleven months.
Input prices faced by manufacturers in India witnessed a sharp increase in the month under review. Higher raw material prices, particularly for metals, were the main drivers of the latest rise in costs. Output prices also increased, but at a slightly weaker rate than in January.
During the April-January period of the current fiscal, the six core industries-crude oil, petroleum refinery products, coal, electricity, cement and finished steel-registered a growth of 5.6%, compared to 5.5% expansion in the same period last year
New Delhi: The output of the six core infrastructure industries grew by 7.1% in January 2011, supported by the healthy expansion of sectors like crude oil, petroleum refinery products and electricity, reports PTI.
The six core sectors-crude oil, petroleum refinery products, coal, electricity, cement and finished steel-had expanded by 9.8% in January 2010.
In December 2010, the output of the core infrastructure sectors grew by 6.1%. These core industries account for 26.68% of the country's total industrial output.
Of the six industries, petroleum refinery and crude oil output grew by 8.7% and 10.8% in January from 3.8% and 9.8%, respectively, in the same period last year, as per the data released by the industry ministry.
Electricity generation grew by a healthy 9.3% in the month under review compared to 6.4% in January 2010. However, coal output contracted by 1.2% in January 2011, in contrast to 5.4% expansion in the corresponding period last year.
Growth in cement production slowed to 1.8% in the month under review from 12.4% in January 2010.
Growth in finished steel production slowed to 8.2% in January 2011, from 16.8% in the comparable period a year ago.
During the April-January period of the current fiscal, the six core industries registered a growth of 5.6%, compared to 5.5% expansion in the same period last year.