According to the E&Y’s Rapid-Growth Markets Forecast, growth in India is expected to accelerate strongly in CY13 at 9.5% as the global economy recovers, impact of previous interest rate tightening wanes, investment increases and exports pick up
Mumbai: India is expected to grow at 6.8% in calendar year (CY) 2012, in comparison to the previous forecast of 8%, but expansion is expected to accelerate strongly in CY 2013 to touch 9.5%, reports PTI quoting global audit and consulting firm Ernst & Young (E&Y.
E&Y had pegged GDP growth for CY 2012 at 8% in its first Rapid-Growth Markets Forecast (RGMF) released in October 2011.
“While growth in the current year has moderated, India’s medium-to-long-term growth prospects remain intact,” E&Y India partner & India markets leader Farokh Balsara said in a statement here.
According to the latest RGMF, growth in India is expected to accelerate strongly in CY13 at 9.5% as the global economy recovers, impact of previous interest rate tightening wanes, investment increases and exports pick up.
An improvement in both domestic and external demand will feed the recovery in growth, it said.
E&Y said slackening demand, turbulent and volatile markets and credit liquidity problems in Europe are beginning to squeeze rapid-growth markets (RGMs) but not to the extent of derailing robust economic performance.
The RGMs are expected to grow collectively by 5.3% this year, in stark contrast to the mild recession expected in the Eurozone in H1 2012 and modest growth in the US, according the latest E&Y report.
While growth in the RGMs will continue to be the envy of advanced economies in the near term, they are showing the strains from the fall in demand from the Eurozone, as well as the buffeting to financial markets and business confidence over the past few months, the consulting firm said.
“As a result, growth in 2012 is expected to be lower than forecast by RGMF in October. However, these markets will continue to contribute nearly half of the world’s growth over the next three years.”
RGMF also observed a reversal in portfolio flows since July as investors became increasingly risk averse. Threats to liquidity and lending by European banks with a wide global reach are particularly disquieting for RGMs, it said.
Banks are selling assets and cutting back on loans under pressure to strengthen their capital which is weakening financial flows into and within RGMs with potentially depressive impacts not only on business operations but also business investment, the report said.
The immediate impact has been currency depreciations, most notably in Brazil and India. The sharp depreciation of the Indian rupee led to increased inflationary pressure on the economy, said the forecast.
“While growth prospects in the short-term have been dented by the turmoil in global markets, and could be further affected by the events in the euro area, growth in RGMs is set to rise about 6.5% in 2013-14, a pace of expansion that will be significantly higher than in advanced economies,” it added.
By filing the caveat, the operators have ensured that the courts would pass no orders on the Department of Telecom (DoT) plea without hearing their counsel, or get an ex-parte relief
New Delhi: Apprehending that the government may appeal against the Telecom Dispute Settlement and Appellate Tribunal (TDSAT) order which dismissed its plea that the telecom tribunal has no jurisdiction over the intra-circle third generation (3G) roaming pacts, private operators have filed caveat in both the Supreme Court as well as the high court.
By filing the caveat, the operators have ensured that the courts would pass no orders on the Department of Telecom (DoT) plea without hearing their counsel, or get an ex-parte relief.
The government had questioned role of TDSAT which had on 24th December given a lifeline to telecom operators, by entertaining their plea during the scheduled winter vacations and asking DoT not to take any coercive step against them.
A day prior to that the government had asked five telecom operators to stop inter-circle roaming on 3G bandwidth within 24 hours.
It was challenged before TDSAT. The operators are —Bharti Airtel, Vodafone Essar, Idea Cellular, Aircel and Tata Tele Services.
Confirming the move, one of the counsels representing the operators told PTI that chances are that DoT many move the high court, which is already hearing a similar issue in a PIL.
Last week, a bench headed by the acting chief justice AK Sikri had adjourned the petition on 3G roaming to the second week of February.
TDSAT had on 20th January dismissed DoT plea questioning its jurisdiction to decide on 3G roaming dispute.
It had also directed the five operators to hand over copies of their 3G roaming agreements to DoT with a rider that the government maintain its confidentiality.
DoT had questioned the jurisdiction of TDSAT saying that the tribunal has no power to look into the licence terms and conditions entered among the operators and the DoT.
TDSAT had already directed DoT not to take any coercive action against the private telecom operators on 3G roaming.
“We expect Wholesale Price Index (WPI) inflation to cool a little in the coming months... We expect WPI inflation to ease toward 6.5% by mid-2012,” Moody's Analytics said in its report, ‘India: Wholesale Price Index’
New Delhi: Global ratings agency Moody’s has said inflation in India is likely to moderate to around 6.5% by the middle of this year and the Reserve Bank of India (RBI) may go for interest rate cuts by February, reports PTI.
“We expect Wholesale Price Index (WPI) inflation to cool a little in the coming months... We expect WPI inflation to ease toward 6.5% by mid-2012,” Moody's Analytics said in its report, ‘India: Wholesale Price Index’.
According to the agency, while inflation is on a downward trend, the month-on-month fall in January is not likely to be as steep as was witnessed in December 2011.
Headline inflation fell to a two-year low of 7.47% in December from 9.11% in November. The moderation was mainly on account of cheaper food items.
Food inflation has been in the negative zone since mid-December on the back of a steep decline in prices of vegetables, particularly potatoes and onions.
“We were honing in on a March rate cut, but this latest inflation cooling may give the RBI sufficient reason to move before then. The Indian economy is slowing sharply and with inflation coming off its peaks, there’s no reason for the RBI to continue sitting on their hands,” Moody’s said in its report.
“Look for an initial rate cut in February,” it added.
The central bank had hiked interest rates by 375 basis points between March 2010 and October 2011 to deal with persistently high inflation.
However, in its last review in December the RBI pressed the pause button on its monetary tightening strategy and said that it might go for rate cuts in the future if inflation moderates further.
At the same time, the RBI is confronted with a moderation in economic growth. The government has cut its FY11-12 growth projection from 9% to about 7% for the current fiscal.
The central bank is scheduled to conduct its third quarterly review of the monetary policy on 24th January.
However, experts feel RBI will refrain from cutting rates this time.
The RBI need not wait for the March mid-quarter review for announcing a change in the monetary policy and can go for a rate cut at any time.
“... There are still pipeline pressures that need watching, as indicated by the solid rise in non-food prices,” Moody’s said.
Inflationary pressure continues in manufactured items, which have a weight of over 65% in the WPI basket.
Prices of manufactured products went up by 7.41% year-on-year in December, as against 7.70% in the previous month.