Weekly Digest

Govt admits $9 bn export gaffe

Fears about exports being shown on the higher aspect have come true with the govt. conceding today that it goofed up because the} numbers got inflated by USD $9 billion during April-November period of the fiscal.

Commerce Secretary Rahul Khullar  said that, There wasn't only mis-classifications but also "error in double counting and all kind of things" because of issues in the computer software which was recently upgraded. Having admitted mistakes, Khullar said that at least now "the notion that the govt is deliberately cooking up and telling lies...has got to stop.

The mismatch came about mainly because of over-estimation of engineering export, the growth of which had baffled economists as it was not in tandem with the growth of industrial production during the period.

While the index of industrial production (IIP) stood at 5 per cent for the April-September period, exports grew by 52.08 per cent during the same period.

Experts though, aired concerns over the veracity of the export data and the government had summarily brushed aside their arguments. “There was a misclassification of goods ... notwithstanding the misclassification, there were also errors like double counting and all other sorts...

Food inflation falls sharply to 6.6 percent

Food inflation has dropped sharply in the last one month giving the much needed relief to common people and the policymakers who have been struggling for almost the last two years to control the general price rise.

Onion became cheaper by 39.20 percent during the week under review, while price of potatoes declined by 15.75 percent. Wheat became cheaper by 4.70 percent year-on-year and price of vegetables dropped by 1.25 percent, according to data released by the commerce and industry ministry. The primary articles index, which has a 20.12 percent weightage in the wholesale price index, dropped to 6.92 percent for the week under review as compared to 7.74 percent in the previous week. It as at 10.39 percent for the week ended Nov 5.

The fuel and power index remained unchanged at 15.53 percent. The headline inflation based on the wholesale price index was recorded at 9.73 percent in October, according to the latest official data.

The Reserve Bank of India (RBI) has hiked key policy rates 13 times since the beginning of 2010 to control the price rise. The recent decline in inflationary pressure may give some comfort to the economic policymakers who have been struggling to control the price rise for the last two years, without much success.

The following are the yearly rise and fall in prices in the week under review of some main commodities that form the sub-index for food articles:

Onions: (-) 39.20 percent

Vegetables: (-) 1.25 percent

Fruits: 10.72 percent

Potatoes: (-) 15.72 percent

Eggs, meat, fish: 10.04 percent

Cereals: 1.68 percent

Rice: 2.34 percent

Wheat: (-) 4.70 percent

Pulses: 13.00 percent

CRISIL Research cuts 2011-12 GDP growth to 7.0%

Ratings agency Crisil on Thursday lowered its growth forecast for the Indian economy in 2011-12 to 7 per cent, from the earlier estimate of 7.6 per cent, due to global slowdown and weak domestic investment climate.

Crisil said said economic growth in the second half (October-March) of the current fiscal is likely to slip to 6.7 per cent, from 7.3 per cent in the first six months.

"This will restrict the overall GDP growth for 2011-12 at 7 per cent. This would be the second-lowest growth in the past nine years after 6.8 per cent in 2008-09, during the peak of global financial crisis," the report said.

The country's Gross Domestic Product (GDP) growth slipped to 6.9 per cent in the second quarter, the lowest in over two years.

The economic growth in 2010-11 stood at 8.5 per cent. Growth in eight core infrastructure industries dipped to 0.1 per cent in October, the lowest in five years.

RBI has already revised its growth projection for the Indian economy to 7.6 per cent, from 8 per cent earlier.

Finance Minister Pranab Mukherjee said last week that GDP growth in the current fiscal is likely to be around 7.5 per cent, far below the 9 per cent projection made by the government in its pre-Budget survey.

Crisil said, "The industry growth will remain constrained by lagged impact of RBI's interest rate hikes, weak exports due to slipping demand, particularly from Europe and growing bottlenecks in the mining sector,"