RBI lowers GDP forecast for FY'12 to 8%
Facing downside risks from the sovereign debt crisis in the euro-zone nations and high oil prices, the Indian economy is likely to grow 8 per cent in 2011-12, the Reserve Bank said on Tuesday.
RBI's GDP growth projection is lower than the 9 per cent estimates of the government.
RBI Governor D Subbarao [ Images ] listed risks to the economy in the annual credit policy speech. They include, sovereign debt problems in the euro-zone, high commodity prices, especially of oil, and accentuation of inflationary pressure in the emerging market economies.
The central bank's projections are "based on the assumption of a normal monsoon, and crude oil prices averaging $110 a barrel over the full year 2011-12," he said, adding that "our baseline projection of real GDP growth is around 8 per cent".
On back of estimated 8.6 per cent GDP growth in 2010-11, the government had projected the country's economy to expand at 9 per cent (plus or minus 0.25 per cent) this fiscal. It had expanded at 8 per cent in 2009-10.
The International Monetary Fund and the World Bank had forecast that India's [ Images ] economy would grow at 8 per cent and 9 per cent, respectively.
Subbarao, however, warned that global events may impact the domestic economy.
"Should the global recovery slacken...it will impact our economy through trade, finance and confidence channels," he said.
Recent political turmoil in Egypt [ Images ] and Tunisia, followed by the ongoing civil war in Libya, a major oil exporter and OPEC member, have pushed up global crude prices.
On growth-inflation trade-off, Subbarao said high and persistent inflation undermines growth by creating uncertainty for investors, and driving up inflationary expectations.
"An environment of price stability is a pre-condition for sustaining growth in the medium-term," he said.
03 May 2011
01 May 2011
Pakistan inching towards giving MFN status to India
AMRITSAR: Indian Commerce Secretary, Rahul Khullar, who returned after talks with his Pakistani counterpart Zafar Mahmood, said Pakistan is inching ahead to bestow Most Favoured Nation (MFN) status to India.
Khullar, who returned though Attari border check post, said talks on the issue with Pakistan were at an advanced stage and consultations would be
completed by November. He termed the talks with Pakistani commerce secretary as positive.
“We talked on all issues and some important points, including MFN status to India, were discussed in detail and in a highly positive manner,” he said.
“The talks were on specific issues and more will be planned in near future on diverse issues of trade and commerce.”
Commerce secretaries from Pakistan and India met on April 27-28 in Islamabad for 5th round of talks to
further trade and economic relations under the composite dialogue process.
Khullar said he invited Mahmood to India in November, so that talks could be given a final shape.
“We also discussed Lahore-Amritsar trade ties, which need to be strengthened more. With integrated check post getting ready at Attari, trade and commerce will be more strengthened.”
He said that improving trade ties would also work as confidence building measures, ensuring peace and prosperity between the two countries.
Meanwhile, Indian exporters expressed their belief that the trade with Pakistan can jump to $10 billion in three years after the secretary-level meeting this week.
“The bilateral trade will cross $10 billion in next three years, as focus of the joint communique is on the removal of non-tariff barrier which is key to trade expansion,” Ramu Deora, president of Federation of Indian Export Organisations (FIEO), said.
Exporters are upbeat because the statement refers to “immediate necessary” steps to end the discriminatory trade regime. India’s trade with Pakistan is about $2 billion of its global merchandise trade of $595 billion.
According to a study by Indian Council for Research on International Economic Relations (ICRIER), the potential of India, Pakistan trade is $14.3 billion with India exporting goods of about $11 billion and importing $3 billion. Other studies said trade through third countries like United Arab Emirates was much higher at around $3-$5 billion.
The two sides have agreed to consider possibility of a preferential trade deal, ease curbs on investment, banking and relax rules for issuing business visas.
“Businesses can act as a bridge between nations to build political relationships. It is business which is followed by political relationship,” CII president B. Muthuraman said.
“Business community is keen to do business with Pakistan,” Federation of Indian Chambers of Commerce & Industry (FICCI) said.
Analysts said a preferential trade deal would allow the lowering of tariffs or even duty-free import.
The relaxations on investment and banking are significant in light of the bar on Pakistani investments and banks in the country.
Indian officials said relations would be strengthened by the decision to do away with current “positive list” (of items that can be traded) with a “negative list” (a small list of products that require protection and, hence, cannot be traded) within the next six months.
The two sides agreed to examine in two months how to initiate and expand trade in all types of petroleum products and study feasibility of electricity trade. FIEO will take steps to set up a joint chamber with its counterpart in Pakistan. FICCI says potential sectors for trade are agriculture, textiles, surgical goods, and plastics.
Khullar, who returned though Attari border check post, said talks on the issue with Pakistan were at an advanced stage and consultations would be
completed by November. He termed the talks with Pakistani commerce secretary as positive.
“We talked on all issues and some important points, including MFN status to India, were discussed in detail and in a highly positive manner,” he said.
“The talks were on specific issues and more will be planned in near future on diverse issues of trade and commerce.”
Commerce secretaries from Pakistan and India met on April 27-28 in Islamabad for 5th round of talks to
further trade and economic relations under the composite dialogue process.
Khullar said he invited Mahmood to India in November, so that talks could be given a final shape.
“We also discussed Lahore-Amritsar trade ties, which need to be strengthened more. With integrated check post getting ready at Attari, trade and commerce will be more strengthened.”
He said that improving trade ties would also work as confidence building measures, ensuring peace and prosperity between the two countries.
Meanwhile, Indian exporters expressed their belief that the trade with Pakistan can jump to $10 billion in three years after the secretary-level meeting this week.
“The bilateral trade will cross $10 billion in next three years, as focus of the joint communique is on the removal of non-tariff barrier which is key to trade expansion,” Ramu Deora, president of Federation of Indian Export Organisations (FIEO), said.
Exporters are upbeat because the statement refers to “immediate necessary” steps to end the discriminatory trade regime. India’s trade with Pakistan is about $2 billion of its global merchandise trade of $595 billion.
According to a study by Indian Council for Research on International Economic Relations (ICRIER), the potential of India, Pakistan trade is $14.3 billion with India exporting goods of about $11 billion and importing $3 billion. Other studies said trade through third countries like United Arab Emirates was much higher at around $3-$5 billion.
The two sides have agreed to consider possibility of a preferential trade deal, ease curbs on investment, banking and relax rules for issuing business visas.
“Businesses can act as a bridge between nations to build political relationships. It is business which is followed by political relationship,” CII president B. Muthuraman said.
“Business community is keen to do business with Pakistan,” Federation of Indian Chambers of Commerce & Industry (FICCI) said.
Analysts said a preferential trade deal would allow the lowering of tariffs or even duty-free import.
The relaxations on investment and banking are significant in light of the bar on Pakistani investments and banks in the country.
Indian officials said relations would be strengthened by the decision to do away with current “positive list” (of items that can be traded) with a “negative list” (a small list of products that require protection and, hence, cannot be traded) within the next six months.
The two sides agreed to examine in two months how to initiate and expand trade in all types of petroleum products and study feasibility of electricity trade. FIEO will take steps to set up a joint chamber with its counterpart in Pakistan. FICCI says potential sectors for trade are agriculture, textiles, surgical goods, and plastics.
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