India's industrial production accelerated in December as record investment in factories, roads and power plants boosted demand for cement and steel.
Production at factories, utilities and mines rose 7.6 percent from a year earlier, after gaining a revised 5.1 percent in November, the statistics office said in a statement in New Delhi. Analysts had forecast a 6.9 percent gain.
The pace of increases may not last, with the government citing moderating output as a reason growth will slow this year. Signs of a cooling expansion may prompt Reserve Bank of India Governor Yaga Venugopal Reddy to consider cutting interest rates.
"Capital spending is shoring up industrial output," said D.H. Pai Panandiker, president at RPG Foundation, an economic policy group in New Delhi. "The central bank will be under increasing pressure to reduce rates as the economy slows."
Reddy refrained from lowering rates at the Reserve Bank's last monetary policy announcement on Jan. 29 on concern rising oil and food prices would stoke inflation. Wholesale prices, which rose 4.1 percent in the last week of last month, don't reflect last year's 57 percent increase in crude oil costs.
The government on Thursday said India's economy may expand 8.7 percent in the 12 months to March 31, the weakest pace in three years, because of slowing manufacturing. Growth was 9.6 percent in the last financial year.
Higher borrowing costs are prompting consumers to postpone purchases. Bajaj Auto Ltd, India's second-largest motorcycle maker, posted a 16 percent drop in sales last month, its 12th straight month of declines.
ABN Amro Bank NV's purchasing managers' index indicated manufacturing growth recovered in December from the previous month and fell again last month to the lowest level since September.
Indian Finance Minister Palaniappan Chidambaram was to meet chairmen of state-run banks yesterday to find ways to reduce interest rates and boost consumer demand. Industrial production growth last year averaged 10.1 percent.
In response to the minister's call last month for lower rates, State Bank of India, the nation's biggest by assets, on Monday cut its benchmark prime lending rate by 25 basis points to 12.5 percent.
"The cumulative impact of monetary tightening will soften industrial activity in the coming months," said Rajeev Malik, senior economist at JPMorgan Chase & Co in Singapore. "Higher capital expenditure and infrastructure spending will likely be key offsetting factors."
Economists are split whether the central bank will immediately start cutting its benchmark rate because inflation stoked by higher oil and food costs presents a threat. Six of nine economists surveyed by Bloomberg News last month said Reddy would maintain the repurchase rate at 7.75 percent -- the highest in six years -- in the next monetary policy statement on April 29.
Indian Prime Minister Manmohan Singh's government is spending 1.34 trillion rupees (US$34 billion) in the year ending March 31, a 40 percent increase over the previous year, on roads, ports and power plants.
Companies are also expanding, encouraged by India's economic growth and on optimism rising incomes will stoke higher demand. Automakers, including General Motors Corp and Suzuki Motor Corp, are spending more than US$6.6 billion to build new factories in the South Asian nation.
Economic expansion in India is still the second-fastest after China of the world's biggest economies. The economy has grown an average 8.8 percent since 2003, the fastest expansion since the country's independence in 1947.
India's middle class, defined as those with annual disposable incomes between US$4,380 and US$21,890, has more than doubled to 50 million in the past decade, said McKinsey & Co.
PROTECTION: The investigation, which takes aim at exporters such as Canada, Germany and Brazil, came days after Trump unveiled tariff hikes on steel and aluminum products US President Donald Trump on Saturday ordered a probe into potential tariffs on lumber imports — a move threatening to stoke trade tensions — while also pushing for a domestic supply boost. Trump signed an executive order instructing US Secretary of Commerce Howard Lutnick to begin an investigation “to determine the effects on the national security of imports of timber, lumber and their derivative products.” The study might result in new tariffs being imposed, which would pile on top of existing levies. The investigation takes aim at exporters like Canada, Germany and Brazil, with White House officials earlier accusing these economies of
EARLY TALKS: Measures under consideration include convincing allies to match US curbs, further restricting exports of AI chips or GPUs, and blocking Chinese investments US President Donald Trump’s administration is sketching out tougher versions of US semiconductor curbs and pressuring key allies to escalate their restrictions on China’s chip industry, an early indication the new US president plans to expand efforts that began under former US president Joe Biden to limit Beijing’s technological prowess. Trump officials recently met with their Japanese and Dutch counterparts about restricting Tokyo Electron Ltd and ASML Holding NV engineers from maintaining semiconductor gear in China, people familiar with the matter said. The aim, which was also a priority for Biden, is to see key allies match China curbs the US
Teleperformance SE, the largest call-center operator in the world, is rolling out an artificial intelligence (AI) system that softens English-speaking Indian workers’ accents in real time in a move the company claims would make them more understandable. The technology, called accent translation, coupled with background noise cancelation, is being deployed in call centers in India, where workers provide customer support to some of Teleperformance’s international clients. The company provides outsourced customer support and content moderation to global companies including Apple Inc, ByteDance Ltd’s (字節跳動) TikTok and Samsung Electronics Co Ltd. “When you have an Indian agent on the line, sometimes it’s hard
‘SACRED MOUNTAIN’: The chipmaker can form joint ventures abroad, except in China, but like other firms, it needs government approval for large investments Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) needs government permission for any overseas joint ventures (JVs), but there are no restrictions on making the most advanced chips overseas other than for China, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. US media have said that TSMC, the world’s largest contract chipmaker and a major supplier to companies such as Apple Inc and Nvidia Corp, has been in talks for a stake in Intel Corp. Neither company has confirmed the talks, but US President Donald Trump has accused Taiwan of taking away the US’ semiconductor business and said he wants the industry back
RSS