New Delhi: There is no cheer on the economic front this Diwali. From industrial production to inflation to the sliding rupee, bad news has been coming from almost all the fronts. While the Indian economy is still growing at a healthy rate of almost six per cent, compared to less than two per cent for almost the entire developed world, the future is not too rosy unless the government, which in the past few weeks undertaken a few reforms, goes all out to tackle the problem.
The Chinese economy is also showing signs of cooling down after registering double-digit growth for the last several years and the world is yet to come out of the crisis that started in 2008. Several steps taken by the European Union and the USA have failed to revive world economy. Some of the European Union member countries are on the verge of bankruptcy and a bailout package for them has become a huge bone of contention among the relatively well off members.
In India Diwali is a festival when the goddess of wealth Laxmi is worshipped and the country hopes for a better economic future. But this time all the economic indicators present a very bleak picture. The price of gold, which is in high demand during Diwali, has risen exponentially over the last couple of years, making it out of the reach of a vast majority of the people.
Tracking a firm global trend, gold prices rose by Rs 76 to Rs 31,719 per 10 grams in futures trade on Monday as speculators created fresh positions. At the Multi Commodity Exchange, gold for delivery in December rose by Rs 76, or 0.24 per cent, to Rs 31,719 per 10 grams, with a business turnover of 3,422 lots. Similarly, the metal for delivery in February moved up by Rs 69, or 0.22 per cent, to Rs 31,124 per 10 grams, with a business turnover of 247 lots.
Marketmen said fresh buying by speculators in tandem with a firm global trend where gold traded near the highest in three weeks as investors focused on the US budget debate and after data showed Japan's economy shrank in the third quarter influenced the gold at futures trade.
The rupee fell to a two-month low on Monday, touching 55 to the dollar, after data showed India's trade deficit widened in October, raising concerns about the current account deficit. The economy showed no signs of coining out of the sluggishness with industrial production contracting by 0.4 per cent in September. The dismal show came after the decline in manufacturing sector, consumer as well as capital goods output. Growth in overall factory output, as measured by the Index of Industrial Production (IIP), was 2.5 per cent in September 2011.
Inflation is yet another cause for worry as is has defied all the measures undertaken by the government and the Reserve Bank of India (RBI) to rein it. The date released on Monday showed that higher food prices have pushed up inflation to 9.75 per cent in October. The prices of several items like sugar, pulses and vegetables as well as clothings have jumped in the last couple of months.
The highest rise in prices during the month was recorded by sugar, up 19.61 per cent, year-on-year basis. It was followed by edible oil which turned expensive by 17.92 per cent, while pulses were dearer by 14.89 per cent on the annual basis. Vegetable rates during the month increased by 10.74 per cent while meat and fish and egg rates rose by 12.18 per cent. At the same time, clothing and footwear also witnessed an increase in prices at 10.47 per cent on an annual basis.
India's exports in October contracted 1.63 per cent year-on-year, for the sixth month in a row, to $23.2 billion, mainly due to the demand slowdown in the US and European markets. Exports on October 2011 stood at $23.6 billion.
However imports grew by 7.37 per cent to $44.2 billion in October, leaving a trade deficit of $20.96 billion. During the April-October period of the current fiscal, the country's shipments have shrunk by 6.18 per cent to $166.92 billion while imports during the period dipped by 2.66 per cent to $277.13 billion.
"The world trade is continuously contracting. Our integration with the world trade has increased so any ripple worldwide will impact India's trade," Commerce Secretary SR Rao said in New Delhi on Monday while releasing trade figures. He also said that the country's import bill has increased due to jump in the gold and petroleum imports.
During the first seven months of the financial year, the trade deficit stood at $110.2 billion. Oil imports in October increased by 31.6 per cent year-on-year to $14.78 billion. However, non-oil imports declined by 1.73 per cent to $29.42 billion.
During April-October 2012, oil imports grew by 10 per cent to $95.5 billion from $86.8 billion in the corresponding period 2011. However, non-oil imports during the period dipped by 8.22 per cent year-on-year to $181.56 billion.
(With additional information from PTI)
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