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GDP growth slows to 6.1 pc

NEW DELHI: India's economic growth slowed to its weakest annual pace in almost three years in the three months to December, as high interest rates and rising input costs constrained investment and manufacturing.

Gross domestic product (GDP) rose 6.1 percent in October to December compared with a year earlier, a lower than expected increase, figures from the federal statistics office showed.

That marked a sharp pullback from 6.9 percent growth in July to September and was the seventh successive quarterly slowdown, providing a gloomy backdrop for a central bank policy meeting and federal budget, both due in just over two weeks.

The median forecast of economists in a Reuters poll was for GDP to rise 6.4 percent. The outcome of 6.1 percent was the weakest in 11 quarters.

"Moderation in the manufacturing sector was likely the starkest as higher input prices and a sharp jump in borrowing costs depressed output," said Radhika Rao, an economist at Forecast in Singapore.

"The ball is in the government's court now to kick start policy reforms."

The yield on India's benchmark 10-year government bond rose 1 basis point to 8.2 percent after the data. Shares and the rupee were little changed.

Growth in Asian economies is expected to slow down further in the first quarter of calendar 2012, suggesting that India may feel more economic pain in the months ahead. China's January to March growth is forecast to drop for the fifth straight quarter.

Unlike most other Asian economies, India has struggled to beat down inflation, so the central bank has kept interest rates at a three-year high since October while policymakers elsewhere in the region were cutting rates.

India has also suffered a longer-term steady decline in growth owing to a lack of economic reform that resulted in weak investment. Average growth of 9.5 per cent in the three years to 2007/08 slowed to 8.4 per cent in the past two fiscal years and is widely expected to ease to about 7 per cent in the current financial year ending March.

The Reserve Bank of India, which has asked the government to cut fiscal deficits to help rein in inflation, signalled last month it was ready to cut interest rates to try to stimulate the economy.

Indian consumer prices rose 7.65 percent in the year to January. That was higher than wholesale inflation but suggested some moderation in price pressures which could give the central bank room to cut interest rates.

Still, rising oil prices are emerging as a concern for the RBI while Finance Minister Pranab Mukherjee, faced with a burgeoning fiscal deficit due in part to a huge subsidy bill, is not in a strong position to announce major stimulus measures.

The central bank will release the outcome of its policy review on March 15, a day before the government announces it budget.

Economists point to government policy paralysis, stubborn inflation and high interest rates as major reasons for the slowdown in investment.

Wednesday's data showed manufacturing barely grew at just 0.4 percent in the December quarter from a year earlier. Annual car sales are likely to drop for the first time since 2002 in the year to March after January sales fell short of expectations.

The farm sector grew 2.7 percent from a year earlier, the data showed.

Economists said growth may languish below 7 percent in coming quarters as well, particularly if crude oil prices stay high. India imports nearly 80 percent of its oil needs, and oil accounts for nearly a third of the country's imports.

The central bank ran a 20-month interest rate tightening cycle until October to try to rein in inflation. Economists generally expect the RBI to cut its main policy rate by 100 basis points in 2012 from the current 8.5 percent. ReutersBack

 

 

Sehwag, Zaheer rested for Asia Cup

MUMBAI: India selectors have rested opening batsman Virender Sehwag and pace duo Zaheer Khan and Umesh Yadav from the country's squad for the next month's Asia Cup one-day international competition in Bangladesh.

Big-hitting all-rounder Yusuf Pathan and paceman Ashok Dinda were recalled to the 15-man squad, the India cricket board (BCCI) said in a statement on Wednesday.

Defending champions India, who also won the 50-over World Cup on home soil last year, will play Pakistan, Sri Lanka and hosts Bangladesh in the four-nation tournament from March 11-22.

Squad: Sachin Tendulkar, Gautam Gambhir, Virat Kohli, Rohit Sharma, Suresh Raina, Manoj Tiwary, Yusuf Pathan, Ravindra Jadeja, Mahendra Singh Dhoni (captain), Irfan Pathan, Praveen Kumar, R. Vinay Kumar, Ashok Dinda, Ravichandran Ashwin, Rahul Sharma. Reuters
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2 LeT men nabbed in Delhi, terror strikes foiled

NEW DELHI: In a major operation, the Delhi police has arrested two suspected LeT terrorists who were allegedly planning to carry out terror strikes in the Capital targeting vital installations and VVIPs. Delhi police sources said the operation was launched to nab the two Lashkar-e-Toiba men after receiving inputs from Central intelligence agencies that the duo had entered the Capital to carry out strikes.

Effective coordination with the Jammu and Kashmir and Jharkhand police helped nab the two terrorists, the sources said.

They said the two were planning to carry out major strikes in the national Capital by targeting vital installations and VVIPs. PTIBack

 

 

Having blunt conversation with India, China on Iranian oil: US

WASHINGTON: The United States is having "very intense and very blunt" conversations with India, China and Turkey on reducing their dependence on Iranian oil, Secretary of State Hillary Clinton has told lawmakers.

Clinton, testifying before a congressional committee on Tuesday, said the US was asking these countries to take specific measures that would reduce their dependence on Iranian oil. But, without naming one, she did acknowledge that this would be a bit tough for some countries.

"With respect to China and Turkey and India, we've had very intense and very blunt conversations with each of those countries. I think that there are a number of steps that we are pointing out to them that we believe they can and should make," Clinton said while responding to questions from Senator Robert Menendez.

"In a number of cases, both on their government side and on their business side, they are taking actions that go further and deeper than perhaps their public statements might lead you to believe," Clinton said.

"We are going to continue to keep an absolute foot on the pedal in terms of our accelerated, aggressive outreach to them. And they are looking for ways to make up the lost revenues, the lost crude oil," she said.

Claiming that oil deficit was a difficulty for several other countries, Clinton said the US had come up with lots of suggestions that would help these countries in resolving the crisis.

"Our expectation and the direction we are giving to countries is that we do expect to see significant reductions. I am pleased to report, Senator, that we've been aggressively reaching out to and working with countries to assist them in being able to make such significant reductions," Clinton said.

Earlier in the day, testifying before the state, foreign operations and related programmes subcommittee of the Senate Appropriations Committee, Clinton told Senators the US was aggressively pursuing sanctions against Iran.

"We are implementing the new Iran sanctions aggressively. The (US) President issued an executive order on February 6th that blocks assets under US jurisdiction of all Iranian banks; also makes it clear that both the departments of treasury and state are expected to enforce the sanctions absolutely," she said.

"We have been travelling the world, high-level teams from treasury, energy and state, to explain what the sanctions are to counterparts around the world. We're very frank in these discussions about the requirements of US law," the US leader said. PTIBack

 

 

 



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