The drought situation in India could affect the country’s economic recovery. The Planning Commission met on Tuesday to discuss the impact of the drought and rising inflation. Though India’s economy grew at 6.1% in the quarter ending June, deputy chairman of the commission Montek Singh Ahluwalia said growth would be lower in the second and third quarters but should pick up in the fourth quarter.
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Ahluwalia also said the country needed to contain the fiscal deficit, revive investments in infrastructure, and develop a clear disinvestment programme.
India’s exports declined for the tenth straight month in July, with demand in its biggest markets, the US and Europe still low. Merchandise shipping declined 28.4% from a year earlier to $13.6 billion. The government has been trying to reverse the decline. Last week it extended tax refunds for exporter and also encouraged them to target emerging markets.
While exports have declined, manufacturing is doing better. India’s manufacturing output rose for a fifth straight month as domestic demand increased. The Purchasing Managers’ Index stood at 53.2 in August. Any reading above 50 indicates an increase in production in the index, which is compiled by two firms HSBC Holdings and Markit Economics. Cuts in interest rates and taxes and increased government spending have helped power demand within India.
After a successful IPO last month, government-run power company NHPC began its listed on the Bombay Stock Exchange on Tuesday. It’s shares made modest gains, reaching a high of nearly Rs40 during the day to close at Rs36.70. The issue price for NHPC shares was Rs36.
The Ministry of External Affairs has agreed to underwrite Rs70 crore in expenses for a hydrological study NHPC is conducting to develop two hydroelectric projects in Myanmar. India wants to strengthen its ties with Myanmar, to access the country’s natural gas reserves and counter Chinese influence.
Pipavav Shipyard says it will concentrate on building ships for the defence and oil and gas industries. It’s wants to get into Indian Navy projects worth at least 50,000 crore rupees. In July Pipavav won a Rs545 crore ship building contract from government oil company ONGC.
Infosys is closer to acquiring land for a second campus in Bangalore. On Tuesday, the Karnataka government said the land that Infosys wants, can be used for industrial purposes. If the deal goes through, the new Infosys facility could be four times larger than the current campus.
Markets continued to fall on Tuesday after the previous day’s losses. The Sensex went down 115 points ending trade at 15,551 and the Nifty fell 37 points closing at 4,62.