A new report concludes the prospects for India’s economy could be worse than previously forecast. C. Rangarajan, the head of the Prime Minister’s Economic Advisory Council released projections for the fiscal 2011-12. It’s new forecast for growth is 8.2% compared to the earlier 9%. What’s more it doesn’t expect wholesale inflation will ease until November. Worse yet, the report says the fiscal deficit in March of next year is likely to reach 4.7%. That’s compared to the government’s own target of 4.6%. The EAC’s paper also pegged India’s current account deficit at 2.7% by the end of the year.
The EAC report suggests outside interest in India remains strong. For starters, it says foreign direct investment will increase to $ 35 billion from last year’s $23.4 billion. And total capital inflows are expected to go up to $72 billion from just under $61.9 billion in the previous 12 months. The report also recommended the government allow 49% FDI in all sectors that are not prohibited.
Auto sales in July have gone into low gear. Rising interest rates and higher fuel costs have put the brakes on a lot of car purchases. Maruti Suzuki’s domestic sales during the month dropped 26% to 66,504 vehicles. And Hyundai Motor sold 25,642 cars, a decline of 11%.
Of course, not all car companies did badly. Mahindra and Mahindra’s utility vehicle business expanded in July. Its sales increased 42% to 37,323. And two wheeler firm Hero Moto Corp saw a 15% rise to 4,91,036 units.
News of the last-minute America deal to avoid a default sent Indian markets into positive territory. The indices broke a four day losing streak shooting up in early trade only to moderate later in the day. The Sensex finished the session 117.13 points higher at 18314.33 And the Nifty rose 34.80 to 5516.80.