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Indian economy on an upswing

New Delhi,Mar 12 () : Indian economy seems to be finally looking up as figures indicate that manufacturing sector recorded a growth of 2.4% in January.

Exports rose and the current account deficit was contained. The Index of Industrial Production data (IIP) for January in contrast to negative figure of 0.6 % in December 2012 has now expanded at 2.4 percent.

The output of the manufacturing sector which was 0.7% is now at 2.7%; the power sector output grew from 5.2-6.4%; capital goods sector however continued the negative growth contracting further at (-)1.8% compared to previous figure of (-)0.9%.

Economists feel that IIP in coming months will further show growth. Consumer Price Index is not likely to come below 10%.

The apex bank, the Reserve Bank of India (RBI) felt that current account deficit (CAD) and inflation are reasons why the interest rates cannot be cut. The Finance Minister on the other hand is saying that all effective steps to contain both have been taken and RBI has to do its job now. A poll by ET Now says that the RBI may cut repo rate by at least 25 basis points in March.

Jim Yong Kim, World Bank President on a visit to India, said the country’s economy in the next fiscal will soon get back to growth of 6% and more thereafter, backing the government’s estimate presented in the budget. Kim estimates are in tune with the economic survey which projects growth at 6.1-6.5%.

Kim expressed his disappointment over the current growth of 5%. With European markets picking up, India’s goods exports continued its growth story which began in January this year and for a second consecutive month in February it grew by an annual 4.23% to $26.26 billion (around Rs. 1.43 trillion).

The export sector was shrinking for the past eight months last year. The import bill too increased mainly on oil imports which was $15.1 billion, a rise of 15.45% but non-oil goods showed a decline to $26 billion, a drop of 3.57%. The total deficit is $14.92 billion and India import bill stands at $41.18 billion, marking an increase of 2.6%.