New Delhi, January 9
Crisil Research, India’s largest independent and integrated research house has predicted that India’s GDP will grow at a higher rate of 6.7 per cent in 2013-14 in comparison to 5.5 per cent estimated for the current fiscal due to a revival in consumption.

A pickup in agriculture, predicated on a normal monsoon, lower interest rates and higher government spending will support private consumption demand. The improved agricultural output, along with a stronger rupee and lower crude oil prices will also help in reducing Wholesale Price Index inflation to around 7% per cent from 7.7% projected for 2012-13.

Crisil managing director & CEO Roopa Kudva said: “India’s GDP growth in 2013-14 will be supported by the revival of the private sector consumption growth aided by higher growth in agriculture, high government spending and lower interest rates.”

A normal monsoon will boost agricultural GDP growth to an above-trend rate of 3.5% in 2013-14, also gaining from a lower base of 2012-13. With the easing of inflation, the RBI is expected to cut interest rates by 75-100 basis points starting January 2013, thereby lowering retail lending rates and boosting demand in interest sensitive segments. The likely increase in government spending in the form of higher expenditure on social sector schemes and rural development will be driven by the upcoming general elections in 2014.

Increased welfare expenditure by the government, lower interest rates, moderation in inflation and high farm incomes (assuming a normal monsoon) will boost household spending and thereby, benefit sectors such as consumer durables, hotels and restaurants and financial services. Further, improved external demand, as a result of marginal recovery of global growth, could raise India’s exports, especially in the IT/ITeS sector.

Says Crisil chief economist Dharmakirti Joshi: “An improvement in private consumption will create demand for goods and services, which in turn will raise industrial growth to 5.4%. Although this is an improvement over the current fiscal, industrial growth will still lag its last ten-year average of 7.9%.”

New Delhi, January 9
Consumers will now have to pay up to 30 per cent extra for data services as the country’s leading telecom operators, Bharti Airtel and Vodafone, have hiked tariffs for data services. Other telecom operators are expected to soon follow suit with the industry facing a drop in profit margins.

Bharti Airtel recently increased 2G data rates and rivals are expected to take similar steps to cover costs and improve margins, said industry officials.

Airtel recently revised its 1GB 2G data plan from Rs 100 to Rs 125.

"This nominal price revision is subject to rate elasticity, customer demand and supporting cost structures. Our recent revision...is an increase of only 2-3 paise per MB. It continues to be an excellent value proposition for our customers," an Airtel spokesperson said.

Vodafone too has made similar changes in the monthly plans and has reduced data limits available under various prepaid plans.

While the Rs 95 plan (28 days validity) is now available for Rs 124, others plans allowing 250 MB data usage and 150 MB usage have been reduced to 150 MB and 100MB, respectively.

When contacted, a Vodafone spokesperson told PTI: "We are aware of some of our competitors increasing tariffs for 2G data recently. We see this as an encouraging step for the industry and are taking corrective measures accordingly at our end."

An spokesperson for Idea Cellular, the third largest operator, declined to comment, but sources said the company may also revise mobile data tariffs.

Bharti Airtel has maintained for long that prices of voice and non-voice services need to be hiked for the telecom industry to remain healthy, invest in future technologies and generate returns for shareholders.

"The current tariffs do not even cover marginal costs for most operators. So from an economics perspective, do we need to increase prices? The answer is yes," Bharti Airtel CEO (India and South Asia) Sanjay Kapoor had said earlier.

Telecom industry officials say that competitive pressures have prevented telecom operators from hiking rates so far.

New Delhi, January 9
As expected the car manufacturers witnessed the steepest fall in car sales in the last four months in December last year, forcing industry lobby group Society of Indian Automobile Manufacturers (SIAM) to call for a cut in excise duty to spur demand.

Under severe pressure due to the prevailing market conditions, SIAM also demanded continuation of all benefits of the Auto Mission Plan for another ten years till 2026.

India's car sales are expected to post their weakest growth in nine years, if any at all, as automakers such as Tata Motors and Maruti Suzuki battle with falling demand due to high interest rates and rising car ownership costs.

Slumping GDP growth, rising fuel prices and expensive credit have slashed car sales in India, a market that was the toast of the industry two years ago and has attracted billion-dollar bets from global manufacturers hungry for growth.

"Negative sentiment among lower-end customers by virtue of interest rates not coming down, high fuel charges; all these put together is hurting sentiments," SIAM president S. Sandilya said. SIAM cut its car sales growth forecast for the year that ends in March to 0-1% on Wednesday, its third downgrade this financial year from an initial estimate of 10-12%.

Car sales in India, where major players include Tata Motors, Maruti Suzuki and South Korea's Hyundai Motor, have grown every year since the financial year that ended in March 2004.

"Going by current trends, we do not think the industry will be able to recover in the fourth quarter (January-March) unless government extends full support," said Sandilya, who called on the RBI to reduce "extremely high" interest rates that currently stand at 8 per cent.

Bangalore, January 9
India's manufacturers barely increased production in November compared to the year before as factories closed for holidays a month later than in 2011, a Reuters poll found on Wednesday.

The survey of 25 economists predicted that the index of industrial production (IIP), measuring output at factories, mines and utilities, rose just 0.7% year-on-year in November following an 8.2% rise in October. Production was likely hit as Diwali,when many factories shut shop for a day or two, was celebrated in November last year. The year before it was in October.

"Comparatively there were lesser working days in November 2012 and hence the base effect," said Aman Mohunta, economist at Nomura.

Forecasts for the notoriously volatile indicator ranged from a contraction of 3.3% to growth of 6.3%. November's reading will be knocked by the previous year's IIP clocking a high 6%. November's median expectation is lower than the average 1.1% growth seen so far in calendar 2012 and is significantly below the double-digit growth rates that IIP posted between late 2006 and early 2008.

"The momentum continues to be slow. We don't expect a spectacular pick up, at the same time we don't expect a further fall either," added Mohunta. He saw November's factory output shrinking by 3% annually but expects it to grow around 0.5-1% in the next couple of months. Other economists share expectations of a pick up over the next few months.

"Infrastructure has been seeing some improvement. We are not seeing a very sharp rebound, but sentiment has improved," said Quant Capital Economist Bhupesh Bameta, adding that annual IIP growth is moving towards the 3-4 percent range in the near term.

Infrastructure output, or core output data, which is typically released before the headline number and accounts for nearly 38% of overall industrial production, grew 1.8% year-on-year in November, sharply slower than in the previous month.

India has been plagued by sticky inflation, burgeoning deficits, a slowdown in domestic savings, a slump in exports and economic growth that is likely to be the worst in a decade. Both the Reserve Bank of India and the government have recently expressed concern over the ballooning deficits, particularly the current account gap which was the widest in absolute terms since 1949 in September.

Economists will closely watch December inflation data due to be released on Monday for further signs that the RBI could cut rates. Expectations for a rate cut when the RBI's policy committee meets on January 29 hardened last month after November wholesale price data showed inflation at a 10-month low. — Reuters