New Delhi, August 14
Headline inflation declined surprisingly to 6.87 per cent in July raising hopes of a rate cut, although some analysts pointed out that it was because regulated fuel prices had not been raised for a year.

The Wholesale Price Index based inflation last month was at 7.3% and 9.3% in the same period last year. The markets were enthused by the figures as the feeling is the low inflation numbers will spur the RBI to cut interest rates.

Crisil Research said the decline in inflation is mainly due to nonrevision of diesel, LPG and kerosene prices for a year rather than decline in prices within the fuel category. The impact of last year’s revision in these prices on inflation – measured as a year-on-year change in prices —has dropped off this July, it said.

Crisil noted as and when administered fuel prices are revised upwards during this year, fuel inflation would once again pick-up. There remains significant suppressed inflation in the economy at present. Crisil pointed out that if diesel, LPG and kerosene prices are fully aligned to the global prices in a single revision, WPI Inflation will shoot up by 3.4 percentage points over and above the current level.

In addition to suppressed fuel inflation, the upside risk to WPI inflation arises from the adverse impact of deficient rainfall. As a result of higher-than-expected food inflation, Crisil Research has revised the WPI inflation forecast for FY13 up to 8% from 7%.

Industry body CII said in a statement that inflation has been showing signs of tapering off during the last few months and has been brought about by a fall in fuel and manufacturing prices. However, what is causing concern is the steep rise in food prices which are way above the comfort zone .Going forward, weak monsoon could lead to a further spike in food prices.

Given the decline in inflation, industry has once again raised the pitch for an interest rate cut. CII said it hoped the declining trajectory of inflation would encourage the RBI to cut rates.

New Delhi/Beijing, Aug 14
Karl Slym, the executive vice president of one of General Motors' joint ventures in China, left the company after less than a year in the job on Tuesday to join Tata Motors as managing director.

Slym joins Tata Motors at a time when the Indian company has warned about sales at home and amid renewed doubts about the sales outlook for its key Jaguar Land Rover subsidiary.

Slym headed the India operations for General Motors from 2007 until last year and took over as executive vice president at SAIC GM Wuling Automobile Co, GM's joint venture in China that produces no-frills micro-vans, in January.

SAIC GM Wuling is based in Liuzhou in the southern China region of Guangxi. The company sold 686,720 Wuling cars during the first half of this year, up 13.6% from the year-ago period. GM had no issues with Slym's management of the China joint venture, people familiar with the matter said.

Slym, who will take up his new role on October 1, will now lead all Tata Motors operations in India and overseas, although the company's popular luxury unit Jaguar Land Rover will be managed independently, Tata Motors said in a statement on Tuesday.

Slym will succeed P.M. Telang, who retired in June, Tata Motors said. A General Motors statement said it will name a replacement for Slym "at a later date."Tata Motors, India's biggest truck and bus maker, posted a 3.6% fall in vehicle sales for April-June. The India business profit nearly halved to Rs 2.1 billion. — Reuters

Brussels/Berlin, August 14
The eurozone's debt-ravaged economy shrank in the second quarter, having flatlined in the first, despite continued German growth which economists said could soon be snuffed out.

The 17-nation currency bloc contracted by 0.2 per cent on the quarter, data showed on Tuesday. Germany eked out growth of 0.3 per cent, marginally beating forecasts, but its forward-looking ZEW sentiment index slid for a fourth month running, undercutting even the lowest estimate in a Reuters poll.

Economists said worse is likely to come and even Europe's largest economy is unlikely to defy gravity for long unless decisive action is taken to tackle the bloc's debt crisis.

"Growth turned out to be pretty solid. But this could be the last positive piece of news out of Germany for some time," said Joerg Kraemer at Commerzbank. "The German economy could contract in the summer. It is fundamentally in good structural shape, but can't decouple from the recession in the euro zone, plus the global economy has also shifted down a gear."

Aside from a downward blip in the last three months of 2011, the eurozone has posted pretty consistent, albeit anaemic, growth over the past three years although some of its debt-laden members have been in recession for some time. — Reuters

New Delhi, August 14
India’s exports which had been declining for the last two months, slumped by almost 14.8% in July to US $22.4 billion, the biggest fall in three years. Given the slowdown in the economy, imports too declined 7.61% to $37.9 billion in July, leaving a trade deficit of $15.5 billion.

Commerce Secretary S.R. Rao said the impact of the slowdown in Europe and the United States is contracting world trade. Rao said due to the demand slowdown in the two biggest markets — the US and Europe "it’s a stiff challenge" to achieve the export target of $350 billion set for the current fiscal.

Asked whether the government is planning to provide more incentives to exporters, he said there is need to take more steps to reduce transactions cost of exporters to increase competitiveness of Indian goods in the global markets.

Federation of Indian Export Organizations (FIEO) president M. Rafeeque Ahmed said the dip in export growth is primarily on account of sluggish global conditions and slowdown in domestic manufacturing.