India's Industrial Production Probably Accelerated in February - Bloomberg
India's industrial production growth probably accelerated in February, vindicating the central bank's unexpected interest rate increase a fortnight ago to damp consumer demand and curb inflation.
Production at factories, utilities and mines rose 11.2 percent from a year earlier, following January's 10.9 percent gain, according to the median forecast of 12 economists in a Bloomberg survey. The data is due tomorrow at noon in New Delhi.
Unprecedented demand for manufactured goods has kept inflation above the central bank's target for 16 straight weeks, prompting the Reserve Bank of India on March 30 to raise its key overnight lending rate and banks' reserve requirement. The central bank, which has increased its lending rate to a five- year high, may now refrain from raising borrowing costs in its scheduled April 24 monetary policy announcement, economists said.
``The Reserve Bank may prefer to wait and see the impact of recent monetary policy actions on consumer demand and inflation,'' said D. H. Pai Panandiker, president of the RPG Foundation, an economic policy group based in New Delhi. ``Interest rate increases in the past four months have been quite aggressive.''
Reserve Bank Governor Yaga Venugopal Reddy on March 30 raised the cash reserve ratio, or the amount of cash lenders must set aside against deposits, for the third time since December and increased the benchmark overnight lending rate for the sixth time in 15 months.
``The outlook for the medium term is a bit clouded given recent tightening measures,'' Citigroup Global Markets Inc. economists Rohini Malkani and Anushka Shah said in a report on April 4. ``However, given the continuation of key growth drivers, such as an investment cycle upturn and urban consumption, we expect economic growth to sustain around 9 percent in the current fiscal.'' India IIP Forecasts
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IIP Firm YoY
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Median 11.2%
Average 11.3%
High 13.9%
Low 9.0%
Number of Estimates 12
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Anand Rathi Securities 13.5%
Citigroup 11.3%
DBS Group 12.1%
HSBC 11.0%
ICICI Securities 9.1%
ICRA Limited 10.7%
IDBI Capital 12.6%
ING Vysya Bank 13.9%
Institute of Economic Growth 9.0%
JPMorgan Chase 10.6%
Lehman Brothers 10.7%
Thomson IFR 11.3%
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