Inflation and exports data released on Monday raised hopes of a revival in investments and growth. Declining for the fifth straight month, the pace of wholesale inflation dropped to a six-year low of 0 per cent in November.
Exports growth turned positive again – at 7.27 per cent – in November raising the hope that the $340-billion target for the current fiscal will be met.
Though the trade deficit widened to an 18-month high of $16.86 billion, the surge was in part due to a 40-per cent jump in import of machinery and transport equipment over October, signalling a possible revival in investments.
The rupee closed at an over 10-month low of Rs. 62.94 to a dollar, which will make India’s exports relatively more competitive.
India grew at sub-5 per cent over the last two years. Growth recovered to 5.7 per cent during April-June, before slipping again to 5.3 per cent in the July-September quarter.
The inflation data reflects the falling cost of production in the economy, largely on the back of the sharp contraction in global prices of crude and commodities. It also reflects moderating food prices.
Deadlock on GST broken
In a last-minute compromise deal, the Centre on Monday night decided to keep petroleum out of Goods and Services Tax (GST) in return for States agreeing to entry tax being subsumed in the new tax regime proposed from April 2016, reports PTI.
On the issue of compensation to States for revenue loss because of subsuming of all indirect taxes in the GST, the Finance Ministry will seek legal opinion on how it can be accommodated in the Constitution Amendment Bill that it wants to bring in the ongoing Winter session of Parliament.
