Chinese premier warns slowing growth raises job concerns

BEIJING (Reuters) - China's slowing growth poses a major challenge to job creation for the world's most populous nation and the country will need to achieve a "golden" balance between structural adjustment and growth, Premier Li Keqiang was quoted as saying on Sunday.

China's economy is set to grow at its slackest pace in 23 years in 2013, at 7.5 percent, as its export sales falter on fragile global demand.

The country's leaders have pledged deep economic reforms to shift away from an export-led economy to one more reliant on domestic consumption, while making it clear they will accept lower growth rates during the transformation. But Li said such a path would present challenges.

"China has already entered a new stage of development. To maintain a growth rate as rapid as in the past is not realistic, but development is the foundation to solving many problems," state media quoted Li as telling a recent meeting with business leaders.

"As a big country with 1.3 billion people, there is no certain pace of development that can cope with so many difficulties and problems, especially preserving jobs."

The premier added that China would need to find a "golden balancing point" between upgrading the economy and maintaining a reasonable growth rate to ensure further job creation.

China's leaders gather from November 9 to November 12 at a Communist Party plenum to discuss deepening reforms of the world's second largest economy.

Li told Chinese and foreign business leaders last week that China would further reform its government finances, financial markets and industry, among other areas.

(Reporting By Dominique Patton; Editing by Ron Popeski)

View the original article here

Fed maintains strong stimulus as U.S. growth stumbles

By Pedro da Costa and Alister Bull

WASHINGTON (Reuters) - The Federal Reserve extended its support for a soft U.S. economy on Wednesday, sounding a bit less optimistic about growth as it announced plans to keep buying $85 billion in bonds per month.

In announcing the decision, the Fed nodded to weaker economic signals that have been due in part to a fiscal fight in Washington that shuttered much of the government for 16 days earlier this month.

The central bank noted that the recovery in the housing market had lost some steam and suggested some frustration at how slowly the labor market was healing.

However, it also dropped a phrase expressing concern about a run-up in borrowing costs, suggesting greater comfort with the current level of interest rates.

"Available data suggest that household spending and business fixed investment advanced, while the recovery in the housing sector slowed somewhat in recent months," the policy-setting Federal Open Market Committee said. "Fiscal policy is restraining economic growth."

The decision on bond buying was widely expected and the Fed's statement differed only slightly from the economic assessment it delivered after its last meeting in September.

U.S. stocks sold off slightly, while the dollar climbed against the euro and the yen. Prices of U.S. Treasuries turned negative, pushing yields higher.

"On balance, the Fed's statement was slightly less dovish than expected," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange. He cited the central bank's abandonment of a phrase that expressed concern about an earlier tightening in financial conditions, including higher mortgage rates, which other economists also saw as fractionally hawkish.

Still, the Fed tempered its description of the labor market to take into account a recent weakening in jobs figures, saying only that there had been "some" further improvement.

"Until the economic data strengthens, and strengthens meaningfully, I think expectations for tapering (the bond purchases) are going to remain subdued," said Krishna Memani, chief investment officer at Oppenheimer Funds in New York.

He said there were only "modest" chances the Fed would reduce its buying at its next meeting in December.

NO TAPER

The Fed shocked financial markets last month by opting not to scale back its bond buying, after allowing a perception to harden over the summer that it was ready to start easing off on the stimulus. Its caution has since been vindicated.

Consumer and business confidence has been dented by the bitter political fight that triggered the government shutdown and pushed the nation to the brink of a harmful debt default, and a slew of recent data has pointed to economic weakness.

Reports on Wednesday showed U.S. private-sector employers hired the fewest number of workers in six months in October, while inflation stayed under wraps last month.

Other data on hiring, factory output and home sales in September had already suggested the economy lost a step even before the government shut down. Readings on consumer confidence this month have shown the fiscal standoff rattled households.

But policymakers made no direct reference to the budget showdown, which Paul Ashworth, chief U.S. economist at Capital Economics, saw as a telling omission.

"If officials are trying to downplay the impact of the shutdown and are happier with the level of long-term interest rates, then perhaps a December taper isn't quite as out of the question as we had previously thought," he said. "We still think sometime early next year is the most likely outcome, but the balance of risks just shifted a little."

In response to the deepest recession and weakest recovery in generations, the central bank lowered overnight interest rates to near zero in 2008 and more than quadrupled its balance sheet to $3.8 trillion through its bond purchases.

The Fed repeated on Wednesday that it would keep rates near zero as long as the jobless rate remained above 6.5 percent and inflation did not threaten to rise above 2.5 percent.

Traders of rate futures kept bets in place that the central bank will wait to raise rates until at least April 2015.

The response to the Fed's aggressive easing of monetary policy has not been uncontroversial, with some Fed hawks and many Republicans arguing there is a risk of runaway inflation or financial market bubbles.

One of those hawks, Kansas City Federal Reserve Bank President Esther George, dissented from the central bank's latest decision - as she has at every meeting this year - favoring a modest reduction in the pace of bond purchases.

In contrast, Fed Chairman Ben Bernanke and his presumptive successor, Vice Chair Janet Yellen, have argued that the threat of persistently high unemployment is the most pressing issue right now.

Data on Wednesday showed inflation over the past 12 months at just 1.2 percent, well below the central bank's 2 percent target.

(Reporting by Pedro da Costa and Alister Bull; Editing by Krista Hughes, Tim Ahmann and Andrea Ricci)

View the original article here

Karnataka to promote media, entertainment industry growth

Bangalore, Oct 29 (IANS) Karnataka would promote the media and entertainment industry growth by encouraging skill development and formulating friendly policies, Chief Minister Siddaramaiah said at a trade conference here.

"We will nurture the media and entertainment industry by encouraging skill-building and initiating dialogue with its stakeholders to formulate progressive and growth-friendly policies," Siddaramaiah said at the first 'Entertainment Business' conclave, organised by the Federation of Indian Chambers of Commerce and Industry (Ficci) here.

Observing that developing innovative programming content, identifying niche areas and expanding markets through new content delivery platforms would be growth levers, he told about 500 participants that developing mobile applications and websites were the need of the hour.

"The future of the industry will rest on sustaining subscription revenues and creating a firm foundation from them, building on online content qualitatively and giving advertisers innovative ways to reach out to readers," Siddaramaiah said.

Asserting that the industry had opportunities to incubate ideas and explore various business models, he said southern luminaries had placed Indian cinema on the global radar.

As the third largest segment, the Rs.2,680-crore South Indian cinema accounts for half of the total films produced in the country annually, with a 11 percent market share in the entertainment pie.

Noting that in the digital era, boundaries for the industry were unlimited, Siddaramaiah said content could be enhanced, marketed and delivered to audience through multiple means.

"The industry can explore remaking old movies, which depicted good value systems and useful themes of eternal value to society," he noted.

The southern television industry is at a crucial stage against the backdrop of digitization. As a dominant segment in the market, it is projected to grow at Rs.13,470 crore, accounting for the largest share of the sector at 56 percent with a compound annual growth (CAGR) rate of 20 percent over the next four years.

According to a report by global professional services firm Deloitte, the size of the south India media and entertainment industry is at Rs.23,900 crore and projected to reach Rs.43,600 crore by 2017 at a CAGR of six percent annually.

Marked by a high literacy rate and a sizable vernacular readership base, the southern region is one of the strongholds of the Indian print industry with 28 percent share of the market, valued at Rs. 6,680 crore.

"Amongst the four southern states, Andhra Pradesh and Tamil Nadu account for 58 percent of the total revenue. English print dominates the southern markets, barring Kerala, where vernacular print in Malayalam accounts for about 90 percent of the revenue," the report said.

Leading English newspapers like The Times of India and The Hindu have launched vernacular daily editions to consolidate their presence.

Players in South India continue to be pioneers of technology usage in film-making, surpassing even mainstream Bollywood films.

View the original article here

Oerlikon subsidiary opens India office to spur growth

Bangalore, Oct 25 (IANS) World's leading vacuum solutions provider Oerlikon Leybold Friday opened an India office here to power its sales in the South Asian region for higher market share.

"We continue to invest in emerging markets like India to serve industrial needs better in South Asia and the India office will be the sales and service hub for the region," Oerlikon chief executive Martin Fuellenbach told reporters here on the occasion.

Though the Cologne-based Swiss firm has been present in India since 2005 through agents and later by setting up a subsidiary, it augmented its services for vacuum gauge calibration to provide complete set-up of complex systems.

"As our key customers like the space department are located here (Bangalore), our presence will enable us to better serve their needs as we offer complete solutions," said Oerlikon India general manager M. Sreenivasulu.

Coming under the space department, the state-run Indian Space Research Organisation (ISRO) makes and launches rockets and satellites to meet the country's various communications and remote sensing applications.

The Oerlikon India subsidiary has an in-house vacuum gauge calibration facility and a helium leak testing service, with skills and capacity to service all its products except turbo pumps.

"Going forward, the India region will be key to our growth plans because of skilled manpower at a competitive cost," Fuellenbach said.

The company has flown in its application experts from Germany to train local engineers to service its customers in the countries across the region.

As a leading industrial group specialising in machine and plant engineering, Oerlikon provides cutting-edge technologies for chemical fiber machining, drive, vacuum, coating and advanced nano-technology in 34 countries the world over.

The company's advanced vacuum solutions are used in manufacturing and analytical process besides research activities.

View the original article here

Tepid U.S. job growth supports Fed's cautionary stance

By Lucia Mutikani

WASHINGTON (Reuters) - U.S. employers added far fewer workers than expected in September, suggesting a loss of momentum in the economy that would likely add to the Federal Reserve's caution in deciding when to trim its monthly bond purchases.

Nonfarm payrolls increased 148,000 last month, the Labor Department said on Tuesday. While the job count for August was revised to show more positions created than previously reported, employment gains in July were the weakest since June 2012.

Economists polled by Reuters had expected the economy to add 180,000 jobs in September.

"This report on the labor market will soften people's assessments of current conditions," said Cary Leahey, a senior economist at Decision Economics in New York.

But there was some silver lining in the report, with the unemployment rate dropping a tenth of a percentage point to 7.2 percent, the lowest level since November 2008.

The jobless rate is derived from a separate survey of households, which showed an increase in employment last month.

U.S. Treasury debt prices rose on the report, while the dollar fell against the euro and the yen.

The closely watched monthly employment report was released more than two weeks later than originally scheduled because of the partial shutdown of the federal government earlier this month.

Signs the economy lost steam even before the acrimonious budget fight could convince the Fed to hold off any decision on scaling back its bond buying until the extent of the economic damage from the fiscal standoff is clear.

Economists estimate the 16-day government shutdown shaved as much as 0.6 percentage point off annualized fourth-quarter gross domestic product, through reduced government output and damage to both consumer and business confidence.

Fed officials will meet next week to discuss monetary policy, on October 29-30. They surprised markets last month by sticking to their $85 billion per month bond-buying pace, saying they wanted to see more evidence of a strong recovery.

Now, many economists think the Fed will hold off on scaling back economic stimulus until next year.

"With the possibility of a replay of the budget showdown as early as mid-January, why would the Fed want to pull any levers now? It's hard to expect any tapering of the Fed's bond purchases until the budget mess straightens itself out," Leahey said.

There are fears lawmakers will engage in another bruising round early next year when Congress must agree on a budget to fund the government and once again raise the nation's borrowing limit.

Employment gains in September were mixed last month, with government payrolls increasing 22,000 jobs after rising 32,000 in August. Both state and local governments added jobs last month, offseting the decline in federal employment.

There was surprise weakness in the leisure and hospitality industry, which has been adding jobs consistently over the past years. The industry shed 13,000 jobs, the most jobs since December 2009.

The information sector failed to recoup all the jobs lost in August as the motion picture industry shed workers, with payrolls only rising 4,000 last month.

But there was good news in the construction industry, where payrolls increased 20,000, which could ease fears of a leveling off in home building. Construction employment had barely increased over the prior two months.

The manufacturing sector added a meager 2,000 jobs as automobile assemblies shed some jobs. Retail employment increased 20,800, slowing somewhat from the solid gains seen for much of this year.

Average hourly earnings increased three cents in September. They have risen 49 cents or 2.1 percent over the past 12 months. The length of the average workweek held steady at 34.5 hours.

(Reporting by Lucia Mutikani; Additional reporting by Ellen Freilich in New York; Editing by Andrea Ricci)

View the original article here

Chidambaram expects credit growth in public sector banks to be 'satisfactory' for rest of the year

New Delhi, Oct. 22 (ANI): Finance Minister P. Chidambaram on Tuesday said that the credit growth in public sector banks has been 'satisfactory', and added that he expected it to remain so, for the rest of the fiscal year.

"Credit growth has been satisfactory in the first quarter of this year - June 2013 over June 2012. Overall, credit growth has been 12.08 percent for the public sector banks. Anything that I say is only concerning the public sector banks. So, we think, that credit growth will be satisfactory for the remaining part of the year too," Chidambaram said.

Chidambaram also termed the rise in bad loans at banks as 'unacceptable', and said that he expected their Non-Performing Assets (NPAs) to come down when the pace of economic growth picks up.

"I have expressed my concern about the NPAs. NPAs is a function of the slowdown in the economy. NPAs have indeed increased, but, I want to point out that the tremendous improvement has taken place in the banking sector in the last 12 or 13 years," Chidambaram said while lauding the improvement in the banking sector in recent years.

A slowing economy has adversely affected the demand for credit and led to a rise in bad loans in banks of the country. Rising bad loans have made banks wary about lending, thus impeding the supply of domestic credit.

Net NPAs to net advances ratio of state-run lenders slipped to 1.8 percent at end-March 2013 from 1.5 percent a year earlier. (ANI)

View the original article here

HDFC Bank quarterly profit growth slowest in a decade

MUMBAI (Reuters) - India's third-biggest lender by assets HDFC Bank posted its slowest quarterly profit growth in a decade due to a drop in net interest margins and losses in its investment portfolio, sending the bank's shares down as much as 3 percent.

HDFC Bank's conservative lending has helped it outperform local peers struggling with rising bad loans such as State Bank of India (SBI) and ICICI Bank . Until the quarter ended September, HDFC had reported quarterly profit growth exceeding 30 percent for the last decade.

Net profit rose 27 percent from a year earlier to 19.8 billion rupees in the quarter ended September 30, HDFC Bank said on Tuesday. That was in line with analysts' expectations, according to Thomson Reuters I/B/E/S.

While net interest income gained nearly 15 percent to 44.8 billion rupees, the bank's loan book grew at a slower pace than expected by some analysts as the economy expanded the least in a decade. HDFC Bank's net interest margin, which measures loan profitability, also shrank.

Analysts expect the coming quarters to remain subdued for Indian lenders, including HDFC Bank, which has a forward 12-month price to earnings ratio of 16.6 times, the highest among the country's big banks.

"There are two major worries - loan book growth has been in line with the system, although they had guided for faster growth," said Manish Ostwal, banking analyst at Mumbai-based brokerage KR Choksey.

"Secondly, margins have declined on a sequential basis. That shows that newer business is being done at lower margins and its ability to pass on costs is not so strong."

The bank's loan book grew 16 percent from a year earlier, while net interest margin narrowed to 4.3 percent from 4.6 percent in the previous quarter and 4.4 percent a year earlier.

HDFC Bank cut lending rates to attract borrowers ahead of the festive season in October-November but kept deposit rates high to retain savings in a tight liquidity environment.

Asset quality at India's third-biggest lender behind SBI and ICICI also worsened. Gross nonperforming loans as a percentage of total assets rose to 1.1 percent from 0.9 percent a year earlier, HDFC Bank said.

The bank also posted a 1.03 billion rupee loss in its treasury income, or the return on investments in bonds and other financial instruments. That compares with a gain of 485 million rupees a year earlier.

HDFC Bank booked mark-to-market losses on its bond portfolio in the second quarter as market yields rose 133 basis points. Emergency measures by India's central bank in mid-July to support the rupee led to a spike in bond yields.

(Reporting by Swati Pandey; Additional reporting by Reshma Apte in BANGALORE; Editing by Ryan Woo)

View the original article here

China's Q3 GDP growth fastest this year, but outlook dim

By Aileen Wang and Kevin Yao

BEIJING (Reuters) - China's economy grew at its quickest pace this year between July and September in a rebound fuelled largely by investment, although signs are already emerging that the pick up in activity may lose some vigour.

Gross domestic product in the world's second-biggest economy rose 7.8 percent from a year earlier, official data showed, marking only the second quarter in the last 10 in which growth has accelerated.

An unexpected fall in exports in September, and easing growth in factory output and retail sales suggested the economy was already slowing down at the end of the quarter.

Authorities are also expected to cool credit growth as inflation pushes to a seven-month high, another factor analysts say will drag on economic activity.

"The growth peak was behind us in the third quarter," said Ting Lu, an economist at Bank of America-Merrill Lynch. "We believe the People's Bank of China will slightly shift its monetary policy from a moderate expansion in the third quarter to a neutral stance."

After three decades of double-digit growth heavily reliant on exports and investment, China is trying to shift or "restructure" the economic mix so that activity is geared much more to consumption, as it is in more developed countries.

But the latest figures show investment accounted for over half of the expansion so far this year, underlining the challenge Beijing faces to restructure the economy, which it hopes will provide for more sustainable growth in the future.

Reducing reliance on China's traditional growth drivers is expected to crimp the economy, although sluggish global demand has provided an added drag.

In the first nine months of the year, the $8.5 trillion economy grew 7.7 percent from a year earlier, putting it on track to achieve Beijing's 2013 growth target of 7.5 percent, which would still be China's worst performance in 23 years.

The surprise fall in exports came after emerging market demand wilted as choppy financial markets sapped confidence, a trend the government said this week is likely to continue.

The impasse in the U.S. Congress over the government's debt ceiling could be replayed before a new February 7 deadline, shaking confidence once more.

And with the yuan hitting a record high on Friday for the fifth consecutive day, Chinese exporters face the hurdle of a rising currency eroding their competitiveness.

"The economy is facing a complex and uncertain domestic and international environment," Sheng Laiyun, a spokesman for the National Bureau of Statistics told a briefing.

"In addition, we have accumulated chronic structural imbalance problems in our economy and need to deepen reforms."

REBALANCING?

The data shows China is a long way from having consumption as the main driver of its economic growth.

Consumption accounted for 46 percent of growth in the first nine months, compared with 56 percent taken up by investment. Exports, on the other hand, subtracted 1.7 percent from growth.

The government has sped up projects in infrastructure to support growth, although it has stayed away from more aggressive measures to avoid undermining its efforts to steer the economy in another direction.

Overall investment in infrastructure expanded at a red-hot pace of 29 percent between January and September, the second-fastest area of investment growth after agriculture.

Nie Wen, an analyst at Hwabao Trust in Shanghai, estimated government-backed investment could have accounted for around 25 percent of the total in the first three quarters of the year, Usually, it is 15-20 percent, Nie said.

Investment in the property sector, where prices are at record highs despite measures to calm the market, were also especially buoyant, with the housing industry accounting for 16 percent of the economic activity in the first nine months. That is up from 15 percent in the first six months.

Overall investment rose in the first nine months by 20.2 percent from a year earlier, compared with expectations for a 20.3 percent gain.

CONTROL LOAN GROWTH

The figures suggesting the economy lost steam towards the end of the third quarter mirror a fall in power consumption growth, one of the barometers of economic health favoured by China's Premier Li Keqiang.

Factory output in September climbed 10.2 percent from a year earlier, slightly above expectations of 10.1 percent but weaker than August's annual pace of 10.4 percent.

Retail sales rose 13.3 percent from a year ago, slightly missing forecasts for a 13.5 percent rise and down from August's 13.4 percent gain, despite a seasonal spike in car purchases.

To underpin the economy, most analysts believe China will keep interest rates unchanged in the next year-and-a-half.

But with inflation hitting a seven-month high in September of 3.1 percent at a time when the central bank has voiced concerns about a brisk expansion in credit, points to some policy tweaks.

Chinese banks lent more than expected in September, data showed last week, taking total loans issued for the year to 7.3 trillion yuan, a level that could easily breach last year's 8.2 trillion yuan.

Lu from Bank of America-Merrill Lynch said the government could take steps to crimp rapid credit expansion and avoid expanding its "mini stimulus", which has so far included accelerating infrastructure investment.

"This could be as good as it gets," said Mark Williams from Capital Economics in London. "We continue to expect gross domestic product growth to slow next year to around 7 percent."

(Additional reporting by Shao Xiaoyi and Natelie Thomas; Writing by Koh Gui Qing; Editing by Neil Fullick)

View the original article here

Industrial output growth slumps to 0.6 percent

New Delhi, Oct 11 (IANS) India's industrial output growth slumped to 0.6 percent in August from 2.75 percent recorded in the previous month, due to contraction in manufacturing and mining sectors, government data showed Friday.

According to data released by the Central Statistics Office (CSO), manufacturing output, that constitutes nearly 76 percent of the industrial production, contracted by 0.1 percent in August year-on-year and mining production declined by 0.2 percent.

However, electricity output jumped by 7.2 percent.

The cumulative growth of the factory output, measured in terms of Index of Industrial Production (IIP) for the period April-August stood at 0.1 percent.

For the first five months of the current financial year, manufacturing output dropped by 0.1 percent, while mining production slumped by 3.4 percent.

Electricity sector has posted 4.5 percent growth in April-August period.

As per use-based classification, basic goods sector recorded 1.5 percent growth in August year-on-year and intermediate goods output increased by 3.6 percent. However, capital goods production dropped by 2 percent.

Consumer goods output dropped by 0.8 percent.

Output of consumer durables products slumped by 7.6 percent, while consumer non-durables recorded growth of 5 percent. The overall consumer goods sector posted a decline of 0.8 in output.

Economist at Angel Broking Bhupali Gursale said the industrial output data was a "huge disappointment" since markets were largely factoring in better numbers owing to the core output data and export growth.

"Healthy electricity production has supported the index excluding which the performance on a year-on-year basis would be flat," Gursale said.

D.S. Rawat, secretary general of Assocham, said: "The negative growth in critical industrial segments, especially in the festive season calls for a serious thinking by policy makers."

"The cheaper loans being announced for financing consumer goods may help revive consumer durables demand in the festive season to some extent. However, other sectors too need such boosts," Rawat said.

View the original article here

Low growth, high inflation likely to persist in India

By Rajesh Kumar Singh

NEW DELHI (Reuters) - Economic data on Monday will likely offer further evidence of high inflation and weak growth, complicating the RBI's mission of cooling prices without worsening the slowdown and adding to the government's difficulties as it heads into an election season.

Asia's third-largest economy has been caught in a situation which some analysts define as akin to stagflation for the past three quarters -- with economic growth stuck below 5 percent and prices rising at a fast clip.

Inflation numbers due later on Monday will likely show the same trend.

According to a Reuters poll, wholesale prices probably rose 6 percent in September, slightly below a six-month high of 6.1 percent in August. Consumer inflation, also due on Monday, is expected to have quickened to 9.60 percent last month from 9.52 percent in August, the poll showed.

The government will release the data on wholesale prices around 12:00 p.m. Consumer price data is due at 5:30 p.m.

The inflation data comes on the heels of Friday's disappointing industrial output numbers. Output grew a much-slower-than expected 0.6 percent in August, compared with an upwardly revised 2.75 percent expansion in July, hurt by weak investment and consumer demand.

The government is hopeful the economy will start to recover by the end of the year on higher farm output and exports. But the latest industrial production data has dampened that hope.

Output grew just 0.1 percent between April and August, the first five months of the fiscal year 2013/14.

That will be a worry for Prime Minister Manmohan Singh's Congress party as it campaigns for five state elections starting in November, a warm up for national elections due by next May. The opposition Bharatiya Janata Party has gained momentum in recent months thanks in part to the weak economic performance of Singh, a veteran economist and reformer.

"India is likely to face low growth and high inflation for some time," said Daniel Martin, Asia Economist at Capital Economics in Singapore, who expects the Reserve Bank of India (RBI) to increase its repo rate by another 25 basis points later this month.

"A higher repo rate will hold up the economic recovery. It is a difficult situation for the central bank."

Economic growth has averaged 4.6 percent between the fourth quarter of 2012 and the second quarter of 2013. Headline inflation, measured by wholesale prices, averaged around 7 percent in the same period -- way above the central bank's perceived comfort level of 5 percent.

INFLATIONARY WORRIES

Worries over high inflation led new RBI chief Raghuram Rajan to surprise markets in his policy review last month with an interest rate hike. Economists are now split over whether Rajan will hike rates again at the next review on October 29.

If inflation data does come in line with expectations, the odds for another hike at the October review will only increase.

Even though India is stumbling through its worst economic crisis since 1991, Rajan has clearly signaled he would focus on price stability, which he sees as a necessary condition for lifting economic growth from a decade low.

Inflation is expected to come down in coming months as a slowing economy is likely to keep demand-driven price pressures in check and as this summer's strong monsoon rains may eventually cool food prices.

Yet, price risks persist. Adjustments in domestic prices of subsidised fuel and other imported items following a sharp depreciation of the rupee are still incomplete.

Although the rupee gained 5 percent last month, it is still down around 10 percent this year against the dollar, meaning higher import costs for items such as oil, fertilizer, pulses and edible oil in rupee terms.

The rupee hit record lows in late August, pressured by the country's gaping current account deficit and a general exodus of global investors from emerging market assets.

RECOVERY IN SIGHT?

In its bid to revive the economy ahead of polls, Singh's government has decided to inject capital into banks so they can offer cheaper loans for purchases of items such as bikes, fridges, washing machines and televisions.

The move is aimed at boosting production in the consumer durables sector, which has failed to register growth since last November.

A pick-up in merchandise exports, aided by a recovery in global economy along with the rupee depreciation, has bolstered the government's hopes for an economic rebound in the quarter to end-December.

Singh is also counting on the prospect of strong farm output for an economic boost. The sector is expected to post annual growth of about 5 percent this fiscal year, which should lift rural incomes and increase demand for goods and services.

"Strong exports and a rebounding farm sector will only help at the margins," said Martin of Capital Economics. "India's recovery largely depends on a revival in investments."

(Reporting by Rajesh Kumar Singh; Editing by Sanjeev Miglani & Kim Coghill)

View the original article here