RBI: oil prices a concern, sectoral growth is slower

Written by Banking Bureau | Mumbai, Jan 28 | Updated: Jan 29 2008, 05:26am hrs
Global oil prices remain a concern for Reserve Bank of India (RBI), although headline inflation, based on the wholesale price index (WPI), was only 3.8% on January 12, 2008.

The easing of inflation from a year ago was mainly led by primary food articles and some manufactured products, RBI said in its Macroeconomics & Monetary Developments: Third Quarter Review of 2007-08, released Monday, a day before its third-quarter review of annual monetary policy.

The economy continued to exhibit robust growth in Q3 2007-08, albeit with some moderation. All sectors showed lower growth rates than a year ago, the report said. Agriculture and allied activities recorded higher growth in the first half of 2007-08, but growth in the industrial and services sectors was lower.

The central bank said merchandise exports grew 22% in April-November 2007, slower than the 26.2% growth in the same period a year ago, while growth in imports at 26.9% was marginally lower from 2006s 27.4%. Non-oil imports rose substantially, while oil imports showed a sharp deceleration. Overall, the merchandise trade deficit widened to $52.8 billion in April-November 2007 from $38.5 billion in 2006.

In the same period, infrastructure sector growth was also lower at 6%, compared with 8.9% a year ago. The index of industrial production rose by 9.2% but was still lower than the previous years 10.9%, as was also the case with manufacturing, which registered a growth of 9.8% during the eight-month period under review, compared with 11.8% in April-August 2006.

The services sector recorded double-digit growth at 10.5% in April-September 2007.