CAR PROJECTS SLOW DOWN

The economic slowdown has affected the car sales drastically in the last month which is now in turn affecting the new car projects in the country. The new plant which was to be set up in the out skirts of Chennai in Oragadam by Nissan and Renault is being delayed now due to the present state of the nation’s economy. The car major had plans of investing Rs. 4, 500 crore for setting up the plant but now they are holding back a bit. Nissan had also planned for the manufacturing of commercial vehicles in collaboration with Ashok Leyland which is also on the slow mode. Renault Nissan has announced that this is a temporary realignment which is mainly due to the recent economic downturn. They had plans for investing about Rs. 4, 500 crore till the year 2015 for the Chennai plant which is expected to have a capacity of about four lakh which was to be shared by the two car majors Renault and Nissan equally. The project will speed up as soon as the demand grows. The cars are expected to be out by the year 2010. Nissan’s deal with the Ashok Leyland for the commercial car project is also delayed by six months by which the economic condition is expected to be on the upbeat. There are also rumors that the delay is not due to the slowdown but only due to the problems in land.

EXPORTERS STILL DISAPPOINTED

Though the excise duty has been cut and in addition to that a huge sum of Rs. 1,100 crore has been allocated by the government in an act to lend a helping hand to the exporters, they are still unhappy. The Export Credit Guarantee Corporation were not interested in the policy known as the single buyer policy, but the scheme newly introduced by the government has forced them to go back to the single buyer policy in order to enjoy the benefits given by the government. Exporters are disappointed due to the fact that no announcement has been made regarding the duty drawback scheme and the duty entitlement passbook. They had expected a full package including the rise of duty drawback rates and the extension of the export credit to 270 days from the present 180 days. As the mini budget did not meet their expectations as there were no plans of change in the duty drawback rates in it. In addition there also were no announcements regarding the extension in the credit period from the present 180 days to 270 days. This has greatly disappointed the exporters. One fact to be noted here is that this disappointment prevails even after the allocation of Rs. 1, 100 crore by the government for the rescue of exporters. The exporters are expecting further steps from the government’s side.

INFLATION RATE COMES DOWN TO 8.4%

Now the Reserve Bank of India can breathe a bit more freely as ever squeezing inflation rate has come down to a seven month low of 8.4%. This fall in the inflation rate would help the Reserve Bank to go for deep rate cuts which would in turn contribute in propelling the economy. The raising inflation rate had played a vital role in continuing economic down turn. This dip in the inflation rate has also reflected in the share markets as they showed a strong rally following the dip. This rate mainly depends on the whole sale prices and hence has declined but the inflation rate for the food articles has not declined. Instead the inflation rate of food commodities has increased to 10.43% from its last week’s rate of 9.93%. The cost of food products like sea fish, fruits, vegetables etc. has risen when compared to the last week. If we come to the fuel sector, the oil barrels which cost about $145 few months back has steeply fallen to a bottom value of about $45 a barrel now which has brought some smiles in the aviation industry. This would surely help positively the nation’s economy and also the Reserve Bank to cut down the rates.
The stock market also responded well to the dip in the inflation rate by climbing up by almost 480 points crossing the 9,000 mark further reaching 9, 200 points at the end. Over the years we have seen a correlation between the wholesale prices and the prices of the food commodities. This correlation has made it sure that the inflation rate of food products will also come down in the months to follow. The price of steel, chemicals and textiles also declined among the manufactured items this November which must finally end up in the rate cuts from the side of RBI.