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DELHI: India s ailing economy showed little sign of improvement on Monday, trapped in a spell of weak growth and high inflation when the country is on the cusp of political change that is widely expected to script an economic revival.Output from mines, utilities and factories fell for a second straight month in March, shrinking 0.5 per cent from a year earlier compared with analysts median forecast of an annual contraction of 1.5 per cent, government data showed on Monday. Output had fallen a revised 1.8 per cent in February.In other data, consumer inflation accelerated to a three-month high of 8.59 per cent in April from 8.31 per cent in March.Asia s third-largest economy is battling the worst slowdown since the 1980s as GDP growth has almost halved to under 5 per cent in the past two years. The slowdown, however, has not cooled inflation that has been averaging nearly 10 per cent for the past two years, way above the central bank s comfort zone.on Monday s data will likely put Reserve Bank of India (RBI) chief Raghuram Rajan into a quandary ahead of a policy meeting on June 3. Higher inflation readings make it tougher for him to support a flagging economy. There is no scope for the RBI to reduce interest rates given the sustained increase in consumer price inflation despite a favourable statistical base, said Rupa Rege Nitsure, chief economist at Bank of Baroda. We are looking at an extended pause in interest rates. Coinciding with the final day of India s five-week national election, the data underscored the enormity of challenges awaiting a new government that takes over after the counting of votes on May 16. If the (new) government fails to impress quickly, investor optimism could soon turn to disillusion, cautioned Miguel Chanco, India Economist at Capital Economics.Capital investment growth probably hit an 11-year low last fiscal year as firms shelved more than $100 billion in projects, the highest in the past 18 years, data from think tank CMIE showed, due to policy uncertainty and pending regulatory clearances.Capital goods production, a barometer of investment in the economy, has contracted in nine of the past 12 months. In March, it fell 12.5 per cent from a year earlier.Persistently high inflation and elevated interest rates in an economy hit by slowdown have crimped consumer demand. Consumer goods output, a proxy for consumer demand, has grown just once in the past 11 months. It fell an annual 0.9 per cent in March.While many analysts are hoping for a rapid implementation of pending labour, fiscal and tax reforms for a faster economic recovery, some say high corporate leverage and rising bad loans at Indian banks will hamper a pick-up in investment activity.Stressed loans in India - those categorised as bad and restructured - total $100 billion, or about 10 per cent of all loans. Reuters discount oakleys NBA PLAYOFFS d ray ban sunglasses
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