Situation
On a monthly basis - production ( IIP) contracted to a negative -4.8% growth in Feb’07 ( as compared to a 1.3% growth in Jan’07).
On an annual basis - Feb’07 grew at 11% p.a ( down from 11.4% p.a). Production has had a continuous drop since Nov’06 ( 15.8% p.a)
On a 3 month average basis ( to take out any “adjustments/ re-arrangement” ) - the annual growth was at 11.7% p.a. (13.2% p.a in Jan’07) The average was growing since Oct’06 ( 8.9% p.a) and peaked in Jan’07.
Background
The Serengeti hosts the largest and longest overland migration in the world, a biannual occurrence. Around October, nearly 2 million herbivores travel from the northern hills toward the southern plains, crossing the Mara River, in pursuit of the rains( 500 miles) . In April, they then return to the north through the west, once again crossing the Mara river.
These herbivores face immense dangers crossing the Mara river ( crocodiles) , and in the Masai Mara plains.(Lions and Hyenas)
This event is far more organized and efficient than the manner in which the Indian Government (GOI) / Reserve Bank of India (RBI) has recently gone about in managing India’s monetary policy / economic policy.
The GOI / RBI has gone on a rampage in the past two months. ( dont know where to begin and have no clue how it will end)
This is the flashback for the past 2 months :
RBI sequence of events and our comments
GOI measures and our comments
The real Question
RBI - Is it sovereign anymore?
What is clear is that with the current interest rates /polices - dont expect Production to be in great shape for 2007.
Conclusion
(click on image for a clearer visual)
1) 3 month rolling average looks like dropping towards 9 % p.a towards Jun’07.
It is now likely that annual IIP calculated on a monthly basis may drop towards Jun’07. This expectancy contradicts last report - please see the note ( in “block quotes”)for the reason.
2) IIP could then range between 10% - 12% p.a towards end ‘07
Note : ( another fascinating habit of the GOI )
The Government of India has restated IIP for :
- Nov’07 from 15.4% p.a to 15.8% p.a
- Dec’07 from 11.1% p.a to 12.5% p.a
- Jan’07 from 10.9% p.a to 11.4% p.a
This results in the 3 month average touching the 13.2% in Jan’07 ( originally data reflected as 12.2% p.a)
The previous report had indicated that the 3 month average would peak out at 13% and then drop.
Further the report went on to explain that , since the average still had space to rise, ( from the 12.2% towards 13%), the monthly growth would continue to rise.
However having seen the restatement - we now have to assume that the 3 month average peaked out at 13% ( as expected) in Jan’07. Therefore the monthly growth from here on now looks like its on a decline.
While the Indian Govt data clearly stated in the Jan’07 report that the the Jan’07 figures are ”estimates ” - its creative accounting for the Nov’07 - Dec’07 data needs to be noted.
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