Fiscal Study

Global luxury products and top fashion labels are looking to tap the growing Indian market. Indeed, India is a market of contrasts. Car makers are looking to produce the world's cheapest car, valued at US$2,500, to cater to the Indian mass market, where many travel in bullock carts. They are also looking to sell luxury four-wheelers priced over $1 million, Asia Times reports:

The size of the luxury market in India is estimated to be about $4 billion, and is expected to rise to $30 billion by 2015, which would include luxury assets such as private jets and luxury homes, cars or yachts and art.
The luxury-car segment, broadly defined as vehicles worth more than Rs2.5 million ($63,000), should clock sales of more than 4,000 units this year, a 30% rise over the previous year.

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India's inflation held below the central bank's target for the 10th straight week, adding to optimism borrowing costs won't be raised further anytime soon, Bloomberg reports:

The wholesale price index was 4.10 percent in the week to Aug. 11, compared with 4.05 percent the previous week, the Ministry of Commerce & Industry said today in New Delhi. Analysts had estimated inflation at 4.05 percent.
The Reserve Bank of India, which wants to keep inflation below 5 percent this year, kept borrowing costs unchanged last month after raising them by 2.25 percentage points since October 2004. Interest rates at a five-year high have led to slowing bank loan growth and reduced demand for manufactured products.

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India’s industrial production growth probably slowed in April as the highest interest rates in five years began to damp consumer demand, according to the median forecast of 14 economists in a Bloomberg News survey, The Financial Express reports:

The Central Statistical Organisation will release the production numbers at noon in New Delhi on Tuesday. “The slowdown in April may be the start of the impact of monetary tightening, which was huge,” said Prasanna Ananthasubramaniam, a fixed-income analyst at ICICI Securities Ltd. in Mumbai.

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JUDGING by the latest burst of economic euphoria in India you would think that the monsoon had arrived early this year, bringing relief from the country's scorching heat, The Economist reports:

Indian businessmen and politicians are cheering the latest economic numbers, which appear to show that inflation is falling even as growth remains strong. This, they claim, shows that the risk of the economy overheating has faded. Their glee is premature: India's economy, like Delhi this week, remains far too hot.

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Inflation fell to 4.85% for the week ended May 26—dropping below the 5% mark for the first time in the last eight months—from 5.06% the previous week, aided by a fall in the price of food and manufactured commodities, and a high base last year, The Financial Express reports:

Inflation stood at 4.99% in the same period last year. Some analyst said a decline in inflation was very much on the cards. “The base effect, which reduced inflation, is known and understood. There is no surprise in that,” said one analyst.

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As India's economic ministers patted one another's backs last week, taking credit for the country's gross domestic product (GDP) recording its second consecutive year of more than 9% growth, attention turned to the problem of the parallel "black" economy - the one that remains off the books and beyond the reach of the taxmen, Asia Times reports:

The black economy, which "quintessentially was the phenomenon of the 1970s, is back and booming", said Business World, a leading business magazine, adding that it is distorting the legal economy, pushing up stock and property prices, causing inflation and even making the rupee unusually strong against the US dollar, all of which is taking its toll on the country's industries and taxpayers.

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