Indian growth unexpectedly strong

India's economy grew 5.8% in the first three months of the year compared with the same period last year, which was better than had been expected.

The official gross domestic product figure was down from 8.6% annual growth seen in the first quarter of 2008.

Although growth has slowed from last year, the economy is still expanding faster than most other countries.

It grew 6.7% in the full financial year, which was down from a rate of 9% in the year to the end of March 2008.

'Growth bottomed out'

"The GDP growth number justifies the claim that India is dealing with the global crisis from a position of strength," said Rupa Rege Nitsure, chief economist at Bank of Baroda in Mumbai.

"This means that growth has bottomed out, or at least the deceleration has stopped."

The figures are good news for the newly-elected Congress-led government, which has made reviving growth its top priority.

Among the sectors showing an improvement was farm output, which grew at an annualised rate of 2.7% in the first three months of 2009 having contracted 0.8% in the previous quarter.

Construction grew 6.8% in the period compared with 4.2% in the previous quarter.

But the manufacturing sector contracted an annual 1.4%, having grown 0.9% in the previous three months.

Obama 'helped' Opel rescue deal

German Chancellor Angela Merkel has revealed the US president helped swing a deal to save carmaker Opel from the imminent bankruptcy of its parent firm.

She said Barack Obama helped clear some hurdles threatening the transaction during a phone conversation.

Earlier, Germany agreed the deal with Magna International, a Canadian car parts maker, to take over Opel, part of the European wing of US carmaker GM.

It should protect Opel if GM files for bankruptcy protection in the US.

GM is expected to do this as early as Monday.

Marathon talks

"I spoke on the phone with the American president yesterday [Friday] and we were in agreement that we had to do everything possible to come up with a good results for this complicated task," Mrs Merkel told reporters in Berlin. "That conversation clearly influenced the negotiations last night," she said, adding that Mr Obama helped clear some hurdles over the financing of the rescue deal.

The deal was announced early on Saturday by German Finance Minister Peer Steinbrueck, following marathon talks between German politicians, US government officials and executives from General Motors and Magna.

"A solution has been found to keep Opel running," Mr Steinbrueck said.

He said that although it was impossible to exclude all risk, the deal agreed would safeguard Opel's sites in Germany and preserve "the highest possible numbers of jobs" there.

Berlin is expected to provide an immediate loan facility of 1.5bn euros ($2.1bn, £1.3bn).

The Canadian company has said it will put more than 500m euros ($700m; £435m) into Opel, which employs more than 25,000 people in Germany.

Significant numbers of workers are also spread around Spain, Belgium, Poland and the UK, where Opel cars are branded as Vauxhall for British customers.

Magna's bid was backed by Russia's state-run bank Sberbank and Russian magnate Oleg Deripaska's truck firm Gaz. The consortium hopes to see GM expand its reach into the Russian market.

Before the announcement of the deal, Magna said it planned to cut 2,500 jobs in Germany, about 10% of Opel's workforce in that country. Italy's Fiat, a former potential bidder, had said it would cut 10,000 jobs.

GM operations in Europe will now be placed under the care of a trustee to shield them from the parent company's filing for bankruptcy protection in the US.

GM ready to file for bankruptcy

Car giant General Motors is expected to file for bankruptcy protection later on Monday, marking the biggest failure of an industrial company in US history.

The stricken firm had until 1 June to present a viable revival plan in return for emergency government funding.

Reports say a majority of bondholders have now agreed to a deal giving them at least a 10% stake in what is likely to emerge as a much smaller company.

President Barack Obama is due to give full details at a news conference.

The BBC's Jonathan Beale, in Detroit, says Mr Obama is expected to announce $30bn (£18.5bn) in new funding for GM.

GM's sales have been hit hard by the financial crisis and the firm has received $20bn in state aid.

In return for more cash the federal government is reported to be receiving a stake of 60% in a new, leaner company due to be re-launched within 90 days.

Senior executives at General Motors have been making final preparations for completely restructuring what was once the world's largest car company, under judicial supervision.

A Chapter 11 bankruptcy filing by GM would rank as the third largest bankruptcy in US history following Lehman Brothers' collapse and the failure of telecoms giant WorldCom.

European deal

The restructuring is likely to drastically change General Motors, with some 20,000 workers thought likely to lose their jobs.Our correspondent says long-established subsidiaries Pontiac, Saturn and Hummer, as well as Saab, the remaining GM brand in Europe, are under threat as production plants are expected to close across the country.

GM's European arm is likely to be spared bankruptcy following a proposed deal by Canadian car parts maker Magna International to buy GM Europe's Vauxhall and Opel brands.

However, unions fear that jobs may be lost at Vauxhall plants in Luton and Ellesmere Port, which employ 5,500 people.

UK Business Secretary Lord Mandelson said he had received further assurance from GM Europe that Vauxhall production would remain in the UK.

Jobs may also go in Belgium, Poland and Spain.

GM, once the largest company in the world, has been losing market share since the early 1980s.It has been driven to bankruptcy because of high production costs and by the collapse in credit markets and consumer spending. It made losses of $30bn last year.

GM was also slow to move away from producing gas-guzzling SUVs when consumers were looking for more fuel-efficient vehicles.

Toyota sold more vehicles than GM in 2008, putting an end to the American company's 77-year reign as the world's biggest carmaker.

FM to hold pre-budget consultations today

Finance Minister Pranab Mukherjee will start the customary pre-budget consultations with different interest groups on Monday for preparation of the budget, likely to be presented in the first week of July.

Mukherjee will hold consultations with trade and industry bodies, economists, agriculturists, bankers and corporate honchos in the run up to the budget, which industry hopes will be growth-oriented.

"We will meet the FM for the pre-budget consultations on Monday," FICCI President Harsh Pati Singhania said as he plans to ask the government for steps to restore economic growth, ensure national security and improve governance.

Apart from industry bodies as FICCI, CII, ASSOCHAM and FIEO, industry sources say the Finance Minister will hold discussions with corporate honchos like Ratan Tata, Mukesh Ambani, Anil Ambani, Kumarmangalam Birla and Sunil Bharti Mittal.

"The regular budget 2009-10 exercises are underway in full swing," Mukherjee had said on Thursday pointing out that the Congress in its manifesto had promised to come out with the Budget within 45 days of the government formation.



Faced with the challenge of reviving the economy, impacted by the global financial meltdown and demand contraction, Mukherjee started consultations with the top Ministry officials on budget soon after taking charge last Monday.

He said the focus of the government would be "Aam Admi" (common man) and that the budget would address the problems of sectors like textiles, leather and gems and jewellery hit hard by the financial crisis.

With inflation at low levels, the industry bodies see no reason for interest rates not falling to single digit levels.



CII President Venu Srinivasan had earlier said that interest rates in India remain high compared to many other economies.

Industry bodies like CII, FICCI, ASSOCHAM and American Chamber of Commerce in India have already presented their pre-budget memorandum to Revenue Secretary P V Bhide even before the formation of the new government.

The Prime Minister Office has also started work on the 100-day action plan for the new government and at the same time different ministries are also finalising priority programmes for the first three months.

Oil prices rise towards USD 67 in Asian trade

Oil prices rose in Asian trade on Monday to near seven-month highs, fuelled by a rise in regional equities markets and a weakening US dollar, dealers said.

New York's main futures contract, light sweet crude for July delivery, rose 56 cents to USD 66.87 a barrel.

Brent North Sea crude for delivery in July advanced 54 cents to USD 66.06.


"Oil is heading up this morning. It's actually moving in sync with stock markets in Asia.... What's really supporting oil is primarily investors buying commodities as the US dollar weakens," said Victor Shum, an analyst with Purvin and Gertz energy consultancy in Singapore.


A weak US currency makes dollar-priced oil cheaper for holders of stronger currencies and in turn, tends to stimulate demand and push prices higher.



The US dollar is losing allure among investors amid growing signs of a recovery in the global economy as they seek higher yields from other foreign currencies, analysts said.


Investors usually favour the US dollar because of its safe haven status in times of economic uncertainty despite the low returns compared with other units.


However, Shum cautioned that the rally was "very fragile" as global energy demand remained weak.


"The reality is that there is a big contradiction confronting oil markets today. Fundamentals are very weak but oil prices have increased by 50 per cent since last December amid a glut of oil," he said on Monday.