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January inflation eases to 5.07%, December IIP lower at 7.1%

The higher target came in place of the 3.2 per cent — or Rs 5.46 lakh crore — for the current fiscal announced earlier.

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A slight easing of food prices helped lower India’s retail inflation in January to 5.07 per cent even as factory production growth slowed somewhat in December to 7.1 per cent, according to official data on Monday.

India Inc lauded the continuing high single-digit recovery in industry as well as the slight fall in inflation.

While retail inflation was 5.21 per cent in December 2017, the Index of Industrial Production (IIP) had grown at an impressive 8.8 per cent in November.

On a year-on-year basis, the consumer price index (CPI) last month was at a much higher level than the 3.17 per cent in January 2017.

The consumer food price index (CFPI) in January stood at 4.58 per cent compared with the 4.85 per cent of December 2017.

As per the data released by the Central Statistics Office (CSO), the sequential slowdown in factory output was mainly on account of lower production in the manufacturing sector.

However, on a year-on-year basis, the manufacturing sector expanded by a healthy 8.4 per cent, while the mining sector’s output inched up by 1.2 per cent and the sub-index of electricity generation increased by 4.4 per cent.

“In terms of industries, 16 out of the 23 industry groups in manufacturing sector have shown positive growth during December 2017 compared with corresponding month of the previous year,” the CSO said.

According to the data, the industry group ‘manufacture of other transport equipment’ has shown the highest growth of 38.3 per cent followed by 33.6 per cent in ‘manufacture of pharmaceuticals, medicinal chemicals and botanical products’ and 29.8 per cent in ‘manufacture of computers, elecronic and optical products’.

Last week, The Reserve Bank of India (RBI) kept its key interest rate unchanged at 6 per cent for the third time in succession at its final bi-monthly monetary policy review of the fiscal, citing upside risks for inflation from rising global crude oil prices and other domestic factors.

The RBI said its decision to keep its repo rate, or short-term lending rate for commercial banks, unchanged is consistent with the neutral stance of the central bank aimed at achieving its median inflation target of 4 per cent.

“We expect headline inflation to be at 5.1 per cent in the fourth quarter (January-March), including the impact of HRA (house rent allowance) to central employees, up from the 4.6 per cent in Q3,” RBI Governor Urjit Patel told reporters in Mumbai after the release of the monetary policy review.

However, the fact that the central bank did not raise the repo rate in the face of hardening inflation as recommended by one of the six monetary policy committee (MPC) members is being considered as an attempt to aid in economic recovery.

Industry chamber Assocham termed the IIP data “a positive sign towards growth cycle of industrial activity in India”.

“However, risks to the Indian economy continues to prevail in the forms of continued uncertainties in the global environment due to geo-political situations, including rising global protectionism could further delay a meaningful recovery of external demand,” said Assocham President Sandeep Jajodia.

“Besides, private investment continues to face several impediments in the form of corporate debt overhang, stress in the financial sector, where (banks’) NPAs (non-performing assets) continue to increase, excess capacity and regulatory and policy challenges,” he added.

“This is the second consecutive month in which IIP has shown high single-digit growth, which is encouraging,” India Ratings and Research (Ind-Ra) Principal Economist Sunil Kumar Sinha said in a statement.

“However, Ind-Ra believes it still early to read much from these numbers as these have been calculated on a low base when industrial output had collapsed due to the impact of demonetisation,” he said.

“Retail inflation came down to 5.07 per cent in January 2018, lower than 5.21 per cent recorded last month, but remained higher than the RBI’s base target value of 4 per cent,” he added.

Rating agency Crisil said that inflation, however, continued to firm up in large parts of the services sectors such as housing, driven by the revision in house rent allowance payments, education and in recreation, amusement and personal care and effects.

“Yet, core inflation, stayed broadly unchanged from the previous month, at around 5.1 per cent in January,” a Crisil release said.

“The industry seems to be shedding away the weight of GST-related glitches behind and trying to get back lost momentum, as both domestic and global growth surge.”

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Karnataka politics, oil prices depress equity market

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Mumbai, May 21: Formation of a non-BJP government in Karnataka, along with weakness in global indices and rising crude oil prices, pulled the key Indian equity indices to close in the negative territory for the fifth consecutive session on Monday.

According to market observers, automobile, consumer durables and healthcare stocks slumped during the day’s trade.

After opening on a flat note, the indices traded higher during the early hours in the day but were unable to hold on to the gains for long.

At 3.30 p.m., the wider Nifty50 of the National Stock Exchange (NSE) provincially closed at 10,516.70 points, down 79.70 points or 0.75 per cent from the previous close of 10,596.40 points.

Similarly, the barometer 30-scrip Sensitive Index (Sensex) of the BSE settled in the red. It had opened at 34,873.16 points, closed at 34,616.13 points (3.30 p.m.) — down 232.17 points or 0.67 per cent — from its previous session’s close of 34,848.30 points.

The Sensex touched a high of 34,973.95 and a low of 34,593.82 points. The BSE market breadth was bearish with 1,969 declines against 680 advances.

The major gainers on the BSE were State Bank of India (SBI), Tata Consultancy Services (TCS), Coal India, Axis Bank and ICICI Bank, while Sun Pharma, Dr. Reddy’s Lab, Yes Bank, Tata Motors and Tata Motors (DVR) were the major losers.

On the NSE, the top gainers were SBI, BPCL and Coal India. The major losers were Dr Reddy’s Lab, Sun Pharma and UPL.

IANS

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In five years, private banks see 450 percent hike in NPAs

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New Delhi, May 21: Data of last five years revealed that the Non-Performing Assets of private banks on a surge, with a 450 percent hike in gross NPAs of these lenders from Rs 19,800 crore at the end of financial year 2013-2014 to Rs 109,076 crore at the end of March 2018.

According to the Indian Express report, Among the banks that have accumulated a huge rise in bad loans are ICICI Bank, Axis Bank, HDFC Bank, Kotak Mahindra Bank, Federal Bank and Yes Bank.

ICICI Bank is on top of the NPA list with Rs 54,063 crore in bad loans. It has recorded a 514 percent increase in NPAs in five years – from Rs 10,506 crore in FY 2013-14 to Rs 54,063 crore in March 2018, the IE report stated.

Axis Bank saw a 988 percent jump in its bad debts in last five financial years. The Bank’s bad loans have climbed up from Rs 3,146 crore in FY 2013-14 to Rs 34,249 crore in FY 2017-18, the report said.

The Reserve Bank of India (RBI) had recently imposed a fine of Rs 3 crore on Axis Bank for violations of NPA classification.

While HDFC Bank’s NPAs rose from Rs 2,989 crore to Rs 8,607 crore in the last five financial years.

Yes Bank’s NPAs jumped from Rs 175 crore in FY 2013-14 to Rs 2627 crore in 2018.

Last year, the RBI in a risk assessment discovered that Yes Bank had under-reported its NPAs by Rs 6350 crore.

However, Yes Bank is not alone in under-reporting NPAs. From ICICI to HDFC to Axis Bank, all have invited flak from the RBI for asset divergence. In March 2017, the RBI in its assessment had found that HDFC had under-reported its NPAs by Rs 2052 crore.

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Petrol, diesel prices hit all time high; rates hiked for 8th day in row

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New Delhi, May 21: Petrol and diesel prices on Monday were increased in the range of 33-34 paise per litre and 25-27 paise per litre across Delhi, Kolkata, Mumbai and Chennai. That marked fresh all-time highs of petrol and diesel prices in Delhi.

On Sunday, petrol was priced at Rs 76.24 per litre in Delhi, more than the previous all-time high price of Rs 76.06 reached in September 2013. Diesel prices had been registering new all-time highs for past few sessions. With effect from 6 am, Monday, petrol was sold at Rs. 76.57 per litre in Delhi while diesel retailed at Rs. 67.82 per litre, according to Indian Oil Corporation.

Monday’s revision marked an eighth consecutive hike in petrol and diesel prices in the four metros.

Prior to these hikes, petrol and diesel prices were not raised for about three weeks before Karnataka elections. Because of that, oil marketing companies (OMCs) needed to raise petrol prices by Rs. 4.6 per litre, or 6.2 per cent, and diesel rates by Rs. 3.8 per litre, or 5.8 per cent, according to brokerage Kotak Institutional Equities.

While the crude oil prices are near their 2014 highs the rupee has weakened by more than 6 per cent so far this year. That is why domestic petrol and diesel prices may continue to rise in the very short term, say experts.

According to a report of The Economic Times Union Petroleum and Natural Gas Minister Dharmendra Pradhan on Sunday had said the hike in the fuel prices is due to the less production of oil in the Organization of the Petroleum Exporting Countries (OPEC) and hike in crude oil price in the international market. The Union Minister also assured the citizens that the Indian government will soon take out a solution to tackle the situation.

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