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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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Retail

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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Some want IBC not to be implemented: ArcelorMittal

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Sunil Mittal-wefornews

New Delhi, Jan 22 After years of trying to get a foothold in India through a greenfield project and almost getting it via a brownfield acquisition, the world’s largest steelmaker ArcelorMittal on Tuesday castigated corporate rivals for trying to sabotage its takeover bid of Essar Steel under the new bankruptcy rule.

“It appears there are certain parties in India who would like that the Insolvency and Bankruptcy Code (IBC) not be implemented according to the law.

“The IBC was introduced for a very serious reason – to address a major problem with bad loans. If the law is not implemented correctly and the rules are flouted, as suggested by some, this sends a negative signal about the certainty of India as an investment destination,” ArcelorMittal India tweeted.

The outburst of the company headed by NRI Lakshmi Niwas Mittal, is significant as it follows the decision by India’s largest lender State Bank of India (SBI) to put on sale its entire loan exposure of Rs 15,431 crore in bankrupt Essar Steel, which is undergoing resolution proceedings since August 2017, much beyond the mandatory 270 days allowed under the IBC.

In October 2018, the Committee of Creditors (CoC) to Essar Steel, led by SBI, had approved ArcelorMittal’s proposal of Rs 42,000 crore to the lenders and an additional Rs 8,000 crore towards capital expenditure in Essar Steel.

However, a group of creditors including the promoters of Essar Steel have challenged the decision of the CoC. Last week, the CoC filed an application at NCLAT requesting for a speedier disposal of the case within the next three weeks.

The company, in its tweeted statement, said that the opportunity to make an offer for the assets in the IBC process has been very transparent and no company or individual can say they were not aware of the process and therefore should not expect to come in at a late stage, providing no details as to the financing of their offer after a decision has been taken by the CoC.

Soon after the CoC of the debt laden firm had declared ArcelorMittal as the highest bidder in the auction for the steel company, promoters of Essar Steel came up with its offer to repay Rs 54,389 crore seeking withdrawal from insolvency proceedings.

The plan included an upfront cash payment of Rs 47,507 crore to all creditors, including Rs 45,559 crore to the senior secured financial creditors, i.e. 100 per cent recovery.

“In the case of Essar Steel, opportunities have been provided to bidders for nearly a year to first be eligible and second, to make a compelling offer.

“ArcelorMittal has followed the process from the start. We fully expect the process to continue to be implemented correctly and as per the law and that statements attempting to convince otherwise not be given any credibility,” it concluded.

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Sensex down 130 points minutes after opening in green

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Sensex equity Nifty

Mumbai, Jan 22: The S&P BSE Sensex declined around 130 points minutes after opening on a positive note on Tuesday, tracking weakness in the major Asian markets.

The NSE Nifty50 also traded over 40 points lower than its previous close.

At 9.37 a.m., the Nifty50 traded at 10,917.95, lower by 43.90 points or 0.40 per cent from its previous close.

The BSE Sensex, traded at 36,439.17 points, lower by 139.79 points or 0.38 per cent from the previous close of 36,578.96 points.

It had opened at 36,649.92 points and so far it touched an intra-day high of 36,650.47 and a low of 36,413.30 points.

IANS

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RSS affliates warn against farm loan waiver in interim budget

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Farmers Protest

New Delhi, Jan 21 (IANS) Four BJP governments in states had rolled out farm loan waiver schemes but RSS affiliates have strongly warned against these in the interim budget, saying such a move would only worsen the agrarian crisis and put further pressure on the banks.

This comes in the midst of speculation that the Narendra Modi government may be showering sops on farmers in its interim budget before the Lok Sabha polls.

Instead, the sangh parivar affliates want a social security net and various forms of assistance for the farmers.

With agrarian distress expected to be a major plank for the opposition and the Congress promise of farm loan waiver that helped it majorly in its victory in the Hindi heartland state, there are indications that the Modi government may walk a similar path making the February 1 exercise more significant than a vote on account.

Buoyed by the Congress coming to power in Rajasthan, Madhya Pradesh and Chhattisgarh, party President Rahul Gandhi has flayed Modi for waiving corporate loans while ignoring the plight of farmers. He has even asserted that an “united opposition will not let Modi sleep” until and unless farmers’ loans across the country were waived.

While the Congress’ farm loan waiver attracted much ridicule from Prime Minister Modi, it was he who had triggered the trend of waiving farm loans when ahead of Uttar Pradesh elections he had announced relief for the farmers in February, 2017. Subsequently the Yogi Adityanath-led BJP government announced a loan waiver package for around 86 lakh small and marginal farmers.

The BJP governments in Maharashtra and Rajasthan in 2018 had announced waiver of loans taken by small and marginal farmers.

Soon after the Congress executing its pre-poll promise of loan waiver in the three Hindi heartland states, the BJP regime in Jharkhand in December last followed suit, giving farmers financial assistance of Rs 5,000 per acre for the kharif season.

However, the Bharatiya Kisan Sangh (BKS), a sangh parivar affliate, asserts that the Modi government should desist from indulging in populist measures. Its has warned about pitfalls of farm loan waivers.

“The last thing the government should do is resort to farm loan waivers. Rather than being a solution, loan waiver would further deepen the miseries of our farmers. Indeed farmers are in distress and the way the opposition parties for their electoral sake, have raised the issue, the government may deem it to be a political compulsion. But it would be a mistake if it does so,” BKS organisational secretary Dinesh Kulkarni told IANS.

Explaining the opposition to the “short-cut” of loan waiver, Kulkarni said such a move only encourages the practice of defaulting on loans contending that only a handful of farmers benefit.

“The Congress governments in Rajasthan, Madhya Pradesh and Chhattisgarh have waived farm loans but has it solved the crisis of the farmers. The only thing that it did is pressuring the banks and making them wary of giving further loans to the farmers,” Kulkarni said.

He said that unless there was holistic mechanism to ensure that farmers get the right price for their produce and middlemen are eliminated, the vicious circle of debt will continue.

“Loan waiver may halt the vicious debt circle for a short period of time but it won’t bring them out of that. Without a mechanism to make agriculture profitable or even allowing the farmers to recover their cost of production, they will be back to being debt ridden from the next season,” said Kulkarni adding that the government must sit with peasant bodies and other stakeholders to chalk out long term plans to resolve the agrarian distress.

Talking about its expectations from the budget, the RSS’ labour wing the Bharatiya Mazdoor Sangh (BMS) said the focus should be on expanding the social security net to the unorganised sector including agriculture workers and also advocated against farm loan waiver.

While admitting that the government may be inclined towards presenting a populist budget, BMS President C.K. Saji Narayanan said farmers should be incentivised to procure seeds , fertilisers and equipments rather than waiving their loans.

“Our farmers are in distress and indeed need lot of assistance from the government but loan waiver should be the last thing. Waiver as a short term measure is acceptable but then it has its long term effects on the economy which the government should guard against.

“The need is put up a mechanism to ensure that farmers gets right price of their produce. They should be given subsidy to purchase seeds, fertilisers and equipments instead of loan waiver,” Narayanan said.

A critic of the Modi government’s labour and economic policies, Narayanan said the budget should focus on giving relief to the middle class and urorganised sector workers.

“This government for most part of its tenure, has functioned like Congress-led UPA. But in the last year or so there has been substantial change in its attitude. However, with elections on the horizon, it may indulge in populist measures. But that doesn’t mean it should go for loan waivers.

Narayanan said the government in the budget should look to providing relief to the middle class and the workers in the unorganised sector.

“Our major demand is that the income tax exemption limit should be raised to Rs 10 lakh besides that we hope that government will no more neglect our workers especially contract labourers. In addition to hiking contract labour’s wages, unorganised sector has to be brought under social security net including agricultural labours,” he added.

While Prime Minister Modi and his government have been touting GDP growth as FDI inflow as its major achoevemnets, the Swadeshi Jagaran Manch (SJM), the economic wing of the RSS said, job-less growth was meaningless.

“GDP growth or FDI inflow should not be the parameters for development, what matters is how much employment is generated.

“As regards the agrarian crisis, the question is why our farmers are debt ridden, and answer to that question can never be loan waiver,” SJM National Co-Convener Ashwani Mahajan said.

He held the “historic neglect” of the agriculture sector by successive governments to be the core issue.

“Besides their persistent failure to even recover their cost of production, the steady rise of prices of farm inputs and farm equipments being under GST, has further pauperised the farmers,” he said.

He said instead of giving the farmers “alms” in form of loan waiver, the need was concrete policies aimed at reforming and reviving the farm sector and making it economically viable and profitable.

“There are large numbers of seasonal agricultural labourers who are rendered jobless for a large part of the year. The focus should be on rehabilitating them as also come with policies to make agriculture profitable.

Mahajan recommended giving major focus on food processing, oil seeds protection, change in crop production, subsidizing farm inputs.

“The one thing that must be immediately done is to exempt farm equipments from GST. We sincerely hope the government will use this budget to lay out long term plans to revitalize the economy and resolve the agrarian crisis instead of falling trap to electoral populism,” added Mahajan.

(Anurag Dey can be contacted at [email protected])

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