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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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Govt may sweeten deal further for Air India sale bid

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Air India 777

New Delhi, Oct. Oct 21 : The government may further extend the date for submission of bids for Air India sale date beyond October 30 to give investors more time to make an offer while sweetening the deal terms further, finance minister officials privy to the development said.

The submission of initial bid or expression of interest (EoI) may be extended by 45 days to two months to December. Also, officials said that bidders would be given the option to decide on the quantum of debt in Air India books that they will like to absorb rather than freezing the debt amount and seeking investors bids.

As per the Air India EoI floated by DIPAM in January, of the airline’s total debt of Rs 60,074 crore as of March 31, 2019, the buyer would be required to absorb Rs 23,286.5 crore, while the rest would be transferred to Air India Assets Holding Ltd (AIAHL), a special purpose vehicle.

With the proposed changes, buyers will decide on the level of debt that they will take and the one taking the largest debt may be considered favourable to be declared winner.

Disinvestment secretary Tuhin Kanta Pandey has also hinted at changes in the current structure of Air India transaction process in an interaction with journalists last week.

For the government, Air India has now become a test case on how to get investor interest in adversarial market conditions. While the airlines financials are already under severe pressure, the Covid -19 pandemic had further dented the prospects of the aviation industry putting the sale process under further problems. The bidding process for the debt-ridden airline has been postponed four times earlier and of October 30 deadline is changed now, it would be fifth such extension.

Sources said that changes in the structure of the sale process to facilitate investors would go by the principle of letting buyers decide the enterprise value of Air India rather than its market cap or using other valuation methodology. The enterprise valuation determines the value of an entity based on its market capitalisation and also debt in books and cash balances.

Sources said that changes in the valuation method has be approved by a CGD (Core Group on Disinvestment) headed by the cabinet secretary at its meeting last week and now it would be has placed before AISAM (Air India Specific Alternative Mechanism).

For Air India, the government is finding it tough to get investors on board. A Tata Group led consortium was considered favourite to take over the airline earlier but its interest in the airline lately has been subdued. With foreign airlines bleeding over fall in air travel during the pandemic, getting investors would be difficult. But Air India, with vast pool of international flying slots and a running overseas operation under the Vande Bharat scheme, is expected to get some investor interest.

Air India has been been unprofitable since its 2007 merger with state-owned domestic operator Indian Airlines Ltd., and since then is flying on government budgetary support adding pressure to central resources.

Air India disinvestment will be a key component of this years sell target of Rs 2.1 lakh crore. The government has so far mobilised a mere Rs 5,500 crore as disinvestment receipt.

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India’s April-August FDI inflow rises 13%

“FDI equity inflow also increased by 57 per cent from $160.46 billion during 2008-14 to $252.42 billion (2014-20).”

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New Delhi, Oct 21 : FDI inflows into India have increased by 13 per cent during April to August 2020 on a year-on-year basis, official data showed on Tuesday.

According to the Ministry of Commerce and Industry, $35.73 billion has been received during the period under review.

“It is the highest ever for first 5 months of a financial year and 13 per cent higher as compared to first five months of 2019-20 ($31.60 billion),” the ministry said in a statement.

“FDI equity inflow received during F.Y. 2020-21 (April to August, 2020) is $27.10 billion. It is also the highest ever for first 5 months of a financial year and 16 per cent more compared to first five months of 2019-20 ($23.35 billion).”

Besides, the ministry’s data showed that FDI inflows have risen by 55 per cent during the last 6 years.

“Total FDI inflow grew by 55 per cent, i.e. from $231.37 billion in 2008-14 to $358.29 billion in 2014-20,” the statement said.

“FDI equity inflow also increased by 57 per cent from $160.46 billion during 2008-14 to $252.42 billion (2014-20).”

The ministry said that measures taken regarding FDI policy reforms, investment facilitation and ease of doing business have resulted in increased inflows into the country.

“Continuing on the path of FDI liberalisation and simplification, Government has carried out FDI reforms across various sectors,” the statement said.

FDI is a major driver of economic growth and an important source of non-debt finance for the economic development of India, it added.

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Gadkari lays foundation for India’s first multi-modal logistic park in Assam

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Nitin Gadkari

Guwahati, Oct 21 : Indias first Rs 694 crore international Multi-Modal Logistic Park (MMLP) would be set up at Jogighopa in western Assam under the Bharatmala Project of the Union Ministry of Road, Transport and Highways.

According to the officials, the first MMLP at Jogighopa, which would be connected to road, rail, air and waterways, would be developed in 317-acre land along the Brahmaputra River, and would provide direct or indirect employment to nearly 20 lakh youth in Assam.

While laying the foundation stone for the project virtually from Delhi on Tuesday, Union Minister for Road Transport, Highways and MSMEs, Nitin Gadkari, said that his ministry envisages to develop 35 MMLPs in the country, of which work on preparing DPR (detailed project report) and feasibility report is underway.

Gadkari said that Assam’s MMLP is being made by the National Highways and Infrastructure Development Corporation (NHIDC), and the first phase of construction is scheduled to be completed by 2023 and the work would begin next month.

He informed that works worth Rs 280 crore have already been awarded, including Rs 171 crore for road construction, Rs 87 crore for erecting the structure, and Rs 23 crore for rail lines.

The minister said that the distance of 154 km between Jogighopa and Guwahati would be covered by making a four-lane road on this stretch, while a 3 km rail line would connect Jogighopa station with the MMLP. Another 3 km rail link would connect it to the Inland Water Transport and the road to newly developed Rupsi airport would be upgraded to four lanes for better connectivity.

He said the MMLP would have all the necessary facilities including warehouse, railway siding, cold storage, customs clearance house, yard facility, workshops, petrol pumps, truck parking, administrative building, boarding and lodging, eating joints, water treatment plant etc.

The minister further informed that his ministry has plans for national highway works worth Rs 80,000 crore in Assam.

He said, NH works for 575 km worth Rs 3,545 crore are going to be completed within this financial year and NH works of nearly Rs 15,000 crore would be awarded by next year, while DPRs will be completed for works of Rs 21,000 crore for the state.

Union DoNER (Development of North Eastern Region) Minister Jitendra Singh said that more than 10 waterways are being developed in the northeast, bringing down the logistic cost by one fourth.

He said this cost effective mode of transport would be a cheaper option for trade, business and transportation and would boost trade across the borders, especially with the eastern neighbours by leaps and bounds.

He said that MMLP is a novel idea, and would be replicated by other states soon.

Assam Chief Minister Sarbananda Sonowal, Union Ministers Gen (Retd) V.K. Singh, Rameshwar Teli, and Assam Ministers Himanta Biswa Sarma, Chandra Mohan Potwary and Phani Bhushan Choudhury also addressed the event.

Historically, Assam and the northeastern region used to have a very vibrant trade activity with the neighbouring countries.

The region had multi-modal transportation networks, roadways, railways and riverine waterways through the territories along Bangladesh and Myanmar.

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