Declining inflation may present a case for further monetary policy easing.
Despite admitting to price pressures both from food items and input prices, RBI Governor Shaktikanta Das on Wednesday hoped that a normal Southwest monsoon will have a "soothing impact" on inflation pressures and ruled out any wide variations in medium-term inflation forecast from what was given in April. In an unscheduled address earlier in the day amidst the raging pandemic, Das said the overall outlook for the economy is highly uncertain and is clouded with downside risks. He offered a slew of relief and liquidity measures to individuals and small businesses apart from a Rs 50,000 crore special liquidity window to the healthcare sector.
Inflation rose to 4.86 per cent in June, driven mainly by rising prices of food articles, especially vegetables including onion.
The projects - Delhi-Varanasi, Mumbai-Nagpur, Delhi-Ahmedabad, Chennai-Mysore, Delhi-Amritsar, Mumbai-Hyderabad, and Varanasi-Howrah - are expected to cost around Rs 10 trillion.
Continuing decline in food prices, including vegetables, pulled wholesale price inflation to a five year low of 1.77 per cent in October.
Food prices rose 8.64 per cent year-on-year last month, slower than an annual rise of 9.90 per cent in March.
Softening of global commodity prices might not help much
The price rise measured in terms of Wholesale Price Index rose for the second straight month, to 5.79 per cent in July, on account of double digit rise in prices of food articles, mainly vegetables, including onion.
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A section of the market believes RBI should hold rates as negative real rates will hurt savings and investment.
If Nirmala Sitharaman does indeed present a 'never-before' like Budget on February 1, going by her promise, she would create a new benchmark for post-contraction Budgets, observes A K Bhattacharya.
Total debt for listed Indian companies excluding financials fell only 4 per cent to $368 billion in the year ended in March 2015.
In case of onions, inflation skyrocketed to 127.04 per cent, while for the eggs, meat and fish segment the rate of price rise was 5.76 per cent.
Onion prices, however, continued to rule high with 79.78 per cent increase in September.
Disagreeing with Reserve Bank's projection on the price situation, former RBI Governor and PM's Economic Advisory Council chairman C Rangarajan said WPI and CPI may not be as high as being projected by the central bank.
This could be the reason why Prime Minister Narendra Modi mentioned tomato, onion, and potato as his government's 'TOP' priority, in an election rally on February 5 in poll-bound Karnataka.
The RBI's projection for WPI inflation for this fiscal is 5.5 per cent.
This is the second straight month of decline in wholesale price based inflation.
People can afford to buy more food. So, the demand is up and so are prices.
Debt returns are always negative for investors in India, unless they are willing to take huge risk
India's annual rate of inflation, based on its monthly Wholesale Price Index, climbed to 6.01 per cent for the month of May 2014, as against 5.20 per cent for May and 4.58 per cent during the corresponding month of the previous year, which has set off alarm bells.
Though the ministry is considering 2017-18 as the new base year, no decision has been taken as the committees of experts are awaiting some more data before finalising their opinion.
A comprehensive technical framework needed, from which a more convincing policy could be demonstrated
Overall slowdown in the economy and growing volumes of unbranded generic medicines in the domestic market are behind poor sales.
Vegetable prices which had witnessed a 21.16 per cent contraction in June, shot up by 21.95 per cent in July.
RBI has cut policy rate thrice during 2015.
The food-price segment in the WPI has been growing at 8.3 per cent, much higher than the rise in the index for manufactured articles. In fact, segments like minerals and fuel have witnessed a decline in the WPI and have pulled the inflation down. The rise in food prices affects the common man more than the increase in prices of any other item.
Last week, the Consumer Price Index-based inflation for the month had contracted to 4.4 per cent.
The rupee has depreciated 2.35 per cent in the past three months and one per cent in the past month, despite strong capital flows and falling oil prices.
There is little to suggest inflation levels will come down since you hardly see the same levels of seasonality in prices that were there earlier.
'We will likely be buffeted by tailwinds from the global economy, geopolitical shifts and robust domestic demand.'
Chief economic adviser to the finance ministry Arvind Virmani on Wednesday said the retail price-based inflation, which is ruling above the wholesale price index, will come down with a lag but would not fall as much as the rate of rise in wholesale prices is falling.
Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan may have found the Reserve Bank of India (RBI)'s inflation projections on the higher side, but independent experts agree with the central bank and expect both wholesale and retail prices to remain high.
The increase by more than three per cent is largely due to jump in the rate of inflation in the case of WPI for fuel, power, light and lubricants
D&N cites positive changes in momentum in certain segments of economy, but says some areas of concern remain
Top losers in the Sensex pack include Bharti Airtel, Infosys, Asian Paints, RIL, Coal India, HDFC Bank, HDFC, TCS, ONGC and M&M, falling up to 3.09 per cent.
Stock markets will remain closed on Tuesday
The Central bank primarily factors Consumer Price Index while deciding on policy rate.
In February last year, it was (-)2.17 per cent.
Reiterating his earlier stance, BJP's Rajya Sabha member Subramanian Swamy has written a letter to Prime Minister Narendra Modi, asking him to sack RBI Governor Raghuram Rajan.
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