QBiz: Retail Inflation Hit 6 Year High; IMF Alert For India

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1. IMF Sounds an Alert Over India's Rising Debt

India urgently needs more ambitious structural and financial sector reform measures and a medium-term fiscal consolidation strategy due to the rising debt levels , the International Monetary Fund (IMF) said Thursday, 13 February.

Responding to a question on the recent budget presented by Union Finance Minister Nirmala Sitharaman, IMF spokesperson Gerry Rice said that there is a weaker economic environment in India.

"While the budget touches on ongoing sectoral efforts, there remains an urgent need for more ambitious structural and financial sector reform measures and a medium-term fiscal consolidation strategy, anchored in tangible revenue and expenditure measures, especially given rising debt levels,” Rice told reporters.

(Source: Economic Times)

2. States May Also Get an Escape Clause to Breach Fiscal Deficit

The NK Singh-led Fifteenth Finance Commission (FFC) may allow states to invoke an “escape clause" to breach their mandated fiscal deficit target by half a percentage point, giving them flexibility to respond to economic shocks similar to the option available to the Centre.

If accepted by the central government, the change may give states much-needed fiscal space to raise resources by borrowing funds at a time when their revenues have been under pressure because of reduced avenues for raising taxes and a tepid growth in goods and services tax collections. Under the Fiscal Responsibility and Budget Management (FRBM) Act, states are mandated to keep their fiscal deficit at 3% of gross domestic product.

Based on the recommendations of a review committee headed by Singh in 2018, the FRBM Act was amended to make debt-to-GDP ratio the principal macroeconomic anchor of fiscal policy for the central government.

(Source: Livemint)

3. Retail Inflation Hits a Near 6-Year High of 7.59%

Factory output shrank in December after a mild pickup in November while retail inflation accelerated to a 68-month high in January in twin blows to the struggling economy.

Data released by the statistics office showed industrial output contracted 0.3% in December compared with a 1.8% rise in November. April-November industrial growth was 0.5% against 4.7% in the year-earlier period.

The simultaneously released Consumer Price Index (CPI) showed retail inflation raced to 7.59% in January from 7.35% in December, strengthening the likelihood of a prolonged pause in interest rates by the Reserve Bank of India (RBI) despite muted growth.

(Source: Economic Times)

4. Inflation Spike Transitory, Expect It to Drop to 4-4.5% by July, Says CEA K Subramanian

A surge in onion prices contributed around 70 basis points to retail inflation that scaled a 68-month peak of 7.59% in January, chief economic adviser Krishnamurthy Subramanian said on Thursday, 13 February, stressing that the latest spike in inflation is “transitory” and is substantially driven by volatile vegetable prices and an unfavourable base.

He also pointed at a healthy co-relation of 0.53 between the Purchasing Managers’ Index (PMI) and the Index of Industrial Production (IIP), based on data for over seven years, and indicated that the surge in the PMI index in January would augur well for factory output growth. The PMI for manufacturing scaled a near eight-year peak in January and that of services jumped to a seven-year high. The IIP, however, shrank 0.3% y-o-y in December 2019, having reversed a modest rise in the previous month and recording its fourth contraction in five months.

Subramanian expected retail inflation to come down to a more realistic level of 4-4.5% by July, as the effect of an inconducive base wanes. Fresh arrivals of crops, especially onion, in March and higher vegetable output will have a soothing effect on inflation in the coming months.

(Source: Financial Express)

5. Vodafone Idea Posts Rs 6,439-Cr Dec-Quarter Loss; Subscriber Base Falls 21%

Vodafone Idea reported a consolidated loss of Rs 6,439 crore for the December quarter as compared with a Rs 5,005-crore loss in the same period in 2018-19.

This is higher than analyst estimates, which had pegged the loss at Rs 4,000 crore, after being in the red by a record Rs 50,922 crore in the September quarter. Exceptional items in the quarter were valued at Rs 633 crore, largely on account of integration and merger-related costs.

While a large part of the liabilities on account of aggregate gross revenues (AGRs) was in the September quarter (just over Rs 30,000 crore), the company made a Rs 53-crore balance provision for those in the December quarter. The company posted revenues of Rs 11,089 crore, down 6 per cent over the year-ago quarter, and this was in line with analyst estimates.

(Source: Business Standard)

6. Diesel Prices Today Cut to 7-Month Low, Petrol Rates Remain Cheapest in 5 Months

Petrol prices today remained at a five-month low as oil marketing companies kept the price of the fuel steady for third day in a row. However, diesel prices were cut on Thursday, 13 February by 5 paisa. In Delhi, petrol cost ₹71.94 a litre - the lowest in about 5 months. In Kolkata, the fuel retailed at ₹74.58 a litre, in Mumbai at ₹77.6 a litre and in Chennai at ₹74.73 a litre respectively.

In Delhi, diesel today cost ₹64.82 a litre, 5 paise cheaper than the price on Wednesday, 12 February. This is the lowest price of the fuel in seven months.

Petrol and diesel prices are revised by oil marketing companies on a daily basis. The retail prices of petrol and diesel in India depend on the international crude prices and the rupee-US dollar exchange rate. India imports about three-fourth of its crude requirements.

(Source: Livemint)

7. Govt Appoints Rajiv Bansal as Air India CMD Amid Privatisation Process

In between the privatisation process of Air India, the government appointed Rajiv Bansal, an additional secretary with the oil and gas ministry, as the new boss of the state-owned airline. He will replace Ashwani Lohani, the current Chairman & Managing Director (CMD), who didn’t agree to extend his one-year contract, which expired on 11 February.

Bansal has served as CMD of Air India for around a year in 2017 before going back to the oil & gas ministry.

Lohani, who was reappointed Air India CMD in 2019, had earlier held the position for around two years from 2015. In August 2017, he was named the Chairman to the Railway Board.

(Source: Business Standard)

8. Adani Transmission Q3 Net Rises 33% Year-On-Year to Rs 204 Cr

Adani Transmission on Thursday, 13 February reported a 32.5% y-o-y increase in consolidated net profit to Rs 204 crore in the October-December quarter of 2019 on sharp increase in operating margins. Operating margins for the December quarter rose 1,069 basis points on year to 43.31% as overall expenses fell.

The overall expenses were lower by 6.7% y-o-y at Rs 2,477.75 crore as the cost of power purchased for the third quarter fell 21.29% y-o-y to Rs 667.67 crore, and the cost of fuel consumed fell 17% y-o-y to Rs 233 crore. Revenue from operations rose 3% y-o-y to Rs 2,572 crore on higher revenue contribution from the transmission business, even as the revenue from distribution business fell marginally 1% during the quarter. Adani Transmission’s operating profit for the December quarter was higher by 37% y-o-y at Rs 1,114 crore.

Anil Sardana, MD and CEO of Adani Transmission, told reporters in a media conference call that they have taken approval from the regulator to buy 700 MW of hybrid wind and solar power matching the load requirement of Mumbai at a very competitive price. “This will help us to reduce the cost of power going ahead and reduce the tariff for consumers under the multi-year tariff regime that we have proposed for Mumbai.”

(Source: Financial Express)

9. Air India Express April-September Profit Jumps 283% YoY Amid Stake Sale Process

Air India Express, the low-cost subsidiary of national carrier Air India Ltd, on Thursday reported a net profit of ₹679.80 crore during April-September against ₹177.30 crore reported a year ago.

The Kochi-headquartered airline's revenue rose 75% year-on-year to Rs.3124.34 crore, the company said in a statement.

“In this financial year, we will exceed the figure of Rs. 5000 Crore in operating revenues, and this will be for the first time, since the Airline’s inception," K. Shyam Sundar, CEO, Air India Express said in the statement.

Air India Express reported a revenue of Rs.4171.5 crore and a net profit of ₹168.5 crore during 2018-19.

The airline said it will introduce non-stop flights on Tiruchirappalli–AbuDhabi and Tiruchirappalli–Doha sectors in its 2020 summer schedule, commencing on 28 March.

(Source: Livemint)

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