New Delhi, September 16
Food inflation hit a three-year high of 18.18 per cent on the back of a huge increase in the prices of onion and other vegetables, in turn pushing up headline inflation for the third month in a row to a six-month high of 6.1 per cent in August as the depreciation in the rupee in the past few weeks started to show its effect.

While the rupee has strengthened lately, hitting a one-month high of 62.83 and inflation rearing its head again, analysts said it would be difficult for the RBI to cut rates in the monetary policy review due later this week.

Analysts said the impact of the weakness of the rupee is playing out in the August numbers. The wholesale price index (WPI) inflation was at 5.79 per cent in July and 8.01 per cent in August, 2012.

To add to the economic woes, a business confidence survey released by industry body, Ficci said the index was at its lowest level in 4 years and reminiscent of the difficult economic conditions seen during 2008-09.

Vegetables like onion contributed the most to the rise in inflation with the highest increase being witnessed in case of onion which reported an increase of 245 per cent year-on-year. The price of vegetables in general rose by 77.81 per cent pinching household budgets.

The high increase in prices was also seen in other essential food such as rice, cereals, egg, meat and fish.

Commenting on the rising inflation, Prime Minister's Economic Advisory Council (PMEAC) chairman C Rangarajan said it was mainly on account of depreciating rupee but hoped it would come down in the coming months due to the good monsoon.

Analysts said the rising inflation will add to the economic problems. India Ratings & Research said India’s macroeconomic management will become more difficult on account of increasing Wholesale Price Index (WPI) and suppressed inflation due to non-pass through of the full impact of falling rupee.

“Inflation in food items escalated further to 18.2% in August 2013 from 11.9% in July 2013. Although favourable monsoon is likely to yield a bumper kharif crop, inflation in rice has been close to 20% since June 2013 and has been over 15% since October 2012. Also, inflation in vegetable prices was around 80% in August 2013. While good monsoon would dampen the overall food inflation in the coming months, we believe it is unlikely to decline sharply any time soon due to structural factors driving food inflation”, it said.

Crisil has revised upward the average WPI inflation forecast for this fiscal to 6.2 per cent from 5.3 per cent.

“Core inflation is low right now, but loosening of monetary policy to support growth runs the risk of creating a situation of high generalised inflation as the supply shocks persist. We expect RBI to leave interest rates unchanged on September 20 and also for the rest of the year”, it said.

Industry body Federation of Indian Chambers of Commerce and Industry (Ficci) said the rupee value displayed unprecedented volatility in the past few months depreciating by over 20% since beginning of the fiscal.

“While in the past few days, we have seen the rupee gaining against the dollar, the earlier fall is likely to have contributed to the inflationary pressures in the economy", said Didar Singh, secretary-general, Ficci.

New Delhi, September 16
Inflation and forex market conditions are expected to weigh on the RBI decision as it reviews monetary policy later this week, PMEAC chairman C Rangarajan said today.

"All that I can say is that the RBI, I believe, will take into account the behaviour of inflation as well as what is happening in the foreign exchange market and take a decision," he said on the sidelines of an Assocham organised event here.

RBI is scheduled to announce mid-quarter review of the monetary policy for 2013-14 on September 20.

On the impact of the likely tapering of quantitative easing by the US Fed this week, the Prime Minister's Economic Advisory Council (PMEAC) chairman said: "The impact of the tapering has already been digested. The market has already reacted to that."

Therefore, he said, whatever adjustment that will be made to the tapering has been practically completed by now.

"But in any case the reactions to the tapering will be a global phenomenon, not necessarily a phenomenon related to India," he said.

Expressing concern over increase in the gross non- performing assets of the banks, Rangarajan said they have risen from 2.3 per cent at the end of 2010-11 to 3.2 per cent at the end of 2011-12 and to 3.92 per cent at the end of June, 2013.

Further, the Indian banks' restructured standard assets have increased sharply to 6.1 per cent as on June 30, 2013.

Banks will need to watch out for liquidity risks which will increase because of maturity mismatches, he said, adding that the increased exposure to real estate and infrastructure will lengthen maturity of bank assets. — PTI 

New Delhi, September 16
In yet another setback to Ranbaxy Laboratories, the US Food and Drug Administration (USFDA) has issued an import alert on drugs produced by the company at its Mohali plant in Punjab, for violation of current good manufacturing practices.

As per information available on the USFDA website, the import alert, dated September 13, will cover all ‘drugs and drug products’ produced by the company at the Mohali plant.

While the US health regulator did not specify details for issuing the alert, it said "detention without physical examination may be appropriate when an FDA inspection has revealed that a firm is not operating in conformity with current good manufacturing practices (GMP's)".

A Ranbaxy spokesperson said: "We have so far not received any communication from the USFDA on this subject. We are seeking information from the USFDA in this regard." As per the company's website, the Mohali plant produces oral solids in dosage form.

In May this year, Ranbaxy had pleaded guilty to "felony charges" relating to manufacture and distribution of certain 'adulterated' drugs made at two units in India and agreed to pay $500 million to US authorities as penalty.

Hyderabad, September 16
Union Finance Minister P Chidambaram today called for mandatory digitisation of all insurance policies to cut down costs and eliminate the threat of forgery.

He was speaking after launching insurance repository system developed by the Insurance Regulatory and Development Authority (IRDA) here.

Chidambaram asked the insurance regulator to work towards having a time frame for mandatory digitisation of life and non-life policies.

The insurance repository system helps the policy holders keep their insurance policies in electronic form and undertake modifications and revisions. A policy holder can open an e-insurance account with an insurance repository to buy and keep policies issued by various insurers in electronic mode. The account opening is free of cost to the account holder.

"It is a novel idea but should have been implemented long time ago. It is a modest beginning with life insurance policies," Chidambaram said and asked IRDA and the private depositories to quickly extend the service to non-life policies as well.

“During natural calamities such as the recent floods in Uttarakhand, people lost their insurance policies making claim and settlement of insurance almost impossible. Loss of identity in case of migration also affects claim and settlement of policies. Hence we require a mandatory digitisation of life and non-life insurances in the country,” Chidambaram said.

The digitisation would also help cut down the cost of maintaining insurance policies. “At present, the insuring agencies have to spend Rs 150 per account per year, whereas managing an e-policy will be as cheap as Rs 20 per policy. And there will be no threat of forgery as there will be one account for multiple polices held by the policy holder,” he said.

Speaking on the occasion, IRDA chairman TS Vijayan said the new system was part of the regulator’s efforts to improve services to policy holders and increase insurance penetration. “The percentage of insurance penetration is mere 3.96 per cent compared to the world average of 6.5 per cent during 2012,” Vijayan said.

According to IRDA, five private companies have been given the status of insurance repositories and provided with a licence that will be valid till July 31, 2014. The five companies are: NSDL Database Management Limited, Central Insurance Repository Limited, SHCIL Projects Limited, CAMS Repository Services Limited and Karvy Insurance Repository Limited. The repository will issue a unique code number to all policy holders, and their policies will come under that number. It maintains the history of the policy details such as claims, nominees, beneficiaries and other data.

The Finance Minister said there was a need for more competition in the sector to bring down the costs. The new system will make it an economical proposition for insurance companies to issue and service e-policies as compared to traditional paper policies.

A policy holder can also convert the existing policies into electronic form by submitting a request after opening an e-insurance account. 

Hyderabad, September 16
Despite the current political turmoil over Telangana statehood issue, the software exports from Andhra Pradesh continue to surge. The IT exports from the state have registered a 26 per cent jump in 2012-13 to touch Rs 51,285 crore compared to Rs 40,646 crore in the previous year.

While the exports from the state’s Software Technology Parks of India (STPI) have increased to Rs 34,785 crore, the revenue from the IT Special Economic Zone (SEZ) soared to Rs 16,500 crore from Rs 11,698 crore, the state IT and Communications Minister Ponnala Lakshmaiah said.

As against an all India average growth rate of 23.5 per cent, Andhra Pradesh recorded a 26 per cent growth during the year. The share of IT/ITES exports from Andhra in national exports stood at 12.5 per cent in 2012-13 compared to 12.4 per cent in the previous financial year.

This shows that the IT-savvy state has been largely immune to the political unrest in the wake of agitations and counter-agitations on the contentious Telangana issue. A significant aspect of the IT sector growth is that even the tier-II cities have registered impressive growth. During 2012-13, Visakhapatnam accounted for Rs 1,445 crore worth software exports followed by Vijayawada (Rs 115.26 crore) and Kakinada (Rs 61.54 crore).

The minister said the IT industry had generated 13.78 lakh jobs in the state. The quality infrastructure, talent pool and affordable real state costs continue to be the core strengths of the state in attracting IT companies.

Outlining the new projects in the pipeline, Lakshmaiah said an Information Technology Investment Region (ITIR) was being set up on the city outskirts with assistance from the Central Government. It envisages development of self-contained, integrated knowledge clusters for growth of IT and electronic hardware manufacturing units.

Aimed at attracting an investment of over Rs 2.19 lakh crore in the IT and IT-Enabled Services (ITES) sectors, the ITIR will come up over an area of 50,000 acres in and around Hyderabad in two phases over a period of 25 years. The ambitious project would create direct employment for 15 lakh youths, he said. Andhra Pradesh is the first state to be granted the prestigious ITIR by the Centre.

The proposed Animation and Gaming Zone at Raidurg on the city outskirts is another prestigious project. “We have allocated 30 acres of land and want to develop six lakh sq ft area in the first phase with green building concepts. We want to create a landmark building, which will be on par with global projects such as Dubai Media City. This zone will give the impetus for various sectors such as media, animation and gaming. The foundation stone will be laid in the next two months,” he said.

New Delhi, September 16
The country’s largest coal producer, Coal India Ltd (CIL), is set to invite global tenders this week to develop coal blocks that can produce an estimated 18 million tonnes of coal in a year.

As per CIL officials, the coal producer, which has been in various controversies of late, is expected to invite Request for Proposal (RFP) from private operators to develop five open cast mines and two underground mines and produce coal under the Mine Developer-Operator (MDO) mode.

The move is expected to bring in large investment from the private sector and it may well touch Rs 5,000 crore.

The earlier attempt by CIL to invite RFP for some of the mines had not evoked much response. But it is confident of a good response this time after making some changes in the conditions for bidding to allow a larger number of operators to participate.

Last month the coal ministry had also come out with the ‘Request for Proposals’ for engaging merchant bankers and selling brokers for the disinvestment of CIL.

As per the earlier decision, cleared by the Union Cabinet, the government is looking at disinvesting 5 per cent paid-up equity capital (31,58,18,220) shares of CIL out of its shareholding of 90 per cent through Offer for Sale (OFS) of shares by promoters through the stock exchanges method as per SEBI Rules and Regulations.

The government is also considering allotting shares to eligible and willing employees of CIL at a discount of 5 per cent. This is being done as a sweetener to the protesting unions. The employees would be offered shares at a 5 per cent discount on the discovered price up to a maximum of 10 per cent of the OFS size.