Mumbai, June 20
The advent of double digit inflation saw the Sensex plunge 517 points today to close at 14,571 points. In the broader markets, the Nifty fell 156 points to 4,348 points.

After staying in the green during early trade, the Sensex began its plunge as details of rising inflation poured in during trading hours. As it became evident that inflation has hit a 13-year high, the markets’ fall continued.

Even as bankers and analysts hit the television studios warning of soaring interest rates that could hit the growth prospects of companies, the mood turned sombre. Statements from Axis Bank indicated that the Reserve Bank of India (RBI) could tighten the flow of money to choke inflation. Similar views came from the public sector UCO Bank as well. Other experts felt that the RBI may wield the stick even ahead of its scheduled meeting on monetary policy in July.

This could raise interest cost for infrastructure companies and thereby hurt their margins, it was felt.

Statements by the finance minister that strong measures were needed on demand and monetary sides to check price rise accentuated the panic.

All the Sensex stocks except ONGC took a beating. Reliance Communications was the highest loser plunging 6.65 per cent to Rs 491. Reliance Industries came close falling 6.6 per cent at Rs 2,096. Other big losers included Hindalco and Jaiprakash Associates.

Oil and gas companies took a beating as well amidst fears that the government may force them to reduce prices. Reliance Natural Resources, Essar Oil, Cairn India and RPL were all down by more than 5 per cent each.

Fears of rising interest rates also spooked counters in the real estate, banking and auto space, who were battered. The realty index on the BSE was down about 4.5 per cent, while auto was down 2.44 per cent.

The sentiment has been poor as analysts felt that the hike in fuel prices has not been fully reflected in inflation numbers. In other words, inflation in the coming weeks could continue to soar.

New Delhi, June 20
Managing inflation, which has reached a 13-year high of 11.05 per cent, appears to “have gone beyond the government’s hand” and is posing a major threat to growth, industry bodies said today.

Assocham, CII and Ficci said inflation has reached the “concern zone” and poses a threat to the economic growth.

“Inflation is not only a concern for the government but also a concern for the industry... many things seem to have gone beyond its hands,” Assocham said in a statement.

According to CII, the unabated rise in prices, though a reflection of global trend, “reduces the space for fiscal and monetary policy maneuverability, without seriously impacting growth”.

Ficci said maintaining GDP growth would be a serious challenge before the government and “the prospects of strong economic growth as seen in the past would certainly take a hit”.

However, the chambers said the double-digit inflation was anticipated in the backdrop of increase in fuel prices at the retail level announced by the government on June 4.

The economy has been growing by an average of over 8.5 per cent for the last four years. It was accompanied by a moderate inflation for the last three years. But it started rising since February this year.

Commenting on the inflation data, exporters body Federation of Indian Export Organisations (FIEO) said the high inflation rate would offset the competitive advantage of Indian exporters, who were beginning to regain ground due to the marginal depreciation of the rupee in the last two months.

“Hike in cost of domestic inputs would impact exports of traditional sectors like handicrafts, textiles, leather, marine products and agro-processed,” FIEO president Ganesh Gupta said in a statement.

Inflation touching the double digit 11.05 per cent would give a serious blow to exports and affect competitiveness of Indian exporters in the global market, he said. — PTI 

New Delhi, June 20
The Reserve Bank of India (RBI) may soon raise the interest rate for short-term lending to banks once again as a measure to control the unabated rise in inflation that shot to 13-year high at 11.05 per cent, economists said.

The short-term lending rate (repo rate) is currently ruling at 8 per cent and this may be increased to 8.25 per cent even before the July policy announcement.

It is quite possible that the RBI may increase the repo rate by a quarter per cent before July policy review, HDFC Bank chief economist Abheek Barua said.

The hike could come in the next 10 days, he said, adding, depending on the situation, the RBI could also increase the cash reserve ratio (CRR) — the ratio of deposits that banks have to keep with the RBI.

The central bank would come out with quarterly review of the credit policy on July 29.

According to Saumitra Chaudhuri, member of the Prime Minister’s Economic Advisory Council, the unexpected surge in inflation is due to revision of non-sensitive fuel items like light diesel oil, naphtha, furnace oil and bitumen.”All of it has come during the week pushing inflation by additional one per cent,” he said.

There is lot of pressure on interest rates. The RBI may further tighten the monetary policy in order to anchor inflation to reasonable level, Chaudhuri said.

The monetary authority could raise repo or CRR depending on the condition, he added. Any change in key policy rate or ratio by RBI would force the banks to revise both deposit and lending rates to maintain its margin which is already under pressure. — PTI

New Delhi, June 20
The inflation touched 11.05 per cent this week, up by almost 3 per cent from 8.75 per cent when last recorded, breaking a 13-year record.

The government, which is already facing a virtual notice from the Left to withdraw support on the issue of the Indo-US nuclear deal, faced strident criticism both from the Left partners and the Opposition even as it put the Congress on the backfoot.

BJP spokesman Rajiv Pratap Rudy demanded the resignation of Prime Minister Manmohan Singh and finance minister P. Chidambram here today. BJP president Rajnath Singh suggested an all-party meeting to work out immediate relief measures.

The CPM also slammed the government and blamed its current economic policies for the present inflation. The CPM politbureau issued a statement saying: “The Manmohan Singh government is squarely responsible for this dismal situation. It cannot escape by blaming global inflation.”

The statement reminded that “the government refused to take measures suggested by the Left parties such as strengthening and universalising public distribution system and banning forward trading in all essential commodities. Nor is it willing to do away with iniquitous taxation structure and the import parity pricing of petroleum products.”

The CPM politbureau also reminded that “the government refuses to tax the windfall profits of private refineries like the Reliance Industries, which made profits of Rs 10,372 crore in 2007-08.”

The Congress, on the other hand, was defensive. Party spokesman Shakeel Ahmad while expressing concern over the new record of 11.05 per cent blamed global economic situation for this.

New Delhi, June 20
For domestic airlines reeling under constant hikes in aviation turbine fuel it should come as a small consolation that their market is increasing. Latest figures indicate that the number of passengers carried by domestic carriers have increased since last year.

Passengers carried by domestic airlines between January and May 2008 were 192.42 lakh as against 176.52 lakh in the corresponding period of 2007, thereby registering a growth of 9.01 per cent.

The total domestic passengers carried by scheduled airlines of India in May was 41.16 lakh. These include Air India (domestic) - 6.10 lakh, Jet Airways -8.45 lakh, JetLite - 3.52 lakh, Deccan - 5.76 lakh, Kingfisher - 5.92 lakh, SpiceJet - 4.44 lakh, Paramount - 0.47 lakh, GoAir - 1.61 lakh, IndiGo - 4.82 lakh.

Market share of Indian Airlines, Jet Airways and Go Air has reduced from 15.1 per cent, 21.6 per cent and 4.6 per cent in April 2008 to 14.8 per cent, 20.5 per cent and 3.9 per cent, respectively, in May 2008. The market share of other airlines has either marginally increased or remained steady.

The percentage share of carriers has been Air India (domestic) - 14.8 per cent, Jet Airways - 20.5 per cent, JetLite - 8.6 per cent, Deccan - 14.0 per cent, Kingfisher - 14.4 per cent, Spice Jet - 10.8 per cent, Paramount - 1.1 per cent, Go Air - 3.9 per cent and IndiGo - 11.7 per cent.

The seat factors of domestic airlines in May were Air India (domestic) - 61.2 per cent, Jet Airways - 73.9 per cent, JetLite - 75.8 per cent, Air Deccan - 71.5 per cent, Kingfisher Airlines - 70.1 per cent , Spice Jet - 72.7 per cent, Go Air - 78.0 per cent, Paramount Airways - 81.2 per cent and IndiGo - 74.0 per cent.

Shimla, June 20
The Himachal Pradesh government is implementing ‘handicraft weavers comprehensive welfare scheme’ aimed at providing insurance cover with enhanced insurance benefits, besides, better health facilities to handicraft weavers.

An official spokesperson said here today that two components of the scheme were health insurance scheme and Mahatma Gandhi weavers’ insurance scheme. The main objective of the health insurance scheme was to make the weaver community economically self-reliant, besides, providing them better medical facilities. Besides weaver, the scheme would cover wife and two children for which premium of Rs 69.56 would have to be paid every year. The weavers with at least 50 per cent of the income from handicraft weaving were eligible.

The scheme would be implemented through ICICI Lombard General Insurance Company. The medical treatment expenses of the weavers would be reimbursed by the ICICI Lombard and annual limit of availing medical assistance under the scheme would be Rs 15,000 per family.

Under the Mahatma Gandhi weavers’ insurance scheme enhanced insurance cover and medical insurance would be provided to weavers not only in case of natural death but also during death by accident, complete or partial disability. He said those weavers who had an income of at least 50 per cent from handicraft weaving and were between 18 to 59 years of age were eligible to avail the benefits of the scheme.

Ludhiana, June 20
Making the first ever “organised” effort, over 200 knitwear and apparel manufacturers in the region have joined hands to collectively interact with their potential buyers from across the nation. For the country’s leading industry, efforts are a step in their direction to gain advantage of an organised approach that had been lacking so far.

Eyeing high-end retail and wholesale consumers, these small and medium manufacturers would hold a five-day meet with their buyers in Ludhiana. So far, beginning of the season marked individual visits by potential buyers, which involved a lot of time and money of both parties.

Intensifying competition motivated industrialists to initiate such a move.

“We realised that individual interactions created a lot of hurdles like wastages in terms of money and time. Besides, the reach was limited. It is the first such effort wherein we are expecting heavy business," said Sudarshan Jain of Knitwear and Apparel Manufacturer Association of India that is holding the event. About 700 buyers have already given their participation consent to translate into business worth over Rs 500 crore.

Confidentiality on designs, however, would be maintained, said traders. It is a norm with manufacturers here to hold closed-door meetings with their potential buyers as they fear that their designs may get leaked and hence, misused.

The industry, that witnessed a boom in business last year, has been attracting buyer enquiries for over a month now. Most industrial units are ready with their samples and production would reach its peak as soon as orders materialise.

A large number of small and medium entrepreneurs are still conducting their operations in an “unorganised manner”, said Jain, adding that the coming year would see higher participation from such unit owners.

BRIEFLY

Gold, silver up
MUMBAI: Silver on Friday rose by Rs 115 per kg to open at Rs 24,505 and standard gold by Rs 150 per 10 gm to open at Rs 12,500 per 10 gm, on increase of fresh demand from ornament makers, from its previous close, traders at the Bombay Bullion Association said here. — UNI

Advanta acquires US firm
MUMBAI: Advanta India, a subsidiary of United Phosphorous, on Friday said it has acquired the sunflower seed business of US-based Limagrain for an undisclosed amount. The acquisition was carried out through a subsidiary of the company, the Bangalore-based firm said. — PTI

Great Offshore bags order
MUMBAI: Great Offshore has bagged an order for its heavy lift vessel in a Mediterranean company for $15 million per annum, an official source said here on Friday. The order comes with an option of extending for another year, the source said. — PTI

Mascon Global
MUMBAI: Mascon Global on Friday said it would raise $150 million (about Rs 644 crore) through issue of securities in the international market. The board has approved the issuance of global depository receipt and foreign currency convertible bonds to raise the said amount, Mascon Global said. — PTI

Parsvnath net down
MUMBAI: Parsvnath Developers on Friday announced a net profit of Rs 108.88 crore for the quarter ended March 31, 2008, a decline of 17.79 per cent over the corresponding period a year-ago. The company had a net profit of Rs 132.44 crore in the fourth quarter of FY’07, Parsvnath Developers said. The board has declared a dividend of 30 per cent at the rate of Rs 3, for every share of Rs 10 for 2007-08. 
— PTI 

CPI up by 2 pts in May
Shimla: The all India Consumer Price Index (CPI) number for agriculture and rural labourers for May 2008 increased by two points each to stand at 431 points for both series. The increase in the indices, which track the prices of goods consumed by agricultural and rural labourers and act as measure of inflation. — PTI