The Tribune, Chandigarh, India

	Inflation data dims hopes of large rate cut by RBI Rises to 7.55% in May; food inflation, too, surges to 10.74% Sanjeev Sharma Tribune News Service New Delhi, June 14 Headline inflation climbed up to 7.55 per cent in May as compared to 7.2 per cent in the previous month on the back of spurt in prices of food articles like potato, pulses and wheat, tempering hopes of a substantive interest rate cut by the Reserve Bank of India (RBI) next week. In another not so good news for the economy, exports shrunk by 4.16 per cent to $ 25.68 billion. This was on the back of the economic problems in the developed economies like the US and Europe. Though manufacturing inflation has eased in a pronounced way for the past six months and for the month came in at around 5 per cent, it is the food inflation which is keeping the Wholesale Price Index (WPI) inflation high. Food inflation rose to 10.74 per cent in May, from 10.49 per cent in the previous month. Finance Minister Pranab Mukherjee said inflation would be in the range of 6.5-7.5 per cent throughout the year and a good monsoon may help ease inflationary conditions. According to Crisil Research, food inflation which remained in the double-digit zone for the third consecutive month could rise further due to a steep increase announced in the minimum support prices of foodgrains. Crisil has revised its average inflation forecast for 2012-13 up to 7 per cent, from the estimate of 6.5 per cent. High fuel and food inflation, along with weak currency and indirect tax increase would keep the momentum in inflation high this fiscal. The stock markets reacted negatively to the higher inflation numbers with the BSE Sensex falling by 203 points. The stock markets are expecting a 25 basis points cut in interest rates and easing of liquidity in the form of a CRR cut by the RBI to revive investments and growth in an economy which is floundering. WPI inflation has remained higher than GDP growth for the past nine quarters, which is not a good sign for a growth economy.
	Indian economy in stagflation, says Moody’s New Delhi, June 14 Global financial services firm Moody’s today said Indian economy is facing stagflation, where growth is slow and inflation high, and cautioned that the Reserve Bank cannot be too aggressive in cutting interest rates. "India’s economy is in stagflation, with notably weaker growth but inflation still stubbornly high," said Glenn Levine, senior economist, Moody’s Analytics. Amid wholesale price-based inflation ticking up to 7.5 per cent year-on-year in May due to supply-side factors, the agency said it will cause further "headaches" at the RBI. "Yet with the inflation numbers now being driven by supply-side factors, and with the currency being pushed downwards...and India’s weaker growth prospects, we think that the RBI could cut rates without it putting too much upward pressure on inflation," said Moody’s Analytics. The RBI is scheduled to review mid-quarter monetary policy on June 18. Moody's said the recent plunge in the rupee is pushing up the price, especially imported of goods and commodities priced in US dollar. It further said with the rupee now sitting 15 per cent below its peak of late-February, this will ensure that WPI inflation remains in the 7 per cent to 8 per cent range for another six months. "Indeed, with the growth side of the economy slowing, the risks have shifted sharply towards growth and they (the RBI and other policy makers) should just grin and bear the higher inflation numbers," it added. Stagflation is a situation when economic growth of a country stagnates while inflation is rising. — PTI
	Nokia sells luxury brand Vertu to EQT VI To slash 10,000 jobs; shut factories Helsinki/New Delhi, June 14 Mobile handset firm Nokia today said it will sell its luxury mobile brand Vertu to private equity firm EQT VI for an undisclosed amount. The move is a part of Nokia's strategy to dispose of its non-core assets. "Nokia has agreed terms for EQT VI, part of the leading private equity group in Northern Europe, to acquire Vertu, the global leader in luxury mobile phones from Nokia," the company said. Nokia said it would retain a minority shareholding of 10 per cent in Vertu. However, the company has not disclosed financial details of the transaction but according to media reports the deal size could be around $250 million. "This is a logical next step in the evolution of Vertu as the world leader in luxury mobile products," Vertu president Perry Oosting said. In a separate announcement, Nokia today said it will cut up to 10,000 jobs globally by the end of 2013 and shut down some facilities. "Nokia plans to reduce up to 10,000 positions globally by the end of 2013. Nokia is beginning the process of engaging with employee representatives in accordance with country-specific legal requirements," it said in a statement. As of March 31, 2012, Nokia employed 1,22,148 people. Of these, 68,595 were employed by Nokia Siemens Networks. Nokia said it is balancing its investment priorities and plans to rescale the company by making additional reductions in devices and services. — PTI
	Electronic fund transfers set to become free New Delhi, June 14 In a move that would bring relief to bank customers, the government has asked the Reserve Bank to work out a framework under which funds could be transferred electronically free of charge from one account to the other. These suggestions were made by Finance Minister Pranab Mukherjee in his address at a meeting with chief executives of the public sector banks, which among others, was also attended by RBI Deputy Governor KC Chakrabarty. At present, banks charge between Rs 5 and Rs 55 for electronic transfer of funds from account of one bank to another through National Electronic Fund Transfer (NEFT) and Real Time Gross Settlement (RTGS). "I would also urge upon Reserve Bank of India (RBI) to proactively work on this front and to see that all electronic banking transactions should be possible without any charges being levied," Mukherjee had said on Tuesday. Cost free electronic transaction would encourage customers to use this medium for inter-bank as well as intra-bank fund transfer across the country. The move would also help reduce cash movement and cash transaction, a senior official of a public sector bank said. For outward transactions under RTGS mechanism, banks charge Rs 30 for electronic transfer of Rs 2 lakh to Rs 5 lakh and Rs 55 for amounts above Rs 5 lakh. On the other hand, under NEFT the charges range between Rs 5 and Rs 25. Citing example of Oriental Bank of Commerce, which has waived all charges for electronic transactions up to Rs 1 lakh, Mukherjee had said, "I am confident that all the public sector banks would follow this excellent initiative." — PTI
	Exports shrink 4.16% in May New Delhi, June 14 Amid demand slowdown in the Western markets, India's May exports declined by 4.16 per cent to $25.68 billion. The exports had totalled $26.7 billion in the same month last year. Besides, signalling a slowdown in the domestic market, the imports declined as well by 7.36 per cent to $41.9 billion in May 2012 from $45.2 billion year-on-year, Director-General of Foreign Trade Anup Pujari told reporters. With sharp decline in imports, the trade deficit in May has shrunk to $16.3 billion, from $18.5 billion year-on-year. After crossing the $300 billion mark last fiscal, India is looking at an export figure of over $360 billion in 2012-13. Exports in April were $24.4 billion. The overseas shipments in April-May of 2012-13 now total $50.13 billion, as against $50.48 in the same period last fiscal. Cummulative imports during the first two months of this fiscal were $79.8 billion, down 2.42 per cent from $81.87 billion in the same period of 2011-12. Earlier this month, the government had announced a slew of measures like continuation of interest subvention to boost exports because of fragile global economy and problems in the euro-zone. — PTI
	Gold soars to Rs 30,550 New Delhi, June 14 Gold prices surged to an all-time high of Rs 30,550 per 10 gm in the national capital today on sustained buying by jewellers for the coming marriage season amid a firming global trend. The gold today climbed Rs 130 level, surpassing its previous record level of Rs 30,420 set yesterday. The yellow metal has gained Rs 920 in the previous four trading sessions. Silver also rose by Rs 100 to Rs 55,700 per kg on increased offtake by industrial units. Sentiment remained firm after gold gained in global markets on speculation the Federal Reserve will take more steps to buoy the economy, potentially hurting the dollar. — PTI
	Indian market unattractive: Goldman Sluggish domestic, global economic growth outlook to blame New Delhi, June 14 Indian stock market does not present attractive prospects for investors in the near term amid sluggish domestic and global economic growth outlook, according to Goldman Sachs. The global investment banking major Goldman Sachs in its report said a sluggish domestic and global growth outlook would have a bearing on the Indian equities in the coming months. "We find that the Indian stock market does not present an attractive risk/reward entry point currently as macro headwinds are likely to persist in the near-term," it said. The report titled 'India: Fade short-lived rally, not too late to underweight Portfolio' focuses on the performance and future outlook for National Stock Exchange's 50-share benchmark Nifty index. Goldman Sachs said continued weak domestic growth in the next 3-6 months as well as a poor global growth environment would weigh on Nifty, which has been seeing bearish trends in recent months. This index, according to Goldman Sachs, is the "most exposed market in Asia to a 'muddle-through' environment through liquidity and foreign corporate debt linkages". "Poor Nifty performance has been attributable in part to a gridlocked political landscape, plagued by project delays and lack of reforms. "While we agree that the political headlines have created uncertainty in the market, the main impact to the market is through the investment channel in our view," the report said. Goldman Sachs noted that an important component of "our underweight view on India" stems from risk of significant capital flight. It said while the impact of RBI rate cuts is months away, a potentially poor monsoon season poses risks of sticky inflation which in turn might dampen policy flexibility in case growth continues to slide. Pointing out that India relies on foreign funding, Goldman Sachs said, "lowered growth expectations for India have impacted investment appetite already, and we are wary of policies that could further curb capital flows into the country or beget foreigner equity selling, which has not yet occurred in size." Concerns are on the rise that Indian economy is losing momentum, mainly after it touched a nine-year low of 6.5 per cent in 2011-12. Also, industrial production rose just 0.1 per cent in April as against 5.3 per cent in the year-ago period. — PTI
	Infosys inks pact with Israel govt To enhance cooperation in R&D Bangalore, June 14 IT company Infosys today signed an MoU with Israel government to establish and enhance cooperation in industrial research and development (R&D). This MoU is a part of the ‘Global Enterprise Collaboration Program’ developed by the Office of the Chief Scientist of Israel to accelerate innovation through a global ecosystem. It creates a framework for industrial cooperation between Infosys and Israeli corporations in the emerging technology areas of cloud, information security, sensors, analytics, and sustainability, Infosys said in a statement here. Speaking on the occasion, Subu Goparaju, senior vice-president and head of Infosys Labs said, “This collaboration aligns with our vision to bring together different innovation networks from around the world and make them relevant to our clients. “At Infosys, we are looking at leveraging the innovation ecosystem in Israel, as part of evaluating early stage technologies that are relevant for clients to build tomorrow's enterprises”. — PTI
	Mercedes rolls out new C Class at Rs 35 lakh Mumbai, June 14 German luxury carmaker Mercedes-Benz today launched the new C Class AMG Performance Edition and said it has lined up more compact premium cars as part of its aggressive growth plans for India. "With the launch of the new C Class AMG, Mercedes-Benz aims to redefine the luxury entry level sedan segment. We are looking at expanding by launching new products and increasing network penetration," Mercedes-Benz India Director (Sales & Marketing) Debashis Mitra told reporters here. The C Class sedan is priced at Rs 34,62,609 ex-showroom in Mumbai. Mercedes-Benz sold about 7,430 units last year and was the second-largest seller of high-end cars after BMW, which sold more than 9,400 cars. Mercedes was the top-selling luxury carmaker in India until it was overtaken by German rival BMW. During the January-April period, the company sold around 2,499 units, Mitra said. The firm will focus on launching new products, increasing network penetration and introducing new marketing initiative to increase market share. — PTI