New Delhi, April 15
Headline inflation fell below 6 per cent for the first time in 40 months, giving more elbow room to the RBI to cut interest rates. Coupled with the sharp fall in international crude oil prices, it could ease some problems for the struggling economy.

Declining prices of vegetables pulled down inflation to over three-year low of 5.96 per cent in March. Inflation based on the Wholesale Price Index (WPI) stood at 6.84 per cent in February. In March 2012, it was 7.69 per cent.

This is the lowest inflation number in the past 40 months, according to Crisil Research. Core or non-food manufacturing inflation continued its downward momentum and fell to 3.5 per cent in March, reflecting reduced pricing power of corporates due to slowing demand in the economy. Household consumption growth slipped to a low of 4.1 per cent in 2012-13.

Crisil Research said weakening rural demand in 2012-13 has also reduced protein-food (milk, egg, fish & meat) inflation, which had risen significantly over the past few years driven by high growth in rural incomes. Average protein-food inflation declined to 10.4 per cent in 2012-13 from 11.3 per cent in 2011-12 and 23.2 per cent in 2010-11.

Industry is hoping for rate cuts given the lower inflation number which had been a big worry for the RBI. "Going ahead, we expect this trend to continue and this should give more space to the RBI for considering a cut in the policy rates. Non-food manufacturing inflation continues to remain under restrain", said Naina Lal Kidwai, president, Ficci.

"A cut in interest rates at this juncture is critical as industrial growth continues to remain sluggish as corroborated by the IIP data released last week. Though growth in capital goods sector has indicated a revival in March, it is extremely crucial to carry this forward. The continued support to growth triggers at this point in time is indispensable", added Kidwai.

Analysts are expecting a 25 basis points cut in the RBI policy on May 3. Bhupali Gursale, economist, Angel Broking, said the softening of headline WPI inflation to a three-year low can mainly be attributed to cooling down of primary articles (particularly food) inflation.

“Owing to the positive trend in inflation, we believe there is scope for a 25 bps rate cut in the RBI’s annual policy on May 3. But we maintain some caution in reading this data due to upward revision in the provisional numbers", she added.

New Delhi, April 15
Gold prices today tumbled by Rs 750 to Rs 27,600 per 10 grams to hit an over 15-month low in the national capital due to persistent selling by stockists triggered by a heavy sell-off in global markets.

The precious metal, which had suffered the most ever in the previous session by losing Rs 1,250, today fell further to touch its lowest level since December 31, 2011.

Silver followed suit and plunged by Rs 2,100 to Rs 48,000 per kg in continuation to a drop of Rs 2,500 on Saturday on poor offtake by industrial units and coin makers. Selling further gathered momentum as gold on the global front plunged to the lowest level since April 2011 on speculation that some central banks selling and expectations of some economic recovery.

In London, gold dropped by $90.70, or 6.14 per cent, to $1,386.30 an ounce. Silver also fell by 10.52 per cent to $23.13 an ounce. Besides on the domestic front, weak trend at the futures market, where both the precious metals, silver and gold, hit their daily lower limits, further fuelled the downtrend.

Also in the spot market, gold of 99.9 and 99.5 per cent purity tumbled by Rs 750 each to Rs 27,600 and Rs 27,400 per 10 grams, respectively. Sovereigns declined by Rs 100 to Rs 24,700 per piece of eight grams.

In line with a general weak trend, silver ready dropped further by Rs 2,100 to Rs 48,000 per kg and weekly-based delivery by Rs 2,880 to Rs 45,900 per kg.— PTI

New Delhi, April 15
The CII has called for easing of interest rates by at least 100 basis points in the current fiscal and demanded reforms to kick start investment.

The new CII president, Kris Gopalakrishnan, co-founder and co-chairman, Infosys, said in order to revive growth, it is essential to kick start both investment and consumption demand. “The RBI needs to work in tandem with the government in boosting growth by easing interest rates by at least 100 basis points in the current fiscal,” he said.

Gopalakrishnan added early implementation of Goods and Services Tax (GST) and Direct Tax Code (DTC) is also important. Early implementation of GST would help in adding 1-1.5 per cent to the GDP, he added. On GST, he hoped that the amended constitutional Amendment Bill will be placed in Parliament in the monsoon session.

He said supply-side constraints was the main reason for inflation and reduction in interest rates would help in enhancing investments and increase in boosting capacity.

He stressed the need for a Cabinet Committee on Investment (CCI) to aim for making a repository of the top 50 stalled projects in terms of investment incurred and go for their revival on a priority basis.

"Streamlining procedural reforms is another major step for India to catapult itself to the high growth trajectory," he added.

He also highlighted the need to increase investor confidence and increase investments by aiming for fiscal consolidation, maintaining the momentum of economic reforms and allowing FDI in critical sectors such as insurance and banking. Startup activities need to be increased by announcing measures to foster entrepreneur spirit, he emphasised. 

New Delhi, April 15
Europe's second biggest oil firm BP plc head Bob Dudley and his partner Reliance Industries chairman Mukesh Ambani today sought clarity on pricing of natural gas as they felt an interim arrangement being considered by the government was inadequate.

Dudley, on a stop-over visit on way to Shanghai, along with Ambani drove to Planning Commission Deputy Chairman Montek Singh Ahluwalia's residence for a breakfast meeting this morning and had sought a meeting with Law Minister Ashwani Kumar.

The duo are believed to have sought clarity on pricing of natural gas from April next year when the current sub-market price of $4.2 per million British thermal unit expires.

Dudley, on his second visit in as many months, and Ambani feel the Rangarajan Committee recommendation of doubling domestic natural gas price to $8-8.5 per mmBtu will be inadequate for bringing high risk deepsea discoveries to production. — PTI 

Mumbai, April 15
Shares of gold loan companies like Manappuram Finance and jewellery makers today fell sharply by up to over 13 per cent, following weakness in gold prices which hit over 15-month low.

Muthoot Finance's scrip tanked 13.13 per cent to close the day at Rs 131.35, while Manappuram Finance dived 9.84 per cent to Rs 17.40 on the BSE. Selling was also seen among jewellery makers with PC Jewellers falling 5.65 per cent, Thangamayil Jewellery (5.45 per cent), Titan Industries (4.37 per cent), Gitanjali Gems (2.40 per cent) and Tribhovandas Bhimji Zaveri (0.86 per cent). — PTI

Mumbai, April 15
Ratings agency Crisil today cut its FY14 growth forecast for India to 6 per cent from the earlier 6.4 per cent citing a variety of reasons, including the high lending rates, weaker pick-up in consumption and issues around mining and project clearances.

"We have cut the GDP growth forecast for FY14 to 6 from 6.4 per cent expected earlier," Crisil Research said in a note issued here.

In the Budget, Finance Minister P Chidambaram had said the government was targeting a growth of 6.1-6.7 per cent for the current fiscal.

Crisil said a weaker-than-expected pick-up in household consumption being witnessed at present could begin to act as a drag on manufacturing.

The rating agency has cited "downward rigidity", wherein the repo rate cuts by the Reserve Bank are not getting passed in lending rates, as among the factors for the downward revision.

"Although we continue to believe that growth in FY14 will be greater than last year's 5 per cent, the recovery is fragile and hinges critically on a normal monsoon," the report said.

Issues around policy-making, especially in mining and the "lack of speedy project clearances, which continue to hurt manufacturing, infrastructure and investment activity" also topped Crisil's list of factors that it felt will hurt growth.

Additionally, the lowering of the European GDP forecast to -0.5 per cent from the earlier -0.1 per cent by some estimates may have an adverse impact on the domestic growth, the report said.

Economic growth in FY13 is expected to come down to a decade low of 5 per cent, according to estimates.

International rating agencies like Standard & Poor's (Crisil's parent company) and Fitch had last year threatened to downgrade the country's rating to junk on lower growth, troubles on the policy front and the high fiscal deficit and current account deficit. The CAD had hit a historic high of 6.7 per cent in the third quarter of last fiscal.

Crisil said it expects the fiscal deficit during FY14 to be at 5.1 per cent against the budget estimate of 4.8 per cent saying the government will not be able to meet the 19 per cent growth target in tax collections due to lower growth.

However, it said CAD, which is slated to breach record highs in FY13, could go down to 4.5 per cent in the current fiscal, which would still be higher than the comfort level. — PTI