New Delhi, July 15
Headline inflation has reversed the declining trend of four months and inched up to 4.86 per cent in June on the back of a sharp hike in food items like onion, rice and other cereals.

The rise in inflation is the latest headache for the government which is battling multiple problems on the economic front, including weak growth and a falling rupee.

Analysts say the fall in the rupee will exert more pressure on inflation in the coming months as imports like petrol have become costlier.

Industry body Assocham has warned that this will lead to expensive imports and lack of pricing power will mean shutdown of manufacturing capacity and loss of jobs as being seen in the auto industry.

Inflation based on the Wholesale Price Index (WPI) had stood at 4.70 per cent in May. Food inflation rose to 9.74 per cent, driven by price rise in onion, cereals and rice in June, against 8.25 per cent in the previous month. Vegetable prices went up by 16.47 per cent from 4.85 per cent in May. Inflation in onion shot up by 114 per cent in June as against 97.40 per cent in May.

Finance Minister P Chidambaram today met Prime Minister Manmohan Singh and later held discussions with RBI Governor D Subbarao, who said the central bank will look into latest inflation numbers before coming out with the monetary policy review on July 30.

In his meeting with the Prime Minister in the morning, Chidambaram briefed him on his US visit last week and is believed to have discussed the current economic situation against the backdrop of falling rupee.

Chairman of Prime Minister's Economic Advisory Council C Rangarajan expressed apprehension that rupee depreciation could have bearing on the price situation. Analysts are now not factoring a rate cut in RBI’s July policy given the falling rupee and rising inflation numbers.

Analysts have warned that a weak rupee will hurt inflation even more. Crisil Research said a weak rupee is offsetting the gains from low global commodity and crude prices. “Demand pressures will remain weak, but we could see some lift in core inflation. With a weak currency, imported costs of production go up and eventually businesses might have to pass them on to consumers. These developments seriously challenge the RBI’s aggressive year-end target of 5 per cent WPI inflation”, it said.Assocham said the low inflation scenario that was seen emerging since the beginning of the current fiscal has indicated its reversal. This would further affect the prospects of economic growth revival. “Primarily, the corporate sector will continue to bear the brunt of higher growth in input prices and lower growth in output demand and prices. This indicates the impending job cuts and labour unrest in the short term as already noted in the case of automotive industry”, it said. 

Ludhiana, July 15
The over three-decade-old Ludhiana Stock Exchange (LSE) will finally cease to exist as it has failed to comply with the conditions laid down by market regulator SEBI. SEBI had laid down two conditions for the regional stock exchange to stay afloat. One of the conditions was to register an annual trading turnover of Rs 1,000 crore and another was to have an equity net worth of Rs 100 crore.

This decision was taken during the extraordinary general body meeting of the LSE today. In a last bid to stay afloat, the LSE had been negotiating with the Calcutta Stock Exchange to record the annual turnover specified by SEBI but things didn’t work out. In August last year, LSE chairman Padam Parkash Kansal resigned as the exchange could not fulfil the conditions laid down by SEBI.

The licence of the exchange expires in April 2014. So it will continue working till then.

The Ludhiana Stock Exchange was established in 1981 by SP Oswal of Vardhaman Group and BM Lal Munjal of Hero Group.

The extraordinary general meeting of the exchange was chaired by VP Gaur, chairperson of the LSE. After deliberations, the general house approved the resolutions of voluntary exit by the exchange in accordance with Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, said Gaur.

The members resolved that the governing board of the exchange or any committee, sub-committee of the board, as may be constituted for the purpose, will be authorised to do all necessary acts, deeds and things as they deem fit and take all decisions, including negotiations, as may be required in the best interests of the members of the exchange in order to give effect to above proposals approved by general house and further to comply with all other legal and procedural formalities in this regard. 

Chandigarh, July 15
By ensuring austerity in expenditure and plugging loopholes in tax collection, Haryana has not only managed to keep the state’s coffers full but it has also been able to utilise this money for public good, resulting in achieving the highest per capita expenditure in the country.

In a recent PRS Legislative Research carried out by Centre for Policy Research, Haryana has been ranked among the top states in the country for having a high per capita expenditure, low total outstanding liability as percentage of GSDP and for having highest employment in the manufacturing, non- manufacturing and services sector. These growth indicators for Haryana are much higher than even Gujarat, which is largely accepted as a model for good development.

The research has found that as against Rs 13,118 being the expenditure per head incurred by the Gujarat Government, Haryana’s expenditure per head is Rs 16,467. Comparatively, Punjab’s per capita expenditure is Rs 15,489 —which is also higher than Gujarat.

A high per capita expenditure means that the state government has enough resources at its disposal to spend on welfare activities of its residents, which includes infrastructure, education, health and social welfare. In case of Haryana, though the government has failed to mop up additional revenues by imposing new taxes and raise its tax to GSDP ratio, the state government has been able to increase its revenue collection by better tax compliance.

The state’s target is to increase its VAT collection by over 17 per cent every year and excise collection by Rs 500 crore. Besides, the state has also cut down its administrative expenditure by 10 per cent and marginally brought down the ratio of its salary and pension bill to total revenue receipts (from 38.68 per cent to 37.94 per cent). Even the debt to the GSDP ratio has been brought down from 16.5 to 16.47 per cent. 

Chandigarh, July 15
Weakening rupee against US dollar has cast its shadow on imports from Pakistan through the Attari-Wagah land route as importers claimed downfall of 30-35 per cent in volume of import of commodities from neighbouring country because of sharp currency fluctuations.

Adopting a cautious approach, Indian traders have now either cut down their new import orders or held them back completely until the rupee gets stabilised against American greenback.

"There is a downfall of 30-35 per cent in volume of import from Pakistan because of sharp weakening of Indian rupee against US dollar," Amritsar-based trader Jaspal Singh said.

"Against the average daily arrival of 125-130 truckloads crossing over to India, we are now receiving just 70 trucks a day carrying commodities like cement, gypsum, chemicals from Pakistan," Singh said.

Traders mainly import cement, gypsum, chemicals, including soda ash, liquid and dry fruits from Pakistan, valuing over Rs 1,000 crore per annum, importers said.

Financial transactions between traders of Pakistan and India at Attari-Wagah route is carried out in US dollar currency.

He said sharp fluctuations in rupee against US dollar has made costlier to import from Pakistan, thus making it unviable.

The rupee got depreciated by over 10 per cent against the dollar since this fiscal and it even touched a lifetime low of 61.21 on July 8. Traders import cement in bulk form from Pakistan as it is 30-35 cheaper per bag against the cement available in India.

Besides, gypsum is another commodity which is imported in a huge quantity. Importers further said the appreciating dollar against rupee will also take a toll on the new season of import of dry fruits, including dry dates, which will start in next 15-20 days.

"There has been almost 40 per cent less booking of dry fruits this season against last year’s orders as traders fear losses because of weakening rupee against dollar," dry fruit importer Anil Mehra said.

He said on an average, 17 lakh bags (70 kg bag) of dry fruits are imported ever year from neighbouring country as there is a huge demand for dry fruits across India.

Blaming the Centre for its "poor" policies, traders sought early and effective action from the government to stem the weakening of rupee against dollar.

"There is a huge volatility in the currency and traders are not sure of which rate they will pay after booking orders as rupee is not stabilising yet. The government needs to step its efforts to bring stabilisation in rupee against dollar," said trader Rajdeep Uppal. — PTI

Kolkata, July 15
Chairman of Tata Sons Cyrus Mistry today said the group has no intention to leave West Bengal. "Tatas have never left West Bengal. We will never leave West Bengal as a group," Mistry told shareholders at the AGM of Tata Global Beverages.

He declined to make any comment on the Supreme Court's recent observations on Singur. "The matter is sub-judice and we do not want to discuss at this stage," he said.

The SC had said Tata Motors should make its stand clear on its leasehold rights over the Singur land.— PTI 

BRIEFLY

OBC cuts interest rates by 0.25%
New Delhi: Oriental Bank of Commerce on Monday slashed interest rates on term deposits of Rs 5 crore and above on select maturities by 0.25 per cent. The bank has slashed rates on maturities of 180-269 days to 8 per cent from 8.25 per cent earlier. — PTI

SpiceJet shares surge nearly 8%
Mumbai: SpiceJet scrip spurt nearly 8 per cent on Monday following a report that Kuwait Airways was looking to pick up stake in the airline, although the SpiceJet termed it as media speculation. After surging 9.56 per cent to Rs 30.35 in the intra-day trade, the stock finally ended at Rs 29.90, up 7.94 per cent from its previous close on the BSE.— PTI

Reliance to lay CBM pipeline
New Delhi: Reliance Gas Pipelines Ltd has won a licence to lay 312-km pipeline to transport coal gas (CBM) produced from its parent RIL’s Sohagpur block in Madhya Pradesh. The company will lay the pipeline from Shahdol in Madhya Pradesh to Phulpur near Allahabad in Uttar Pradesh.— PTI

Cotton exports plunge 36% 
New Delhi: India's cotton exports are estimated to have plummeted by 36 per cent to 9.14 million bales in the first 11 months ended June of the current marketing year, a latest USDA report said. The country had shipped 13.91 million bales of cotton in the August-June period of the 2011-12 marketing year. — PTI