New Delhi, March 14
Headline inflation eased to a 9-month low of 4.68% in February due to falling prices of vegetables but opinion is divided on a rate cut as core inflation has inched up and the inflation print for next month is likely to be higher due to the base effect.

Food inflation based on Wholesale Price Index (WPI) dropped to 8.12% in February, compared to 8.8% in the previous month as the rate of price rise slowed in almost all items, except fruits and milk.

Inflation was at 5.05% in January. Meanwhile, December inflation has been revised upwards to 6.4%, from 6.16% estimated earlier.

Analysts said a rate cut is unlikely. Indranil Pan, chief economist, Kotak Mahindra Bank, said the lower-than expected WPI inflation of 4.68% in February was driven by lower vegetable prices similar to retail inflation dynamics.

However, he said core inflation inched higher to 3.15% due to chemicals and metals segments. "We expect the RBI to keep policy rates unchanged with a neutral stance. We expect March WPI inflation to move higher to 5.5% due to unfavorable base effects and this would not affect RBI's reaction function", he said.

Pan emphasised that going forward, what has to be kept in mind is the falling trajectory of metal prices globally as also the impact of inclement weather recently and the prospects of a poor monsoon due to El Nino factor in India on food prices.

The RBI, which has maintained a hawkish interest rate regime to tame inflation, is scheduled to announce the next monetary policy on April 1. Industry has been demanding a cut in interest rates to boost economic growth, which has slowed to a decade-low level.

Assocham President Rana Kapoor said that the further drop in WPI inflation in February sets a stage for the Reserve Bank of India (RBI) to go in for cut in the policy interest rates in wake of the sharp deceleration in industrial demand. Kapoor said the sub-5% inflation is certainly good news for the macro economy and the focus should now shift back to growth which needs to be revived at the earliest.

Analysts are less hopeful. Bhupali Gursale, economist, Angel Broking, said as far as the RBI's policy action is concerned, it is more likely to be impacted by retail inflation and despite considerable moderation, the CPI inflation still remains over the 8% level. "We continue to expect a status quo on rates in the April 1 policy review", she said.

New Delhi, March 14
Prime Minister’s Economic Advisory Council (PMEAC) chairman C Rangarajan today said speedy and effective implementation of the projects particularly in the infrastructure sector is important for achieving higher economic growth,

Addressing a conference organised by Confederation of Indian Industry (CII) Northern Region, coinciding with its annual regional meeting, Rangarajan said various procedural and other bottlenecks relating to the mega infrastructure projects, key industrial and freight corridors need to be removed on priority basis to give a fillip to the growth in the region.

Rangarajan spelled out the importance of controlling subsidies. “There is a need to prioritise the spending on subsidies and subsequently I hope we would be able to bring the subsidy spending down to 1.6% from current 2.2% of the GDP. Critical sectors like food security do demand subsidies, but it can be withdrawn from other sectors like petroleum to bring about a balance”, he said.

On growth, he said the growth rate would be around 5.5% in the last quarter which would enable achievement of the projected rate of 4.9% for the present year. “For the next year, I expect the growth rate to pick up to 5.5-6% backed by sound growth in agri, services & infra sectors”, Rangarajan said.

Jayant Davar, chairman, CII Northern Region & co-chairman and managing director, Sandhar Technologies, said global uncertainty has taken a toll on the Indian economy with the GDP for the past two years growing at sub-5% per annum, much below the potential growth rate. The complex business regulatory framework is adversely impacting the ease of doing business in the country, said Zubin J Irani, deputy chairman, CII Northern Region & president, United Technologies. He said there is a need to review the compliance and regulatory processes to make them more simple and relevant.

Chandigarh, March 14
Growing import of bicycles and their components from China to India is posing a threat to domestic bicycle industry, which produces over 41,000 bicycles per day.

This is the conclusion drawn from a study undertaken by Assocham Economic Research Bureau. “There is a need to increase the import duty on bicycles and its parts from prevailing 20% to 30%. By doing this, the prices of bicycles made both in India and China would equate in the global market,” noted the study titled 'Future of Indian Bicycle Industry'.

“There is an urgent need to impose anti-dumping laws to check rising cheap import of bicycles and components from China which has been dumping its products into India,” said DS Rawat, secretary-general, Assocham, while releasing the findings of the study today.

“The import of bicycles and their components from China to India have risen by around 41% in the past five years. So it is imperative for India to review the FTAs and SAFTA to safeguard the interests of the domestic bicycle industry,” he said.

India’s exports of bicycle to other countries have grown at a compounded annual growth rate (CAGR) of around 17% while the imports grew at around 35% mainly on account of uncompetitive pricing, noted the study.

“Soaring fuel prices, rising rural incomes, growing health consciousness together with free distribution of bicycles to students by various state governments in order to promote education and keep a check on dropout rates will push the growth of bicycle industry in India and the industry is expected to generate about 1 million jobs during the course of next couple of years or so,” highlighted the study.

However, input cost inflation like rising steel prices (largely due to rising exports of iron ore pellets), poor condition of roads, especially in the rural areas are other challenges faced by the industry, it added.

New Delhi, March 14
Coal India executives, who were protesting against the non-fulfilment of their demands, including performance-related pay, have called off their strike after talks with the management.

"The strike has been deferred as assurances have been given by the Coal India management on their (employees) issue with regard to performance-related pay referred by the Committee of Secretaries to the Cabinet. So, that is a major progress," CIL Director (HR) R Mohan Das said.

Coal Mines Officers Association of India (CMOAI) general secretary PK Singh said, "We have decided to defer the strike after the assurance for four to five weeks." The CMOAI had earlier called for a three-day strike that began yesterday.

Coal India Limited has a strong workforce of 3.49 lakh employees, of which 19,000 executives had called for strike pressing for implementation of performance-related pay and new 
pension scheme, which requires the Coal Ministry's nod. — PTI 

Mumbai, March 14
The much-awaited exchange-traded fund (ETF) of select heavyweight Central public sector units was launched by Goldman Sachs today.

CPSE-ETF is an open-ended scheme comprising 10 major PSUs such as ONGC, Gail and Coal India. The new fund offer will open for subscription on March 18 for anchor investors (investing above Rs 10 crore) and the next day for non-anchor and retail investors."Though ETF is a very popular (investment vehicle) globally, it is at a nascent stage in India. Also, equity ETFs are yet to gain traction here. Through the CPSE-ETF, the government is trying to make this product popular," Alok Tandon, Joint Secretary, Disinvestment Department, told reporters at the launch here.

The new index is another option of Government divesting stake in public sector enterprises, he said.

The Government plans to raise up to Rs 3,000 crore from this scheme in the outgoing fiscal, Tandon added.

Describing the scheme's benefits, he said it provides a sound opportunity for investors to be part of the top 10 PSUs — ONGC, Gail, Coal India, IndianOil, Oil India, PFC, REC, Container Corp, Bharat Electronics and Engineers India.

"While 5% upfront discount will be offered to all class of investors, 6.66% loyalty units will be provided for retail individual investors," he said. The scheme is managed by Goldman Sachs India MF and will be listed on exchanges in the form of an ETF. — PTI

BRIEFLY

ICICI Lombard under IRDA scanner for irregularities
New Delhi: Private insurer ICICI Lombard has come under the scanner of insurance regulator IRDA for alleged irregularities involving several crores in the implementation of government-sponsored insurance schemes meant for poor people. The vigilance department of the Insurance Regulatory and Development Authority (IRDA) is looking into such complaints. — PTI

End free use of other-bank ATMs in metros, says IBA
Mumbai: The Indian Banks Association (IBA) on Friday said it has requested the RBI to allow banks to charge customers in the metros to pay for accessing ATMs of other banks but continue with the current cap of five free transactions a month for rural customers. "We have made our recommendations to the RBI that at least in the metros, the current five free usage of other bank ATMs be withdrawn so that every transaction on other bank ATM is chargeable," IBA chief executive MV Tanksale said. — PTI

ONGC, OIL buy 10% govt stake in Indian Oil Corp
New Delhi: ONGC and Oil India Ltd (OIL) have bought a 10% stake in Indian Oil Corp (IOC) from the government for Rs 5,340 crore. ONGC and OIL bought 5% stake each at Rs 220 per share, sources privy to the development said. — PTI

GK Pillai quits as MCX Stock Exchange chairman
Mumbai/Delhi: Former Home Secretary GK Pillai resigned on Friday as chairman of MCX Stock Exchange, even as the government and market regulator SEBI tried to assuage concerns arising out of the bourse coming under the CBI scanner. The resignation came hours ahead of a scheduled Board meeting of MCX-SX, where former LIC chairman Thomas Mathew T has taken over as new chairman. — PTI