New Delhi, July 14
After the uptick in industrial growth, there is more good news for the economy, as consumer inflation fell to 30-month low of 7.31% in June, mainly on account of lower prices of food items, including vegetables, cereals and meat. The government measures to check hoarding seemed to have had an impact, industry observers said.

The retail inflation, measured on consumer price index (CPI), was 8.28% in May. Its lowest was 7.65% in January, 2012, the month the government started releasing the data in percentage terms.

Headline inflation measured by the Wholesale Price Index (WPI) after rising to a five-month high in May, also dipped to 5.43% in June mainly on account of decline in prices of food items and vegetables with the exception of potato and onion. It was at 5.16% a year ago in June 2013.

Sidharth Birla, ficci president

As per the Wholesale Price Index (WPI) inflation, prices of vegetables as a category declined by 5.89% during the month while that of potato and onion soared by 42.51% and 10.70%, respectively, in the wholesale market.

The fall in inflation will sooth the nerves of the economy which is bracing for higher food prices on account of a deficient monsoon.

Sharad Jaipuria, president, PHD Chamber, said the decline in WPI inflation at a time when the country is facing deficient monsoon is appreciable.

He said the government has taken measures to check hoarding and facilitating the supply chain in various essential commodities.

“The latest WPI numbers indicate moderation in overall inflation and food prices. It is heartening to note that the government is making a serious attempt to address the root cause of spiralling food prices with a set of focused measures undertaken by the government last month,” said FICCI president Sidharth Birla.

Welcoming the moderation in the provisional Consumer Price Index for June 2014, Assocham said the moderation in prices offers a big relief to the policy makers.

Aditi Nayar, senior economist, ICRA, said notwithstanding the moderation in headline and core-CPI, caution is warranted on account of the shortfall in precipitation and sowing thus far in the kharif season, which could keep food inflation and inflationary expectations at elevated levels. Additionally, an improvement in demand conditions going forward may prevent a sustained easing of inflationary pressures.

The insurance industry has got a boost with the Budget announcement of FDI cap being increased to 49%. Roopam Asthana, CEO and whole-time director, Liberty Videocon General Insurance, talks about the impact of the FDI cap hike, how the young population will drive insurance penetration and the bundling of products in the future.

Q: What is the joint venture structure and operational model of Liberty Videocon?

A: Liberty Videocon General Insurance Company Limited is a joint venture between Videocon Industries Limited and Liberty Citystate Holdings PTE Ltd which is a group company of US-based Liberty Mutual group. In line with the IRDA regulations, the joint venture partnership holding is around 22% with Liberty and 78% with Videocon.

The senior management of the company is totally composed of professionals with deep experience in the non-life insurance sector and other financial services in India.

Q: Being a late entrant into the industry, what are the disadvantages?

A: In our opinion, the number of companies operating in general insurance business in India is very few compared to the size of our country and the opportunity to write business. Even compared to some comparable developing economies, the number of companies in India is less.

Also the general insurance space in India has been witnessing some favourable trends like double-digit growth even in tough economic conditions, removal of third party pool which was a source of large losses.

Post de-tariffication of pricing, the industry saw a big drop in rates and we are of the view that the discounting has now bottomed out and we will surely see hardening of rates in areas like fire insurance and health insurance. Underwriting losses are also stabilising and will improve further if some changes are effected in the Motor Vehicles Act and third party claims can be managed better. If these trends are evaluated collectively, the market is very attractive for a new entrant.

Q: What are the areas where your company is focusing on?

A: We plan to have a good balance between the personal lines and the commercial line of business, our first formal soft launch happened with commercial products followed by retail motor insurance product and other products.

Q: What is your reaction on the Union Budget?

A: As far as the increase in FDI cap in insurance sector is concerned, this was a much-awaited announcement. The sector was in dire need of capital to implement their expansion plans - particularly in emerging markets of the country. With more capital coming in from foreign partners, players can now strengthen their distribution infrastructure and invest in technology.

Q: What are the emerging trends in general insurance sector?

A: As GDP per capita ratio increases, penetration of insurance premium as a percentage of GDP also increases. This trend will be supported by the rising income levels of India’s young population.

The penetration of Small and Medium Enterprises (SMEs) in the case of non-life insurance is low and that of Small Enterprises (SEs) is negligible. As one looks at the maturing of these SME/SE businesses, it is clear that their awareness about insurance and hence, penetration will multiply manifold.

Health insurance will emerge as a second dominant product given its low penetration today and the rising cost of healthcare in the future.

Personal insurance will evolve significantly with the addition of new products beyond auto. Further, bundling of products is likely to grow as an effective way to sell low-ticket size, mass-market products.

New Delhi, July 14
The government will make necessary changes in law and bring it on par with international standards to enable cars, especially those running on bio-fuels, to ply on Indian roads, Road Transport Minister Nitin Gadkari said today. He said the government will try to introduce the changes in the next session of Parliament.

“We will try to introduce the changes in the next session of Parliament. The government has already announced to make necessary changes in law for e-rickshaws that will give employment to over 2 lakh people,” Gadkari said. He said the ministry would also study automobile laws in the US, Canada, Brazil and Germany before making any change. — PTI

New Delhi, July 14
The government has slapped an additional penalty of $579 million on Reliance Industries (RIL) for producing less than targeted natural gas from its KG-D6 block, Oil Minister Dharmendra Pradhan said today.

With this, the total penalty on RIL for missing the target in four fiscal years beginning April 1, 2010, now stands at a cumulative $2.376 billion, the minister informed the Lok Sabha today. The penalty is in the form of disallowing costs incurred.

The Production Sharing Contract (PSC) allows RIL and its partners BP Plc and Niko Resources to deduct all capital and operating expenses from the sale of gas before sharing profit with the government. — PTI

BRIEFLY

Gold prices fall by Rs 280 on weak global cues
New Delhi: Snapping its four-day rising streak, gold prices fell by Rs 280 to Rs 28,450 per 10 grams in the national capital on Monday on slackened demand at prevailing higher levels amid weak global cues. Silver also dropped by Rs 400 to Rs 45,600 per kg on reduced offtake by industrial units and coin makers. — PTI

Airtel expands 4G services in Punjab
Amritsar: Bharti Airtel on Monday expanded 4G services to four towns in Punjab — Amritsar, Hoshiarpur, Phagwara and Kapurthala. Customers in these towns will be able to access 4G services through dongles and Wi-Fi modems on Apple iPhone 5S and 5C, Xolo LT 900 and LG G2 (model D802T).— PTI

L&T bags over Rs 5,000-cr order from Kuwait
New Delhi: L&T Hydrocarbon, a wholly owned subsidiary of Larsen and Toubro, today said it has received an over Rs 5,000 crore order from Kuwait Petroleum Corporation, a state-run firm. It would execute a complete Engineer-Procure-Construct contract for a gathering centre for KOC, a subsidiary of KPC. — PTI

IndiGo to add 12 new domestic flights
Mumbai: No-frills airline IndiGo on Monday said it will add 12 new flights in its domestic network, that include a second daily non-stop flight between Mumbai and Indore and a fourth daily non-stop flight between Delhi and Pune. Of these, four services will be operational from Tuesday while the remaining eight flights are scheduled to take off next month, IndiGo said. — PTI

Kumar Rajan takes over as general manager of SBI
Chandigarh: Kumar Rajan on Monday took over as the general manager, Network-III, of the State Bank of India’s Chandigarh Circle comprising offices and branches in the states of Himachal Pradesh and Jammu & Kashmir. He replaces Neeraj Vyas, who has been promoted and transferred to the bank’s corporate office in Mumbai as chief general manager. — TNS