Welcoming the new index, experts said it will take time, may be few years, before the CPI will replace WPI as benchmark for the government decision making and RBI's monetary policy
New Delhi: Starting Tuesday the government will release the nation-wide Consumer Price Index (CPI) on a monthly basis for better reflection of retail price movement and to help the Reserve Bank of India (RBI) take effective monetary policy steps to deal with inflation, reports PTI.
The new CPI, according to experts, will eventually replace the Wholesale Price Index (WPI) for policy actions to deal with the price situation.
The monthly CPI will be in addition to the three retail price indices-for agricultural labourers, rural labourers and industrial workers-prepared by the ministry of labour.
The new data will be prepared by the ministry of statistics and programme implementation (MOSPI).
"CPI uses defined basket of goods and services that represents purchasing pattern of a particular household. Since this is driven from the consumption side, it provides a relatively realistic view on how consumers are affected," Deloitte, Haskins & Sells director Anis Chakravarty said.
He said that for these reasons a reliable indication of demand side pressures and inflation is received from utilising CPI as a measure.
Welcoming the new index, experts said it will take time, may be few years, before the CPI will replace WPI as benchmark for the government decision making and RBI's monetary policy.
WPI, as per Mr Chakravarty, "poorly reflects the cost of living because it does not focus on the prices at which the consumer is purchasing the goods".
The WPI measures the price changes from the production side and not from the consumption side and hence it provides a skewed picture, he added.
Globally also the consumer price index is taken as the main benchmark.
While the concept is appealing, most of what is covered is also available in a regular critical illness product. The new product is neither inexpensive nor does it offer lifelong renewal
Bajaj Allianz Women Critical Illness Plan is touted as the first-of-its-kind to cover women specific illness. It does offer some benefits that are not offered in regular critical illness products like paying 50% of sum insured (SI) on birth of a child with any one or more congenital disabilities, covers burns and lump-sum payment of Rs25,000 each as children's education bonus and loss of job within three months of diagnosis of a critical illness.
The drawback is that the women specific critical illness like breast cancer, fallopian tube cancer, cervical cancer and so on are already covered by regular critical illness products along with other type of cancers. Moreover, the regular critical illness product covers many others like coronary artery bypass surgery, first heart attack, kidney failure, stroke, multiple sclerosis and so on.
The premium pricing is comparable to Bajaj Allianz's own regular critical illness product, but gives less value due to restricted illness covers and the maximum SI is only Rs2 lakh. The cover is only for age group 21 to 55 years whereas some regular critical illness products in the market allow lifelong renewal (subject to conditions).
Will the market rally for the 8th week? Toss a coin
We had written on 8 February 2012 (http://www.moneylife.in/article/will-the-market-rally-for-a-sixth-week-in-a-row/23543.html) that the markets are likely to end the sixth week higher. Our guess was proved right, based on the probabilities at that given point in time. However, the markets have continued to surge higher, up for the 7th week, as well. We are into the 8th week now. What are the odds that the momentum and bull market will end up higher by end of this week?
We analysed all weekly closes data points in the last 21 years. We fond out that there have been 16 occurrences where Sensex moved up seven weeks in the row in the past 21 years. However, the 8th week turned out to be positive only half the number of times. In other words, the markets ended the 8th week 8 times out of 16. A perfectly random outcome. The last time it happened was in 2010, between the period 11 February 2010 and 1 April 2010. Interestingly, out of the 16 times the market was up for seven weeks in the last 21 years, the 8th week was positive only twice in the nineties.
Over the last seven weeks, the Sensex has given handsome returns of 15.4%. Since today is a holiday, we will only know how the markets will start this week by tomorrow end of day, to give us an indicator as to the likelihood of markets being positive this week, as well. With most global markets up, it could be a positive start to the week.
With the odds 50-50 this time around, the probabilities of the current upward momentum extending well into its 8th week has greatly diminished, but by no means improbable, given that market has an uncanny ability to surprise us. So what do you do? Toss a coin, instead, to check if the market will continue its bull run. You might be lucky, or not, depending on which side of the trade you're on.