“It is important to explain to our people that if we subsidise diesel artificially, by running up a large fiscal deficit, that would also exert an upward pressure on prices,” chief economic advisor Kaushik Basu said
New Delhi: On a day the government was battling the political fallout of petrol price hike, its economic advisor pitched for a bold decision on freeing diesel prices, which he claims would eventually cool down inflation, reports PTI.
“I personally believe that we should decontrol diesel prices, which will take some pressure off the fiscal burden.
And in the long run, it will cause inflation to go down,” chief economic advisor Kaushik Basu told PTI in an interview.
Inflation should ideally be below 5%, he said.
“However, (it is) important to explain to our people that if we subsidise diesel artificially, by running up a large fiscal deficit, that would also exert an upward pressure on prices,” Mr Basu said.
In September, headline inflation was measured at 9.72% and food inflation has risen to a nine-month high of 12.21% for the week ended 22nd October.
While petrol prices are market-linked, the government administers the prices of LPG, kerosene and diesel backed by heavy subsidies.
Only Thursday oil marketing companies increased petrol prices by Rs1.80 per litre. Finance minister Pranab Mukherjee has acknowledged that the hike in petrol prices will have some impact on inflation.
Both Congress’ allies and opposition parties have slammed the price hike and have sought its roll back.
Petroleum minister S Jaipal Reddy has sought a meeting of the Empowered Group of Ministers (EGOM) to devise ways to cut the mounting losses to oil marketing companies due to the pricing of diesel, domestic LPG and kerosene as oil companies.
Prices of the cooking fuel and diesel were last revised in June.
Mr Basu, who also heads a prime minister-appointed panel on inflation, said deregulating diesel prices will make India a more responsible country environmentally, because then “we will not encourage over-consumption of diesel over other more environment-friendly energy substitutes”.
On inflation, he said bringing it down is a priority.
“I would like Indian inflation to be kept firmly below 5%. In fact, I would like a target of 4%. That gives you flexibility for relative price adjustment and also purchasing power parity adjustment, which is natural during high growth,” he said.
The CEA, however, admitted that India won’t be able to bring down inflation to the target of 5% by the end of the fiscal.
“But if we can reach 5% or less sometime toward the end of the next calendar (2012), that would be good,” he added.
The Reserve Bank of India (RBI) has hiked interest rates 13 times since March 2010, in its bid to tame inflation, a cause of big concern for the government.
The central bank expects inflation to moderate to 7% at March-end and Mr Basu agrees with the forecast.
The Nandan Nilekani-led UIDAI wanted to issue Aadhaar cards instead of the laminated letter mentioning the UID number. However, all of a sudden, it has cancelled its tender issued for printing of Aadhaar cards without giving any reason
The Unique Identification Authority of India (UIDAI), which is on a high for tagging residents under its ambitious unique ID (UID) project Aadhaar, has been compelled to stick with its mandate and not venture out of its marked territory. The UIDAI, led by Nandan Nilekani, has cancelled its tender for printing of Aadhaar cards within a month of issuing it, without giving any reason.
Earlier, on 4th October, the UIDAI issued a tender, (F. No. 14014/07/2011-Logistics) inviting bids for printing and delivery of Aadhaar cards. The notice said, "As of now, UID number is being delivered to the resident in the form of a laminated letter through post. Now the GoI (Govt of India) has decided to deliver the UID/Aadhaar number in the form of an Aadhaar Card. This Request for Proposal document is intended to invite bids from reputed and reliable firms for undertaking the work of Printing of the Aadhaar Card and delivering that card to the designated Post Offices across India. The data for the preparation of Cards will be provided by the UIDAI in electronic form."
The UIDAI launched the Aadhaar scheme in September last year and the authority is expected to issue two crore UID (12-digit unique) numbers by end-March 2012. So far the UIDAI has generated 5.96 crore Aadhaar numbers and more than one crore residents have enrolled themselves in the system across the country.
Issuing any identification card under the Aadhaar scheme was never the mandate of UIDAI. Here is what the site of the Authority says: "UIDAI has been created as an attached office under the Planning Commission. Its role is to develop and implement the necessary institutional, technical and legal infrastructure to issue unique identity numbers to Indian residents."
However, the tender inviting notice shows that the Authority is acting on the decision taken by the government. Currently, the UIDAI is under heavy criticism for concerns like privacy issues, use of biometrics and the incentives being paid for enrolling more residents. Many voices have been raised against the forceful implementation of the UID project, with most objections focused on concerns over privacy. The incentive issue will certainly push government employees to enrol more residents by any means, when they don't know what Aadhaar is and how it would affect their lives.
While some activists, like Advocate Kamayani Bali Mahabal had started petitioning the Prime Minister, others like VK Somasekhar, founder-trustee of Grahak Shakti and Col (Retd.) Thomas Mathew of Citizens' Action Forum have sent legal notices to UIDAI and the Planning Commission questioning their “illegal” activities in implementing the UID project, or Aadhaar, without any legal authority to do so.
The National Identification Authority of India (NIA) Bill is still pending before Parliament. The Bill seeks to constitute a statutory authority and lay down its powers and functions, besides deciding the framework to issue the UID or Aadhaar numbers. Yet, the Indian government and UIDAI have gone about implementing the scheme and issuing Aadhaar numbers without any Constitutional validity as yet.
According to an expert, the government is the Executive not empowered by the Constitution to implement projects spending public money without legislative sanction. "In the case of UIDAI, while the Executive may appoint anyone to head it, the government is legally constrained from implementing the project and issuing Aadhaar numbers," the expert said.
The NIA Bill is under the consideration of the Parliamentary Standing Committee on Finance, headed by former finance minister Yashwant Sinha and has members from across the political spectrum.
Nifty may continue in the range of 5,160 and 5,310
The market pared all its gains and slipped into the red for a short while in post-noon trade. However, buying interest in select stocks in trade that followed ensured a positive close. Today the Nifty made a four-day closing high (including today) at 5,284. The struggle in share prices is likely to remain for some more time. The index may continue to move in the range of 5,160 and 5,310. The gain of 18 points has been on the volume of 55.73 crore shares on the National Stock Exchange (NSE).
Easing of European worries after Greek Prime Minister George Papandreou on Thursday decided to cancel the referendum on the fresh bailout plan for the beleaguered country boosted markets across the world. Encouraged by the development, the Indian market too opened strong. The Nifty gained 59 points to open at 5,325 and the Sensex resumed trade at 17,675, up 193 points. Oil & gas, auto, metal, realty and IT sectors led the benchmarks to the day’s high in early trade. At the highs, the Nifty rose to 5,326 and the Sensex stood at 17,702.
The market moved sideways till noon trade after which it pared most of the early gains following a remark by finance minister Pranab Mukherjee that the latest increase in petrol prices would “have some impact on inflation”.
The benchmarks slipped to their intraday lows at around 2pm as selling pressure resulted in the oil & gas sector emerging as the top loser. At the lows, the Nifty fell to 5,257 and the Sensex was down at 17,474. The market staged a minor recovery to end above the lows of the day. The Nifty settled at 5,284, up 18 points and the Sensex closed 81 points higher at 17,563.
The advance-decline ratio on the NSE was in favour of the gainers at 1016:690.
The broader indices outperformed the Sensex with the BSE Mid-cap index advancing 0.75% and the BSE Small-cap index gaining 0.38%.
All sectoral indices, barring the BSE Oil & Gas (down 0.31%) settled higher. The top gainers were BSE Metal (up 1.64%); BSE Capital Goods (1.03%); BSE Realty (0.80%); BSE TECk (up 0.70%) and BSE Bankex (up 0.62%).
The major gainers on the Sensex were Hindalco Industries (up 2.43%); Jindal Steel (up 2.42%); Hero MotoCorp (up 2.19%); Sterlite Industries (up 1.69%) and State Bank of India (up 1.54%). The top losers were Tata Power (down 1.95%); Hindustan Unilever (down 0.85%); Reliance Industries (down 0.57%); Maruti Suzuki (down 0.51%) and Mahindra & Mahindra (down 0.39%).
The Nifty leaders were Ambuja Cement (up 2.77%); Hero MotoCorp (up 2.54%); Hindalco Ind (up 2.47%); Cairn India (up 2.18%) and Sun Pharma (up 2.03%). The major laggards were Ranbaxy Laboratories (down2.08%); Tata Power (down 2.04%); Reliance Infrastructure (down 1.84%); Dr Reddy’s (down 1.27%) and Sesa Goa (down 1.14%).
Markets in Asia settled higher as hopes of easing of the debt crisis in Europe boosted investor sentiments. Besides, the surprise move by the European Central Bank to cut its interest rate by a quarter of a percentage point to 1.25% on Thursday was seen as a step towards sustaining growth in the continent.
The Shanghai Composite gained 0.81%; the Hang Seng jumped 3.12%; the Jakarta Composite surged 2.10%; the KLSE Composite advanced 1.04%; the Nikkei 225 climbed 1.86%; the Straits Times gained 1.36%; the Seoul Composite went up by 3.13% and the Taiwan Weighted settled 1.92% higher.
Back home, institutional participation in the equities market was meagre on Thursday. While foreign institutional investors pumped in Rs15.45 crore in stocks, domestic institutional investors bought stocks aggregating Rs1.91 crore.
Carborundum Universal, an abrasives and ceramics manufacturer has divested it entire shareholding in Laserwords Pvt Ltd. In a filing with the exchanges it said that it has divested its stake for Rs50 crore. The transaction is in line with Carborundum’s overall strategy to divest its non-core assets to fund its core businesses. The stock gained 0.97% to close at Rs156.30 on the NSE.
Power equipment makers including BGR Energy Systems, BF Utilities and Siemens settled higher on reports that the government will consider imposing higher duty on imported power equipment. BGR Energy gained 1.50%, BF Utilities surged 3.88% and Siemens rose 0.63% on the NSE today.
LIC Housing Finance, a subsidiary of life insurance giant LIC, today said that it will float a Rs500 crore real estate venture capital fund within 2-3 months. The company has held roadshows for raising money from domestic institutions and high networth individuals. The fund will be raised through LIC Housing Finance Asset Management company, a subsidiary of LIC Housing Finance. The scrip rose 1.44% to close at Rs239.60 on the NSE.