"India is facing its worst inflation problem in a decade, and since the central bank can do little in the short run, the government must play a greater role in addressing it, Moody's Analytics said
The government needs to play greater role in taming inflation by reigning in spending, as the Reserve Bank of India's (RBI) tightening of its policy rates will have little impact on checking price rise, global research firm Moody's said today, reports PTI.
"India is facing its worst inflation problem in a decade, and since the central bank can do little in the short run, the government must play a greater role in addressing it, Moody's Analytics said.
"The problem cannot be tamed by simply raising interest rates to slow monetary growth," it added.
Moody's said growth of bank credit and money supply were sluggish in May at 18.8% and 15.1%, year-on-year, but surging prices of food and imports saw consumer inflation reach 13.9% during the month.
It said although the government has taken steps to divest stake in public sector undertakings (PSUs) and cut oil subsidies, it needs to reign in spending and borrowing because the combined central and state deficit is close to 10% of the gross domestic product (GDP), total economic output.
The research firm added that fiscal austerity would slow prices and boost the economy's longer-term prospects.
"With economic growth on a solid footing, inflation spiking, and liquidity in the banking system short, there is little excuse for not taking aggressive action to quickly reduce the budget deficit," Moody's said.
It said that with key state elections coming up there was a major question over whether the government would have the political will to step up austerity measures.
Moody's added, however, that with business confidence revived and firms looking to expand, it should set aside concerns about upsetting coalition members and tighten its fiscal affairs.
These stocks are going up on the hope that high 3G auction prices will prevent players from continuing their cutthroat tariff wars and that the recent regulatory recommendations will be toned down
Telecom stocks have been rising for the past few sessions and today they simply flared up. At the time of writing this, Bharti was trading at Rs303, up 8%, Idea was up 11% at Rs65 and RCom was up 2% at Rs192. What is driving all this buying?
What is driving telecom stocks is the hope that high 3G auction prices will prevent incumbents from engaging in further highly competitive tariff wars and that the recent recommendations of the Telecom Regulatory Authority of India (TRAI) will be toned down.
In fact, using this logic, a host of brokerages have been pushing telecom stocks aggressively to institutional investors over the past few days. Credit Suisse (CS) came out with a report today in which it upgraded its EPS estimate for Idea for FY11 by 100%! The report goes out on a limb to assume a stable competitive environment, which will lead to steady revenue per minute. It says, “Incumbents have positively surprised us on mobile metrics over the past two quarters, and we have come across instances of tariff increase." CS has a price target of Rs360 for Bharti and Rs75 for Idea. Religare too came out with a report today in which it assumes that a number of Idea\'s loss-making circles will turn profitable in FY11.
But an even bigger assumption in the market is that since the recent TRAI recommendations are now with the Cabinet, they will be overturned or at least watered down. TRAI has recommended that 2G auctions should be along the lines of the recent 3G auctions and that a one-time fee should be paid for spectrum between 6.2MHz to 8MHz. This means existing telecom players such as Bharti and Vodafone will have to shell out large sums.
In Bharti\'s case, market players are also hoping that Bharti will unlock value in its tower business Indus in which it holds 42% stake (like Reliance Communications recently did) and bring down its debt (which it has incurred for its Zain buy). Besides, it had got a boost from the Life Insurance Corporation of India recently upping its stake in the company to 5%. Yesterday when Bharti closed at Rs281, traders were anticipating that the stock would face its first resistance at Rs300, which it has cleared in a day. The next level to watch out for is Rs330. Two important red flags, especially if you are a short-term trader. One, a casual observation of Bharti\'s chart shows that these kind of sharp up-moves have usually been followed by sharp pullbacks. Two, serious buyers, such as financial institutions do not generally engage in undisciplined trades, i.e., they will not bid up a stock by 10% in a day. Therefore it is safe to assume that the \'serious\' buying has already quietly happened over a few sessions, earlier in the week and today\'s gain is more speculative in nature.
While the total goods earnings stood at Rs14,930.11 crore in the three-month period, the total passenger revenue earnings also went up to Rs6190.70 crore
Railways have posted over 7% growth in earnings during the first three months of this fiscal, reports PTI.
During the period between 1st April to 30th June, it earned Rs22,061.13 crore as compared to Rs20,610.63 crore during the same period last year, registering an increase of 7.04%.
While the total goods earnings went up from Rs13,927.05 crore during this period last year to Rs14,930.11 crore this year, the total passenger revenue earnings also went up to Rs6190.70 crore, said an official statement.
Earnings from other departments stood at Rs626.01 crore during this period.
The release said approximate number of passenger bookings during April-June 2010 stood at 1,937.22 million compared to 1,836.51 million during the same period last year, showing an increase of 5.48%.
In the suburban and non-suburban sectors, the number of passengers booked during this period was 965.05 million and 972.17 million respectively.