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Core non-food items, particularly fuel, expected to remain high due to global price trends
New Delhi: Food inflation fell to 8.06% for the week ended 21st May on the back of cheaper pulses, wheat and some vegetables, and this will encourage the government after the slower economic growth figures that came out a couple of days ago.
Food inflation, as measured by the Wholesale Price Index (WPI), stood at 8.55% during the previous week. The rate of price rise of food items was a high 21.15% in the third week of May last year.
As per data available from the government today, the prices of pulses were down by 9.22%, year-on-year, and wheat was cheaper by 0.77%. This may have happened as a result of the record production of wheat and pulses in the 2010-11 crop year (July-June). Prices of vegetables overall were down by 1.06% on an annual basis and potatoes were also cheaper by 2.15%.
However, prices of other food items became more expensive. Fruits were up by 30.51% and onions by 12.32% year-on-year. Protein-based items also continued on their recent upward trend, with milk prices becoming dearer by 7.04% and eggs, meat and fish 5.5% more costly. Cereals were also dearer by 4.78% and the price of rice went up by 2.51%.
Overall, prices of primary articles registered a 10.87% rise during the week under review, compared to 11.6% in the previous week.
The rate of price rise of non-food primary articles dropped to 21.31% for the period from 23.22% in the previous week. Fibres became dearer by 55.82% and minerals by 11.78%.
The recent hike in retail prices of petrol was also reflected in the data. Petrol was up 32.41%, year-on-year. Inflation in petrol had been consistent at 21.81% during the previous few weeks.
The government and the Reserve Bank of India (RBI) expect inflationary pressure to be more from core (non-food) items on account of high global prices of commodities, particularly crude.
A rise in prices of food items was the main reason for inflationary pressures in 2010. Food inflation was in double digits for most of last year, before moderating since March this year. Food inflation fell to an 18-month low of 7.47% in the first week of May, before going up again in the following week.
Headline inflation stood at 8.66% in April. The RBI has projected, in its monetary policy for 2011-12, that overall inflation would average 9% in the first half of this fiscal.
The latest drop in food inflation numbers comes in the wake of a slew of bad news for the economy. GDP growth slowed to a five-quarter low of 7.8% in the January-March quarter, while six core industries registered a meagre 5.2% expansion in April.
Experts have blamed inflation and the resultant rate hikes by the RBI, for the slowdown in investment and poor economic growth numbers.
Sun TV dived over 30%, SpiceJet dropped more than 13% after Centre for Public Interest Litigation files petition on the basis of Tehelka report that Maran favoured Aircel when he was telecom minister, in ‘quid pro quo’
Shares in Sun TV and the budget carrier SpiceJet plunged by over 30% and 13% respectively in trading at around noon today, following reports that a public lawsuit named Dayanidhi Maran, the former telecom minister and now textiles minister and brother of the chairman of the companies, in a telecom probe.
According to the report, the Centre for Public Interest Litigation (CPIL), which has helped drive the investigations into the 2G, moved the Supreme Court yesterday, to demand an inquiry by the Central Bureau of Investigation into allegations that Mr Maran granted licences to Aircel when he was telecom minister on the basis of a "quid pro quo".
The shares of the Maran family-owned Sun TV Networks, which opened lower in a weak market, crashed to Rs260 at around noon, sharply down from its Wednesday close of Rs377. Shares in SpiceJet, which is also owned and run by Dayanidhi's brother Kalanithi Maran, suffered a similar fate and after opening at Rs40.45, dropped to Rs35.55.
These companies are just two of several companies that have had a question mark hanging over them for some time now, because of some cases that have been initiated against their owners or directors for alleged manipulation of the system through bribes.
A new petition filed by CPIL through advocate Prashant Bhushan, said, Tehelka magazine, in its 4 June 2011 issue, had published a cover story in which "a serious case has been made out against" Mr Maran during the time he was telecom minister between 23 May 2004 and 15 May 2007.
In November 2006, the Department of Telecommunication (DoT) issued 14 letters of intent to Aircel, and all of them were converted into licences in December 2006. "Within three months of this," Tehelka said, "Mr Maran's family-owned business (Sun TV) received substantial investment from Maxis Group (which owns Aircel) by taking a 20% equity in Sun Direct. The FIPB approved this investment on 2 March and 19 March 2007. Maxis Group invested a total of Rs599.01 crore in Sun Direct between December 2007 and December 2009."
Also, Astro, a Maxis Group company, through its wholly owned company South Asia Multimedia Technologies, made an investment of Rs11.28 crore in South Asia FM Ltd (SAFL), an radio company owned by the Maran group, which had licences to own and operate 23 FM radio stations in India. These transactions show a clear quid pro quo for getting the UAS licences by Malaysia-based Maxis Group, Tehelka alleged.
Dayanidhi Maran has denied these charges. Two other key leaders of the DMK, which is a partner in the Congress-led alliance government in Delhi, have been arrested and are in custody charged in a multi-crore telecom corruption scandal.
Among the companies that have been named in the bribes-for-licences-and-spectrum case are Reliance Communications (RCom), Unitech and DB Realty and some officials of these firms have also been arrested and are under investigation.
The stocks of these companies have been volatile over the past six months, mainly because of the corruption cases. DB Realty has lost the most, dropping nearly 70% from Rs240 early December 2010. RCom has slipped over 30% from Rs141 and Unitech more than 45% from Rs65 in the same period.