Inflation numbers disturbing: PMEAC chief

"I think the inflation numbers are in a sense upsetting ... We need to address the issue of inflation even more strongly. We need to use more monetary and fiscal policy to contain inflation," PMEAC chairman C Rangarajan opined

New Delhi: Describing the rise in inflation to above 9% as 'upsetting', the Prime Minister's Economic Advisory Council (PMEAC) today pitched for further tightening of the monetary policy by the Reserve Bank of India (RBI) at its next review, which is due on Thursday, reports PTI.

"I think the inflation numbers are in a sense upsetting ... We need to address the issue of inflation even more strongly. We need to use more monetary and fiscal policy to contain inflation," PMEAC chairman C Rangarajan told reporters here.

His reaction came after the release of the latest data, which showed headline inflation going up to 9.06% in May from 8.66% in April on the back of rising prices of manufactured products and petrol.

Asked about the expected hike in policy rates by the RBI at its mid-quarterly review on 16th June, Mr Rangarajan said: "... I think the RBI will probably look at the inflation issue more seriously and will take some action... (It) will probably decide to do in the context of the high level of inflation."

He, however, refused to cite any numbers on the quantum of the hike in short-term lending (repo) and borrowing (reverse repo) rates.

"I do not know what the RBI will do, but I think the concern regarding inflation will be very dominant," he said.

The RBI has already hiked key policy rates nine times since March 2010 to curb demand and tame inflation. With headline inflation remaining high, it is now almost certain that the apex bank will go for another hike at its 16th June mid-quarterly review.

Experts have said that such action is inevitable and the RBI has also said in recent times that taming inflation is the biggest challenge before it.

The PMEAC chief also favoured deregulating diesel prices.

"The oil marketing companies are losing in a big way. If the diesel prices are not raised, then the burden on the Budget will also increase... We need to move toward adjusting the diesel prices in line with international crude prices," Mr Rangarajan said.

He, however, refused to comment on any timeframe for deregulating diesel prices.

Oil marketing companies had in mid-May hiked retail prices of petrol, which was deregulated last year, by over Rs5 a litre. However, the price of diesel and LPG prices was not increased, as these are still in the controlled list.

Oil firms have been saying that the regulated prices have been hurting them as global crude rates continue to hover around $100 per barrel, mainly on account of the conflict in the Middle East and North Africa region.

Last month's petrol price hike was reflected in the May inflation numbers. Petrol prices went up by 27.31% on an annual basis. Overall inflation in the fuel and power segment stood at 12.32% year-on-year.

Prices of manufactured products, which have a weight of around 65% in the WPI basket, went up by 7.27% year-on-year in May.

In its monetary policy for 2011-12 released last month, the RBI had said that high prices of global commodities, particularly crude, will continue to drive inflation upward.

It had projected inflation to average 9% for the first six months of 2011-12.

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Moneylife Foundation launches new initiative, widens reach and activities

The Foundation held its first meet to form a Voluntary Experts Group to address specific issues like insurance, banking, capital markets, the Right to Information Act, financial literacy, senior citizens’ issues and property matters on Saturday, 11th June. This is part of Moneylife Foundation’s ongoing effort to empower citizens and spread financial literacy

A damp monsoon-hit Saturday seemed like the wrong day to start a new initiative for Moneylife Foundation—but happily, our voluntary experts began to come in almost 30 minutes ahead of schedule.

So over some sweet & piping hot tea and biscuits, the Voluntary Experts Group (VEG) got off to a bright and successful start. The age spectrum extended from the young and eager who came here to help, and to the wise and experienced who arrived to offer their guidance. In other words, people who attended were from the 20s to their 80s.

We had 21 voluntary experts from Mumbai along with all of Team Moneylife attending the weekend meet! After a round of introductions and views on issues to be discussed, the Group identified a few core areas that would be taken up on a priority basis this year. These were:  insurance, banking, capital markets, the Right to Information Act, financial literacy, senior citizens’ issues and property matters.

Based on the feedback from the meeting, Moneylife Foundation will work on a code of ethics which will be circulated to all, to ensure Chinese Walls between the Foundation’s activities and the personal professional work of each member of the VEG.

After discussions, it was agreed that all VEG members would meet on the second Saturday of every month at 11am at the Moneylife Knowledge Centre at Shivaji Park, Mumbai, on specific subjects while core groups and sub-committees (which are in the process of being formed) can meet as per their convenience.

Detailed minutes of the meeting will be circulated to all the members and also posted on Moneylife Foundation's website at www.mlfoundation.in
 
We have received 60 odd offers to volunteer from around the country. We are very grateful for your support and will write to each one of you as soon as we figure out how to make best use of your offer to help investors.

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Citigroup reduces stake in HDFC by 1.5%

The reduction is part of Citi's mitigation efforts ahead of the adoption of Basel III capital rules. The transaction resulted in a pre-tax profit of approximately $160-million, as per a Citigroup press release

Mumbai: Citigroup today said that it has reduced its 11.4% stake in mortgage lender Housing Development Finance Corporation (HDFC) by 1.5% to 9.9%, reports PTI.

Reducing its holdings in HDFC to below 10% is a part of Citi's mitigation efforts ahead of the adoption of Basel III capital rules.

The transaction resulted in a pre-tax profit of approximately $160-million, a press release issued here stated.

Citigroup has no plans to sell any additional shares of HDFC, it added.

"We have been an investor in HDFC since 2005 and continue to have a very strong and productive relationship with its senior management team. This transaction was motivated by our capital planning, as we prepare for the implementation of Basel III, rather than strategic considerations," Citigroup's chief financial officer, John Gerspach, said.

"Citi remains deeply committed to India and we continue to invest in our franchise in this very important market. We have unique experience, deep relationships and local insights, all of which are strong competitive advantages," Citigroup India's CEO, Pramit Jhaveri, said.

Over the past three years, Citigroup raised around $60-billion from capital markets for its clients in India and advised on nearly $25-billion of India-related mergers and acquisitions.

In the consumer business, Citigroup has 42 full-service Citibank branches in 30 cities and a market share of over 20% in credit card spends.

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