New Delhi: Ahead of the Reserve Bank of India’s (RBI) monetary policy review on Tuesday, the Prime Minister's economic panel today pitched for tightening of money supply as the current inflation rate at over 10% is double than the comfort level and can hurt high economic growth in the medium-term, reports PTI.
Describing inflation as source of major concern for quite some time, the PM's Economic Advisory Council (PMEAC) chairman, C Rangarajan, told reporters that inflation would start coming down only by August-September and stands at 7%-8% in December, before declining to 6.5% by this fiscal end.
As such, the PMEAC's projection of inflation in its Economic Outlook for 2010-11 was a percentage point higher than 5.5% projected by the RBI. Mr Rangarajan attributed this to the impact of fuel price hike on inflation.
"A bias towards (monetary) tightening is necessary," Mr Rangarajan said.
He said if the RBI does not take strong monetary action to contain inflation, it can opt for a series of "baby steps" after 27th July monetary review.
"Evidence on the funds flow side, as well as on the output side, clearly shows a strong economic recovery. In the backdrop of inflation rates that are more than twice the comfort-zone, it is important that monetary policy completes the process of exit and move towards a bias on tightening," Mr Rangarajan said.
He said controlling high inflation is essential for sustainable growth in the medium-term.
It is widely expected that RBI in its 27th July monetary policy review will raise short-term key rates — repo and reverse repo — to tame inflation that has been in double digits for a fifth month in a row at 10.55% in June.
However, the former RBI governor refused to go into specifics that he will prescribe for RBI to take in its 27th July monetary review.
The Reserve Bank has already started tightening money supply to tame inflation that has been in double digits for the fifth month in a row. Earlier this month, it raised its short-term lending and borrowing rates (repo and reverse repo) by 25 basis points.
This is a reverse of RBI's stance of easing money supply after the collapse of US financial services major Lehman Brothers deepened global financial crisis in September 2008.
Mr Rangarajan said inflation is triggered by food prices.
To control food inflation, he prescribed release of foodgrains through the public distribution system (PDS) in a manner to dampen these prices and continuation of import of wheat, rice and sugar on zero customs duty.
Even after a decline, food inflation stood at 12.47% during the week ended 10th July.
New Delhi: The European Union (EU) today asked India to further open its economy for foreign investments even as the country has taken tentative steps towards liberalising foreign direct investments (FDI) in sensitive defence and multi-brand retail sectors.
"We would like India to further open its economy to EU investments," the head of the delegation of the EU to India, Daniele Smadja, said at a Federation of Indian Chambers of Commerce and Industry (FICCI) function here.
She said that the 27-member economic bloc has an open regime for FDI and the EU want to take it forward with India.
"We are ready to commit to full openness towards Indian investment...," Smadja said.
The EU accounted for 27% of FDI India received in 2009. The Netherlands, Germany and the UK are the main investors.
The ambassador said the proposed comprehensive free trade agreement between India and EU would bring more predictability in the bilateral investment relations.
"Concluding the free trade agreement (FTA) negotiations will send clear signal of engagement on both sides...we need to seize this opportunity," she said.
She added the negotiations for the trade pact are likely to be completed this year.
Under the Lisbon Treaty, investment policy will be developed and managed at the European level giving the EU a strengthened negotiating hand.
"We will therefore be able to integrate both investment liberalisation and investment protection to our talks with India, which will make the agreement more comprehensive...," she added.
The EU is the largest investor in India but the biggest outlet for Indian investments abroad.
Tata's deal with Corus, Tata Motor's acquisition of Jaguar and Land Rover and Arcelor's acquisition by Mittal are some of the major bilateral investments.
India remained in the list of top ten countries in 2009 to have the highest FDI in the world. In 2009, the country received FDI worth $34.6 billion, while the outward FDI was $14.9 billion, an UNCTAD report said.
The country has taken several steps including simplification of it foreign investment policy to attract FDI.
Recently, the industry ministry has started debate to open sensitive defence and multi-brand retail sectors to foreign investors. While 26% FDI is allowed in defence, India does not permit it in multi-brand sector that employs about 33 million people.
The commercial is much too ordinary, given the high standards Vodafone has set with the zoozoos.
Er, where did the delightful zoozoos disappear? Vodafone is back with a brand new creature, and this time it’s an animated parrot. For now, I happened to watch just one commercial. The parrot has been used to sell Vodafone’s Rs4 bonus card offering for prepaid consumers.
The talkative parrot plays the role of the owner of a typical Mumbai Irani eatery. The voiceover, not surprisingly, is that of actor Boman Irani, who is a bawaji, and did run an Irani joint at one point in his life. And this renders the parrot pretty true to life. The parrot rants in disbelief that you can’t get a thing on earth for Rs4 in today’s times (the BJP would agree… the beleaguered party has been parroting this issue for a while now).
So the parrot cribs that you can’t get the sali of the sali boti for four bucks. You can’t get the gilli of the gilli danda for four bucks, and that leave alone eat, he wouldn’t even allow you to smell his delightful mawa cakes for four bucks, and so on. Tied in with this cynicism is the Vodafone offer of a bonus card that delivers a laundry list of value-adds for just Rs4.
Yes, it’s an okay commercial. Though Boman’s voice does up the fun ante a bit, the commercial is much too ordinary, given the high standards Vodafone has set with the zoozoos. This sort of stuff we have seen before, in ads and in them movies. I suspect Vodafone managers have decided to leave out the zoozoos this time, possibly because they believe that sort of humour is a little up-market. And the Rs4 scheme is clearly targeted at the lower end of the mobile spectrum, and therefore they needed, what in advertising is famously called, an ‘idiot-proof’ solution.
I actually don’t agree with this thinking. Surely the zoozoos could have been used to speak to the lower-class segment; surely they could have used the creatures in a format that works for that market. That’s what lateral thinking is all about. Having spent millions creating a power brand identity with the zoozoos, it makes little sense to create an all-new property, which will cost both time and money to be established. In fact, Vodafone already uses actor Irfan Khan for cards and schemes targeted at the bottom end, and funnily enough even that route wasn’t utilised here!
Net-net: A needless creation of a new identity. And wastage of some serious investments to nurture it. And the parrot doesn’t even capture the imagination. Tsk, tsk.