Finance minister says recent volatility in prices of food, fuel throws up fresh challenges
Hanoi, Vietnam: Warning that volatility in food and fuel prices may be turning into a global, long-term phenomenon, India today called for a co-ordinated effort at the international level to control inflation.
Recent volatility in global prices of food and fuel has thrown up fresh challenges in management of inflation, finance minister Pranab Mukherjee said. "... Management of inflation, in addition to domestic efforts, will increasingly have to be a globally coordinated effort," the finance minister said at a session on managing inflation and capital flows at the Governors' Roundtable of the Asian Development Board's annual meeting here.
Mr Mukherjee, however, blamed the loose monetary conditions in developed economies aimed at fighting deflationary trends to foster a recovery, which have led to volatile capital flows, partly contributing to volatility in commodity prices, PTI reports.
"Today, the entire globe is facing simultaneous volatility in food, fuel prices and commodity prices. Thus, over the last four years, we have moved from a fuel crisis to a food crisis, to a financial and economic crisis, and now, we are back to a food and fuel price crisis," he said.
India is grappling with high food inflation and the Reserve Bank of India tightened rates on Tuesday towards dealing with the problem, even at the cost of hurting short-term economic growth.
"We need to look closely at the contribution of different factors to food price volatility and inflation in order to understand and respond through policy reform," Mr Mukherjee said. He argued that a significant part of inflation was due to imbalances and inadequacies in global financial and monetary management.
The minister said one set of policies must address issues such as excessive liquidity and speculation, while another set of policies is required to address other issues such as panic buying and exchange rate fluctuations.
On capital flows, Mr Mukherjee said there had been a steady revival in flows to India in 2009-10 and this trend continued in 2010-11 due to strong economic fundamentals.
"However, easy monetary policy in terms of very low interest rates and quantitative easing in advanced economies have led to an increase in liquidity and lowering of long-term interest rates. These are also driving capital to emerging economies in search of higher yields," he said.
Mr Mukherjee said capital flows have exhibited considerable volatility, causing macro-economic instability in the event of sudden stops and reversals, eroding competitiveness and complicating the setting of policies. "I believe that policy prescriptions with respect to capital flows should be even-handed," he said.
He said, so far as lumpy and volatile flows are a spillover from policy choices of advanced economies, "managing capital flows should not be treated as an exclusive problem of emerging market economies and the burden of adjustment should be shared". He said policymakers must therefore have the flexibility, and discretion to adopt macro-economic, prudential and capital account management policies.
Escorts reported its net profit for the quarter ended 31 March 2011 at Rs73.22 crore compared to Rs41.47 crore in the corresponding period last year
Buoyed by a robust 76.56% jump in its net profit for the quarter ended 31 March, tractor maker Escorts today said it will set up a new production facility within the next two years with a total installed capacity of 50,000 units per annum.
The company reported its net profit for the quarter ended 31 March 2011 at Rs73.22 crore compared to Rs41.47 crore in the corresponding period last year.
The total net operating income during the second quarter increased by 33.49% to Rs901.81 crore from Rs675.56 crore in the year-ago period.
During the January-March period, the company’s tractor sales rose by 20.85% to 17,672 units from 14,623 units in the same period last fiscal.
“Our agri-solution business performed very well during the quarter, besides robust contribution from the construction division. Sales grew very strongly and we have almost reached the peak of our production capacity,” Escorts joint managing director Nikhil Nanda told PTI.
The company currently has four tractor plants that can produce about 95,000 units annually.
When asked about expanding its capacity, Mr Nanda said: “We have decided to set up a new plant and this will be in a new location. The installed capacity of the plant will be 50,000 units and it will be operationalised within next two years.”
He, however, declined to share details such as the location and the planned investment for the proposed unit.
“Besides, we are also investing Rs165 crore in our agri-machinery business, mainly to expand the capacity of higher powered engines and introduce higher HP tractors,” Mr Nanda said.
The company is setting up a machine shop with an annual installed capacity of about 50,000 units to supply parts to the upcoming facility, he added.
He said the company is investing another Rs50 crore for its construction division to expand the capacity of material handling and earth moving equipments and introduce new products from its Ballabhgarh unit in Haryana.
“With strong demand for infrastructure machinery, we are today focused and have aggressive plans for the construction equipment business. Technology tie-ups are in the pipeline to offer higher value added products to our customers, with an aim to become a one-stop shop,” he said.
Shares of Escorts closed 3.08% down at Rs130.55 on the Bombay Stock Exchange today, while the benchmark Sensex declined 1.40% to 18,210.
Oberoi Realty has posted a net profit of Rs104.99 crore in the corresponding period last year
Oberoi Realty reported 30.16% jump in its consolidated net profit for the quarter ended 31 March 2011, at Rs136.66 crore.
The company had posted a net profit of Rs104.99 crore in the corresponding period last year, Oberoi Realty said in a filing to the Bombay Stock Exchange (BSE).
The total income during the fourth quarter also increased by 58.17% to Rs266.76 crore from Rs168.65 crore in the year-ago period, it added.
For the financial year 2010-11, the consolidated net profit went up by 12.88% to Rs517.18 crore from Rs458.18 crore in the same period previous fiscal.
The consolidated total income in last fiscal stood at Rs996.04 crore compared to Rs789.88 crore in the year-ago period, up 26.10%, the company said.
The company’s board has recommended a 10% dividend, which is Re1 per equity share, for 2010-11.
“The response to our newly launched residential project has been very encouraging and indicates the aspirational power of our brand. The high occupancy rates of our office space and retail projects ensure a steady rental income for our company,” Oberoi Realty chairman and MD Vikas Oberoi said.
Shares of Oberoi Realty closed 1.23% down at Rs249.60 on the Bombay Stock Exchange today, while the benchmark Sensex declined 1.40% to 18,210.