The Indian rupee rose by 22 paise to Rs49.90 per US dollar in early trade today on persistent selling of dollars by banks and exporters in view of weakness of the American currency in overseas markets.
This is the 11th consecutive month when inflation has been above the 9% mark. The RBI will have to look at other options as the apex bank’s move to hike key rates 13 times since March last year has not produced the desired results
New Delhi: Headline inflation hovered stubbornly near the double-digit mark in October, rising marginally to 9.73% from 9.72% in September. The government attributed the marginal rise to in increase in prices of food products, fuel and manufactured goods which put more pressure on the common man’s pocket and major sectors of the economy, reports PTI.
Inflation, as measured by the Wholesale Price Index (WPI), at 9.08% in October 2010.
On an annual basis, food items became 11.06% more expensive year-on-year during the month under review. Food inflation was recorded at 9.23% in September.
Vegetables grew 21.76% costlier on an annual basis, while fruit prices were up by 11.96% and milk by 11.12% during the month. Eggs, meat and fish witnessed 12.59% inflation during October 2011.
Inflation in overall primary articles stood at 11.40% in October compared to 11.84% in September.
Non-food primary articles, which include fibres, oil seeds and minerals, grew dearer by 7.71% in October, as compared to a 14.82% rise in the previous month.
Prices of manufactured products, which have a weight of around 65% in the WPI basket, went up by 7.66% year-on-year in October against 7.69% in September.
Inflation in manufactured items has been high since February this year, when it crossed the 6% mark.
Experts said stubborn inflation will put pressure on the government and the Reserve Bank of India (RBI) at a time when the latest data shows growth in industrial output plunged to a two-year low of 1.9% in September.
Among manufactured items, iron and semis grew dearer by 21.67%, edible oil prices rose by 13.09%, the cost of tobacco products moved up by 12.53% and cotton textiles became 10.80% more expensive.
Inflation in the fuel and power segment stood at 14.79% on an annual basis in October, as against 14.09% in the previous month.
The spill-over of the over Rs3 per litre hike in petrol prices by oil marketing companies in mid-September seems to have been reflected in the numbers.
This is the 11th consecutive month when inflation has been above the 9% mark.
Elevated inflation levels close to double digits are likely to put pressure on the RBI to look for alternative policy options to bring the price situation under control. The apex bank has already said that another rate hike at its next mid-quarterly policy review in early December is unlikely.
The apex bank has already hiked key policy rates 13 times since March 2010 to tame inflation.
India Inc has said the string of rate hikes, which have raised the cost of borrowing, have acted as a dampener to fresh investment and hindered growth.
Growth in industrial production fell to a two-year low of 1.9% in September. Economic growth in the April-June period stood at 7.7%, the slowest expansion rate in the past six quarters.
At its second quarterly review last month, the RBI said it expects inflation to start moderating by December and fall to 7% by March 2012.
“We have asked them (Kingfisher) to come up with some fresh funds if the banks are to at all consider their request for restructuring. We want to see more funds coming from the company itself... The amount that the carrier should raise is about Rs 800-Rs1,000 crore,” SBI managing director Hemant Contractor said
Mumbai: State Bank of India (SBI), which has the largest exposure to crisis-ridden Kingfisher Airlines, today said it has asked the carrier to raise fresh equity to the tune of Rs800-Rss1,000 crore if banks are to consider a second restructuring of existing debt or extend fresh advances, reports PTI.
On whether the bank will consider making fresh advances to Kingfisher, SBI managing director Hemant Contractor said, “We have to be satisfied about the viability of the company.
There is no point restructuring if the company’s operations are not going to be viable.
“We have asked them to come up with some fresh funds if the banks are to at all consider their request for restructuring. We want to see more funds coming from the company itself...”
The amount that the carrier should raise is about Rs 800-Rs1,000 crore, Mr Contractor told reporters on the sidelines of the WEF-CII organised India Economic Summit here.
When asked whether banks have asked the airline to sell some of its assets to reduce its debt of over Rs7,000 crore, Mr Contractor said, “One thing that is being discussed is selling some of its assets. If they do, it is good or they would have to find some other means.”
He also informed that SBI has Rs1,400 crore exposure to the airline and that is a standard asset as of now. He was quick to add, “If the restructuring is successful, we will be able to maintain the current status.”
Meanwhile, an official of the Vijay Mallya-promoted airline told PTI that the airline board is meeting in Mumbai to take stock of the situation.
When asked whether bankers have set a timeframe for the airline to raise the funds, Mr Contractor declined comment.
Meanwhile, Yes Bank managing director and CEO Rana Kapoor called for concerted efforts by the government to salvage the crisis-ridden airline industry, as it is critical for the economy.
“This is an industry, and KF included, that needs a very strong dose of support, I think the government need to do something strategic like allowing foreign direct investment (FDI) or loan restructuring, or by repricing ATF (aviation turbine fuel),” Mr Kapoor said.
A clutch of banks led by SBI and ICICI have lent nearly Rs7,000 crore to the airline. Out of this, around Rs1,500 crore was restructured last November.
Started in May 2005, the airline has never made a profit and is yet to announce its Q2 numbers.