Watch CPI data for inflation: Morgan Stanley

The global investment bank said that the RBI is facing a dilemma on policy action in the current stagflation-type environment. Growth is slowing yet inflation remains a challenge

The Indian research arm of global investment bank, Morgan Stanley, in its “India Economics” report said that Consumer Price Index (CPI) is an important measure to assess the trend in inflation expectations. In the past, price levels as measured by Wholesale Price Index (WPI) and CPI (Industrial Workers) usually tracked a similar trend—but over the last three years, a huge gap has opened up. Hence, WPI/core WPI inflation is not a sufficient measure to assess the outlook for inflation expectations.
Headline CPI inflation (industrial workers) has reaccelerated since March this year. CPI (IW) remained high at 10.05% in June from 10.2% in May and April, 8.6% in March, 7.6% in February and 5.3% in January. Non-food CPI inflation has also remained high at 9.5% in June over 9.7% in May, 9.8% April and 9.1% in March. This indicates that domestic price pressures remain elevated.
India’s provisional headline inflation rate (as measured by the Wholesale Price Index, WPI) decelerated to 6.87% year-on-year in July 2012 from 7.25% y-o-y in June 2012. The deceleration in headline inflation was primarily led by lower fuel inflation—the fuel index declined by -1.5% month-on-month (m-o-m) in July, the global investment bank added.
Non-food manufactured inflation that the Reserve Bank of India (RBI) monitors accelerated to 5.44% y-o-y in July from 4.85% y-o-y in June. The increase in non-food manufactured inflation component also partly reflected base effect—the non-food manufactured index had declined by 0.1% m-o-m in July last year.
Morgan Stanley further said that apart from lower global commodity prices, the delay in pass-through of administered fuel and electricity price hikes—and thus the consequent second-round impact on core inflation—has been a key force keeping WPI core inflation at steadier levels.
According to Morgan Stanley’s oil and gas analyst, Vinay Jaising, “if the government were to achieve its budgeted oil subsidy estimates (based on current oil futures prices and current exchange rate), regulated fuel basket prices (including diesel, PDS kerosene and cooking gas) would need to be hiked 29% (adding 183 bps to WPI inflation).”
Similarly, if the government were to ensure that losses of state-owned electricity distribution companies were brought down to the past trend of around 0.3% of GDP from the current 0.7% of GDP, the required hike in electricity tariff would lift WPI headline by another 50 bps.
The global investment bank stated that the decline in the fuel index reflected in the non-administered component could stem from the lagged pass-through of the decline in global crude prices in June Vs May (-12.8% m-o-m in dollar terms).
Meanwhile, food inflation (primary and manufactured) remained steady at 9.5% y-o-y in July against 9.4% in June. Primary food inflation, though remaining high, decelerated to 10.1% y-o-y in July against 10.8% in the previous month. However, manufactured food inflation accelerated to 6.3% in July over 5.8% in June.
Morgan Stanley stated that poor progress of the monsoon in the June-September season thus far (15% below normal) and consequent adverse impact on area under cultivation (-8.8% y-o-y) means that the summer (Kharif) crop output growth will be significantly lower. Excess stocks of rice will help to reduce any adverse impact on prices, but lower area under coverage for pulses, coarse cereals and oilseeds will keep food inflation elevated. Indeed, food prices as measured by daily wholesale food prices (available from Department of Consumer Affairs) have continued to accelerate in July and August (to date) as well.
Morgan Stanley believes that the high government deficit and strong growth in rural wages (at over 20% year-on-year for last three years) are key factors keeping inflation expectations high. Also, the RBI’s survey of households indicates that inflation expectations still remain high at double-digit levels. Persistently high inflation expectations are not surprising considering the trend in CPI.
The Kharif crop output growth will be significantly below estimates, the continued deficiency in rainfall trend would also affect water reservoir levels and have an adverse impact on the winter (Rabi) crop outlook as well. Along with the adverse domestic conditions, the external environment has also deteriorated further, with more downside to domestic growth. All this would lead to a downside risk of about 30-60 bps to the current estimate for GDP growth of 5.8% in FY13, Morgan Stanley said.
The global investment bank said that the RBI is facing a dilemma on policy action in the current stagflation-type environment. Growth is slowing yet inflation remains a challenge. WPI inflation has remained above the RBI’s comfort zone of 5%-5.5% for past 32 months now. Inflation is expected to hover around the 7% mark for the next few months, as pressures from food prices will keep the headline number high.
More importantly, the high CPI inflation and inflation expectations will not provide any comfort to the RBI to cut policy rates in the next meeting on 17th September.


Newly amended RTI rules: The good, the bad and the ugly

What’s objectionable is that the government not only adopted secrecy in amending the rules but also seemingly ‘misplaced’ the file containing suggestions from citizens, as revealed in an RTI reply

In a shocking move, the Department of Personnel & Training (DoPT) has in the last fortnight, notified the amended rules of the Right to Information Act without taking into consideration the thousands of suggestions by citizens in 2010. Incidentally, citizens sent suggestions after DoPT issued advertisements calling for them. What’s brazen and unforgivable is that in a RTI reply to Commodore Lokesh Batra (retd) in, the DoPT had stated that the folder containing citizens’ suggestions is missing and the status is the same as of today.


Former Central Information Commissioner (CIC) Shailesh Gandhi observes that, “I think people’s anger at the rules being made without a transparent discussion is justified. The amendments to the rules were discussed publicly in beginning of 2011, and then forgotten. The government should have put the proposed rules before the public and discussed these in Parliament, before notifying them. It is sad that the government does not appear to be willing to discuss things transparently and this creates a trust deficit.”


So, what do the newly amended RTI rules contain and how will it affect the RTI applicant?


The 500 word limit for application fee is very reasonable

Rule amended by DoPT: 3.Application Fee—An application under sub-section (1) of Section 6 of the Act shall be accompanied by a fee of Rs10 and shall ordinarily not contain more than five hundred words, excluding annexures, containing address of the Central Public Information officer and that of the applicant:

Provided that no application shall be rejected on the ground that it contains more than five hundred words.


Former Central Information Commissioner CIC) and RTI activist, Shailesh Gandhi: “In the absence of any word limit, some applicants ask so many queries that they lose sight of the information they want. Putting a word limit would result in more focused applications and better provision of information. There is no bar on an applicant putting two applications, if he feels it essential. I do not believe this restriction would really affect seeking information.”


Noted RTI activist, Vijay Kumbhar: “I think that’s very fair as you can write an in depth article in 500 words and here you are going to ask only queries, which anyway should be precise and crisp. We need to bring in discipline in filing RTI applications.”


Noted RT activist, Cmde Lokesh Batra (retd): “(i) Invariably, the applicants need to write the background with reference to which information is being sought as a prefix to queries or attach a document as a reference. At time the information requested is interlinked with more than one subject. 

(ii) This Act is meant even for illiterates, then how can you expect people to follow such a tight word limit. 

(iii) Even otherwise, everyone is not capable of summarising his or her thoughts so crisply. Hence the restriction imposed in the proposed RTI Rules not acceptable.”


Proof for Below Poverty Line (BPL) applicant:

Rules amended by the DoPT: Exemption from payment of fee—No fee under rule 3 and 4 shall be charged from any person who is below poverty line provided a copy of the certificate issued by the appropriate government in this regard is submitted along with application.


Dr Pralhad Kachare, Director, RTI Cell, YASHADA: “The procedure to get a BPL certificate is not difficult. In the case of Maharashtra, the list of BPL holders is kept with the Gram Sevak or Block Development Office (BDO) or with the municipal corporation if you reside in a city. A GR issued by the Maharashtra government states that those who are holders of the yellow ration card come under BPL. In absence of that, the tahsildar’s certificate stating that the person earns Rs25,000 per year is valid. However, due to the errors of ‘inclusion’ and ‘exclusion’, there are many who get themselves under the ‘inclusion’ list to reap benefits of government schemes. So, in that sense, this proof may not necessarily show the correct identification, but this would be in occasional cases.”


Cmde Lokesh Batra (retd):  “The government has cunningly mentioned “copy of the certificate” which means each time you have to provide a legally attested copy. I have been fighting for a self-attested copy as the official document is anyway available to the BPL holder.”


RTI applicant should pay for postal charges more than Rs50

Rules amended by the DoPT Fees for providing information—Fees for providing information under sub-section (4) and sub-sections (1) and (5) of Section 7 of the Act shall be charged at the following rates, namely—

a) Rs2 for each page in A-3 or smaller size paper

b) actual cost or price of a photocopy in large size paper;

c) actual cost or price for samples or models;

d) Rs50 per diskette or copy;

e) price fixed for a publication or Rs2 per page of photocopy for extracts from the publication;

f) fees for inspection of records for the first hour of inspection and a fee or Rs5 for each subsequent hour or fraction thereof; and

g) so much of postal charges involved in supply of information that exceeds Rs50


Shailesh Gandhi: “The requirement that if the postage cost is over Rs50 the applicant should pay appears fair to me. Ultimately, the poorest citizen bears this cost and if a lot of information is being sought, it appears reasonable that the applicant must pay the postage cost. In Maharashtra the complete postage cost is being borne by the applicant since the beginning.


Cmde Lokesh Batra (retd): “The ‘PREFACE’ says that citizens should voluntarily participate in the process of nation building by way of ensuring ‘transparency’ and ‘accountability’ in the governance, by making a request for certain information from the government that is theirs. (a) In this voluntarily participation as it is an applicant has to spend time and energy and money in seeking information. Where is the question of further charges? 

(b) Tax Payers money: Even the expenditure done by ‘public authorities’ in meeting the provisions of the Act comes from tax-payers, so why burden applicants with further cost.    

(c) Section 4: The Act has a statutory requirement for public authorities to suo motu disclose information held with them, through various means of communications, including internet so that the public have minimum resort to the use of this Act to obtain information. If even after five years of RTI Act in place public authorities have failed to deliver; why should the people by penalized for failure of governance?”


Too many documents asked for appeal to commission

Rules amended by the DoPT: Appeal to the Commission—any person aggrieved by an order passed by the First Appellate Authority or by non-disposal of his appeal by the First Appellate Authority, may file an appeal to the Commission in the format given in the Appendix and shall be accompanied by the following documents, duly authenticated and verified by the appellant namely –

  1. a copy of the application submitted to the Central Public Information Officer;
  2. a copy of the reply received, if any, from the Central Public Information Officer
  3. a copy of the appeal made to the First Appellate Authority;
  4. a copy of the order received, if any, from the First Appellate Authority;
  5. copies of the other documents relied upon by an appellant and referred to his appeal and;
  6. an index of the documents referred to in the appeal.

Return of Appeal—An appeal may be returned to the appellant, if it is not accompanied by the documents as specified in rule 8, for removing the deficiencies and filing the appeal complete in all respects.


Cmde Lokesh Batra (retd): “The sub section which says that ‘copies of the other documents relied upon by an appellant and referred to his appeal’ can be an excuse for the Commissions to send back the copy to the Appellant and ensure that precious days are wasted.

A statement should be added that: ‘Provided that no Appeal would be rejected merely because the documents were not verified or attested. Where there is a doubt or dispute, the appellant would be asked to attest the documents as required.’

(b) By repeatedly talking about the ‘First Appellate Authority’ it sounds that Commission will accept no direct complaint under section 18.”


Will this lead to PIOs taking assistance of lawyers?

Rules amended by the DoPT: Presence of the appellant before the Commission—(1) The appellant shall be informed of the date at least seven clear days before the date of hearing.

(2) The appellant may be present in person or through his duly authorized representative or through video conferencing, if the facility of video conferencing is available, at the time of hearing of the appeal by the Commission.

(3) Where the Commission is satisfied that the circumstances exist due to which the appellant is unable to attend the hearing, then, the Commission may afford the appellant another opportunity of being heard before a final decision is taken or take any other appropriate action as it may deem fit.

Presentation by the Public Authority—The public authority may authorise any representative or any of its officers to present its case.


Shailesh Gandhi: “My own reading of the new rules is that there is no explicit compulsion for an appellant to be present, nor is there any bar on a representative. However, if any commissioners interpret them in a perverse manner, we would have to agitate for a change.”


Cmde Lokesh Batra (retd):  “Firstly, video conferencing is available only in a few areas in India so what does the appellant do if there is no such facility? He would obviously be required to travel to places where the Commissions are located so you can imagine the burden on the citizen for whom information is his public right and here he would have to personally bear the travel expenses.


Secondly, while the Public Information Officer is allowed to “authorise any representative” which can be a lawyer too thus diluting the power of RTI. It is a dangerous precedent which is already happening in many cases.

The ugly part of the Amended Rules of RTI: Citizens suggestions ‘missing’


States Cmde Lokesh Batra (retd)

In December 2010, the government sought citizens’ suggestions on “Proposed Amendment to RTI Rules”. Thousands of people participated in this process by sending their valuable comments. Within days of receiving peoples’ comments, DoPT informs me that the folder containing peoples’ comments is missing—21 months later it is still missing. This has been established in the recent reply that I got stating that the file is missing in the PMO office. Notwithstanding, the government goes ahead and secretly promulgates amendment to RTI Rules and call it “RTI Rules 2012”. Asking peoples' comments which are thrown into the drain is nothing but a “Cruel Joke on Indian Citizens”.

(Vinita Deshmukh is the consulting editor of Moneylife, an RTI activist and convener of the Pune Metro Jagruti Abhiyaan. She is the recipient of prestigious awards like the Statesman Award for Rural Reporting which she won twice in 1998 and 2005 and the Chameli Devi Jain award for outstanding media person for her investigation series on Dow Chemicals. She co-authored the book “To The Last Bullet - The Inspiring Story of A Braveheart - Ashok Kamte” with Vinita Kamte. She can be reached at [email protected])




4 years ago

We should learn to be fair to the government whenever it is due and stop crying hoarse on it's every action.

By and large these amendments do not dilute the spirit of the law nor the right to information.

All those concerned with RTI have a responsibility to teach/assist people in need as to how to make best use of RTI and make the applications. People shun elitist activist.

It is not true that in Maharashtra the complete postage cost is being borne by the applicant since the beginning. I have received several replies without paying postage. As a matter of fact it was not demanded.

We must guard ourselves from the fact that our right to make complaint to CIC under Sec.18 must remain intact for following reasons:

Right to complain under Sec.18 co-exists with a right to make Second appeal u/s 19(1). They are exclusive. The act gives RTI applicant a choice to either make a complaint or prefer a second appeal. There is nothing in the act which forbids RTI applicant from making a complaint without first preferring second appeal. In other words preferring a second appeal u/s 19 is not a precondition for making a complaint. Sec.18(1) of the act, inter alia, states, that it shall be the duty of the Central Information Commission or State Information Commission, as the case may be, to receive and inquire into a complaint from any person.

As a matter of fact CIC has no right to remand back the matter to first AA in case it has not been disposed off by him when appealed. The act says one can go in second appeal within 90 days from the date on which the decision should have been made or actually received. So once second appeal is preferred CIC is legally bound to decide it and it has no right under sec.19(8) to remand it back to FAA.

Those ICs at the central Information Commission who started the practice of remanding back the appeals and complaints on the ground that it was not heard by AA with a direction to him to hear it, as a innovative step, should introspect about it's illegality and criminal waste of time,money and energy of appellants.

With due respect and sense of responsibility, I state that those who get themselves appointed to statutory quasi judicial positions through the same opaque appointment system have a no moral right to cry against non transparency and should stop doing so. People can easily through this hpypocricy.

These are the same persons who use their influence with state ICs and get their appeals heard out of turn and over the shoulders of those appellants waiting in the queue. They then go and get their pictures published in print media again using their contacts.

I must state that I do not write or speak without hard evidence.

Vijay Trimbak Gokhale
Parvati Nivas,
Savarkar Road,
Dombivli (East) 421 201

Vaidya Dattatraya Vasudeo

4 years ago

If the folder of suggestions is missing the entire process should be re-initiated, with very wide publicity by the Government, and very active campaigning by the activists.

Indians are know to be misusing every concession, the same is the case with BPL. There should be a limit upto which a BPL should get benefit. I remember there was some case where a person under BPL has requested copies of all the candidates who had applied for a particular post. Most probably, it was some one else who was doing this. And as an intelligent BPL, I can simply get this bunch of papers and sell it to a scrap shop. Is there anything that can stop some one from doing. There has to be strict limit for this.

nagesh kini

4 years ago

If the folder of citizens' suggestion is in fact 'missing', they will always provide them afresh.
Now that the new rules are here to stay and the limit of 500 words appears reasonable, let us give it a fair try.
So far, I've got extremely positive responses when my queries are focused. Not a single personal appearance.
Some departments prefer Sec.4 inspection as it does away with the task of written reply 'putting up for signature' hassles!


4 years ago

Govt has spent crores of Public money for e-Governance projects. Almost all Govt depts ahve internet connectivity, email ids etc. Then why govt can't use email as a response to RTI applications? It will be fast, Free & environment friendly as no cutting of Trees to make addl papers :)
Govt offices already have printers, scanners & copiers. So lets insist on soft copies or information on Pen drives to make it FREE.


nagesh kini

In Reply to SANJAY SINVHAL 4 years ago

How do you send Rs.10?


In Reply to nagesh kini 4 years ago

Easiest way is to purchase a Postal Order for ten rupees from the nearest Post Office.

nagesh kini

In Reply to Chishty 4 years ago

My question was how to remit when one puts queries on line?
If one submits the RTI application in a Head PO in duplicate attaching Rs.10 Postal Order, it will be forwarded to the PIO at their cost.

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