Retail inflation rises to 8-year high at 7.8 percent in April
Retail inflation surged to 7.79 percent in April, the fastest rise in eight years, led by a surge in food and fuel prices. Food inflation rose by as much as 8.38 percent. The latest inflation number heightened expectations that the Reserve Bank will look at more aggressive interest rate hikes in June to cool prices.
Why it’s important: Since persistently high inflation could derail growth, the benchmark interest rate will have to rise. The central bank could now hike the repo rate by 25-40 basis points in its June policy meeting and raise rates by around 75-100 bps in the current financial year to March 31.
Soaring inflation sinks equities for fifth day, rupee continues slide
India’s stock indices plunged by 2.22 percent, the fifth consecutive day of decline, as concerns over high inflation and heavy selling by foreign portfolio investors roiled markets. The fall in equities was accompanied by a weakening of the rupee, which hit a record low of 77.63 against the dollar.
Why it’s important: Bears are tightening their grip over the stock markets and India is no exception. The fear index, or VIX, has shot up 6 percent to tough a seven-week high. It indicates market uncertainty is likely to continue.
India’s factory output expands at slow pace of 1.9 percent in March
Industrial production grew at a slower pace of 1. 9 percent in March compared to last year, official data showed. The index of industrial production grew 24.2 percent in the year-ago period and 1. 46% in February. Factory output for the entire 2021-22 financial year grew 11.3 percent compared to a shrinkage of 8.4 percent in 2020-21.
Why it’s important: Overall industrial output remains weak since the index is only 1 percent above its pre-pandemic level in March 2019. Weak consumption demand is likely to see more headwinds in the coming months from the persistently high inflation.
Rainfall could become erratic in the second half of the monsoon season
Conflicting atmospheric conditions in the Pacific and Indian Oceans could lead to a normal to above normal rainfall during the first half of the monsoon season, which would be good for sowing the summer crop. However, the second half of the rainy season may get volatile rains that would affect irrigation.
Why it’s important: The June to September southwest monsoon is critical for farm output and economic growth as about 60 percent of India’s farms depends on rainfall. The country needs a good cropping season to keep runaway inflation in check.
Tatas pick chief of Singapore Airlines’s budget unit to lead Air India
Tata Sons named Campbell Wilson, chief executive of Singapore Airlines’ low-fare Scoot arm, to helm Air India after former Turkish Airlines chief Ilker Ayci turned down the role following opposition to his appointment.
Why it’s important: Air India was sold to the Tatas in January, after the group emerged as the top bidder in October. The sale ended years of government efforts to privatize the money-losing airline. There are expectations that the flag carrier will now be run more efficiently and eventually become profitable again.
India could become top market for Unilever in a decade: CEO
India could outstrip the US to become its largest market in a decade, Unilever global chief executive Alan Jope said, even as the fast-moving consumer goods firm warned of unprecedented inflation, rising inequality and the climate change crisis hurting the consumer goods market globally.
Why it’s important: The question, Jope said, is when India will become the company’s biggest business and not if. The optimism is against a backdrop of slowing consumer demand in India over the past few quarters.
Technology investor SoftBank to pare investments drastically this year
Masayoshi Son, founder, and chief executive of Japanese conglomerate SoftBank has said that the group this year will likely invest only half or even a quarter of what it did in 2021. Last year was record-breaking for technology investments amid a never-seen-before funding euphoria across private and public markets.
Why it’s important: There is a slowdown expected in big-ticket startup funding which is being led by macroeconomic factors and the ongoing war in Ukraine. This was only to be expected.
Byju's in talks to raise $1 billion to fund acquisition plans
Byju’s, India’s most valuable startup, is in talks with lenders to raise more than $1 billion in acquisition financing as the online education provider looks to expand its business rapidly. The Bangalore-based firm is in talks with banks, including Morgan Stanley and JPMorgan Chase & Co, for the funding to acquire another edtech company.
Why it’s important: The Covid-9 pandemic has provided a huge boost to online education and coaching centers. Byju’s has been on a shopping binge in the US and elsewhere and bought out startups offering coding lessons, professional learning courses, and test prep classes for competitive Indian exams.
India set to soon overhaul competition law, regulator
The central government will likely overhaul the Competition Act in the monsoon session of Parliament starting July and revamp the anti-trust watchdog Competition Commission of India to regulate India’s booming digital economy better. The corporate affairs ministry has prepared already the amendments, which is now being evaluated.
Why it’s important: The revamp will consider the disruption caused by the digital economy that was not the case when the competition law was passed two decades ago. The changes may bring mergers and acquisitions of startups with smaller sales and asset bases but with a huge valuation under the legal ambit.
Future Retail gets more time to respond to insolvency plea
The Mumbai Bench of the National Company Law Tribunal has granted more time to Future Retail to file its reply to the insolvency petition moved by Bank of India against the company under Section 7 of the Insolvency and Bankruptcy Code. The matter will be heard again on June 6.Why it’s important: Lenders are looking to recover some of their dues from the beleaguered firm, which is swamped with legal challenges by Amazon over its sale of assets to Reliance Industries.