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Tuesday,19-January-2021

Business

Headline inflation to remain at elevated level in Q2FY21: RBI Governor

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RBI-Governor-Shaktikanta-Das

Headline inflation is expected to remain at elevated level in Q2FY21, but is likely to ease during the second half of the current fiscal aided by a favourable base effect, RBI Governor Shaktikanta Das said on Thursday.

The Governor said the Monetary Policy Committee (MPC) was of the view that supply chain disruptions on account of the COVID-19 pandemic persists, with implications for both food and non-food prices.

“A more favourable food inflation outlook may emerge as the bumper rabi harvest eases prices of cereals, especially if open market sales and public distribution offtake are expanded on the back of significantly higher procurement. Nonetheless, upside risks to food prices remain,” Das said while delivering the decision of the MPC on monetary policy.

“The abatement of price pressure in key vegetables is delayed and remains contingent upon normalisation of supplies. Protein-based food items could also emerge as a pressure point.”

Consequent to the high retail inflation, the MPC decided to retain the RBI’s key short-term lending rates, but maintained its growth oriented accomodative stance.

Accordingly, the repo rate, or short-term lending rate for commercial banks, was retained at 4 per cent.

Like wise, the reverse repo rate stands unchanged at 3.35 per cent.

The MPC voted to maintain accommodative stance, thus opening up possibilities for more future rate cuts.

It was expected that the MPC might hold rates as recent data showed that retail inflation has been at an elevated level during June.

The retail or consumer price index (CPI) stood at 6.09 per cent in June.

The urban CPI stood at 5.91 per cent and rural at 6.20 per cent.

As per the data, retail inflation level has reached the upper limit of the medium-term CPI inflation target of 4 per cent.

The target is set within a band of +/- 2 per cent.

Besides, Das in his address pointed out that higher domestic taxes on petroleum products have resulted in elevated domestic pump prices and will impart broad-based cost push pressures going forward.

“Taking into consideration all these factors, the MPC expects headline inflation to remain elevated in Q2:2020-21, but likely to ease in H2:2020-21, aided by favourable base effects,” Das said.

“Given the uncertainty surrounding the inflation outlook and extremely weak state of the economy in the midst of an unprecedented shock from the ongoing pandemic, the MPC decided to keep the policy rate on hold, while remaining watchful for a durable reduction in inflation to use available space to support the revival of the economy.”

Business

Sugar production up 31% to 142.70 lakh tonne

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Sugar

Sugar production rose nearly 31 per cent to 142.70 lakh tonne in the three and a half months of the current sugar season (SS) 2020-21 (October-September) as compared to the last year as per the data released by the apex industry body, Indian Sugar Mills Association (ISMA) on Monday.

As per the industry body, 487 sugar mills in operation across the country as on January 15, 2021 have produced 142.70 lakh tonne of sugar, as compared to 108.94 lakh tonne produced by 440 sugar mills as on January 15, 2020. This is higher by 33.76 lakh tonnes or 30.98 per cent from last season’s production for the corresponding period.

In Uttar Pradesh, 120 sugar mills have produced 42.99 lakh tonnes in the three and a half months of the season while 119 sugar mills in operation during the same period last year had produced 43.78 lakh tonne of sugar. The slightly lower production this year is because of reportedly lower cane yields and lower sugar recoveries in the state, said ISMA.

In Maharashtra, 181 sugar mills in operation have produced 51.55 lakh tonne till January 15, 2021, as against 139 sugar mills which had produced 25.51 lakh tonne last year up to the same period. This is 26.04 lakh tonne higher as compared to last season’s production for the corresponding period.

In Karnataka, 66 sugar mills have produced 29.80 lakh tonne of sugar, as compared to 21.90 lakh tonne produced by 63 sugar mills in the 2019-20 sugar season on January 15, 2020.

In Gujarat, 15 sugar mills are operating for the 2020-21 SS and they have produced 4.40 lakh tonne of sugar till January 15, 2021. In 2019-20 SS, a similar number of sugar mills were in operation on January 15, 2020, who had produced 3.72 lakh tonne of sugar till that date.

In Tamil Nadu, 20 sugar mills have produced about 1.15 lakh tonne of sugar as against 1.57 lakh tonne produced last year on the corresponding date.

The remaining states of Andhra Pradesh, Telangana, Bihar, Uttarakhand, Punjab, Haryana, Madhya Pradesh, Chhattisgarh, Rajasthan and Odisha have collectively produced 12.81 lakh tonne of sugar till January 15.

For the year 2020-21, Oil Marketing Companies (OMCs) have allocated about 309.81 crore litre, including about 39.36 crore litre from damaged foodgrains and surplus rice. This would mean a blend of about 7-8 per cent, depending on the total fuel demand, said the industry body.

However, some states like Uttar Pradesh, Maharashtra, Karnataka, Delhi, Punjab, Haryana and Uttarakhand have already achieved a blending percentage of 9-10 as on January 11.

The allocated quantity of ethanol indicates about 20 lakh tonne of estimated net lower sugar production during 2020-21 SS due to diversion of B heavy molasses and sugarcane juice away from ethanol and into sugar production.

The major contributions (about 93 per cent) are from the major sugar producing states viz. Uttar Pradesh, Maharashtra and Karnataka. This is as estimated by ISMA in its first advance estimates of sugar production released in October 2020.

As is the practice, ISMA has procured the satellite images in January 2021. Based on the images of the cane area remaining to be harvested, trend of recovery, yield and drawal percentage of sugarcane achieved so far, ISMA will come out with its second advance estimates of sugar production for 2020-21 SS, if required, by the end of January.

As per market reports, about three lakh tonne of sugar has been exported during the period October to December 2020, which is against the MAEQ of 2019-20 SS which was extended up to December 31, 2020.

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Business

Tamil Nadu: Daicel Corporation to invest Rs 230 cr in airbag inflator plant

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Nissan-India

Japan’s multi-product Daicel Corporation will set up an automotive airbag inflator plant near here at an investment of Rs 230 crore.

“In the first phase the investment will be Rs.230 crore. The focus will be on the domestic market. Based on the demand we will look at other markets,” an official told IANS on Monday.

The plant owned by Daicel Safety Systems India Pvt. Ltd, will come up at CapitalLand’s OneHub Chennai, an industrial township located near here.

The proposed plant is expected to go on stream by December 2023.

According to Daicel Safety official, the company supplies its products to tier I vendor for automotive manufacturers. The company’s airbag inflators can be found in all the major Japanese and Korean car makers in India.

He declined to comment on the proposed plant’s production capacity.

“Until now, we have been supplying products to the Indian market from our production site in Thailand and other countries. However, due to the growth potential of the Indian automobile market, and the need to strengthen automobile manufacturer and airbag module manufacturer supply chains in India, we have decided to establish a local production site at OneHub Chennai,” Takase Yoshifumi, Managing Director, India Operations, Daicel Corporation said.

“We will further strengthen our presence in the Indian market through stable production and supply of products, contributing to the development of the Indian economy through both inflator production and parts’ procurement in the country,” Yoshifumi added.

“We welcome Daicel to India and join OneHub Chennai’s growing community of leading multi-national companies. OneHub Chennai offers the right eco-system and plug-and-play infrastructure for the company’s manufacturing plant,” Vinamra Srivastava, CEO, Business Parks, CapitaLand India said.

The 1,250 acre business city OneHub Chennai (OHC) is developed by CapitaLand in a joint venture with IREO and Japanese Consortium comprising Mizuho Bank and JGC Corporation.

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Business

Sensex down 250 points; auto, metal stocks plunge

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Bombay-Stock-Exchange

The key Indian equity indices traded on a negative note on Monday morning with the BSE Sensex falling over 250 points.

Heavy selling pressure was witnessed in auto, metal and oil and gas stocks.

Around 10.10 a.m., Sensex was trading at 48,777.74, lower by 256.93 points or 0.52 per cent from its previous close of 49,034.67.

It opened at 49,061.22 and has so far recorded an intraday high of 49,122.23 and a low of 48,691.63 points

The Nifty50 on the National Stock Exchange was trading at 14,343.60, lower by 90.10 points or 0.62 per cent from its previous close.

The top gainers on the Sensex were HDFC Bank, HCL Technologies and TCS, while the major losers were Tata Steel, Bajaj Finserv and Bajaj Finance.

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