Fruit prices soar, may add to food inflation woes
- Fruit prices have risen sharply due to the late arrival and heavy rains of the monsoon, which have affected the crops. Fruits, which contributed 0.3 percentage points to food inflation in FY23, may add more this year as prices are expected to be higher than earlier estimated, according to experts.
- The retail price of apples was 15% higher in August at ?175.63 per kg compared with ?158.2 per kg average in May.
- The economists say that fruit inflation could rise to 5% by December and that it could push up the overall retail inflation, which is already above the Reserve Bank of India's comfort zone of 6%, tomato and vegetable prices have also increased significantly in recent months.
Parliament Watch: Key Bills Passed in Monsoon Session
Some of the key bills are:
- The Digital Personal Data Protection Bill, of 2023, aims to protect the privacy and rights of citizens over their personal data and regulate the processing of such data-by-data fiduciaries.
- The Essential Defence Services Bill, 2023, which empowers the government to prohibit strikes, lockouts, and lay-offs in units engaged in essential defense services.
- The Insolvency and Bankruptcy Code (Amendment) Bill, 2023, introduces a pre-packaged insolvency resolution process for micro, small, and medium enterprises (MSMEs).
- ?The Tribunals Reforms Bill, of 2023, which abolishes certain tribunals and authorities and transfers their functions to existing judicial bodies.
- The Constitution (One Hundred and Twenty-Seventh Amendment) Bill, 2023, restores the power of states to identify and specify their own backward classes for reservation benefits.
Surplus Liquidity in Banking System Surges to 14-month High
- The surplus liquidity in the banking system, as measured by the excess funds that banks park at the Reserve Bank of India's (RBI) absorption window, averaged Rs 2.48 lakh crore a day in August, the highest since June 2022.
- It is attributed to factors such as hefty government expenditure, RBI's interventions in the forex market, and a greater-than-expected quantum of Rs 2,000 notes in circulation.
- RBI may continue with its stance of withdrawing monetary accommodation to contain price pressures. RBI will announce its next monetary policy statement on Thursday.
FMCG Cos Fight for Market Share with Agile Small Peers
- Fast-Moving Consumer Goods (FMCG) sector in India, where large players such as Hindustan Unilever Ltd (HUL), Nestle India Ltd, and Britannia Industries Ltd are facing stiff competition from smaller and regional players.
- Small players have been able to gain market share by offering lower prices, innovative products, faster distribution, and better customer service. Large players have responded by launching new products, cutting costs, increasing rural penetration, and acquiring niche brands.
- Data from NielsenIQ shows that small players have increased their share in categories such as biscuits, snacks, chocolates, detergents, and hair care.
L&T Partners to Invest $4 Billion in Green Hydrogen Projects
- Larsen & Toubro (L&T), India's largest engineering and construction company, has partnered with NTPC Ltd, Indian Oil Corporation Ltd, and Power Grid Corporation of India Ltd to invest $4 billion in green hydrogen projects over the next five years.
- L&T will provide engineering, procurement, and construction (EPC) services for the projects, which will use renewable energy sources such as solar and wind to produce hydrogen through electrolysis. It is exploring opportunities to export green hydrogen to countries like Japan, South Korea, and Europe, where there is a high demand for clean energy.
- L&T's CEO SN Subrahmanyan said that green hydrogen is the future of energy and that L&T is committed to contributing to India's green hydrogen mission.
China Slides into Deflation as Recovery Efforts Falter
- China's economy is in trouble, as it has slipped into deflation for the first time in more than two years.
- Consumer price index (CPI), a measure of inflation, contracted by 0.3% year-on-year in July, while the producer price index (PPI), a measure of factory gate prices, rose by 9% year-on-year, the highest since 2008. It is attributed to factors such as the impact of Covid-19 outbreaks, floods, supply chain disruptions, rising raw material costs, and regulatory crackdowns on various sectors.
- Deflation poses a risk to China's economic growth and stability, as it erodes consumer confidence and corporate profits, and increases the real burden of debt.
Oil Rises as Tight Supply Counters Likely Rate Hikes
- Oil prices rose on Monday despite expectations of higher interest rates by major central banks, which could dampen global demand for fuel.
- Brent crude futures gained 0.7% to $74.10 a barrel, while West Texas Intermediate (WTI) crude futures rose 0.6% to $71.91 a barrel. Oil prices were supported by tight supply conditions due to production cuts by OPEC+ countries, declining US inventories, and geopolitical tensions in the Middle East.
- The prices were resilient to the hawkish signals from central banks such as the US Federal Reserve and the European Central Bank, which have indicated that they may start tapering their stimulus measures and raising interest rates sooner than expected.
Economists See Odds of US Recession at 50% or Less
- A strong majority of business economists now say the odds of the US entering a recession in the next 12 months are 50% or less, according to a National Association for Business Economics survey.
- Some 71% of respondents reported such an outlook in the results of the poll, published Monday. That marks a sharp turnaround from NABE's previous survey in April, which showed an almost even split between those forecasting a downturn and those who were not.
- This is attributed to factors such as ongoing strength in the labor market and a pullback in key consumer price metrics. While economists have in recent months repeatedly altered their forecasts for when a potential recession may begin, the NABE survey results suggest many may now be changing their minds altogether on the inevitability of one.
India and UK Discuss Nine Areas in FTA
- India and UK have identified nine areas of cooperation under their proposed free trade agreement (FTA), which include goods market access, services market access, investment, digital trade, intellectual property rights, sanitary and phytosanitary measures, technical barriers to trade, trade remedies and trade and sustainable development.
- Both sides have held two rounds of discussions on these areas since June and are aiming to conclude an early harvest agreement by March 2024.
- India and UK have set an ambitious target of more than doubling their bilateral trade from $15.4 billion in FY20 to $27 billion by FY25.
MG Motor expects EVs to drive a fourth of its sales in India this year
- MG Motor India, a subsidiary of China's SAIC Motor Corporation, expects electric vehicles (EVs) to account for 25% of its sales in the country this year, up from 13% in the first half.
- The company has seen strong demand for its EV models, such as ZS EV and Astor, and plans to launch more products in this segment.
- MG Motor India is investing in charging infrastructure, battery technology, and localization of components to boost its EV business. MG Motor India's president and managing director Rajeev Chaba, said that the company is bullish on the EV market and aims to sell 15,000-20,000 EVs annually by 2025.
