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Inflation rises owing to surge in food, fuel prices

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A man weighs vegetables at a popular market in Caracas on October 24, 2013. Venezuela, which is highly dependent on basic commodity imports, will massively boost its food and basic supplies imports in the next two months to counter shortages and high inflation, Vice president for the economy Rafael Ramirez said Wednesday. Since President Nicolas Maduro took office on April 19, Venezuela has seen a cyclical increase in shortages of sugar, coffee, oil, milk and toilet paper, among other products. Meanwhile, annual inflation in September soared to 49.4 percent, the highest in the past 13 years, according to official data.  AFP PHOTO / JUAN BARRETO        (Photo credit should read JUAN BARRETO/AFP/Getty Images)

By NewsGram Staff Writer

India’s retail inflation surged to 5.40 percent in June from 5.01 percent in May due to a rise in food and fuel prices propelled, official data showed on Monday.

The data furnished by the Central Statistics Office (CSO) showed that the retail, or the consumer price index (CPI) inflation, in the corresponding month of 2014 stood at 6.77 percent.

According to the CSO data, the CPI-urban for June inched higher to 4.55 percent from 4.41 percent in May. The June CPI-rural, meanwhile, jumped to 6.07 percent from 5.52 percent in May.

The main cause for the rise in June inflation was attributed to costlier food items.

The “Food and beverages” sub-indice in the CPI has the highest weightage of about 45.86. It rose to 5.48 percent from 4.80 percent in May.

However, food inflation during June 2015 was lower in comparison to the corresponding month of 2014, when it stood at 7.21 percent.

The food inflation in the urban areas touched 5.24 percent from 4.48 percent in May. The food inflation burden for the rural households in June rose to 5.61 percent from 4.74 percent in May.

The food inflation in rural and urban areas during the corresponding month of 2014 stood at 8.05 percent and 5.62 percent, respectively.

Prices of protein based food items like pulses, milk, egg, meat and fish accelerated. Pulses became costlier by 22.24 percent on an year-on-year (YoY) basis.

Milk and milk-based products became dearer by 7.18 percent. Prices of meat and fish appreciated by 6.99 percent. Cost of eggs rose by 5.09 percent.

Spices became expensive by 9.71 percent. Vegetables’ prices were up by 5.37 percent.

However, sugar and confectionery costs came down by 8.55 percent in the month under review on an Year-on-Year(YoY) basis.

Fuel and light products which constitutes 6.84 percent of the CPI grew by 5.92 percent in June.

The uptick in the CPI will be a major concern for the Indian industry, as it belies the hope of a future rate cut by the Reserve Bank of India (RBI).

The recent slowdown in the factory output, revealed by the Index of Industrial Production (IIP) data released on Friday and good progress of monsoon, had renewed hopes of India Inc. for another rate cut from RBI during its monetary policy review in August.

“CPI breaching the 6 percent comfort level in rural India is a concern. Uptick in retail prices in urban and rural regions in June has shrunk RBI’s window for cutting rates further,” said Debopam Chaudhuri, chief economist, ZyFin Research.

A retarded growth in manufacturing output slowed India’s overall industrial production expansion to 2.7 percent for May — against 4.1 percent in April.

The RBI had lowered its short-term lending rate by 25 basis points in its monetary policy review in June.

That time RBI Governor Raghuram Rajan said the central bank’s next move will be data-dependent. It will also keep an eye on how monsoon progresses and the steps taken by the government to mitigate its negative effects, Rajan had added.

(With inputs from IANS)

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Raghuram Rajan: The Man Who Revolutionized The Indian Banking System

During his academic days, he won the Director's Gold Medal in IIT Delhi and was a Gold medalist at IIM Ahmedabad.

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Raghuram Rajan was born on 3 February 1963, in Bhopal, Madhya Pradesh. Wikimedia Commons
Raghuram Rajan was born on 3 February 1963, in Bhopal, Madhya Pradesh. Wikimedia Commons
  • On September 5, 2013, Rajan took charge of Governor of India’s central banking institution
  • Raghuram Rajan graduated in electrical engineering from IIT Delhi
  • Under Raghuram Rajan, the RBI licensed two universal banks and approved eleven payments banks

Raghuram Rajan is one of the technically financial people to grace the Indian economy and banking sector. He came at the time when the Indian economy was in the worst crisis ever faced in last decades. Through his meticulous planning, he banked on reforming and stabilizing the financial situation in the nation. On September 5, 2013, Rajan took charge of Governor of India’s central banking institution, succeeding Duvvuri Subbarao.

Raghuram Rajan was born on 3 February 1963, in Bhopal, Madhya Pradesh in a Tamil family. His father was a senior officer in the Intelligence Bureau department. He is married to Radhika, a classmate from IIM and has two children.

Also Read: Was ‘The First Women President Of India’ A Well Deserved One?

Raghuram Rajan graduated in electrical engineering from IIT Delhi and then he joined Tata Administrative Services as a management trainee. However, he soon left this to pursue a doctoral program in management at the MIT Sloan School of Management. After that, he acquired a Post Graduate Diploma in Business Administration from IIM, Ahmedabad in 1987 and later Raghuram Rajan did his PhD from the Massachusetts Institute of Technology.

Raghuram Rajan was appointed as the Vice-Chairman of Bank for International Settlements (BIS) on 9th November 2015.  Wikimedia Commons
Raghuram Rajan was appointed as the Vice-Chairman of Bank for International Settlements (BIS) on 9th November 2015. Wikimedia Commons

During his academic days, he won the Director’s Gold Medal in IIT Delhi and was a Gold medalist at IIM Ahmedabad. Even after being so bright, he admitted of having poor command over the Hindi language.

Take a look at some of the aspects related to the life of one of the genius economist of India: 

  1. After Raghuram Rajan joined as the Governor of the RBI, the rupee rose 2.1 percent against the US dollar. Before that, the rupee had weakened sharply against the dollar, hitting almost Rs 69 to a single dollar.
  2. To bring down the inflation, the RBI under Rajan adopted the Consumer Price Index (CPI) despite the Central Government’s disapproval. Consequently, the CPI dropped from 9.52 percent in August 2013 to 5.24percent in April 2016, accompanied by the required drop in global commodity prices.
  3. Under Raghuram Rajan, the RBI licensed two universal banks and approved eleven payments banks. It was done to extend the country’s banking services to the two-thirds of the population, who were until then still deprived of basic banking facilities.
  4. Raghuram Rajan has the privilege to be appointed as the youngest-ever Economic Counselor and Director of Research (chief economist) at the International Monetary Fund (IMF) from October 2003 to December 2006.
  5. During his stay at IIT Delhi, Raghuram Rajan was the head of the student’s council.
  6. Raghuram Rajan was ranked by his fellow mates as the economist with ‘the most important ideas for a post-crisis world’ in a 2011 poll in The Economist.
  7. Raghuram Rajan has the distinction of being featured on Foreign Policy magazine’s Top 100 Global Thinkers list in 2010 and 2012.
  8. Raghuram Rajan has also served as a professor in the University of Chicago’s Booth School of Business in the economics faculty. Before leaving the position due to public service commitments, he was awarded the accolade in 2007 which he held till 2013.
  9. Raghuram Rajan was appointed as the Vice-Chairman of Bank for International Settlements (BIS) on 9th November 2015. The bank was established as an international company by shares of the central banks of different countries. The bank provides banking facilities to the central bank and is also regarded as the key bank of the central banks.
  10. Raghuram Rajan authored a very popular book, ‘Fault Lines: How Hidden Fractures Still Threaten the World Economy,’ was awarded the Best Business Book of the Year in 2010 by Financial Times-Goldman Sachs. This book argued that serious flaws in the economy are to blame for the current economic crisis.

    After Raghuram Rajan joined as the Governor of the RBI, the rupee rose 2.1 percent against the US dollar. Wikimedia Commons
    After Raghuram Rajan joined as the Governor of the RBI, the rupee rose 2.1 percent against the US dollar. Wikimedia Commons
  11. Raghuram Rajan was awarded the inaugural Fischer Black Prize by the American Finance Association in January 2003. The award is given to the financial economist under the age of 40 who has made the significant contribution to the sector and is given in every two years.
  12. In 2005, Raghuram Rajan presented a theory outlining the looming financial dangers and risks associated with the current system and he got a very negative response for it. But when an actual global economic crisis occurred in 2008, his analytical skills came true.
  13. During Raghuram Rajan’s term as the RBI(Reserve Bank of India) governor, the RBI sold the longest ever government bonds with a 40-year maturity.
  14. In September 2003, Raghuram Rajan became the youngest ever to be appointed as the Economic Counselor and Director of Research (Chief Economist) of the International Monetary Fund.
  15. Raghuram Rajan has served at the University of Chicago’s Booth School of Business as the Eric J. Gleacher Distinguished Service Professor.