oppn parties Turbulence Ahead For The Economy

News Snippets

  • Ministry of External Affairs said that China is building bridges in the areas occupied by it in Pangong
  • India tells Western nations that there is no global shortage of wheat so it should not name India alone as the country has suffered setback in production due to the heatwave in March
  • RBI has slashed the dividend it pays to the Centre by 70% to Rs 30307 cr. Last year it had paid Rs 99132cr
  • Probe panel says that the Telangana encounter of 4 rape accused was staged
  • A Mathura court says that the Mathura Shahi Idgah case does not fall under the Places of Worship Act
  • Calcutta HC says CBI cannot be asked to probe each and every matter
  • CBI files fresh case of corruption against Lalu Prasad and family for scams when he was railway minister
  • Jet Airways likely to begin commercial operations in September
  • In a day of assured trading on Friday, bulls make a comeback: Sensex rises 1534 points to 54326 to recover all losses of the earlier session, Nifty rises 456 points to 16266
  • IPL: Ashwin scores a quick-fire 40 to take Rajasthan Royals home against CSK and ensures top two finish
  • Supreme Court sentences Congress leader Navjot Singh Sidhu to one year rigorous imprisonment in the 1988 road rage case
  • Home Minister Amit Shah says rights should not be demanded before fulfilling responsibilities and that universities are no place to wage ideological battles
  • NIA court convicts JKLF chief Yasin Malik in terror funding case after he pleads guilty of all charges
  • A study backed by PM-EAC has recommended universal basic income and urban job guarantee and greater spend on social sector schemes
  • Supreme Court rules that the decisions of the GST Council are not binding on the Centre and the states, leaving the door open for states to levy further taxes
Supreme Court transfers Gyanvapi case to Varanasi district judge
oppn parties
Turbulence Ahead For The Economy

By Linus Garg
First publised on 2022-05-13 02:08:30

About the Author

Sunil Garodia Linus tackles things head-on. He takes sides in his analysis and it fits excellently with our editorial policy. No 'maybe's' and 'allegedly' for him, only things in black and white.

 After four days of volatile trading which resulted in losses for investors, the stock markets crashed on Thursday. Sensex tumbled by 1158 points to 52930 and Nifty went down by 359 points to 15808. Investors were jittery ahead of the announcement of the CPI data and their worst fears were confirmed when the NSO reported that inflation, as measured by the consumer price index (CPI) stood at 7.8% in April, the highest in eight years.

Food and fuels prices are fuelling the inflation which, according to the Finance Ministry, is likely to stay elevated in FY22-23. The ministry said that timely action by the government and the RBI will reduce the duration of inflation. It also said that India was better placed than most nations to tide over the global economic stress and record steady growth.

During the trading hours in Indian stock markets, the US inflation figure for April was put out. It stood at 8.3% which was lower than March but still high enough to spook the market which now expects another stiff rate hike by the US Fed. Such a hike will result in another flight of funds from the Indian stock markets as FIIs will withdraw funds.
The day was also bad for the Indian rupee, which hit an all-time low of Rs 77.63 per dollar and later settled at Rs 77.5025. A falling rupee will add to inflation as fuel costs and prices of imported inputs for industry will increase leading to passing on of the costs to the consumer.

Indian economy is now entering a very turbulent phase. The cost-push inflation, along with rate hikes by the RBI and subdued consumer demand makes the picture hazy for companies. The Centre and the states should seriously think of reducing taxes on fuel as an effective short term measure to keep prices in control.