MPC minutes:
In the recently released minutes of the Monetary Policy Committee (MPC) meeting, RBI Governor Shaktikanta Das expressed satisfaction over the economic recovery. He said that it turned out to be better than anticipated- in terms of both growth and inflation.
He has also remained committed to ensuring the availability of liquidity in the system. Further, the minutes suggest that the RBI could continue with the current accommodative stance for a longer duration. However, the members have expressed their worry about the lack of investments and systemic stress.
Despite the swift recovery, concerns continue to hover around the economic condition. As Ashima Goyal puts it, output levels remain below 2019 levels despite the recovery.
Supply chains are yet to normalize, and unemployment rates continue to remain high. However, near-term inflation outlook appears less risky which is a major relief. Mridul K. Saggar noted that food prices appear at the bottom. They might start firming up from Q1 of 2021-22. But, high food inflation like last year is unlikely.
Tata's Safari:
Tata Motors has brought back its iconic SUV Safari. The second-generation Tata Safari shares its Omega Arc platform with the smaller Harrier. It is available in both six- and seven-seater versions, and comes with a starting price tag of Rs 14.69 lakh.
Tata Motors has recently expanded its focus on the SUV segment. Its recent launches- Nexon and Harrier- have received an encouraging response.
Its SUV sales have grown 20% so far this year compared to the same period last year. Safari, given its iconic brand name, is likely to continue Tata Motors' journey in the SUV segment.
Dynamics of fuel prices :
After declining for two days, the prices of petrol and diesel have started to climb again. India entirely depends on imports when it comes to petroleum products. Hence, recent output cuts by the Organisation of the Petroleum Exporting Countries (OPEC) have hurt it badly. Apart from that ~60% of the prices are formed by taxes. It includes central as well as state government taxes.
Following the recent hike, petrol price in Delhi currently stands at Rs 90.83 per liter while that of diesel is at Rs 81.32. With this, pump prices of petrol and diesel have gone up by about Rs 4.63 a liter and Rs 4.84 paise per liter respectively in Delhi this month.
In this context, a reduction in taxes could provide temporary relief. However, we see a limited possibility of that happening as India has always levied heavy taxes on petroleum products. Two, India should look beyond OPEC and cultivate alternative sources like Iran for importing petroleum products.
The government is also speeding up its program of blending ethanol with petrol. Last year the government had set a target of reaching 10% ethanol-blending by 2022 from 8.5% currently. India has set the target of achieving 20% ethanol-blending with petrol by 2025.
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