Business, Economy & Banking Current Affairs - 2019
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The Union Ministry of Commerce and Industries has released the data on WPI Inflation. The data makes the following observations:
- The WPI Inflation fell to a 10-month low of 2.76 per cent in January owing to softening prices of fuel and some food items.
- The WPI inflation has stood at 3.8 per cent in December 2018, and 3.02 per cent in January 2018.
- Manufactured products inflation which has a weightage of 64.23 per cent in WPI declined to 2.61 per cent in January, from a level of 2.96 per cent in January 2018.
- The wholesale based price inflation for ‘fuel and power’ segment fell sharply to 1.85 per cent as against 8.38 per cent in December 2018, due to easing in prices of motor fuel and LPG.
- The government also revised the November WPI downwards to 4.47% from 4.64% earlier.
- The primary articles inflation with the weightage of 22.62 per cent increased to 3.54 per cent in January from 2.53 per cent in same month last year.
In its last monetary policy review, RBI had decreased the lending rate by 0.25 per cent. It is expected that the decrease in inflation may provide further head-room to the RBI to cut interest rate (repo) in the coming months.
The Central government has increased the minimum selling price (MSP) of sugar by Rs. 2 per kg to Rs. 31.
Minimum Selling Price
Minimum Selling Price is the rate below which the mills cannot sell sugar in the open market to wholesalers and bulk consumers like beverage and biscuit makers.
Rationale behind the Increase
The decision to increase the minimum selling price has been taken keeping in mind the debt burden of the industry. As per the data provided by the Indian Sugar Mills Association, arrears of sugarcane farmers stood at around Rs. 20,000 crore as of January-end.
The increase in the Minimum Selling Price is expected to help millers to make the payment to sugarcane farmers. The government is also putting in place a mechanism to ensure the benefit due to the increase in the minimum selling price is passed on to the sugarcane farmers.
Other Steps taken to aid the ailing Sugar Mills
The government has taken several other steps like the increase in import duty on sugar to 100 per cent, scrapping of export duty, the creation of buffer stock, and subsidy for mandatory export of 5 million tonnes in the 2018-19 marketing year to help cash-starved mills clear cane dues.