Controlled Pricing for Diesel and Kerosene accounting for India Inc’s largest CADs in recent times finally crumbled when last year Governmentaccede to a first subsidy cu ton Diesel, allowing OMCs to raise the price of Diesel a lil up. In today’s move that left market speculating since mid day yesterday, the stepped regime of decontrol for the year ahead was put in place wwith a first INR 0.45 increase in Diesel. Supplies to Defence, Railways, commercial establishments and State Transport companies will now be priced at free market levels based the new pricing formula recently established from india’s import basket and use to compute as the price for which subsidies are posted to the OMCs
LPG Cap moved up to 9 cylinderss per family, wwith more than 2.5 million cylinders saved in the first months of control since October last year mostly accounted by diversions for auto lpg and other commercial uses.
Pre Budget Fiscal hits include the establishment of a rule to assing Divestment funds to PSU Bank recapitalisation. The government is going to redo Spectrum auctions with refarming for base spectrum in Delhi and Mumbai circles in March at 30% lower prices of INR 2500 Crores or INR 25 bln per MHz for 800 MHz spectrum and INR 18.3 bln for National CDMA spectrum
Meanwhile prices of soyabean have fallen 38% since the crop was sown in July so the government has updated a new 2.5% duty on crude palm oil, an intervention which only makes crude palm oil 1% pricier while Sugar prices are set to roll 30% higher with the current SAP for Sugarcane and the reduction in subsidies may bring a cascading impact for multiple months on dal and vegetables as supply costs creep up.
Inflation will thus remain high and rate cuts are unlikely immediately making 2014 more amenable to the bulk of the recovery in growth. Auto salesa re likely to start inching back but not too fast as Petrol prices ar e not going to reduce by much and disposable income spend remains higher but skewed to eating out and entertainment while we sort out any possible plan for India Inc returning to double digit growth
Meanwhile page 14 on the TOI says Reebok is indeed back in India under new management while Walmart docked its suppliers and their consultants last week marking many red and a few yellow meaning shut down in prior modes of approval for business at Easy Day and Walmart stores in India. Honda is also rejigging its portfolio with the new CR-V ad the Amaze sedan. In the exchanges only OMCs are moving even as Nifty trades up to near 6100 levels