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September 2018
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Business News
Higher MSP may have inflation, fiscal costs: Report
 
New Delhi, Jul 8 (PTI) Government's decision to hike MSP for kharif crops is expected to impact GDP by

by 0.1-0.2 per cent besides adding to inflationary pressures, says a DBS report.

According to the global financial services major, higher MSPs carry inflation as well as fiscal costs.

"For the fiscal math, impact is likely to be in the tune of 0.1-0.2 per cent of GDP, which might necessitate higher revenue support or lower capex spending to limit any risk to the 2018-19 deficit targets," DBS said in a research report.

Seeking to address farm distress ahead of general elections, the Centre on July 4 hiked price paid to farmers for paddy by a record Rs 200 per quintal and by up to 52 per cent for other summer-sown crops.

The move is expected to lead to higher inflation and widen fiscal deficit because of increase in food subsidy bill to over Rs 2 lakh crore from Rs 1.70 lakh crore provided in the Budget for 2018-19, experts said.

As per the report, for the rest of this financial year, the impact on inflation will be in the range of around 25-30 bps.

Regarding RBI's policy stance, the report said higher MSPs will add to inflationary pressures, fiscal slippage and this might prompt the central bank to go for another rate hike.

"For RBI, MSP increase poses an additional risk to their inflation view, besides fiscal slippage worries and higher oil prices," the report said adding "August rate hike risks remain on the table".

In June, the Reserve Bank had upped its retail inflation projection by 0.30 per cent and kept the policy stance in the neutral zone, even as it hiked the key rate by 0.25 per cent to 6.25 per cent.


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KERALA NEWS
Bar bribery case: Court dismisses the vigilance report
 Thiruvananthapuram: The vigilance special court dismissed the report that absolved K.M. Mani from th  
State Kalolsavam to be held in December
Actor Captain Raju passes away at 68
Hartal affected normal lives
INTERNATIONAL NEWS
Kim, Moon join hands on peak of sacred North Korean volcano
 (Pyongyang, Sep 20, 2018):The leaders of the rival Koreas took to the road for the final day
Palestinian schools strive to modernize classrooms
Trump: Declassified Russia probe papers expose 'bad things'
100 die in severe flooding in Nigeria: relief agency
NATIONAL NEWS
CAT 2018: Registration extended to Sept 26; Admit card to Release on Oct 24
 CAT is one of the most sought after exam in the country for candidates possessing a Bachelor’s degre
2 history-sheeters arrested following encounter: Police
Attack on Cong workers in Chhattisgarh is political persecution: Rahul Gandhi
Instant Triple Talaq to be criminal offence
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