RICE BASMATI, WHEAT WEAKEN ON REDUCED OFF TAKE
New Delhi : Rice basmati and wheat prices fell by up to Rs 100 per quintal at the wholesale grains market today due to reduced off take against sufficient stocks position. Market men said muted demand from retailers led to the slide in rice basmati prices.
They said that reduced off take by flour mills amid sufficient stocks position on persistent supplies from growing regions kept pressure on wheat prices.
Meanwhile, the government projected wheat output at an all-time high of 97.44 million tonnes (MT) in the 2016-17 crop year ending next month due to good monsoon. In the national capital, rice basmati common declined by Rs 100 to Rs 7,400-7,500 per quintal. Wheat (desi) and wheat dara (for mills) also fell by Rs 30 each to Rs 2,100-2,370 and Rs 1,725-1,730 per quintal.
COTTON AREA INCREASES
MUMBAI: Cotton planting in India, the world’s biggest producer of the fibre, is likely to rise by 15 percent in the 2017/18 marketing season to a three-year high as farmers switch away from other crops, likely boosting cotton production and exports. Higher output in India could kill a rally that pushed global cotton prices to their highest in three years this month.
“This year farmers received higher prices, so they are going to raise the area under cotton. We are expecting around a 15% increase,” said Mekala Chockalingam, chairman of the state-run Cotton Corporation of India (CCI), the biggest cotton buyer in the country. Domestic cotton prices rose 19 percent from a year ago to 41,300 rupees ($639) per 356 kg candy, following the rally in overseas prices.
A candy is a traditional measure of mass in India. A 15% rise in crop area would lift India’s cotton planting to around 12.08 million hectares (29.9 million acres) in the marketing year starting on October 1, highest since the 2014/15 year.
That compares to 10.5 million hectares in the current marketing year, the lowest in seven years. “We have lost area in the last few years. We will recover that lost area as long as the monsoon is normal,” said Nayan Mirani, president of Cotton Association of India.
Most Indian farmers start planting cotton – a crop that requires lots of moisture – with the onset of monsoon rains in June, although some with irrigated fields start as early as May. India looks likely to receive above average monsoon rainfall as concern over the El Nino weather condition has eased, the chief of India’s weather office said.
Oilseeds and pulses compete with cotton in key producing areas like the western states of Maharashtra and Gujarat. Prices of oilseeds and pulses plunged as much as 60 percent due to bumper production this year, which will force many of them to switch to cotton, said Chirag Patel, chief executive officer at Jaydeep Cotton Fibers Pvt Ltd, a leading exporter.
India, which competes with Brazil, the United States and African countries in the world market, is estimated to have produced 35.1 million bales in 2016/17, up 3.8 percent from the previous year, according to the state-run Cotton Advisory Board. Pakistan, Bangladesh, China and Vietnam are key buyers of Indian cotton.
However, in the last few months Indian textile mills have been aggressively importing cotton due to an appreciation in the rupee. The country is likely to import a record 3 million bales in the current year.
INDIA TO IMPORT LPG FROM IRAN
NEW DELHI: India has for the first time ever signed a contract to import liquefied petroleum gas (LPG) from Iran as it looks at additional sources of cooking fuel to meet rising domestic demand. State-owned oil firms will import one very large gas carrier (VLGC), or 44,000 tonnes, per month for an initial six-month period, industry sources said.
India imports almost a million tonnes of LPG every month to meet rising demand that has been further fuelled by the government drive to give free gas connections to poor women. LPG consumption in 2016-17 rose 9.8 per cent to 21.55 million tonnes. Of this, 11 million tonnes came from imports.
India mainly imports LPG via term contracts from major Middle Eastern producers Saudi Aramco, Qatar’s Tasweeq, Abu Dhabi National Oil Co and Kuwait Petroleum Corp. Sources said LPG imports will rise over the next three years to 16-17 million tonnes as the government pushes for making available cooking gas cylinders to the poor and wean them off polluting fuels. The country is looking to import LPG from Bangladesh.
India had imported 8.8 million tonnes of LPG in 2015-16. Imports last year made India the world’s second-largest importer of LPG, behind China. It overtook Japan, which imported 10.6 million tonnes. Last May, the government launched a programme to provide free cooking gas connection to poor women with a view to cut on use of firewood and polluting fuels like dried cow dung. LPG demand is projected to grow by 9.7 per cent to 23.7 million tonnes in the current fiscal and is likely to touch 35 million tonnes by 2031-32.
A record 3.45 crore LPG connections were given during the fiscal ended March 31, 2017, including 2.2 crore free connections to poor women. This has taken the number of LPG consumers to 20.08 crore. As many as 6 crore connections have been given in last three years, taking LPG to 72.84 per cent of the population. The government is targeting giving out 3 crore connections including 1.5-2 crore under the free LPG connection scheme during the 2017-18 fiscal and another 4 crore in the following year. This would help take LPG coverage to 95.49 per cent of the population.
POWER TARIFF AT ALL TIME LOW
NEW DELHI: Solar power tariff has dropped to a record low of Rs 2.62 per unit in the auction conducted for Bhadla solar park. The price is even lower than NTPC’s average coal-based power tariff of Rs 3.20 per unit.
“Bhadla Ph-IV Solar Park results in a historic lowering of tariffs. Phelan Energy (50MW) and Avaada Power (100 MW) have bagged projects at Rs 2.62 per unit. Softbank Cleantech has won 100 MW capacity at Rs
2.63 per unit,” a senior official said. After the auction Power Minster Piyush Goyal tweeted “Another milestone towards Prime Minister Narendra Modi’s vision of clean affordable power for all: Bhadla Solar Park achieves tariff of Rs 2.62/unit.”
Last month, the levelized solar power tariff had dropped to the then all-time low of Rs 3.15 per unit in an auction of a 250 MW project at Kadapa in Andhra Pradesh. Earlier in February, the lower capital expenditure and cheaper credit had pulled down solar tariff to a new low of Rs 2.97 per unit for the first year in an auction conducted for 750 MW capacity in Rewa Solar Park in Madhya Pradesh. However, the levelized tariff for Rewa project has worked out to be Rs 3.30 per unit. In January last year, solar power tariff had dropped to a new low, with Finnish energy firm Fortum Finnsurya Energy quoting Rs 4.34 a unit to bag the mandate to set up a 70-MW solar plant under NTPC’s Bhadla Solar Park tender. In November 2015, the tariff had touched Rs 4.63 per unit following aggressive bidding by US-based SunEdison, the world’s biggest developer of renewable energy power plants.
Chennai: Insurers are likely to increase their rates on property/fire insurance post-July, after the insurance regulator on Wednesday instructed them to peg new rates to the Insurance Information Bureau’s (IIB) revised data. The regulator also increased the list of risk occupancies from 90 to 109, effective from July 1, 2017.
How does the move affect the industry? Till 2007, rates were fixed when it came to fire and property insurance. The only differentiater an insurer could offer was the service quality as rates fixed. Later, when the industry was de-tarriffed, there was unhealthy, cut-throat competition among insurers as they fought over clients; offering them lower and lower rates as incentives. “Charging lower premiums at some point started affecting the profitability of that line of business and the servicing of claims. Loss ratios increased from around 30% before de-tarrifing to 60-75% in recent years. And in an effort to cut losses IRDAI came out with the first set of regulations in 2015,” said an executive from United India Insurance Co.
The regulator then set out guidelines on how much an insurer could charge on fire policies. “IRDAI then instructed the IIB to come with a rate insurers could charge for different occupancies. The way we insure a cinema the atre or rice mill or hospital would be different from how we’d insure a godown which had inflammable goods. For instance, an IT office would have a much lower insurance/fire risk than a manufacturing unit. So IIB put together rates based on occupancy. And now they’ve revised the rates in 2017, after the 2014 guidelines,” said an executive at a private insurer.
The guidelines are to ensure that insurers’ do not charge premiums that are lower than prudent. What the new guidelines say is that you can take IIB’s rates. Or you can make your internal assessment and set your own rate. But your base rate cannot be lower than IIB rate,” said the executive. The assumption is that the base rate, plus the cost of acquiring the new business, management expenses – which is the “burning cost” should be proportional to the premium so that the company does not make losses.
“The idea being that with the new burning cost calculated, you cannot make losses. Of course fire as a line of business does not make as high losses as health and other portfolios; but it still is better to be prudent,” said the executive. Another guideline the IRDAI has issued is with regard to IIB data on burning costs does not include natural catastrophes such as strong typhoons, flood, inundation (STFI) risks and earthquake. The regulator has instructed insurers to use their own judgement for pricing add-on covers, apart from FLEXA risks (fire, lightning, explosion, aircraft (insurance).
CREDIT GROWTH PLUNGES
Mumbai The new fiscal year began on a sour note for bank credit growth, which slipped to 4.32 per cent in the fortnight to April 28, much lower than the 63-year low level of 5.08 per cent in fiscal 2017, the latest RBI data showed. In the reporting fortnight, credit grew at an anaemic 4.32 per cent to Rs 75.45 trillion as against the Rs 72.32 trillion in the same period.
For the fiscal ending March 2017, credit growth had plunged to a multi decadal low of 5.08 per cent with an outstanding loans at Rs 78.81 trillion as against Rs 75.01 trillion on Arpil 1, 2016. The lowest recorded credit growth was in fiscal 1953-54 when it grew at a pale 1.7 per cent.
However, loan growth had marginally risen to 5.52 per cent in the fortnight to April 14 to Rs 76.31 trillion. Even then the cumulative growth for the first month of the new fiscal year is only 5.3 per cent.
Low credit growth is due to high bad debt and weak corporate demand, and also due to increasing use of debt from corporate bond markets, where rate of interest is much cheaper than what banks are offering. In the reporting fortnight, bank deposits growth also slowed to 10.33 per cent to Rs 105.09 trillion compared to Rs 95.25 trillion in the fortnight ended April 29, 2016.
In the previous fortnight, bank deposits had grown by 11.59 per cent to Rs 105.91 trillion.
Banks have seen a rise in deposits due to large flow of funds into the banking system after the note-ban last November.
QUALITY MAIN ISSUE OF GENERIC DRUGS
New Delhi: Sounding a note of caution on the MCI move asking doctors to prescribe only generic medicines, CII President Shobana Kamineni has said poor quality of drugs could be dangerous for patients. Kamineni, who is also Executive Vice Chairperson of Apollo Hospitals Enterprises, pitched for making India a major medical tourism destination to “heal the world”. During an interaction with, she also made a strong case for promoting traditional medicines like Ayurveda.
On the contentious issue of doctors being asked to prescribe generic medicines instead patented drugs, Kamineni said the real problem is quality of drugs. “If the generics are high quality, yes. Quality is the main thing. You cannot inject something that is not good quality… People can take the wrong thing. That’s also a danger,” said the first woman president of the leading industry chamber.
She said that for pharmacist, who are only diploma holders, it would not be easy to interpret the right mixture of salts and molecules of a generic drugs. “It’s important that a via media is found… If we need to create more access to health care, let us find the way. But let us find the safe way,” she added.
Observing the cost of health care is low in India in comparison to developed world, the CII president said the country has an unique opportunity to become hub of medical tourism.
The Medical Council of India (MCI) has advised doctors to prescribe medicines by generic names in place of brand names. While generics have established bioequivalence with the originators’ products, similars have not.
The Indian Pharmaceutical Alliance (IPA) patients may end up with drugs that “may not be effective at all” if doctors were made to prescribe only generic medicines. Kamineni, whose group firm Apollo Pharmacy is among the biggest organised chemists in the country, said alopathy doctors are not allowed to prescribe Ayurvedic medicines. “We have science in Ayurveda. We have science in Yoga and we should celebrate that,” she said.