India’s food inflation “remains a concern,” Indian Finance Minister Pranab Mukherjee said as he began unveiling a budget that economists predict will include measures to shield consumers from rising prices.
“The principal concern this year is continued high food prices,” Mukherjee told parliament in New Delhi yesterday in a speech that will outline tax and spending proposals for the financial year starting on April 1. “The economy is back to pre-crisis growth trajectory.”
The economy grew 8.2 percent last quarter, adding pressure on Indian Prime Minister Manmohan Singh’s government to join Hong Kong and Singapore in expanding benefits to help people cope with inflationary pressures.
Mukherjee might cut income tax and boost spending on food subsidies and rural jobs, Nomura Holdings and Goldman Sachs Group Inc said.
India’s benchmark wholesale-price inflation rate averaged 9.4 percent in the nine months through December, the most in the past decade, the finance ministry said on Friday. The price gauge rose 8.23 percent in January. Food inflation averaged 17.2 percent in the past year.
The Reserve Bank of India on Jan. 25 raised its benchmark repurchase rate for the seventh time in the past year to 6.5 percent and signaled more increases.
Singh’s government faces five state elections this year and said last week that its “foremost” priority was to curb inflation, which reduces purchasing power in a nation where the World Bank estimates more than three-quarters of the people live on less than US$2 a day.
Thousands of workers from across India led by trade unions marched toward the country’s parliament in New Delhi on Feb. 23, the fourth major rally in the capital in a year, protesting rising food prices, low wages and job insecurity.
“From a political management perspective, we expect the government to announce some relief measures for urban poor,” said Chetan Ahya, a Singapore-based economist at Morgan Stanley. “There is a possibility that the finance minister announces reduction in income tax burden for the lower-income segment.”
Mukherjee might raise the -income-tax exemption limit from 160,000 rupees (US$3,530) in the financial year starting on April 1, and increase spending on the government’s rural jobs program by 60 percent to 640 billion rupees, said Tushar Poddar, a Mumbai-based economist at Goldman Sachs. He said food subsidies may be increased as well.
Singapore plans to spend S$6.6 billion (US$5.2 billion) on benefits including tax cuts and rebates, the government said on Feb. 18. In Hong Kong, relief measures announced this month to help residents cope with inflation included an electricity subsidy and a waiver of property rates.
South Korea announced yesterday that it would temporarily scrap or lower tariffs on 24 commodities, including cheese and aluminum ingots, starting early this month, its latest effort to ease quickening inflation at home.
The government will also -increase tariff-free imports of -powdered milk and frozen pork bellies and cut tariffs further on eight other commodities including corn, olives and grapeseed oil this year, the Ministry of Strategy and Finance said in an e-mailed statement yesterday.
“It’s a very difficult situation,” South Korean Finance Minister Yoon Jeung-hyun said in parliament in Seoul yesterday, referring to rising prices in Asia’s third-largest economy. “This difficulty will likely remain for a significant period of time.”
The government is considering upgrading the nation’s grain distribution system as prices of three major grains almost doubled in the past year, fueling inflation concern, Yoon said.
Consumer prices increased 4.1 percent from a year earlier last month, breaching the central bank’s 4 percent ceiling, and the producer-price inflation rate climbed at the fastest pace in more than two years.
Meanwhile, a gauge of Australia’s annual inflation remained above the top of the central bank’s target range last month as food prices advanced.
Consumer prices rose 3.6 percent in the 12 months to last month after a 3.4 percent gain over the period to January, according to an index compiled by TD Securities Ltd and the Melbourne Institute released in Sydney yesterday. They increased 0.2 percent from a month earlier after a 0.4 percent gain in January.
Reserve Bank of Australia Governor Glenn Stevens will keep the benchmark interest rate unchanged at 4.75 percent for a third meeting tomorrow, according to a Bloomberg News survey, as consumer restraint slows inflation and offsets an expansion of the mining industry. Yesterday’s report showed the price of fruit and vegetables rose by 5.1 percent last month.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
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