The week in review

The week in review

Former RBI governor Y V Reddy has said fiscal deficit is under stress and it could put pressure on the interest rates when the turnaround comes. He was however confident that the RBI would be able to deal with this problem. Referring to Consumer Price Index he said one should keep in mind the fact that the underlying inflationary pressure in India is very high.

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He said, “…to asses the underlying inflationary pressure, and in order to compare the policy actions taken by other countries, we should recognize that the CPI of India is still on a high side and that should be an important input. Very often the financial markets may not give attention to that."

The country’s largest maker of home and personal care products has been losing market share by value across key product categories. Mint reported that Hindustan Unilever’s market share fell ranging from two to six percentage points in the last four quarters mainly as price-sensitive consumers switched to cheaper products, while HUL has been hiking its prices in the last one and a half years. The company’s net sales and profit have gone up in the period to December, but that’s mainly because of the higher prices. The decline in market share is clearly a matter of concern for the company because its volumes are going down.

An AC Nielsen report says the overall market for soaps, detergents, shampoo and other products has grown in double digits over the last one year, But a DSP Merrill Lynch study shows HUL’s share has fallen in these categories. While the soap market grew 18%, HUL’s market share fell to 47.5% in the three months ended March from 53.4% in the January-March quarter of 2008.

Similarly detergents grew 23.4% in 2008-09 but HUL’s share fell to 36.8% from 38.9%. The shampoos market grew 18% and again HUL’s share came down to 44.7% compared with 46.3% a year ago. While the trend may be worrisome for HUL, it’s still far ahead of all rivals and continues to be the market leader

Just before phase four of elections which was considered crucial for the Congress, Rahul Gandhi caused a flutter in political circles by openly wooing NDA allies JD(U) and AIADMK. The young Gandhi was all praise for JDU leader and Bihar Chief Minister Nitish Kumar and declared at the same time that the NDA existed no more. Rahul’s open overture ruffled BJP feathers.

Gandhi said, “All these parties were part of the NDA at one point of time. But now the NDA no longer exists."

While targeting the BJP’s allies, Rahul also made an attempt to cosy up to former Congress allies -- the left parties. He went to the extent of saying that if the Left parties did manage to get the numbers, he would be the first one to support them.

"The ideological differences between Congress and Left persist but there is lot of meeting ground and reasonable amount of common space," he said.

The Left rebuffed Rahul’s overture and called it a sign of desperation and repeated its refrain that it was working to bring a non-Congress, non-BJP alternative to power at the Centre.

With the world looking to save fuel and electric vehicles offering a viable option, countries in the west are supporting the idea. The US announced a $7,500 rebate and the UK government 5000 pounds. In India, manufacturers like Hero Electric, Electrotherm India and Reva Electric Car Company have asked the government for a 25% subsidy and for Value Added Tax to be reduced to 4% from 12%. While there have been incentives at the state level, the center is yet to respond to the industry demand. However, sources at the Ministry of New and Renewable Energy say a policy may be announced after the general elections.