The Mint Report for 03 February 2011

The Mint Report for 03 February 2011

Former telecom minister A. Raja is going to remain under arrest until at least 7 February. On Thursday a special CBI court allowed the agency to keep Raja in custody for five more days. It also extended the custody of Raja’s former personal secretary R.K. Chandolia, and former telecom secretary Siddarth Behuria. All three were arrested on Wednesday in connection with the 2G spectrum scandal.

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And the CBI also made its case against Raja in the special court on Thursday. It claimed the accused favoured some telecom firms by advancing dates and by leaking details of policy changes. The CBI also named Swan Telecom and Unitech Wireless as being two beneficiaries of the scandal.

And on the economy, India’s food inflation has accelerated to a one-month high. The food price index stood at 17.05% in the period to 22 January. That’s compared to the previous week’s 15.57%. High prices of onions may have contributed to the latest rise in inflation. Some economists expect food prices to ease in the coming weeks along with onions prices.

And while inflation is speeding up, so is India’s services sector. The HSBC Markit Purchasing managers’ Index for services was at 58.1 in January. In December it rose to 57.7. But while last month’s growth was fuelled by new orders, inflation was also driving up input prices. The PMI for manufacturing, released on Wednesday, also showed a modest acceleration coupled with rising raw materials costs.