The Week in Review for 11 March 2011

The Week in Review for 11 March 2011

Finance minister Pranab Mukherjee has announced a series of sops and handouts. Replying to questions in the Lok Sabha on Friday, he revealed measures that could make some happy. Topping the list is the controversial MPLADS programme. Mukherjee announced financial assistance under that scheme would be hiked to Rs5 crore for each MP from the current Rs2 crore. That will work out to an additional expenditure of Rs2,270 crore every year. Mukherjee also said investments into healthcare and education would be treated like infrastructure. That would make them eligible for the government’s viability gap funding programme.

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The finance minister also announced sops to farmers and fishermen on loans. Three of the four states going to polls next month as well as Puducherry are coastal regions. But with the Election Commission’s code of conduct already in place, contestants in these regions will not be able to use the new sops until the polls close.

Changing gears, Honda Motor is now close to getting out of its alliance with the Hero Group. On Tuesday, Hero Investments announced it had agreed to buy Honda Motor’s 26% stake Hero Honda. Hero Investment will pay Rs3,842 crore for the stake. That works out to Rs739.97 per share. In contrast, shares of the company closed at Rs1532.05 on the BSE on Friday. Hero Investments is the investment arm of the Hero Group. Two firms, Bain Capital and GIC of Singapore are funding the stake purchase.

There’s some good news on the economy, with factory production in January beating forecasts. New figures show the industrial production rose 3.7% during the month. That’s in contrast to December’s revised estimate of 2.5%.

There’s been an unexpected surge in India’s overseas trade. The commerce ministry says exports shot up a full 50% in February to $23.6 billion. Imports meanwhile grew 21% to $31.7 billion. But commerce secretary Rahul Khullar has warned that the import numbers aren’t reliable because of technical glitches. His ministry has promised more reliable data by the end of the month.

Food inflation has fallen to below 10% in late February. The food price index rose just 9.52% in the period to 26 February. In the week before, it had gone up 10.39%. The latest slowdown in food inflation was led by a fall in potato prices. The latest slew of economic data comes just days before the RBI reviews policy rates on 17 March.