The inflation rates in terms of the consumer price index (CPI) and the wholesale price index (WPI) continued to chart divergent paths for the second consecutive month in September. The CPI inflation rate rose to a 14-month high of 3.99% in September, closer to an average of the Reserve Bank of India (RBI)-mandated target of 2-6%, from 3.28% in August.
After remaining steady in July-August 2019, the core CPI inflation eased to a 26-month low of 4.2% in September 2019, offering some relief in light of the significant uptick in headline inflation. Health services in the CPI continued to see the inflation rate above 7% though it moderated to 7.66% from 7.84%.
The Indian rupee appreciated by 28 paise to 70.74 against the US dollar in early trade on Monday (14.10.2019) as gains in domestic equity market and positive developments on the US-China trade talks front strengthened investor sentiments.
Even as a dearth of new power purchase agreements is stalling many under-construction and existing private power units, the virtually exclusive regime of cost-plus tariffs for the state-run NTPC is further undermining their ability to commence operations or operate at higher capacities.
In the latest instance, NTPC’s sourcing of coal from mines located 1,100 km away in Jharkhand for its 1,200 MW Khargone plant in Madhya Pradesh is seen to raise its fuel cost, resulting in many states, including MP, having to pay the state-run firm despite them not sourcing electricity from the unit.
According to Union power ministry web portal, as on October 7, Madhya Pradesh procured most power from power plants where fuel costs were between `0.59 per unit — `2.53 per unit. On that day, it did not procure any electricity from NTPC’s Mauda-1 unit, where the fuel cost is `3.21 per unit.
M Ashok Khurana, Director-General, Association of Power Producers (APP), reported media, since NTPC bears no risk from its projects covered under the cost-plus mechanism, apart from consumers who would pay high tariffs for its inefficiencies, the situation is also adversely affecting private power players who are in dire need of power purchase agreements (PPAs).
Private players had cried foul and lodged complaints to the Central Electricity Regulatory Commission (CERC) claiming that PPAs were signed “with a clear intention of bypassing the impending competitive bidding requirements”. They also alleged that NTPC was eager to sign PPAs on a cost-plus basis because it was quoting tariffs much higher than its private counterparts in contemporary competitive bidding instances. About 8,000 MW of commissioned private power plants are currently stressed due to lack of assured markets via PPAs.
The Power business of Larsen & Toubro (L&T) has operationalised two thermal power units of 660 MW each at NTPC’s Khargone Super Thermal Power project in Madhya Pradesh and Tanda Thermal Power Station in Uttar Pradesh.
The 660 MW Khargone unit is the country’s first ultra-supercritical unit set up on complete engineering, procurement and construction (EPC) basis. Ultra-supercritical units feature steam parameters of 600-degree Celsius and 270 kg/cm2 pressure resulting in higher efficiencies, enabling plants to consume less coal, resulting in lesser emissions in comparison to sub-critical and supercritical power plants.
Wholesale prices based inflation eased to 0.33% in September, as against 1.08% in August due to fall in prices of non-food articles, government data showed on Monday. The annual rate of inflation, based on monthly wholesale price index (WPI), was at 5.22% in September 2018.
The rate of price rise for the food articles was at 7.47% during the month, while that for non-food articles stood at 2.18%, showed the data released by the Ministry of Commerce and Industry.
The World Bank slashed India’s growth rate forecast for the current fiscal year to 6% in 2019-20, down from 7.5% as it estimated earlier. In its latest edition of the South Asia Economic focus, The Bank also mentioned gradual recovery at 6.9% in FY 21 followed by 7.2% in FY 22 assuming monetary stance would remain accommodative, given benign price dynamics.
The bank’s report foresees sluggish consumption due to slower growth in rural income, domestic demand, and credit from non-banking financial companies (NBFCs). However, benefit of corporate tax cut would influence investments in the medium term amidst weakness in financial sector.