RBI may hike rates as food inflation surges to 10.05%

After a gap of over five months, food inflation entered the double-digit zone at 10.05 per cent for the week ended August 20, with Finance Minister Pranab Mukherjee describing the trend as "disturbing" and experts saying RBI may go in for another rate hike.

The weekly food inflation, measured by Wholesale Price Index (WPI), went up from 9.80 per cent on account of expensive onion, vegetables, fruits and protein-based items.

The last time food inflation crossed 10 per cent was in the week ended March 12.

"Food inflation has gone up... This is really disturbing. We shall have to ensure and remove the supply constraints on food items," Mukherjee told reporters here.

As per the official data released today, prices of onion soared by 57.01 per cent year-on-year and potato rose by 13.31 per cent during the week under review.

Fruits became dearer by 21.58 per cent and vegetables overall by 15.78 on an annual basis.

Prices of protein rich items, egg, meat and fish were up 12.62 per cent, while milk and cereals became dearer by 9.22 per cent and 4.64 per cent respectively.

Attributing the jump in food inflation to seasonal factors, experts opined it could again force the Reserve Bank to hike interest rate during its mid-quarter monetary policy review scheduled on September 16.

"With headline inflation remaining well above 9 per cent, we expect RBI to raise key policy rates by 25 basis points at its next mid-quarterly review," Crisil chief economist D K Joshi said.

Food items constitutes about 14 per cent to the WPI.

Japan's Parliament Confirms Noda as Prime Minister

Japan's parliament voted Tuesday to confirm Yoshihiko Noda as the nation's sixth prime minister in five years.

Mr. Noda, who as finance minister has steered the nation's economy through one of its most difficult periods, was approved in both the lower house, where his Democratic Party of Japan has a solid majority, and in the opposition-controlled upper house.

Outgoing Prime Minister Naoto Kan and his Cabinet resigned earlier Tuesday, making way for Mr. Noda to name his own team later this week.

LDP lawmakers on Monday elected Mr. Noda as party leader to replace Mr. Kan, who stepped down amid widespread criticism of his handling of the crisis caused by a massive earthquake and tsunami in March.

After his election, Mr. Noda made an immediate plea for unity in his divided party. Addressing party lawmakers from both chambers at a Tokyo hotel, he called on the Democrats to close ranks and stop bickering as they face tough challenges. 

Mr. Noda stressed the importance of cooperation in addressing the nation's troubled economy, recovery from the March disasters, and ending the nuclear crisis from the damaged Fukushima power plant.  

As an ally of the outgoing Mr. Kan, Mr. Noda is likely to continue many of his predecessor's policies. He is also considered a staunch supporter of the Japan-U.S. security alliance.

In Washington, a spokeswoman for the U.S. State Department, Victoria Nuland, said the United States is looking forward to continuing close cooperation with Japan and its next prime minister across a broad range of issues.

Mr. Noda will have to deal with a deeply divided parliament.  While the ruling party has a solid majority in the lower house, the upper house is in the hands of the opposition Liberal Democratic Party and in a position to block any legislation.

Mr. Noda is expected to seek a coalition with the Liberal Democrats and a third party, but it is not clear whether the LDP will be willing to cooperate.

More than 20,000 people are dead or missing from March's earthquake and tsunami, and thousands more have been displaced from homes near the Fukushima nuclear plant.

Across Japan, homes and factories are operating on reduced power as the government conducts safety tests on all of the country's nuclear reactors.

Lokpal: Pranab stresses on Constitutionality

Finance Minister Pranab Mukherjee started the Lokpal debate in the Lok Sabha on today, stressing on the necessity of staying within the Constitution. The House also unanimously requested anti-corruption crusader Anna Hazare to end his fast, which has entered its 12th day.

"We are at a crossroads," said Mukherjee in Parliament, kicking off the debate on the Lokpal Bill. "We are being watched by everyone." He called for an objective, dispassionate debate, requesting that MPs try to seek a Constitutionally acceptable solution.

Mukherjee said that if a consensus is arrived at after the debate, the recommendations shall be sent to the Standing Committee. The Committee will examine the recommendations for applicability and constitutionality.

The House will take up Hazare's Jan Lokpal Bill along with three other versions of the Lokpal Bill including the one Government already tabled in Parliament.
Stressing that the Government is in favour of a strong Lokpal, Mukherjee pointed put that the Government formed a joint drafting committee half of whose members were nominated by Hazare.

Explaining the sequence of events from April when Hazare launched his fast for the first time demanding a strong Lokpal, the Finance Minister said that the joint drafting committee met nine time April 16 to June 22.

He said that there were 40 basic principles which Hazare and his associates put forward during those meetings. He claimed that out of 40 on 26 basic principles, there was an agreement, there were seven principles, on which in-principle agreement and on seven points there was an agreement but it required editorial changes.

"I appeal to the MPs to use this occasion to pass the Bill without disturbing the constitutional process. I appeal to the MPs to have an objective discussion on this, try to find a solution within the constitutional frame work without harming the democratic supremacy in the matter of legistalation and resolve this impasse," said Pranab.

Mukherjee said, "This is one of the rare occassion where proceedings of the House is drawing the attention of entire nation and perhaps world, as the largest functioning democracy is at a crucial stage. Whatever we do, we have to do within the framework of the Constitution."

"We have to keep in mind that everything we do must be consistent with our constitutional framework. We are at a crossroads, all of us want the agitation to end. The issues raised by Anna Hazare is important, they need to be looked into. After delibertaion's are over, we can arrive if possible on a consensus which will reflect the sense of the House. The Prime Minister assured this House that our Government is committed to bring appropriate legislation to bring transparency in public service. The Prime Minister made a statement in the Lok Sabha on August 26 reiterating Government's resolve on the Lokpal Bill," he said.

Close race seen to select next Japanese leader

A close race emerged Saturday among the men seeking to replace Prime Minister Naoto Kan and lead Japan as it emerges from its worst disaster since World War II, with five declaring their candidacy for the ruling party's top spot.

Kan announced Friday he would resign after serving nearly 15 months that have been plagued by ruling party infighting, gridlock in parliament and clamorous criticism of his administration's tepid initial reponse to the March 11 earthquake and tsunami and ensuing nuclear crisis.

A new leader is to be chosen Monday. Public opinion polls show that the favorite to replace Kan is former Foreign Minister Seiji Maehara, but Trade Minister Banri Kaieda has emerged as a strong contender said he was backed by veteran party power broker Ichiro Ozawa.

The Japanese public, yearning for political unity and resolve in the wake of the disasters, has grown disgusted with the squabbles and blame-trading that have dominated parliamentary sessions.

The five members of the ruling Democratic Party of Japan who declared their candidacies after Kan's announcement planned to hold news conferences and debates Saturday and Sunday. Then, the party's 398 members of parliament were to vote Monday to choose the new party chief, who will almost certainly become prime minister because of the party's majority in the more powerful lower house.

Kan's successor will become Japan's sixth prime minister in five years, perpetuating the high turnover in political leadership even as the country grapples with a sluggish economy, an aging population and the enormous reconstruction effort after the country's triple disaster.

So far, candidates running for party chief have spelled out little about their vision for post-tsunami reconstruction or other serious issues, such as tackling the bulging national debt. Most of them also have not taken a clear stance on the future of atomic power despite growing public worries about meltdowns at the Fukushima Dai-ichi nuclear power plant.

In the murky world of faction-dominated Japanese politics, they seem more concerned about getting votes from fellow party members and shoring up their base of support, experts say.

The party leadership race could end up as a duel between the relatively young and telegenic Maehara, the former foreign minister, and Kaieda, the economy minister, who reportedly has the backing of party stalwart Ozawa.

A China hawk, Maehara, 49, gained prominence by taking a firm stand toward Beijing during a territorial spat last year over some disputed islands in the East China Sea. He is strongly pro-Washington and supports a close security alliance with the U.S.

Other candidates in the party leadership race include Finance Minister Yoshihiko Noda, who has spent recent weeks contending with the yen's record appreciation that is hurting Japan's exporters, former Transport Minister Sumio Mabuchi and Farm Minister Michihiko Kano.

After Monday's party vote, the new Cabinet could be installed as early as Tuesday.

Team Anna putting words in my mouth: Pranab

Accusing Team Anna of "distorting" facts about the meetings to resolve the Lokpal issue, the government on late Wednesday night said Parliamentary processes cannot be bypassed and the same was made clear to the activists after considering their proposals.

Rebutting the charge by Team Anna that there was a dramatic change in government's "tone" at the latest round of talks, Finance Minister Pranab Mukherjee said Team Anna had made certain demands at an earlier meeting with government representatives.

"Today, I informed them that government considered these proposals and it is not possible to do it," he told.

Mukherjee said Team Anna had demanded that the government Lokpal Bill will be withdrawn and the Jan Lokpal bill be introduced, it should not go through the Standing Committee and Parliament pass it within the Monsoon session.

Now that this distorted view has come, neither there is question of going back to square one nor there is change in government's attitude because if the government would have changed its attitude, there was no reason of resuming dialogue since yesterday," he said.

Mukherjee said he had told the activists that the Parliamentary Standing Committee can consider and make any amendments it wants and the process of Committee will be expedited and put on fast track.

Asked about Team Anna's remarks that Mukherjee had told them that Hazare's health condition was not the government's concern, the minister said, "They are putting words in my mouth.

"I am repeatedly making appeal (to Hazare to end his fast). I made the appeal yesterday, I made appeal today," the minister said. 

Now Raja wants PM Manmohan Singh as witness in 2G case

Jailed former telecom minister A Raja on Wednesday told a Delhi court that he would get Prime Minister Manmohan Singh, then finance minister P Chidambaram and present telecom minister Kapil Sibal summoned as witnesses to prove government did not incur any loss in the 2G allocation.

"Aaj main bata dena chahta hu ki main Prime Minister, tabke finance minister or vartman ke telecom minister ko battor gawah banaunga (Today, I want to state that I would get the Prime Minister, the then finance minister and the present telecom minister summoned as witnesses)," senior advocate Sushil Kumar, appearing for Raja, told Special CBI Judge OP Saini.

The moment it is established that there was no loss to the state exchequer, the whole case of cheating and conspiracy in the spectrum allocation will go, he said, claiming that the Prime Minister and two other ministers would be able to establish that.

He said Raja would move an application under section 91 of the CrPC for getting certain documents from the CBI which had so far not been brought before the court.

The defence counsel also raised the issue of offloading of equity by Swan Telecom Pvt Ltd and Unitech (Tamil Nadu) Wireless Pvt Ltd to Dubai-based Etisalat and Norway-based Telenor respectively and maintained that there was no criminality involved in those transactions.

"First of all there was no sale of licences, then the offloading of equities was within the limit of 74%. Moreover, the transactions were cleared at the highest level (the Foreign Investment Promotion Board)," he said.