Inflation still at 5.1 percent, but food prices rise (GS Paper 3, Economy)
Why in news?
- India’s retail inflation remained virtually unchanged at 5.09% in February, even as food prices paid by consumers resurged from 8.3% in January to 8.66% spurred primarily by vegetables, which rose at a seven-month high pace of 30.25%.
Details:
- Inflation measured by the Consumer Food Price Index (CFPI) accelerated from 9% in January to 9.2% for urban residents. Rural India experienced an 8.2% uptick in February, compared with 7.9% in the previous month.
- Overall retail inflation stayed higher in rural India, unchanged from the 5.34% recorded in January, while urban inflation eased slightly from 4.9% to 4.8% in February. Most economists expect inflation to stay in the 5.1%-5.2% range in March as well.
- This would lift average inflation in the last quarter of 2024 over the 5% average projected by the Reserve Bank of India (RBI). The persistently high food inflation may push interest rate cut hopes further into the horizon, especially as the RBI expects price rise to average 5% in the April to June quarter too.
Core inflation:
- Core inflation, excluding food and energy costs, remained below 4% for the third month in a row.
- While some estimates pegged it at the lowest level since 2015 when the current series of inflation data began, it was at a 52-month low of 3.4%. On a sequential basis, the Consumer Price Index rose 0.16%, while the CFPI rose 0.11%.
- Apart from vegetables, prices rose at a faster clip for eggs (10.7% in February, from 5.6% in January), and meat and fish (5.2% from 1.2%), and the pace of inflation was largely unchanged for sugar (7.5%) and cereals (7.6%).
- Pulses and spices prices experienced a slight deceleration, but still remained steep compared with last February, rising 18.5% and 13.5%, respectively.
State-wise inflation:
- Among the major States, inflation was above the RBI’s upper tolerance threshold of 6% in four States, compared with five in the previous month.
- Odisha’s inflation remained the highest at 7.55%, followed by Telangana (6.7%) and Haryana (6.3%) Seven other States experienced price rise over the national average of 5.1%, including Uttar Pradesh, Rajasthan, and Gujarat. Delhi and Madhya Pradesh continued to record the lowest inflation in the country, at 2.4% and 3.86%.
Conclusion:
- The current bout of inflation is purely food-driven, and will persist in the coming months as onion prices have bounced higher.
Panel recommends law to regulate Big Tech firms
(GS Paper 3, Science and Technology)
Why in news?
- The Committee on Digital Competition Law, formed by the Corporate Affairs Ministry recently released its report, recommending legislation to regulate the market power of Big Tech firms like Google and Meta.
- The Competition Act of 2002 “intervenes after the occurrence of an anti-competitive conduct”.
- The recommendations, if implemented, would better equip the Competition Commission of India (CCI) to rule on competition matters for tech firms.
Need for New law:
- The report raises alarm on the market power of these Big Tech firms, owing to their “network effects”, through which they are able to rapidly increase their user base and establish market power that is difficult for a new entrant in the industry to dislodge.
- It recommends the creation of a new law, the Digital Competition Act, to “introduce an ex-ante legislation specifically applicable to large digital enterprises, to supplement the Competition Act”.
SSDEs:
- A draft prepared by the panel targets firms with a “significant presence” in the market for a “Core Digital Service,” terming them “Systemically Significant Digital Enterprises (SSDEs)”. The draft would compel firms to determine whether they are Systemically Significant Digital Enterprises.
- If a firm does not self-designate, the penalty recommended by the committee would be derived from not the company’s domestic revenues, but from the entire corporate group’s global turnover.
Impact:
- This will have a major impact on the Big Tech enterprises like Google, Apple, Amazon etc., as they will now also be subject to a separate regulatory regime.
- Such ex-ante regulation could potentially stifle innovation by imposing burdensome regulations on tech companies.
