Newspaper Summary 150526

 

WPI inflation hits 42-month high of 8.3% in April as fuel prices surge

By Shishir Sinha, New Delhi

Driven by a surge in fuel prices, wholesale inflation, measured by the Wholesale Price Index (WPI), reached a 42-month high of 8.3 per cent in April. This is a significant jump from the 3.88 per cent recorded in March.

The Ministry of Commerce and Industry stated that this positive rate of inflation is primarily due to rising prices for mineral oils, crude petroleum and natural gas, basic metals, non-food articles, and other manufactured products. Specifically, inflation in the fuel and power segment skyrocketed to 24.71 per cent in April, up from just 1.05 per cent in March. Crude petroleum inflation reached 88.06 per cent, largely reflecting the impact of the West Asia crisis and the effective blockade of the Strait of Hormuz.

Further details from the fuel and power basket include:

• Petrol: Increased to 32.40 per cent (from 2.50 per cent in March).
• High-speed diesel: Rose to 25.19 per cent (from 3.26 per cent).
• LPG: Reached 10.92 per cent (from -1.54 per cent).

Despite a 50 per cent spike in global crude oil prices, the government has maintained stable rates for fuel pumps and household LPG to protect consumers, though prices for commercial LPG cylinders have been raised.

In other categories, inflation for non-food articles rose to 12.18 per cent (from 11.5 per cent), while food articles saw a slight increase to 1.98 per cent (from 1.90 per cent).

Outlook and Economic Impact Rahul Agrawal, Senior Economist at ICRA, noted that the significant jump between March and April suggests that March's figures may be revised upward in June. He expects the WPI print for May to exceed 9 per cent due to hardening food prices, continued pass-through of elevated energy costs, and the depreciation of the rupee.

Additionally, the gap between CPI and WPI prints widened to a 44-month high of 482 basis points in April. Agrawal anticipates that CPI inflation will cross 4 per cent in May, but expects the Monetary Policy Committee (MPC) to remain on hold during the June review due to uncertainty surrounding the duration of the West Asia conflict.

Air India losses drag SIA Group’s FY26 net profit down 57 per cent

By Rohit Vaid, New Delhi

The Tata Group-led Air India’s losses have significantly weighed on the net profit of its other major stakeholder, the Singapore Airlines (SIA) Group, which holds a 25.1 per cent stake in the carrier.

Accordingly, Singapore Airlines Group’s net profit declined 57 per cent to SGD 1.184 billion in FY25-26, down from SGD 2.778 billion in the previous fiscal year. In its annual report, the SIA Group noted that Air India posted a loss of SGD 3.56 billion (equivalent to over ₹26,000 crore) during FY25-26.

Difficult Conditions and Accounting Factors

The group’s auditors have flagged the Air India investment as an area of financial risk due to difficult operating conditions and geopolitical uncertainty. However, following a review, the SIA Group did not write down the value of its investment.

SIA stated that the decline in net profit was primarily due to the absence of a SGD 1.098 billion non-cash accounting gain that had been recognised in November 2024 after the completion of the Air India-Vistara merger. Additionally, the swing from profits to losses for associated companies in FY25-26 resulted from SIA accounting for its share of Air India’s full-year losses, compared with only four months in the previous fiscal year. This resulted in a negative earnings impact of SGD 846 million during the year.

Commitment to India Operations

Despite the financial strain, the SIA Group reiterated its commitment to the Air India investment, describing it as a “core component” of its long-term multi-hub strategy. The group noted that the investment provides critical exposure to one of the world’s largest and fastest-growing aviation markets while complementing its Singapore hub. SIA is working closely with Tata Sons to support Air India’s multi-year transformation programme.

Air India’s Headwinds

According to the SIA Group, Air India faces several challenges, including:

• Industry-wide supply chain constraints.
• Air space restrictions and constraints on operations to key West Asia markets.
• Elevated jet fuel prices.

Amidst this growing pressure, senior executives from Singapore Airlines recently travelled to India to discuss the carrier’s operational and financial situation with Tata Sons.

Impact on Workforce and Operations

During an internal interaction with employees, Air India management indicated that no workforce reduction is currently planned. However, the airline has deferred annual salary hikes for at least one quarter.

Chief Executive Officer and Managing Director Campbell Wilson informed employees that external developments continue to exert pressure on profitability. Consequently, Air India has temporarily suspended flights on multiple international routes and reduced frequencies across several overseas operations between June and August 2026.

‘India ready for global headwinds, revenue loss will not affect stability’

STABILISATION PUSH. Measures taken over past 2 months will protect economy, say FinMin officials
FISCAL CUSHION. The Centre said it can comfortably manage an estimated ₹1 lakh crore revenue loss from recent excise duty cuts on petrol and diesel, citing strong fiscal buffers and reforms

By Shishir Sinha, New Delhi

The Centre on Thursday said it had sufficient fiscal headroom to manage the impact of global economic turbulence despite an estimated revenue loss of nearly ₹1 lakh crore from the recent cut in excise duty on petrol and diesel. While outlining a series of measures taken over the past two months to shield the economy from external shocks, Finance Ministry officials stated the government’s ability to absorb this impact stemmed from “prudent fiscal management and sustained reforms over the last decade”.

“The ability to act proactively, allocate resources and provide relief where needed is the result of prudent fiscal management and sustained reforms over the last decade,” an official said, adding that the government remained committed to protecting economic stability amid global uncertainty. Officials noted that the ₹10 per litre reduction in central excise duty on petrol and diesel, announced on March 26 in response to sharp rises in global crude oil prices, could result in a revenue loss of approximately ₹1 lakh crore this financial year.

Fuel Tax Cuts

According to the government, the fuel tax cut was intended to:

• Cushion consumers from rising fuel prices.
• Contain inflationary pressures.
• Support the transport and logistics sectors.
• Ease pressure on oil marketing companies.

Simultaneously, the Centre imposed export duties and cesses on petrol, diesel, and aviation turbine fuel to discourage overseas shipments and ensure domestic availability amid volatile energy markets. Officials revealed that 16 measures have been introduced over the past 72 days to mitigate the economic impact of the global crisis, particularly disruptions stemming from tensions in West Asia. One key step was the creation of an Economic Stabilisation Fund with a corpus of ₹1 lakh crore to serve as a fiscal buffer against supply-chain disruptions and other external shocks.

Industry Relief

The government also announced targeted relief for domestic industries:

• SEZ Relief Window: Notified on March 31, this allows eligible manufacturing units in Special Economic Zones to sell goods in the domestic tariff area at concessional customs duty, helping companies utilize idle capacity.
• Petrochemical Inputs: Customs duty exemptions were granted from April 2 to June 30 to support sectors like textiles and pharmaceuticals that rely heavily on imported raw materials.
• ECLGS 5.0: The Cabinet recently approved the Emergency Credit Line Guarantee Scheme 5.0 to ease working capital stress for MSMEs, traders, and airlines affected by the West Asia crisis. This scheme is expected to facilitate an additional credit flow of ₹2.55 lakh crore, with 100 per cent government guarantee coverage for MSME loans.

Import Duty Tweaks

On Wednesday, the government further raised import duties on gold, silver, and platinum to curb non-essential imports, aiming to reduce pressure on foreign exchange reserves and stabilize the rupee.

‘Nifty may hit 42K by 2029 if FII flow reverses’

By Our Bureau, Bengaluru

The Nifty 50 could potentially scale 42,000 by 2029 if historical flow patterns and domestic growth momentum sustain, according to a report by CNI InfoXchange that analysed past trends, particularly following periods of heavy selling by foreign portfolio investors.

Market Resurgence

The report, titled Nifty’s Resurgence With the Return of FII, suggests that equities have increasingly become flow-driven rather than purely earnings-led over the last several years. The study highlighted two significant periods:

• Nearly $54 billion in FII inflows between 2019 and September 2021 powered a 63 per cent rally in the Nifty.
• An additional $45 billion in inflows between July 2022 and September 2024 resulted in a 68 per cent surge in the benchmark index.

The report notes that India's market structure has fundamentally strengthened due to expanding domestic institutional investor (DII) participation, systematic investment plan (SIP) inflows, and growing alternative investment fund activity. These factors have collectively reduced the market’s vulnerability to foreign selling, keeping market corrections relatively contained even during periods of heavy FII outflows.

Projections for 2029

If the country attracts another $50 billion in FII inflows over the next two years, historical dynamics could push the Nifty toward 40,000-42,000 by 2028-29. Key factors supporting this rally include:

• Sustained GDP growth above 7 per cent.
• Supportive RBI policy and large-scale infrastructure and manufacturing reforms.
• Strong domestic liquidity and a continued capex cycle backed by government spending.

Furthermore, the report expects India’s weight in the MSCI Emerging Markets Index to rise to 23.5-25 per cent by FY28, potentially overtaking China. It projects a total FPI and FDI inflow potential of $160-180 billion over FY27 and FY28.

The report concludes that while the bull case requires strong earnings growth, stable inflation, and supportive global liquidity, the path to 42,000 remains heavily dependent on global macro stability.

Puttaparthi to host major defence infra hub

By Our Bureau, Hyderabad

The laying of the foundation stone for the advanced medium combat aircraft (AMCA) programme infrastructure and the launch of multiple defence, aerospace and drone manufacturing projects will be held in Andhra Pradesh’s Puttaparthi on May 15. The event is a major milestone for the State to emerge as a hub for defence manufacturing, aerospace innovation and unmanned systems development.

Tesla opens experience centre in Bengaluru

Bengaluru: Tesla has opened its fourth experience centre in Bengaluru’s Whitefield. Since entering India in July 2025, Tesla has opened experience centres in Mumbai, Delhi, and Gurugram, with Bengaluru emerging as its fourth key market. It has sold over 340 vehicles in India so far, largely driven by the Model Y lineup, while also expanding charging and service infrastructure across major metros.

— OUR BUREAU

‘Air connectivity between India, Singapore adequate’

Our Bureau, Mumbai

Air connectivity between India and Singapore remains adequate with more than 250 weekly services, Singapore’s Changi Airport Group (CAG) has said.

The airport operator issued a statement after Air India announced a cut in its overseas flights, including to Singapore. While Air India has temporarily suspended its Chennai-Singapore flight till August, frequencies from Mumbai and Delhi have been reduced.

Adequately Served

“We understand that the current environment can be challenging for some of our airline partners. Even with the reduction of services by Air India, passengers who wish to travel between India and Singapore remain adequately served, with more than 250 weekly services across 15 Indian cities scheduled for June,” the CAG said.

Singapore Airlines is the largest carrier on India-Singapore routes, followed by IndiGo, Scoot, Air India and Air India Express. Bhutan’s Druk Air also connects Guwahati with Singapore.

“When the macro environment improves, CAG is committed to working closely with Air India to reinstate the suspended flights,” the group added.

India is the fifth largest source market for Singapore Tourism, with over 2.46 lakh visitors in the first three months of CY 2026. In 2025, the island state received over 1.2 million Indian tourists.

While outbound travel, especially to Gulf and long-haul markets, has been impacted by the West Asia conflict, travel companies are banking on short-haul segments to drive business growth. Corporate travel demand is also expected to hold steady.