The government has revamped the Wholesale Price Index (WPI) system from August. An announcement to this effect was made by Anand Sharma, Union Minister of Commerce & Industry at a press conference in New Delhi today. In the new series, the inflation stood at 8.5% for August. The overall inflation for August was 9.5% as per the old series (base year 1993-94).

Mr. Sharma informed that the new WPI series has been prepared by shifting the base year from 1993-94 to 2004-05. Moreover, the new series would include commodities for the calculation of WPI. While 400 odd products are added to the goods basket, about 200 outdated items are dropped from it. Added products include gold, silver, refrigerators, computers, television, VCD, dish antenna, washing machine, microwave oven, mineral water, readymade food and crude petroleum. The inclusion of new items that are widely used by middle-class would help in tracking the changing consumption pattern.

“It (the new series) will help in informing both the government and people how the prices are moving. This will give a robust picture and reflect actual price movement,” Mr. Sharma said.

Finance Minister Pranab Mukherjee remained optimistic when he said, “Inflationary pressure is still there because food prices have gone up because of the erratic monsoon, but I do hope annualized inflation would be much lower in the new series.”

“The change in base would improve the accuracy and make the index less prone to fluctuations,” said TCA Anant, chief statistician of India. He added, “The commodity basket will be analyzed every quarter, even though the groups will remain fixed.”

The new WPI series is based on the recommendations of a working group headed by Abhijit Sen, member, Planning Commission.

The collection of affirmative news that hogged the headlines during the weekend helped the country’s stock markets scale new highs in a bullish rampage today. While BSE benchmark Sensex crossed the 19,000 mark, NSE’s Nifty swept past 5,700. Sensex is touching the milestone for the first time since January 2008, after a gap of 32 months.

The July industrial growth figures, released over the weekend, saw a quantum jump from just above 5% the previous month to 13.8%. There is no doubt that these numbers exceeded market expectations by a wide margin. The growth was mostly driven by the manufacturing sector, especially the capital goods segment.

The heartening economic data from the US and China is aiding all Asian markets in a big way. The benchmark indices of Japan, China, Singapore, Hong Kong, South Korea and Taiwan have notched substantial gains ranging between 0.55% and 2%. The new Basel III norms for the banking sector introduced by the global banking regulators have also helped propel the markets into a bullish run. European markets, CAC, DAX and FTSE, have all reacted positively to the new norms by rallying 1% to 2%. Market indications point towards Dow surging by 78 points at the opening.

In BSE, banks hogged the limelight with as many as 18 banks touching all-time highs. The not-so-stringent norms announced by the Basel Committee on Banking Supervision have benefited banks across the Asia-Pacific region no end. There is strong indication that interest rates will be hiked during September 16 policy review of the central bank, which has strengthened the euphoria. SBI lead the gainers with Rs 3147 (up 5.5%). HDFC at Rs 664 (up 5.3%), ICICI Bank at Rs 1097 (up 4.4%), HDFC Bank at Rs 2282 (up 1.8%) and Axis Bank at Rs 1424 (up 3.3%) are the other gainers.

Despite the rally, the market breadth was only marginally positive. In BSE, out of the 3085 stocks traded, 1510 stocks gained 1449 declined and 126 ended flat.

Union Finance Minister Pranab Mukherjee conceded that the escalating food price inflation is indeed worrisome and suggested solutions such as appropriate monetary measures by RBI and inducing efficiency in the public distribution system (PDS) by state governments. The Finance Minister was speaking at the 179^th Annual General Meeting (AGM) of the Calcutta Chamber of Commerce in Kolkata on Saturday.

Mr. Mukherjee said that when there is an efficient PDS in place, it will provide food grains at subsidized rates to more than 40-50 crore people in the country, with the rest of the population having means to procure it from market. He stressed the importance of food economy in India. “Development of PDS infrastructure is the responsibility of the state government. It is not a question of passing the blame but a constitutional arrangement,” he added.

The Finance Minster acknowledged the close relationship between inflation and economic growth. However, he said that inflationary problems will not prompt him to slowdown the healthy growth of the economy. “I am concerned that the prices are increasing. But I cannot ignore economic factors and change the gear of growth in reverse direction.”

Mr. Mukherjee also defended the government move to procure food grains in huge quantities. He said that as agriculture in the country is still dependent on rains, it would be foolhardy on government’s part to choose not to procure and rely on good fortune. “If we don’t procure so much, how are we going to feed our 120 crore population although there is a little bit of risk of damage,” he asked.

FM’s statement that the RBI will take ‘whatever’ steps to curb inflationary tendencies indicates the government’s stand ahead of RBI’s mid-quarter monetary policy review scheduled next week. Already speculations were rife that interest rates will be hiked following the tremendous jump in the industrial growth rate.

The Swedish telecom equipment manufacturer, Ericsson is declining to play ball with the Department of Telecom (DoT) by defying its directive to share source code, reports The Financial Express. However, the world’s largest telecom equipment maker is confident of arriving at an amicable agreement with the Indian telecom authorities without compromising its business in India.

“We are trying to cooperate as much as we can with the Indian government to show what we have and what we can do (over the issue of security). We are talking to the government and the idea is to have a balanced approach that would accommodate both security concerns and business objectives,” said Hans Vestberg, Ericsson’s global president & CEO.

The government security agencies had earlier raised security concerns with imported telecom equipments over the possibility of embedded malware and spyware. This had prompted DoT to revise its rules, making it mandatory for equipment vendors to share source code and design details with the government. The amendment in rules also includes imposing heavy penalty on telecom operators and equipment providers in case of security breach.

The telecom equipment vendors are up in arms against this amendment citing infringement of intellectual property rights as impediment to sharing source code. With the 3G rollout looming large, the Prime Minster’s Office has intervened in the issue. PMO has directed DoT to revert to previous rules for the moment and has given DoT two months to work out an acceptable solution with the vendors.

In 3G equipment order scene, Chinese vendors are giving a tough competition to European telecom equipment manufacturers like Ericsson and Nokia Siemens with their rock-bottom prices that are almost 40% lower. The majority of 3G equipment orders already placed by the two operators Reliance Communications and Tata Teleservices went to Chinese vendors like Huawei and ZTE.

Despite these developments, Mr. Vestberg is resolute on his stand. “We are present in over 100 countries across the globe and we haven’t faced such security issues anywhere else.”