1. Wholesale inflation eased to 4.7% in January

India’s wholesale price inflation cooled further in January to a two-year low of 4.73% from 4.95% in December, thanks to a slight decline in manufactured products’ price rise and fuel and power inflation, even as pace of inflation in food and primary articles hardened sequentially.

January marks the eighth successive month of sequential moderation in wholesale inflation, since it peaked at 16.63% in May 2022. It was helped in no small measure by base effects as January 2022 had recorded a 13.7% surge in wholesale prices.

Cereals inflation at the wholesale level sped to the highest level in nine-and-a- half years to hit 15.5% in January.

Paddy inflation stood at 7.2% and wheat price rise at 23.6% (up from 20.7% in December 2022). Fuel and power inflation eased from 18.1% in December to the lowest level in 22 months at 15.2%, while manufactured products inflation eased marginally from 3.4% to 3% over the same time frame. “Within manufacturing, cement has registered high increase of around 8.4% which will add to building costs and can affect the real estate sector. These costs could ease with fuel prices coming down,” said Bank of Baroda chief economist Madan Sabnavis, who expects wholesale inflation to dip further to end up around 4% by March.

“Decline in the rate of inflation in January, 2023 is primarily contributed by mineral oils, chemicals & chemical products, textiles, crude petroleum & natural gas, textiles, and food products,” the Ministry said. This is the second month in a row that retail inflation, which resurged to 6.52% from 5.7% in December, is higher than the wholesale inflation rate, signalling that input cost pressures are easing for producers even as they continue to pass on the burden to consumers. “The wedge between inflation measured by the Consumer Price Index and Wholesale Price Index (WPI) widened sharply to 177 basis points (bps) in January from 75 bps in December 2022,” rating firm ICRA noted.

Food inflation, which had moderated sharply from 2.5% in November to 0.65% in December, rebounded to almost 3%. Primary articles inflation also inched up from 2.4% to 3.9% in January. Within food items, vegetable prices fell year-on-year for the third month in a row. Minerals, which have a weightage of less than 1% in the WPI, reported a 9.3% deflation compared to 30% inflation a year earlier.

2. Army set to close around 80 deals worth ₹15,000 cr., says Gen. Pande

Army chief says that in terms of overall combat aviation profile, force is looking at having 90-95 light combat helicopters; it is set to receive indigenous light utility helicopters to replace over 200 ageing Cheetah and Chetaks currently in service

The Army, which is currently executing the fourth tranche of emergency procurements, has identified nearly 80 deals, roughly valued at ₹15,000 crore, the Chief of the Army Staff, General Manoj Pande, said on Tuesday. On the helicopter front, he said the indigenous light combat helicopter (LCH), which the Army just inducted, was more versatile in its manoeuvrability and light weight and so is most suited for the mountains.

As reported by The Hindu earlier, the Army moved its first LCH squadron, 351 Army Aviation, to Missamari, Assam, in the eastern sector near the Line of Actual Control (LAC) last November. The LCH is the first dedicated attack helicopter operated by the Army.

“In terms of the overall combat aviation profile, we are looking at 90-95 LCHs,” Gen. Pande told presspersons on the sidelines of Aero India.

The Army is also slated to receive the AH-64E Apache attack helicopter in February 2024 as reported earlier. However, the LCH is yet to get its anti-tank and air-to-air missiles. One of the weapon systems on the LCH and the advanced light helicopter (ALH) is the HELINA (Helicopter Mounted NAG) being developed by the Defence Research and Development Organisation (DRDO). Gen. Pande said HELINA trials had been a success and they were looking at integration of HELINA on the platform.

Indigenous LUH

The Army is also set to receive the indigenous Light Utility Helicopter (LUH), which Gen. Pande said falls in the category of reconnaissance and surveillance. It will replace the over 200 ageing Cheetah and Chetaks in service.

The Army sought some improvements from Hindustan Aeronautics Ltd. (HAL) on the LUH and it was working on it, Gen. Pande said, pointing out that autopilot was one of the requirements. “We are eventually looking at 110 LUHs after the six limited series production variants are inducted,” Gen. Pande said.

Army Aviation has three Brigades at Leh, Missamari and Jodhpur operating around 145 indigenous ALHs, 75 of which are the Rudra weaponised variants and around 190 ageing Cheetah, Chetak and Cheetal helicopters. Another 25 ALH Mk-III are on order and will be inducted within two years.

The Army is inducting niche technology in a big way and at the same time, looking at right-sizing its manpower. On this, Gen Pande said once new technology was inducted, it should optimise the manpower, and referred to the induction of, and the cut down on, animal transport in high-altitude areas..

3. Editorial-1: Disturbing dilation

Untamed inflation risks hurting domestic consumption

Just five days after Reserve Bank of India Governor Shaktikanta Das asserted that inflation ‘has shown signs of moderation and the worst is behind us’, Monday’s release of Consumer Price Index (CPI) estimates for January revealed a disconcerting reversal in price gains trend. Headline retail inflation, which had steadily eased over the last quarter of 2022 from September’s five-month high of 7.4%, quickened by 80 basis points last month to 6.5%. Propelling the acceleration was a 175 basis-points jump in food prices, with inflation measured by the Consumer Food Price Index, quickening to 5.94%, from December’s 4.19%. Adding to the disquiet is the fact that inflation had already been at an elevated 6% in January 2022, implying that the year-on-year increase was sans a favourable base effect and entirely due to an upsurge in the momentum of price gains. Food prices climbed across the board, with vegetables being the solitary item in the CPI’s 12-member food and beverages sub-group to post a year-on-year deflation of 11.7% as winter supply outstripped demand. Cereals, which include rice and wheat and carries the heaviest weight of almost 10% in the sub-group, logged a 16.1% jump in prices, and milk and dairy products, the second-heaviest, saw prices gain by 8.79%. Policymakers must be particularly worried about the 2.6% month-on-month dilation in cereal prices, more so because this disproportionately impacts rural households, which spend a larger share of their income on food. With a 12.4% weight in the rural consumption basket, cereal prices fuelled January’s overall rural headline inflation at an even quicker 6.85% pace.

The surprise reversal in price trends suggests inflationary expectations in the economy are nowhere near anchored and will necessitate further policy action both from the RBI and fiscal authorities. To be sure, Mr. Das last week not only announced a 25 basis-points interest rate increase but also committed the RBI to enacting policy that ensures a durable disinflation. With core inflation, or price gains that strip out the impact of food and fuel prices, remaining stubbornly stuck above 6% and in fact inching up last month to 6.23%, from December’s 6.22%, policymakers face the challenge of targeting the components of the inflationary trend that can be addressed by raising credit costs and tamping down on demand. Given that inflation in several key services categories including health and personal care is running well above the RBI’s upper bound of 6%, with prices continuing to harden, the Centre and States must mull measures including rationalisation of GST rates to help ease the inflationary burden on the economy. With overseas demand set to stay weak this year, untamed inflation risks hurting domestic consumption and thereby overall economic growth.

4. Fossil and time

Absolute vesting of powers in the GSI may impede palaeontological research

Sporadically, but surely, palaeontologists report intriguing discoveries from India. In January, a team discovered 92 dinosaur nesting sites with 256 fossilised eggs of the titanosaurus — among the largest of its kind, from 100-66 million years ago, when ‘India’ was a continent and yet to merge into the Eurasian land mass. Similarly, the deserts of Kutch, Gujarat and the Deccan traps in Maharashtra bear witness to the forces that shaped the diverse geography, and tangentially history, of the most populous country. Unlike the quest to preserve cultural history and man-made artefacts from archaeology, there has been limited effort to preserve and communicate at large this natural ‘geo-history’ such as rock formations, sediment and fossils. For decades now, researchers have been warning that this neglect is leading to an erasure of this history from the public mind and a destruction as well as appropriation of this natural wealth. To that end, the draft Geo-heritage Sites and Geo-relics (Preservation and Maintenance) Bill, 2022, piloted by the Ministry of Mines, is seen as a step to give the process of such conservation firmer footing.

The Bill’s provisions give the Director General of the Geological Survey of India (GSI), a subordinate body of the Ministry of Mines, the power to declare sites as having ‘geo-heritage’ value, take possession of relics (fossils, rocks) that rest in private hands, prohibit construction 100 metres around such a site, penalise — with fines of up to ₹5 lakh and possibly imprisonment — vandalism, defacement, and violations of directives by the Director General of the GSI. This has rankled experts who work outside the GSI-fold in central and State universities, institutes of national importance and private organisations who fear that such absolute vesting of powers in the GSI alone may impede palaeontological research. They demand a more inclusive body, on the lines of a National Geoheritage Authority, that can, more democratically, decide on declaring sites as being of ‘geohistorical’ importance and how best to preserve artefacts and finds. The government, it is learnt, is still far from introducing the Bill in Parliament and deliberating on several aspects. While there are merits and demerits to either approach on governance, it is important to keep in mind that legislation, while acting as a ring fence, ought not to become a tool for suppressing independent investigation. Given the premium for land and India’s economic needs, there will be conflict over questions of preservation and livelihood, but any legislation must endeavour to balance these forces and enable consensus.

5. Opinion-1: Ladakh, a fragile region, needs autonomy

The normally peaceful residents of Ladakh are in agitation mode. They are set to gather in Delhi today to pursue their demand for special constitutional status, which would allow them to decide on a development path that safeguards the region’s fragile ecological and cultural heritage.

On January 26, one of Ladakh’s most respected educationists and inventors, Sonam Wangchuk, began a fast in the open in sub-zero temperatures. He issued an appeal to Prime Minister Narendra Modi to meet this demand. On January 31, Leh held perhaps its largest-ever demonstration with over 20,000 people. Two weeks before this, the Leh Apex Body and the Kargil Democratic Alliance, two of Ladakh’s most powerful religious and political organisations, rejected a committee set up by the Central government to examine the status issue. They said the committee’s mandate was vague and did not consider the specific demands made by them. Student groups and civil society groups too have ramped up their demand for constitutional safeguards.

A fragile ecosystem

Why are the people of Ladakh dissatisfied with the region’s status as a Union Territory (UT)? After all, Ladakhis had been demanding UT status for many years, and when it was announced in 2019 by the Centre, there had been celebrations across the region.

Since 2019, the celebratory mood has considerably diminished. Many Ladakhis have realised that their real need of relatively free and autonomous functioning and substantial local employment generation is still a mirage. For 1,000 years, Ladakh was an independent kingdom before being integrated into Jammu and Kashmir (J&K). The memory of this long history has not been erased, and it rankles that while it is no longer subject to J&K, Ladakh is now being ruled from New Delhi.

In 2019, the BJP government had announced that Ladakh would get special constitutional status providing it autonomy. Before the Ladakh Autonomous Hill Development Council (AHDC) election, Sixth Schedule status was promised to the region, similar to what is seen in some parts of north-east India. This promise is yet to be fulfilled. The Home Minister has rebuffed senior Ladakhi politicians and activists who have approached him on this.

It is important to understand the sensitivity of Ladakh. The region’s cold desert ecosystems harbour rare mammals like the wild yak and the snow leopard, and diverse flora. Cultures and livelihoods have evolved to be sensitive to the fragility of ecosystems that cannot bear heavy human activity. High-altitude pastoralism, agriculture, and trade have been the mainstays of Ladakhi economy and society for centuries.

Administrators sitting in or appointed from Delhi hardly comprehend what can and cannot work in such a landscape. Ladakh is already groaning under infrastructure development, intense armed forces presence, and excessive tourism. Since Ladakh became a UT, there is even more focus on an exploitative ‘development’ path. There is enormous commercial interest for mining, tourism, hydropower, and other natural resources. The UT administration has been inviting investments in the region, and India’s biggest corporations are showing interest. A new airport is under construction, and road construction, including into the relatively unexploited Zanskar region, has been ramped up. Ladakh already faces serious problems of landslides, erosion, solid waste and effluents, disturbance to wildlife, and cordoning off common lands for development projects. In the name of a ‘carbon-neutral’ Ladakh, mega-solar projects are in the offing; the 2023 Budget has allocated ₹20,000 crore for solar power evacuation and grid integration from a project of 13GW in the ecologically fragile Changthang region.

Since 1995, Ladakh has had an AHDC with the aim of enabling locally determined development. However, a study by Kalpavriksh in 2019 showed that decision-making was mostly dominated by Srinagar and Delhi. Exceptions showed the potential of autonomy; in 2005, the HDC with civil society groups came up with an innovative Ladakh 2025 Vision Document. Unfortunately, it remained in cold storage due to political and financial constraints. Now, the UT administration is commissioning similar documents to consultancy agencies from outside Ladakh, as if local people don’t have enough expertise.

Working together

There are opportunities for Ladakh and Delhi to work together. A Hill Council decision for Ladakh agriculture to become fully organic could be backed by the Central government (for instance, by requiring the armed forces to purchase locally grown and made items). Communities could be aided to claim and operationalise collective rights over grasslands using the Forest Rights Act. Tourism could be fully oriented towards community-run, ecologically sensitive visitation.

Ladakhi civil society organisations and some government departments are already implementing amazing initiatives for livelihoods sensitive to the area’s ecology, decentralised solar energy use, sustaining the food and agricultural heritage, entrepreneurship, and much else. But if the Central government (and some of Ladakh’s own people) continue with the present mindset, all this will amount to nothing. A constitutional status that enables locally determined pathways, driven by a sensitive local population, can help avoid the disastrous track that many other parts of India have tread.

A constitutional status that enables locally determined pathways can help avoid the disastrous track that many other parts of India have tread