CARLSBERG PROBE IN INDIA UNIT FINDS CHILD LABOUR, PAYOFFS
The consumer price index figures due on Tuesday are expected to show a 5% year-onyear rise in December
An investigation of alleged unlawful practices at Carlsberg India found “potential improper payments” to government officials and regulatory lapses, its former auditor said in a document seen by Reuters.
Reports by a different global consultancy, also seen by Reuters and previously unreported, disclosed other lapses at Carlsberg India Pvt. Ltd in 2018, including child labour.
The findings cast a fresh shadow on operations and compliance practices at the Indian joint venture of Danish brewer Carlsberg A/S, which according to IWSR Drinks Market Analysis has a 17% share of India’s $7 billion beer market.
Carlsberg’s probes and a boardroom dispute come amid other challenges: an antitrust investigation last year concluded Carlsberg India colluded for years on prices with rivals, though a final ruling is pending.
MUMBAI: Inflation in India may finally be slowing, opening the door for central bank to resume monetary easing and helping it push back against calls for a shake up of policy framework.
Consumer price index figures due on Tuesday are expected to show a 5% increase in December from a year earlier, returning to the Reserve Bank of India’s target range of 2% to 6%. Prices rose quicker than 6% in 11 of the 12 prior readings, hampering RBI’s ability to counter the downturn.
The price moderation couldn’t come at a better time for Governor Shaktikanta Das, with the inflation targeting mechanism that’s been in place since 2016 coming up for review this year. RBI will give its official recommendations in an annual report due in the next few weeks.
Critics, including some in Prime Minister Narendra Modi’s government, are seeking a widening of the inflation targeting band so the bank can focus on doing more to stimulate growth. Others are calling for policy to target core inflation, which strips out volatile food and energy prices, and the current benchmark headline inflation.
RBI has been gently pushing back on any changes, through working papers and statements by senior officials. It has argued the elevated headline inflation is a supply-side impact of the pandemic, not a policy flaw.
“I don’t think this is the result of any significant policy errors,” said Hugo Erken, head of international economics at Rabobank in Utrecht. “But RBI needs ways to restore faith of agents in the economy that 2%-6% is an inflation rate that will be achieved.”
Flaw or not, India’s above target CPI has kept RBI from adding to the 115 basis points of easing it delivered in the first half of 2020, although some of its peers in Asia-Pacific were able to use the rate tool to support economies, thanks to price-growth that was within or in line with target.
Price pressures in India have for the most part been driven by factors beyond the central bank’s control: costlier food items, broken supply chains due to a strict lockdown, and hefty levies on already rising retail fuel prices.
Crude oil, India’s top import, has surged more than 40% since the end of October, thanks to a series of vaccine breakthroughs, and the increase is an added threat to inflation, as also trade balance—making the economy heavily reliant on foreign inflows in stocks and bonds to help finance import needs. Indian bonds saw outflows of over $13 billion last year amid concerns a wider fiscal deficit and contraction will lead to the nation’s credit score being cut to junk.
That’s part of the reason some economists have called for abandoning the current framework of tracking retail inflation to decide monetary policy, and instead target core prices, which strip out volatile food and fuel costs.