Telecom Tariff Hike May Add To Inflation, Cautions RBI Governor Das

Raising concerns of higher inflation in the near term, Reserve Bank Governor Shaktikanta Das on Thursday observed that recent announcements by the telecom operators to raise tariffs will add to the inflation rate in the country.

In a surprise move, the Reserve Bank of India (RBI) decided to keep the repo rate unchanged at 5.15 percent, citing high rate of inflation and a likely further increase in food inflation.

Addressing the media post the policy announcement, Das said: “With regard to the core inflation, it is expected to remain in the curent zone as it is, below 4 percent… again some evidence shows that certain decisions relating to telecom and others, which may play out. They may have some impact on the core inflation. It is expected that inflation will come to about 3.8 percent in the Q2 of next year.”

“There is a case for looking through the current spike in headline inflation, which is mainly due to the spike in food inflation. Our calculation shows that during Q4 (January-March), food inflation in particular is likely to remain very high and its moderation in the coming months is dependent on several factors.”

All the three private telecom players Vodafone Idea, Bharti Airtel and Jio has raised their taiff plans pre-paid tariff plans and the increase has been as high as 40-50 percent.

The hike comes after three years and amid the acute financial stress the sector is going through after a Supreme Court ruling on adjusted gross revenue.

The revised rates of Vodafone Idea and Airtel came into effect on Tuesday and those of Jio would be effective on Friday.―Business Standard