Acharya: Pricing power of Big 5 driving core inflation

Former RBI deputy guv refers to RIL, Tata, Aditya Birla, Adani, Bharti as Big 5 

- BHASKAR DUTTA

A sharp rise in industrial concentration led by five major private sector firms has allowed these companies to charge much higher product prices than competitors, in turn possibly leading to persistent core inflation, former Reserve Bank of India Deputy Governor Viral Acharya said on Monday.

"The Big 5 are able to charge product prices that are substantially higher than other competitors in the market. In contrast this is not true, on an average, of the top 5 (in various sectors). The implication is basically that the top 5, which are not (always) the Big 5, are not actually charging mark-ups that are systematically higher than others," Acharya said at the NSE-NYU conference on Indian Financial Markets.

The 'Big 5' Acharya referred to were the Reliance Group, the Tatas, Aditya Birla Group, Adani Group and Bharti Telecom.

"...what we are finding is that perhaps this is a component that's actually driving some of the core inflation. We find that when input prices rise, if market power in an industry is high, the wholesale price inflation in that sector actually rises a lot more and then of course that eventually will feed into the CPI," he said via videoconference.