Indian Economy - Current Affairs for July, 2016

Indian Economy Current Affairs for July, 2016

Month wise coverage of Indian Economy Current Affairs helps you improve your general knowledge and prepare for all competitive exams like IBPS, Bank PO, SBI PO, RRB, RBI, LIC, Specialist Officer, Clerk, SSC, UPSC, Railway etc. This section is updated daily with the most important events.

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▼ SBI engages IOC Kisan Seva Kendras as banking correspondents   [07-29-16]

SBI has engaged Indian Oil Corporation’s Kisan Seva Kendras as banking correspondents to extend banking facilities to farmers across the nation.

  • SBI signed an MoU with IOC as part of the financial inclusion programme lending further services to the farming community.
  • Indian Oil Corporation has set up 6,500 Kisan Seva Kendras in rural and remote areas providing access to numerous agricultural inputs like seeds, fertilisers and pesticides to farmers.
  • Tie up will enable farmers to avail various products and services by SBI customer service points such as saving account, recurring deposit and more.
  • IOC with net profit of INR 103.99 billion for 2015-2016 is India’s largest commercial enterprise.

▼ 241 infrastructure projects lead to cost overrun of INR 1.59 crore: Statistics Ministry   [07-28-16]

Around 241 infrastructure projects including those delayed due to land acquisition, forest clearances and other reasons led to cost overrun of INR 1.59 lakh crore according to official data.

  • Statistics Ministry monitored around 1076 infrastructure projects an addition INR 150 crore or more across sectors like roads, railways and power in May 2016.
  • Out of 1076 projects, 4 are ahead of schedule, 252 are on schedule, 330 are delayed and 241 projects reported cost overrun while 70 projects reported time and cost overrun.

▼ Government raises FDI limit in pharma companies   [07-28-16]

Government of India has raised FDI limit in pharmaceutical companies to attract and retain latest technologies, capital and follow international best practices.

  • FDI cap in brownfield pharma was recently raised to 74 percent under the automatic route from 49 percent earlier.
  • Beyond 74 percent, foreign investment is permitted under the approval route for attracting capital and technological advancement.
  • Government has also put in place necessary safeguards by providing non-compete clause will not be permitted.
  • Indian promoters will operate in the same line of business in new ventures.
  • Close to 3088 Industrial Entrepreneurs Memorandum were signed between January 2015 and July 2016 envisaging an investment of INR 4.8 lakh crore.
  • Close to 427 IEMs were signed in the electrical equipment sector followed by textiles and food processing.
  • Maximum IEMs were inked in Maharashtra followed by Gujarat, Karnataka and Telangana.

▼ Government notifies revised pay grades for implementation of 7th Pay Commission recommendations   [07-27-16]

Government of India has notified revised pay grades for implementation of the recommendations of the 7th Pay Commission.

  • This provided nearly 10 lakh employees with 2.57 times hike in basic pay.
  • Minimum pay in central government effective from January 1, 2016 will be INR 18,000 per month and at the highest level, it will be 2.5 lakhs.
  • Existing pay (Pay in Pay Band plus Grade Pay) in the pre-revised structure on December 31, 2015 shall be multiplied by a factor of 2.57.
  • Two dates should be there for the grant of increment namely January and July 1 each year, instead of July 1 only.
  • Employees will be entitled to only one annual increment on either of these two dates depending upon the date of appointment, promotion or grant of financial upgradation.
  • Cabinet has also provided a pay increase for central government employees and pensioners which is estimated to cost the exchequer INR 1.02 lakh crore each year.

▼ Overall power deficit during April-June quarter equalled 0.9 percent   [07-26-16]

Overall power deficit during the April-June quarter this fiscal was 0.9 percent while peak deficit was 2 percent.

  • Central Electricity Authority said the demand-supply gap of electricity had been brought to the lowest ever since 2.1 percent during 2015-2016.
  • It has further reduced to 0.9 percent during April-June 2016-2017.
  • As against an overall demand of 295.34 billion units in April-June, 292.82 billion units were supplied, a deficit of 0.9 percent.
  • Close to 149.97 billion units were supplied against the peak demand of 152.97 billion units.
  • This recorded a deficit of 2 percent in the time under review.

▼ India receives USD 5.34 billion in FDI in current fiscal   [07-25-16]

India has received USD 5.34 billion FDI in the current two months of the present financial year

  • During April-May, country attracted USD 4.76 billion FDI under automatic route.
  • Around USD 582 million came through the approval route.
  • The aim is to ensure that India is one of the most attractive and investment friendly investment destinations in the world.
  • Government has relaxed FDI policy in sectors such as pharma, defence, food retailing and broadcast.
  • During the two months, defence received no FDI and pharma attracted USD 452.86 million foreign inflows.
  • The other sectors include air transport, information and broadcasting and retail trading.
  • In Q1 April-June of 2016-2017, FPI investors pumped in INR 10,4561 crore.
  • For attracting the international investor, numerous reforms were taken in the FDI and FPI policy.

▼ RBI asked to use forex reserves to provide long term loans at low interest rates to EXIM Bank   [07-25-16]

RBI has received a proposal from the Commerce and Industry Ministry to use part of the forex reserves to provide long term loans at low interest rates to the Export Import Bank of India

  • A portion of the forex reserves have been asked to be set aside for project export finance for the EXIM Bank.
  • RBI offered the un-utilised amount under its limit of USD 5 billion to the India Infrastructure Finance Company as a long term loan to EXIM Bank.
  • IIFCL indicated RBI committed the entire quantum of USD 5 billion to borrowers and there would not be any residual or un-utilised amount offered to EXIM bank.
  • EXIM Bank has been able to command competitive pricing in its foreign currency debt issues.
  • Amount of INR 1300 crore was released to the EXIM Bank by the government as capital in 2015-2016.

▼ SIT on black money has recommended a ban on cash transactions of more than INR 3 lakhs   [07-20-16]

Special Investigation Team on black money has recommended a ban on cash transactions of more than INR 3 lakh and restricting cash holding with individuals to not more than INR 15 lakh to curb illegal wealth in the economy.

  • SIT headed by Justice MB Shah submitted its 5th report to the SC on methods for curbing black money in the economy.
  • SIT recommended a total ban on cash transactions above INR 3 lakhs and an Act to be framed to declare such transactions as illegal/punishable by law

▼ CRISIL: Urban inflation less than rural   [07-20-16]

A report released by CRISIL shows that for the past 5 years, 69 percent of India’s population residing in its rural areas has experienced a higher degree of inflation as against urban counterparts.

  • Report indicates in the past 24 months to June 2016, while urban inflation fell from 9 percent to 5.3 percent (compared with the two years prior)rural inflation fell from 10.1 percent to 6.2 percent.
  • Gap has remained around 100 basis points in the recent past and is in the recent past and is caused by higher core and fuel inflation in rural areas.
  • In fiscal 2016, rural core inflation was 6.7 percent as against 4.8 percent in urban.
  • Sub-categories such as health, education, household goods and services as well as recreation and amusement recorded higher inflation in hinterland in the previous fiscal.
  • NSSO household consumption expenditure data for 2011-2012 offers data in support of this.
  • Schemes to improve access to infrastructure such as Pradhan Mantri Gram Sadak Yojana have yet to near completion.

▼ Wholesale Price Index rose to 20 month high of 1.6 percent in June   [07-20-16]

Wholesale Price Index rose to 20 month high of 1.6 percent in June from 0.8 percent in May will work well for toll road projects revenues for the fiscal 2017-2018, according to ICRA.

  • The toll rates are expected to increase in the range of 3.0-3.7 percent during FY2018, marking the highest growth after FY2015.
  • Average increase in WPI for 2017 is around 3 percent and a report also indicated that toll fees are revised annually to adjust for inflation as determined by movements in WPI.
  • The report also indicated that toll fees are annually revised to adjust for inflation as determined by WPI movements.
  • Projects for which toll rates are linked fully with WPI, the toll rates are revised downwards whereas for other projects, increase has been 2.7 percent in FY2016 and 1.9 in FY2017.
  • Traffic growth has been robust during FY2016 which is likely to continue during the current fiscal.
  • According to the report, in a low inflation scenario. when there is no commensurate fall in interest rates, profitability of toll road projects is negatively impacted.

▼ Government releases INR 100 crore for APY   [07-19-16]

Government of India has released INR 100 crore towards co-contribution for Atal Pension Yojana for 2015-2016.

  • As per the scheme, those who have registered before March 31, 2016 will get co-contribution from the government which will be 50 percent of the subscriber contribution up to a total of INR 1000.
  • Co-contribution will be for 5 years from 2015-2016 to 2019-2020.
  • Government of India through PFRDA has released co-contribution for 2015-2016 for 16.96 lakh eligible APY subscribers amounting to INR 99.57 crore.
  • Subscribers lacking pending contribution in accounts till March 2016 won’t be paid with co-contribution
  • Government is implementing Atal Pension Yojana through banks and Department of Post.
  • Total number of subscribers registered under this yojana has crossed 30 lakh as on June 30,2016.

▼ Pension Fund Regulatory and Development Authority introduces new mobile app   [07-18-16]

Pension Fund Regulatory and Development Authority introduced new features for the benefits of National Pension System subscribers including a mobile app “NPS by NSDL e-Gov.”

  • Subscribers can raise a request for transaction statement for a particular financial year.
  • Subscribers can also view their NPS account as well as latest details of scheme wise units along with the latest NAV and total value of the schemes, details of the five contributions credited and change contact details or modify password and set security question through Mobile App.
  • Subscribers can now update or modify their address on their own using Aadhaar based authentication.

▼ Corporate group and Bansal Group signs agreement with Ministry of Railways    [07-15-16]

An agreement was signed between Indian Railway Stations Development Corporation Limited and Bansal Group for the redevelopment and modernisation of Habibganj Railway Station located in Bhopal, M.P.

  • The Habibganj station would now be the first station to be redevelopment and this station is one of the eight such railway stations which have been allocated to IRSDC by the Ministry of Railways.
  • IRSDC has been entrusted with the task of railway development.

▼ CCEA approves the proposal of DoT regarding transfer of shares   [07-15-16]

Cabinet Committee on Economic Affairs approves the proposal of the Department of Telecommunications regarding the transfer of shares by ITI Limited to the Special National Investment Fund to meet SEBI’s minimum public shareholding requirement.

  • ITI Limited will be allowed to meet SEBI’s requirements of minimum 25 percent public shareholding by August 2017.
  • Cabinet also approved the revised cost estimate of INR 7290.62 crore for the ongoing Puntsangchhu-II Hydroelectric Project in Bhutan.
  • Total escalation of the project at this stage is INR 3512.82 crore as per the government.

▼ CCEA approves disinvestment of 15 percent of NBCC   [07-15-16]

Government expects to earn INR 56,000 crore through the sale of its stake in PSUs this financial year. This will result in estimated receipts of INR 1706 crore to the government.

  • Actual realisation amount will be based on market conditions and investor interest prevailing at the time of actual disinvestment.
  • To create a belongingness among employees of NBCC, the decision has been made to allot additional shares to eligible and willing employees at discount of 5 percent to the issue/discovered (lowest cut off) price of the offer for sale.
  • Government expects to earn INR 56,000 crore through the sale of its stake in PSUs this financial year.
  • Around INR 36,000 crore of this comes from minority stake sales and the remaining INR 20,000 crore from strategic stake sales.

▼ GAAR should not apply to FPI: ASSOCHAM   [07-14-16]

General Anti Avoidance Rules/GAAR should not apply to foreign portfolio investor on redemption and maturity of participatory notes, according to industry body ASSOCHAM.

  • The chamber said it was common for investors to gain economic exposure to Indian securities through P-notes
  • ASSOCHAM holds that existence of a P-Note arrangement or status of underlying Indian position referencing P-notes or passing economic benefits or status of underlying Indian position referencing P-notes or passing of economic benefits to P-note holders should not be the criteria for evaluation commercial substance at the FPI level.
  • The body also said GAAR provisions should not apply to FPI on redemption or maturity of P-notes

▼ Fertiliser industry overall volumes rose 58.2 million tonnes in 2015-2016   [07-13-16]

Fertiliser industry’s overall volume rose 7 percent to 58.2 million tonnes in 2015-2016 despite back to back droughts in the previous two years, according to rating agency ICRA

  • Overall volume for fertiliser industry during 2014-2015 stood at 54.1 MT
  • ICRA fertiliser industry report “Fertiliser Volumes, Price Trends and Green Vision” made this announcement.
  • Volume growth during FY16 has been driven by low opening inventory levels compared with the previous years and low base effect was supported by moderate growth in the domestic production of urea and higher import for non urea fertilisers.
  • Higher volume growth has led to rising systemic inventory levels on March 2016
  • Domestic production of urea witnessed 8 percent growth during FY2016 driven by positive change initiatives at policy level by the government.
  • This includes the New Urea Policy 2015 and the Gas Pooling Policy

▼ Index of Industrial Production for May at an upside   [07-13-16]

Index of Industrial Production for May rose on an upside coming at 1.2 percent against a decline of -0.8 percent in April.

  • This has been the best figure since February 2016.
  • Four of the previous six months have seen a contraction.
  • Contraction declined to 2.2 percent for the month in question.
  • Consumer Price Index for June was flat at 5.77 percent as against 5.76 percent in May.
  • Food inflation rose to 7.79 percent in the previous month

▼ YES Bank and SIDBI sign MoU   [07-11-16]

An MoU was signed between SIDBI and YES Bank under the partial risk sharing facility for financial energy efficient projects.

  • SIBDI will guarantee 75 percent of the loans up to INR 15 crore extending to energy efficiency projects.
  • SIDBI is the project execution agency while the bank is the first Indian lender to be empaneled in the program.

▼ SaaS market in India expected to triple to about USD 1 billion by 2020: NASSCOM   [07-11-16]

Software-as-a-Service market in India is expected to grow by as much as three times to USD 1 billion by 2020, as per NASSCOM research.

  • Demand will be driven by businesses aiming to zero in on core operations.
  • Market for SaaS was pegged at USD 300 million in 2014-2015 as against USD 407 million in 2015-2016.
  • SaaS is a pay-as-you-go software distribution model.
  • Research points that there are differences in over 150 firms offering solutions in SaaS segment with start ups powering the segment.
  • Close to 40-45 percent of the companies within the segment are startups.
  • Investors are showing keen interest in the number of startups.
  • India SaaS based products have received close to USD 450 million in the first two quarters of the previous year.
  • Close to 170 million was invested in such start-ups in 2014 across 22 deals.
  • Number of such deals have grown by 2 times to 22 in 2014 from 11 in 2011.
  • With 60 percent of the funding, in post 2012, more startups are being able to access funding in the past 5 years.
  • The US and EU account for more than 80 percent of the demand for Indian SaaS Solutions as per the report.
  • Internationally, the SaaS market was pegged at USD 31 billion in 2015; it is expected to grow at 18 percent annually to USD 72 billion by 2020.
  • Players like SAP, Oracle, IBM and Microsoft have cornered close to 50 percent of the global SaaS market

▼ Indian sugar production to fall by 7 percent: ISMA   [07-11-16]

Indian sugar production could fall by 7 percent to 23.26 MT in the next marketing year commencing in October with a decrease in sugar output on account of rainfall deficit in Maharashtra and Karnataka.

  • Sugar output is estimated to fall for the second straight year in 2016-2017 marketing year on account of drought in major sugar producing states.
  • Sugar production in India, the world’s second largest sugar producer after Brazil is estimated as having fallen to 25.1 MT in 2015-2016 marketing year ending September from 28.3 MT in the previous year.
  • ISMA has released the preliminary estimate indicating sugar output was pegged at 23.26 million tonnes in 2016-2017.
  • This is around 1.8 to 1.9 MT less than current production of 25.1 MT.
  • This is in concordance with the government’s estimate of 23-23.5 MT for the next year- ISMA attributed the likely fall in sugar output to a decline of 5.5 percent in sugarcane acreage to 4.99 million ha in 2016-2017 as against 5.28 million ha in the previous year
  • This results in lower sugar cane output.
  • ISMA data indicates sugar production in Maharashtra- the biggest producer in India- is estimated to decline to around 6.15 MT in 2016-2017 from 8.40 MT in the present year.
  • The area under cane cultivation in 2016-2017 fell due to a drought like situation whereby there was poor rainfall and lesser water availability for irrigation.
  • Cane area in the state is currently 7,80K ha as against 1.05 million ha in 2015-2016.
  • UP is the second largest sugar producing state. Here the production is estimated to rise to 7.54 MT in 2016-2017 marketing year from 6.82 MT in the present year.

▼ RBI notifies interest rates for different small saving schemes for quarter ending September   [07-11-16]

RBI on July 7, 2016 has notified the interest rate for different small savings scheme for the quarter closing September.

  • Interest rates have been retained as they were for the previous April-June quarter
  • Internet rates for small savings schemes like Kisan Vikas Patra and Public Provident Fund Scheme are notified on a quarterly basis.
  • Interest rate on savings deposit is 4 percent while for the 5 year recurring deposit and 5 year senior citizen’s scheme is 7.4 percent and 8.6 percent respectively.
  • Public Provident Fund Scheme earns interest rate of 8.1 percent and Kisan Vikas Patra of 7.8 percent.
  • 110 months maturity period is stipulated for these schemes.
  • Interest rate on Sukanya Samriddhi Account Scheme is 8.6 percent and in another notification, there has been a review of reporting requirements with an aim to reduce the burden of compliance. Banks have been told to discontinue submission of such reports with immediate effect.

▼ Rajasthan introduces minimum wages for part time workers   [07-8-16]

Rajasthan has become the first state in the country to introduce minimum wages for part time workers

  • Labour department has issued a notification and now part time workers come under the Minimum Wages Act 1948
  • State government has also increased minimum wages in all categories of scheduled employment by INR 104 per month.
  • Rajasthan is called the Land of the Kings; it has several colour coordinated cities like Jaipur (Pink City) and Udaipur (White City)

▼ FSSAI signs agreement with ASCI   [07-4-16]

Regulatory authority FSSAI has partnered ASCI to check misleading ads in the food and beverages sector.

  • ASCI will monitor ads across numerous media and the council has been provided suo moto monitoring mandate by FSSAI to process complaints against misleading food and beverages ads
  • Agreement also requires ASCI to report FSSAI’s non compliance of ASCI’s decisions for further action as per the FSSAI act.
  • The MoU was signed between FSSAI CEO Pawan Agarwal and ASCI chairman Benoy Roychoudhury
  • FSSAI is an agency of the Ministry of Health and Family Welfare, GoI

▼ India’s textile and apparel exports expected to touch USD 50 billion in FY 2016   [07-4-16]

Aided by the special package and marketing plans, India’s textiles and apparel exports are expected to touch USD 50 billion mark this fiscal from USD 38 billion in FY2016

  • Union Cabinet approved INR 6000 crore package for the sector aiming to create one crore new jobs in 3 years and attract investments of USD 11 billion while eyeing USD 30 billion in exports
  • Key markets like EU and US are expected to grow and new markets such as Iran, Russia and S. America will also be explored
  • Country is ready to capitalise on falling share of China in textile exports in the global market and the nation’s market share has fallen to 38 percent from 40 percent on account of high wage rate and entry into high tech end products.
  • Cotton Textile Export Promotion Council also released an Ernst and Young report titled “Textile Industry as a Vehicle of Job Creation for Inclusive Growth.”
  • It is also important to finalise FTAs with EU, Australia and Canada in addition to negotiating concessional tariff with China to protect domestic suppliers.
  • Labour intensive home textiles segment suffered on account of tariff disadvantage of 9.6 to 16 percent in markets like EU and Canada