Indian Economy - Current Affairs for March, 2016

Indian Economy Current Affairs for March, 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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  • Month & Year   
▼ India growth forecast pegged at 7.4% for 2016-2017: ADB   [03-31-16]

ADB has cut India’s growth forecast to 7.4% for 2016-2017 and global headwinds will pull down the growth rate in the next fiscal. ADB has pegged growth at 7.8% in the earlier instance.

  • ADB’s Asian Development Outlook also projected a rise in consumer inflation
  • This is chiefly on account of the impact of salary hike on government employees and likely mid pick up in global oil prices
  • Indian Finance Ministry has estimated growth to by between 7 to 7.5 percent in the next fiscal year and India is currently one of the fastest growing economies in the world.

▼ EIB to lend India INR 3300 crore for constructing Lucknow Metro rail line   [03-31-16]

The European Union, through the European Investment Bank (EIB), will lend India €450 million (approximately INR 3,300 crore) towards constructing a 23-km long Lucknow Metro rail line and a purchasing a fleet of new trains.

  • The EIB is the EU’s official bank and the world’s biggest international public bank, and its loan will cover half of the total project costs for the Lucknow Metro.
  • The first tranche of €200 million was signed on March 30th, during Prime Minister Narendra Modi’s visit to Brussels, as part of the 13th India EU Summit.
  • The remaining tranches will be disbursed over the course of the project.
  • Lucknow’s Metro is expected to increase the public transport mode share from 10% to 27% in the city of 3 million.
  • This marks the largest transport loan outside Europe for 10 years and EIB’s first sovereign loan to India

▼ RBI changes new rules for lending rates   [03-30-16]

RBI has tweaked upcoming new rules for lending rates. The central bank said on 29th March 2016 the fixed rate loans of close to three years offered by lenders will be linked to the marginal cost of funding. Loans above that tenor should be exempt. Earlier, all fixed rate loans have been exempted from being set based on marginal cost of funding. The change will apply to new rules implemented from April 1, 2016.

  • The new rules force lenders to base lending rates on marginal cost of funds
  • It is not based on average cost of funding
  • New rules will force lenders to adjust lending rates in relation to market rates removing the sector’s discretion in making a decision as to how much to charge for loans.

▼ Indian economy to grow 7.7% in 2016-2017   [03-22-16]

Indian economy will grow 7.7% in 2016-2017, according to rating agency ICRA. It projected Indian economic growth to improve to 7.7% in the coming fiscal led by domestic consumption demand against the backdrop of OROP recommendations and 7th Pay Commission. The agency also said that though fresh project pipelines appear robust, commencement of work will lag announcement provided moderate capacity utilisation is there in some sectors.

▼ Government discontinuing guidelines for NEFT   [03-21-16]

Reserve Bank of India is discontinuing a two year provision where banks have to submit data in association with NEFT transactions by customers who have walked in and do not have an account with them. Bank should continue to maintain relevant records, however adding the necessary details when required.

▼ Artisans, Job Workers exempt from 1% excise on jewellery   [03-21-16]

To prevent further agitation by jewellers against imposition of 1 percent excise duty, finance ministry has asked artisans and job workers to not pay this levy. Artisans and job workers not covered by this duty are not required to take registration, pay duty, file returns or maintain a book of accounts. For jewellery manufactured on job work, the liability is on the manufacturer and not the job worker, the government decided.

▼ Panel tasked with aim to lower poverty backs Tendulkar line   [03-21-16]

Niti Aayog’s Task Force on Eliminating Poverty has argued the poverty line is not the basis of identification of the poor. Instead, it is the BPL census on the basis of which state governments identify the poor. Main criticism of the Tendulkar line is that it is low…but other estimates of poverty say little about what is happening to households in utter poverty. Committee chaired by former Chairperson of the PM’s Advisory Council and the National Statistical Commission, late Suresh Tendulkar calculated poverty line for 2004-2005 at levels that were equivalent in PPP terms to one US dollar per person per day. This was the internationally accepted poverty line at that time. Tendulkar computed poverty lines for 2004-2005 at a level that was equivalent in PPP terms to INR 33 per day.

▼ Ministry of Tourism to create Paryatak Mitras   [03-16-16]

The Ministry of Tourism has launched a programme open to college going students to inculcate in them appropriate tourism traits and knowledge, to enable them to act as Tourist Facilitators (Paryatak Mitra).The development and promotion of tourism is chiefly the duty of the State Governments/Union Territory Administrations.

▼ Yes Bank inks pact with India Brazil Chamber of Commerce for cooperation in knowledge sharing   [03-14-16]

Yes Bank has inked a pact with India Brazil Chamber of Commerce for cooperation in knowledge sharing and B2B covering the core sectors of sports, media and entertainment with special focus on IT infrastructure, broadcast driven business opportunities and special innovative business integrations.

▼ Government relaxes norms for startup MSMEs   [03-14-16]

As per the decision, MSMEs can deliver goods and services as per prescribed technical and quality specifications and norms on prior experience and turnover will be relaxed for them. This will assist startup MSMEs to take part in 20% public procurement from MSMEs and relaxation has been made for creating a conducive start up environment in India.

▼ Insurance Regulatory and Development Authority issued new guidelines   [03-11-16]

IRDAI has said on 10th March 2016 that the insurer should assess the credit risk of the buyer which adds more than 2% of the total turnover of policy holders while revising guidelines with respect to the credit insurance business. The regulatory body has revisited 2010 guidelines which regulate the credit insurance market to give a much needed boost to growth of the credit insurance market. Listing conditions for trade credit insurance, it has said that trade credit insurance policy should not be issued to lenders, financiers or banks.

▼ India leads among emerging economies: IMF   [03-11-16]

India has performed best among the emerging economies though health of PSBs and corporates is a major worry. Vulnerabilities in corporate financial positions and public bank asset quality pose a risk to economic recovery and financial stability if not addressed in time. Corporate profitability is at a 10 year low, large companies are too leveraged and stressed assets in the system are over 14% with state run banks contributing the plan’s bulk.

▼ India’s economic growth forecast for next fiscal pegged at 7.7%: Fitch   [03-8-16]

Fitch Ratings lowered the economic growth forecast of India for the next fiscal to 7.7 percent and maintained GDP projection for present fiscal at 7.5 percent. Fitch has forecast an 8% growth in December for the year 2016-2017 on account of capex spreading and gradual implementation of broad based structural reform agenda. 2016-2017 and 2017-2018 would be supported by greater amounts of real disposable income, leading to a normal monsoon after deficient rainfall for the past 2 years and the implementation of the recommendations of the 7th Pay Commission.

▼ Food processing sector attracts USD 385.45 million FDI till December FY 16   [03-7-16]

Food processing sector has received USD 385.45 million in FDI till December FY 2016 according to Minister of State for Food Processing Sadhvi Nirajan Jyoti. Total FDI in the previous fiscal stood at USD 515.86 million from April 2012 to December 2015. Government has also announced 100% FDI in marketing of food and products related to food produced and manufactured in India. 100% FDI will be allowed through the FIPB route leading to marketing of food products manufactured in India, benefiting farmers and generating employment.

▼ USAID provides first loan guarantee in health sector   [03-4-16]

The loan guarantee has been issued to RBL Bank Limited providing loans totalling USD 9 million to Wellspring Healthcare Private Limited (Healthspring). This is the first loan guarantee that USAID will provide in the country's health sector. High quality primary healthcare would be provided through this.

▼ NHAI ties up with ISB for training   [03-4-16]

NHAI has tied up with Indian School of Business, Hyderabad for the development of competence of its technical and managerial manpower. The programme called Leadership Programme in Infrastructure Management relates to multiple disciplines namely economics, finance, law and social as well as environmental issues.

▼ NASSCOM and TN sign agreement to establish first startup warehouse in state   [03-3-16]

NASSCOM and TN state government have signed an agreement to establish the first startup warehouse in the state spread over an area of 8000 square feet. It will accommodate close to 50 startups and provide resources to the new companies. Information Technology Department and Electronics Corporation of TN have exchanged documents with NASSCOM for the warehouse which will be set up under the NASSCOM 10,000 startups initiative aimed at scaling up the startup ecosystem in the nation and funding the growth of 10,000 startups in the field of technology over the span of the next 10 years.

▼ India ranks 90th in terms of energy security: WEF   [03-3-16]

India has been ranked as 90th in a list of 126 nations compiled by World Economic Forum based on ability to deliver secure, affordable and sustainable energy. The Global Energy Architecture Performance Index Report of the WEF was topped by Switzerland followed by Norway. Sweden, France, Denmark, Austria, Spain, Colombia, New Zealand and Uruguay. Brazil was the top performer among BRIC nations followed by Russia, India and China.

▼ Mechanism to be set up for strategic disinvestment of CPSEs   [03-2-16]

GoI has approved Department of Investment and Public Asset Management for laying down the procedure and mechanism for strategic disinvestment of CPSEs or Central Public Sector Enterprises. Previously, strategic disinvestment would be associated with recommendations of the Disinvestment Commission. Government has also approved setting up of CGD or Core Group of Secretaries on Disinvestment under the Cabinet Secretary to implement the CCEA decision. NITI Aayog will perform the role of the Disinvestment Commission.

▼ RBI makes amendments to treatment of certain balance sheet items of banks   [03-2-16]

RBI has made amendments to the treatment of specific balance sheet items of banks boosting regulatory capital and aligning the same with globally adopted Basel III capital standards. According to the new riles, banks will be permitted to recognise part of real estate assets, foreign currency assets and deferred tax assets as capital with suitable hair cuts. This is in light of regulatory forcing banks to associate more stressed assets as NPAs leading to enhanced capital requirements. Existing capital adequacy guidelines were reviewed for aligning the definition of regulatory capital with internationally adopted Basel III capital standards issued by the Basel Committee on Banking Supervision. The amendments to be carried out with immediate effect include revaluation reserves due to change in carrying amount of bank property will be considered as Tier 1 instead of Tier 2 capital and continue to be reckoned at 55% discount. Foreign currency translation reserves due to translation of financial statements of the bank’s foreign operations to reporting currency may be considered as Tier 1 capital and reckoned at 25% discount. Foreign exchange translation reserves will suit banks with operations which have foreign operations such as SBI and BoI.