Economy Current Affairs
July 2011 Economy
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July 2011

The Union Cabinet of India on 28 July 2011 gave its approval for setting up a national level security fund (NSSF) for unorganized sectors named as National Social Security Fund. The fund is likely to benefit 43.3 crore workers in the unorganized sector. The National Social Security Board will administer the fund. The Union Finance minister Pranab Mukherjee announced the fund during the budget 2010-11. The Ministry of Labour & Employment will be the nodal Ministry for the operation of the Fund.According to an estimate done by the National Sample Survey Organisation total unemployment in both organised and unorganized sector is 45.9 crore workers. Out of them, 43.3 crore workers belong to unorganized sector. A large number of unorganized workers were having occupations like agarbatti-making, embroidery work, papad making and bidi making. 

The RBI hiked short-term lending and borrowing rates sharply by 50 basis points for the third time in three months to control high inflation, a move that would make all personal and corporate loans more expensive. The RBI has also revised its fiscal-end inflation projection to 7 per cent from 6 per cent earlier. With July 26 increase of 0.50 per cent, the short-term lending (repo) rate has been hiked to 8 per cent and the short-term borrowing (reverse repo) rate has also been increased by a similar margin to 7 per cent. It, however, has retained the cash reserve ratio (CRR) at 6 per cent. This is the 11th time since March, 2010, that the RBI has raised the interest rate to check inflation, which is currently ruling at over 9 per cent. 
According to the fourth advance estimates released by the Agriculture Ministry, India is set for a record food grains production in the 2010-11 crop year at 241.56 million tonnes. Wheat and pulses output are estimated to touch an all time high of 85.93 million tonnes and 18.09 million tonnes respectively. The record production was attributed to good monsoon, higher minimum support price to farmers and focussed policy approach, particularly to enhance production of pulses and oilseeds. Wheat output was estimated to be higher by 5.13 million tonnes in 2010-11. Pulses production enhanced by 3.43 million tonnes with gram at 8.25 million tones, urad at 1.74 million tonnes and moong 1.82 million tonnes recording significant increases. Rice output was estimated at 95.32 million tonnes as against 89.09 million tonnes harvested in 2009-10. Oilseeds production was estimated at 31.1 million tonnes against 24.8 million tonnes in the previous crop year with a record soyabean output of 12.66 million tonnes. Total foodgrains output for rabi and kharif in 2009-10 was 218.11 million tonnes. The highest production in recent years was 234.47 million tonnes in 2008-09. 

 The Cabinet Committee on Economic Affairs (CCEA) on 22 July 2011 approved BP’s purchase of 30% stake in 21 out of 23 oil blocks belonging to Reliance Industries in the Krishna Godavari basin for $7.2 billion. The deal will give Reliance access to BP`s expertise in deep-water drilling and accelerate development and production at its fields, particularly the under-performing eastern offshore KG-D6. BP on the other hand will gain entry into the oil market where energy demand is growing at 5-8 per cent. 

According to a latest World Trade organization (WTO) report India achieved tenth rank in export of services worldwide and emerged as the 20th biggest merchandise exporter in 2010. India stood 12th and 22nd position globally in services and goods exports, respectively in 2009. India`s goods exports went up by 31 per cent in 2010, helping the country to expand its market share to 1.4 per cent from 1.2 per cent in 2009. Engineering and petroleum exports contribute about 40% of India’s total exports.The report ranked China first in terms of merchandise exports followed by the U.S. and Germany. In services export, the U.S. is on the top slot followed by Germany and the U.K. 
Eight Indian companies, including Indian Oil Corporation (IOC) and Mukesh Ambani-led Reliance Industries Limited (RIL) featured in the list of the world`s 500 largest companies compiled and released by Fortune magazine on 11 July 2011. The other Indian companies on the list are: SBI (282), BPCL (307), HPCL (354), Tata Steel (410), ONGC (413) and Tata Motors (442).Indian Oil is at the 98th spot, up from 125th place last year. Mukesh Ambani-led Reliance Industries also improved its ranking from previous year`s 175 to 134th position. Indian Oil raked in annual revenues of USD 68,837 million while that of Reliance Industries stood at USD 58,900 million. Out of the eight Indian companies in the list, five are state-run entities. 
The oil ministry blocked Cairn India’s plans to begin oil production from the Bhagyam oilfield which is the second biggest find in the Rajasthan block. Cairn had planned to put the Bhagyam oilfield into production by October to take total output from the Rajasthan block to 175,000 barrels per day. The ministry insisted that it will not approve further programme on Bhagyam unless Cairn calculates profits to be divided among stakeholders and the government after adding royalty to the cost.

 he Union government on 7 July 2011 cleared guidelines of the FM Radio Phase III expansion. The FM Radio Phase III expansion will allow private radio channels to broadcast news of All India Radio and enable revenue generation of Rs 1733 crore from the auction of license for services in 227 cities in the country. A meeting of the Cabinet chaired by Prime Minister Manmohan Singh also approved hiking of foreign investment limit in private FM radio broadcasting company to 26% from the current 20%. The FM Phase-III policy will extend FM radio services to about 227 new cities, in addition to the present 86 cities with a total of 839 new FM radio channels. The FM phase III policy will result in coverage of all cities with a population of one lakh and above through private FM channels. 

India dropped by one position to become the fourth largest steel producer in the world in 2010 with 68.3 million tonnes (MT) production, according to World Steel Association (WSA). The US became the third largest producer of the alloy with 80.5 MT output in 2010. It was the fifth largest steel maker in 2009.However; there was no change in the first two slots. With 626.7 MT production, China remained on top while with 109.6 MT output, Japan was the second highest producer in 2010. Russia became the fifth highest maker of the alloy in the world. It produced 66.9 MT steel in 2010.