Economy Current Affairs
December 1st week 2015 current affairs
Category : Economy Current Affairs
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1) GDP growth seen at 7.3-7.6% in July-September

  • After the seven per cent growth in the first quarter of the current financial year (FY16), most economists estimate gross domestic product (GDP) growth in the second quarter at 7.3-7.6 per cent.
  • The projected growth would be way below the 8.4 per cent witnessed in the second quarter of FY15. In fact, high GDP growth a year ago would also make economic expansion in the second quarter of this financial year look smaller, due to what is called `base effect` in technical jargon. The GDP data for the second quarter will be out on Monday. The first quarter number might also see a revision. 
  • While most economists forecast the growth to be 7.3 per cent, Care Ratings Barclays and India Ratings put it bit higher. While Care Ratings expected the growth to be 7.4 per cent, Barclays projected it to be 7.5 per cent and India Ratings forecast it at 7.6 per cent. India Ratings (Ind-Ra) pegged the growth higher than other economists, as it believes the economy expanded that much in volume terms (GDP growth is taken without inflation).
2) AP sets target of 10K MW by 2020
  • The Andhra Pradesh State government is taking steps to tap renewable sources of energy. In line with the Central government’s plan to develop solar power capacity of one lakh MW by 2020, the State government finalised an action plan to develop solar power plants with an installed capacity of 10,000 MW by 2020. 
  • According to Energy secretary Ajay Jain as part of the solar mission, the biggest solar park in Asia, with a capacity of 3,500 MW (N P Kunta1,000 MW, Orvakallu 1,000 MW, Talaricheruvu 500 MW and Galiveedu 1,000 MW) is being developed in Anantapur district in association with NTPC and AP Solar Power Corporation. The government also decided to introduce latest technologies and best practices adopted in the West to harness adequate power from energy sources at an affordable price to the domestic consumers.
3) RBI eases norms for accessing foreign loans
  • Indian companies will now be able to raise money from foreign regulated financial entities, including pension funds, insurance funds and sovereign wealth funds, with the Reserve Bank of India relaxing rules for offshore borrowings. 
  • The RBI on 30th November unveiled a revised external commercial borrowing (ECB) policy, entailing, among other things, a more liberal approach towards long-term foreign currency borrowings and rupee-denominated ECBs, and expansion of the list of overseas lenders. For example, it has raised the limit for small value ECBs with a three-year maturity to $50 million from the existing $20 million. 
  • There will only be a small negative list that will not be allowed to raise funds via ECBs or rupee-denominated borrowing. This could include stock market operations, real estate activity and purchase of land. ECBs refer to commercial loans in the form of bank loans, securitised instruments buyers’ credit, and suppliers’ credit from non-resident lenders with a minimum average maturity of three years. 
  • According to the RBI, ECBs as a means to attract funds from abroad will continue to be a major tool to calibrate its policy towards capital account management. These guidelines will be reviewed after a year, based on the experience and evolving macroeconomic situation. 
  • To promote long-term foreign currency borrowings, the RBI said such borrowings would come with fewer restrictions on end-use. The extended term will make repayments more sustainable and also minimise roll-over risks for the borrower. Further, resident entities will enjoy a more liberal regime for rupee-denominated ECBs, where the currency risk is borne by the lender. The list of infrastructure entities eligible for ECB has been harmonised with the list of the government.

4) States get more time to spend funds on micro irrigation

  • The Agriculture Ministry has extended by a month the deadline for States to utilise funds under the Pradhan Mantri Krishi Sinchai Yojana (PMKSY) for implementation of micro irrigation projects. 
  • Earlier, Agriculture Minister Radha Mohan Singh had said that unutilised funds should be diverted to States that showed better utilisation. About Rs. 1,000 crore had been allocated to States for micro irrigation schemes to be implemented by November but several States were found lagging, at a review meeting held recently. Under the scheme, States were supposed to restore water bodies and converge micro irrigation projects.
  • The schemes had to be implemented by States but if they failed to do so, then they would stand to lose the funds. So far, of the Rs.1,000 cr. released, only 50 per cent had been utilised. Against a target of 5 lakh hectares, only 1.32 lakh hectares had been brought under micro irrigation. 
  • The programme envisages drought proofing, drip and sprinkler irrigation and tying up with MGNREGS schemes, all of which are within the purview of State governments. 
  • The Minister said some of the States that had suffered crop damage due to drought and deficit southwest monsoon had not even submitted memorandum for drought relief funds. 
  • The Pradhan Mantri Krishi Sinchai Yojana, with an outlay of Rs. 50,000 crore for a period of 5 years (2015-16 to 2019-20), aims to achieve convergence of investments in irrigation at the field level. 
  • It focuses on convergence of ongoing schemes including the Accelerated Irrigation Benefit Programme (AIBP) of the Ministry of Water Resources, River Development & Ganga Rejuvenation; the Integrated Watershed Management Programme (IWMP) of the Department of Land Resources; and On Farm Water Management (OFWM) component of National Mission on Sustainable Agricure (NMSA) of the Department of Agriculture and Cooperation. 
  • The PMKSY has to be implemented in an area development approach, adopting decentralised State-level planning, allowing the States to draw their irrigation development plans based on district/block plans.
5) RBI keeps repo rate unchanged at 6.75%, CRR at 4%
  • Reserve Bank of India governor, Raghuram Rajan on December 1st left the key policy interest rate, or repo rate unchanged, at 6.75 percent. In its bi-monthly monetary policy review, the RBI also kept the Cash Reserve Ratio unchanged, at 4 percent. The RBI governor said that uptick in retail inflation, excluding food and fuel, for two months in succession warrants vigilance. Rajan said, the Reserve Bank will use the space for further accommodation, when available, while keeping the economy anchored to the projected disinflation path that should take inflation down to 5 per cent by March 2017. 
  • On growth, the RBI governor said robust second quarter GDP numbers suggest that the economy is in early stages of recovery. But he retained the RBI`s earlier projection of 7.4 per cent growth for the current fiscal. 
6) Govt to launch Rs 10,000-cr fund for domestic electronic firms
  • The government plans to launch an electronics development fund soon, with a corpus of Rs 10,000 crore to provide financial assistance to firms for electronics manufacturing. The fund, housed with Canbank Venture Capital Fund, will start this month with an initial corpus of Rs 2,500 crore and the rest will be raised from various sources. 
  • US-based chip maker Qualcomm announced $400,000 fund for development of electronic products by Indian entrepreneurs under its ‘Design in India’ programme in association with IT (information technology) industry body National Association of Software and Services Companies (Nasscom). 
  • The programme, started from 1st December, will run till February 29 next year. Qualcomm will shortlist 10 entities which will be eligible for funding of $10,000 each to start prototyping their product idea at Qualcomm’s lab in Bengaluru. Subsequently, it will select three best products and give them funding of $100,000 each. 
  • Engineering export from India was around $18.1 billion in 2014-15. This is the fastest growing segment within the information technology industry and expected to reach $40 billion by 2020. Nasscom President R Chandrashekhar said DeitY has also selected Nasscom to set up an incubation centre for developing an Internet of Things (IOT) ecosystem.
7) Telangana set to lose Rs1,500 cr Central funds
  • Telangana State would be losing a whopping Rs 1,500 crore which it was entitled for the implementation of Centrally Sponsored Schemes (CSS) in the current financial year , the changes effected by the Union government in the cost sharing pattern. Besides foregoing its share of funds from the Centre, it would have to bear an additional financial burden of another Rs 1,500 crore on the implementation of these schemes- which in turn would mean an additional burden of Rs 3,000 crore on the State exchequer. 
  • It may be noted that the Union Government has decided to de-link eight Centrally Sponsored Schemes (CSS), including National e-Governance Plan, Backward Regions Grant Funds, Modernisation of Police Forces and Rajiv Gandhi Panchayat Sashaktikaran Abhiyaan (RGPSA), from its support. 
  • As many as 24 CSS will have to be run as per the changed sharing pattern. The State government has already taken up the issue with the NITI Aayog in a meeting held in Delhi. 
  • Finance Department Special Chief Secretary Pradeep Chandra and Planning Department Principal Secretary B P Acharya told NITI Aayog members that cut in the Central funding would prove to be a burdensome for the State. They felt the need for continued funding by the Centre for the ongoing programmes in current financial year as per the original funding pattern. The changes could be effected from the next financial year. 
  • According to the officials, the Centre has cut its share in some CSS. The funding pattern of ICDS has been changed from 75:25 to 65:35 between Centre and State. State government has to bear the cut made by the Centre for 10 percentage points in the case of ICDS. Same is the case with five more schemes. Union government has changed the funding pattern of CSS, in this financial year, as it raised the funds to the states through share in the direct transfer system. 
  • The share of the States has been raised to 42 per cent. NITI Ayog has reviewed the funding pattern to the Centrally Sponsored Schemes and recommended revised funding pattern. Several schemes have been transferred to the states also. State was allocated Rs 17,000 crores in the Union Government budget for the present financial year. With the cut in the CSS grants, this would go down to Rs 15,500 crores in the next financial year. 
  • The State Finance and Planning officials urged the Centre to postpone revised funding pattern and to release grants in the old manner to complete the ongoing programmes under CSS. Apart from this, they have also sought details of transfer of funds to the State, from the Centre and wanted the Centre to give the outlines of the funds that would be granted to the State in the next Union budget. 
  • As the State government wants to present its budget in January next year, notwithstanding the presentation of Union Budget in February, next year, it wants to know in advance about the funds to come from the Centre to prepare its revenue estimations. NITI Ayog conducted the meeting with the heads of Planning and Finance departments of the states, to elicit their opinions on the role of the NITI Ayog in the economic and development related issues of the country.

8)Celkon launches first `Made in TS` tablet

  • Current Affirs Celkon Mobiles is planning to invest Rs 250 crore on setting up new manufacturing units in Hyderabad and Tirupati to produce mobile phones and tablets by mid 2016. The company will raise funds internally to fund the expansion. Telangana IT minister K T Rama Rao formally launched first ‘Made in Telangana’ tablet of Celkon on 1st December in Hyderabad. Priced at Rs 4,999, the tablet comes with a 3G SIM slot which works on Android Lollipop. The 1.2 GHz quadcore, 1GB RAM tablet has 2,800 mAh battery with an expandable memory of 32 GB. 
  • The company which is making 3 lakh devices a moth now is targeting to manufacture 10 lakh phones a month after having the new units in place. It is also going to enter a collaboration with a Chinese company firm shortly to foray into manufacturing of television sets.
9) Cabinet gives ex-post-facto nod to FDI reforms in 15 sectors
  • Cabinet on 2nd December gave ex-post-facto nod to recently announced FDI policy reforms in 15 sectors. Last month the government had opened these sectors in a bid to push up reforms. The sectors include real estate, defence, civil aviation and news broadcasting. 
  • The Cabinet also approved setting up of six new Indian Institutes of Technology (IITs) in Andhra Pradesh, Chhatisgarh, Goa, Jammu, Kerala and Karnataka. The Cabinet also gave its approval for their operationalization initially under the Societies Registration Act to give a legal status to them till IIT Act is amended. 
  • Each IIT will have an initial intake of 180 students in its first year which would increase to 450 in the second year and to 928 in the third year. About 1,412 crore rupees is estimated to be incurred between 2015 and 2019 for running these IITs. 
  • The Cabinet also approved the revised cost estimates to the tune of 4,799 crore rupees as against the originally approved cost of 2,500 crore rupees, for setting up of five Indian Institutes of Science Education and Research, IISERs at Kolkata, Pune, Mohali, Bhopal and Thiruvananthapuram. 
  • Approved for rehabilitation package and upgradation of infrastructure of the Bangladeshi enclaves and Cooch Behar district after transfer of enclaves between India and Bangladesh has also been given by the Cabinet. The total financial implication for implementation of various components is around 1006 crores. This includes 898 crores as the fixed cost of strengthening and creation of infrastructure in Cooch Behar district and Bangladesh enclaves in India. 
  • Besides, a variable cost of 107 crore rupees is likely to be incurred for the rehabilitation. The actual variable cost would depend upon the actual number of families returning to India. All the works will be implemented by the State Government or its agencies in a time-frame of 3 to 5 years, and funds will be released by the Ministry of Home Affairs to the State Government as grant-in-aid. 
  • Approval was also given for MoU between Indian and Germany, to expand bilateral development cooperation in the field of Solar Energy and for implementation of Make in India campaign for Capital Goods Sector. In an another decision, Cabinet gave its nod for signing of the agreement between India and Iran on visa facilitation for Diplomatic, Official, Service and Ordinary passport holders. 
  • The Cabinet also gave its nod for a Memorandum of Understanding, MoU between India and Maldives in the field of sports and youth affairs. It also approved signing of a MoU between India and Israel in the field of water resources management and development cooperation.
10) NRLM interest subvention to 100 more districts
  • The Cabinet on 2nd December approved some critical changes in key rural development programmes, which would enable targeted intervention for faster poverty reduction. 
  • Interest subvention under the National Rural Livelihood Mission (NRLM) has been extended to 100 more districts, along with the allocation of funds under the Himayat programme. Besides, Deen Dayal Upadhyaya Grameen kaushalya Yojana has been made flexible to enable swift disbursal. 
  • On NRLM, the Cabinet approved the extensive use of the database generated by the newly released socio economic caste census (SECC) for rural areas for targeted reduction of poverty and convergence with other schemes. 
  • Under the interest subvention scheme, women SHGs availing loans up to Rs 300,000 from banks are charged seven per cent interest per annum; they also get additional interest subvention of three per cent for timely repayment, bringing down their effective rate of interest to four per cent per annum. 
  • On the Himayat programme, the Cabinet has approved the existing cap of Rs 235.30 crore on the total outlay to be replaced with a demand-based allocation and target within the overall Budget provision of NRLM. The scheme will be funded entirely by the Central government.