Economy Current Affairs
Economy Current Affairs Jan 2nd Week 2018
Category : Economy Current Affairs
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 1. World Bank Projects Indias Growth Rate at 7.3% in 2018.

‘Enormous potential backed by reforms, when compared with other economies’

India’s growth rate in 2018 is projected to hit 7.3% and 7.5% in the next two years, according to the World Bank, which said the country has “enormous growth potential” compared to other emerging economies with the implementation of comprehensive reforms. India is estimated to have grown at 6.7% in 2017 despite initial setbacks from demonetisation and the Goods and Services Tax (GST), according to the 2018 Global Economics Prospect released by the World Bank here.

“In all likelihood, India is going to register higher growth rate than other major emerging market economies in the next decade. So, I wouldn’t focus on the short-term numbers. I would look at the big picture for India and big picture is telling us that it has enormous potential,” Ayhan Kose, director, Development Prospects Group at the World Bank, told PTI in an interview.

‘China, slow’

He said in comparison with China, which is slowing, the World Bank is expecting India to gradually accelerate. “The growth numbers of the past three years were very healthy,” said Kose, author of the report.

India’s economy is likely to grow 7.3% in 2018 and then accelerate to 7.5% in the next two years, the bank said. China grew at 6.8% in 2017, 0.1% more than that of India, while in 2018, its growth rate is projected at 6.4%. And in the next two years, the country’s growth rate will drop marginally to 6.3 and 6.2%, respectively.

To materialise its potential, India needed to take steps to boost investment prospects, Kose said.

There are measures underway to do in terms of non- performing loans and productivity, he said. “On the productivity side, India has enormous potential with respect to secondary education completion rate. All in all, improved labour market reforms, education and health reforms as well as relaxing investment bottleneck will help improve India’s prospects,” Kose said.

India has a favourable demographic profile which is rarely seen in other economies, he said.

“In that context, improving female labour force participation rate is going to be important,” he said.


2. Karnataka Tops States with Investment Intentions of Rs. 1.49 lakh crore.

Karnataka topped all states with investment intentions of Rs 1.49 lakh crore till October 2017, which was 43 per cent of the country`s total investment intentions, said R V Deshpande, Karnataka Minister for Large, Medium Industries and Infrastructure Development.

Addressing the third meeting of Council for Trade Development and Promotion at New Delhi, he said Karnataka has topped in FDI inflows and has performed well in exports, contributing about 40 per cent in electronics and software services.

“Both, goods and services put together, our contribution is about 19 per cent, which places the State in the second rank in the country,” he added.

Deshpande said GDP growth is coming down. “To give boost to GDP, it is important to give thrust on rural economy.``

“Hence, thrust to be given on rural economy by accelerating agricultural sector. So, farmers, agri-food processing industries, and exporters will be benefited and in turn exports as well as GDP will improve,” he explained.


3. Paytm Launches Investment Arm, to Invest $10 million.

Paytm, run by One97 Communications Ltd, has set up a new entity called Paytm Money Ltd that will offer investment and wealth management products and will invest close to $10 million upfront in the new entity.

Paytm Money is the fourth product from One97’s stable after Paytm Mall, Paytm Payments Bank and Paytm wallet; it will be available as a separate mobile application to users, said Vijay Shekhar Sharma, founder of One97 Communications.

Paytm could also end up creating a money market fund in the long term just like Ant Financial in China, said Sharma. Alibaba’s four-year-old Yu’e Bao Fund is one of the biggest money market funds in the world.

Paytm, which also has a payment bank, could make money through the deposits customers keep in their wealth management accounts. Experts have raised concerns over the business model of payments banks and how it would be difficult for these banks to make money as they are not allowed to lend. Synergies between Paytm Money and bank could help solve that problem for Paytm.

Paytm Money is in the process of seeking approval from the Securities and Exchange Board of India (Sebi) to act as an investment advisor. To start with, it may offer mutual fund products to users.

“We ultimately want to be the Charles Schwab of India with a zero-fee brokerage,” said Sharma.

Paytm Money seems to be an attempt by the company to find more ways of keeping user money with Paytm and build customer loyalty for the long term.

Paytm Money will be headed by Pravin Jadhav as senior vice-president.

Jadhav previously worked with Servify, a personal device assistant, and Rediff, a news, information, entertainment and shopping portal.

“India’s wealth management services market have so far focused mainly on the urban segment leaving a huge chunk of the market untapped,” said Jadhav in an e-mailed statement.

Paytm Money currently has a 40-member team working out of Bengaluru and is looking to add another 150-plus people over the next 12-18 months.

It aims to launch in the first quarter of 2018 after receiving regulatory approvals.

“We started as a payments platform and expanded customer offerings to deposits with Paytm Payments Bank. Today, with Paytm Money, we have taken the next logical step in the direction of wealth management,” said Sharma. “We aim to increase the size of wealth management customer base and bring simple and easy-to-understand wealth products to our consumers.”

The company is already in discussions with leading asset management companies to offer mutual fund investment products. According to Jadhav, only 15 million people are invested in mutual funds today and he aims to take this number to 200-300 million users with Paytm Money.

“We want to double the market share in two years,” he added.

Paytm counts SoftBank Group Corp., SAIF Partners, Alibaba Holding Ltd and Ant Financial Services Group as its investors.

Paytm’s owner One97 was valued at over $7 billion in May 2017 when the company raised close to $1.5 billion from SoftBank.

Investor interest in Paytm, the top online payment services provider in India, increased after the government in November 2016 invalidated old high-value banknotes, spurring cashless payments.


4. Flipkart`s PhonePe Inks Pact with FreeCharge.

Flipkart’s payments arm PhonePe on Tuesday said it has partnered mobile wallet company FreeCharge to allow the latter’s customers pay for transactions at PhonePe’s partner merchants.

According to the deal terms, PhonePe has now enabled its over 45 million users to link their existing FreeCharge wallets to the PhonePe app.

Once linked, PhonePe customers will be able to spend their FreeCharge wallet balance at all online and offline merchant outlets that accept payments via PhonePe, it added.

“This is in line with our vision of making PhonePe India’s first truly open payments platform, where customers can use any and all payment instruments of their choice,” PhonePe Head Banking Products and Strategic Partnerships Hemant Gala said.

To pay via FreeCharge on PhonePe, customers can link FreeCharge from ‘My Account-Other Wallets’ section, following which they can pay using FreeCharge or PhonePe wallet balance. As part of the partnership, FreeCharge customers will be able to recharge and pay bills as well as make payments for over 60,000 online and offline merchants, including MakeMyTrip, PVR, Cleartrip, 1mg, FreshMenu, Cafe Coffee Day, Apollo Pharmacy, KFC, Barista, Spencer’s and FoodWorld.

Last year, Flipkart’s rival Snapdeal had agreed to sell its mobile wallet business — FreeCharge — to Axis Bank in a ?385-crore deal.

Flipkart’s payments arm PhonePe has now enabled its over 45 million users to link their existing FreeCharge wallets to the PhonePe app


5. Union Cabinet Approves Amendments in FDI Policy, Policies Further Liberalized.

In the financial year 2016-17, total FDI of US $ 60.08 billion received, which is an all-time high.

The Cabinet chaired by PM Narendra Modi has approved amendments in FDI Policy and further liberalized few of the policies of FDI.

As per the extant policy, foreign airlines are allowed to invest under Government approval route in the capital of Indian companies operating scheduled and non-scheduled air transport services, up to the limit of 49% of their paid-up capital.

However, this provision was presently not applicable to Air India, thereby implying that foreign airlines could not invest in Air India. It has now been decided to do away with this restriction and allow foreign airlines to invest up to 49% under approval route in Air India.

The Townships, Housing, Built-up Infrastructure and Real Estate Broking Services

It has been decided to clarify that real-estate broking service does not amount to real estate business and is, therefore, eligible for 100% FDI under automatic route.


6. UIDAI Introduces Virtual ID to Strengthen Privacy and Security of Aadhaar Data.

In an attempt to address security and privacy concerns around leakage of Aadhaar numbers and data, the Unique Identification Authority of India on Wednesday introduced two new measures - virtual ID and limited KYC.
The virtual identity or virtual ID will be a random 16-digit number mapped to the Aadhaar number of a citizen, and will come with an expiration date.
The VID will not be duplicable by agencies performing authentication of Aadhaar number, and hence will ensure safety of the Aadhaar number.
According to a statement by UIDAI, which administers Aadhaar, the VID can be generated and revoked only by the Aadhaar number holder through channels such as the Aadhaar portal and the mAadhaar mobile app. The older VID gets canceled each time the Aadhaar number holder issues a new one.
The issue of privacy of citizen data has picked up steam in the last week after The Tribune reported that an anonymous WhatsApp number was selling access to the entire Aadhaar database for as low as Rs 500.
The UIDAI has further introduced limited KYC (know your customer) process wherein only some entities, categorised as global authentication user agency (global AUA) will be allowed to store a citizen`s Aadhaar number, while others, known as local AUAs will not be allowed to store Aadhaar numbers.
These agencies will be given a UIDAI token specific to them, to enable them to uniquely identify their customers.
The UID token, a unique character for system usage, will be unique to every authentication request made by a global or local AUA.
Currently, every agency that uses Aadhaar for KYC authenticates a user and often stores a person`s Aadhaar number.
In the absence of strong data protection and privacy laws, the issue of what can be done with stored citizen information is a grey area.
The new measures do not specify what happens to the Aadhaar numbers that have already been stored by public or private entities. It also does not mention which AUAs would qualify as global or local.