(Current Affairs) Economy & Energy | April + May: 2014

Economy

9-member panel set up by IRDA

  • Insurance regulator IRDA has set up a nine-member committee to review the 14 non - legislative recommendations made by the Financial Sector Legislative Reforms Commission (FSLRC).
  • The committee will also examine the extant legislative and regulatory framework in compliance 14 non-legislative recommendations (NLRs).
  • The non-legislative recommendations are related with consumer protection, transparency and capacity building, among others.
  • The Insurance Regulatory and Development Authority (IRDA) said the committee will submit its report by April-end.
  • The committee members include C.R. Muralidharan, G. Prabhakara, and Mathew Varghese, all ex-Members, IRDA and M.S. Sahoo, ex- Member, SEBI.
  • The committee will identify the gaps and possible improvements in the extant framework vis-a-vis the 14 NLR. The panel will also suggest changes or modifications to the extant framework in compliance with the 14 NLR.

Import tariff value of gold & silver

  • Government slashed the import tariff value on gold and silver to $404 per ten grams and $635 per kg, respectively, taking into account the volatility in the global prices
  • Import tariff value is the base price at which customs duty is determined to prevent underinvoicing. The tariff value is revised on a fortnightly basis after analysing the global price trend.
  • The notification in this regard has been issued by the Central Board of Excise and Customs (CBEC).
  • Gold is the second largest import item for India after petroleum. However, gold imports are expected to decline this year as government has taken several measures to curb shipments to address the high current account deficit.

Interest rate futures as hedging instrument

  • Interest rate futures, which were launched across three bourses and touted as a muchneeded hedging instrument, are seeing a sharp drop in participation already.
  • IRFs are contracts, which allow a bond investor to hedge against interest rates, and have the option of being settled in cash without the physical bond.
  • Volumes have slipped to as low as Rs 476.35 crore from Rs 3,080 crore notched on their launch day on the National Stock Exchange (NSE). Turnover on the MCX-SX and BSE have seen a fall of 74% and 70%, respectively.
  • Banks can keep 24% of their bond portfolio under HTM and the portfolio is not required to be marked to market prices.
  • Banks can move their bonds from available-for-sale and held-for-trading portfolios to the HTM once in every financial year.
  • There is also a lack of participation from public sector banks, the biggest market participants of the bond market.

Rationalising reserve prices

  • Rationalisation of spectrum reserve prices has helped the government get Rs.40,000 crore of bids on the opening day of the ongoing auction.
  • People are now expected to realise how irrational it was at that point in time for media and everybody to shout that the government is losing revenue,according to Mr. Sibal said, while referring to lowering of the base price compared to 2013 auction, which did not evoke much response from mobile firms.
  • The architectural vision of ‘GI Cloud’ encompasses a set of discrete cloud computing environments spread across multiple locations, built on existing or augmented infrastructure, following a set of common protocols, guidelines and standards issued by the Centre.
  • Some of its features include self-service portal, multiple cloud solutions, secured VPN access and multi location cloud.

Output of India’s pvt sector

  • India’s private sector output contracted for the seventh consecutive month in January as services sector output remained weak amid tough economic conditions.
  • The fall was largely on account of drop in services sector output unlike the manufacturing sector which had seen acceleration in production growth in January.
  • Service providers in the country reported falling new business orders for the seventh month running in January, amid increased competition for new work, deteriorating confidence among clients and weaker underlying demand.
  • Retail or CPI inflation in December moderated to a three-month low of 9.87 per cent, while the wholesale or WPI was at 5-month low of 6.16 per cent during the month.

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