(Current Affairs) Economy & Energy | March: 2016


Before clearing National IPR policy gohhvt. to hold discussions with WIPO

  • Commerce and Industry Ministry will hold discussions with the World Intellectual Property Organisation (WIPO), the global body for promotion and protection of intellectual property rights (IPR), before approaching the cabinet for clearance of the national IPR policy.
  • There will be discussions between the WIPO and the Department of Industrial Policy and Promotion (DIPP) on some components of the proposed national IPR policy.
  • These could include ways to integrate a formal awareness strategy into the policy to ensure respect for IPRs, as well as on an effective enforcement framework and capacity building measures.
  • The government's decision to formulate a national IPR policy followed criticism from developed countries, including the US, of India's “weak” IPR system as it allegedly does not do enough to effectively protect IPRs.
  • The U.S. had on January 11 sought public comments for the 2016 version of the Special 301 Report.
  • The report “identifies countries that de ny adequate and effective protection of IPR or deny fair and equitable market access to US persons who rely on IP protection.”
  • Noting America’s concerns on India’s IPR system, the 2015 Special 301 report said India will remain on the ‘Priority Watch List’.

Startups for tax breaks, single window system

  • Simplified tax structure, easy compliance process and single window system are some of the issues that startups expect to be addressed through the much-awaited ‘Startup India’ policy.
  • Ease of doing business is important for any enterprise but critical for startups.
  • With limited resources at their command, they cannot afford to spend too much time, money and effort in navigating a complex environment, populated by archaic laws and a labyrinth of registrations, permits and approvals.
  • Startup India is expected to mark the next phase of growth for entrepreneurship and startups in India.
  • With 4,200 enterprises, India already ranks third in the world for the number of start ups after the U.S. and the U.K. With three to four startups emerging every day, this number is expected to reach several thousand by 2020.

World Development Report critical of Digital spread

  • With 60 per cent of the world’s population still offline, institutional and regulatory barriers to efficiency are exacerbating the problem of low and unevenly distributed “digital dividends” from growing Internet penetration across countries, a new World Bank study has found.
  • In its annual World Development Report (WDR) the Bank appeared to strike a balance between outlining the positive outcomes from a deepening digital economy in countries such as India, and the fact that automation of jobs was in some cases leading to inequalities in the labour market between high-skill and low-skill workers.
  • The 2016 WDR issue titled “Digital Dividends,” noted that almost 1.063 billion Indians were offline even though India ranked among the top five nations in terms of the total number of Internet users, along with China, the U.S., Japan and Brazil.
  • Commenting on the report’s findings that 40 per cent of the world’s population is connected by the Internet, Kaushik Basu, Chief Economist for the World Bank, said, “While these achievements are to be celebrated, this is also occasion to be mindful that we do not create a new underclass.”
  • With nearly 20 percent of the world’s population unable to read and write, the spread of digital technologies alone is unlikely to spell the end of the global knowledge divide.
  • The report also cautioned that with the advent of big data, which includes the likes of India’s Aadhaar unique identity project, “secret snooping by governments can be for legitimate law enforcement reasons, but sometimes violates laws and rights.”
  • In fact, the Bank found that a large proportion of Indians believed that their online information was entirely private.
  • The WDR noted, “57 percent of Indians believe private information on the Internet is very secure, but only 18 percent of French and 16 per cent of German respondents do.”
  • Yet, there were numerous examples worldwide of success stories where the power of the Internet had been leveraged to improve, for example, the delivery of public services.

Rupee goes below 67 per dolar

  • The rupee tumbled by 44 paise to a more than 2-year low at 67.29 against the U.S. currency on fresh dollar demand from banks and importers amidst volatile equities.
  • The Indian unit resumed sharply lower at 66.98 a dollar against Wednesday’s closing level of 66.85 at the Interbank Foreign Exchange (Forex) market.
  • It dropped further to a 2-year low at 67.30 before concluding at 67.29, showing a loss of 44 paise or 0.66 per cent.

Moody’s says Indian banks will see some respite in NPA

  • The Indian banking sector could expect some respite from bad loans that have increased sharply over the last three years with ratings agency Moody’s Investors Service.
  • Its unit ICRA, stating that the pace of growth in non-performing assets will moderate over the next 12-18 months.
  • The ratings agencies noted fresh NPA generation had moderated during the first half of the current financial year despite withdrawal of regulatory forbearance.
  • Banks are now mandated to make standard restructured asset provisioning on par with NPA provisioning from April 1, 2015.
  • According to RBI data, gross bad loans in the banking system increased to 5.1 per cent of gross advances as of September 2015, from 3.4 per cent in March 2013.
  • During the same period, stressed assets, which are defined as gross NPA plus standard restructured advances, increased to 11.3 per cent from 9.2 per cent.
  • The ratings agency noted that while public sector banks reported some moderation in their bad-loan ratios during the first six months of the financial year ended March,31, 2015, their holdings of weak standard assets represented 2-2.5 times their total gross non-performing assets.
  • ICRA said that while credit growth for the public-sector banks may remain low until at least end-FY17, such growth is still likely to outpace internal generation, thereby adversely affecting capital adequacy.
  • The ratings agency estimate public sector banks need to raise Rs.3.3 lakh crore of tier-I capital between FY16 and FY19.
  • The government has said that it will infuse Rs.70,000 crore in the public sector banks in four years, starting from this financial year. “With current plan to infuse Rs.70,000 crore, credit growth will have to drop to 8-10 per cent.

Industrial output dips to 5 year low

  • A sustainable recovery in the Indian economy remains elusive with industrial output shrinking by 3.2 percent in November 2015, marking its worst performance since October 2011.
  • While consumer price inflation inched up to 5.6 per cent in December.
  • The dichotomy of rising inflation accompanying a decline in industrial output poses a fresh problem to the government of how to spur domestic demand.
  • The spike in retail inflation makes it difficult for the RBI to cut interest rates to spur investments, while cramping the Centre’s ability to use fiscal fillip to prop up the economy.
  • The contraction in November’s IIP comes after a 9.8 per cent growth in the index in October 2015. The contraction was mainly driven by a contraction in the manufacturing sector, of -4.4 per cent, the worst the sector has performed since October 2014, when it contracted -5.6 percent.
  • The capital goods sector also saw a significant contraction on a usage basis, of -24.4 percent in November 2015,compared with a growth of 16.1 per cent in October 2015.

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