(Current Affairs) Economy & Energy | October: 2015

Economy

Centre eases foreign investment rules, banks likely to gain most

  • In a move that will attract more overseas inflows and improve the ease of doing business in India, the government on Thursday simplified foreign investment rules by bringing together different categories.

  • The Cabinet Committee of Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, introduced a composite cap for all kinds of overseas inflows, including foreign direct investment (FDI), foreign portfolio investment (FPI) and investments by non-resident Indians (NRIs).

  • The decision, which was first announced by finance minister Arun Jaitley in the Budget, boosted stocks of banks, which will now find it easier to attract foreign capital up to 74%. Banks are already reeling under the pressure of rising bad loans and need billions of dollars to meet capital requirements.

  • Besides banks, credit information firms, commodity and power exchanges, and defence and other retail companies among others, will also benefit from the policy.

Bullet train project: costly affair for india

  • India’s maiden bullet train corridor between Mumbai and Ahmedabad will cost nearly Rs one lakh crore and the first train can run in 2024 if work begins in 2017, according to a final feasibility report on the project prepared by the Japanese governmental agency.

  • The Japan International Cooperation Agency(JICA) in its report submitted to the Railway Ministy today envisages a reduction in the travel time on the 505-km long corridor between the two western cities to two hours from the existing over seven hours.

  • The report estimates that the project where the bullet train will run at a speed of over 300 km per hour will cost Rs 98,805 crore. It also suggested that the train fare could be higher than that charged for First AC of Rajdhani Express, a senior rail ministry official involved with the project said.

  • Railways will examine the report and decide the future course of action, the official said.

  • As a follow-up action, a Cabinet note seeking approval for the project with an outline of the project feasibility and timelines is likely to be prepared next month.

  • If work begins in 2017, the line can be completed in 2023 and made operational in 2024, it is projected.

  • After the study of the financial feasibility of the line, the final report suggests the fare of the bullet train between Mumbai and Ahmedabad may be somewhere around one and half times more than the fare of the first AC of Rajdhani Express and it would be around Rs 2,800. 

  • It is estimated that by 2023 around 40,000 passengers are expected to avail this service everyday and accordingly it would be a financially viable service.

  • The Mumbai-Ahmedabad corridor is expected to enable trains to run at a top speed of 350kmph.

  • From the initial estimated cost of Rs 65,000 crore, it has gone up after taking into account various factors like price escalation and interest.

Apple grows faster in India than China

  • India is proving to be quite a strong growth engine for Apple, the world’s most valuable company that sells the iPhone smartphones, iPad devices and Mac line of computers.
  • Growth rate in India has surpassed that witnessed in China.
  • Sales in India were up 93% in April-June against 87% growth in China, according to numbers released by the company, while announcing quarterly results on Tuesday.
  • However, it must be noted that China is many times bigger for Apple in terms of absolute volume and revenue, contributing almost 25% to the $49.6 billion revenue that the company clocked in April-June quarter.
  • India, on the other hand, is still a billion-dollar market for Apple, and that too on an annual basis. But, India is moving up fast, say distributors and sellers of Apple’s devices.

TRAI disclose firms faulting on call drop service norms

  • The Telecom Regulatory Authority of India (TRAI) has named Vodafone, Idea, Reliance and Airtel among the cell phone service providers failing to meet the quality of service norms in Delhi or Mumbai, especially on mobile call drops.

  • The audit, done by an independent agency in the two metros, on behalf of the regulator, found that Tata (CDMA) in Delhi and Bharti Airtel in Mumbai are the only service providers meeting the benchmark of less than 2 per cent call drops.

  • In Delhi, the highest call drop rate was that of Reliance (17.29 per cent), followed by Airtel (8.04 per cent), Aircel (5.18 per cent), Vodafone (4.28 per cent) and Idea (2.84 per cent). The call drop rate for Tata (CDMA) stood at 0.84 per cent.

  • The situation is no better in Mumbai with Idea registering the highest call drop rate of 5.56 per cent, followed by Tata (GSM) (5.51 per cent), Vodafone (4.83 per cent), Aircel (3.19 per cent) and Reliance (2.29 per cent). For Airtel, this was 0.97 per cent.

  • The TRAI said the drive was conducted in view of complaints on call drops and other network issues on June 23 and June 24 in Mumbai and July 9 to 11 in Delhi.

  • As per the audit report, barring Tata (CDMA) in Delhi, none of the service providers in Delhi and Mumbai, meets the benchmark for Rx Quality, which measures voice quality during calls.

  • The number of call drop complaints by mobile phone subscribers has been on the rise, especially in metros. However, operators, on their part, have cited lack of spectrum and delay in its allocation as one of the reasons for network-related issues along with hurdles in installing mobile towers due to radiation issues.

  • The TRAI report points out that during the last six months around 801 sites in Mumbai and 523 sites in Delhi were shut down due to reasons such as sealing of sites by municipal authorities and radiation-related issues. The closure of each site impacts three to four neighbouring sites and this may lead to increased call drops.

Oil prices slip further on concerns over supply glut

  • Oil prices slipped, on Wednesday, after the American Petroleum Institute (API), the largest U.S trade association for gas and oil, published that oil inventories increased by 2.3 million barrels in Cushing, Oklahoma.

  • West Texas Intermediate (WTI), the most prominent U.S benchmark for crude oil, fell by 58 cents to $50.28 a barrel for September deliveries. Brent North Crude for September, the benchmark for European, African and Middle Eastern crude oil prices, fell 35 cents and was trading in London at $56.69 a barrel at mid-day.

  • Oil spot prices in July last year were close to $105 per barrel, and prices have fallen more than 10 per cent this month alone.

  • Crude oil prices have fallen in the last year because of protracted over-supply and weak demand, which is being exacerbated by the Greek crisis and the Chinese stock market fall as well as an expectation that the U. S will raise interest rates this year.

  • Excess supply is expected to persist with the Iran nuclear deal, which will bring Iran’s oil onto the market in a few months.

  • The Oil Producing and Exporting Countries (OPEC), the cartel of oil producing nations that includes Iran but is led by rival Saudi Arabia, announced that it would not cut back on output. The group said that the oil price dip was likely to be temporary and that demand was likely to pick up.

  • OPEC’s oil output faces challenges and competition from other energy sources, including U.S shale, as well as internal differences in opinion, with Iran and other smaller oil producing members requesting a cut back in supply in light of falling prices.

Cabinet to take up gold monetisation scheme in few weeks

  • The Government is likely to consider and approve gold monetisation scheme in the next few weeks, which proposes to offer tax-free interest to individual on depositing the yellow metal with banks.
  • “Cabinet note on this (gold monetisation scheme) has been circulated. It will take couple of weeks before approval comes,” sources said.
  • Various proposals including interest rate are at the discussion stage, sources said. Sources said that nod on issuance of Sovereign Gold Bond could take a while.

IDFC gets banking licence from RBI, to launch services by year-end

  • The Infrastructure Development Finance Company (IDFC Ltd) on Friday declared on it’s website that theReserve Bank of India (RBI) had granted banking licence to the financial company making it the second lender after Bandhan Bank to enter the banking sector after more than a decade.

  • IDFC and Bandhan Financial Services Pvt Ltd emerged successful out of 25 contenders for new bank licences issued by the RBI in April last year. Bandhan Financial got RBI’s approval last month.

  • IDFC’s executive chairman, Rajiv Lall after receiving the final nof for the banking licence had said that the company plans to start operation from October 1 with an initial loan book of around Rs 55,000 crore with an estimated 20 branches. Of these 15 are expected to be in tier-VI cities with rest of the branches in New Delhi and Mumbai.

  • YES Bank was the last bank to be set up in 2004. Bandhan said in June it would launch banking operations in August.

  • Millions of people in India do not have access to formal banking services. The move to grant new permits marked the start of a cautious experiment to create more competition in a sector dominated by state lenders many of which are reluctant to expand into rural areas or towns where banking penetration is low.

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