(Current Affairs) Economy & Energy | September: 2016

Economy

Cabinet approved foreign investment changes in NBFCs

  • The Cabinet approved a proposal to amend rules for foreign investment in non-banking finance companies (NBFCs).
  • Foreign investment in ‘other financial services’ that are not regulated by any regulators or by a government agency can be made via the approval route,
  • Further, minimum capitalisation norms as mandated under FDI policy have been eliminated as most of the regulators have already fixed minimum capitalisation norms
  • The Cabinet Committee on Economic Affairs approved a one-time grant of Rs.900 crores spread over three years for an R&D project for the development of Advanced Ultra Super Critical (AUSC) technology for thermal power plants.
  • The estimated cost of the project is Rs.1,554 crore, according to the government.
  • The Rs.900 crore, commencing from 2017-18, is to be provided as plan gross budgetary support to Bharat Heavy Electricals (BHEL) for the implementation of the R&D project.
  • The Cabinet gave its ex-post facto approval for the amendment of Section 64 and section 65 and the consequential amendment in Section 115 of the Factories Act, 1948 by the introduction of the Factories (Amendment) Bill, 2016 in Parliament.
  • The Cabinet also approved the introduction of pension and post-retirement medical services benefits to the employees of the Food Corporation of India.
  • “The annual financial implication for both schemes combined would be around Rs.134.4 crore at present level of salaries of the employees,” the government said.

Govt came up with new norms for appraisal and approval of public-funded schemes

  • Finance Ministry has issued new norms for the appraisal and approval of public-funded schemes as well as to improve the delivery of goods and services to citizens.
  • With the announcement in the Union Budget 2016-17 of doing away with Plan Non-Plan distinction at the end of Twelfth Five Year Plan, it is imperative that a plan non-plan neutral appraisal and approval system is put into place.
  • One of the guidelines is that no new scheme or sub-scheme can be initiated without the prior “in-principle” approval of the Department of Expenditure. This will not apply to the announcements made in the Budget Speech for any given year.
  • The new policy also empowers ministers to approve expenditure proposals of up to Rs 500 crore, up from the previous limit of Rs 150 crore.
  • The Finance Ministry move is aimed at improving the delivery of goods and services to citizens.

Govt to boost connectivity in rural areas

  • About Rs.10,000 crore will be spent in the current financial year from the Universal Service Obligation Fund (USOF) to execute various digital infrastructure projects to boost connectivity in rural areas.
  • This amount “is the highest in the history of USOF,” Telecom Secretary said at a seminar on 'ICT emerging technologies & USOF for Digital India.'
  • The USO Fund is maintained by the government. Under the New Telecom Policy, a provision was made to raise money for this fund through a ‘Universal Access Levy’, charged from operators as a percentage of various licenses fees being paid by them.

Ease of doing business index will be improved after GST

  • Union Finance minister said that the Goods and Services Tax regime, once implemented, will improve the ease of doing business in the country.
  • Mr. Jaitley said the NDA government is committed to making such enterprises more competitive and providing them access to capital.
  • Starting this year, the census of MSME units in the country will be done online instead of relying on physical surveys with the intention of creating a comprehensive database with real-time information on different enterprises.
  • This database will eventually be used for public procurement purposes and would also be used by public sector enterprises to scale up their purchases from small enterprises.
  • Separately, an online finance facilitation web portal was unveiled by the National Small Industries Corporation that provides credit support to MSME units for raw material purchases.
  • The portal will allow the MSMEs to apply for loans from the various banks.

TRAI introduced portal to allow mobile phone users to check the call drop rate

  • Telecom regulator TRAI introduced a portal that will allow mobile phone users to check the call drop rate, network coverage and call quality on their operators’ network.
  • This will bring in transparency about the network performance as consumers will be able to see if the call drop situation has changed.
  • Further, the regulator is likely to come out with a consultation paper on net neutrality and their final view on the issue of free data by the end of this month.

Inflation at two year high

  • Retail inflation accelerated to a two-year high of 6.07 per cent in July due to higher food prices, official data showed.
  • Industrial output for the first quarter of 2016-17 has grown by just 0.6 per cent. While the index of industrial production (IIP) rose 2.1 per cent in June 2016.
  • Inflation in the food category of the Consumer Price Index accelerated to 8 per cent in July from 7.5 per cent in June.
  • Inflation in the housing segment remained flat at 5.4 per cent in July, while that in the fuel and light segment slowed to 2.75 per cent in July from 2.9 per cent in June.
  • Inflation in the clothing and footwear segment accelerated to 5.2 per cent from 5 per cent in June.
  • Analysts said higher inflation will make it challenging for the Reserve Bank of India to meet its inflation target of 5 per cent set for March 2017.
  • “While the pace of growth (of IIP) still remains low, there was an improvement across the board,” according to a report by Crisil.
  • The growth in the IIP in June was mainly driven by the electricity sector, which grew 8.3 per cent in that month compared to 4.7 per cent in June.
  • Manufacturing sector growth remained subdued at 1 per cent in June, up from 0.6 per cent in May. Activity in the mining and quarrying sector also picked up with the sector growing at 4.7 per cent in June compared to 1.4 per cent in May.
  • The capital goods sector, however, contracted 16.5 per cent in June compared to a contraction of 12.35 per cent. The consumer durables segment slowed marginally to 5.6 per cent in June from 6 per cent in May.
    Exports shrink again in July
  • After rising for the first time in 18 months in June, exports shrank again in July, contracting 6.84 per cent due to decline in shipments of engineering goods and petroleum products.
  • Gold imports, which till recently was a matter of concern for the government, more than halved to $1.08 billion in the month. Merchandise exports totalled $21.69 billion in July as against $23.28 billion in the same month last year.
  • Declining exports as well as in imports narrowed the trade deficit in July to $7.76 billion as against $13.09 billion in the year-ago period.
  • Exports have been falling since December 2014 due to weak global demand and slide in oil prices.
  • As per the data released by Commerce and Industry Ministry, imports in July were at $29.45 billion, down 19.03 per cent from $36.37 billion in the same month a year ago.
  • Gold imports dropped over 64 per cent to $1.08 billion, from $2.97 billion in July 2015. Import of the precious metal has been declining sharply due to measures like higher customs duty and gold schemes.
  • Gold used to be the second most imported item in the country after petroleum. Data revealed that imports of petroleum, crude and related products fell 28 per cent in July, while that of coal, coke and briquettes shrank by about 7 per cent.

Off-grid solar can meet India’s power demand

  • The slow pace of capacity addition in the solar sector has created room for a variety of off-grid solar solutions to grow and provide electricity to those as yet not connected to the power grid, according to a private sector industry leader.
  • Off-grid solar is increasingly being viewed as the way to bring sustainable and cheap lighting to the vast segments of India that are yet to be connected to the electricity grid, especially in difficult terrain.
  • “Over 300 million people in India don’t have access to the electricity grid and are living in complete darkness,” Ms. Modi added.
  • The coming together of various factors, both external and domestic, has meant that there are several types of household solar products entering the market, ranging from simple solar lanterns powered by in-built solar panels, to entire solar invertors that use rooftop solar panels.
  • These off-grid solar solutions, apart from helping the government meet its renewable energy target, also provide economical savings — both to the government and the consumer.
  • “The government is spending Rs.30,000 crore a year on importing kerosene, which is a complete waste of foreign exchange,” Ms. Modi said.
  • “The average rural household uses 18 litres of kerosene a month, 12 of which are used only for lighting. The rest is for cooking. They spend Rs.150 a month only on kerosene.”
  • However, despite some cost factors easing in the off-grid solar industry, others still pinch, leading to economic activity that could have taken place in India moving to China instead.
  • The battery makes up 30 per cent of the cost of the product, according to Ms Modi, and the company has to pay a 30 per cent duty on its import. This renders making solar lanterns and invertors in India economically unviable.

Govt to do away with the minimum educational qualification for public transport drivers

  • The Centre has proposed doing away with the minimum educational qualification for public transport drivers.
  • At present, it is compulsory for drivers of all commercial vehicles, such as buses, trucks and taxis, to clear class VIII at the school-level before applying for a driving licence.
  • The Centre has proposed diluting this requirement in the Motor Vehicles Amendment Bill of 2016 which was introduced in Lok Sabha earlier this week.
  • Taxi drivers may no longer need to have one year’s driving experience in a private vehicle before being eligible for a commercial vehicle licence, provided that one has undergone specialised training from any government accredited driving school.
  • At present, driving a private vehicle for at least one year is a must before one can get a learner’s licence to drive a public transport vehicle.
  • As per the plan, the Central government will empower a body to certify schools to impart training to aspirant drivers across the country.
  • The official said that a “structured training programme” will be formulated by the Centre, possibly with the help of National Skill Development Corporation (NSDC) so that faster issuance of transport licences is possible.
  • The training programme will likely be for 2-3 months and may focus on core driving skills, latest technology exposure, vehicle maintenance, soft skills, discipline and health and hygiene of the drivers, the official said.Remedial training
  • At present, after the applicant has failed the test of competence more than three times, he or she can re-apply only after two months of appearing for the test.
  • Now, the applicant will also have to undergo this remedial training course compulsorily.

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