(Current Affairs) Economy & Energy | November : 2013
Economy
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Economic Outlook 2013-14 Released (Free Available)
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FMC’s Administrative Control shifted to Finance Ministry (Free Available)
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Government notified GAAR (Free Available)
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RBI appealed against currency garlands (Only for Online Coaching Members and Premium Members)
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Foundation of MEMU Coach Factory was laid at Bhilwara (Only for Online Coaching Members and Premium Members)
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MEMU Trains (Only for Online Coaching Members and Premium Members)
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Austerity Measures to Contain Rising Fiscal Deficit Announced (Only for Online Coaching Members and Premium Members)
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RBI issued norms for Currency Swap Window (Only for Online Coaching Members and Premium Members)
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RBI Banned Zero Percent Interest Rate Schemes for Purchase of Consumer Goods (Only for Online Coaching Members and Premium Members)
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RBI Increased the Repo Rate (Only for Online Coaching Members and Premium Members)
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CCEA Took Steps For Operationalisation of Infrastructure Debt Funds (Only for Online Coaching Members and Premium Members)
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Expert Committee to revise and strengthen Monetary Policy Framework (Only for Online Coaching Members and Premium Members)
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RBI allowed the Non-Resident Investors to buy Shares under FDI Scheme (Only for Online Coaching Members and Premium Members)
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Import Duty on Gold Hiked (Only for Online Coaching Members and Premium Members)
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SEBI relaxed KYC norms for foreign investors (Only for Online Coaching Members and Premium Members)
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Category I includes (Only for Online Coaching Members and Premium Members)
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Corporate Bodies, Trusts, Individuals, Family Offices (Only for Online Coaching Members and Premium Members)
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Government Notified Changes in the FDI Policy (Only for Online Coaching Members and Premium Members)
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CCEA approved the Methodology for Coal Block Auction (Only for Online Coaching Members and Premium Members)
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RBI liberalised norms for banks to open branches in Tier I cities (Only for Online Coaching Members and Premium Members)
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Russia Lifted Ban on Import of Non-Basmati Rice and Oilseeds from India (Only for Online Coaching Members and Premium Members)
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RBI relaxed Trade Credit Norms to raise Funds from Abroad (Only for Online Coaching Members and Premium Members)
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RBI Announced Committee to Frame Vision for Financial Inclusion (Only for Online Coaching Members and Premium Members)
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Bhartiya Mahila Bank Started Recruitment Process (Only for Online Coaching Members and Premium Members)
Economic Outlook 2013-14 Released
The Economic Advisory Council to the Prime Minister (of
India) on 13 September 2013 released the document Economic Outlook 2013-14 in
New Delhi. The economic growth forecast of India for the current fiscal 2013-14
was lowered to 5.3 percent from 6.4 percent projected earlier. The PMEAC had in
April 2013 projected 6.4 percent growth for Indian economy for current financial
year. RBI too had earlier lowered its growth
projection for this fiscal to 5.5 percent from 5.7 percent. The Economic Outlook
condition listed out host of measures including further liberalisation of FDI
norms to improve economy.
The other major highlights of Economic Outlook India are as following:
- The PMEAC expects the agriculture sector to grow by 4.8 percent in the current fiscal up from 1.9 percent, while the industrial growth has been pegged at 2.7 percent as against 2.1 percent in 2012-13.
- The growth of services sector, however, is projected to decelerate to 6.6 percent in current fiscal from 7.1 percent a year ago.
- In order to promote growth, the advisory council suggested that the government should liberalise FDI investment norms, resolve tax concerns of the industry, fast track public sector investment and initiate measures to contain fiscal deficit.
- Referring to the external sector, the advisory council expressed hope that the Current Account Deficit (CAD) in 2013-14 will come down to 70 billion US dollars or 3.8 percent of GDP, from 88.2 billion US dollars or 4.8 percent a year ago.
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As regards rupee, it was hoped at the current level it is well corrected. Stability is returning to the foreign exchange market. As capital flows return and as CAD begins to fall, this tendency will strengthen.
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Admitting that rupee depreciation will put some pressure on inflation, the advisory council stated that On balance, WPI inflation by end March 2014 will be around 5.5 percent as against the average of 7.4percent in 2012-13 and 5.7 percent for March end 2013. The wholesale and retail inflation widened in recent months primarily on account of higher weightage of food items in CPI. The retail inflation in August 2013 stood at 9.52 percent, while the WPI numbers in July was at 5.79 percent.
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The trade deficit, PMEAC said, would come down to around 185 billion US dollars in 2013- 14, against an estimated 195.7 billion US dollars in 2012-13.
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Between 2010-11 and 2012-13, the combined impact of higher net oil and net gold imports on the CAD (Current Account Deficit) was almost 57 billion US dollars or 3 percent of GDP.
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The CAD may go even below 70 billion US dollars in 2013- 14 if the recent trends in exports and imports are maintained through the year.
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Net Capital flows are projected to fall to 61.4 billion US dollars in 2013-14 against an estimated 89.4 billion US dollars in 2012- 13 putting pressure on the country’s forex reserves.
FMC’s Administrative Control shifted to Finance Ministry
The administrative control of Forward Markets Commission
(FMC), the chief regulator of Forwards and Futures Commodity Markets in India on
9 September 2013 was transferred to Ministry of Finance following the
orders of Government of India. Earlier, the FMC was under the control of the
Department of Consumer Affairs under the Ministry of Food. With this decision,
the regulators of financial sector like SEBI, RBI, IRDA and PFRDA, all have been
brought under one roof and that is Ministry of Finance. The Government notified
its decision to bring the commodity markets regulator Forward Markets Commission
(FMC) under the ambit of the Finance Ministry on 6 September 2013. The proposal
to this effect was moved in August 2013 in the wake of the alleged scam in the
National Spot Exchange Limited (NSEL) of 5600 crore rupees. NSEL stopped its
functioning in the month of August 2013 following the Governments orders which
were issued in the wake of violation of certain rules.
About Forward Markets Commission (FMC)
Forward Markets Commission (FMC) headquartered at Mumbai, is
a statutory body set up in 1953 under the Forward Contracts (Regulation) Act,
1952. It is a regulatory authority which was overseen by the Ministry
of Consumer Affairs, Food and Public Distribution, Govt. of India. Recently,
with the decision of Government of India the administrative control of FMC was
shifted to Union Finance Ministry. FMC under its ambit regulated futures trading
on 21 commodity bourses that includes MCX and NCDEX.
Comment
The Government’s decision on FMC would help in increasing the coordination between the market regulators. It will also be helpful for the government in resolving the NSEL payment crisis of 5600 crore rupees.
Government notified GAAR
The Union government of India on 26 September 2013 notified GAAR (General Anti Avoidance Rules). It seeks to check tax avoidance by investors routing their funds through tax havens. It will come into effect from 1 April 2016. The GAAR will apply to entities availing tax benefit of at least 3 crore rupees. It will apply to foreign institutional investors, FIIs that have claimed benefits under any Double Tax Avoidance Agreement (DTAA)Investments made by a non-resident by way of offshore derivative instruments or P-Notes through FIIs, will not be covered by the GAAR provisions. The notification said, investments made before 30 August 2010, will not be scrutinised under GAAR.