Downloaded from: http://www.upscportal.

com

Economy & Energy: April 2011

Prepare for long-term climate change impacts on food production: FAO

Potentially catastrophic impacts on food production from slow-onset climate changes are expected to increasingly hit the developing world in the future, and action is required now to prepare for those impacts, the Food and Agriculture Organisation (FAO) warned in a report to the United Nations Framework Convention on Climate Change. Currently the world is focussed on dealing with shorter-term climate impacts caused mainly by extreme weather events that is absolutely necessary, said FAO Assistant Director-General for Natural Resources Alexander Mller.

FDI norms fine-tuned to attract more investment

Concerned over the continued decline in foreign direct investment (FDI) over the last few months, the Central Government unveiled a major policy reform allowing flexibility for Indian companies to raise funds from abroad. At the same time, it plugged the loopholes for backdoor FDI entry breaching sectoral caps. The new circular issued by the Department of Industrial Policy and Promotion (DIPP) states that under the new norms, Indian companies have been allowed to issue equity against import of capital goods and liberalise conditions for seeking foreign investment for production and development of agriculture seeds. The facility of conversion of capital goods import into equity was earlier available for companies raising external commercial borrowings (ECBs). The government also removed the restrictive condition of obtaining prior approval of Indian companies for making investments in the same field. In order to plug the loopholes in the system, the government has classified companies into two categories companies owned or controlled by foreign investors and companies owned and controlled by Indian investors. The government has done away with the earlier category of investing companies, operating companies and investing-cum-operating companies.

http://upscportal.com/civilservices/current-affairs

Downloaded from: http://www.upscportal.com

It further said that the companies would be free to prescribe a formula for transforming convertible instruments (like debentures, partly paid shares, preferential shares and the like) into equity in accordance with the guidelines of FEMA and SEBI.

100 % FDI allowed in some areas of farm sector

Tuning the policy norms further to attract declining foreign investment, in a significant development, the Centre announced allowing 100 per cent foreign direct investment (FDI) in the agriculture sector, including seeds, plantation, horticulture and cultivation of vegetables. According to a circular by the Department of Industrial Policy and Promotion released on Consolidated FDI Policy Circular 1 of 2011, 100 per cent FDI has been now allowed in development and production of seeds and planting material, floriculture, horticulture, and cultivation of vegetables and mushrooms under controlled conditions. The policy will come into effect from Friday (April 1). Besides, animal husbandry (including of breeding of dogs), pisciculture, aquaculture under controlled conditions and services related to agro and allied sectors have been brought under the 100 per cent FDI norm. Similarly, the tea sector has also been brought under the 100 per cent FDI norm. The DIPP has imposed certain conditions for companies dealing with development of transgenic seeds and vegetables wanting to take the 100 per cent FDI route. Under the 100 per cent FDI in tea sector, it demands compulsory divestment of 26 per cent equity of the company in favour of an Indian partner/Indian public within a period of five years prior to approval of the State Government concerned in case of any future land use change.

GoM to decide Cairn-Vedanta deal

In a setback to U.K.-based Vedanta Resources' attempt to seal the deal' with Cairn Energy Ltd. (CIL), the Cabinet Committee on Economic Affairs (CCEA) decided to refer the matter to a Group of Ministers (GoM) headed by Finance Minister Pranab Mukherjee following sharp differences in the Cabinet over granting approval to the deal. The deal had become controversial' following the adverse opinion of the Solicitor General of India and the Law and Justice Ministry that London-based Vedanta Resources must agree to equitably share royalty on oil produced from Cairn India's mainstay Rajasthan oilfields before the government nod.

TRAI proposes Rs.1-lakh cr infrastructure investment

The Telecom Regulatory Authority of India (TRAI) issued important recommendations related to manufacturing, infrastructure and green telecom to promote structured growth of the sector. It has also proposed investments of over Rs.1-lakh crore for technical upgradation and improvement of manufacturing capabilities of the sector. TRAI has recommended preferential market access to domestic manufacturers and tax concessions in equipment manufacturing policy. It has called for treating telecom

http://upscportal.com/civilservices/current-affairs

Downloaded from: http://www.upscportal.com

infrastructure as an essential infrastructure. It has also asked for making green measures as an integral part of the proposed National Telecom Policy 2011 and ensuring energy certification for all telecom products, equipment and services in the telecom network. It has also called for setting up of a Telecom Standards Organisation (TSO) for carrying out all works related to telecom standards, driving international standards and drawing up specifications of the equipment to be used in the Indian telecom networks, including security standards. Pointing out that Indian market for semiconductor chips is around $8 billion, TRAI has recommended setting up of two fabrication units with government assistance.

ADB meet to focus on food, fuel prices

Skyrocketing food and fuel prices in Asia and the Pacific was the prime focus of discussion at the annual meeting of the board of governors of the Asian Development Bank (ADB) starting May 3 in Hanoi. Even as nearly two billion people in the Asia-Pacific region have already been struggling on less than $2 a day, soaring prices of food and fuel have further complicated economic and monetary policy-making for governments, while floods and earthquakes have added to the pressure. Alongside, environmental degradation and climate change, growing and ageing populations, and global economic rebalancing are among the myriad other challenges as Asia seeks to cement the foundations for a prosperous future.

Mini Ratna status for Pawan Hans

Pawan Hans Helicopters Limited was conferred the Mini Ratna Category-I status by President Pratibha. It has been providing services to the paramilitary forces and support services for oil exploration. Recently, the company established its own training school.

Indian handicrafts to take part in Hong Kong fair

Seeking to promote its products to a wide range of customers and fight the growing competition worldwide, the Export Promotion Council for Handicrafts display 125 varieties of products in the three trade fairs held in Hong Kong from April 20.

Exports jump 37 % to $246 billion in 2010-11

Braving the slow economic growth and declining demand from the western markets, India's exports posted an impressive 37.1 per cent rise at $245.9 billion for the fiscal ending 2010-11. During March shipments posted an impressive 43.9 per cent growth at $29.1 billion. Releasing the export figures, Union Commerce and Industry Minister Anand Sharma said exports have not only posted a phenomenal growth but have also surpassed the growth target of $220 billion set for 2010-11. Exports had suffered in 2009-10 at a mere

http://upscportal.com/civilservices/current-affairs

Downloaded from: http://www.upscportal.com

$178 billion under the impact of global slowdown and the government had to intervene to help exporters through different bailout packages. Engineering goods by far constituted the largest component of the exports entailing considerable domestic value addition and engineering exports crossed $60 billion, a growth of 84.76 per cent. Petroleum products exports were up 50.58 per cent at $42.45 billion. The gems and jewellery sector, which is a considerable employer of people, saw an export of $33.54 billion showing a growth of 15.34 per cent. Drugs and pharmaceuticals sector for which India has gained a considerable global reputation saw total exports at $10.32 billion a growth of 15.08 per cent. In readymade garments, exports crossed $11.1 billion showing a growth of 4.23 per cent. Cotton yarn fabrics exports rose by 42.87 per cent to $5.66 billion. Exports of carpet, jute and leather, which are the labour-intensive sectors, assured considerable dynamism in growth. Agricultural exports and allied sectors, including tea, coffee, tobacco, spices, cashew, oil meals, fruits and vegetables and marine products, crossed the $12-billion mark to $12.92 billion. Iron ore exports have actually gone down by 25 per cent to $4.5 billion.

Poverty rate declines from 37.2% to 32%

The latest data of the Planning Commission indicates that poverty has declined to 32 per cent in 2009-10 from 37.2 per cent five years ago. The preliminary estimates are based on the formula suggested by the Tendulkar Committee for computing the number of poor. Planning Commission Deputy Chairman Montek Singh Ahluwalia said that the 2009-10 data shows a decline in poverty from 37.2 per cent in 2004-05 to 32 per cent in 2009-10 as the per the preliminary data worked out by the Planning Commission member Abhijit Sen. The Tendulkar Committee had suggested that poverty be estimated on the basis of consumption based on the cost of living index instead of caloric intake. It said that the basket of goods should also include services such as health and education. The new poverty line, as suggested by the Tendulkar Committee, is different for rich and poor States, and for rural and urban areas within a State.

12th Plan to target 9-9.5% growth

The full Planning Commission meeting chaired by Prime Minister Manmohan Singh agreed to work towards a growth target of 9.0-9.5 per cent for the 12th Plan (2012-17). It endorsed the objectives and challenges outlined by the Commission for the five-year period involving special focus on policy and governance reforms and redesigning of government programmes. The Planning Commission gave a presentation on the ongoing 11th Plan and objectives of the 12th Plan which include 100 per cent literacy, inclusive growth and development of physical and social infrastructure within the overall target of fiscal consolidation. According to the Commission's presentation, for aiming at 100 per cent adult literacy, the 12th Plan (2012-17) would have to increase expenditure on health from 1.3 per cent to at least 2.0-2.5 per cent of GDP (gross domestic product).

http://upscportal.com/civilservices/current-affairs

Downloaded from: http://www.upscportal.com

The country was estimated to have recorded an annual growth rate of 8.2 per cent during 11th Plan as against the target of nine per cent. In particular, the economic performance was impacted by the global financial crisis and drought.

Discovers gas in Cauvery-Palar basin

Reliance Industries announced a rich gas and condensate discovery in the very first well drilled in the block located in deepwater Cauvery-Palar basin. The block, with an area of about 8,600 sq. km was awarded to Reliance under NELP-III. It currently holds 100 per cent participating interest in this block. This is one of the 23 exploration blocks where BP Exploration (Alpha) Limited would have a 30 per cent participating interest, subject to Government approval. The discovery well, CYPR-D6-SA1, is located in a water depth of 1,194 metres and was drilled to a target depth of 3,815 metres and terminated in crystalline basement.

Inter-ministerial group to examine FDI in pharma

With rising demand from the pharmaceutical industry to put a cap on foreign direct investment (FDI), the Central Government announced its decision to form an interministerial group to examine the issue. The group will be headed by Planning Commission member Arun Maira, Department of Industrial Policy and Promotion (DIPP) Secretary R. P. Singh said. The government permits 100 per cent foreign direct investment (FDI) via automatic route. Mr. Singh said that for brownfield investments, 100 per cent FDI should be permitted but through the approval route. However, concerns were raised by the domestic industry and the Health Ministry over about six takeovers of big Indian pharma companies by global drug majors. The DIPP had also raised concerns over the growing dominance of multinationals in the sector. The department in its discussion paper on the pharma sector has proposed to cap FDI at 49 per cent.

SEBI to set rules for art funds, antique investments

The Securities and Exchange Board of India may soon frame a stringent set of rules for funds investing in art works, antiques, coins and stamps, with an aim to check black money flow into these products and safeguard the interest of genuine investors. SEBI considers investment funds focussed on art works, antiques, coins and stamps as collective investment schemes, which come under the ambit of the capital market regulator. Globally, art funds are famous as an alternative class of investments for rich investors and have started gaining some ground in India over the past few years. Earlier in 2008, a time when the art funds first became visible in India, the regulator had issued a public notice to warn the investors against putting their money into art funds or

http://upscportal.com/civilservices/current-affairs

Downloaded from: http://www.upscportal.com

schemes of entities not registered with SEBI. At that time, SEBI had said that its analysis of various art funds had found them to be collective investment schemes' and were being launched by various entities without registering with SEBI in accordance with the SEBI (Collective Investment Schemes) Regulations, 1999. As per the existing regulations, only an entity registered with SEBI as a collective investment management company is allowed to offer any collective investment fund or scheme, including those focussed on art works.

Record food production in 2010-11

India's food production crossed 235 million tonnes during 2010-11 as per the latest estimates and this is the highest since Independence, S. Ayyappan, Director-General of the Indian Council of Agricultural Research, said. The previous highest production, at nearly 233 million tonnes, was achieved in 2008-09, while the output declined to around 218 million tonnes during 2009-10. In 2010-11, the country produced 30.2 million tonnes of oilseeds, and 17.2 million tonnes of pulses which had never crossed the 15 million tonne-mark in the past apart from 94.5 million tonnes of rice and 84 million tonnes of wheat. Maize production was 30 million tonnes, sugarcane 340 million tonnes and cotton 39 million bales. Agriculture also recorded a 5.4 per cent growth a first again compared to the four per cent growth achieved all these years, Dr. Ayyappan said.

DGH to probe decline in gas output from KG-D6 fields

Close on the heels of the Petroleum Ministry directing Reliance Industries Limited (RIL) to stop gas supplies to non-core sectors, the Directorate-General of Hydrocarbons (DGH) has decided to send a fact-finding team to probe and assess the sudden decline in the output of gas from the RIL-operated KG-D fields. A three-member team lead by Gautam Sinha, Head of Production at the DGH will assess and review well-wise production and reservoir performance of KG-D6 fields on April 27 and 28, officials in the Petroleum Ministry said. Reliance had in 2006 won government award to invest $8.836 billion on Dhirubhai-1 and 3 (D1 and D3 fields) in its Eastern offshore KG-D6 block after assuring production of 61.88 million metric standard cubic metres per day (mmscmd) of gas from 22 wells by April 2011 and 80 mmscmd from 31 wells by 2012.

RBI moots deregulation of savings bank interest rate

The Reserve Bank of India (RBI) made a pitch for deregulation of savings bank deposit rates, saying that deregulation of interest rates on savings bank (SB) accounts would benefit savers, as it would enable lenders to come out with innovative products to attract more funds from low-income households.

http://upscportal.com/civilservices/current-affairs

Downloaded from: http://www.upscportal.com

While the RBI had deregulated interest rates on fixed deposit schemes in 1997, it continues to fix the rate on savings bank deposits. The interest rate on savings bank deposits has remained unchanged at 3.5 per cent since March 1, 2003. Savings deposit interest rate has not been deregulated for the reason that a large portion of such deposits are held by low-income households in rural and semi-urban areas.

Both Sudans assure India on energy front

The governments of both Sudans assured India that its investments in the oil sector would remain safe despite the formal bifurcation of the country on July 9 into Sudan and South Sudan. India is Sudan's third largest partner in the oil sector and its companies account for a quarter of the country's oil off-shore industry. But 70 per cent of oil is produced in the south, which voted overwhelmingly to separate and 100 per cent of the facilities such as refineries and pipelines are in the north. The Indian national oil company, ONGC Videsh produces 1.6 lakh barrels of oil every day but 60 per cent is produced in the southern parts.

IAS PRE 2011

Current Affairs Books
ORDER ONLINE

http://upscportal.com/civilservices/order-online/current-affairs-books
Search More Books@: http://upscportal.com/civilservices/order-books

http://upscportal.com/civilservices/current-affairs