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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 Müller.

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.

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the Centre announced allowing 100 per cent foreign direct investment (FDI) in the agriculture sector. (CIL). plantation.1-lakh cr infrastructure investment • The Telecom Regulatory Authority of India (TRAI) issued important recommendations related to manufacturing. 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. Besides. the tea sector has also been brought under the 100 per cent FDI norm. The policy will come into effect from Friday (April 1). in a significant development.1-lakh crore for technical upgradation and improvement of manufacturing capabilities of the sector. • • • GoM to decide Cairn-Vedanta deal • In a setback to U. • TRAI proposes Rs. infrastructure and green telecom to promote structured growth of the sector. aquaculture under controlled conditions and services related to agro and allied sectors have been brought under the 100 per cent FDI norm. TRAI has recommended preferential market access to domestic manufacturers and tax concessions in equipment manufacturing policy. 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. floriculture.Downloaded from: http://www. According to a circular by the Department of Industrial Policy and Promotion released on “Consolidated FDI Policy — Circular 1 of 2011”. 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 .K. and cultivation of vegetables and mushrooms under controlled conditions.upscportal. including seeds. Similarly. 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. pisciculture. It has called for treating telecom • http://upscportal. It has also proposed investments of over Rs. preferential shares and the like) into equity in accordance with the guidelines of FEMA and SEBI. 100 per cent FDI has been now allowed in development and production of seeds and planting material. horticulture. partly paid shares. 100 % FDI allowed in some areas of farm sector • Tuning the policy norms further to attract declining foreign investment. animal husbandry (including of breeding of dogs).com • It further said that the companies would be free to prescribe a formula for transforming convertible instruments (like debentures.-based Vedanta Resources' attempt to ‘seal the deal' with Cairn Energy Ltd. Under the 100 per cent FDI in tea sector. horticulture and cultivation of vegetables.

com • infrastructure as an essential infrastructure. Releasing the export figures. Exports had suffered in 2009-10 at a mere • http://upscportal. including security standards. TRAI has recommended setting up of two fabrication units with government assistance. India's exports posted an impressive 37.9 billion for the fiscal ending 2010-11. and global economic rebalancing are among the myriad other challenges as Asia seeks to cement the foundations for a prosperous future.9 per cent growth at $29. 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. It has also called for setting up of a Telecom Standards Organisation (TSO) for carrying out all works related to telecom standards. 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. growing and ageing populations. driving international standards and drawing up specifications of the equipment to be used in the Indian telecom networks. • 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. 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. 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.1 billion.upscportal. the Export Promotion Council for Handicrafts display 125 varieties of products in the three trade fairs held in Hong Kong from April 20. equipment and services in the telecom network. Even as nearly two billion people in the Asia-Pacific region have already been struggling on less than $2 a day. Recently. Exports jump 37 % to $246 billion in 2010-11 • Braving the slow economic growth and declining demand from the western markets. Alongside. Pointing out that Indian market for semiconductor chips is around $8 billion. ADB meet to focus on food. 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.Downloaded from: http://www. the company established its own training school.1 per cent rise at $ . environmental degradation and climate change. During March shipments posted an impressive 43.

2 per cent five years ago. exports crossed $11. including tea. Agricultural exports and allied • • $178 billion under the impact of global slowdown and the government had to intervene to help exporters through different bailout packages. Drugs and pharmaceuticals sector for which India has gained a considerable global reputation saw total exports at $10.54 billion showing a growth of 15.32 billion a growth of 15.2 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. crossed the $12-billion mark to $12. coffee.08 per cent.0-2. assured considerable dynamism in growth. oil meals.upscportal.0-9. Planning Commission Deputy Chairman Montek Singh Ahluwalia said that the 2009-10 data shows a decline in poverty from 37. a growth of 84. fruits and vegetables and marine products. which are the labour-intensive sectors. It said that the basket of goods should also include services such as health and education.76 per cent.23 per cent. Engineering goods by far constituted the largest component of the exports entailing considerable domestic value addition and engineering exports crossed $60 billion. The Planning Commission gave a presentation on the ongoing 11th Plan and objectives of the 12th Plan which include 100 per cent literacy.Downloaded from: http://www. 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. and for rural and urban areas within a State. for aiming at 100 per cent adult literacy.5% growth • The full Planning Commission meeting chaired by Prime Minister Manmohan Singh agreed to work towards a growth target of 9. The preliminary estimates are based on the formula suggested by the Tendulkar Committee for computing the number of poor.92 billion. cashew.1 billion showing a growth of 4. 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. According to the Commission's presentation. as suggested by the Tendulkar Committee.5 per cent for the 12th Plan (2012-17). saw an export of $33. inclusive growth and development of physical and social infrastructure within the overall target of fiscal consolidation. Poverty rate declines from 37.87 per cent to $5. which is a considerable employer of people. In readymade garments. is different for rich and poor States.66 billion. tobacco. The new poverty line.58 per cent at $42.3 per cent to at least 2. the 12th Plan (2012-17) would have to increase expenditure on health from 1. jute and leather. Exports of carpet. spices. • • http://upscportal.45 billion. Petroleum products exports were up 50.34 per cent.5 billion.2% to 32% • • • The latest data of the Planning Commission indicates that poverty has declined to 32 per cent in 2009-10 from 37. The gems and jewellery sector. • 12th Plan to target . Iron ore exports have actually gone down by 25 per cent to $4. Cotton yarn fabrics exports rose by 42.5 per cent of GDP (gross domestic product).

The block.2 per cent during 11th Plan as against the target of nine per . It currently holds 100 per cent participating interest in this block.Downloaded from: http://www. Inter-ministerial group to examine FDI in pharma • • • • With rising demand from the pharmaceutical industry to put a cap on foreign direct investment (FDI). However. the economic performance was impacted by the global financial crisis and drought. coins and stamps. with an area of about 8. 100 per cent FDI should be permitted but through the approval route. is located in a water depth of 1.upscportal. 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 regulator had issued a public notice to warn the investors against putting their money into art funds or http://upscportal. a time when the art funds first became visible in • The country was estimated to have recorded an annual growth rate of 8. Singh said. The government permits 100 per cent foreign direct investment (FDI) via automatic route. 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 department in its discussion paper on the pharma sector has proposed to cap FDI at 49 per cent. antique investments • • • • The Securities and Exchange Board of India may soon frame a stringent set of rules for funds investing in art works. The discovery well. SEBI considers investment funds focussed on art works. CYPR-D6-SA1. antiques. which come under the ambit of the capital market regulator. This is one of the 23 exploration blocks where BP Exploration (Alpha) Limited would have a 30 per cent participating interest. Globally. with an aim to check black money flow into these products and safeguard the interest of genuine investors. subject to Government approval.194 metres and was drilled to a target depth of 3. antiques. In particular.815 metres and terminated in crystalline basement. Mr. SEBI to set rules for art funds. Earlier in 2008. coins and stamps as “collective investment schemes”. The DIPP had also raised concerns over the growing dominance of multinationals in the sector. The group will be headed by Planning Commission member Arun Maira.600 sq. 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. Department of Industrial Policy and Promotion (DIPP) Secretary R. P. km was awarded to Reliance under NELP-III. Singh said that for brownfield investments. the Central Government announced its decision to form an interministerial group to examine the issue.

Dr. 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. . was achieved in 2008-09. At that time. Maize production was 30 million tonnes. RBI moots deregulation of savings bank interest rate • The Reserve Bank of India (RBI) made a pitch for deregulation of savings bank deposit rates. 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.2 million tonnes of pulses — which had never crossed the 15 million tonne-mark in the past — apart from 94. • A three-member team lead by Gautam Sinha. at nearly 233 million tonnes.836 billion on Dhirubhai-1 and 3 (D1 and D3 fields) in its Eastern offshore KG-D6 block after assuring production of 61. officials in the Petroleum Ministry said. S. • Reliance had in 2006 won government award to invest $8.upscportal. including those focussed on art works. said. 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. As per the existing regulations. Ayyappan said. while the output declined to around 218 million tonnes during 2009-10.4 per cent growth — a first again — compared to the four per cent growth achieved all these years. In 2010-11.5 million tonnes of rice and 84 million tonnes of wheat. and 17. Director-General of the Indian Council of Agricultural Research. sugarcane 340 million tonnes and cotton 39 million bales.2 million tonnes of oilseeds. 1999. the country produced 30.88 million metric standard cubic metres per day (mmscmd) of gas from 22 wells by April 2011 and 80 mmscmd from 31 wells by 2012. Ayyappan. 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. The previous highest production. Agriculture also recorded a 5. as it would enable lenders to come out with innovative products to attract more funds from low-income households. only an entity registered with SEBI as a collective investment management company is allowed to offer any collective investment fund or scheme. saying that deregulation of interest rates on savings bank (SB) accounts would benefit • schemes of entities not registered with SEBI. 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.Downloaded from: http://www.

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. which voted overwhelmingly to separate and 100 per cent of the facilities such as refineries and pipelines are in the north.upscportal. 2003. 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. But 70 per cent of oil is produced in the south. The interest rate on savings bank deposits has remained unchanged at 3. The Indian national oil company.5 per cent since March • • While the RBI had deregulated interest rates on fixed deposit schemes in 1997.Downloaded from: .com/civilservices/order-online/current-affairs-books Search More Books@: http://upscportal. IAS PRE 2011 Current Affairs Books ORDER ONLINE http://upscportal. 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. ONGC Videsh produces 1.6 lakh barrels of oil every day but 60 per cent is produced in the southern parts. it continues to fix the rate on savings bank deposits.

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