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eCOnOMIC GROwTh RATe fOR 2010-2011 TO 8.4 %
The Union government on 31 January 2012 revised the economic growth rate for 2010-2011 financial year to 8.4 percent in comparison to the previous estimate of 8.5 percent. The Indian economy grew 8.4% in 201011, lower than the previous estimate of 8.5%, on the back of strong farm sector and services sector growth. The Indian economy, Asia’s third-largest slowed in recent quarters due to the impact of the global slowdown, high inflation and high interest rates. Policymakers estimated growth in 2011-12 to be close to 7%. 8.4% expansion in the gross domestic product (GDP) during 201011 was achieved due to high growth in transport, storage and communication (14.7%), financing, insurance, real estate and business services (10.4%), trade, hotels and restaurants (9%) and construction (8%). At constant prices, the primary sector- agriculture, forestry and fishing, showed a high growth of 7% during 2010-11 as against 1% during
the year 2009-10. The growth rate of secondary sector stood at 7.2% and that of the service sector is 9.3% during 2010-11.
GROSS dOMeSTIC PROdUCT (GdP)
Gross Domestic Product (GDP) at factor cost at constant (2004-05) prices in 2010-11 was estimated at Rs. 4885954 crore as against Rs. 4507637 crore in 2009-10 registering a growth of 8.4 per cent during the year which is same as in the year 2009-10. At current prices, GDP in 2010-11 was estimated at Rs. 7157412 crore as against Rs. 6091485 crore in 2009-10, showing an increase of 17.5 per cent during the year.
GROSS nATIOnAL InCOMe
The Gross National Income registered a growth of 7.9 per cent in 2010-11 over 2009-10. India's per capita income grew by 15.6 per cent to Rs.53331 in 2010-11, crossing the Rs.50000-mark for the first time. In real terms based on 2004-05 prices,
the per capita income grew by a slower 6.4 per cent to Rs.35993 in 2010-11 as compared to Rs.33843 in 2009-10. In Terms of Foreign Fund flows January 2012 is the Best Month since November 2010 As per data published by the market regulator SEBI on 27 January 2012, net FII buying crossed the $2-billion mark in January 2012 making January the best month in terms of foreign fund flows since November 2010. FIIs had recorded a net outflow of $358 million in 2011. Inflows in January 2012 is in sharp contrast to over $1 billion outflow in January 2011. The surge in inflows also helped strengthen the Indian rupee which closed above the 49-level after nearly 10 weeks. January’s inflow figure, however was less than a third of the monthly inflow record set in October 2010, when $6.4 billion was pumped in by foreign fund managers. In October 2010 the figures were further pumped through the hugely successful Coal India IPO. SEBI’s data showed a net FII inflow of $1779 million. Institutional
Integrated Guidance Programme for IAS (Pre) - 2012 http://upscportal.com/civilservices/online-course/integrated-free-guidance-programme
4 per cent against 5. transparency and better monitor public an operator that has 4.8 per cent growth in November 2011. The Telecom Commission had recently approved sector regulator TRAI’s recommendation that during mergers. These eight sectors had recorded a 6. The growth of these eight sectors during April-December 2011 was 4.com/civilservices/online-course/integrated-free-guidance-programme . 25 http://www.4 MHz of spending. while those which fared better include coal. The sectors that showed poor performance in December 2011 due to a fall in output include crude oil.com http://upscportal. These companies had hoped the Commission’s policy changes had hoped that policy changes permitting the sharing of airwaves.2012 http://upscportal.3% In deCeMBeR 2010 According to the data released by the Commerce and Industry Ministry on 30 January 2012. petroleum refinery products and steel. natural gas. the combined entity be allowed to have up to 25% of the total airwaves in the region. The telecommnication companies cannot therefore share 3G spectrums. A non-licensee or licensee who has not been assigned spectrum as yet cannot be party to spectrum trading. • Spectrum sharing deals will also have to be renewed every five years. Spectrum can be shared only between two spectrum holders. both companies will have to pay usage charges on the total airwaves held jointly. operators share between 2% and 6% of their annual revenues based on the quantity of airwaves they hold. fertiliser. The eight core sectors have a combined weight of 37. the Telecom Commission decided to allow mobile phone companies to share spectrum. must financial management which could be pay current prices for additional used for enforcing more transparency and effectiveness of Public delivery 4. the growth rate of eight core industries slowed down to 3. • When operators share spectrum.3 per cent in December 2010. The companies had signed up 3G customers across the country riding on bilateral roaming agreements that allow these firms to use each other’s airwaves C R SUndARAMURTI COMMITTee ReCOMMendATIOn Government-appointed C R Sundaramurti Committee submitted its report to finance minister Pranab • The telcos sharing spectrum Mukherjee. Second generation (2G) spectrum is largely used for offering vanilla voice services. The aggregate of the two is slightly over the $2 billion mark. Incumbents such as Bharti Airtel. after the telecom department asked these companies to terminate their 3G roaming deals.9 per cent in the Index of Industrial Production (IIP).7 per cent during the corresponding period in 2010. Aircel and Idea Cellular took the government to court. The riders are as follows: • Only those operators that have airwaves in a particular region can share it.1 per cent in December 2011 from 6. • Two companies can share airwaves only if their combined holdings do not exceed the limits prescribed in the M&A norms. It essentially means.civilservicesmentor. MOBILe PhOne COMPAnIeS TO ShARe 2G SPeCTRUM OnLy The apex decision-making body of the communications ministry.UPSCPORTAL Current Affairs : http://upscportal. and offer high-end data services even in regions where they do not have 3G spectrum.com/civilservices/current-affairs trading data on the BSE showed net inflow figure on 27 january at Rs 1240 crore. which translates to $252 million. The Commission also decided to introduce slew of riders to govern spectrum sharing. and is sharing radio classification structure will provide a frequencies with another telco foundation for a more robust public that has the same amount. cement and electricity.com Integrated Guidance Programme for IAS (Pre) . The decline in core sector activity was due to a fall in the production of crude oil and natural gas. GROwTh RATe Of eIGhT CORe IndUSTRIeS feLL TO 3. The proposed accounting airwaves.1% In deCeMBeR 2011 fROM 6. The Commission has however limited this facility to 2G airwaves alone. The report suggested a must pay the government the complete overhaul of government commercial value of the airwaves accounting norms in order to enforce it is using. would put an end to this controversy. Vodafone.4 units of spectrum it is using. Currently.
NPS was primarily targeted at the unorganized sector.com/civilservices/online-course/integrated-free-guidance-programme . Floated for civil servants in 2004.civilservicesmentor. schedule tribes. The panel has also carried out standardisation of coding of all such entities which are recipient of public fund.50% of the investment. The cut marked RBI’s first reduction in CRR since January 2009 when it had released funds to stimulate demand in the wake of the Lehman Brothers crisis. So far the points of presence or the distributors used to get a flat Rs 20 as initial subscription charge and Rs 20 for any subsequent investment.25% of the subscription amount.6% earlier. the point of presence will be entitled to 0.25% of that amount. Bajpai committee constituted by PFRDA to review NPS. committee had suggested 0. so far only about 1 million people out of a workforce of about 400 million in the unorganized sector have joined NPS.The regulator proposed to lay down criteria for pension fund managers and grant licences to anyone who qualifies. PfRdA ChAnGed The InCenTIve STRUCTURe TO BOOST nPS The poor performance of National Pension System. subject to a minimum of Rs 20 and maximum of Rs 50000. The proposed classification structure provides for capturing expenditure on special thrust area of government policy objectives such as development of women. Every year on subsequent investments. PFRDA’s measure is poised to serve two purpose.50 per cent for the second consecutive time after raising it 13 times between March 2010 and October 2011. for the first time in over two months. programme or scheme from one level of governance to another level of administrative entities. fixed the incentive at 0. It would help national and sub-national governments for better planning. a distributor will get a flat Rs 100 on initial subscription and 0. It lowered its growth forecast to 7% from 7. allocation and application of resources. the rupee touched the 49-mark against the G. The NPS has seven fund managers overseeing assets of Rs 10000 crore. The Committee is of the opinion that the recommendations/suggestions framed by it would help in the effective management tools.The RBI also kept the repo rate unchanged at 8.com http://upscportal. ReCOMMendATIOnS The committee in its report recommended rationalisation and reorganisation of the existing account classification of list of major and minor heads of accounts (LMMHA) of centre and states. Bajpai committee had observed that the earlier structure of the pension system was amounting to the poor subsidizing the rich—a person investing Rs 6000 and a person investing Rs 1 lakh were both paying Rs 20. below poverty line population. and more effective monitoring of public spending.N.25% of the initial subscription amount.n. BAJPAI COMMITTee ReCOMMendATIOn The pension regulator on the basis of the recommendation of the G. as channels of public delivery. As a consequence.2012 http://upscportal.UPSCPORTAL Current Affairs : http://upscportal. The panel also proposed a multidimensional classification framework which has seven mutually exclusive segments with their own individual hierarchical structures. RBI thus released Rs 32000 crore to banks through a half percentage point cut in the cash reserve ratio. The minimum that a point of presence can charge is Rs 20 and the maximum Rs 25000. Home loans and other loans to individuals and businesses will become cheaper with the cut in CRR.bringing about a more equitable incentive structure and incentivizing the distributors to push NPS.com Integrated Guidance Programme for IAS (Pre) . Also the fixed sum was acting as a deterrent to sell NPS amid better commissions-yielding products such as insurance policies. the NPS was opened to all citizens in May 2009 to provide a pension option to 360 million informal sector workers bereft of any old-age income security.com/civilservices/current-affairs channels of the government. The accounting classification of receipts and disbursements is prescribed under the Constitution and is maintained by the Controller General of Accounts (CGA) on the advice of the Comptroller and Auditor General of India (CAG). or NPS led the Pension Fund Regulatory and Development Authority (PFRDA) to change the incentive structure for the distributors from a fixed sum to a percentage of the investment amount. The revised accounting classification codes which are being perceived as a milestone in the area of accounting reforms were proposed to be implemented with effect from financial year 2013-2014. The measure is likely to facilitate tracking of flow of funds under a government CRR deCReASed TO 5. The 26 http://www. which does not have any form of social security.5 per cent with effect from 28 January 2012. As per PFRDA’s measures announceds. However.5 PeR CenT The Reserve Bank of India (RBI) on 24 January 2012 cut the cash reserve ratio (CRR) by 50 basis points from 6 per cent to 5. schedule castes.
UPSCPORTAL Current Affairs : http://upscportal.com/civilservices/current-affairs dollar in intra-day trade.com/civilservices/online-course/integrated-free-guidance-programme . Currently.5 billion in the December 2010. The RBI's action is seen as an attempt to strike a balance between risks to growth and inflation.com http://upscportal.9% in the January-March quarter riding on the back of robust 40. However.civilservicesmentor.down 15% yearon-year to $3 billion in December 2011. The exemption was earlier available only till March 2012 and only to companies which had opted for it in 2008-09. In spite of this. the exporters are exploring new markets like Latin America. RBI was prompted to ease liquidity because of a structural shortfall which was forcing banks to borrow anywhere between Rs 1. The net profits in the banking industry was attributed to lower provisions and low base. despite the drop in December. of petroleum products. profits are expected to fall by 7. Also.25 lakh to Rs 1. Kochi and Bangaluru airports to help double the foreign tourist arrivals. corporate India is expected to report substantial amount of forex losses in the December 2011 quarter since major chunk of the forex liabilities of corporate India are short-term. As per the review. Philippines. the country’s gem and jewelry exports still grew in the second half. The sharp fall wa attributed to poor CenTRe fOR MOnITORInG IndIAn eCOnOMy’S RevIew Centre for Monitoring Indian Economy (CMIE) estimated Corporate India’s sales to grow 21. The exports had stood at $3. gems and jewellery exports fell into the negative zone . high interest rates and delay in payment of cash subsidy to the oil marketing companies (OMCs) by the government.2% in the first half of 2011-12 due to steep rise in raw material and fuel prices. the corporate affairs ministry provided some relief by allowing capitalisation of MTM losses on long-term loans taken for the acquisition of fixed asset till March 2020. a sharp depreciation in rupee since September 2011 brought mark-to-market (MTM) losses to firms and thus further pulled down profits. The major export markets include the UAE & Hong Kong. demand from Europe and the US.com Integrated Guidance Programme for IAS (Pre) . reaching $32.8% in the March 2012 quarter due to a sharp drop in expansion TOURISM SeCTOR COMMITTee TO exTend vISA-On-ARRIvAL fACILITy Inter-ministerial coordination committee for tourism sector Headed by Principal Secretary to the PM Pulok Chatterjee in its meeting on 19 January 2012 decided to extend Visa-on-Arrival facility to Goa. India mainly imports gold and rough diamonds in large quantities and re-exports value-added items like jewellery. During the April-December period of 2011-12. GeMS & JeweLLeRy exPORTS dIPPed 15% According to the report by Gems and Jewellery Export Promotion Council (GJEPC) released in January 2012.2% in the financial year 2011-12. The central bank decided to reverse a two-year policy of interest rate hikes because of decelerating growth although inflation continued to remain a concern.7% and that of the non-financial services sector by 18. touching the peak in 2011-12 fiscal. Income of the financial service have grown by a strong 32% due to high interest rates and healthy credit growth.65 per cent to $32. Profits fell 13. compared to the the April-December period of 2010-11. gems and jewellery exports grew 11. Visaon-Arrival is extended to 11 countries including Japan.2.1 billion. expected to rise by 9. the overseas shipments in May 2011 had logged in 33% growth.5 lakh from RBI in January. To reduce dependence on traditional markets. Hyderabad. Excluding petroleum product companies. however. CMIE however expects corporate sales to drop to 16. sales of the manufacturing sector are expected to have expanded by 20.2012 http://upscportal. India Inc is expected to see a 19% growth in sales in March 2012 quarter. 27 http://www.2% rise in net profits of the banking industry. CMIE noted.6% in 2011-12. However. Forex. Africa and Russia. Singapore.1 billion – 11.65% higher than in the corresponding half of 2010. In a situation where high input costs and interest rates continue to haunt Indian companies.
eco tourism and reaching out to schools to promote tourism related vocational schools were amongst the decisions taken by the committee. Upgraded road connectivity to all major tourist circuits. Cambodia. Culture Secretary. the names of the TRAI ORdeRed TO BLOCK BULK InTeRnATIOnAL SMS The Telecom Regulatory Authority of India on 20 January 2012 asked telecom companies to block bulk international SMS. Namibia. these could not be delivered through the network. The Ministry of Environment and Forest were asked to finalise its eco-tourism policy at the earliest possible after analysing the feedback it received from different quarters. Currently. TRAI’s move is aimed at giving mobile subscribers further relief from pesky messages. These SMSes contain the headers which are alphanumeric or starting with +91 or numbers with international codes. eco and cultural sectors in the country • co-ordination committee consisting of Joint Secretaries of MHA. should be pro-poor and focus on employment creation. Grenada. It was observed that tourism ought to be seen as development. and Antigua and Barbuda. the TRAI stated that there were several incidences of promotional SMS being routed through the servers located at international destinations and delivered to customers registered for not receiving telemarketing calls. Vanuatu. In order to facilitate connectivity.civilservicesmentor.com Integrated Guidance Programme for IAS (Pre) . Secretary (Rural Development) and Secretary(Tourism) will identify the potential of tourism in rural. Mumbai. Nauru. the companies are required to submit a brief description of the hedging strategy proposed. The new regulations on unsolicited telemarketing calls and SMS were not being properly followed. It was also decided that a subcommittee consisting of Member Secretary. Sweden. Kochi and Bangaluru airports • sub-committee to identify the potential of tourism in rural.com http://upscportal. Planning Commission. which is crucial for tourism. if any source or number from outside the country generates more than 200 SMSes an hour with a similar signature. banks need RBI’s approval to give permission to companies to hedge. including.The banks were asked to submit an annual report to the RBI as on 31 March every year giving the names of the corporates to whom they have granted permission for commodity hedging and the name of the commodity hedged. Fiji. Jersey. Sint Maarten. it was decided that Ministry of Defence (Border Road Organisation) will expedite ongoing work at Gangtok and Leh roads which are tentatively scheduled to be completed by 2014 and 2015 respectively. Panama. There were 6. Tonga. Emphasis was on the need to give tourism a major fillip during the 12th Plan so as to more than double the number of foreign tourists arriving in India and further encourage domestic tourism. Albania. cultural and heritage sites • Ministry of Defence (Border Road Organisation) will expedite ongoing work at Gangtok and Leh roads RBI PeRMITTed BAnKS TO ALLOw hedGInG In COMMOdITIeS The Reserve Bank of India in January 2012 allowed banks to grant permission to listed and unlisted companies to hedge price risk in commodities other than precious metals in international exchanges. Vietnam and Finland. TRAI observed that 28 http://www. A co-ordination committee consisting of Joint Secretaries of MHA. MEA and Tourism Ministry constituted to resolve day-to-day visa related complaints • Ministry of Environment and Forest asked to finalise its ecotourism policy • Culture Ministry asked to adopt a pro-active tourism policy which should promote museums. instruments proposed to be used for hedging.com/civilservices/online-course/integrated-free-guidance-programme . Bosnia. Before permitting the corporates to undertake hedge transactions.UPSCPORTAL Current Affairs : http://upscportal. including Gangtok and Leh. MEA and Tourism Ministry was constituted to resolve day-today visa related complaints.The Visa-on-Arrival facility is now available at four international airports at Delhi.2012 http://upscportal. generally such SMSes originated from locations within Germany. Kolkata and Chennai. eco and cultural sectors in the country and submit its report within four weeks. out of whom 12761 had availed the scheme. Also. hIGhLIGhTS Of The MeeTInG • extend Visa-on-Arrival facility to Goa. The move is aimed at helping the companies limit losses from volatility. The regulator thus oredered all telecom companies to ensure that no international SMS containing an alphabet header or alphanumeric header or +91 as the originating country code is delivered through their networks. Secretary (Environment and Forests).com/civilservices/current-affairs New Zealand. the United Kingdom. Hyderabad.29 million foreign tourists in 2011.
stood at 113. The entry fee for different types of unified licence is to be Rs.70 to the dollar.44 % As per data released by the government on 18 January 2012.5 points.20 crore for a national-level unified licence under 29 http://www. based on retail prices.2 points on an all-India basis. and miscellaneous items.2 points and 102.The fall was attributed to cheaper vegetables which saw a dip of 15.9% economic growth in the fourth quarter.The rupee could gain further since demand for dollars may subside following the doubling of duty on precious metals imports. Indices for cereals and pulses on the other hand remained stable at 107.5 points. the least among major markets with Hong Kong. recommended that the new licence regime will not have spectrum bundled with it and the operators will have to bid for the spectrum separately.30 touched on 15 December 2011. fixed line. Internet and long-distance calls and other telcom services.78 per cent to 122.15 lakh for each district level unified licence.UPSCPORTAL Current Affairs : http://upscportal. The consumer indices include five major groups-food. The Indian rupee. emerging markets are currently poised to cut interest rates after China’s 8. The currency rose 1. service area level and district level. together with expected peak positions thereof and the basis of calculation can also be included. CPI for clothing. clothing.com Integrated Guidance Programme for IAS (Pre) . including fruit and vegetables. The Indian rupee is found to be doing well despite imports still outstripping exports which many say could return to haunt the currency.7%.20 crore for national level. Prices in the 'fuel and light' segment also rose by 0.2% to close at 50.4 points in November. Also.64 per cent to 123. the new regime.civilservicesmentor.com/civilservices/current-affairs commodity exchanges and brokers through whom the risk is proposed to be hedged and the credit lines proposed to be availed.44 per cent month-on-month in December 2011. The Department of Telecommunications (DoT) also issued standalone IndIAn RUPee ROSe By 6. The benchmark Sensex rose 1.9 points in December compared to 114. making it the best-performing index in Asia. which was the worst performer in Asia in 2011.2 crore for each Metro and Acategory. fuel and light.2 points. beverages and tobacco.33 per cent in December vis-a-vis the previous month.4 Mhz spectrum bundled with it. Rs.com http://upscportal.1 crore for each B category. There have been inflows from FIIs. is presently turning out to be the best in 2012 due to measures by the Reserve Bank of India. The CPI.01 per cent month-onmonth to 98.50 lakh for each C category service areas levels and Rs. Korea and Singapore gaining more. At the allIndia level. TRAI proposed that the applicant company will have to pay one time nonrefundable entry fee before signing the license agreement. bedding and footwear stood higher at 122. The name and address of the regulatory authority in the country concerned may also be given.2012 http://upscportal.6% from its life low of 54.com/civilservices/online-course/integrated-free-guidance-programme . bedding and footwear. Telecom service providers at present hold Unified Access Service Licence (UASL). with the index inching up to 120 points from 119.5 points in November. The UASL is given to companies with 4.8 points in December from 114. against 121. TeLeCOM ReGULATOR'S dRAfT GUIdeLIneS fOR The new UnIfIed LICenSInG The draft guidelines proposed three levels of unified licence — at national level. Size/ average tenure of exposure and/or total turnover in a year. Rs.31 per cent to 112. Licence shall be issued on non exclusive basis. The index for condiments and spices went down by 0. the slowest in 10 quarters. pulled down the Consumer Price Index (CPI) by 0. It is up 6% in 2012 and 6. both debt & equity. RS. housing.9 points.6% The Indian rupee rose to a twomonth high and shares climbed on 18 January 2012 as a result of revival of US dollar flows and also because of the undervalued shares which lost more than 35% in US dollar terms in 2011.3 points in November. However. The regulator also proposed to have no restriction on the number of players in a service area.20 CRORe fOR A nATIOnAL-LeveL UnIfIed LICenCe The Telecom Regulatory Authority of India (TRAI) on 16 January 2012 proposed a fee of Rs. COnSUMeR PRICe Index dOwn By 0.6 points in November. It has risen 6% since January 2. TRAI however. which suggests that there will be only four types of licence in future as against many currently available across the communication sector. The fruit index also fell by 3. Shanghai. the CPI for food. which authorises them to provide mobile. without any restriction on the number of entrants in a licence area. Rs. beverages and tobacco declined by 1. cheaper food items.
IMPORT dUTy On GOLd & SILveR The Union government nearly doubled the import duty on gold and silver by changing the customs and excise duty structure on precious metals.8 per cent.7 % India's exports recorded a subdued growth of 6.25 per cent in August. Silver will be charged 6 per cent of its value on each day from the earlier Rs 1.UPSCPORTAL Current Affairs : http://upscportal.8 billion in December 2011 thereby translating into a trade deficit of $12. Though growth during the month under review was not robust.8 per cent as a result of the export growth witnessed in the early months of 2011. 36.8 per cent. Foreign investors. reducing market volatility and deepening the markets.com/civilservices/current-affairs licences separately. The QFI shall transact in Indian equity shares only on the basis of taking and giving delivery of shares purchased or sold and it shall not issue offshore derivatives instruments/ participatory notes. Overseas shipments in Novemeber 2011 had grown by just 3. RULeS TO dIReCT InveSTMenT In STOCKS By fOReIGn InveSTORS Market regulator SEBI on 13 January 2012 unveiled rules for direct investment in stocks by foreign investors. will also have to obtain a separate permanent account number or PAN. who wish to invest directly in Indian shares. The DP will have to provide on a daily basis.5 per cent of its value on each day as against Rs 200 per 10 grams. SEBI’s guidelines were issued following this announcement by the government. ISIN wise and company wise buy/ sell information and any other transaction or any related information to their respective depositories on the day of transaction. Excise on gold will be charged at 1.8 per cent in October 2011. with the overall limit capped at 10% in a company.com/civilservices/online-course/integrated-free-guidance-programme . Sebi specified that QFI’s will have to invest in demat form through Sebi-registered depository participants (DPs) who will have to fulfill the Know Your Customer (KYC) norms. The regulator mentioned that the investors will need to take delivery of shares they purchase on the local bourses. The growth in exports in December 2011 though not robust was higher than November 2011. including individuals. and for silver it will be 4 per cent as against Rs 1000 per kg. will not be allowed to open demat account as qualified IndIA'S exPORTS ReCORded A GROwTh Of 6. The Finance Ministry by adopting this stand has moved to a model where customs and excise will be charged on the value of the metal instead of a flat charge. SEBI noted that qualified foreign investor (QFIs) can buy up to 5% of the paid-up capital of a company. when overseas shipments grew by just 3. Also. Following the government’s decision. or QFI. where details of the ultimate beneficiary are not accessible or where the beneficial owners are ring fenced from each other. it was higher than in November. periodically and also provide information regarding change in paid up equity capital in any listed company immediately.6 billion. like the one for offering Internet services that are generally known by the nature of the service being offered. gold will now attract an import duty on 2 per cent of its value on each day as against the earlier flat levy of Rs 300 per 10 grams.8 per cent year-onyear to $37. and will vary with varying prices of the metal in the market. export growth slipped to 44. From a peak of 82 per cent in July. QFI wise.com Integrated Guidance Programme for IAS (Pre) .com http://upscportal.2012 http://upscportal.civilservicesmentor.7 per cent year-on-year in December 2011 on account of poor demand in Europe and the US. QFIs were barred from issuing offshore derivatives instruments or participatory notes and will also have to give a declaration to this effect to the DP. a year-onyear growth of 25. Platinum and diamond would also cost more. The stock exchanges shall provide the details of paid up equity capital of all the listed companies to the depositories once in six months. in a move aimed at boosting capital inflows. RBI ISSUed GUIdeLIneS On COMPenSATIOn In PRIvATe & fOReIGn BAnKS The Reserve Bank of India (RBI) on 13 January 2012 issued guidelines on 30 http://www. SEBI's guideline was issued seeking to put curbs on opaque structures to prevent routing of funds by resident Indians. The Sebi circular however does not mention whether these investors can trade in India’s futures and options segment.36 per cent in September and 10. Entities having opaque structures. exports aggregated to $217.500 per kilogram.8 billion. DPs will have to ensure that the same set of end beneficial owners is not allowed to open more than one demat account as QFI. The measure was adopted by the government to arrest the widening current account deficit. The Union government on 1 January 2012 decided to allow foreign resident investors to invest directly in the Indian equities market. During the AprilDecember period of 2011. foreign investor. Imports on the other hand grew at a faster pace of 19.
1 per cent increase as compared to a mere 0.7 per cent growth in November 2010. The industrial production had registered a 6.6 per cent during the month under review as compared to 4.civilservicesmentor.9 PeR CenT In nOveMBeR 2011 As per the Index of Industrial Production (IIP) data. chief executive officers and other risk takers in private and foreign banks. The compensation practices. The Index industrial production. bank board would have the option to clawback this deferred compensation. pay other than accrued benefits like gratuity and pension. slower than 10. Foreign banks operating in India will be required to submit a declaration to RBI annually from their head offices to the effect that their compensation structure in India. industrial production bounced back with a growth of 5.8 per cent as compared to 8. especially of large financial institutions. Risk management staff will have more of fixed component than the rest. including that of CEO’s. It was observed that employees were too often rewarded for increasing the short-term profit without adequate recognition of the risks and long-term consequences that their activities posed to the organisations. 31 http://www.5 per cent in November 2010. the IIP growth during the April-November period of 201112 stood at 3.UPSCPORTAL Current Affairs : http://upscportal. went up by 6. The central bank’s directions are aimed at preventing greed from destabilising the institution.com/civilservices/current-affairs compensation of wholetime directors. The guidelines however deal with the structure of pay which in the past favoured excessive risk-taking. With this. which contributes nearly 38 percent to The RBI GUIdeLIneS The norms provided also include capping the variable component of the compensation at 70% of the fixed pay in a year.com/civilservices/online-course/integrated-free-guidance-programme .6 per cent in November as compared to of 6.9 per cent in November 2011.As per the guidelines issued.The guidelines based on the recommendations of the International Financial Stability Board did not prescribe any quantitative limit on absolute pay. marking a five-month high in a reversal from the negative trend witnessed in October 2011. They will not be allowed to grant severance IndUSTRIAL PROdUCTIOn BOUnCed BACK wITh A GROwTh Of 5. Compensation payable under deferral arrangements should vest no faster than on a pro-rata basis. Electricity also saw a robust growth of 14.4 per cent in the same period of 2010-11.8 percent in the 2010/11 fiscal year that ended in March.com http://upscportal. banks are permitted to exclude the Employees Stock Option Plan from variable pay.4% expansion in November 2010. Production of consumer goods witnessed a healthy 13. guaranteed bonus has been banned. In the event of negative contributions.2012 http://upscportal. were one of the important factors which contributed to the recent global financial crisis. Private sector and foreign banks are also required to obtain regulatory approvals for remuneration of CEOs and wholetime directors.5 percent clocked in the 200910 fiscal. Banks will now be permitted to offer joining bonus only in case of new hires and will be limited to first year. The guiderlines include provisions to clawback pay if transactions fail years after origination. except in cases where it is mandatory by any statute. of Industrial Production in 2011 was noted to be very volatile.com Integrated Guidance Programme for IAS (Pre) . constituting over 75 per cent of the index. grew 6. Output had grown 7. Infrastructure sector output. is in conformity with the FSB principles and standards. Growth in the manufacturing sector.6 per cent in November 2011.8 percent in November 2011. The variable pay would have to be deferred over a period of three years.
including UPA ally Trinamool Congress. The Principal Secretary observed that the PSU investment could provide stimulus to the economy and asked the companies to draw up credible investment programmes and implement those with an objective to achieve the maximum benefit for the companies themselves as well as the national economy. while Provogue (India) zoomed up by 14. The upgradation will improve flows from foreign institutional investors and flows from non-resident Indians will also accelerate.2012 http://upscportal.52%. Shares of retail giants Kishore Biyani-led Future Group firm Pantaloon Retail (India) surged by 10% to an early high of Rs 161. In 2008-09.5% and 50% year-on-year respectively.civilservicesmentor. The rating agency had also upgraded the long-term government bond denominated in domestic currency from Ba1 to Baa3.3 billion. 17 companies with cash and bank balances in excess of Rs.38%. Among the companies. Moody’s upgraded the credit rating of Indian government’s bonds from speculative to investment grade. especially from Italy and France. dePARTMenT Of IndUSTRIAL POLICy And PROMOTIOn nOTIfIed 100% fdI In SInGLe-BRAnd ReTAIL The Department of Industrial Policy and Promotion (DIPP) ON 10 January 2012 notified the rules allowing 100% foreign direct investment (FDI) in single-brand retail.50% and Vishal Retail jumped by 4. fdI InTO IndIA wenT UP By 56% Foreign direct investment (FDI) into India went up by 56% to $2.com/civilservices/online-course/integrated-free-guidance-programme .com http://upscportal. The country had received $1. surpassing $19.com Integrated Guidance Programme for IAS (Pre) . the mandatory sourcing of at least 30% would have to be done from the domestic small and cottage industries which have a maximum investment in plant and machinery of USD 1 million (about Rs 5 crore). the inflows were down by 16.22% to Rs 28.98%. In a similar fashion.62 billion overseas investment in November 2010.995 crore domestically and Power Grid Corporation of India is to invest Rs. Koutons Retail gained 12. Cumulative flows for the AprilNovember period stood at of $22. In December 2011.20. including Rs. The move was expected to encourage FIIs to increase their exposure in gilts and help companies raise funds from abroad at competitive rates.41 lakh crore domestically in 2012-13 and Rs. Analysts opined that if the upward MOOdy’S UPGRAded ShORT-TeRM COUnTRy CeILInG On fOReIGn CURRenCy BAnK dePOSIT fROM nP TO PRIMe The Finance Ministry announced on 10 January 2012 that rating agency Moody’s Investor Services upgrade the short-term country ceiling on foreign 32 http://www.1. The government was however forced to put FDI in multi-brand retail on hold in the face of opposition by several political parties.81% from $14. In respect of proposals involving FDI beyond 51%.35009 crore overseas.com/civilservices/current-affairs PMO dIReCTed CASh-RICh PSUS TO InveST AROUnd `. In 2010-11.76 lakh crore.02 billion in 2010. Currently 51% FDI is permitted in this segment of retailing which was opened to foreign players almost six years ago. while not prime is a speculative grade.461 crore overseas. The long-term country ceiling on foreign currency bank deposit was also upgraded from Ba1 to Baa3. currency bank deposit increasing from NP (not prime) to Prime (P-3).1. ONGC is projected to invest the maximum amount of Rs.6 billion in 2009-10. FDI stood at $27.33. Shopper's Stop rose by 9.20.53 billion in November 2011.43 billion achieved in the full financial year 2010-11. the FDI was up by 62.During the April-November period.20000 crore.83 billion.53526 croreRs.40. At a meeting chaired by Prime Minister's Principal Secretary Pulok Chatterjee. indicating an improvement in investor sentiment. Tata Group retail venture Trent Ltd advanced by 5.10 on the BSE following the announcement by the government.41 lakh crore domestically to act as a stimulus in the next fiscal (201213).1000 crore were identified to undertake these investments primarily in the infrastructure sector. NTPC will invest Rs. from $25. to venture alone in the growing Indian market.1.43 billion. Upgradation suggested acceptable ability to repay short-term obligations.UPSCPORTAL Current Affairs : http://upscportal. In September and October 2011. Removal of the investment cap will help global fashion brands. The decision to increase FDI in singlebrand retail was taken by Cabinet on 24 November 2011 along with the decision to open the gates for overseas investment in multi-brand retail.065 crore in the domestic market and Rs.1. Prime falls under the investment grade. FDI into equity had dipped 25% to $19.76 LAKh CRORe fOR STIMULUS The Prime Minister's Office on 11 January 2012 directed cash-rich public sector undertakings (PSUs) to invest around Rs. The PSUs will invest Rs.
AdB LOAn TO fInAnCe ROAd PROJeCTS In nAxALhIT AReAS CLeARed The Union government in January 2012 cleared an external loan to finance part of the programme launched by the Ministry of Rural Development in left wing extremism-affected villages. West Bengal. While about 50 PSUs including Hindustan Aeronautics Ltd and Heavy Engineering Corporation Ltd which can be listed on stock exchanges did not opt for the same. the Finance Ministry is working on several methods including share buyback by cash-rich PSUs. The ADB. The clearance is for a loan of $500 million from the Asian Development Bank (ADB) to speed up construction of rural roads. The Moody's upgraded India's short-term foreign currency rating from speculative to investment grade.000 crore through stake sale in PSUs in the current fiscal. 33 http://www. Currently. The demand for the loan was made in the backdrop of the MoRD's multiwinged programmes in the left wing extremism-affected areas. 12. power.computers and hardware. the US. silver.com Integrated Guidance Programme for IAS (Pre) . the turnover in the bullion segment rose more than twofold to Rs 80. Mauritius.civilservicesmentor. NMCE (Rs 27826 crore).54 lakh crore in the corresponding period in 2010.com http://upscportal. Odisha. According to FMC data. Chhattisgarh. there are about 50 PSUs which are listed and their shares are actively traded in the stock market. In the three remaining months befor the fiscal year 2011-12 comes to end. Rural connectivity is considered pivotal to the success of this stratagem. The selling pressures in the stock market from the foreign institutional investors and rising trade deficit had led the rupee to decline by about 15% since August 2011. Under the MoU system. which has already extended a loan of $800 million was petitioned with a fresh proposal for rural connectivity investment programme to construct or upgrade 7000 km of roads connecting eligible habitations in Maoist-affected States of Bihar. 12. The develoment is to have a positive effect on rupee in the foreign exchange market.500 crore was posted by MCX inDecember 2011 followed by NCDEX (Rs 179490 crore). There are about 50 more of such government-owned firms which are eligible but unlisted for various reasons. the FDI in the current financial year 2011-12 will cross $30 billion. As per the programme proposed by the MoRD.22 lakh crore till December 2011 in the current fiscal (2011-12). under which Central forces assist execution of welfare and development schemes to wean the local people from the path of naxalism. The maximum turnover of . Sectors which attracted the maximum funds include services. which his Ministry to gather resources to give thrust to the Pradhan Mantri Gram Sadak Yojana (PMGSY).6 million. ICEX (Rs 23. Madhya Pradesh.40.The government had set a target of raising Rs 40. construction activities.UPSCPORTAL Current Affairs : http://upscportal.36 lakh crore during the April-December period of the 201112 fiscal from Rs 37.655 crore) and ACE (. Germany and the UAE are major sources of FDI for India. administrative ministry. the UK.com/civilservices/current-affairs trend in FDI continued.com/civilservices/online-course/integrated-free-guidance-programme . besides Assam where too the PMGSY has progressed with little to cheer. Union Ministry of Rural Development (MoRD) issued directions for negotiating and early signing of the loan. telecom and housing and real estate. One of the options to incentivise the PSUs for IPOs is to put this task in the memorandum of understanding (MoU) which an individual enterprise signs with its 21 COMMOdITy exChAnGeS In IndIA ROSe 66% As per the Forward Markets Commission data released on 9 January 2012 that the turnover of the 21 commodity exchanges in India increased by 66% to Rs 137. the Union government will supplement with a contribution of $127. in addition to the $5000 million to finance the project UnIOn GOveRnMenT TO InCenTIvISe UnLISTed PSUS TO heLP TheM COMe UP wITh InITIAL ShARe OffeRInGS The Union government decided to incentivise the unlisted PSUs to help them come up with initial share offerings in the stock market in 201213. to reduce poverty and ensure economic growth of the region.70 lakh crore in December 2010.2012 http://upscportal.713 crore). The turnover of these exchanges had stood at Rs 82. soya oil and chana. Singapore. annual targets are set for the PSUs and CEOs get personal appraisal points if the tasks are achieved. the Netherlands. Japan. guar seed. The maximum trade was seen in gold. The government already decided that unlisted PSUs with no accumulated losses and having earned net profit in three preceding years should come out with initial public offerings (IPOs) even as the state holding would not come below 51%. The Ministry has been able to receive Rs 1145 crore through disinvestment in Power Finance Corporation. The MoRD has been providing incentives and assistance to the local people. crude oil. particularly tribals.
nO fLOATInG InTeReST RATeS On SMALL SAvInGS SCheMeS The Finace Ministry on 4 January 2012 clarified that the rates applicable on small savings instruments schemes would be announced on April 1 each year and the rate would remain valid till the maturity of the scheme. 34 http://www. For PPF. the interest rate fixed every year will be applicable to all PPF accounts. The objective is to ensure that their investment activities and assets positions are in sync with their liabilities. The insurers are also required to develop and implement controls and reporting systems for the ALM policies that are appropriate for their businesses and to the risk to which they are exposed.UPSCPORTAL Current Affairs : http://upscportal. The guidelines. The clarification from the Finance Ministry came in the face of fears that the revision of interest rates on small savings schemes from 1 December 2011. insurers have to put in place an effective mechanism to monitor and manage their asset-liability positions. are floating rates and that the rates will undergo change IRdA InTROdUCed UnIfORM ASSeT-LIABILITy MAnAGeMenT nORMS fOR InSUReRS Insurance regulator IRDA on 4 January 2012 introduced uniform asset-liability management norms for market players to ensure their solvency. the Finance Ministry pointed out that the rate prevailing at the time of investments will remain fixed and unchanged till the maturity of the investment. The programmewas supposed to have covered all habitations with a population of 500 people (250 people in the case of tribal and hilly areas) by 2007. The ALM can be used to measure the interest rate risk faced by insurers. IRdA GUIdeLIneS The IRDA guidelines require the ALM (asset liability management) policy to be approved by the board of the insurer. While approving the ALM policy. which would come into effect from 1 April 2012. Under the uniform framework. Any revisions in interest rates in the subsequent years would only be applicable to the investments made in the relevant period. The Ministry stated that barring the Public Provident Fund (PPF). the rates of interest on all small savings schemes will remain fixed throughout the tenure of investment. the rate of interest for the 15-year PPF scheme would not remain fixed for the entire period as the interest accruals in the PPF account each year would vary. Such board-approved policy is to be submitted to the IRDA within 90 days. The ALM policy will enable the insurers to understand the risks they are exposed to and develop ALM policies to manage them effectively.com/civilservices/online-course/integrated-free-guidance-programme . the board is to take into account the asset-liability relationships. The government had hiked the interest rates on small savings deposits schemes of various maturities with effect from 1 December 2011 to chanel the outflow of funds from small savings schemes administered by the National Small Savings Fund (NSSF) in view of the investor preference for bank term deposits.com/civilservices/current-affairs that includes setting up of training and research centres pertaining to rural roads. make it mandatory for insurance companies to prepare an ALM policy as well as get it approved by the Insurance Regulatory and Development Authority (IRDA) by end of March 2012.com Integrated Guidance Programme for IAS (Pre) .com http://upscportal. the insurer's overall risk tolerance. Insurance Regulatory and Development Authority (IRDA) announced a broadly-defined uniform framework for reporting asset liability management activities adopted by life and non-life insurance companies. IRDA has issued these guidelines to bring about uniformity in the ALM norms being followed by both life and non-life insurance companies. solvency positions and liquidity requirements. Any change in the policy must be reported to the regulator. They would have to put in place effective procedures for monitoring and managing their assetliability positions to ensure that their investment activities and asset positions are appropriate to their liability. risk and return needs. The regulator also asked firms to undertake stress tests to ascertain their ability to meet financial obligations in the event of a crisis. risk profiles and solvency positions. The guidelines also make it mandatory for the board BenefITS Of ALM POLICy The Asset-Liability Management (ALM) norms are critical for the sound management of the finances of the insurers that invest to meet their future cash flow needs and capital requirements. depending on the interest rate announced for that particular year.2012 http://upscportal. However.civilservicesmentor. risk profiles and solvency positions. to frequently review the ALM policy of the insurer. To clear the confusion over the returns on investment in small savings schemes. Provision of rural connectivity to habitations of 500 people in general areas and 250 people in tribal areas need to be worked upon on pririty basis.
Similarly. two years and five years too were raised from December. otherwise known as open market operation (OMO).com/civilservices/current-affairs in sync with fluctuations in yields on government securities.UPSCPORTAL Current Affairs : http://upscportal. but with lesser restrictions. The IPP method can be used to increase public holding by 10% and could be offered to only qualified institutional buyers with 25% being reserved for mutual funds and insurance companies. interest rates on deposits of various maturities of one year. Allotment will be done either on price priority or clearing price basis proportionately and RePORT On BILL TO AMend fORwARd COnTRACTS ReGULATIOn ACT 1952 The Parliamentary Standing Committee submitted its report on a 35 http://www. 2011. promoter or promoter group of companies however will not be allowed to bid for the shares.com http://upscportal. Banks have been borrowing in excess of R 1 lakh crore a day from the RBI's liquidity adjustment facility (LAF) or repo window. Exchanges will provide a separate window for the offer for sale of shares which will co-exist with the normal trading hours. a special window can be used by promoter stakeholders to sell at least 1% of the paid-up capital of a company.6 per cent while raising the ceiling on annual contributions to the fund to Rs. The central bank has decided to ease liquidity by buying back gilts for an amount of R10. There shall be at least 10 allottees in every IPP issuance. It is similar to the blockdeal mechanism for secondary stock market transactions. SEBI had earlier directed all such promoter shareholders to dilute their equity stake to 75% or below by June 2013 through public offering of shares. the revised buy-back process is expected to give a fair deal to all shareholders.70000. For the purpose of compliance with public holding norms. would be overseen by the exchanges.1 lakh from Rs. SEBI’s measure is considered to be very progressive step towards creating an organised and effective mechanism that will not only facilitate fund raising but also assist companies to comply with the listing norms in a non-disruptive manner. It had also hiked the interest rates on PPF deposits from 8 per cent to 8. including the 10-year paper which till recently was the benchmark paper. Under the IPP. InSTITUTIOnAL PLACeMenT PROGRAMMe (IPP) Under the institutional placement programme (IPP). No single investor shall receive allotment for more than 25% of the offer size. RBI deCIded TO eASe LIQUIdITy By BUyInG BACK GILTS The Reserve Bank of India on 3 January 2011 decided to conduct an open market operation (OMO) to inject more liquidity into the system. The move was directed to kick-start government's divesment programme as well as help promoters of companies to sell a part of their holdings. as is done in the case of rights issues and fix a record date for determination of entitlements as per shareholding on record date. The RBI will buy up to Rs 12000 crore of government bonds via open market operations on 6 January 2012. or around Rs 55000 crore. The OMO announcement came after the market trading hours. Interest rates on Post Office Savings Accounts rose to 4 per cent from 3.5 per cent.000 crore in the backdrop of banks accessing the Reserve Bank of India (RBI)’s borrowing window for more than R1 lakh crore each day. RBI announced an auction for R10. The companies’ were also barred from using the qualified institutional placement ( QIP) route for diluting promoters' shares.civilservicesmentor.2012 http://upscportal. The liquidity deficit in the system in recent weeks has been way beyond the limit of 1% of the net liabilities of the system.com Integrated Guidance Programme for IAS (Pre) . The auction method can be only used by promoters of top 100 companies based on average market capitalisation for sale of their stakes.000 crore worth of bonds. As per the auctioning route. SeBI ALLOwed AUCTIOnInG Of SeCURITIeS The capital market regulator SEBI on 3 January 2012 allowed auctioning of securities through stock exchanges and introduced a new method for institutional placement of stocks. shares can be sold only to qualified institutional buyers. However. the Reserve Bank of India decided to conduct open market operations consistent with the stance of the monetary policy and based on the current assessment of prevailing and evolving liquidity conditions. the new institutional placement route can be used for either fresh issue of shares or dilution by the promoters through an offer for sale. The sale of Kisan Vikas Patra (KVP) has been discontinued from November 30. companies will have to announce the ratio of buy-back. The maturity period of Monthly Investment Schemes (MIS) and National Savings Certificates (NSCs) been reduced from six years to five years. Besides improving efficiency.com/civilservices/online-course/integrated-free-guidance-programme .
was asked by the Lok Sabha speaker in December 2010 to prepare a report on the bill and submit it to the Lok Sabha Secretariat. submitted its report on the FCRA (Amendment) Bill 2010 to Parliament on 22 December 2011. the proposal was vehemently opposed by Railway Ministry fearing adverse impact on goods movement. which includes officials from the Oil Ministry and its technical arm. The KG-D6 block oversight committee. chaired by Congress MP Vilas Baburao Muttemwar.com Integrated Guidance Programme for IAS (Pre) . D-19 and D-22) fields after the government representative raised certain objections. It is seen as the single-most important reform in the eight-year-old commodity exchange market. The investment proposal was signed by the three partners in the block. The levy is now likely to come into force from 1 April instead of 1 January as announced earlier.com/civilservices/online-course/integrated-free-guidance-programme . The inclusion of the clause was one of the reasons why the bill in its earlier avatar during the UPA I regime faced resistance. Parliamentary Standing Committee on consumer affairs.com http://upscportal. 19 and 22 (D-2.civilservicesmentor. The Federation of Indian Mineral Industries. RIL agreed to cap spending on the four fields at $1. The standing committee report suggested raising the upper limit on penalties for offences like insider trading to Rs 50 lakh from Rs 25 lakh stipulated in the Forward Contracts Regulation Act (FCRA) Amendment Bill 2010. Finance Minister Pranab Mukherjee in the 2010-11 Union Budget had brought transport of goods by railway under the service tax net from 1 April 2010. which is the final approval an operator needs before beginning work. put a cap on the cost of developing the four fields that surround the currently producing Dhirubhai-1 and 3 (D-1 & D-3) fields in the KG-D6 block. a futures position taken by a trader is on the other hand marked to market daily. RIL’s investment plan will boost falling output in the Krishna-Godavari Basin KG-D6 block. where the minimum traded quantity for most farm products is 10 tonne. The report suggested that options will actually make it easier for farmers and smaller users to participate in the exPORT dUTy RAISed On IROn ORe exPORTS TO 30 % The Union government raised the ad valorem duty (export duty) on iron ore exports to 30 per cent from 20 per cent. investing in an option also tends to minimise losses as only the premium to buy (call option) or sell (put option) is forgone in the event of prices moving adversely.com/civilservices/current-affairs bill to amend the Forward Contracts Regulation Act 1952. plus or minus 15%. the apex body of miners however complained that Indian ore would no longer be competitive internationally.529 billion. The decision is expected to step up finances of cash-strapped government by around Rs 8500-9000 crore. However. Movement of coal and cement among others goods would become costlier with the imposition of service tax. UK's BP Plc and Niko Resources of Canada and the representative of DGH. IMPLeMenTATIOn Of Levy On RAILwAy fReIGhT SeRvICe defeRRed The implementation of levy on railway freight service was put off once again in the backdrop of high inflation. The levy on transport of goods by rail was deferred for the sixth time. The MC had at its two previous meetings in November and December 2011 refused to approve the field development plan (FDP) for the Dhirubhai-2. the Directorate General of Hydrocarbons (DGH).UPSCPORTAL Current Affairs : http://upscportal. The committee in its report recommended a doubling of the maximum penalty for trading rule violations to Rs 50 lakh. 6. The RePORT The report recommended that options be introduced for the benefit of stakeholders. set up in 2009. Those who had opposed the bill then especially the Left parties argued that options would increase speculation in commodities. met for the third time in three months on 3 January to finally approve the proposal.2012 http://upscportal. The bill seeks to empower commodity futures market regulator Forward Markets Commission on par with its securities markets counterpart. Railway Ministry is of the opinion that any levy on freight service would adversely impact the industry.RIL. (RIL) $1.529 BILLIOn InveSTMenT PLAn The Union government on 3 January 2012 approved Reliance Industries' 36 http://www. Marking to market involves daily settlement of the difference between the prior agreed price and the daily futures price. D-6.The current department-related standing committee (DRSC). It can thus lead to huge losses alongside supernormal profits. forcing the government to defer it repeatedly. food and public distribution. Insider trading involves using unpublished price sensitive information for personal gain.529 billion investment plan for developing four satellite fields in the flagging KG-D6 block. The cost cannot vary by more than 15%. The increase in export tax could lower GOveRnMenT APPROved RIL’S $1. The MC approval. derivatives market as trading lot sizes will be lower than in futures contracts.
when exported had contracted by 6. India's iron-ore exports is not likely to exceed 50 million tons in 2011-12. 30 per cent resources of the total 68% are borrowed from banks and financial institutions as at the end of March 2011.com/civilservices/online-course/integrated-free-guidance-programme . The two states account for around 70% of India's iron-ore exports. The Supreme Court had in early 2011 banned mining in the major iron-ore producing districts of Karnataka to prevent illegal mining and environmental damage. RBI STUdy SOUGhT CAP On BORROwInGS By nBfC’S fROM BAnKS Reserve Bank of India (RBI) raised red flags over the high dependability of non-banking finance companies (NBFCs) on the banking system because the apex bank feels that the higher dependence would mean systemic vulnerability in the context that NBFCs are involved in higher risk activities vis-à-vis the banking system.e. Volumes were hit by a mining ban in the southern state of Karnataka. The data on engineering exports was inflated by around $15 billion. The new system will incentivise improvement in quality. resulting in better quality of coal to consumers and commensurate revenue realisation for coal firms.87% to $22. 2011.com/civilservices/current-affairs the profit margin of Sesa Goa Ltd. The commerce ministry had overestimated exports by over $9 billion due to software upgrade and punching errors that prompted a revision of data revision for the previous eight months. The higher borrowings of NBFCs from the banking system tend to raise concerns about their liquidity position.6 per cent.com http://upscportal. The consolidated balance sheets of NBFCs (both the categories i. GCV measures the amount of heat released by carbon and hydrogen in coal when it is heated and is an internationally accepted pricing mechanism. The UHV took into account the heat trapped in ash. industry officials had estimated exports in 2011-12 to be between 60 million and 65 million tons because of mining-related issues. IndIA’S exPORTS ReCORded SLOweST In TwO yeARS As per the to Commerce Ministry data released on 2 January 2012. Finance Minister Pranab Mukherjee had earlier imposed a 20 per cent duty on exporting the domestically mined mineral. moves to reduce environmental impact and illegal mining affected production. In Indian coal. a freeze on sale of old stocks in western Goa state and transport bottlenecks in the eastern state of Orissa. Moderation in demand in developed markets also impacted export. More so.com Integrated Guidance Programme for IAS (Pre) . The growth rate was the lowest since October 2009.2012 http://upscportal. The new system is based on the recommendations of the Integrated Energy Policy Committee and the Expert Committee on Road Map for coal sector reforms. Steel Minister Virbhadra Singh always wanted more restrictions on exports. The board approved switching over of non-coking coal pricing from Useful Heat Value based grading system to Gross Caloric Value (GCV) based classification with effect from 1 January 2012. exports 37 http://www. India's largest iron-ore exporter by volume. The Coal Ministry mentioned that the pricing of coal on GCV-based mechanism was not likely to lead to any significant change in pricing. Shipments from the South Asian country decreased 28% between April and November to 40 million tons. deposit taking and non-deposit taking and systemically important companies) revealed that more than 68 per cent of the consolidated balance sheet constitutes borrowings. Prior to the export tax change. over to internationally-accepted Gross Caloric Value-based pricing mechanism. India exported 97. India’s exports recorded their slowest pace of growth in 1two years at 3.civilservicesmentor. In Goa.49 billion in November 2010.64 million tons iron ore in 2012. according to the Federation of Indian Mineral Industries.3 billion in November. compared to $21. increase further. while export of gems and jewellery and petroleum products was underestimated by $12 billion. Based on his ministry’s inputs. the UHV mechanism was followed in India Howeverbecause of the high-ash content in Indian coal..8 per cent in November 2011 as a result of the global slowdown.UPSCPORTAL Current Affairs : http://upscportal. GCV is 25% higher than UHV. The concerns to be further accentuated in case the banks’ own liquidity position becomes tight at the time of crisis or even at crisis like situation. As a result of high export tax and railway freight. Borrowings by way of debentures issued by the NBFCs constituted around 33 per cent and of which a sizeable portion is subscribed by the banking system. The banking system’s exposure to NBFCs-D (deposit taking) was observed to have considerably increased over the years. if such reliance happens to CIL APPROved The SwITChInG OveR TO GROSS CALORIC vALUe-BASed PRICInG MeChAnISM State-owned Coal India (CIL) announced on 2 January 2012 that its board approved in a meeting held on 30 December 2011 the switching exPORT Exports grew 3.
The index indicated the strongest improvement in business conditions since June 2011. In November. The PMI was released by the banking major HSBC on 2 January 2012. Manufacturing sector employment also increased slightly during December 2011. Costs went up on higher prices of raw materials and fuel on the input front. the second consecutive expansion after shrinking for four months.48 billion in November 2010.8 billion.1% in October.53 billion.97 billion in November 2011. Between April-November exports grew 33. Non-oil imports.0 in November. Between April and November oil imports stood at $94. This was the first fall in industrial output in nearly two years.2 in December. 36. The index stayed above the 50 mark that separates growth from contraction for 33 months now. its biggest monthly rise since April.registered 54.2% to $ 309.25 per cent in August.1billion.46% 38 http://www. a year-on-year growth of 24.2 from 51.6 billion vis-a-vis the year-ago period. up from 51. exports aggregated to $192.6 billion. From 82 per cent in July.69 billion.67% compared to $65.69 per cent to $25. rose 25. The successive rate hikes by the RBI and weak macroeconomic conditions domestically and globally were blamed for the contraction.0 in November. The demand from clients allowed manufacturing companies to increase output prices at an accelerated pace to pass on the costs. 2009. further decine in export will push export growth ina negetive zone. imports aggregated $28.com http://upscportal.9 billion in November 2011 which in the process translated into a trade deficit of $13. 2009. 2010.55 per cent. Oil imports grew by 32.7 billion while imports also rose 30. The PMI or Purchasing Managers’ Index dipped to 50. The country's overseas shipments had amounted to $21.3 billion in November 2011 while non-oil imports rose by 21. PMI ReLeASed By hSBC The HSBC Purchasing Managers' Index ( PMI) . export growth slipped to 44. Experts opined that the country's exports growth during the entire fiscal would stand at about 20 per cent. an increase of 42.5% at $35.1 per cent contraction in the IIP numbers in October 2011. New orders from overseas clients also grew at a faster pace than November 2011.28 per cent to USD 10.92 billion in November 2011.com/civilservices/current-affairs for the current fiscal is expected to be around $280 billion. international firms.36 per cent in September and 10.com Integrated Guidance Programme for IAS (Pre) . According to export body Fieo Director General Ajay Sahai. The trade deficit during the eight months of the fiscal year therefore stood at $116. adding with higher demand.84 billion.5 per cent year-on-year to $35.4 in September 2011.8 per cent in October. raising worries about the health of the manufacturing sector. its slowest since March. to $ 215.2012 http://upscportal. India’s manufacturing activity was at a a sixmonth high in December 2011 on account of an increase in factory output and new orders from domestic and IMPORT Imports were up 24.2% to $192.41 billion during the AprilNovember period. In the eight-month April-November period.UPSCPORTAL Current Affairs : http://upscportal. The HSBC Markit India Manufacturing PMI jumped to 54. a key gauge of economic activity. The official industrial output data showed factory output plunged 5. TRAde defICIT Imports grew at a faster rate of 24. Data released by the government had showed a 5.civilservicesmentor.a headline index designed to measure the overall performance of the manufacturing sector .com/civilservices/online-course/integrated-free-guidance-programme . below the $300 billion target for 2011-12 due to global economic slowdown. ending a period of job losses that had set in during August 2011.