The

Analyst G-20 and India’s Presidency

Handout
14th July, 2023
CONTEXT: Recently the G20 Sherpa Amitabh Kant said that the Ukraine war was not on India’s list of priorities for
outcomes from its presidency of the grouping.

Background of G20 Theme : ‘One Earth, One Family, One Future

’

G20 Leaders' Summit

➔ The 18th Heads of State and Government Summit
of the Group of 20 (G20) will take place in
September 2023 in New Delhi, India.
India's G20 Priorities
➔ Green Development, Climate Finance & LiFE
➔ Accelerated, Inclusive & Resilient Growth
What is G20? ➔ Accelerating Progress on SDGs
➔ Technological Transformation & Digital Public
Infrastructure.
➔ Multilateral Institutions for the 21st century
➔ Women-led Development

Beginning of Amrit Kaal

Working of G-20 - 2 Tracks
➔ Sherpa Track - It focuses on non-economic
and financial issues, such as development,
anti-corruption and food security, while
addressing internal aspects such as
procedural rules of the G20 process.
➔ Finance Track - It focuses on economic and
financial issues.
➔ As it takes the G20 Presidency, India is on a
mission to bring about a shared global future for
all through the Amrit Kaal initiative with a focus
on the LiFE movement which aims to promote
environmentally-conscious practices and a
sustainable way of living.
Voice of Global South
➔ Prime Minister Narendra Modi’s proposal for the
African Union to be inducted as a member of the
G20 at the Delhi Summit, slated to be held on
September 9 and 10.
Russia Ukraine War
- The G20 Sherpa Amitabh Kant said that the
Ukraine war was not on India’s list of
priorities for outcomes from its presidency of
the grouping.
 The
Analyst Inflation - Monetary Policy Response
Handout
14th July, 2023
CONTEXT: Given the risk of high food prices, RBI is likely to maintain status quo on interest rates.
Current Scenario
➔ Retail Inflation Edged up - The pickup in inflation
can be largely traced to two factors:
◆ A fading base effect
◆ Higher food inflation
➔ Status quo on rates -
◆ In its last meeting, the monetary policy
committee had voted to maintain the
status quo on rates.
What is inflation ?
➔ It refers to the persistent increase in the average
price level, as reflected in the general price index
such as the consumer price index or the wholesale
price index in the economy over time.
What is Monetary Policy ?
➔ Macroeconomic policy laid down by the central
bank. Which involves management of money
supply and interest rate and it intends to achieve
macroeconomic objectives like inflation,
consumption, growth and liquidity.
What is Monetary Policy Committee ?
➔ The Reserve Bank of India Act, 1934 was amended
by Finance Act (India), 2016 to constitute MPC.
➔ Section 45ZB of the amended RBI Act, 1934, lays
down that “the Monetary Policy Committee shall
determine the Policy Rate required to achieve the
inflation target”, and that “the decision of the
Monetary Policy Committee shall be binding on
the Bank”.
Monetary Policy Response to correct inflation
➔ Quantitative tools -
◆ Rates - Repo Rate, Reverse Repo rate,
Marginal Standing Facility rate & Bank
rate etc.
◆ Ratios - Cash Reserve ratio and Statutory
Liquidity Ratio.
◆ Open market operations - involves sale
and purchase of government securities by
RBI vis-a-vis tha banking system.
➔ Qualitative tools -
◆ Margin Requirement - It refers to Loan to
value ratio control e.g. if if margin imposed
by RBI is 40% then the bank is allowed to
give a loan only up-to 60% of the value of
the security.
◆ Rationing of Credit - RBI can ask the
banks to mandatorily lend to some
sectors more than the others.
◆ Moral Suasion - RBI uses policy
statements, public announcements or
outright appeals and advices etc.
➔ Inflation Targeting -
◆ In May 2016, India adopted inflation
targeting as a policy goal, as the Centre,
under section 45ZA of the RBI Act, 1934,
has fixed the CPI inflation target at 4%
with an “upper tolerance limit” of 6%.
◆ Under the new statutory framework, the
central government would, in consultation
with the Reserve Bank of India (RBI), set
an inflation target based on the consumer
price index (CPI) once every five years.
 The
Analyst India - France Strategic Partnership
Handout
14th July, 2023
CONTEXT: As Prime Minister Narendra Modi is on a visit to France, the Defence Acquisition Council approved
procurement of 26 Rafale fighters and three additional Scorpene class diesel-electric submarines from France.
Historical Context and Relations
➔ France as a Colonial Power in India
➔ French Revolution values like Liberty,
fraternity and equality inspired Indian
struggle for Independence.
➔ Pondicherry became part of Independent India
in 1954.
➔ France, the only major Western country that
didn't condemn India's Nuclear Tests e.g.
Smiling Buddha & Pokhran -II
➔ Strategic Ally
Key Areas of Cooperation
➔ Strategic Partnership
◆ 3 Principal Pillars
● Defence Cooperation
● Space cooperation
● Civil Nuclear Cooperation
◆ France Support to India's permanent
seats bid to UNSC
➔ Defence
◆ Defence Supplier
◆ French Scorpene Submarines
◆ Rafale fighter jets
◆ C - 295 aircraft - agreement between
Tata and Airbus.
◆ Joint Exercises
➔ Civil Nuclear Cooperation Agreement 2008
➔ Economic Cooperation
◆ Trading Partners - more than $12
billion in 2021-23
◆ FDI inflow - 11th largest FDI source for
India.
➔ Climate Cooperation
◆ International Solar Alliance
➔ Maritime Ties
◆ Joint Strategic Vision of India-France
Cooperation in the Indian Ocean Region
presents a blueprint for a
strengthening of ties.
◆ India and France in September 2022
agreed to set up an Indo-Pacific
Trilateral Development Cooperation
Fund that will support sustainable
innovative solutions for countries in
the Indo-pacific region.
➔ Exclusion from AUKUS
◆ France left out
◆ Gives chance for closer cooperation
between India France
◆ French interest in Indo Pacific
➔ Ways to deepen the partnership
◆ Increase Trade - Free Trade Agreement
◆ Climate Leadership
◆ More Defence Deals
◆ Enhance Civil Nuclear Cooperation
further.
◆ Increase in Military exercises at Indo
Pacific
 The Capital Expenditure - Mapping the
Analyst Spending of States
Handout
14th July, 2023
CONTEXT: According to CAG report, in 2022-23, the combined capital expenditure of 24 states was Rs 6.1 trillion. This is
Rs 0.9 trillion lower than the capex budgeted for that year, but it is still an all-time high.

Some Basics Status and Trends of Capital Expenditure -

➔ What is Capital expenditure ?
◆ Capital expenditure is the money that a
company or organization spends on
acquiring, maintaining, or improving its
fixed assets, such as buildings, equipment,
and land.
◆ It is a long-term investment, wherein the
cost of the asset is spread out over the
years that it is used, rather than being
charged all at once.
➔ Significance of Capex - CAG data for 24 states - 2022 -23
◆ Increasing productivity ➔ Capex Rs. 6.1 Trillion, 0.9 trillion lower than
◆ Reducing costs budgeted.
➔ Capex Loan Scheme - increase thrust
◆ Improving the quality of a company's
➔ 47% spent in the last Qtr
products or services ➔ Fiscal Deficit - 20% lower Rs. 6.6 trillion against Rs.
◆ Increasing market share 8.2 Trillion
◆ Improving customer service ➔ Overall Decline in WMA & Overdraft

Financial Market - The Current Market Rally

CONTEXT: Over the last three months the Sensex has rallied by 10%, driven by foreign portfolio investors.

Why are markets rising ? Classification

➔ India’s Strong economic fundamentals

➔ Rise in Corporate profitability
➔ Broad-based Service Exports
➔ Availability of Large no of educated and young
population
➔ Lower wage inflation relative to other countries
Stock Exchanges
What is a Financial Market ?
Serves as a market where financial instruments like stocks,
bonds and commodities are traded. Adheres to a set of
➔ Marketplace where people trade financial
rules and regulations directed by Securities and Exchange
securities and derivatives at low transaction
Board of India
costs.
Stock Index
A stock index is a statistical measure of the performance
of a group of stocks.
➔ Sensex - Stock market index for the Bombay Stock
Exchange.
➔ Nifty - Stock market index for the National
Stock Exchange