24 – 28 November 2011

Economic News

24 – 28 November 2011

1.     India and Nepal signed a revised Double Taxation Avoidance Agreement (DTAA), which will facilitate exchange of banking and tax information and sharing it with law enforcement agencies.

2.    The government had set up committee headed by Planning Commission member (Energy) B.K. Chaturvedi to suggest measures to increase coal production and increase its availability to meet the growing needs of the power sector. Prime Minister Manmohan Singh will consider the Chaturvedi Committee report that has suggested exempting imported coal from the 5 per cent customs and 5 per cent countervailing duty (CVD).

3.    The 12th five year Plan (2012-17) aims to substantially boost R&D investments to two per cent of the country's GDP with half the contribution coming from the corporate sector.

4.    Struggling to meet the 11th Plan revised target of 62,000 MW of capacity addition from 78,000 MW, due to shortage of coal, non-availability of gas, high cost of imported coal, the United Progressive Alliance-II government is preparing to unleash a second set of power sector reforms, including open access to consumers to choose their electricity supplier and restructuring of power utilities of seven major States — including Uttar Pradesh and Tamil Nadu.

5.    Andhra Pradesh Chief Minister N. Kiran Kumar Reddy announced full waiver of interest on bank linkage loans up to Rs. 5 lakh from January 1, for women members of self-help groups who repay the loan on time.

6.    European Commission said the India-EU free trade agreement (FTA) was likely to be finalised by the first quarter of 2012.

7.    The Central Government sought Parliament's approval for Rs.30,000-crore fuel subsidy payout to state-run oil marketing companies (OMCs) during the first-half of the current fiscal.

8.    The Reserve Bank of India deregulated the interest rate on savings accounts in urban co-operative banks (UCBs)

9.    Union Cabinet gave its approval for 51 per cent foreign direct investment (FDI) in multi-brand retail and 100 per cent FDI in single-brand retail. The proposal for 51 per cent FDI in retail has come with certain riders, including approval to be taken from the Foreign Investment Promotion Board (FIPB), a minimum investment of $100 million by the foreign investor, putting 50 per cent of the total FDI in back-end infrastructure and procurement of 30 per cent of the products from small scale industries. The retail chains will be allowed only in cities with a population of more than 10 lakh as per the 2011 census. There are 51 cities with a population of more than one million, based on the 2011 census.

10.The government notified the increase in interest rates on PPF to from 8 to 8.6 per cent, and also raised the ceiling on annual contributions to the fund from Rs. 70,000 to Rs. 1 lakh. Interest rates on savings accounts held in post offices will go up from 3.5 to 4 per cent. The sale of Kisan Vikas Patras (KVP) will be discontinued from November 30. There was an apprehension about KVP, which was kind of a bearer instrument, that it was used for money laundering. The maturity period of monthly investment schemes (MIS) and national savings certificates (NSC) would be reduced from six to five years. MIS will earn an interest of 8.2 per cent. Every Rs. 100 invested in NSCs will fetch Rs. 150.90 at the end of five years.

11.India inked an agreement with the Eurasian Group (EAG), a group that enforces anti-money-laundering standards in the region. The EAG is a FATF- (Financial Action Task Force) styled regional body with nine members, including India, Russia and China, and 29 observers, of which 12 are countries and 17 are international organisations. India was accorded membership in the EAG in December last year.

12.The Union Cabinet approved the Companies Bill, 2011, a move that will help improve efficiency and increase accountability of the corporate sector.  It will also make mandatory for companies to earmark 2 per cent of their average profit of the preceding three years for corporate social responsibility (CSR) activities.

13. State Bank of India (SBI) has decided to abolish pre-payment charges on home loans

24 – 03 December

Economic News - 2

24 – 03 December

1.     The Food security Bill that proposes to cover 75 per cent population in rural areas and 50 per cent in urban areas for providing food grain on subsidised price (rice - 3 Rs/Kg, wheat - 2 Rs/Kg, Millet - 1 Rs/Kg) will be implemented from next fiscal year.

2.    A Sister-State agreement between Maryland (USA), and Andhra Pradesh was signed by Chief Minister N. Kiran Kumar Reddy and Maryland Governor Martin Joseph O' Malley.

3.    Calcutta Stock Exchange (CSE) launched operations on the National Stock Exchange (NSE) platform, becoming the only stock exchange in India to offer facility to trade on three trading platforms — Bombay Stock Exchange (BSE), National Stock Exchange (NSE) and CSE — with a single membership.

4.     Delayed forest clearance for captive mines could adversely impact development and financing of a large number of power projects, Planning Commission Deputy Chairman Montek Singh Ahluwalia has said India risks missing the 1,00,000-MW capacity addition target for the 12th Plan.

5.     Angry over the North Atlantic Treaty Organisation (NATO) attack on its border post near Afghanistan, Pakistan decided to boycott next week's Bonn Conference to decide on the future of Afghanistan.

6.     Conference on global warming will begin in Durban (South Africa). The outcome of the U.N. climate conference will be decided by the interplay of forces between the Basic (Brazil, South Africa, India and China) group formed two years ago, the EU, and the umbrella group of developed countries, led by the U.S. and comprising Russia, Japan, Canada and Australia.

7.     Economic growth slipped to a disappointing 6.9 per cent in the second quarter of this fiscal year (2011-12), the lowest in the last nine quarters. This prompted the government to lower its full-year growth projection to 7.3 per cent against 8.5 last fiscal. The latest projection by Mr. Mukherjee to 7.3 per cent is significantly lower than his Budget estimate of 9 per cent growth. The RBI has already lowered its growth projection for the current fiscal to 7.6 per cent from an estimated 8 per cent. 

8.     The Defence Research and Development Organisation (DRDO) developed Agni-I to bridge the gap between Prithvi, which has a range of 250 km, and Agni-II, which can strike targets 2,500 km away. Defence specialists say Agni-I, with a range of 700 km, is Pakistan-specific, capable of covering the entire western range.

9.     Aamir Khan was appointed UNICEF Ambassador for promoting child rights and nutrition.

10. Following its ground-shaking downgrade of the United States' sovereign debt rating from AAA to AA+ on August 5, top credit rating agency Standard & Poor's downgraded several major U.S. and European banks this week and concurrently upgraded several Chinese financial institutions.

11.  Major central banks around the globe took coordinated action to ease the strains on the world's financial system, saying they would make it easier for banks to get dollars if they need them. The European Central Bank, the U.S. Federal Reserve, the Bank of England and the central banks of Canada, Japan and Switzerland are all taking part. The central banks agreed to reduce the cost of temporary dollar loans they offer to banks called liquidity swaps by a half percentage point.

12.  The Strategic Forces Command (SFC) of the armed forces successfully test-fired an Agni-I missile from the Wheeler Island, off the Odisha coast, to test its readiness to launch ballistic missiles carrying nuclear warheads. The Agni-I, developed by the Defence Research and Development Organisation (DRDO), is already in the Army's arsenal. The missile, with a range of 700 km, is Pakistan-specific would fill the gap between Prithvi-II, which has a range of 250 km and the Agni-II, which can take out places 2,500 km away. The Agni-V has a range of 5,000 km.

13.  A year down the line public sector bank ATMs may start accepting cash directly through cash acceptors, have solar powered back-up, and 24x7 surveillance. These are some of the recommendations of a committee on ATMs headed by Dr Ashok Jhunjhunwala.

14.  Insurance Regulatory and Development Authority (IRDA) came out with guidelines allowing life insurance companies, which have been in business for over ten years, to raise funds from the public through initial public offerings (IPOs).

15.  The much-delayed guidelines on credit default swaps (CDS)-derivative instruments that allow lenders to pass on the credit risk to others-became effective from December 1. CDS are contracts where an investor in bonds or a lender (the user or protection buyer) gets a cover against default from another party (the protection provider).

16.   During the first four years of the 11th Five-Year Plan period (2007-08 to 2010-11), the average annual growth rate of foodgrains production in the country has been 2.90 per cent. Production of food grains increased from 234.47 million tonnes in 2008-09 to 241.56 million tonnes in 2010-11.

17.  India to see highest foreign remittances in 2011 (USD 58 billion): World Bank

18.  After hovering above the 9 per cent mark for most of 2011, the United States' unemployment rate finally dropped to 8.6 per cent for November.

19.  The current volatility in the stock market and withdrawal of FIIs has a direct correlation with the euro zone crisis. It will have some impact, particularly on FII flows. Mr. Mukherjee said Up to now, the indication is that FDI inflow is much better compared to last year, but FII outflow is an area of concern

20.  The Reserve Bank said it will shortly issue Rs 1,000 and Rs 10 notes incorporating therupee symbol, which was approved last year.

21. The United Nations has warned that the world is at the cusp of another recession, pointing to the slowdown in economic growth in all countries including the growth engines- India and China. In a report 'World Economic Situation and Prospects 2012',UN has downgraded its global economic growth forecast by one percentage point for 2012 to 2.6% and 3.2% for 2013.