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