January 2019 - Economy News



  • Foreign investors pulled out more than 4,000 crore rupees from the Indian capital markets so far in January, 2019. This comes following a collective net inflow of over 17,000 crore rupees in the capital markets both equity and debt by Foreign Portfolio Investors, FPIs, during November and December, 2018. According to data available with the depositories, FPIs withdrew a net amount of 3,987 crore rupees from equities and 53 crore rupees from the debt market, taking the total outflow to 4,040 crore rupees.


  • China flag China's economy grew at 6.6 per cent in 2018, its slowest rate in almost three decades. The world's second biggest economy was grappling with the effects of the current trade war with the US and declining exports. In the three months to December, the economy grew 6.4% from a year earlier, down from 6.5 per cent in the previous quarter. The data was in line with forecasts but underlines recent concern about weakening growth.

    China's National Bureau of Statistics (NBS) said that last year's growth rate was down from 6.8 per cent in 2017 and was the lowest since 1990 when growth rate was 3.9 per cent. China's rate of expansion has raised worries about the potential knock-on effect on the global economy. The trade war with the US has added to the gloomy outlook. The US and China have been locked in an escalating trade spat since early 2018, raising import tariffs on each other's goods.


  • WTO Chief calls for urgent steps to deal with emerging global trading challenges. The World Trade Organization (WTO) chief Roberto Azevedo has warned that the global trading system is heading for what he called dark ages if urgent steps are not taken. Speaking at a meeting in World Economic Forum in Davos, he urged the world leaders to hammer out a multi-lateral trading agreement.

    The WTO chief's warning came as the world leaders were debating on emerging threats to international trading systems amid a growing clamour in several countries for inward looking policies. Mr Azevedo said, the challenges are bigger than ever before. Mr Azevedo asserted that the multilateral trading system is viable. He said that the system has to respond to global reality and world changing faster than ever before. The IMF has also said that the ongoing trade war between the US and China is hurting global growth. Besides China's economy grew at its slowest place since 1990 in the last quarter of 2018.


  • Former Reserve Bank of India (RBI) governor Raghuram Rajan on 22 January, 2019 said consumers are benefiting in a big way from the business of scale with several services in the new technology age coming for free or very cheap, but it needs to be seen whether this can continue going ahead.

    Speaking in Davos at a session of the World Economic Forum (WEF) annual meeting, Mr. Rajan said we benefit tremendously from business of scale, there are benefits of efficiency at large corporations and consumers are gaining in a big way from low prices. For example, Google provides a big amount of free services, said Mr. Rajan, who teaches at the Chicago University and is regarded as a global voice on economy. We all know nothing is free, so it needs to be known who is paying for it when consumers get it for free.


  • While Centre’s total debt as percentage of GDP fell to 46.5% in 2017-18, States’ debt rose to 24%. While the Centre is moving in the right direction in terms of meeting the N.K. Singh Committee recommendations on public debt, the States are moving in the opposite direction, data released by the government show.

    According to the Status Paper on Government Debt for 2017-18, the Centre’s total debt as a percentage of GDP reduced to 46.5% in 2017-18 from 47.5% as of March 31, 2014. The total debt of the States, however, has been rising over this period, to 24% in 2017-18, and is estimated to be 24.3% in 2018-19. In absolute terms, the Centre’s total debt increased from Rs.56,69,429 crore at the end of March 2014 to Rs.82,35,178 crore in 2017-18, representing a 45% increase. The total debt of the States increased from Rs.24,71,270 crore to Rs.40,22,090 crore over the same period, an increase of almost 63%.

    The N.K. Singh-headed FRBM (Fiscal Responsibility and Budget Management) Review Committee report had recommended the ratio to be 40% for the Centre and 20% for the States, respectively, by 2023. It said that the 60% consolidated Central and State debt limit was consistent with international best practices, and was an essential parameter to attract a better rating from the credit ratings agencies. “The Central debt has been within control because the government has been trying to stick by-and-large to the fiscal deficit parameters,” Ranen Banerjee, leader, PwC India, said. “The increase in the debt stock at the State level is worrying because they don’t have the wherewithal to service the debt if it goes beyond a certain point. They could then start getting into a debt trap situation.”


  • “Outstanding liabilities of States have increased sharply during 2015-16 and 2016-17, following the issuance of UDAY bonds in these two years, which was reflected in an increase in liability-GDP ratio from 21.7% at end-March 2015 to 23.4% at end-March 2016 and further to 23.8% at end-March 2017,” the status report said.

    “The total outstanding liabilities as a percentage of GDP stood at 24% as at end-March 2018 and is expected to move upward to 24.3% at end-March 2019.” This, combined with the fact that ratings agencies have predicted that the combined fiscal deficit of the States to be 3.2% of GDP in financial year 2020 (higher than the prescribed 3%), and it begins to look increasingly unlikely that the States will meet their 20% debt-GDP ratio target by 2023. The report, however, says that the States do have some fiscal space to reduce their borrowing in the coming years due to the large cash surpluses they hold.

    “State governments as a group have exhibited a tendency to hold large cash surpluses/investments in Cash Balance Investment Account on a consistent basis while at the same time resorting to market borrowings to finance their GFD (Gross Fiscal Deficit),” the report said. “This indicates scope for reducing the quantum of market borrowings by State governments in case they bring down their cash surpluses (parked as investment in treasury bills of the Central government),” the report added.


  • Union Minister for Commerce and Industries, Suresh Prabhu inaugurated the 10th edition of the India Rubber Expo - 2019 in Mumbai. Speaking on the occasion, he said that the rubber industry will continue to grow faster, create more employment opportunities, increase exports and add to the economic output of India. Mr Prabhu said that the government is working on a comprehensive technology strategy to increase India’s economy and improve ease of doing business at the micro level. He had informed that the government is working to increase India's exports and in the last 13-14 months, India’s exports have achieved almost 10% growth. The India Rubber Expo is Asia's largest rubber expo. The event offers a unique opportunity for Indian companies to meet and collaborate with overseas companies.


  • China's trade surplus with the United States increased in 2018 to 323.3 billion US dollars from 275.8 billion US dollars in 2017, data showed on 14 January, 2019. The surplus with the US is a major source of anger within the Trump administration, which imposed tariffs on hundreds of billions of dollars worth of Chinese goods. However, China's exports to the US sank last month (December, 2018).

    The figures come after a US delegation held three days of talks in Beijing last week in the first meeting since US President Donald Trump and Chinese leader Xi Jinping in December pledged a 90-day truce to resolve the crisis. The country's commerce minister told on 11 January, 2019, that China will work to straighten out trade frictions with the US this year (2019). China's exports to the world fell 4.4 per cent in December from a year earlier, while imports dropped 7.6 per cent, reflecting sluggish demand at home and abroad.


  • The Reserve Bank of India (RBI) said it would inject Rs 10,000 crore into the system through purchase of government securities on January 17 to increase liquidity. The central bank said in a statement that the purchase will be made through open market operations (OMOs). RBI has decided to conduct purchase of Government securities under OMOs for an aggregate amount of Rs 100 billion on January 17, 2019 based on an assessment of prevailing liquidity conditions.

    The eligible participants should submit their offers in electronic format on the RBI Core Banking Solution (E-Kuber) system on January 17. The result of the auction will be announced on the same day and payment to successful participants will be made on the following day. The RBI plans to inject liquidity under OMOs for Rs 50,000 crore in January 2019.


  • All time high Rs. 61,084 Crores for MGNREGA. The Centre has allocated an additional 6 thousand 84 crore rupees to Mahatma Gandhi National Rural Employment Guarantee Scheme, MGNREGA. With this the total allocation for the scheme has reached an all time high of 61 thousand 84 Crore rupees. Over the last 4 years, the Ministry of Rural Development has completed major reforms in the MGNREGA to transform it into a resource for sustainable livelihoods for the poor.

    The Ministry said, there has been a remarkable increasing trend in the budget allocation and release for the programme from nearly 33 thousand crore rupees in 2014-15 to over 55 thousand crore rupees in 2017-18. It said, in the last four years MGNREGA has focused on creation of durable community and individual beneficiary assets, sustainable livelihoods and wage employment for the poor. The Ministry said, to ensure transparency, geo-tagging of assets, AADHAAR linking of Bank Accounts, DBT transfers for all wages, and material payments and Geographic Information System (GIS) based planning of works have been implemented.


  • The government has approved a proposal to extend the 7th Central Pay Commission benefits to teachers and other academic staff of the state government and government aided degree level technical institutes. This will have additional Central government liability of over 1240 crore rupees. The Centre will reimburse 50 per cent of the total additional expenditure from 1st January, 2016 to 31st, 2019 to be incurred by these institutes for payment of arrears.

    The measure will directly benefit more than 29 thousand teachers and other academic staff of state government funded colleges and institutes. Besides, about three-and-a-half lakh teachers and academic staff of private institutes under the AICTE will also benefit.


  • Prime Minister Narendra Modi has said that his Government is committed to provide road connectivity to all the rural habitations in the country. 90% of the rural habitations are now connected by road. He spoke at Kollam in Kerala after dedicating the Kollam Bypass to the Nation. The Prime Minister urged the Kerala Government to expedite implementation of various centrally-sponsored projects in the State.

    The Kollam Bypass on the National Highway-66 considerably reduces travel time between Alappuzha and Thiruvananthapuram, besides avoiding traffic congestion in Kollam town. Notably, this is the first National Highway project in the country taken up on a 50:50 Centre-State partnership. The 13-kilometre-long two-lane bypass is constructed at a cost of 352 crore rupees. It has three major bridges over the Ashtamudi lake, having a total length of 1540 metres and an underpass.


  • Ministry of Water Resources and River Development will organize 9th International Micro irrigation conference from 16 to 18 January, 2019 in Aurangabad, Maharashtra. The Conference will focus on the theme of “Micro Irrigation and Modern Agriculture”. Union Water Resources Minister Nitin Gadkari will inaugurate the event. The three day conference will have exhibitions and sessions to create public awareness for the use of Micro Irrigation on large scale.


  • The total value of BHIM-UPI transactions crossed 1 Lakh Crore Rupees mark in December 2018. Union Minister Ravi Shankar Prasad informed that the app-based payments touched 1 lakh, two thousand five hundred and ninety-four crore rupees mark in December, 2018. It was 82 thousand 2 hundred and thirty-two crore rupees in November and 74 thousand 9 hundred and 78 crores in October 2018. The Minister said BHIM-UPI, a unique fintech innovation of India, has become immensely popular among users.


  • Reserve Bank of India (RBI) has constituted a High-Level Committee on Deepening of Digital Payments to encourage digitization of payments and enhance financial inclusion. The five-member committee headed by UIDAI’s former Chairman Nandan Nilekani will include RBI’s former Deputy Governor Mr. H.R. Khan and Former Secretary, Ministry of Information Technology, Mrs. Aruna Sharma among others.

    The committee will review the existing status of digitization of payments and suggest ways to bridge any gaps in the ecosystem. The committee will also undertake cross country analysis to identify best practices that can be adopted to accelerate digitization of the economy and financial inclusion through greater use of digital payments.


  • The Reserve Bank of India is exploring the possibility of mobile phone-based solution to help visually-impaired people easily identify the currency notes. Currently, intaglio printing-based identification marks are present in the banknotes of Rs 100 and above for helping the visually challenged. About 80 lakh people in the country are likely to benefit from the initiative. The device/mechanism, once developed should be able to identify the denomination of a currency within two seconds and read it out in English or Hindi for the users.


  • The Micro, Small and Medium Enterprises (MSMEs) Ministry has established an export promotion cell to create a sustainable ecosystem for MSMEs. This was stated by the Minister of State (Independent Charge) for MSME Giri raj Singh in a written reply in Lok Sabha. This cell is expected to help in integration of MSMEs into global value chain, evaluation of readiness of MSMEs to export their products and services.


  • The Cabinet has approved the merger of Vijaya Bank and Dena Bank with Bank of Baroda. The move will help create a strong globally competitive bank with economies of scale and enable the realization of wide-ranging synergies, leveraging of networks and low-cost deposits and substantial rise in customer base and operational efficiency. The scheme will come into effect from 1st of April,2019. The pay and allowances and services of the employees of all three banks will remain same as earlier.


  • The Union Cabinet chaired by Prime Minister Shri Narendra Modi has approved Amendment to the Trade Unions Act, 1926 to make provisions regarding Recognition of Trade Unions.

    The approval will facilitate:
    • Recognition of Trade Unions at Central and State level;
    • Ensure true representation of workers in the tripartite bodies;
    • Check on the arbitrary nomination of workers’ representatives by the Government; and
    • Reduce litigations and industrial unrest.
    The proposed Bill will ensure that the nomination of workers’ representatives in tripartite bodies by the government will become more transparent. Trade Unions so recognized would be accountable in maintaining industrial harmony. Recognition of Trade Unions at Central/State level would reduce duplicacy of such exercise by different departments. Recognized Trade Unions may be assigned specific roles at Central or State level.



Share:

0 comments:

Post a Comment

Upsc - Civils Preparation

Exam Strategy
Tips and Tricks
Preparation and Guidance
Optional Subjects - Preparation
Optional Subjects - Guidance
Many more >>

Bank Exams Preparation

Bank, Currency, Money, RBI,
Budget, Planning, Stock Exchange
Insurance, Taxation, International Organizations
Economic Issues, Fiscal Policy, Committee or Commissions
Many more >>

Computer Knowledge

History, Generations, Terminology
Hardware, Software, Internet
Networks, Shortcut Keys
Many more >>

Interview Preparation

General Do's and Don'ts in Interview
Entry and Dressing up
How to prepare?, Qualities judged
Many more >>