(General Awareness For Bank's Exams) Economy April -2014

(General Awareness For Bank's Exams) Economy

April -2014

Communicated monetary policies

Calibrated and clearly communicated monetary policies will build trust and improve business sentiments across the world by leaving little room for speculations , according to the Economic Affairs Secretary ArvindMayaram.
Recent risks of very low inflation in euro areas might demand use of appropriate tools in the coming time to thwart deflation tendencies.
MrMayaram represented India during the ongoing spring meet of the International Monetary Fund and the World Bank.
In terms of exchange rate policy, while flexible exchange rates are desirable, a cautious approach should be followed before going for currency revaluations which can result in trust deficit and currency wars.

Electronic Travel Authorisation

The move to grant in principle approval for Electronic Travel Authorisation (ETA) to travellers from 180 countries to India will boost tourism in the country,according to the tourism Secretary ParvezDewan.
Travelling to India will be made easy once the ETA to visit the country becomes operational.
ETA will allow foreign travellers to apply for a visa from home and receive an online confirmation in five working days, is expected to become operational by October. Barring eight prior reference countries, which include Pakistan, Afghanistan, Iran, Iraq, Somalia, Sudan, Nigeria and Sri Lanka, government has decided to give e-visa to all the 180 countries.
India had considerably relaxed its visa regime and expanded the Visa-on-Arrival (VoA) scheme.
India launched the VoA scheme in January 2010 for citizens of five countries – Finland, Japan, Luxembourg, New Zealand and Singapore — visiting India for tourism purposes. The scheme was later extended to six more countries in January 2011.

Walmart’s online marketplace model

In a first for the domestic retail industry, the world’s largest retailer, Wal-Mart, plans to set up an online marketplace model in its cash-and-carry stores in the country.
The company is entering the wholesale e-commerce space and will extend the business-to-business (B2B) e-commerce platform to its Best Price Modern Wholesale store members.
The platform will provide them with a convenient online shopping opportunity. As an exclusive virtual store for its members, the e-commerce platform will provide a similar assortment of products, as well as special items.
Online retail, at present, accounts for less than 1% of the total market in India, but this space is slated to grow at 50-55% over the next three years to reach R50,400 crore by 2016, according to a report by Crisil.

Greek bond issued

Greece’s Finance Ministry says its first return to the markets in four years has seen strong demand, with the country raising 3 billion euros through five-year bonds at a coupon rate of 4.75 per cent.
Nearly 90 per cent of the sale was to international investors.
The bond sale is Greece’s first since 2010, when it became locked out of the international debt market by high interest rates due to a severe financial crisis. It has been relying on international bailout funds ever since.

Muscle added to IAF Sukhoi

MRF is set to emerge as a major supplier of tyres for the Indian Air Force (IAF) as the country’s leading tyre maker has now created yet another record of supplying aircraft tyres for the defence.
After successfully producing and supplying tyres for Indian defence helicopters, the company has now started supplying indigenously developed tyres for Sukhoi 30 MKI, the most advanced fighter aircraft group in the IAF fleet.
Though MRF has been supplying tyres to various vehicles of Defence Forces, its journey to supply aviation tyres began in 2001. After meeting all requirements and securing approvals from various authorities, it started supplying helicopter tyres for Chetak fleet in 2008. In the same year, it took up the project of developing main wheel tyres for Sukhoi 30 MKI.
After completion of the tests, the product has been cleared by CEMILAC (The certifying authority for Military aviation) for commercial production in 2012. These tyres are being produced at its facility at Medak (Andhra Pradesh).

Global trade to increase

Global trade is expected to increase by 4.7 per cent in 2014, better than the average of 2.2 per cent in the past two years, on the back of projected improvements in the developed economies, according to the World Trade Organisation (WTO).
The world trade growth is projected to accelerate to 5.3 per cent in 2015.
Although the 2014 forecast of 4.7 per cent is more than double the 2.1 per cent increase of last year, it remains below the 20-year average of 5.3 per cent. For the past two years, growth has averaged only 2.2 per cent.
The sluggish pace of trade growth in 2013 was due to a combination of flat import demand in developed economies (0.2 per cent) and moderate import growth in developing economies (4.4 per cent).
On the export side, both developed and developing economies only managed to record small, positive increases (1.5 per cent for developed economies and 3.3 per cent for developing economies).
In 2013, the dollar value of world merchandise exports rose 2.1 per cent to $18.8 trillion, while the value of world commercial services exports rose 5.5 per cent to $4.6 trillion.
The trade forecast for 2014 is premised on an assumption of 3 percent growth in world GDP growth at market exchange rates, while the forecast for 2015 assumes output growth of 3.1 percent.

March Inflation at 5.7 per cent

Snapping the declining trend, the inflation rose to a three month high of 5.7 per cent in March mainly due to spurt in prices of food items like potato, onion and fruits.
The inflation in the food items, based on the wholesale price index (WPI), shot up by 9.9 per cent in March as against 8.12 per cent in the previous month.
The overall WPI inflation, which was on decline since December, had dropped to a nine-month low of 4.68 per cent in February.
The government further said the build up of inflation rate in the 2013—14 financial year was 5.70 compared to a build up rate of 5.65 per cent in the earlier fiscal.
The data further revealed that prices of sugar, pulses, cereals, cement and minerals eased in March compared to the previous month.
Inflation in the fuel and power category (LPG, petrol and diesel) rose to 11.22 per cent versus 8.75 per cent in February.

Pact between Green Trend and BMB

Trends in Vogue, Cavinkare’s arm that manages unisex hair salon network Green Trends, and BharatiyaMahila Bank (BMB) have entered into a pact that seeks to make the entrepreneurial plunge easier for women.
Budding women entrepreneurs who take up a franchisee of Green Trends (GT) can get two-thirds of their total investment (Rs.40-50 lakh) financed by BMB without any collateral.
Collateral security is the key in getting loans from banks for entrepreneurs. This agreement will help all prospective franchisees, especially women, across the country to get collateral-free loans.
The company helps franchisees choose right location, get good realty deal and select right vendors for supplying equipment and systems. It has lined up a string of vendors who could do the works in salons at a competitive rate than others.

El- Nino and it’s impact on Indian economy

Recently, private forecaster Skymet predicted a sub-normal monsoon in India, courtesy El Nino that’s threatening a widespread devastation globally. Given the fears of an imminent drought, the next government has a tall task ahead of it
The Skymet CEO feels an equitable distribution of rains can be a silver lining in this situation. According to him, there is a 40% chance that rainfall in June-September would be less than average, a 25% chance of a drought and zero percent chance of excess rains.
The impact of El Nino need not be source of concern for staples. Its impact on food prices is expected to be minimal as India has sufficient stock of cereals. Most fruits track 30% import duty, if that is brought down, it can be controlled too.
Staple inflation is never a problem, but soaring prices of fruits, vegetables, pulses, fruits etc are.
By June-July the monsoon effects will begin to feed into the households and market.
Statistically India has faced drought every 4.4 years. All El Nino years were not necessarily drought years, though the opposite is true. Since last drought in India was in 2009, this year can be a drought year. There is a consensus among the experts that if the next government manages to keep the lid on fiscal deficit, and if RBI governor RaghuramRajan keeps his promise on rates, India may avert El-Nino devastations.

IFFCO’s urea plant in Canada

Leading fertiliser cooperative IFFCO said that its subsidiary received permission from the provincial government of Quebec to set up a $ 1.6 billion urea plant.
The proposed facility will have a production capacity of up to 1.6 million tonnes of urea and 7,60,000tonnes of diesel diesel exhaust fluid (DEF.
The estimated project cost of $ 1.6 billion is based on the most recent feasibility study.
La Coop fr an agri-food organisation in Quebec that is one of the project shareholders, has agreed to purchase some 5,00,000tonnes of urea a year for distribution across the province, Canada and several US states.
In January 2013, IFFCO’s Canadian subsidiary acquired the land for the plant. The site is at Bncour Port and Industrial Park, which provides access via land, rail and water to markets across North America.
The deep-water port will also facilitate exports, especially to markets in Europe. Quebec province, Canada’s largest, is located in the east-central region of the country.

Universal numbers by EPFO

Retirement fund body EPFO will provide permanent or universal account numbers (UAN) on the pattern of core banking services to its over five crore active subscribers by October 15 this year.
Under core banking services, a customer can avail the bank services in any of its branch through his allotted unique account number.
The UAN will facilitate subscribers in avoiding filing of PF transfer claims on changing jobs.
UAN will be allotted to the present active members by October 15, 2014 and thereafter the coverage of other members will be taken up.
After getting UAN, a subscriber would not be issued new PF account number on joining new firm. It is expected to provide great relief to those workers in organised sector who frequently change jobs, particularly, in construction sector.
The UAN would be one account number which would be allotted to a subscriber for various schemes run by the EPFO for his entire service period with different employers.
Samsung infringed patents of Apple?
A California jury awarded Apple $119 million far less than it demanded in apatent battle with Samsung over alleged copying of smart phone features, and the jury made the victory even smaller by finding that Apple illegally used one of Samsung’s patents.
The verdict was a far cry from the $2.2 billion Apple sought and the $930 million it won in a separate 2012 trial making similar patent infringement claims against older Samsung products, most of which are no longer for sale in the United States.
The jury found that Apple had infringed one of Samsung’s patents in creating the iPhone 4 and 5. Jurors awarded Samsung $158,400, trimming that amount from the original $119.62 million verdict. Samsung had sought $6 million.
Unlike the first trial in San Jose federal court in 2012, Samsung lawyers made Google a central focus of their defence. Google makes the Android software that Samsung and other smartphone manufacturers use as their operating systems. Samsung argued that Google was Apple’s real target.
More than 70 percent of smartphones run on Android, a mobile operating system that Google Inc. has given out for free to Samsung and other phone makers
The verdict marked the latest intellectual property battle between the world’s top two smartphone makers. Apple and Samsung have sued each other in courts and trade offices around the world.
Apple and Samsung are locked in a bitter struggle for dominance of the $330 billion worldwide smartphone market. Samsung has become the leader of the sector with a 31 percent share after being an also-ran with just 5 per cent in 2007. Apple, meanwhile, has seen its market share slip to about 15 per cent from a high of 27 per cent three years ago.

Japan’s jobless rate

Japan’s unemployment rate was flat at 3.6 per cent in March.
The number of jobless declined in March for the 46th consecutive month, falling by 340,000 from a year earlier to 2.46 million people,according to the Ministry of Internal Affairs and Communications
Manufacturers added 190,000 jobs to reach 10.61 million on payrolls, and medical and welfare services saw an increase of 210,000 employees to 7.48 million, while transport and mailing industries eliminated 110,000 positions to 3.32 million.

IPR laws defended by India

Stressing that its IPR regime complies with international laws, India bluntly said it will not take part in any unilateral investigation by the US on its intellectual property rights.
A day after the US Trade Representative (USTR) released its Special 301 report, which kept India out of the Priority Foreign Country list, Commerce Secretary Rajeev Kher said all issues between the two countries, including those related to IPR, should be discussed at the Trade Policy Forum. The US-India Trade Policy Forum is the principal platform for dialogue between the countries, with focus groups on agriculture, investment, IPR, services and tariff and non-tariff barriers.
India has clearly conveyed to the US that the government of India will not subject itself to the investigations. The secretary said India has addressed all concerns of US pharma companies with regard to compulsory licenses (CL), ever-greening of patents, data exclusivity and patent linkage.
The US industry had raised the matter of India’s rejection of patents for Bristol-Myers Squibb’s Sprycel and Novartis AG’s Glivec.

Pressure on Switzerland to disclose bank info

India has strongly objected to Switzerland’s denial of information about account details of certain Indians at HSBC’s Swiss bank branches, in whose cases “incriminating evidence of tax evasion” have been found .
In a strongly-worded letter to his Swiss counterpart, Finance Minister P. Chidambaram has also warned that an effective exchange of tax-related information was “extremely important” for economic co-operation between the two countries and Switzerland must honour its “rights and duties” agreed to in their bilateral Direct Tax Avoidance Convention (DTAC).
Mr. Chidambaram also said that the interpretation made by Switzerland that it can not share information as per India’s request was not in accordance with international standards.
Under global pressure, Switzerland has agreed to ease its banking secrecy laws in recent years and it also signed a revised tax treaty with India in 2011 to facilitate greater flow of information about alleged black money.
However, it has refused to share information with India about the accounts mentioned in the so-called ‘HSBC list’ which India had received from France through a bilateral treaty.

Exim Bank’s PDC in Africa

Export-Import Bank of India (Exim Bank) plans to set up a project development company (PDC) in Africa, with the participation of State Bank of India (SBI), IL&FS and African Development Bank.
The new company will essentially look to bring infrastructure projects in Africa to a bankable stage and facilitate exports from India to Africa. This is the first time Exim Bank is looking to set up a PDC and also the first time in Africa.
Meanwhile, the bank announced a net profit of Rs. 710 crore during the financial year 2013-14. The bank restructured assets worth Rs. 1,400 crore in 2013-14 and it said that it has assets worth Rs. 400 crore in the restructuring pipeline.
189 LOCs, covering 75 countries in Africa, Asia, CIS, Europe and Latin America, with credit commitments aggregating $ 10.33 billion are currently available for utilisation, while a number of prospective LOCs are at various stages of negotiation.

Third largest economy

In a matter of six years, India emerged as the world’s third-largest economy in 2011 from being the tenth largest in 2005, moving ahead of Japan, while the US remained the largest economy closely followed by China.
According to the major findings of the ICP, six of the world’s 12 largest economies were in the middle-income Nigeria account for about half of the African economy.At 27 per cent, Ccategory (based on the World Bank’s definition).
When combined, the 12 largest economies accounted for two-thirds of the world economy and 59 per cent of the population.
The purchasing power parities (PPPs)-based world GDP amounted to USD 90,647 billion, compared with USD 70,294 billion measured by exchange rates, adding that the share of middle-income economies in global GDP is 48 per cent when using PPPs and 32 per cent when using exchange rates.
The six largest middle-income economies — China, India, Russia, Brazil, Indonesia and Mexico — account for 32.3 per cent of world GDP, whereas the six largest high-income economies — US, Japan, Germany, France, UK and Italy — account for 32.9 per cent.
China and India make up two-thirds of the Asia and the Pacific economy, excluding Japan and South Korea, which are part of the OECD comparison. Russia accounts for more than 70 per cent of the CIS, and Brazil for 56 per cent of Latin America. South Africa, Egypt, and hina has the largest share of the world’s expenditure for investment (gross fixed capital formation) followed by the US at 13 per cent.
China and India account for about 80 per cent of investment expenditure in the Asia and the Pacific region.
The five economies with the highest GDP per capita are Qatar, Macao, Luxembourg, Kuwait and Brunei.
Eleven economies have more than USD 50,000 per capita, while they collectively account for less than 0.6 per cent of the world’s population. The US has the 12th—highest GDP per capita.
The five economies with highest actual individual consumption per capita are Bermuda, US, Cayman Islands, Hong Kong and Luxembourg.

Black money case

After resisting for more than three years, the Centre has revealed names of 18 persons in the Supreme Court who allegedly stashed black money with LST bank in Liechtenstein and against whom prosecution have been launched by the Income Tax department.
The names, listed in Centre's affidavit, include Mohan Manoj Dhupelia, Ambrish Manoj Dhupelia, Bhavya Manoj Dhupelia, Manoj Dhupelia and Rupal Dhupelia from Ambrunova Trust and Marline Management.
Centre said that IT department also found evidence against against four members of Manichi Trust — Hasmuk Ishwarlal Gandhi, Chintan Hasmukh Gandhi, Madhu Hasmukh Gandhi and Late Mirav Hasmukh Gandhi. It said that prosecution has been initiated against Chandrakant Ishwarlal Gandhi, Rajest Chandrakant Gandhi, Viraj Chandrakant Gandhi and Dhanalaxmi Chandrakant Gandhi from Ruvisha Trust.
Notwithstanding the Supreme Court order in 2011 to make public the names of account holders in LGT bank received by it in 2009 from German tax authorities, Centre has not done so, drawing the ire of the apex court.

Export of Gems & jewellery

India's gems and jewellery exports dropped 11% in the last fiscal from a year before to $34.74 billion, mainly because outbound shipments of gold jewellery and medallions tumbled due to curbs on raw material supplies.
Importantly, the annual exports of gems and jewellery dropped at an even faster pace in March, by 28.1% to $4.37 billion, the data revealed. Gold jewellery and medallion exports crashed 39.5% in the last fiscal to $11,045.92 million from a year earlier.
Jewellers and industry executives said high premiums, 10% customs duty and restrictions on gold supplies have raised raw material costs for domestic jewellers, driving down exports. While a 40% plunge in gold and silver imports helped reduce the CAD last fiscal, a drop in gems and jewellery exports can be counter-productive, especially for the jewellery manufacturing sector.
To control the CAD, the government raised the import duty on the precious metal three times last year to 10% from 4% and the RBI mandated that at least one-fifth of the imported gold be kept aside for re-exports. The RBI also directed that no fresh tranche of imports by a trader would be allowed until 20% of the previous imported volume is exported after value addition, also aimed at promoting exports.

Shares fall over Ukraine crisis

Shares fell in Asia as investors remained wary of mounting violence in Ukraine, while awaiting a raft of financial indicators due later in the week.
Japan’s benchmark Nikkei 225 stock index fell 1.2 percent to 14,257.37, while Hong Kong’s Hang Seng Index was 0.4 percent lower at 22,142.16.
Shares in New Zealand, Taiwan, China, India and Singapore also fell, though South Korea’s Kospi added 0.2 percent to 1,975.68 and Australia’s S&P ASX 200 gained 0.1 percent to 5,534.30.
The U.S. was preparing to levy fresh sanctions against Russia for Moscow’s failure to uphold terms of an agreement with the U.S., the European Union and Ukraine that calls for Moscow to withdraw Russian forces from the border with Ukraine and encourage pro-Russian militia to turn over buildings they’re occupying in eastern Ukraine.
Meanwhile, pro-Russian gunmen turned to kidnapping, taking dozens hostage, including journalists, pro-Ukraine activists and European military observers.
Worried investors have been shifting from riskier assets into traditional havens like bonds, gold and mainstay equities like utilities, sapping markets of their earlier upward momentum.