(General Awareness For Bank's Exams) Economy

March -2014

Fourth highest billionaires of the world in India by 2023

• India is projected to be home to the fourth highest number of billionaires in the world by 2023, according to a report which said wealth creation will accelerate in the country over the next decade.

•  The 2014 Wealth Report, an annual global perspective on prime property and wealth by property management firm Knight Frank, projected that the number of billionaires in India will grow by an exponential 98 per cent to 119 in the year 2023 from 60 billionaires last year.

•  India will rank fourth after US, China and Russia in 2023 and will have more billionaires than the UK, Germany and France, according to the report.

•  The report said that by 2024, Mumbai is also projected to figure in the top 10 global cities.

Switzerland no more the perfect spot for tax evaders

• Switzerland may no longer be a honeymoon spot for tax evaders. A new international standard of tax data sharing is set to make things harder for tax haven networks around the world that have in the past included Switzerland and tiny island nations and enclaves. But India would have to frame new laws to make use of the new system.

• The new standard, radically different from the current system, aims to prevent wealth from flowing into financial “black holes” through a systematic global regime of information sharing.

• Banks and authorities using secrecy laws to evade governments trying to hunt down black money hoarders could lose much of their power. Past offenders, who have so far easily escaped by moving assets, will be in a fix when information about them gets leaked.

• However, there are some loopholes. Vast amounts of illicit money are concealed through anonymity of contributors in trusts and foundations.

Delhi-Mumbai Industrial Corridor

• The Maharashtra government formally signed shareholder and state support agreements for the ambitious Delhi-Mumbai Industrial Corridor (DMIC) project, in Mumbai recently.

•  The project aims at generating industrial output of Rs 20 lakh crore by 2042.

•  DMIC is slated to be developed in two phases, with the project cost for the first phase being Rs 17,319 crore. Maharashtra Industrial Development Corporation (MIDC) and DMIC Trust has formed a joint venture to execute the project, in which MIDC will hold 51% stake, while the remaining 49% will be held by DMIC.

• The DMIC projects in Maharashtra would cover nearly 29% of land area and 18% project influence area. Around 26% of the state's population would come under the corridor that covers eight districts - Thane, Raigad, Pune, Dhule, Nandurbar, Nashik, Ahmednagar and Aurangabad.

Natco and Indian patent dispute case

• Natco Pharmaceuticals, the Hyderabad-based drug manufacturer, has won a patent case against Teva Pharmaceuticals of Israel.

• The New Delhi High Court dismissed Teva’s suit seeking an injunction over the marketing of a generic version of multiple sclerosis drug, copaxone (glatiramer acetate) in the U.S. While Teva does not have a patent on the drug in India, the injunction sought to prevent Natco exporting it.

• The decision could allow Natco to launch generic version of Teva’sCopaxone in the U.S., subject to approval from the U.S. Food & Drug Administration (USFDA).

•  The patent on the $4 billion sales drug, expires in the U.S. on May 24, 2014.

• Teva sued Natco, seeking an injunction as it alleged Natco’s move infringed on its process patent.

Petronas' Pacific NorthWest project

• Petronas' plan to build a liquefied natural gas (LNG) terminal on Canada's Pacific coast edged closer to reality, as the Malaysian energy giant secured a third equity and offtake partner for the massive gas export project.

•  India's largest oil refiner also agreed to an offtake deal for 1.2 million tonnes of LNG each year, or about 10 per cent of the project's annual exports.

• Petronas' Pacific NorthWest project is just one of about a dozen LNG terminals proposed for British Columbia's rugged Pacific coast, as top global energy firms scramble to build the facilities to export cheap Canadian gas to hungry Asian markets.

•  Indian companies, like their Asian peers, have been scouting for oil and gas assets abroad to meet rising domestic demand.

Hurun's 2014 global rich list

•  India is home to the fifth largest group of billionaires in the world and MukeshAmbani, chairman of Reliance Industries (RIL), is the country's richest man with a personal fortune of $18 billion.

•  According China-based research firm Hurun's 2014 global rich list,MukeshAmbani was ranked 41st in the list that was topped by Bill Gates, whose personal networth stood at a whopping $68 billion.

•  Other noted Indians in the list include Lakshmi N Mittal ranked 49th with a personal net worth of $17 billion.

•  DilipSanghvi of Sun Pharmaceutical Industries and Wipro's AzimPremji both ranked 77th with a personal wealth of $13.5 billion each. Tata Sons' PallonjiMistry ranked 93rd with a personal wealth of $12 billion.

• SP Hinduja& family was ranked 93rd on the list, with a net worth of $12 billion.

200 new low cost airports in India

• With India poised to become the fastest growing aviation market in the world in the next two decades, the government plans to build nearly 200 low cost airports.

•  The government is keen to expand the sector to the smaller cities in a bid to improve air connectivity, especially to Tier-II and Tier-III cities. At least four to five smaller airports from Andhra Pradesh, including those at Kadapa and Rajahmundry, were likely to figure in the list.

•  At present, the non-metro airports accounted for about 30 per cent of the total air traffic, which was expected to rise to 45 per cent in the next few years.

•  The Airports Authority of India was planning to invest Rs.1,500crore in developing non-metro airports in the 12th Plan.

•  Basically, the operation costs were very high and almost 70 per cent costs were “dollar-denominated.” Also, the cost of aviation turbine fuel (ATF) was quite high in the country with some States levying up to 30 per cent VAT.

U.S. curbs on importing gas

•  Keen to import gas from the U.S. to meet its rising energy needs, India will ask Washington to ease restrictions on sales to countries with which it does not have a free trade agreement (FTA).

•  Washington has till now allowed conditional export of liquefied natural gas (LNG) from five of its projects to nations with which the U.S. does not have a free trade agreement, so-called ‘non-FTA’ countries. India does not have a FTA with the U.S. till now. The issue of LNG exports to non-FTA nations would figure at the Indo-U.S. Energy Dialogue .

•  U.S. Energy Secretary Ernest Moniz and Planning Commission Deputy Chairman Montek Singh Ahluwalia will lead the two sides at the talks, which were previously postponed due to row over treatment of Indian diplomat in US.

•  Indian companies led by state-owned GAIL have already signed agreements with U.S. firms to buy as much as 3.5 million tonnes a year of LNG.

•  Indo-U.S. collaboration in increasing efficiency of solar photovoltic cells by using local content and second generation bio-fuel production using non-edible oilseeds produced locally would also be discussed during the talks, they said.

Fortune India's 40 under 40 list

•  Seven women have made it to the Fortune India's first '40 Under 40' compilation that lists individuals who have managed to grow an idea into a profitable business.

•  The list comprises of entrepreneurs and professionals aged 40 years and less as of December 31, 2013. To clarify, this is a listing, not a ranking,

•  KavitaIyer Rodrigues, Director & COO of TheramytNovobiologics and who co-founded the first biotech startup in venture capital firm Accel Partners' stable in 2007 got featured in the list. So was RichaKar Founder & CEO, Zivame.com.

•  The other women entrepreneurs, managers, founders in the list include: KavitaBhupathiChadda, Group CEO Globosport; SimeranBhasin India Marketing head Fastrack& New Brands, Titan Industries; Gauri Singh, Founder and Director, The Maids' Company; AvaniSaglaniDevda, CEO Tata Starbucks and NehaKirpal, Founder & Director India Art Fair.

•  The criteria for selection include growth in business (market share or revenue) and where growth rates were similar, emphasis was on profitability; those who executed a business model or innovation to grow in a tough market, who have reduced the per unit cost of delivering a product or service, scaled up an idea.

•  The individuals in the list belong from diverse sectors, although there are more tech startups than others.

Downgrade of India’s aviation safety ratings

•  Downgrading of India’s aviation safety ratings by the Federal Aviation Administration (FAA) may impact domestic aircraft chartering business in the long run.

•  India does not have adequate number of personnel to carry out regular inspections, aviation companies may tend to become complacent.

•  Recently FAA said that it has downgraded India’s aviation safety rating from the top to the second category.

•  The downgrade from Category I to II means that Indian aviation regulator does not meet the safety standards set by the UN agency, International Civil Aviation Organisation.

•  Bali said if any country has weak safety oversight, then people will hesitate to charter planes from that country as it may tend to sudden checks when the aircraft flies to some other country, forcing unexpected delays.

•  This dismal performance is due to poor induction of aircraft to the existing fleet and large number of de-induction.

Business world’s most powerful Indians

•  In our 2013 power list, ArvindKejriwal, messianic leader of the AamAadmi Party, ranked 79, below Aamir Khan and JayanthiNatarajan. But in the latest list, he ranks fourth.

•  In 14 months, he launched a new party, won a state election, became chief minister for 49 days, and now aims higher, the LokSabha polls with him being projected as a future prime minister.

•  In sharp contrast, we have seen the decline of the Congress and the rise of regional satraps, a development reflected in our 2014 Power List. Three regional leaders, J Jayalalithaa (19 last year), Mamata Banerjee (25 last year) and Mayawati (22 last year), feature in the Top Ten.

• India's most powerful corporate tycoon, MukeshAmbani, has dropped from number 12 last year to 19 this year. That is possibly to do with the global economic crisis and the business environment in India, handicapped by the policy paralysis in the UPA government, as also the many scams that involved businessmen.
  EU tax evasion law blocked by Luxemburg

•  European Union finance ministers failed to agree on a sweeping new policy to fight tax evasion because of resistance from Luxembourg, a tiny country that long has prospered from a secretive banking culture.

• Luxembourg was able to shelve the legislation for the 28-nation bloc because the decision required unanimous approval.

• Luxembourg has insisted for years it would support the proposed law only if non-EU banking hubs within Europe, particularly Switzerland, also sign up.

•  But as the EU’s negotiations with Switzerland, Liechtenstein and three other nations on signing the agreement have made progress, Luxembourg has responded with new reasons for opposition, chiefly the risk that banks outside Europe would draw deposits away if the continent’s banking rules are tightened too much.

ONGC and OIL’s 10% government stake in IOC

• State-owned ONGCBSE -0.17 % and Oil India LtdBSE 0.66 % (OIL) have bought a 10 per cent stake in Indian OilBSE -1.69 % Corp (IOC) from the government for Rs 5,340 crore.

• Oil and Natural Gas BSE -0.17 % Corp (ONGC) and Oil bought 5 per cent stake each at Rs 220 per share.

•  An Empowered Group of Ministers (EGoM) headed by Finance Minister P Chidambaram had on February 28 decided to sell the stake in IOC, the nation's largest oil firm, at a discount of 10 per cent through an off-market deal.

•  The sale of the 10 per cent stake, or 24.27 crore shares, happened in an off-market transaction, with ONGC and OIL buying 5 per cent each.  .

Bitcoins outnumber real currencies

•  The world now has a larger number of virtual currencies than a total 180 recognised currencies in different parts of the globe, notwithstanding issues like bankruptcies and growing regulatory unease about bitcoin and its other digital peers.

•  Within an ear shot of the 200-member mark, a total of 193 virtual currencies are currently being traded across the internet, although none of them carry an official stamp from the government or banking regulator from any of the countries.

•  While bitcoin and other such currencies began coming into existence about four years ago, a frenzied proliferation has more than doubled their count, shows an analysis of data available with various online marketplaces for such currencies.

•  Apart from bitcoins, ripple, litecoin, auroracoin, peercoin and dogcoin have seen steady pickup in volume as well market value. The latest additions include teacoin, aliencoin, magic internet money and heisenberg.

•  However, India’s laxmicoin is yet to start as its promoters are keen on understanding the Reserve Bank of India views on this venture. The RBI has issued a public advisory, warning that such currencies are risky and not part of the traditional banking system.

No 1 employer in Europe: TCS

• India's largest software services firm Tata Consultancy Services (TCS), which has over 2.9 lakh employees globally, has been named as the top employer in Europe by the Top Employers Institute for the second consecutive year.

• Tata Consultancy Services was ranked first among the 20 companies that were eligible for the award. The company was recognised as an exceptional performer across six core Human Resources (HR) areas; primary conditions, secondary benefits, working conditions, training, career development and company culture.

• The Top Employers certification is only awarded to the best employers around the world, organisations that demonstrate the highest standards of employee offerings.

•  TCS was certified in eight separate markets in 2014, including the UK – where the company secured the certification for the fourth year in a row – and Belgium, Netherlands, Germany and Switzerland, where it was certified for the second consecutive year.

•  This year also saw TCS certified in France, Sweden and Denmark for the first time.

Exports up for gold

•  India’s export of gold jewellery rose 1.04 per cent in February, rising for the first time in fiscal 2013-14.

•  Gem & Jewellery Export Promotion Council (GJEPC) said that cumulative gold jewellery exports from April 2013 to February 2014 fell 45.6 per cent to $6.352 billion.

•  Exports of gold jewellery have taken a beating in 2013-14 with the government imposing restrictions on the import of gold in a bid to control the current account deficit (CAD) resulting in very limited gold supplies.

• The measures included higher import duty of 10 per cent on gold and an 80:20 scheme which made it mandatory for gold importers to export a fifth of the gold imported.

•  India’s total gem and jewellery exports during February 2014 fell 8.2 per cent to $3.143 billion ($3.437 billion) while for the 11-month period ending February 2014, it fell 9.9 per cent to $30.828 billion.

Revised intermediaries fee by Sebi

• The board of the Securities and Exchange Board of India (Sebi) decided to revise the fee it charges from various intermediaries in a bid to fund its programme in investor awareness, education and protection in FY15.

•  Laying down the agenda for FY15, the board of Sebi decided to stress on investor awareness and education and enhance the regulator’s reach to potential investors.

•  While Sebi will revise the fee charged for various services in a bid to fund its planned objectives, it has clarified that they will have minimal impact on the investors. The changes in fee structures will be notified by the regulator through circulars going forward.

•  It is expected that Sebi will revise the registration fee and other fee for stock exchanges, mutual funds, brokers and other intermediaries.

Largest retailer in India

•  Mukesh Ambani’s Reliance Retail is expected to emerge as the largest player in India’s organised retail sector this year, overtaking erstwhile market leader Future Retail.

•  It posted a turnover of Rs. 10,857 crore for the nine months ended December 31, 2013. Future group chairman Kishore Biyani had said in January that his group would clock revenues of about Rs. 11,000 crore for the full year. Reliance has already reached that figure in the first nine months of the year and so, is likely to be comfortably ahead by March 31, 2014.

•  Parent company Reliance Industries, which is sitting on a cash pile of Rs. 90,000 crore, has lined up massive expansion plans for the retail business. The target: a turnover of Rs. 50,000 crore from this segment by 2016-17.

•  The company expects the bulk of this growth to come from the value and digital segments, where it can leverage its deep pockets, world class backend and well-oiled logistics chain to provide competitive prices.

EC approval for new gas price regime

• The Petroleum and Natural Gas Ministry is awaiting a nod from the Election Commission to go ahead with notifying a new gas price regime that will almost double the cost of natural gas to $8 to 8.5 per mmBtu from the present $4.2 per mmBtu .

• Petroleum Secretary Saurabh Chandra met Chief Election Commissioner V. S. Sampath last week and submitted the necessary documents on the issue. He also sought formal approval from the EC for hiking gas prices from April 1 The Cabinet had, last December, given its nod for shifting to the new gas pricing regime under the Rangarajan Committee formula . The new pricing formula would be applicable for a period of five years from April 1, 2014.

• The new rates will change every quarter based on 12-month average of global rates and LNG import price with a lag of one quarter.

• The price for April to June 2014 will be calculated based on the averages for the 12 months ended 31 December 2013 and it is expected that the rate in April will be around $8 per mBtu.

Indian shares upgraded

•  Goldman Sachs upgraded Indian shares to "overweight" from "marketweight" and raised its target on Nifty to 7,600, citing reduced external vulnerabilities, including a narrowing current account deficit, and potential for gains ahead of elections that conclude in May.

•  The investment bank added it favours cyclicals over defensives because of expectations of an improving economy and a bottoming out of earnings, according to a report .It also recommended investors to focus on potential election beneficiaries in these markets.

•  It upgraded auto stocks to "overweight", while retaining the same rating on IT and energy stocks.

•  Goldman said Oil and Natural Gas Corp (ONGC.NS), Coal India (COAL.NS), NTPC (NTPC.NS) and Bharat Petroleum Corp (BPCL.NS) as public sector companies that could be key election beneficiaries.

•  Among private sector shares, ICICI Bank (ICBK.NS), Larsen and Toubro (LART.NS), UltraTech Cement (ULTC.NS), JSW Steel (JSTL.NS), Indusind Bank and Voltas (VOLT.NS) were seen by Goldman as gaining from elections.

The third richest family in Britain

• The Hinduja brothers have emerged the third richest family in Britain, as part of an analysis of the divide between the rich and poor in the United Kingdom.

• According to research published by the charity, the latest rich list from Forbes magazine showed that London-based Srichand and Gopichand Hinduja have a combined wealth of $10 billion.

• The five top U.K. entries analysed for its A Tale of Two Britains report found the family of the Duke of Westminster the richest followed by David and Simon Reuben, the Hindujas, the Cadogan family, and Sports Direct retail boss Mike Ashley who, between them, had property, savings and other assets worth £28.2 billion.

•  It implies that the country’s five richest families now own more wealth than the poorest 20 per cent of the population, with their wealth totalling £28.1 billion — an average of £2,230 each.

Eurozone annual inflation

• Year-on-year inflation in the eurozone slowed to 0.7 per cent in February, compared to 0.8 per cent the previous month, the European Union’s statistics office Eurostat.

•  The figure is a revision from the initial Eurostat estimate that inflation would remain at 0.8 per cent in February, meaning that price growth dropped further-than-expected below the European Central Bank’s target of just under 2 per cent.

•  Year-on-year price growth first slowed to 0.7 per cent — the lowest reading since the creation of the euro in 1999 — in October of last year, prompting the ECB to intervene by lowering its key interest rate to 0.25 per cent the following month.

•  Among the 18 eurozone member states, negative annual rates were observed in Bulgaria, Cyprus, Greece, Croatia, Portugal and Slovakia.

•  The highest rates, meanwhile, were recorded in Malta and Finland, where year-on-year inflation stood at 1.6 per cent respectively in February.\

RBI’s status quo on interest rate

•  For many reasons, the Reserve Bank of India’s forthcoming bi-monthly policy statement for 2014-15 will be unique. The idea to have a policy statement once in two months was mooted by the Urjit Patel Committee.

•  The RBI is signalling acceptance of some of the recommendations, which do not involve discussion with the government. However, the core recommendations of the Committee’s report involving inflation targeting and shifting the monetary policy’s anchor to CPI (retail ) inflation, instead of WPI, will be implemented only after a consensus is reached.

•  It is most likely that the RBI will spell out its approach to this important report but no major decisions can be expected. As of now, inflation targeting is not easily understood in the Indian context.

•  The RBI Governor has said that it will be flexible, which suggests that even when it is adopted formally, the central bank will have some leeway to adjust the target rate and or timeframe.

•  Two important issues confront the RBI. In the run-up to the elections — with the model code in force — how far could it go in deciding policy issues? Even on new bank licences, a subject that has taken a long time and is in the final stages, the RBI is not expected to announce the first few licensees.

•  Both WPI and CPI inflation have come down. CPI inflation is down by 300 basis points over the past three months. Without formally adopting it as the policy anchor, the RBI has shown its preference. However, no change in interest rate stance is expected.

•  A sharp fall in food prices has driven down inflation.

•  Yet with CPI inflation very close to the RBI’s March 2015 target of 8 per cent, the RBI will most probably talk of increased upside risks to justify its holding of rates in the forthcoming policy statement.

Retail sector’s long-term positive outlook

• While the organised retail sector in India is going through a difficult phase, the long-term outlook for the sector remains positive. According to a report by CARE Ratings, this is on the back of rising incomes, favourable demographics, entry of foreign players and increasing urbanisation.

•  The current scenario includes high real estate costs, faltering domestic consumption, and limited infrastructural capabilities which curtail the potential for profitable growth, the report said.

•  The sector experienced overall single-digit revenue growth in FY13, and the near-term performance is expected to be on similar lines. “The Same Store Sales (SSS) have been declining indicating a slower growth in revenue from existing stores”.

•  The operating margins of retail companies are expected to remain under pressure in the short-to-intermediate term on account of increasing rentals, higher manpower costs and slower growth in SSS.

•  On the positive long-term drivers for the industry, the report said there was likely to be a steady increase in organised retail penetration with the mall culture fast catching up in Tier-II and Tier-III cities.

•  The government announced foreign direct investment (FDI) policy on multi-brand retail in September 2012. Indian retailers had launched several in-house brands spanning a presence across categories such as food, apparels, home care and beauty & personal care and the emphasis on private labels would boost profit margins.

Tax administration reform panel

•  As part of bringing in more credibility among tax payers and to streamline income tax procedures, the Government has set up a Tax Administration Reform Commission comprising officials from public and private sector agencies, Advisor to Finance Minister.

•  DrShome, is also the chairman of Tax Administration Reform Commission (TARC).

•  The Commission members comprise former chairmen of two tax boards, former Chief Financial Officer from IT service provider Tata Consultancy Services and an Ex-Vice President for Taxation from the Murugappa Group.

India’s external debt

•  India’s total external debt stock stood at $ 426.0 billion on 31 December 2013, 5.2 per cent higher than that on 31, March, 2013. The external debt to Gross Domestic Product (GDP) ratio has marginally worsened from 23.3 percent to 21.8 per cent.

• The increase in external debt was due to long-term debt, especially Non Resident Indian (NRI) deposits.

•  Component-wise, according to the release, commercial borrowings accounted for 31.5 per cent of the total external debt, followed by NRI deposits (23.2 per cent) and multilateral debt (12.3 per cent). Government sovereign external debt stood at $76.4 billion, (17.9 per cent of total external debt) on 31 December 2013 against $81.7 billion (20.2 per cent) on 31 March 2013\

Indian products banned in European Union

•  The European Union’s Standing Committee on Plant Health decided to impose a ban on Indian mangoes and some vegetables from May due to concerns over the presence of pests and insects in consignments arriving from India.

•  The committee’s meeting at Brussels endorsed the emergency measures proposed by the Commission to ban the import of certain fruits and vegetables: [Colocasiasp (taro, eddo) Mangiferasp, (mango) Momordicasp (bitter gourd), Solanummelongena (eggplant) and Trichosanthessp (snake gourd)] from India.

•  The measures prohibit the import of some fruits and vegetables from India to tackle what is called “significant shortcomings in the phytosanitary certification system” of such products exported to the EU.

•  This decision had to be taken due to a high number of such consignments being intercepted at arrival in the EU with quarantine pests, mainly insects, like non-European fruit flies.

•  The EU said that though the prohibited commodities represent less than 5 % of the total fresh fruits and vegetables imported into the EU from India, the potential introduction of new pests could pose a threat to EU agriculture and production.

‘Hospital IT in a box’

•  Dell Services has launched its first cloud-based hospital information system (HIS) solution for the mid-market segment in the Indian healthcare sector.

•  It is the first offering for the pure-play Indian market from Dell’s Healthcare and Life Sciences division, which is the company’s fastest growing and tallest vertical in services.

•  Until now, Dell’s healthcare services here have been limited to providing IT outsourcing service delivery and offshore support, and in the case of a few major players, playing a consultant role.

•  Dell defines the mid-market segment as any hospital that has about 100 beds, and this includes medium-size hospitals that are part of hospital chains.

•  Dell’s healthcare services,are called ‘hospital IT in a box’, and it offers on a ‘pay per use’ model with nil capital investments as a big incentive for healthcare providers in the mid-market segment.

BOI ATMs

•  Bank of India has became the first state-run lender to allow withdrawal of funds to individuals from its ATMs without an account in the bank.

•  'Instant money transfer (IMT)' is a domestic remittance service that allows cardless cash withdrawal from it select ATMs which are tuned for this facility.

•  The IMT allows a customer to send money to a receiver only by using the receiver's mobile number through the bank's ATM or using retail Internet banking facility.

•  IMT transaction on monthly basis while per transaction limit is set up Rs 10,000.

•  The sender will be charged of IMT fee of Rs 25 for every IMT transaction, he or she issues to a receiver or beneficiary.

Approval to reduce subsidy on potash nutrient

• Following the go ahead by the Election Commission, the Fertilizer Ministry is gearing to move the Cabinet Committee on Economic Affairs (CCEA) seeking approval to reduce subsidy on potash nutrient for 2014-15 fiscal, a move aimed at reducing the subsidy component by Rs. 900 crore.

• The Ministry is looking forward to putting up the Cabinet note before the next meeting of the CCEA to fix subsidy of P&K (Phosphatic and Potassic) fertilisers for next fiscal.

• There has been a constant fall in the global prices of potash over the past few months resulting in availability at $320 per tonne instead of $430 per tonne a year ago.

• The subsidy on other major complex fertilizer phosphate has been kept at last year's level of Rs.12,350 per tonne as the global prices are stationary.

• Potash is normally sold in Indian markets at Rs. 16,000 per tonne, while phosphate is available at about Rs. 22,500 per tonne. In the past one year, the total demand of both potash and phosphate was more than 10 million tonnes.

Poverty and India

•  A multi-pronged approach with focus on inclusive economic growth would help eradicate poverty, which is increasingly getting concentrated in a few geographical areas, says a research report.

•  The observations are part of the India Public Policy Report (IPPR) 2014 jointly published by O P Jindal Global University and Oxford University Press.

•  Poverty in India is getting increasingly concentrated in a few geographical areas, among specific social groups and is increasing in urban areas.

•  Also, access to a diverse food basket alone may not help in effectively overcoming malnutrition.

•  The report’s Policy Effectiveness Index (PEI) showed that at all India level there is a gradual, but only a marginal, improvement in the policy effectiveness index over the three decades - period from 1981 to 2011.

•  The index is based on four factors - livelihood opportunity, social opportunity, rule of law and physical infrastructure development.

Anti-dumping duty on raw silk imports

•  To boost domestic silk production, Assocham has urged the government to extend anti-dumping duty on raw silk imports from China, which have grown by 7 per cent during the last 12 years, till December 2015.

•  The Government had imposed antidumping duty on imports of Mulberry Raw Silk of 2A grade and below from China in January 2003, which remained in force until January 2008 and was subsequently extended till January 2014 after a sunset review.

•  Silk import restrictions have two facets; one is concern of sericulture farmers opposing cheap Chinese raw silk imports threatening their livelihood, while the other issue is of the weaving community which requires raw silk to meet the rising demand.

•  India’s silk industry provides jobs to over 7.6 million people across 51,000 villages operating over 3.28 lakh handlooms and over 45,800 powerlooms with over 8.14 lakh weavers, an Assocham study found.

•  China is biggest exporter of raw silk to India accounting for almost 99 per cent of exported raw silk worth $ 224.5 million as of 2012-13. Raw silk imports from China grew at a compounded annual growth rate of 7 over per cent during 2000-01 and 2012-13.

Long-term liquidity in Indian Economy

• Reserve Bank of India (RBI), has kept the indicative policy rate (repo) unchanged at 8 per cent while taking measures to provide longer term liquidity in the system.

•  Repo rate is the rate at which banks borrow funds from the central bank.

•  In pursuance of the Urjit R. Patel Committee’s recommendation to de-emphasise overnight “guaranteed-access” windows for liquidity management and progressively conduct liquidity management through term repos, the RBI has decided to further reduce access to overnight repos , while compensating fully with a commensurate expansion of the market’s access to term repos from the Reserve Bank.

• The RBI Governor said that real GDP (gross domestic product) growth was projected to pick up from a little below 5 per cent in 2013-14 to a range of 5-6 per cent in 2014-15, albeit with downside risks to the central estimate of 5.5 per cent.

RBI’s first bimonthly monetary policy statement

•  Reserve Bank of India (RBI) Governor RaghuramRajan has kept the key policy rate (repo) unchanged since retail inflation still remains “sticky” but introduced steps to increase liquidity and contain volatility in the money market.

•  The RBI, in its first bimonthly monetary policy statement, left the short-term lending rate or repo rate unchanged at 8 per cent and the cash reserve ratio static at 4 per cent. It halved the overnight call money rate to 0.25 per cent and increased the 7-day and 14-day repo limits to 0.75 per cent from 0.50 per cent.

•  On liquidity moves, Mr. Rajan said the primary objective is to improve transmission of policy impulses across the interest spectrum and improve liquidity in the system.

•  The RBI pegged 2014-15 GDP growth at a central estimate of 5.5 per cent. It said the FY'14 current account deficit would be about 2 per cent of GDP.

OPEC members ship more oil than allowed from Iran

•  Iran`s top four crude oil buyers lifted their purchases 17.2 percent in February from a year ago, as the OPEC member continues to ship more oil than allowed under a deal that eases some of the sanctions aimed at its disputed nuclear programme.

•  Under the interim agreement reached in November between Iran and six major powers and that took effect in January, the Islamic nation is supposed to hold its exports at an average of 1 million barrels per day (bpd) for the six months to July 20.

•  But imports by its four biggest buyers, China, India, Japan and South Korea, as well as Turkey, have totalled more than that since at least November, and tanker tracking data indicates only a slight slowdown in

Tehran`s exports in March.

•  Iran`s higher exports could help cap benchmark oil prices that have risen due to supply concerns in countries like Libya, and with the escalating tensions between Russia and the West over the annexation of Crimea by the world`s top oil producer.

•  The increased buying of Iranian crude has come as the modest easing of sanctions has improved sentiment and reduced political risk for the OPEC member`s clients.

•  The United States reminded India earlier this month to keep its Iran imports at end-2013 levels, according to government sources there, which would require Indian refiners to cut buying from Tehran by two-thirds from the first-quarter to drop its intake average back to 195,000 bpd by July 20.

•  Iran`s biggest oil customer, China, lifted imports by 6 percent from a year ago to 552,613 bpd in February, while South Korea`s crude imports more than doubled to 290,714 bpd.

•  Iran Imports into India declined 8.7 percent to about 266,000 bpd.

RBI’s status quo on interest rate

•  For many reasons, the Reserve Bank of India’s forthcoming bi-monthly policy statement for 2014-15 will be unique. The idea to have a policy statement once in two months was mooted by the Urjit Patel Committee.

•  The RBI is signalling acceptance of some of the recommendations, which do not involve discussion with the government. However, the core recommendations of the Committee’s report involving inflation targeting and shifting the monetary policy’s anchor to CPI (retail ) inflation, instead of WPI, will be implemented only after a consensus is reached.

•  It is most likely that the RBI will spell out its approach to this important report but no major decisions can be expected. As of now, inflation targeting is not easily understood in the Indian context.

•  The RBI Governor has said that it will be flexible, which suggests that even when it is adopted formally, the central bank will have some leeway to adjust the target rate and or timeframe.

•  Two important issues confront the RBI. In the run-up to the elections — with the model code in force — how far could it go in deciding policy issues? Even on new bank licences, a subject that has taken a long time and is in the final stages, the RBI is not expected to announce the first few licensees.

•  Both WPI and CPI inflation have come down. CPI inflation is down by 300 basis points over the past three months. Without formally adopting it as the policy anchor, the RBI has shown its preference. However, no change in interest rate stance is expected.

•  A sharp fall in food prices has driven down inflation.

•  Yet with CPI inflation very close to the RBI’s March 2015 target of 8 per cent, the RBI will most probably talk of increased upside risks to justify its holding of rates in the forthcoming policy statement.

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