Special Current Affair for IBPS
Topic: Economy & Energy
National Textile Corporation Inaugurated
The Union Minister of Textiles, K Sambasiva Rao on 22 July
2013 inaugurated the New Bhopal Textile Mills of National Textile Corporation (NTC)
in Bhopal. The mill was taken for the purpose of revival as well as
modernisation along with the BurhanpurTapti Mills in Burhanpur.
It is important to note that textiles sector is the second
biggest employment generator in India after agriculture. According to the
approved scheme of Board for Industrial and Financial Reconstruction (BIFR), in
the first phase, National Textile Corporation Limited replaced 16848 spindles
and commissioned 25200 new spindles in the year 2008 at the cost of 26.42 Crores
Rupees. This led to an increase in the monthly production from 1800 kilograms
per day to 5000 kilograms per day. This meant that despite providing Modified
Voluntary Retirement Scheme (MVRS) to surplus workers, around 380 workers
started getting wages every day. The National Textile Corporation Limited (New
Delhi) also approved the second phase of modernisation for the New Bhopal
In its second phase, the Head Office approved sanction of 81
crore Rupees, which will help in modernisation of the machines. This would
eventually help in increasing the production from 5000 kilograms per day to
14000 kilograms per day. This implies that from present sustenance of 380
workers, the mill will be able to sustain the 650 workers every day. The mill
has also obtained ISO Certification.
Under Nationalisation Act 1974, National Textile Corporation
Limited (Madhya Pradesh) took over seven mills which were making losses. The
Bhopal Textile Mills was one of these. Because of high labour cost as well as
old machinery, all these mills were running into losses continuously. The seven
mills were registered under BIFR. Under approved scheme of BIFR, five of these
seven mills were closed as unviable units and the remaining two mills i.e. New
Bhopal Textile Mills in Bhopal and BurhanpurTapti Mills in Burhanpur were
scheduled for modernisation as well as revival.
Disinvestment of State Trading Corporation and ITDC
The Cabinet Committee on Economic Affairs (CCEA) on 11 July
2013 approved the disinvestment of government stake in State Trading Corporation
(STC) and ITDC. The disinvestment is supposed to bring around 30 crore Rupees to
the exchequer. The disinvestment is required through Cabinet nod to divest 5 per
cent stake in India Tourism Development Corporation (ITDC) and 1.02 per cent in
STC through the Offer for Sale (OFS) route.
The government is expecting the sale of 5 per cent stake or
42.88 crore shares in ITDC to fetch 23.58 crore Rupees. The Government is also
planning to acquire about 10 crore rupees through disinvestment of 1.02 per
cent, or 6.13 crore shares, in STC. It is important here to note that the
government currently holds 92.11 per cent stake in ITDC and 91.02 per cent stake
in STC. The stake is meant to help both the companies meet the minimum 10 per
cent public holding norm of market regulator SEBI.
It is mandated for the government to bring down its stake in
STC and ITDC to 90 per cent by 8 August2013. Shares of STC were trading 5.75 per
cent lower at Rs 99.20 on the BSE in afternoon trade.
SEBI gets more Powers
The Union government on 17 July 2013 approved a proposal to amend SEBI Act for
providing more powers to the market regulator to crack down on Ponzi schemes. As
per the approval, SEBI will be given powers to conduct search and seizure
operations and access call data records. Amendments to the Sebi Act and other
relevant regulations were finalised after detailed consultations with the
Securities and Exchange Board of India (SEBI).
Power to be given to SEBI with the approval
• SEBI regulator will get direct powers to carry out
search and seizure operations and for attachment of assets, as part of
efforts to crackdown on ponzi schemes.
• The SEBI would have powers to seek information, such as
telephone call data records, from any persons or entities in respect to any
securities transaction being probed by it.
SEBI since many years has been seeking a revamp of
regulations as well as consent for a long time, given the changing nature of the
securities market in general, and newer tools being used by manipulators to take
gullible investors for a ride, in particular.
Review of Monetary Policy for 2013-14 released
RBI released the First Quarter Review of Monetary Policy for
2013-14 on 30 July 2013. The highlights are as following:
The repo rate was kept unchanged at 7.25 percent.
Reverse repo remains at 6.25 percent.
Cash reserve ratio unchanged at 4.00 percent
Keeps Marginal Standing Facility rate at 10.25 percent.
Bank rate stands at 10.25 percent.
Considerations behind the Policy Move
The policy stance in this review was informed by two
First, the need for continuous vigil and preparedness to
pro-actively respond to risks to the economy from external developments,
especially those stemming from global financial markets.
Second, managing the trade-off posed by increased
downside risks to growth and continuing risks to inflation and inflation
Monetary Policy Stance
Accordingly, the four broad contours of RBI’s monetary policy
stance are as following:
First, to address the risks to macroeconomic stability
from external shocks;
Second, to continue to address the heightened risks to
Third, to guard against re-emergence of inflation
Fourth, to manage liquidity conditions to ensure adequate
credit flow to the productive sectors of the economy.
Securities Laws (Amendment) Ordinance 2013 promulgated
Pranab Mukherjee, the President of India on 18 July 2013
promulgated the Securities Law Amendment Ordinance 2013. The ordinance would
grant Securities and Exchange Board of India (SEBI), the powers to regulate any
pooling of funds under an investment contract involving a corpus of 100 crore
rupees or more and attach assets in case of non-compliance. The ordinance was
promulgated by the President following the powers granted to him by Clause 1 of
Article 123 of Constitution. The Chairman of SEBI would have powers to authorize
the carrying out of search and seizure operations, as part of its efforts to
crack down on ponzi schemes. With President’s approval of the Ordinance, SEBI
has received the power to seek information, such as telephone call data records,
from any persons or entities in respect to any securities transaction being
investigated by it. Establishment of Special Courts enabled by this Ordinance
would fast-track the resolution of pending SEBI related cases.
Article 123 of Constitution of India: Power of President to
promulgate Ordinances during recess of Parliament.-
(1) If at any time, except when both Houses of Parliament are
in session, the President is satisfied that circumstances exist which render it
necessary for him to take immediate action, he may promulgate such Ordinances as
the circumstances appear to him to require.
(2) An Ordinance promulgated under this article shall have
the same force and effect as an Act of Parliament, but every such Ordinance-
(a) shall be laid before both Houses of Parliament and shall
cease to operate at the expiration of six weeks from the reassembly of
Parliament, or, if before the expiration of that period resolutions disapproving
it are passed by both Houses, upon the passing of the second of those
(b) may be withdrawn at any time by the President.
Explanation.- Where the Houses of Parliament are summoned to reassemble on
different dates, the period of six weeks shall be reckoned from the later of
those dates for the purposes of this clause.
(3) If and so far as an Ordinance under this article makes
any provision, which Parliament would not under this Constitution be competent
to enact, it shall be void.
Production of Cotton to be Lower
Cotton Association of India (CAI) on 8 July 2013 released its
June forecast on cotton production for the season ending September 2013. The
released data estimated lower production at 355.25 lakh bales in the 2012-13,
which would be lower than the 373.25 lakh bales, was produced in 2011-12. The
estimated cotton supply during the season is estimated at 423.46 lakh bales that
include opening stock balance of around 53 lakh bales. Following the details of
the report released, domestic consumption is estimated at 283 lakh bales with
exports at 95 lakh bales and it will leave the closing stock at 45.46 lakh
Data of Cotton Produced in 2012-13 Crop Season
Gujarat – 85.75 lakh bales (It was the largest producer
Andhra Pradesh – The state produced 75 lakh bales
Maharashtra – 72 lakh bales
Haryana – 24 lakh bales
Punjab – 15.5 lakh bales
Karnataka – 13 lakh bales
Madhya Pradesh – 18 lakh bales
Government raised FDI in Telecom Sector
The Union Government of India on 16 July 2013 raised the FDI
limit in Telecom Sector from 74 percent to 100 percent. Government also cleared
that the FDI in the Insurance and Telecom sectors will be up to 49 per cent
through automatic route. The Union Government also mentioned that FDI the single
brand retail would be up to 49 percent through automatic route and remaining
investments would be directed through Foreign Investment Promotion Board (FIPB)
route. FDI in asset reconstruction companies will be up to 49 per cent through
FDI in Credit Information Companies has been raised to 74 per
cent from 49 per cent. The Government also confirmed that the FDI in Defence
Production will continue to be 26 percent. However, it will be directed through
FIPB route for state of art technologies, and investment beyond that will go to
Cabinet Committee on Security. The decision was taken in a meet chaired by Prime
Minister and attended by the Cabinet Ministers.
The decisions were made to boost the Foreign Direct
Investment in the country.
India-Israel trade raised to 6 billion Dollars
As per the report from the Israeli Embassy in July 2013, the
trade between India and Israel touched the 6-billion dollars mark during
2012-13. The trade between India and Israel went up from 5.15 billion in
2011-12. In a meeting of Andhra Pradesh Chambers of Commerce and Industry (Fapcci)
and Indo-Israel Chambers of Commerce and Industry, the diplomat of Economic and
Commercial Affairs to Embassy of Israel Jonathan Ben Zaken asserted the growth
of trade volume from a modest 200 million dollars in 1992. The bilateral
relations between India and Israel had strengthened significantly in recent
years with both nations experiencing a convergence of interests in agriculture,
farm research, science, public health, IT, telecommunications and cooperation in
space. The Israeli agency is looking up for taking advantage of synergies with
India in areas like water technologies, information technology and sectors that
Israel is strong in. It is worth mentioning here that about 265 information
technology companies are already doing significant business in Israel.
India achieved a Record Production of Pulses
India achieved a record production of 18.45 million tonnes of
pulses in the 2012-13 crop year ended June 2013. This augurs well for the
country which is dependent on imports to meet the shortfall of around 3 to 4
million tonnes. Higher support price prompted farmers to grow pulses. According
to the 4th advance estimates released today, overall foodgrain production is
projected at 255.36 million tonnes, which is lower than the record 259.29
million tonnes achieved in the previous crop year. In foodgrains category, rice
production has been revised upward to 104.4 million tonnes from 104.22 million
tonnes and coarse cereals to 40.06 million tonnes from 39.52 million tonnes in
the third estimates. However, wheat output has been revised downward to 92.46
million tonnes from 93.62 million tonnes.
FIPB approved 7 Pharma FDI proposals
The Foreign Investment Promotion Board (FIPB) on 5 July 2013
approved seven Foreign Direct Investments (FDI) proposals for investment in
Indian pharmaceutical companies. The approval has ended the policy of
uncertainty over Investments in the sector. The board also has deferred three
other Pharma proposals as there were ownership issues and it will be taken up
after the Department of Industrial Policy and Promotion (DIPP) clarifies the
policy. The Department of Industrial Policy and Promotion (DIPP), the nodal body
for framing FDI policy, will review the policy to make certain there are enough
safeguards to ensure domestic healthcare concerns. The proposals which were
discussed in the meeting include that of Singapore’s GlaxoSmithKline Pte Ltd,
US’ Mylan Inc, Mauritius-based Castleton Investment Ltd, Mumbai-based Ferring
Therapeutics and Hyderabadbased Verdant Life Sciences. At present, 100% FDI in
pharma sector is allowed through automatic approval route in the new projects
but the foreign investment in the existing pharma companies requires FIPB
What is Automatic Approval Route?
Most sectors are now open to 100% FDI, meaning thereby, that
the foreign companies do not need a prior approval for investment either by the
Government or the Reserve Bank of India. The investors are only required to
intimate the Regional office concerned of the Reserve Bank within 30 days of
receipt of inward remittance. The automatic route allows Indian companies
engaged in various industries to issue shares to foreign investors up to 100% of
their paid up capital in Indian companies. The investors are also required to
file necessary documents within 30 days of issue of shares.
About Foreign Investment Promotion Board
The Foreign Investment Promotion Board (FIPB) is a government
body that offers a single window clearance for proposals on Foreign Direct
Investment (FDI) in India that is not allowed access through the automatic
route. FIPB comprises of Secretaries drawn from different ministries with
Secretary, Department of Economic Affairs, MoF in the chair. It is an
inter-ministerial body which basically examines and discusses proposals for
foreign investments in the country for sectors with caps, sources and
instruments that require approval under the extant FDI Policy (prescribed vide
Circular 1 of 2012) on a regular basis. The Minister of Finance, considers the
recommendations of the FIPB on proposals for foreign investment up to 1200 crore.
Proposals involving foreign investment of more than 1200 crore require the
approval of the Cabinet Committee on Economic Affairs (CCEA).
RBI reduced Realisation Period for Exporters to Nine Months
The Reserve bank of India on 21 July 2013 brought down the
period of realisation and repatriation for exporters of goods and software to
nine months from earlier 12 months. The move to reduce the period of realization
was directed towards increasing foreign exchange inflows. Earlier in November
2012 considering the global slowdown; RBI had increased the time limit so that
they can bring in export earnings to 12 months, from six months at that time.
But as per the industry experts, RBI brought down the realization period because
of the deteriorating current account deficit of the country and the weakening of
the rupee against the dollar. The Reduction of realisation period was taken
after consulting with the Government of India to bring down the realisation
period from 12 months to nine months from the date of export valid till 30
September 2013.India’s exports contracted by 4.6 per cent, for the second
consecutive month, to 23.79 billion dollars in June 2013 compared to that in the
India signed agreement with ADB for loan for NKUSIP
The Government of Karnataka is dedicated to provide
counterpart funds of 41.6 million dollars for a total project investment cost of
101.6 million dollars under this tranche. The Government of India signed an
agreement with Asian Development Bank (ADB) on 19 July 2013 for a 60 million
dollars loan as to improve urban services and to strengthen municipal and
project management capacity in several towns in north Karnataka. Basically the
agreement is for the third project under the overall facility of 270 million
dollars for the North Karnataka Urban Sector Investment Program (NKUSIP).
Provisions under North Karnataka Urban Sector Investment
The third part of the loan under the North Karnataka Urban
Sector Investment Program will develop sewerage networks in six towns, and help
the rehabilitation and expansion of potable water systems in two more towns.
More than 100000 households will benefit from the
The project will support the State in its endeavor to
improve quality of life in towns (Bidar, Davanagere, Dharwad, Gadag-Betegeri,
Gulbarga, Jamkhandi, Sindhanur and Yadgir) in North Karnataka and promote
The project will improve access to better urban services
in the eight targeted urban local bodies, he added.
The project is going to assist implementing the State’s
reform agenda through the execution of property and utility mapping
subprojects using geographic information systems and the establishment of
the Heritage Planning Cell. He said that it will also provide assistance to
enhance billing and collection efficiencies in program towns.
The loan taken from ADB’s Ordinary Capital Resources has a
25-year term including a grace period of five years, commitment charges of 0.15
percent and an interest rate to be determined in accordance with ADB’s
LIBOR-based lending facility. The Government of Karnataka is dedicated to
provide counterpart funds of 41.6 million dollars for a total project investment
cost of 101.6 million dollars under this tranche.
Online Transfer Claim Form for EPFO Revised
The Union Government of India on 4 July 2013 at New Delhi
released Revised Transfer Claim (RTC) form for EPFO beneficiaries. This is the
first step towards the launch of the online Transfer Claim Facilities in New
Delhi. The revised transfer claim was released by the Union Labour & Employment
Minister, Sis Ram Ola.
Features of the Revised form:
The form will be called Transfer Claim Form instead of
Form 13 for easy comprehension by the beneficiaries.
The form can be presented after verification, either
through the present employer or previous employer. Earlier the form could be
submitted after verification only through the present employer.
This form can be submitted online as well as in physical
form. The facility of online submission of this form will be given shortly
after process of collecting the digital signature of the employer is
The facility to file physical form shall continue to
cater to the needs of working class who do not have internet access.
Employee will be allowed to submit their applications
online, if their employer is having registered digital signature.
Online submission of form will introduce paperless
process for claim settlement.
Every beneficiary will be informed through SMS and e-mail
about the stage of process of the claim to make the entire process
transparent and accountable.
After introduction of online claim settlement, endeavour
will be made to substantially reduce the assured time of settlement of
transfer claim which presently is 30 days.
The plan is designed with an aim to develop a system of web
based services to employers and employees for online submission of forms and
settlement of claims.
1200 Crore as SCA to TSP in 2013-14
The Union Ministry of Tribal Affairs has allocated 1200 crore
rupees as Special Central Assistance (SCA) to Tribal Sub Plan (TSP)for the year
2013-14 for being implemented in the states as the Special Area Programme– The
amount allocated for the programme that is funded from the center has been
increased by 11 percent as compared to 2012-13 allocation. The programme also
have a provision of allocating 120 crore rupees more for the incentive projects,
based upon the performance of the state in effective implementation of the
Tribal Sub Plan. The fund would be segregated among 22 states and used for
development of infrastructure and promotion of employment-cum income generation
activities in tribal areas. If implemented successfully, the programme will help
in raising the social and economic status of the tribals. The programme will
give priority to development of key sectors like agriculture, horticulture, land
reforms, animal husbandry, ecology & environment, watershed development,
development of entrepreneurship in small scale industries and small scale
trading as well as improving connectivity in tribal areas. The budget
distribution of the allocated central fund would be done to the states based on
the Yardstick Percentage of Tribal population in a state in the total tribal
population of the Country.
Top three recipients states of the budget are
Madhya Pradesh: 175.25 crore rupees
Odisha: 133.21 crore rupees
Jharkhand: 121.87 crore rupees
RBI imposed Restrictions on Imports of Gold
The Reserve Bank of India on 22 July 2013 imposed certain
restrictions on the import of various forms of gold by nominated banks,
agencies, premier or star trading houses, SEZ units, EoUs which have been
permitted to import gold for use in the domestic sector. In order to narrow down
the Current Account Deficit - CAD and to arrest the fall of rupee, the Reserve
Bank decided to rationalise the import of gold including import of gold coins
into the country. In the revised scheme for gold imports, RBI asked nominated
banks and agencies to ensure that at least one fifth of every lot of gold
imported - in any form or purity - is exclusively made available for the purpose
of export. They have been asked to sell gold for domestic use only to entities
engaged in jewellery business or bullion dealers supplying gold to jewelers.
Further, these banks and agencies will be required to retain 20 per cent of the
imported quantity of gold in the customs bonded warehouses. Fresh imports will
only be permitted only after the export of atleast 75 percent of the retained
quantity that lies in the customs bonded warehouse.
The Reserve Bank of India has brought down the period of
realisation and repatriation for exporters of goods and software to nine months
from earlier 12 months. This move could shore up foreign exchange inflows. Last
November, RBI had increased the time limit to bring in export earnings to 12
months, from six months at that time, in view of global slowdown. Industry
experts said this step has been taken by the Apex bank as the country is facing
a worsening Current Account Deficit and the weakening of the rupee against the
US dollar. The rupee has depreciated by over 12 per cent against the dollar
since the beginning of this fiscal. The Reserve Bank of India has started
scrutiny of nearly 3 thousand companies which could be carrying out non-banking
finance operations without requisite registration. The step has been initiated
by the Apex Bank in the wake of concerns about their actual business activities.
The Reserve bank’s move comes against the backdrop of the government efforts to
crackdown on entities that are illegally raising large amounts of money from the
public. The Reserve bank has sought details from the companies about their
financials, including balance sheets, for the last three years, among others.
Special Liquidity Window for Mutual Funds opened
The Reserve Bank of India (RBI) on 17 July 2013 opened a
special liquidity window for commercial banks to meet the cash requirements of
mutual funds (MFs). The special liquidity window was opened taken into concern
the Mutual Funds which faced heavy redemption pressure in debt-oriented MF
schemes following a series of steps taken by the RBI to shore up the faltering
currency. Keeping all this into consideration the RBI opened a special three-day
repo window that will allow banks to borrow a total of 25000 crore Rupees at a
rate of 10.25%. Banks can borrow this money to lend onwards to MFs. RBI will
conduct the first repo auction under the special facility on 19 July 2013.The
second auction is scheduled for 23 July 2013 and the subsequent operations at an
interval of three days. Individual banks will be allocated funds in proportion
to their bids, subject to the overall ceiling of 25000 crore, Rupees. In
addition, banks availing of the additional liquidity support can seek a waiver
of penal interest for any shortfall in maintenance of the statutory liquidity
ratio (SLR) up to 0.5% of their deposits, in addition to the 2% waiver allowed
under the marginal standing facility (MSF). SLR refers to the proportion of
deposits that have to be invested in government securities.
On 15 July 2013, RBI sought to curb liquidity in the debt markets by making it
more expensive to borrow money in a bid to prevent speculation in the currency
market. The rupee, which fell to a lifetime low of 61.21 against the dollar on 8
July, has recouped some losses following measures by RBI and the Securities and
Exchange Board of India. After having lost as much as 7% since the beginning of
the year, the rupee has recovered by about 3% against the dollar.
RBI fixed the borrowing limit for banks at 1% of the system’s
net demand and time liabilities, or banks’ total deposit base. Effective 17 June
2013, the overnight borrowing limit was set at 75000 crore Rupees for the entire
banking system. There was no limit earlier. Besides the borrowing limit, RBI
also raised the interest rate on money that banks borrow from MSF to tide over
liquidity shortages—by two percentage points to 10.25%. The RBI is also planning
to sell bonds worth 12000 crore Rupees in the secondary market on 18 July 2013
for another liquidity draining measure.
Modified Industrial Infrastructure Upgradation Scheme
The government on 12 July 2013 approved the Modified
Industrial Infrastructure Upgradation Scheme (MIIUS) with an outlay of 1030
crore Rupees during the 12th Five Year Plan period ending March 2017. As per the
Information and broadcasting Ministry, Out of the total outlay, a sum of 450
crore rupees will be utililized on committed liability and the remainder for
taking up 14 to 16 new infrastructure upgradation projects in existing or
Greenfield industrial clusters. The decision will help to develop better common
infrastructure and common facilities, including skill development centres, at
the selected industrial clusters. It will also certainly impact better
employment generation in the selected clusters.
Some Important facts related to the Industrial
Infrastructure Upgradation Scheme
All states are covered under the scheme. However,
projects are likely to be undertaken in only 14 to 16 states/districts due
to limitation of outlay.
At least 10 per cent of the outlay will be set aside for
a minimum of two projects in the North East.
Project proposals would be scrutinised with the help of
the PMA and they would be placed before an apex committee for in-principle
The projects will be monitored after in-principle
approval is given so that these achieve stipulated milestones to qualify for
Earlier In 2003, an Industrial Infrastructure Upgradation
Scheme (IIUS) was launched to improve the industry’s competitiveness by
providing infrastructure through the public-private partnership model in
selected functional clusters. Under the scheme, central assistance would be
provided for as much as 75 per cent of the project cost, subject to a ceiling of
5 crore Rupees. In February 2009, the plan was remodeled based on the suggestion
of an independent evaluation.
The continuation of National Mission on Food Processing
The Cabinet Committee on Economic Affairs on 28 June 2013
approved the continuation of the National Mission on Food Processing (NMFP) for
the remainder of 12th Five Year Plan (2013-17) based on detailed proposals
submitted by the Ministry of Food Processing Industries (MOFPI). The NMFP outlay
for 2012-17 has been kept at 1600 crore rupees consisting of 1250 crore rupees
provided by the Government of India (GOI) and corresponding State share of 350
crore rupees. This includes 320 crore rupees already approved for 2012-13, of
which 250 crore rupees was the GOI share and 70 crore rupees was the State
share. The following schemes under the NMFP will be implemented by State
Governments for the remainder of 12th Five Year Plan in pursuance of today‘s
Scheme for technology up-gradation / establishment /
modernisation of food processing industries.
Scheme for cold chain, value addition and preservation
infrastructure for non- horticulture products.
Setting up/ modernization/ expansion of abattoirs.
Scheme for Human Resource Development (HRD).
Scheme for promotional activities.
Creating primary processing centres / collection centres
in rural areas.
Modernization of meat shops.
Old Food Parks.
Continuation of NMFP shall help in the decentralization of
the implementation of the Ministry‘s schemes, which will lead to substantial
participation of State Governments / Union Territories (UTs). Beneficiaries of
MOFPI schemes will also find it easier to deal with State Governments. The
continuation of NMFP will also help States / UTs in maintaining requisite
synergy between agriculture plans of States and the development of the food
processing sector. This in turn would help in the increase in farm productivity,
thereby leading to an increase in farmers‘ incomes. It would also help in
ensuring an efficient supply chain by bridging infrastructural / institutional
gaps. A National Food Processing Development Council (NFPDC) has been provided
for under the chairmanship of the Minister for Agriculture and Food Processing
Industries. The NFPDC will have representatives of State Governments, industry
associations and related GOI departments. The council will provide guidance to
MOFPI relating to the food processing sector, including the NMFP.