Special Current Affair for IBPS
Topic: Economy & Energy
- Repo Rate Unchanged at 7.25 Percent
- National Mission on Food Processing to be continued
- The Import Duty on Gold and Platinum hiked
- International Pepper Conclave 2013
- SEBI notified Norms for Listing of Preference Shares
- What is Preference Shares?
- Revival of Nagaland Pulp and Paper Company Limited approved
- India 3rd Most Attractive Destination for Investment
- The Real Estate Bill 2013 Approved
- Mineral Production during April 2013
- India’s Food grain Production registered 30 % Growth
Repo Rate Unchanged
at 7.25 Percent
The Reserve Bank of
India (RBI), in its June mid-quarter monetary policy on 17 June 2013, left its
key policy, repo rate unchanged at 7.25 percent in line. Cash reserve ratio (CRR),
remained at 4 percent. Repo is the rate at which banks borrow from the Central
bank. CRR is the portion of deposits that banks are mandated to keep with RBI.
Consequently, the reverse repo rate will remain unchanged at 6.25 per cent, and
the marginal standing facility (MSF), rate and the Bank Rate at 8.25 per cent.
RBI kept the interest
rate stable possibly because despite the fact that the inflation rate has been
coming down and manufacturing growth has not been much to speak of, it realised
that the interest rate difference between Indian markets and Western market has
actually shrunk, which is why the Foreign Institutional Investors, who are
playing in our debt market have pulled off about three billion dollars. They
would not like to aggravate the situation by reducing interest rate at this
point of time and encouraging FII to pull out more from the debt market.
National Mission on
Food Processing to be continued
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 approval:
technology up-gradation / establishment / modernisation of food processing
Scheme for cold
chain, value addition and preservation infrastructure for non- horticulture
modernization/ expansion of abattoirs.
Scheme for Human
Resource Development (HRD).
processing centres / collection centres in rural areas.
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.
The Import Duty on
Gold and Platinum hiked
The government hiked
the import duty on Gold and Platinum from 6 to 8 per cent on 5 June 2013.The
hike is aimed at curbing import of gold, which is mainly responsible for the
rise in Current Account Deficit (CAD) impacting on the country’s foreign
exchange reserves as well as the rupee value. This is the second hike in the
duty in six months as gold imports touched an alarming 162 tonnes in May 2013.
The imports touched a staggering figure of 15 billion US dollars in the last two
months. The CAD, which is a difference between inflow and outflow of foreign
currency, touched a historic high of 6.7 per cent of GDP in the quarter ending
Three kinds of
International Pepper Community (IPC) Common Sales Contracts were launched by
International Pepper Conclave 2013 in order to standardise the contract terms
for export of pepper from various origins. The International Pepper Conclave
2013 was organised with the assistance of Jakarta-based International Pepper
Community (IPC), which is an inter-governmental organisation. All these
contracts were earlier approved by member countries of International Pepper
Community in 2013. IPC explained that the buyers as well as sellers would adopt
the terms of these contracts in some time and trading on these terms would also
begin. The prices of pepper, at present are a little more than 6 US dollar per
kg or 6000 US dollar per tonne. There has been area expansion because of higher
prices since the year 2010. Also, it has led to better yields through better
agronomy and new origins. This would eventually lead to an increase in the
production. It is important to note that the Emirate has become the hub for
commodity trade because free trade policies exist there.
SEBI notified Norms
for Listing of Preference Shares
Market regulator Sebi
in Month of June 2013 notified a new set of regulations to regulate issuing and
listing of non-convertible preference. The listing of preference shares is
basically meant to bring more transparency in raising of funds through such
securities. The listing of privately placed non-convertible redeemable
preference shares would require a minimum application size of 10 lakh Rupees for
each investor which will safeguard the interest of small investors from high
risk securities. The definite structure for issuance and listing of such shares
is supposed to make it easier for banks and infrastructure companies to gain
funds through this route. There is also a requirement of minimum three year term
for the instruments of share besides public issuance of it and also a rating of
AA- or equivalent investment grade. The new regulations is applicable to issuing
by banks of non-equity instruments such as ‘Perpetual Non-Cumulative Preference
Shares’ and ‘Innovative Perpetual Debt Instruments’, which are in according with
the specified criteria for inclusion in Additional Tier I Capital.
What is Preference
Preference share is
an equity security which has the properties of both equity and a debt
instrument. Preference share usually carries no voting rights but sometimes it
may carry a dividend.
There would be a comprehensive regulatory framework as per the new norm for the
public issuance of non-convertible redeemable shares also for listing of
privately placed redeemable preference shares. It is important here to note that
in the last three years, Indian companies have raised over 25000 crore rupees
through preference share issuance.
Revival of Nagaland
Pulp and Paper Company Limited approved
The Cabinet Committee
on Economic Affairs (CCEA) on 4 June 2013 approved the revival of the Nagaland
Pulp and Paper Company Limited (NPPC) with the infusion of funds of 309.38 crore,
The Committee also
approved the regularization of inter se diversion of fund of 54.60 crore, rupees
and had increased the authorized capital of NPPC from150 crore rupees to 250
crore Rupees. To avail term loan from commercial banks against government
guarantee a sum of around 156.50 crore was also approved by the committee.
About Revival Plan
The revival plan
includes rebuilding/re-furbishment of paper machine, pulping mill, new power
The company is
supposed to produce both pulp and paper in the first phase but after with
the implementation of the revival plan, the net value of the company will
become positive and it will start posting profit from the first year after
The company will
start making profit on continuous basis and its reliance on Government of
India for financial assistance for disbursement of salary and wages and
statutory dues to employees shall come to an end, it will come out of the
purview of the Board of Industrial and Financial Restructuring (BIFR).
India 3rd Most
Attractive Destination for Investment
A survey conducted by
United Nations Conference on Trade and Development (UNCTAD) revealed on 26 June
2013 that India was the third most attractive destination for investment in the
world. The survey by UNCTAD included transnational corporations (TNCs) as the
respondents. India was ranked at the third position after china and the United
States. The survey was based on the responses given by 159 top global companies
of the world. The World Investment Report 2013 by the United Nations Conference
on Trade and Development (UNCTAD) revealed that the ranking of top five host
economies of the world remained unaltered since 2012. China was still leading
the list of top most destinations for investment with 46 percent respondents
agreeing on it. This was followed by US, which got 45 percent agreeing votes.
Among other top five investment destinations as responded by TNCs, were
Indonesia and Brazil. An interesting fact about the survey was that, among top
five most attractive destinations for investment in the world, four were the
developing countries. Apart from this, six out of top 10 prospective host
countries were also from the developing world. Thailand and Mexico appeared in
this list for the very first time. As far as the developed countries were
concerned, Japan climbed up three positions because of its reconstruction
efforts after 2011 tsunami as well as expansionary monetary policies, which led
to increased attractiveness of the country for foreign investment in the medium
term. In the meanwhile, Australia, Russia and United Kingdom came down the
rankings in comparison to 2012 survey, while Germany gained two positions.
The Real Estate Bill
The Union Cabinet of
India on 4 June 2013 approved the Real Estate (Regulation and Development) Bill
2013 to set up a regulator for the real estate sector in the country. This was
done with the objective of protecting home buyers from dishonest builders. The
bill seeks to make it mandatory for developers to launch projects only after
acquiring all the statutory clearances from relevant authorities.
It also has
provisions under which all relevant clearances for real estate projects would
have to be submitted to the regulator and also displayed on a website before
starting construction work. A real estate regulator will be set up in every
state. It will ensure that private developers get all their projects registered
with it before sale and only after obtaining all necessary clearances. The
commercial real estate is not covered under the purview of the proposed bill.
However, it will apply to residential buildings. The bill has a provision for
mandatory public disclosure of all project details such as lay out plan, land
status and credentials of promoters etc. An adjudicating officer in the state
will be appointed by the authority for fast tracking settlement of disputes.
There will be Real Estate Appellate Tribunal as per the bill. It will hear
appeals from orders, decisions or directions of regulator and adjudicating
during April 2013
The index of mineral
production of mining and quarrying sector in April 2013 was lower by 16.9
percent compared to March 2013 as per the data released by ministry of mines.
The mineral sector has shown a negative growth of 3.1 percent during April 2013
as compared to that of the April 2012. The total value of mineral production
(excluding atomic & minor minerals) in India during April 2013 was 17772 crore
rupees. The contribution of coal was the highest at 5673 crore rupees (32
percent). Next in the order of importance were: petroleum (crude) 5671 crore
rupees, iron ore 2712 crore rupees, natural gas (utilized) 1883 crore rupees,
lignite 490 crore rupees and limestone 382 crore rupees.
These six minerals
together contributed about 95 percent of the total value of mineral production
in April 2013. Production level of important minerals in April 2013 were: coal
435 lakh tonnes, lignite 39 lakh tonnes, natural gas (utilized) 2942 million cu.
m., petroleum (crude) 31 lakh tonnes, bauxite 2035 thousand tonnes, chromite 242
thousand tonnes, copper conc. 10 thousand tonnes, gold 120 kg., iron ore 119
lakh tonnes, lead conc. 16 thousand tonnes, manganese ore 194 thousand tonnes,
zinc conc. 124 thousand tonnes, apatite & phosphorite 198 thousand tonnes,
dolomite 520 thousand tonnes, limestone 242 lakh tonnes, magnesite 16 thousand
tonnes and diamond 2928 carat. In April 2013, the output of apatite &
phosphorite increased by 33.6 percent, bauxite 14.7 percent and iron ore 1.3
percent. However the production of petroleum (crude) decreased by 3.7 percent,
natural gas (utilized) 5.5 percent, limestone 5.9 percent, lead conc. 8.9
percent, gold 11.1 percent, dolomite 15.0 percent, manganese ore 18.1 percent,
copper conc. 18.6 percent, magnesite 20.3 percent, zinc conc. 23.0 percent,
lignite 27.9 percent, chromite 30.3 percent, coal 33.0 percent and diamond 33.6
India’s Food grain
Production registered 30 % Growth
production registered an impressive growth of over 30 percent in the last nine
years. It went up to 259 million tonnes in 2012-13 from 198.36 million tonnes in
2004-05. This is result of government initiatives like National Food Security
Mission, NFSM, and Rashtriya Krishi Vikas Yojana.
While NFSM is an area
and crop specific scheme, RKVY is a highly flexible mega scheme to incentivise
states for investment in agriculture. The flow of agricultural credit was raised
from 86981 crore rupees in 2003-04 to 5.75 lakh crore in 2012-13.
The Minimum Support
Price of major crops also increased by more than hundred per cent during the
period. India has now become food surplus and exports of agriculture and allied
products have increased from 29.8 billion Dollars in 2011-12 to 33.54 billion
Dollars in 2012-13.