Tag Wise Current Affairs
Tag: Basics of Economics
RBI formalizes $75-billion swap agreement with Japan
Tags: Basics of Economics, External Sector
Published on: 25 February 2019
Government to raise Rs. 3,500 crore via CPSE ETF sale
Tags: Basics of Economics
Published on: 13 March 2019
CBDT enters into 18 Advance Pricing Agreements
Tags: Basics of Economics
Published on: 04 April 2019
ADB lowers India’s growth projection for FY20 to 7.2%
Tags: Basics of Economics
Published on: 04 April 2019
Indian firms foreign investment rises 18% to $2.69 billion in March 2019: RBI
Tags: Basics of Economics
Published on: 12 April 2019
Industrial output contracts 0.1% in March 2019
Tags: Basics of Economics, Industries
Published on: 11 May 2019
CII launches Fiscal Performance Index to assess Central, state budget
Tags: Basics of Economics
Published on: 06 June 2019
SEBI proposes informant mechanism to curb insider trading
Tags: Basics of Economics
Published on: 12 June 2019
India’s foreign exchange reserves rise to record high of US $429.91 billion
Tags: Basics of Economics
Published on: 13 July 2019
Government to decide on new base year for GDP
Tags: Basics of Economics
Published on: 06 November 2019
Government witholds household spending report
Tags: Basics of Economics
Published on: 16 November 2019
Why Indian economy is losing its growth momentum?
Tags: Basics of Economics
Published on: 18 December 2019
Effect of COVID-19 pandemic on Rupee exchange rate
Tags: Basics of Economics
Published on: 22 April 2020
Link between inflation rate and interest rate
Tags: Basics of Economics
Published on: 07 August 2020
Factors that will determine course of India’s economy
Tags: Basics of Economics
Published on: 05 September 2020
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'description' => '<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">Reserve Bank of India (RBI) and Bank of Japan have formalised $75-billion swap agreement signed between both countries in October 2018 during Prime Minister Narendra Modi’s visit to Japan. The agreement is essentially for exchange and re-exchange a maximum amount of US $75 Billion for domestic currency, for purpose of maintaining an appropriate level of balance of payments for meeting short-term deficiency in foreign exchange. Earlier in 2013, Japan had offered $50-billion currency swap to India and before that for $3 billion in 2008.</span></span></span></p>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">India-Japan swap agreement</span></strong></span></span></p>
<ul>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">This arrangement will help to bring in greater stability to foreign exchange and capital markets in India as it will enable availability of $75-billion in foreign capital for use as and when the need arises.</span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It will serve as second line of defence as India has about $400 billion foreign exchange reserves to cushion sudden dollar outflows.</span></span></span></li>
</ul>
<ul>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It will act as cushion against any sharp swings in local currency whenever international financial markets turn volatile. </span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It will make it easier for India to pay for its imports and aid in addressing challenge of depreciation of rupee. </span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It will help to bring down cost of capital for Indian entities while accessing foreign capital market. It will also improve confidence in Indian market.</span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">Moreover, it will help to deter speculative attacks on domestic currency and greatly enhance RBI’s ability to manage exchange rate volatility.</span></span></span></li>
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<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">What is Currency swap?</span></strong></span></span></p>
<ul>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It is foreign exchange agreement between two parties to exchange given amount of one currency for another and after specified period of time to give back original amount that is swapped.</span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">In it, holder of unwanted currency exchanges that currency for equivalent amount of another currency to improve market liquidity of currency owned or to obtain bank financing at lower rate.</span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It is considered to be foreign exchange transaction and is not required by law to be shown on the balance sheet.</span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It involves trading in local currencies and countries can pay for imports and exports through their own currencies rather than involving third country currency.</span></span></span></li>
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<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">Benefits of Currency swap</span></strong></span></span></p>
<ul>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It makes easier to improve liquidity conditions.</span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It helps in savings of foreign exchange when economy is not looking in good shape.</span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It contributes towards stabilising country’s balance of payments (BoP) position.</span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It does away with charges involved in multiple currency exchanges.</span></span></span></li>
</ul>
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'metatitle' => 'RBI formalizes $75-billion swap agreement with Japan',
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'tag' => 'Basics of Economics',
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'title' => 'Government to raise Rs. 3,500 crore via CPSE ETF sale',
'description' => '<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">Union Finance Ministry will launch additional offering of CPSE-Exchange Traded Fund (ETF) on March 19, 2019 to raise at least Rs. 3,500 crore. This ETF sale through follow-on fund offer will come with option of retaining up to Rs. 5,000 crore via green shoe option.</span></span></span></p>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">Previous CPSE-ETF offerings</span></strong></span></span></p>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">In November 2019, Government had raisead up Rs 17,000 crore. It was biggest disinvestment transaction through ETF. The proceeds from this ETF sale will help Government to achieve Rs. 80,000-crore disinvestment target set for this fiscal. As on February 2019, Government has realized Rs.56,473.32 crore as disinvestment proceeds.</span></span></span></p>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">Greenshoe option</span></strong></span></span></p>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">In security issues, it is over-allotment option. It is provision in underwriting agreement that grants underwriter right to sell investors more shares than originally planned by issuer if demand for security issue proves higher than expected.</span></span></span></p>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">Exchange-traded fund (ETF) </span></strong></span></span></p>
<ul>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It is essentially index funds that are listed and traded on exchanges like stocks. </span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It is basically basket of securities that are traded, like individual stocks, on an exchange. Each stock in it is assigned weights that reflects composition of index. </span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It is similar to mutual funds in certain manner but is more liquid as it can be sold quickly on stock exchanges like shares. </span></span></span></li>
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'description' => '<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">Central Board of Direct Taxes (CBDT) entered into 18 Advance Pricing Agreements (APAs) including three Bilateral APAs (BAPAs) in March 2019. These 18 APAS cover international transactions in sectors pertaining to manufacturing, software development services, other services, royalty payment for technology and brand, trading and payment of interest. With this, total number of APAs entered into by CBDT so far has increased to 271, including 31 BAPAs. In FY 2018-19, CBDT had signed 52 APAs, including 11 BAPAs</span></span></span></p>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">Advance Pricing Agreement (APA)</span></strong></span></span></p>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It is agreement entered between taxpayer and tax authority determining <strong>Transfer Pricing methodology</strong> for pricing tax payer’s international transactions for future years. In this case, transfer pricing is setting of price for goods and services sold between related legal entities or subsidiaries within enterprise. </span></span></span></p>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">APAs can be of three types</span></strong></span></span></p>
<ul>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">Unilateral:</span></strong><span style="font-family:"Quicksand",serif"> It involves only taxpayer and tax authority of country where taxpayer is located.</span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">Bilateral:</span></strong><span style="font-family:"Quicksand",serif"> It involves tax payer, associated enterprise (AE) of taxpayer in foreign country, tax authority of country where taxpayer is located and foreign tax authority of AE.</span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">Multilateral:</span></strong><span style="font-family:"Quicksand",serif"> involves taxpayer, two or more AEs of tax payer in different foreign countries, tax authority of country where taxpayer is located and tax authorities of AEs.</span></span></span></li>
</ul>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">India’s APA scheme</span></strong></span></span></p>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It was launched by Government aims to provide certainty to taxpayers in domain of transfer pricing by specifying methods of pricing and setting prices of international transactions in advance. Its provision was introduced in Income-Tax (IT) Act, 1961 in 2012. Further rollback provision was added to in 2014. It aims gives certainty to taxpayers (including MNCs) agreed by them on certain principles in valuation of their cross-border transactions. It also provides them with alternate dispute resolution mechanism with respect to transfer pricing. </span></span></span></p>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">Benefits of APA</span></strong></span></span></p>
<ul>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It helps in determining arm’s length price of international transactions in advance for max period of five future years. </span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It provides certainty with respect to tax outcome of tax payer’s international transactions.</span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It also seeks to strengthen Government’s resolve of fostering non-adversarial tax regime. </span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It has significantly contributed towards improving ease of doing business in India. </span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">India’s APA regime is appreciated nationally and internationally for being able to address complex transfer pricing issues in a fair and transparent manner.</span></span></span></li>
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'title' => 'ADB lowers India’s growth projection for FY20 to 7.2%',
'description' => '<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">Asian Development Bank (ADB) in its recently released Asian Development Outlook (ADO) 2019 has lowered growth forecast of India for 2019-20 fiscal to 7.2% from 7.6% estimated earlier. The downgrade is attributed to moderation in global demand and likely shortfall in revenue on domestic front. H<strong>owever, India will remain one of the fastest-growing major economies in 2019-20</strong></span></span></span></p>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">ADB Projections</span></strong></span></span></p>
<ul>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">For 2018-19, ADB has cut growth estimate to 7% from 7.3% projected in December 2018. </span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">The reasons for growth cut are weaker agricultural output and consumption growth curtailed by higher global oil prices and lower government expenditure.</span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">Growth is expected to rebound to 7.2% in 2019 and 7.3% in 2020 as policy rates are cut expected and farmers receive income support, bolstering domestic demand.</span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">This growth will reverse two years of declining trend as reforms to improve business and investment climate take effect.</span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">However, India’s growth faces some downside risks such as moderation in global demand as financial conditions tighten, uncertainty arising out of global trade tensions, and the weak economic outlook in industrial countries<strong>.</strong></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">On the domestic front, growth could suffer if tax revenue falls short or any disruption affects ongoing resolution of twin problems of bank and corporate balance sheets/</span></span></span></li>
</ul>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">Asian Development Bank (ADB)</span></strong></span></span></p>
<ul>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It is multilateral lending agency based in Manila, Philippines. It was established on 19 December 1966.</span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It is collectively owned by its members. It has total 67 members – 48 from Asia-Pacific region (including India) and 19 from outside.</span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It is modeled closely on World Bank and has similar weighted voting system where votes are distributed in proportion with members' capital subscriptions.</span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It envisions prosperous, inclusive, resilient, and sustainable Asia and Pacific, while sustaining its efforts to eradicate extreme poverty in the region.</span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It assists its members, and partners, by providing loans, technical assistance, grants and equity investments to promote social and economic development</span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It provides finance to both sovereign countries as well as to private entities. It provides soft loans to poorer countries and hard loans to middle-income countries.</span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">Most of its lending is concentrated in five operational areas viz. education, environment, climate Change & disaster management, finance sector development, regional cooperation & integration and private sector lending.</span></span></span></li>
</ul>
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'title' => 'Indian firms foreign investment rises 18% to $2.69 billion in March 2019: RBI',
'description' => '<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">According to Reserve Bank of India (RBI) data on outward foreign direct investment, Indian companies' foreign investment abroad grew 18% to $2.69 billion in March 2019 as compared to the year-ago period. The domestic firms had made investment of $2.28 billion in their subsidiaries and wholly-owned units abroad during March 2018. In February 2019, investment by Indian firms was $1.71 billion, </span></span></span></p>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">March 2019 Outward investments </span></strong></span></span></p>
<ul>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">Of the total investment overseas in March 2019, US $1.68 billion was in form of loan, $564.97 million as equity while rest $443.71 million was in the form of issuance of guarantee.</span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">Major investors included Tata Steel, which invested $1.15 billion in its subsidiary in Singapore.<strong> </strong></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It was followed by JSW Cement with $82 million investment in its wholly-owned subsidiary in the UAE,</span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">IONGC Videsh Ltd also made investment worth $70.37 million in various joint ventures in Myanmar, Russia and Vietnam.</span></span></span></li>
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'title' => 'Industrial output contracts 0.1% in March 2019',
'description' => '<p style="margin-left:0in; margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">Factory output, as measured in terms of Index of Industrial Production (IIP) contracted by-0.1</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">in March 2019. It is lowest in 21 months, mainly due to slow down in manufacturing sector due to contraction in consumption, as well as investment. IIP’s previous low was recorded in June 2017, when output shrank by 0.3</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">.</span></span></span></span></p>
<p style="margin-left:0in; margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">In February 2019, IIP was almost flat, growing at 0.1</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">%.</span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif""> It had expanded 5.3</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">in March 2018. During entire 2018-19 fiscal, it had witnessed 3.6 </span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">growth as against 4.4</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">in the previous fiscal. </span></span></span></span></p>
<p style="margin-left:0in; margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">Breakaway of IIP in March 2019</span></span></strong></span></span></p>
<ul>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">Manufacturing sector:</span></span></strong><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif""> Constituting 77.63</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">of IIP, contracted by 0.4</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">in March 2019 as compared to 5.7</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">expansion in the year-ago month.</span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">Capital goods output</span></span></strong><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">: It declined by 8.7</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif""> as against 3.1</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">contraction in March 2018.</span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">Power sector growth</span></span></strong><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">: It slowed to 2.2</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">in March 2019 as compared to 5.9</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif""> a year ago. </span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">Mining sector</span></span></strong><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif""> <strong>growth</strong>: It also dropped to 0.8</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">in March 2019 compared to 3.1</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">expansion a year ago.</span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">Use-based classification growth rates in March 2019</span></span></strong><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">: 2.5</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">in primary goods, (-) 2.5</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif""> in intermediate goods and 6.4</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">in infrastructure/ construction goods. Similarly, consumer durables and consumer non-durables have recorded growth of (-) 5.1</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">and 0.3</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif""> respectively.</span></span></span></span></li>
</ul>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif""><img alt="" src=" https://www.mediafire.com/convkey/c9e6/lb7m2s21hkletb26g.jpg" /></span></span></span></span></p>
<p style="margin-left:0in; margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">Index of Industrial Production (IIP)</span></span></strong></span></span></p>
<ul>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">It is composite indicator that measures short-term changes in volume of production of basket of industrial products during given period with respect to chosen base period.</span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">It is released on monthly basis by Central Statistical Organization (CSO), Ministry of Statistics and Programme Implementation (MoSPI). Base year is 2011-12.</span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">It comprises 407 individual items and sector wise, these items fall into three categories-Manufacturing (405 items), Mining (1 items) & Electricity (1 item).</span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">The separate weightages of the three sectors are 77.63</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">, 14.37</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">, 7.9</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif""> respectively. In IIP, combined weightages of eight core Industries is 40.27</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">.</span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">In use wise composition, these 407 individual items are divided into capital goods, basic goods, intermediate goods and consumer goods.</span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">Further, consumer goods are divided into consumer durables and consumer non-durables. In it, maximum weight is of basic goods, followed by Consumer Goods, followed by Intermediate and Capital Goods.</span></span></span></span></li>
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'title' => 'SEBI proposes framework for regulatory sandbox',
'description' => '<p style="margin-left:0in; margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Market regulator Securities and Exchange Board of India (SEBI) has proposed framework for Regulatory Sandbox for financial institutions for fintech testing in its recently released discussion paper.</span></span></span></span></p>
<p style="margin-left:0in; margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">SEBI’s Framework for Regulatory sandbox</span></span></strong></span></span></p>
<ul>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Definition of Regulatory sandbox:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> It is defined as live, testing environment where new products, processes, services and business models can be deployed on limited set of eligible customers for specified period of time, with certain relaxations in the regulations and guidelines.</span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Objective of sandbox:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> It is intended to serve as testing ground for new business models and technologies that benefits investors, Indian markets and Indian economy at large.</span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Eligibility:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> To begin with, all market participants registered with SEBI will be eligible to test within sandbox. At a later stage, it will be expanded to fintech start-ups and other fintech firms as well.</span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Risks:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> The applicant should provide adequate disclosure of potential risks to users participating in sandbox and seek prior confirmation from such users that they fully understand and accept the attendant risks. </span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Reports:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> Participant must submit interim reports on the progress of the test to SEBI after receiving approval for conducting tests.</span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Duration of the sandbox testing:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> It is proposed to be maximum of nine months with maximum extension (upon request) of three months. </span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">After completion of testing, SEBI shall decide whether to permit the product, process, service, or solution to be introduced in the market on a wider scale.</span></span></span></span></li>
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'tag' => 'Basics of Economics',
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'title' => 'CII launches Fiscal Performance Index to assess Central, state budget',
'description' => '<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Industry body Confederation of Indian Industry (CII) has launched 'Fiscal Performance Index' to assess quality of budgets presented by the Centre and state governments. It is innovative tool that will examine quality of Budgets at the Central and State levels using multiple indicators.</span></span></span></span></p>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Fiscal Performance Index</span></span></strong></span></span></p>
<ul>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It has been constructed using UNDP's Human Development Index (HDI) methodology. It comprises six components for holistic assessment of the quality of government budgets.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Six components are </span></span></strong></span></span></li>
</ul>
<ol style="list-style-type:lower-roman">
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Quality of revenue expenditure: </span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">measured by the share of revenue expenditure other than interest payments, subsidies, pensions and defence in GDP. </span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Quality of capital expenditure:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> measured by share of capital expenditure (other than defence) in GDP. </span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Quality of revenue:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> ratio of net tax revenue to GDP (own tax revenue in case of States).</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Degree of fiscal prudence I:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> fiscal deficit to GDP.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Degree of fiscal prudence II</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">: revenue deficit to GDP.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Debt index:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> Change in debt and guarantees to GDP.</span></span></span></span></li>
</ol>
<ul>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It will also consider expenditure on infrastructure, education, healthcare and other social sectors can be considered beneficial for economic growth. </span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It will also consider tax revenues are sustainable sources of revenue for the government as compared to one-time income sources.</span></span></span></span></li>
</ul>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Comment</span></span></strong></span></span></p>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">The index take into consideration holistic performance of all entities viewed from all angles of expenditure quality, revenue receipts quality, and fiscal prudence. It moves away from existing mechanism of assess Central, state budget from narrow and sole view of Fiscal Responsibility and Budget Management (FRBM) Act which sets targets for the governments to reduce fiscal deficits.</span></span></span></span></p>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">About Confederation of Indian Industry (CII)</span></span></strong></span></span></p>
<ul>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It is an association of Indian businesses which works to create environment conducive to growth of industry in India. </span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It is a non-government, industry-led and industry-managed, not-for-profit organization. It was founded in 1895 and is headquartered in New Delhi.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It has over 9,000 members, from private as well as public sectors, including SMEs and MNCs and indirect membership of over 300,000 enterprises from around 265 national and regional sectoral industry bodies.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It works with Government on policy issues. It also has been catalyst of change in India’s economic policy reforms.</span></span></span></span></li>
</ul>
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'tag' => 'Basics of Economics',
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'title' => 'India to grow at 7.5% in FY 20: World Bank ',
'description' => '<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">According to recently released World Bank’s Global Economic Prospects, India is projected to grow at 7.5</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">in the next three years supported by robust investment and private consumption. With this India will continue to retain position of being the fastest growing emerging economy in the world.</span></span></span></span></p>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Key Highlights of report</span></span></strong></span></span></p>
<ul>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">China’s growth rate:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> It was 6.6</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">in 2018.In in 2019, it is projected to be dropped to 6.2</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> and then subsequently to 6.1</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">in 2020 and 6</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">in 2021. Whereas India’s growth by 2021 is projected to be 1.5</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">more than China’s 6</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">India’s Growth:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> India is estimated to have grown 7.2</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">in fiscal year (FY) 2018/19, which ended March 2019. Slowdown in government consumption will be offseted by solid investment, which benefitted from public infrastructure spending.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It is projected at 7.5</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">in Fiscal Year 2019/20 (April 1, 2019 to March 31, 2020), unchanged from the previous forecast, and to stay at this pace through the next two fiscal years.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Private consumption and investment will benefit from strengthening credit growth amid more accommodative monetary policy, with inflation having fallen below RBI’s target.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">India’s urban consumption was supported by pickup in credit growth, whereas rural consumption was hindered by soft agricultural prices.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">On production side, robust growth was broad-based, but there was slight moderation in services and agricultural activity accompanied by acceleration in industrial sector. </span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Weakening agricultural production reflected subdued harvest in major crops on the back of less rainfalls.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Services activity has softened mainly due to slowing trade, hotel, transport, and communication activity. Industrial sector will be benefited from strong construction and manufacturing with solid demand for capital goods. </span></span></span></span></li>
</ul>
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'metatitle' => 'India to grow at 7.5% in FY 20: World Bank ',
'metakeyword' => ' World Bank, Global Economic Prospects, India to grow at 7.5% in the next three years, robust investment, private consumption',
'metadescription' => 'According to recently released World Bank’s Global Economic Prospects, India is projected to grow at 7.5% in the next three years supported by robust investment and private consumption',
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'title' => 'SEBI proposes informant mechanism to curb insider trading',
'description' => '<p style="margin-left:0in; margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Market Regulator Securities and Exchange Board of India (SEBI) has invited public comments on its recently released Discussion Paper on amendment to SEBI (Prohibition of Insider Trading) Regulations, 2015 to provision for informant mechanism for insider trading. It proposes mechanism to formalize process of receiving information from whistle-blowers who expose insider trading violations. It also suggests measures to protect and award such informants.</span></span></span></span></p>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Background</span></span></strong></span></span></p>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">The insider trading has been defined in SEBI (Prohibition of Insider Trading) Regulations, 2015. It defines it as means for trading of securities while in possession of unpublished price sensitive information (‘UPSI’). Insiders usually indulge in insider trading through proxy to whom relevant information is communicated. Direct evidence of such communication is seldom available, thus detection and prosecution of insider trading remains challenge. In this background, SEBI has proposed amendments to The SEBI (PIT) Regulations, 2015 which would include the following features.</span></span></span></span></p>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Proposed amendments</span></span></strong></span></span></p>
<ul>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">The new framework rewards and protects individuals who bring forward instances of violations of insider trading norms.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">If such information leads to final order by SEBI with minimum disgorgement of Rs.</span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">5 crore, then monetary award of 10</span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">%</span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> of money coll</span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">ected by SEBI, subject to cap of </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Rs.1 crore, can be given to informant. The reward will be paid from Investor Protection and Education Fund (IPEF). </span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It mandates informant to fill Voluntary Information Disclosure Form (VIDF) with credible, complete and original information related to insider trading, including those pertaining to unpublished price-sensitive information.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It proposes establishment of Office of Informant Protection (OIP). It will be independent of the investigation and inspection wings of SEBI. </span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It will make policy related to receipt and registration of VIDF, deciding on issue of grant of reward to informant upon completion of enforcement action and other related issues.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It mandates informant to disclose his or her identity at time of submission of complaint in the official format. It also allows filing of anonymous complaint through authorised representative who is practising advocate.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It mandates all listed companies and intermediaries to include provisions in their code of conduct to ensure that such individuals are not discharged, terminated, demoted, suspended, threatened or discriminated against, directly or indirectly. This is to protect complainants against victimization.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">However, incase complaint is found to be frivolous, it allows SEBI can initiate actions against the informant.</span></span></span></span></li>
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'tag' => 'Basics of Economics',
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'title' => '20th Meeting FSDC held in New Delhi',
'description' => '<p style="margin-left:0in; margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">The 20th Meeting of the Financial Stability and Development Council (FSDC) was held under the Chairmanship of the Union Minister of Finance and Corporate Affairs Nirmala Sitharaman. It reviewed current global and domestic economic situation and financial stability issues including, inter-alia, those concerning Banking and NBFCs.</span></span></span></span></p>
<p style="margin-left:0in; margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">20th Meeting of FSDC</span></span></strong></span></span></p>
<ul>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It appraised of progress made towards setting-up of Financial Data Management Centre (FDMC) to facilitate integrated data aggregation and analysis as also Computer Emergency Response Team (CERT-Fin) towards strengthening cyber security framework for the financial sector.</span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It also held consultations to obtain inputs and suggestions of financial sector regulators for Budget. All the regulators presented their proposals for the Union Budget 2019-20.</span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It also took note of activities undertaken by FSDC Sub-Committee Chaired by Governor, RBI and action taken by members on the decisions taken in earlier meetings.</span></span></span></span></li>
</ul>
<p style="margin-left:0in; margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">About Financial Stability and Development Council (FSDC)</span></span></strong></span></span></p>
<ul>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It is super regulatory body (non-statutory) for regulating financial sector consisting of all regulators and Ministry Finance.</span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It was setup in 2010 by Indian Government as an executive body for bringing healthy and efficient financial system in economy of the country. It had replaced High Level Coordination Committee on Financial Markets (HLCCFM).</span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Objective:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> Strengthen and institutionalise mechanism for maintaining financial stability, enhancing inter-regulatory coordination and promoting financial sector development.</span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Mandate:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> It deals with issues relating to financial stability, inter–regulatory coordination, financial sector development, financial inclusion, financial literacy and macro prudential supervision of economy including functioning of large financial conglomerates.</span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Composition:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> Union Finance Minister of India is chairman of FSDC. The other 12 members are Governor RBI, Chairman SEBI, Chairman IRDA, Chairman PFRDA, Minister of state (MoS) responsible for the Department of Economic Affairs (DEA), Secretary of Department of Electronics and Information Technology’, Revenue secretary, Finance Secretary and/or Secretary, Department of Economic Affairs, Secretary Department of Financial Services, Secretary Ministry of Corporate Affairs, Chief Economic Adviser (CEA) and Chairperson of Insolvency & Bankruptcy Board of India (IBBI).</span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Sub-committee of FSDC:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> It has been set up under Chairmanship of Governor RBI. It discusses and decides on issues relating to financial sector development and stability.</span></span></span></span></li>
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'tag' => 'Basics of Economics',
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'title' => 'Ramesh Chand Working Group to revise WPI',
'description' => '<p style="margin-left:0in; margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Union Ministry of Commerce & Industry has constituted 18 member Working Group for the revision of the current series of Wholesale Price Index (Base 2011-12). <strong>Ramesh Chand (Member, NITI Aayog) will be chairman of the Working Group.</strong> Office of Economic Adviser, Department for Promotion of Industry & Internal Trade (DPIIT) will be the nodal office for the Working Group and will process its report and recommendation for further necessary action. </span></span></span></span></p>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Terms of Reference of the Working Group are: </span></span></strong></span></span></p>
<ul>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Select most appropriate Base Year for preparation of new official series of Index Numbers of Wholesale Price (WPI) and Producer Price Index (PPI) in India.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Review commodity basket of current series of WPI and suggest additions or deletions of commodities in the light of structural changes in the economy witnessed since 2011-12.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Review existing system of price collection in particular for manufacturing sector and suggest changes for improvement.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Decide on computational methodology to be adopted for monthly WPI/PPI. It may also recommend roadmap for switch over from WPI to PPI.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Examine existing methodology of compilation of PPI approved by Technical Advisory Committee on Series of Prices and Cost of Living and suggest further improvement in compilation and presentation. </span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Examine method of computing linking factor adopted so far and suggest appropriate change in method of computing linking factor, if necessary.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Suggest any other improvements as may be necessary for enhancing reliability of official series of WPI / PPI.</span></span></span></span></li>
</ul>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">About Whoseale Price Index (WPI)</span></span></strong></span></span></p>
<ul>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It is also known as the headline inflation rate (in India). It measures average change in the prices of commodities for bulk sale at level of early stage of transactions. </span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Its basket covers commodities falling under three major groups namely Primary Articles, Fuel and Power and Manufactured products. (The index basket of the present 2011-12 series has total of 697 items including 564 items for Manufactured Products, 117 items for Primary Articles and 16 items for Fuel & Power). <strong>WPI basket does not cover services.</strong></span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">WPI prices tracked are ex-factory price for manufactured products, mandi price for agricultural commodities and ex-mines prices for minerals. Weights given to each commodity covered in WPI basket is based on value of production adjusted for net imports. </span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Office of Economic Advisor (OEA), Department for Promotion of Industry & Internal Trade (DPIIT), Union Ministry of Commerce and Industry calculates the WPI.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">The main uses of WPI are:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> (i) Provide estimates of inflation at wholesale transaction level for the economy as a whole. This helps in timely intervention by the Government to check inflation in particular, in essential commodities, before the price increase spill over to retail prices. (ii) It is used as deflator for many sectors of the economy including for estimating GDP by Central Statistical Organisation (CSO). (iii) It is also used for indexation by users in business contracts. (iv) Global investors also track WPI as one of the key macro indicators for their investment decisions.</span></span></span></span></li>
</ul>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Need of revision of WPI</span></span></strong></span></span></p>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">The current series of WPI with base year 2011-12 was introduced in May 2017. Since 2011-12 base year, Indian econmy has seen significant structural changes. Therefore, it has become necessary to examine coverage of commodities, their weightages and related issues pertaining to existing series of index numbers of WPI.</span></span></span></span></p>
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'description' => '<p style="margin-left:0in; margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Union Finance Minister Nirmala Sitharaman tabled her first Economic Survey ahead of full fledged Union Budget 2019. It was prepared by Chief Economic Adviser Krishnamurthy Subramanian. It lays out roadmap for Union Government's next five years. </span></span></span></span></p>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">The theme of Economic Survey 2019 is about enabling “shifting of gears" to sustained economic growth for objective of $5 trillion by 2024-25. It departs from traditional thinking by advocating growth model for India that views economy as being either in virtuous or vicious cycle, and thus never in equilibrium.</span></span></span></span></p>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">State of the Economy in 2018-19: A Macro View</span></span></strong></span></span></p>
<ul>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">India still the fastest growing major economy in 2018-19.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Growth of GDP moderated to 6.8 % in 2018-19 from 7.2 % in 2017-18.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Inflation contained at 3.4 % in 2018-19.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Non-Performing Assets (NPAs) as%age of Gross Advances reduced to 10.1 % at end December 2018 from 11.5 % at end March 2018.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Current account deficit manageable at 2.1 % of GDP.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Fiscal deficit of Central Government declined from 3.5 % of GDP in 2017-18 to 3.4 % in 2018-19.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Provisional estimate of 2.9% growth rate for the agriculture, forestry and fishing sector.</span></span></span></span></li>
</ul>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Highlights from the Economic Survey 2019</span></span></strong></span></span></p>
<ul>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Private Investment: It is key driver of simultaneous growth in demand, jobs, exports & productivity, capacity, labor productivity, new technology, creative destruction and job creation.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Government proposes to increase retirement age.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Data should be of the people, by the people, for the people.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Government proposes complete overhaul of minimum wages in India. </span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Dwarfs (firms with less than 100 workers) account for more than 50% of all organized firms in manufacturing by number. Contribution of dwarfs to employment is only 14% and to productivity is a mere 8%.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">To achieve vision of $5 trillion economy by 2024, India needs to shift its gears to accelerate and sustain a real GDP growth rate of 8%.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Using insights from behavioral economics to create aspirational agenda for social change.</span></span></span></span></li>
</ul>
<ol>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">From ‘Beti Baco Beti Padhao’ to ‘BADLAV’ (Beti Aapki Dhan Lakshmi Aur Vijay Lakshmi).</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">From ‘Swachh Bharat’ to ‘Sundar Bharat’</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">From ‘Give it up" for the LPG subsidy to ‘Think about the Subsidy’.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">From ‘Tax evasion’ to ‘Tax compliance’.</span></span></span></span></li>
</ol>
<ul>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Behavioral economics provides insights to ‘nudge’ people towards desirable behavior.</span></span></span></span></li>
</ul>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Key principles of behavioral economics:</span></span></strong></span></span></p>
<ol>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Emphasizing the beneficial social norm.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Changing the default option.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Repeated reinforcements.</span></span></span></span></li>
</ol>
<ul>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Swachh Bharat mission: 93.1% of the households have access to toilets. 96.5% of those with access to toilets are using them in rural India.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">India still the fastest growing major economy in 2018-19. Growth of GDP moderated to 6.8 per cent in 2018-19 from 7.2 per cent in 2017-18.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Accommodative RBI policy will help to cut real lending rates.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Political stability may push animal spirits of economy</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">January-March 2019 economic slowdown due to election related activity.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">NBFC sector stress reason for FY19 slowdown.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Oil prices seen declining in Financial Year 2020.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Declining in NPA should push up capital expenditure cycle.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Government policies expected to further lift restrictions on FDI inflows.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">2019-20 GDP growth seen picking up on robust consumption and higher private investment.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Exports may be hit by lower global growth, increased uncertainty over trade tension.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Investment rate picking up in FY2020 on higher credit growth and improved demand.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Working-age population will grow by about 97 lakhs per year in the upcoming decade.</span></span></span></span></li>
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'title' => 'IIP records slowdown in May 2019',
'description' => '<p style="margin-left:0in; margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">According to data released by Central Statistics Office (CSO), factory output measured in terms of Index of Industrial Production (IIP) slowed to 3.1</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">in May 2019, weighed down by muted growth in mining and manufacturing sectors. It had expanded by 3.8</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">in May 2018. It had rose to 4.3</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">in April 2019 after a sharp decline of 0.4</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">in March 2019.</span></span></span></span></p>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Breakaway of May 2019 IIP</span></span></strong></span></span></p>
<ul>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Mining and quarrying sector:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> It was one of only major sectors that saw growth accelerating, from contraction of 0.39% in December 2018 to growth of 3.9% in January. 2019.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Manufacturing sector:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> It eased to 2.5</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Electricity sector:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> It saw growth slowing to 0.8% from 4.45% over the same period</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Capital goods sector:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> It slowed to 0.8</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">against 2.5</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> growth in April 2019.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Primary goods</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">: It slowed to 2.5</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> in May against 5.2%in April 2019.</span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Consumer sector:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> Production of consumer durables contracted 0.1</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">in May 2019 against healthy 2.4</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">growth in April 2019. Production of consumer non-durables grew to 7.7</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> in the same period against a 5.2</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> growth in April 2019.</span></span></span></span></li>
</ul>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">About Index of Industrial Production (IIP)</span></span></strong></span></span></p>
<ul>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It is composite indicator that measures short-term changes in volume of production of basket of industrial products during given period with respect to chosen base period.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It is released on monthly basis by Central Statistical Organization (CSO), Ministry of Statistics and Programme Implementation (MoSPI). Base year is 2011-12.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It comprises 407 individual items and sector wise, these items fall into three categories-Manufacturing (405 items), Mining (1 items) & Electricity (1 item).</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">The separate weightages of the three sectors are 77.63%, 14.37%, 7.9% respectively. In IIP, combined weightages of eight core Industries is 40.27%.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">In use wise composition, these 407 individual items are divided into capital goods, basic goods, intermediate goods and consumer goods.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Further, consumer goods are divided into consumer durables and consumer non-durables. In it, maximum weight is of basic goods, followed by Consumer Goods, followed by Intermediate and Capital Goods.</span></span></span></span></li>
</ul>
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'title' => 'India’s foreign exchange reserves rise to record high of US $429.91 billion',
'description' => '<h2 style="margin-left:0in; margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">According to recently released Reserve Bank of India (RBI) data, India’s foreign exchange (forex) reserves rose by US$ 2.23 billion to reach record high US$ 429.91 billion in week ended 05 July 2019. The rise was on account of rise in value of gold and currency assets</span></span></span></span></h2>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Breakaway of forex reserves (in the reporting week)</span></span></strong></span></span></p>
<ul>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Foreign currency assets:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> It is major component of the overall reserves. It increased by US $906.8 million to US $400.809 billion,</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Gold reserves:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> It increased by US $1.345 billion, taking total to US $24.304 billion.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Special drawing rights (SDRs) with International Monetary Fund:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> It came down by US $4.7 million to US $1.451 billion.</span></span></span></span></li>
<li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Reserve position with IMF:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> It also dipped by US $15.3 million to US $3.346 billion.</span></span></span></span></li>
</ul>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Forex Reserve</span></span></strong></span></span></p>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">They are reserve assets held by central bank of the country in foreign currencies. These reserve acts as buffer to be used in challenging times. They are also used as back liabilities and also to influence monetary policy. Almost all countries in world, regardless of size of their economy, hold significant forex reserves.</span></span></span></span></p>
<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Components of India’s FOREX Reserves:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> Foreign currency assets (FCAs), Special Drawing Rights (SDRs), Gold Reserves and RBI’s Reserve position with International Monetary Fund (IMF). FCAs constitute largest component of India’s forex Reserves. It is expressed in dollar terms and includes effect of appreciation/depreciation of non-US units like the euro, pound and the yen held in the reserves.</span></span></span></span></p>
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'tag' => 'Basics of Economics',
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'id' => (int) 2061,
'title' => 'India records slowest GDP growth',
'description' => '<p><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Times New Roman","serif"">Issue</span></strong></span></p>
<p> </p>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="background-color:white"><span style="font-family:"Times New Roman","serif""><span style="color:black">The Central Statistics Office released the </span></span></span><strong><span style="background-color:white"><span style="font-family:"Times New Roman","serif"">Gross Domestic Product</span></span></strong><span style="background-color:white"><span style="font-family:"Times New Roman","serif""><span style="color:black"> numbers for April-June quarter, which showed India’s GDP expanded 5% in the quarter through June , the slowest pace in six and half years.</span></span></span></span></span></p>
<p> </p>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:12.0pt"><span style="font-family:"Times New Roman","serif"">Background</span></span></strong></span></span></p>
<p> </p>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="background-color:white"><span style="font-family:"Times New Roman","serif""><span style="color:black">As consumer demand and private investment slowed at a time when global trade frictions have dampened business sentiment, Indian econoimy grew at a pace less than 6% in the current quarter of the financial year 2018-19.</span></span></span></span></span></p>
<p> </p>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:12.0pt"><span style="font-family:"Times New Roman","serif"">Details </span></span></strong></span></span></p>
<ul>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="color:black">Manufacturing’ sector</span></strong><span style="background-color:white"><span style="font-family:"Times New Roman","serif""><span style="color:black"> grew by 0.6 percent as compared to growth of 12.1 per cent in Q1 2018-19. </span></span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="color:black">GVA </span></strong><span style="background-color:white"><span style="font-family:"Times New Roman","serif""><span style="color:black">for </span></span></span><strong><span style="color:black">‘Agriculture, Forestry and Fishing’ </span></strong><span style="background-color:white"><span style="font-family:"Times New Roman","serif""><span style="color:black">sector grew by 2 percent as compared to growth of 5.1 percent in Q1 2018-19. </span></span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"> <strong><span style="color:black">‘Mining and Quarrying’</span></strong><span style="background-color:white"><span style="font-family:"Times New Roman","serif""><span style="color:black"> sector grew by 2.7 percent as compared to growth of 0.4 percent in Q1 2018-19.</span></span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"> <strong><span style="color:black">Electricity,Gas, Water Supply and Other Utility Services’ sector grew by 8.6 % as opposed to 6.7 % in Q1 2018-19.</span></strong></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="color:black">Trade, Hotels, Transport, Communication and Services</span></strong><span style="background-color:white"><span style="font-family:"Times New Roman","serif""><span style="color:black"> grew by 7.1 percent as compared to growth of 7.8 percent in Q1 2018-19. </span></span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="color:black">Financial, Real Estate and Professional Service</span></strong><span style="background-color:white"><span style="font-family:"Times New Roman","serif""><span style="color:black">s grew by 5.9 percent as compared to growth of 6.5 percent in Q1 2018-19. </span></span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"> <strong><span style="color:black">Public Administration, Defence and Other Services</span></strong><span style="background-color:white"><span style="font-family:"Times New Roman","serif""><span style="color:black"> grew by 8.5 percent as compared to growth of 7.5 percent in Q1 2018-19. </span></span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Times New Roman","serif""><span style="color:black">Construction sector</span></span></strong><span style="font-family:"Times New Roman","serif""><span style="color:black"> grew by 5.7 % as compared to 9.7 % in Q1 of 2018-19.</span></span></span></span></li>
</ul>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:12.0pt"><span style="font-family:"Times New Roman","serif"">Measures to boost growth</span></span></strong></span></span></p>
<ul>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="background-color:white"><span style="font-family:"Times New Roman","serif""><span style="color:black">The RBI has cut the key lending rate four times in succession by a total of 110 basis points. This move is expected to increase cash flow in the market.</span></span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="background-color:white"><span style="font-family:"Times New Roman","serif""><span style="color:#212121">Public sector banks will get an immediate recapitalization of ?70,000 crore to ease the liquidity crisis, which is hurting big and small traders.</span></span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="background-color:white"><span style="font-family:"Times New Roman","serif""><span style="color:#212121">Simplifying the goods and services tax (GST) further, besides providing relief to the ailing auto sector, which is grappling with the worst slump in passenger vehicle sales in nearly two decades. </span></span></span></span></span></li>
<li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="background-color:white"><span style="font-family:"Times New Roman","serif""><span style="color:#212121">The government has allowed 100% FDI in coal and associated sectors to attract investments and boost growth.</span></span></span></span></span></li>
</ul>
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'tag' => 'Basics of Economics',
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'title' => 'Imported inflation',
'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The Indian rupee breached the 72-a-dollar mark last week, due to weak local and global economic indicators. The weakening of the domestic currency in the past two months has renewed concerns of a return of imported inflation.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Imported Inflation</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">When the general price level rises in a country due to the rise in prices of imported commodities like petroleum, gold , fertilisers etc , inflation is termed imported. Inflation may also rise due to depreciation of the domestic currency, which pushes up the rupee cost of imported items.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Largest contributors to Indian imports</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Petroleum and related products</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Precious stones</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Organic chemicals</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Vegetable oil</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Plastics</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India is a net importer on economic front. If the rupee depreciation is sustained, there will be an impact on inflation.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Imported inflation has sustained mainly through the fuel component. Any sustained increase in oil prices past the $65-per-barrel mark can be a concern. The price of gold, another key contributor to India’s imports, is hovering at $1540 an ounce.This can be a concern too.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The rupee is among the worst performing Asian currencies and has depreciated around 2.72% this year. Analysts believe that rupee to be range-bound around 71-73 per dollar in the near term. This could elevate the problem of inflation.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Way ahead</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The experts are have not pressed the panic button on imported inflation yet but a fragile global economy and trade tensions require a close watch on this indicator.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India’s Current Account Deficit is below 2% and hence India’s external position is expected to remain manageable.</span></span></p>
</li>
</ul>
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'tag' => 'Basics of Economics',
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'title' => 'WPI inflation',
'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India's wholesale price inflation remained unchanged at 1.08% in August as inflation for manufactured items fell to 0%, which showed the reduction of pricing power of producers.</span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>WPI</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>The Wholesale Price Index</strong> (WPI) is the price of a <strong>representative basket of wholesale goods. </strong></span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The WPI is published by the <strong>Economic Adviser in the Ministry of Commerce and Industry.</strong></span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The Wholesale Price Index focuses on the price of goods traded between corporations, rather than goods bought by consumers, which is measured by the Consumer Price Index.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"> The purpose of the WPI is to monitor price movements that reflect supply and demand in industry, manufacturing and construction. This helps in analyzing both macroeconomic and microeconomic conditions.</span></span></p>
</li>
</ul>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Many manufactured items has seen negative inflation or deflation including vegetable and animal oils, leather and apparel products, paper, rubber, chemicals, steel, basic metals among others.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Fuel inflation also fell into negative territory. However, this may be short-lived due to disruption in crude oil supply from Saudi Arabia.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Food inflation accelerated to 7.67% in August from 6.15% a month ago.</span></span></p>
</li>
</ul>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Implications</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Although RBI does not consider WPI inflation for implementing its monetary policy, low level of retail inflation and sagging growth conditions may force RBI to cut policy rate for fifth consecutive time.</span></span></p>
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(int) 18 => object(Cake\ORM\Entity) {
'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
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'title' => 'Fiscal deficit',
'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">NITI Ayog vice-chairman Rajiv Kumar has said that the ?1.45 lakh crore tax giveaway is unlikely to widen fiscal deficit as the shortfall will be met through increased tax collections due to higher growth.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The government had announced tax cuts for corporates by 10-12% points, bringing down the effective corporate tax to 25.17% inclusive of all cess and surcharges for domestic companies.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Budget had estimated fiscal deficit at 3.3% of the GDP for the current fiscal but many analysts say it will be overshooting by at least 70 bps to 4.1% as the quantum of the giveaways is worth 0.7% of the GDP.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">It is said that India’s tax buoyancy has been very good. Therefore, both direct and in direct tax collections will go up with growth after the tax cuts. The higher revenue from tax and non-tax fronts will help the government finance the fiscal deficit.</span></span></p>
</li>
</ul>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Fiscal Deficit</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The difference between total revenue and total expenditure of the government is termed as fiscal deficit. It is an indication of the total borrowings needed by the government.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A fiscal deficit occurs when a government's total expenditures exceed the revenue that it generates, excluding money from borrowings.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A deficit is usually financed through borrowing from either the central bank of the country or raising money from capital markets by issuing different instruments like treasury bills and bonds.</span></span></p>
</li>
</ul>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Impact of Fiscal deficit</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"> Budget deficits crowd out private borrowing, manipulate capital structures and interest rates, decrease net exports, and lead to either higher taxes, higher inflation or both.</span></span></p>
<p style="margin-right:0cm"> </p>
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(int) 19 => object(Cake\ORM\Entity) {
'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 2395,
'title' => 'Current Account deficit narrows down',
'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India’s current account deficit (CAD) narrowed to 2% of Gross Domestic Product (GDP) during April-June quarter from 2.3% during the same period a year ago according to data released by the Reserve Bank of India.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">CAD is one of the key indicators of an economy’s health and measures the difference between the value of the goods and services a country imports and the value of its exports.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Net services receipts rose 7.3% year-on-year in quarter ended June due to rise in net earnings from travel, financial services and telecommunications, computer and information services. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Private transfer receipts, an indicator of remittances by Indians employed overseas, grew 6.2% on-year to $19.9 billion.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Healthy growth in the surplus of services and secondary income, as well as lower crude oil prices helped to restrain the size of the current account deficit in Q1 FY2020 (April-June), despite a sharp increase in gold imports.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Net foreign direct investment was $13.9 billion in April-June as compared with $9.6 billion during the same period a year ago.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Net inflow of foreign portfolio investment was $4.8 billion in the quarter ended June as compared to $8.1 billion a year ago, due to net purchases in both debt and equity markets.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The government expect the current account deficit to decline substantially to $10-11 billion in Q2FY20 (July-September) from $19 billion in Q2 FY2019 (July-September), on the back of moderate crude oil prices and a weak demand for gold imports.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Current Account Deficit</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A country's current account is one of the two components of its balance of payments, the other being the capital account (also known as the financial account). </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The current account consists of the <strong>balance of trade, net primary income or factor income</strong> (earnings on foreign investments minus payments made to foreign investors) and <strong>net cash transfers</strong>, that have taken place over a given period of time. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The current account balance is one of two major measures of a country's foreign trade (the other being the net capital outflow). </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A current account surplus indicates that the value of a country's net foreign assets (i.e. assets less liabilities) grew over the given period, and a current account deficit indicates that it shrank.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A positive current account balance indicates the nation is a net lender to the rest of the world, while a negative current account balance indicates that it is a net borrower from the rest of the world. </span></span></p>
</li>
</ul>
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(int) 20 => object(Cake\ORM\Entity) {
'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 2661,
'title' => 'CMIE report on unemployment',
'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India's unemployment rate in October rose to 8.5%, the highest since August 2016, according to data released by the Centre for Monitoring Indian Economy (CMIE).</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The unemployment rate is defined as the percentage of unemployed workers in the total labour force. Workers are considered unemployed if they currently do not work, despite the fact that they are able and willing to do so. The total labour force consists of all employed and unemployed people within an economy.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">According to CMIE, the urban unemployment<strong> </strong>rate stood at 8.9%, slightly higher than the rural unemployment rate of 8.3%.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Among States, Tripura and Haryana saw unemployment levels of over 20% (the highest), while Tamil Nadu saw the lowest unemployment rate of 1.1%. Rajasthan saw its unemployment rate double between 2018 and 2019.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The data also comes on the back of other indicators showing a downturn in the economy such as a decline in growth of automobile sales and August's industrial output shrinking at its fastest rate in more than six years.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Researchers estimate that between 2011-12 and 2017-18, employment declined by an unprecedented nine million (2% drop), with agricultural employment declining by 11.5%.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In the same period, employment in the service sector increased by 13.4%, while manufacturing employment dipped by 5.7%.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The data in the paper also shows that while employment has been declining, those who are not in Labour Force, Education and Training have continued to increase.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Types of Unemployment</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Frictional unemployment</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Unemployment is due to economic frictions arising from changes in employers’ demands for different types of labour.</span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Seasonal unemployment</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This type of unemployment occurs due to the seasonal nature of some industries. In some industries the demand for goods or services fluctuates seasonally. For example, hotels, restaurants, and ice-cream factories are fully staffed by employees during the summer but many of those workers are laid off during the winter.</span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Technological unemployment</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Im­provements in technology have reduced the demand for labour. In the long run, improvements in technology and the resultant increases in produc­tivity will create jobs by leading to an expansion of the economy.</span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Residual unemployment</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Some people who are not willing to work but get their names registered with employment exchanges in order to receive com­pensation from the government. This classification also includes those people who are unable to work because of physical or mental disabilities.</span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Structural unemployment</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This type of unemployment oc­curs due to a change in the structure of the economy. For example, the setting up of large mechanized man­ufacturing units in India led to the decline of handi­crafts.</span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Cyclical unemployment</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This form of unemployment arises from the trade cycle and is sometimes referred to as mass unemployment. Cyclical unemployment is characterized by a general deficiency of demand and consequently af­fects all industries at one and the same time, produc­ing widespread unemployment.</span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Disguised unemployment</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In this type, people are hired to work but net productivity from their efforts is zero. There is no benefit from their service.</span></span></p>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 2697,
'title' => 'Government to decide on new base year for GDP',
'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The Ministry of Statistics and Programme Implementation (MOSPI) will decide on a new base year for calculating the Gross Domestic Product (GDP) in the next few months.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Though 2017-18 is under consideration as the new base year, no final decision has been taken as the committees of experts are awaiting some more data before finalising their opinion.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The economic growth slowed to over six-year low of 5 per cent in April-June this fiscal. The government has been taking steps to boost investment and perk up the sagging economy.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The industrial production for September has seen a decline after core sector output contracted 5.2 per cent during the recent month according to experts.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>GDP</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Gross Domestic Product (GDP) is the total monetary or market value of all the finished goods and services produced within a country's borders in a specific time period. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">As a broad measure of overall domestic production, it functions as a comprehensive scorecard of the country’s economic health.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">GDP can be calculated in three ways, using expenditures, production, or incomes. It can be adjusted for inflation and population to provide deeper insights.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Types of GDP</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Nominal GDP</strong> is the measurement of the raw data.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Real GDP</strong> takes into account the impact of inflation and allows comparisons of economic output from one year to the next and other comparisons over periods of time.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>GDP growth rate </strong>is the increase in GDP from quarter to quarter.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>GDP per capita</strong> measures GDP per person in the national populace; it is a useful way to compare GDP data between various countries</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Selection of base year</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A base year is the first of a series of years in an economic or financial index. It is typically set to an arbitrary level of 100.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">New, up-to-date base years are periodically introduced to keep data current in a particular index. Any year can serve as a base year, but analysts typically choose recent years.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A base year is used for comparison in the measure of a business activity or economic index.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Current method of GDP calculation</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India's Central Statistic Office calculates the nation's gross domestic product (GDP).</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India's GDP is calculated with two different methods, one based on economic activity (at factor cost), and the second on expenditure (at market prices).</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The <strong>factor cost</strong> method assesses the performance of eight different industries.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The <strong>expenditure-based </strong>method indicates how different areas of the economy, such as trade, investments, and personal consumption, are doing.</span></span></p>
</li>
</ul>
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(int) 22 => object(Cake\ORM\Entity) {
'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 2817,
'title' => 'Rural demand may slip',
'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">All the indicators which point out the health of rural economy have been showing decline. The consumption pattern shows that the meltdown of economy has indeed impacted rural growth patterns.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The government had decided to withhold the findings of the rural household survey, which had shown diverse results. The data indicated that the consumer demand had fallen to a 40 year low.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">All the indicators of rural demand such as sales of FMCG, and of tractors and two-wheelers, in non-cities show they are still in decline.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Other indicators, such as a sharp fall in gold imports in the last four months (half of gold demand is rural-driven) also point to slackening demand.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The most critical factor behind rural stress is not just the fall in nominal wage rates of labour. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">With CPI rising for rural labourers, real wages since March have also seen a decline. The real wage growth, adjusted for CPI-RL (Consumer Price Index-Rural Labourers), has seen the sharpest erosion in August. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">With CPI-RL at 6.23%, even if nominal wages increased 3.4% in August, real wages eroded by 2.83%.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">While some economists say excess and late monsoon in a few large states like Rajasthan, Madhya Pradesh, Karnataka, Maharashtra and Gujarat has suppressed farm incomes, others argue otherwise.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Lack of jobs due to poor or no investment over the years has meant poor incomes and rural to urban migration for work has hardly matched addition to work force.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Rural India accounts for roughly about 38-40 per cent of the total FMCG market. The slowdown in rural India is far more pronounced than in big cities and metros. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">If the urban segment is growing 10 per cent, rural is growing five per cent and this may drop further to 3-4 per cent.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Consumer demand</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Consumer demand is the willingness and ability of consumers to purchase a quantity of products in a given period of time, or at a given point in time.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Demand curve</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In economics, a demand curve is a graph depicting the relationship between the price of a certain commodity (the y-axis) and the quantity of that commodity that is demanded at that price (the x-axis). </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Demand curves may be used to model the price-quantity relationship for an individual consumer (an individual demand curve), or more commonly for all consumers in a particular market.</span></span></p>
</li>
</ul>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><img alt="Rural demand may slip 1 daily current affairs 18 april" src="https://www.mediafire.com/convkey/b313/7k5n9j6zw0l36b46g.jpg" style="height:207px; width:325px" /></span></span></p>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><img alt="Rural demand may slip 2 daily current affairs 18 November" src="https://www.mediafire.com/convkey/2bc7/i0nhmldfdrv4wyx6g.jpg" style="height:207px; width:325px" /></span></span></p>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 2801,
'title' => 'Wholesale and retail inflation',
'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The official data showed that the wholesale inflation in the country for October grew by just 0.16 per cent. In October last year, it grew by 5.5 per cent. The rate of wholesale inflation has been falling steadily.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This deceleration in wholesale prices has happened despite a significant jump in wholesale food prices.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">WPI food inflation rose to 7.6 per cent. The spike was essentially led by an almost 40 per cent surge in vegetable prices and a 17 per cent surge in the price of pulses. Increases in prices of spices and cereals, too, contributed to increasing wholesale food inflation</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The WPI inflation for October has touched a 40-month low. But retail inflation in the country for the same month has touched a 16-month high.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Food articles have a much higher weight ,over 45 per cent in CPI or retail inflation index.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In WPI, their weight is less than 30 per cent. So even a similar spike in prices will show up a much higher impact in the retail inflation index than the wholesale inflation index.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Similarly, fuel and energy have a much higher weight in WPI inflation. A spike in these prices obviously bumps up only the retail inflation while leaving the wholesale inflation unaffected.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Inflation</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Inflation is the increase in the prices of goods and services over time.</span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Inflation increases your cost of living. Inflation reduces the purchasing power of each unit of currency.</span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Deflation</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Deflation is a decrease in the general price level of goods and services. Deflation occurs when the inflation rate falls below 0%.</span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Disinflation</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Disinflation is a decrease in the rate of inflation , a slowdown in the rate of increase of the general price level of goods and services in a nation's gross domestic product over time. It is the opposite of reflation. </span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Recession</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Recession is a slowdown or a massive contraction in economic activities. A significant fall in spending generally leads to a recession. Such a slowdown in economic activities may last for some quarters thereby completely hampering the growth of an economy.</span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Reflation</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Reflation is the act of stimulating the economy by increasing the money supply or by reducing taxes, seeking to bring the economy (specifically price level) back up to the long-term trend, following a dip in the business cycle.</span></span></p>
<p style="margin-right:0in"> </p>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 2799,
'title' => 'Government witholds household spending report',
'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The government<strong> </strong>has decided not to release the household consumer expenditure survey results of 2017-18 due to data quality issues.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">It is alleged that the report has been suppressed because it showed that consumer demand declined in 2017-18 for the first time in more than 40 years.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The Ministry of statistics and program implementation has said that the report cited in the media was a draft and should not be considered the final report.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">They said that they were planning the next consumer expenditure survey in 2021-22 after data quality refinement in the survey process.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Household spending</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Household spending is the amount of final consumption expenditure made by resident households to meet their everyday needs, such as food, clothing, housing (rent), energy, transport, durable goods (notably cars), health costs, leisure, and miscellaneous services.</span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">There are two components of consumer spending: <strong>induced consumption and autonomous consumption</strong>.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Induced consumption</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Induced consumption is the portion of consumption that varies with disposable income. When a change in disposable income “induces” a change in consumption on goods and services, then that changed consumption is called “induced consumption”.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Autonomous consumption</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Autonomous consumption is the consumption expenditure that occurs when income levels are zero. Such consumption is considered autonomous of income only when expenditure on these consumables does not vary with changes in income<span style="font-size:9.5pt"><span style="background-color:white"><span style="font-family:"Arial","sans-serif""><span style="color:#222222">.</span></span></span></span></span></span></p>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 2935,
'title' => 'GDP growth dips to lowest in 6 years',
'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India's annual growth in gross domestic product or GDP fell to 4.5% for the quarter ended September 30, down from 5% in the previous three months and 7% for the corresponding period of 2018.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The government has taken several steps, including a big cut in corporate tax rate in September, to boost investments and bolster economic growth. But the economic growth has failed to recover big time.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">According to the data released by National Statistical Office (NSO), the gross value added (GVA) growth in the manufacturing sector contracted by 1% in the second quarter of this fiscal from 6.9% expansion a year ago.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Similarly, farm sector GVA growth remained subdued at 2.1%, down from 4.9% in the corresponding period of the previous fiscal.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Construction sector GVA growth too slowed to 3.3% from 8.5% earlier. Mining sector growth was recorded at 0.1% as against 2.2% contraction a year ago.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Trade, hotel, transport, communication and services related to broadcasting growth was also down to 4.8% in the second quarter from 6.9% a year ago.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">On the other hand, public administration, defence and other services reported improvement with an 11.6% rise during the quarter under review from 8.6% a year earlier.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India's fiscal deficit in the first seven months through October stood at ?7.2 lakh crore, or 102.4% of the budgeted target for the current fiscal year.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Reasons </strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The credit market has been in tatters after IL&FS collapse. The NBFCs that lend to companies have stopped lending to wholesale segment.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The commercial banks have reduced their lending significantly due to accumulating bad loans.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The growth in collections from Goods and Services Tax and Direct Taxes has reduced for the full year, the Central government has been staring at a shortfall of a Rs 2.7 lakh crore in 2019-20.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Measures</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Government spending can create demand in the market and boost consumption. The increased consumption pattern is set to help manufacturing sector to recover.</span></span></p>
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'title' => 'Credit flow and growth',
'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India’s nominal GDP in Q2FY20 is the <a href="https://indianexpress.com/article/explained/explained-why-gdp-rate-at-4-5-pc-now-makes-rbi-projection-hard-to-achieve-6143112/">lowest in more than 16 years</a> at 6.1 %. The slowdown has been exaggerated by the extraordinarily low inflation and the 4.5% y-o-y growth in GDP is the lowest since Q4FY13.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The nominal GDP has grown by just 6.1% y-o-y in a quarter when nominal government spending jumped 18.9% y-o-y, the biggest increase in 30 quarters. But the government spending likely to be constrained due to poor tax collections.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The government has cited weakening global growth as a reason for India’s sharper-than-expected growth slump.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">But India is a relatively closed economy, and domestic factors have played a bigger role in lowering the growth numbers.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">when the economy is slowing, it is expected that tax collections too, will slow. And since the denominator, the nominal GDP, will be lower, the deficit-to-GDP will go up even more.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The fiscal deficit for the April-October period is at 102% of GDP. Much of the increase in the deficit is because the government has spent more , Rs 16.55 lakh crore versus Rs 14.55 lakh crore in the corresponding period of 2018-19.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The output of the core sector contracted 5.8% y-o-y in October, slightly more than it did in September. Demand for cars was subdued in the festival month, and has fallen in November. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Sales of two-wheelers fell 14% y-o-y in October, suggesting poor rural demand. Also, sales of commercial vehicles were weak, crashing by 23% y-o-y.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Consumers are not willing to spend, especially on big ticket items such as homes. Since there is no quick fix for the compression in credit growth, the growth in Q3 and Q4 will not be meaningfull.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">One big reason why consumption demand has tapered off is rural stress. With prices of agri goods collapsing, farm incomes have been badly hurt. Unless many more jobs are created, it is hard to see consumption getting a boost.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The services sector is in big trouble since the financials of a couple of large telcom players are fragile following adverse regulation. These companies are laying off people in large numbers.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The biggest challenge is to unclog credit flows to industry both small and large. This looks virtually impossible because banks have turned risk averse and are staying cautious in due to an extremely tough environment . This year has seen more than 3,300 companies being downgraded so far.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The lending by NBFCs has slowed sharply over the past year at 34% y-o-y in Q2FY20, with several of them in financial trouble.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">With credit flows tight, more companies are likely to default on loan obligations, which, in turn, means rising loan losses.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">There is the danger of many small and mid-sized businesses closing down, leading to more job losses<span style="font-size:13.5pt"><span style="background-color:white"><span style="font-family:"Arial","sans-serif""><span style="color:black">.</span></span></span></span></span></span></p>
</li>
</ul>
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'title' => 'Why Indian economy is losing its growth momentum?',
'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Indian economy is losing its momentum and going towards slowdown at this point. But until March 2017, the Indian economy was not only growing at a progressively rapid pace but was also the fastest-growing major economy in the world.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In a new working paper published by Harvard University’s Center for International Development, Arvind Subramanian, who was India’s chief economic advisor and Josh Felman, former IMF resident representative to India, give a detailed understanding of how the Indian economy lost its way.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">They argue that Indian economy is facing both <strong>structural</strong> (that is, more long-term issues related to the overall framework of the economy such as the flexibility or inflexibility of labour laws etc.) and <strong>cyclical</strong> (that is, more short-term issues such as a bad monsoon that disrupts production of food articles etc.) challenges.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Since the causes are both structural and cyclical, arresting this economic slowdown is proving to be so difficult as the measures that would have alleviated a cyclical slowdown fail because structural reasons are also involved.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">They also highlight the twin-balance sheet (TBS) problem that India faced since 2014. They show that as the years rolled by the TBS problem morphed into a “four balance sheet challenge” for the economy.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Authors pointed out that the balance sheets of Indian banks were burdened by a high proportion of non-performing loans and the balance sheet of corporates were clogged because they had over-borrowed and were unable to pay.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">When the economy was growing at near double digits, companies borrowed heavily from the market hoping for a future profit.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The banks, especially the government-owned ones, too, ignored prudential norms and lent a lot of money to companies in the hope that this would help boost economic growth.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">As it happened, economic prospects collapsed quite sharply after the<strong> Global Financial Crisis </strong>(GFC) and a high proportion of companies found that their projects were no longer viable. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The end result was that the companies were left with huge loans they could not pay back in time and the banks were left with huge loans that had turned duds.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">But unlike in the developed world, where such companies would have been declared bankrupt and liquidated or where such banks would have sunk, in India, both the companies and the banks survived. This created a long term burden on economy.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The GDP kept increasing even after TBS because, during 2015 and 2016, international crude oil prices fell to a third of what they were in 2014. This essentially meant that Indians could spend more, that boosted the GDP.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India’s growth was boosted by a lending spree provided by non-banking financial companies (<strong>NBFCs</strong>) like IL&FS and DHFL.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">NBFCs took over the leading role of lending to the economy because banks were still struggling with NPAs and were largely unwilling to lend directly to businesses.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>How did the slowdown start?</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">There are two broad but interlinked reasons. One, the unresolved TBS problem, and two, the fall of NBFCs and the real estate sector. Together, they make for the Four Balance Sheet Challenge for the Indian economy.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The unresolved TBS problem provided a progressively weakening ecosystem of banks and companies, the collapse of some of the leading NBFCs has proven to be trigger for the sharp growth deceleration.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Most of the funding from NBFCs was challened to one sector, the real estate. Due to global financial crisis the demand for flats went down leading to failure of real estate sector to pay back loans to NBFCs.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Solutions</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Structural changes to economic condition including solving the Twin Balance Sheet problem. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Increasing consumption so as to boost the economic growth and GDP through measures like tax cut.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Encouraging investments in major sectors such as real estate in order to kickstart stuck up projects.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Keeping government spending intact so that core industries like cements, steel remain functioning.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Encouraging foreign investments so that short term liquidity crisis can be effectively tackled.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Twin Balance Sheet Problem</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Twin balance sheet problem refers to the stress on balance sheets of banks due to non-performing assets (NPAs) or bad loans on the one hand, and heavily indebted corporates on the other.</span></span></p>
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'title' => 'India on the verge of stagflation?',
'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"> With fast decelerating economic growth and sharply rising inflation, there is a growing belief about India facing stagflation.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Stagflation is said to happen when an economy faces stagnant growth as well as persistently high inflation.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Typically, inflation rises when the economy is growing fast. That’s because people are earning more and more money and are capable of paying higher prices for the same quantity of goods. When the economy stalls, inflation tends to dip as well because there is less money now chasing the same quantity of goods.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Its because with stalled economic growth, unemployment tends to rise and existing incomes do not rise fast enough and yet, people have to contend with rising inflation. So people find themselves pressurised from both sides as their purchasing power is reduced.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Over the past six quarters, economic growth in India has decelerated with every quarter. In the second quarter (July to September), for which the latest data is available, the GDP grew by just 4.5%.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In October inflation was a 16-month high and the November inflation, at 5.54%, is at a three-year high. Inflation for the rest of the financial year is expected to stay above the RBI’s comfort level of 4%.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Are these indications of stagflation?</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">It may appear India is facing stagflation but there are some broad reasons to believe otherwise:</span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Although India is not growing as fast as we have in the past or as fast as we could, India is still growing at 5% and is expected to grow faster in the coming years. India’s growth hasn’t yet stalled and declined. Year on year, our GDP has grown in absolute number, not declined.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Retail inflation has been quite high in the past few months, yet the reason for this spike is temporary because it has been caused by a spurt in agricultural commodities after some unseasonal rains.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Retail inflation has been well within the RBI’s target level of 4% for most of the year. A sudden spike of a few months, which is likely to flatten out in the next few months, it is still early days before one claims that India has stagflation.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Tackling stagflation</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The Central Bank could use Monetary policy to try and reduce inflation. Higher Interest rates increase the cost of borrowing and this will reduce aggregate demand (AD). This will be effective for reducing inflation, but, it will cause a bigger fall in GDP.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Another solution to stagflation is to increase aggregate supply through supply-side policies, for example, privatisation and deregulation to increase efficiency and reduce costs of production.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The best policy measure is to reduce personal and business taxes because they tend to reduce labour costs and raise demand for labour. Similarly, sales tax and excise duties should be reduced in order to prevent the price level from rising.</span></span></p>
</li>
</ul>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 3179,
'title' => 'Steps to kick-start economy',
'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India’s Growth rate has plumeted from the level of 8.1% in the fourth quarter of 2017-18 to 4.5% in the second quarter of 2019-20, a fall of 3.6 percentage points. This steady decline will have had an adverse impact on employment and poverty reduction.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Analysts have been trying to decode whether the slowdown is structural or cyclical. If it is cyclical, the expectation is that there is a chance for upturn soon. If it is purely structural, it will take time until the structural rigidities are removed.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">As far as India’s case is concerned there is plenty of evidence to indicate that the decline is cyclical due to reduced demand.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Several important sectors such as automobiles, consumer durables and housing show a slackening of demand. This is also reflected in the low capacity utilisation of several industries.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">On the structural side while the reform agenda has been carried forward, there are segments such as agricultural marketing, land and labour markets which are still waiting for reforms.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">One sector which needs immediate reforms is the financial system, more particularly the banking system and within it the public sector segment. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Even as the policy makers address the problem of non-performing assets, attention has to be paid to defining the relationship between governments and boards of public sector banks and on their respective roles in management.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">One significant factor in the current scene is the steep fall in investment rate (gross fixed capital formation rate) from 34.3% in 2011-12 to 27.8% in the second quarter of 2019-20. This results in a sharp decline in the potential rate of growth by 1.6 percentage points.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Data shows a weakening of private consumption expenditure. But our efforts to raise demand is dependent on income.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Measures</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The three autonomous elements that can be used as levers to raise demand are government consumption expenditure, government investment and exports. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Private investment can be treated as autonomous only to a limited extent. However, private foreign investment can be an independent factor which can be leveraged.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The three autonomous elements that can be used as levers to raise demand are government consumption expenditure, government investment and exports.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"> Private investment can be treated as autonomous only to a limited extent. However, private foreign investment can be an independent factor which can be leveraged. But at present economy across the world is not booming. This leaves place for only government expenditure.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In the present context, the emphasis should be given to ensure that the entire increase in government expenditure is diverted towards capital expenditure and not short term gains.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">As far as monetary policy is concerned, the central bank will have to take steps to quicken the resolution process of bad loans and help banks to move to a more healthy situation. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Reforms in fiscal policy may have to wait till the economy turns around. The GST has to become more manufacturer and trader friendly to increase benefits for the government.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The banking system, currently, has become a burden. Quickening of the resolution process along with the recapitalisation of public sector banks has to take priority.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The cleansing of the financial system which also includes finding solutions to the problems of non-banking financial companies will help to push the economy up. </span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Way ahead</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The reasonably good monsoon may lead to an improvement in agricultural production and rural demand. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Exports can help a bit if there is strong effort and if the global trade environment improves.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Private investment can pick up provided the growth rate begins to look up. Restoring financial institutions like banking and non-banking to a healthy state when they can begin to lend confidently is the most essential prerequisite for faster growth.</span></span></p>
</li>
</ul>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 3307,
'title' => 'Nominal GDP',
'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The National Statistical Office (NSO) released the first advance estimates of the national income that projected growth in India’s GDP at market prices for 2019-20 at 4.98% in “real” terms.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The rate is lowest since the 3.89% in the global financial crisis year of 2008-09. But even more significant was the estimated growth of 7.53% in “nominal” terms, which is the lowest since the 7.35% for 1975-76.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Real and Nominal GDP</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">GDP is the total market value of all goods and services produced in the economy during a particular year, inclusive of all taxes and subsidies on products. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The market value taken at current prices is the nominal GDP. The value taken at constant prices, that is prices for all products taken at an unchanged base year is the real GDP.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In simple terms, real GDP is nominal GDP stripped of inflation. Real GDP growth thus measures how much the production of goods and services in the economy has increased in actual physical terms during a year. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Nominal GDP growth, on the other hand, is a measure of the increase in incomes resulting from rise in both production and prices.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Importance of Nominal GDP</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In the normal course, real growth is what one would ordinarily look at. But the current fiscal year seems extraordinary because the gap between nominal and real GDP growth is just 2.6 percentage points.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In 2019-20, not only is real GDP growth expected to be the lowest in 11 years, but also the implied inflation (also called GDP deflator, or the increase in prices of all the goods and services produced in the economy) is just 2.6%. Simply put, producers have not gained from either higher output or higher prices.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Implications of low Nominal GDP rate</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Listed companies have seen their turnover double in five years or so, which comes with a nominal year-on-year growth of 14-15%. If the latter falls to 7-8%, the same doubling would take 9-10 years.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This would mean that value of their inputs, including salaries paid to employees, would also be rising at a slower rate. This will have profound effect on demand and production.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">For government low nominal GDP growth is a matter of concern because their budgets normally assume double-digit increases in revenues.</span></span></p>
</li>
</ul>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 3309,
'title' => 'Government predicts lower GDP growth',
'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">According to the data released by the Ministry of Statistics and Programme Implementation (MoSPI), India’s gross domestic product will grow by just 5 per cent in the current financial year (2019-20). Last financial year, 2018-19, the Indian economy grew at 6.8 per cent.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The First Advance Estimates (FAE) released computes a variety of data, such as the Index of Industrial Production, the financial performance of listed companies, first advance estimates of crop production etc., for the first 7 to 8 months to arrive at the annual figure.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The gross value added (GVA), which maps the economic activity from the income side as against the GDP which maps it from the expenditure side, is expected to grow by 4.9 per cent in 2019-20 as against 6.6 per cent in 2018-19.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The approach for compiling the Advance Estimates is based on Benchmark-Indicator method. The sector-wise Estimates are obtained by extrapolation of indicators like</span></span></p>
</li>
</ul>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Index of Industrial Production (IIP) of first 7 months of the financial year</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">financial performance of Listed Companies in the Private Corporate sector available upto quarter ending September, 2019</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">1st Advance Estimates of Crop production</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">accounts of Central & State Governments, information on indicators like Deposits & Credits, Passenger and Freight earnings of Railways, Passengers and Cargo handled by Civil Aviation, Cargo handled at major Sea Ports, Sales of Commercial Vehicles, etc., available for first 8 months of the financial year.</span></span></p>
</li>
</ul>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">There are four main drivers of the GDP. <strong>One</strong>, the private consumption expenditure, that is the expenditure that we make in our personal capacity. This category has grown by just 5.7 per cent in 2019-20 while it grew by 8 per cent last financial year.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The <strong>second</strong> driver is the expenditure made by the Government. This grew by 10.5 per cent, which is higher than the rate of growth (9.2 per cent) in the last financial year.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The <strong>third</strong> is the growth in business investments. This driver, which is the key to sustainable long-term growth, grew by less than 1 per cent whereas in last financial year it grew by 10 per cent.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Almost all sectors have witnessed slower growth in economic activity. Only Public Administration, Defence and Other Services,which essentially measures how the government did, grew by 9.1 per cent. All other sectors saw a GVA growth that was slower than the average growth in the last financial year.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The sectors which registered growth rate of over 4.9 per cent are, ‘Electricity, Gas, Water Supply and Other Utility Services’, ‘Trade, Hotels, Transport, Communication and Services related to Broadcasting’, ‘Financial, Real Estate and Professional Services.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The worst performing sectors are ‘Agriculture, Forestry and Fishing’, ‘Mining and Quarrying’, ‘Manufacturing’ and ‘Construction’, which are expected to see a GVA growth of less than 3%.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Gross Value Added</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Gross value added (GVA) is the measure of the value of goods and services produced in an area, industry or sector of an economy. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Gross value added provides a dollar value for the amount of goods and services that have been produced in a country, minus the cost of all inputs and raw materials that are directly attributable to that production.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">GVA thus adjusts gross domestic product (GDP) by the impact of subsidies and taxes (tariffs) on products.</span></span></p>
</li>
</ul>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 3376,
'title' => 'Wholesale inflation increases to 2.59%',
'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Wholesale prices based inflation surged to 2.59% in December, as against 0.58% in November due to increase in prices of food articles like onion and potato.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The annual inflation, based on monthly wholesale price index (WPI), was at 3.46% during the same month a year ago (December 2018).</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The rate of price rise for food articles rose to 13.12% during December as against 11% a month earlier, while for non-food articles it rose nearly four-fold to 7.72% from 1.93% in November.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Among food articles, vegetable prices surged by 69.69% mainly on account of onions, which witnessed 455.83% jump in prices, followed by potato at 44.97%.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The consumer price index based retail inflation spiked to over a 5-year high of 7.35% in December due to costlier food products.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Wholesale inflation</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Wholesale inflation is the rate of increase in wholesale prices gauged by the Wholesale Price Index.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Wholesale Price Index (WPI)</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Wholesale Price Index, or WPI, measures the changes in the prices of goods sold and traded in bulk by wholesale businesses to other businesses. WPI is unlike the Consumer Price Index (CPI), which tracks the prices of goods and services purchased by consumers. The WPI tracks prices at the factory gate before the retail level.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The numbers are released by the Economic Advisor in<strong> the Ministry of Commerce and Industry</strong>. An upward surge in the WPI print indicates inflationary pressure in the economy and vice versa.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Even as the WPI is used as a key measure of inflation in some economies, the <a href="http://www.financialexpress.com/tag/rbi/" target="_blank">RBI</a> no longer uses it for policy purposes, including setting repo rates. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The central bank currently uses CPI or retail inflation as a key measure of inflation to set the monetary and credit policy.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Major components of WPI</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Primary articles is a major component of WPI, further subdivided into Food Articles and Non-Food Articles.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Food Articles include items such as Cereals, Paddy, Wheat, Pulses, Vegetables, Fruits, Milk, Eggs, Meat & Fish, etc.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Non-Food Articles include Oil Seeds, Minerals and Crude Petroleum.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The next major basket in WPI is Fuel & Power, which tracks price movements in Petrol, Diesel and LPG.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The biggest basket is Manufactured Goods. It spans across a variety of manufactured products such as Textiles, Apparels, Paper, Chemicals, Plastic, Cement, Metals, and more.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Manufactured Goods basket also includes manufactured food products such as Sugar, Tobacco Products, Vegetable and Animal Oils, and Fats.</span></span></p>
</li>
</ul>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 3388,
'title' => 'Fiscal deficit',
'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Former Economic Affairs Secretary S C Garg has stated, in his blog dated January 14, that the true fiscal deficit for 2018-19 is 4.7%, more than a full percentage point than the number claimed by Finance Minister Nirmala Sitharam’s Budget in July.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India’s fiscal deficit, which essentially maps how much money the Indian government has to borrow to make up the gap between its expenditure and its revenues, was just 3.4 per cent of the gross domestic product (GDP) for 2018-19. </span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">For the current year, the Union Budget presented in July expected the fiscal deficit to be 3.3 per cent of the GDP.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">It has been suspected that the official figures hide the true fiscal deficit. That’s because some of the government’s expenditure was funded by the so-called “off-budget” items. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">As a result, while this extra expenditure did not figure in the official calculations, it did mean that the true fiscal deficit or borrowing by the public sector was higher than the level presented in the Budget.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Fiscal deficit</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Fiscal Deficit is the difference between the Revenue Receipts plus Non-debt Capital Receipts (NDCR) and the total expenditure.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In other words, fiscal deficit is reflective of the total borrowing requirements of Government.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Significance</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In the economy, there is a limited pool of investible savings. These savings are used by financial institutions like banks to lend to private businesses and the governments.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">If this ratio is too high, it implies that there is a lesser amount of money left in the market for private entrepreneurs and businesses to borrow. Lesser amount of this money, in turn, leads to higher rates of interest charged on such lending.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A high fiscal deficit and higher interest rates at a time like this would also mean that the efforts of the Reserve Bank of India to reduce interest rates are undone.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Way forward</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">There is no set universal level of fiscal deficit that is considered good. Typically, for a developing economy, where private enterprises may be weak and governments may be in a better state to invest, fiscal deficit could be higher than in a developed economy.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In developing economies, governments also have to invest in both social and physical infrastructure upfront without having adequate avenues for raising revenues.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In India, the Fiscal Responsibility and Budget Management Act requires the central government to reduced its fiscal deficit to 3 per cent of GDP. India has been struggling to achieve this mark.</span></span></p>
</li>
</ul>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 3541,
'title' => 'The Annual Budget',
'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Union Finance Minister Nirmala Sitharaman will present the Annual Budget of the government on 1st of February.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A government budget is a document prepared by the government or other political entity presenting its anticipated revenues and proposed spending for the coming financial year.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">According to <strong>Article 77 (3)</strong>, the Union Finance Minister has been made responsible by the President to prepare the budget also called as the annual financial statement and pilot it through the parliament. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Introduction and voting on Demands for Grants is confined only to the Lok Sabha. The Lok Sabha has the power to assent, refuse to assent and even to reduce the amount of the Demand for Grant. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In Rajya Sabha, there is only general discussion of the budget. The upper house does not vote on the Demands for Grants.</span></span></p>
</li>
</ul>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In parliament, the budget goes through 5 stages</span></span></p>
</li>
</ul>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Presentation of budget with Finance Minister’s speech</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">General discussion of the budget. After this, there is an adjournment of houses so that standing committees scrutinises the demand for grants for a month.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Voting on demand for grants in Lok Sabha</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Passing of appropriation bills</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Passing of Finance bills.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Discussion</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Discussion of Budget is done in two stages. In the <strong>first</strong> stage, broad outlines of the budget, principle and policies underlying it are to be discussed in general discussion of the budget which lasts for about 4-5 days. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In <strong>second</strong> stage discussion is held based on reports of concerned Departments/Ministries standing committees, which is usually done after a month of a general discussion of the budget. Standing committees submit reports to the house which are persuasive in nature.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Cut motions</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Cut motions are motions for reduction in various demands for grants. Cut motions seek a reduction of an amount of demands of grants.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Economy cut</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Economy cut motion demands reduction of a specified amount from the demand for Grant representing the welfare of the economy.</span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Policy cut</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The demand for a grant is reduced to Re.1 representing the disapproval of the policy underlying the demand. A member giving such notice should indicate precise terms, the particulars of the policy which he proposes to discuss. </span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Token cut</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Token cut motion is used to voice a grievance. In token cut, the amount of the Demand for Grant is reduced by Rs.100 in order to express a specific grievance.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Budgetary terms</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Disinvestment Receipts</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The term refers to the money raised by the Government through disinvestment, or the sale of its equity stake in companies it owns.</span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Fiscal Responsibility and Budget Management Act</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The Act is an attempt to make the Government adhere to a phased plan to reduce fiscal deficit, which denotes an excess of expenditure over revenue.</span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Dividend Distribution Tax</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This is a tax levied on companies that pay out dividends to its shareholders, i.e. share a portion of earnings with them.</span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Venture Capital Funds</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">These are funds that invest in start-ups, a financially riskier proposition than investing in established companies.</span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Securities Transaction Tax</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">It is a tax on all transactions done over the stock exchanges involving securities such as shares, derivatives, and equity-linked mutual funds.</span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Wholesale Price Index (WPI)</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">It is a measure of inflation, or price change, arrived at after regularly measuring the prices of a slew of wholesale goods.</span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Consumer Price Index (CPI)</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">It is a measure of inflation, or price change, arrived at after regularly measuring the prices of a slew of household goods and services.</span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Capital Gains Tax</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">It is a tax on the gains that ensue when an asset is sold for a price higher than what it was bought for.</span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Ad Valorem Tax</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This is charged as a percentage of the value of a good or service, not at a specific rate per unit.</span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Advance Pricing Agreement (APA)</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">It is an agreement between a taxpaying entity and the taxman that indicates how the former will price transactions with its associates.</span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Fiscal Policy</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">It is what a Government does to influence the course of an economy through decisions on taxes and spending.</span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Monetary Policy</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">It is what a central bank does to influence the course of an economy through decisions on money supply and interest rate.</span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Direct Tax</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A tax such as the income-tax, which has to be borne by the person it or entity it is imposed on.</span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Indirect Tax</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A tax on goods and services, typically, levied on an entity but paid by another.</span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>External Commercial Borrowing (ECB)</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">ECBs refer to commercial loans with a minimum three-year maturity that can be raised from lenders from overseas where interest rates are lower than in India.</span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Fiscal Consolidation</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The term refers to the things a Government does to maintain good fiscal health — cut debt and wasteful expenditure and improve revenue opportunities.</span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Current Account Deficit</strong></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">It is a trade measure that shows the value of a country’s imports of goods and services to be higher than the value of its exports.</span></span></p>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 3552,
'title' => 'Rebooting economy',
'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The fine print of the Union Budget for 2020-21 of the government seems to be to boost the disposable incomes of the Indian consumers.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Typically, there are four engines of GDP (gross domestic product) growth. These are as follows: Consumption of the private individuals (or C), Demand for goods from the government (G), investments from the businesses (I) and the net demand from exports and imports (NX).</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong> GDP = C + G + I + NX</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Corporate investments (I) engine has been slowing down since 2013. Thanks to domestic bottlenecks and a sombre global demand, net exports (NX) too were not of much help. That left only C and G – that is private consumption and government expenditure.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">For the past two years, even private consumption started faltering and this has aggravated in the past one year, as witnessed in the slump in sales across the board. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">With a sharp fall in revenues, there is no way the government can spend without gravely flouting the Fiscal Responsibility and Budget Management (FRBM) Act targets.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>How will the new strategy work?</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The government’s strategy is that leaving people with more money will help boost their consumption levels, which are at present quite low, as witnessed in the slump in sales of goods and services across the board.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Higher consumption will bring down the inventories in the economy and incentivise businesses to invest again. The ground has been prepared to make investments attractive for businesses as the government has already cut the corporate tax rate last year.</span></span></p>
</li>
</ul>
<p><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">Once the business activity recovers, the government would have more taxes coming to it and would be in a better position in the coming years to spend more prolifically.</span></span></p>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 3708,
'title' => 'Imported food inflation',
'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Is food inflation in India influenced by global price movements? On account of certain evidences it appears that international inflation influences domestic prices too.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Retail and wholesale food inflation rates for December 2019 were the highest since November 2013 and December 2013 respectively. Simply put, since October or so, food inflation has made a comeback, both in India and globally.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The United Nations Food and Agriculture Organisation’s (FAO’s) food price index, which is a measure of the change in international prices of a basket of major food commodities with reference to a base period (2002-04), touched 182.5 points in January 2020, the highest since the 185.8 level of December 2014.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Also, the year-on-year inflation rate based on this index has risen steadily from 1.13% in August 2019 to 2.86% in September, 5.58% in October, 9.33% in November, 12.22% in December, and now, 11.33% for January 2020.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This sharp surge in global food prices is reflected in trends in India as well. Annual consumer food price index (CFPI) inflation stood at just 2.99% in August 2019, before climbing to 5.11%, 7.89%, 10.01%, 14.19% and 13.63% in the succeeding five months.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">While the recent rise in domestic food prices has been blamed largely on “local” factors like poor rainfall during the first half (June-July) of the monsoon season and too much of it thereafter till about mid-November, some of it is also “<strong>imported</strong>”.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">While global prices can be transmitted to the domestic market too through exports, traders would sell abroad if realisations are better relative to the local market.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Way forward</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The first is the novel coronavirus epidemic that has reduced Chinese buying of everything from palm oil and soyabean to milk powder and meat. Palm oil prices in Malaysia have plunged from 2,922 ringgit ($719) to 2,725 ringgit ($658) over the last one month.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The second is crude oil. Brent crude prices had touched $70 per barrel after the January 3 United States airstrike that killed Iran’s top military commander, but have dropped since, closing at $57.67/barrel.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The third is the prospect of a bumper rabi (winter-spring) crop in India. The kharif harvest turned out to be not so good because of excess and unseasonal rain. That same rain, though, has helped boost rabi acreage by 9.5% compared to last year. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The arrival of this crop in the mandis from March should cool down prices, especially of vegetables and pulses, which showed the highest year-on-year retail inflation of 50.19% and 16.71% in January.</span></span></p>
</li>
</ul>
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(int) 37 => object(Cake\ORM\Entity) {
'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 3778,
'title' => 'Ways to measure poverty in India',
'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">President Donald Trump praised India for having lifted over 270 million people out of poverty in a single decade, and said that “12 Indian citizens are lifted out of extreme poverty every single minute of every single day”.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Poverty can be defined as a condition in which an individual or household lacks the financial resources to afford a basic minimum standard of living.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The official poverty line is the expenditure incurred to obtain the goods in a “poverty line basket” (PLB). Poverty can be measured in terms of the number of people living below this line (with the incidence of poverty expressed as the head count ratio). The “depth” of poverty indicates how far the poor are below the poverty line.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Six official committees have so far estimated the number of people living in poverty in India,<strong> the working group of 1962</strong>;<strong> V N Dandekar and N Rath in 1971</strong>;<strong> Y K Alagh in 1979</strong>;<strong> D T Lakdawala in 1993</strong>;<strong> Suresh Tendulkar in 2009</strong>; <strong>and C Rangarajan in 2014</strong>. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The government did not take a call on the report of the Rangarajan Committee and therefore, poverty is measured using the Tendulkar poverty line. As per this, 21.9% of people in India live below the poverty line.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The PLB comprises goods and services considered essential to a basic minimum standard of living, food, clothing, rent, conveyance, and entertainment. The price of the food component can be estimated using calorie norms or nutrition targets.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Until the 1990s, the calorie norms method was used — it was based on the minimum number of calories recommended by the Indian Council of Medical Research (ICMR) for a household of five members.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The <strong>Lakdawala</strong> Committee assumed that health and education is provided by the state, therefore, expenditure on these items was excluded from the consumption basket it proposed.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Since expenditure on health and education rose significantly in the 1990s, the <strong>Tendulkar</strong> Committee included them in the basket. As a result of revisions to the basket and other changes in the method of estimation, the percentage of people living below the poverty line in 1993-94 rose from 35.97% to 45.3%.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Expenditure on health and education were not considered until the Tendulkar Committee, which was criticized for setting the poverty line at just Rs 32 per capita per day in urban India (and at Rs 27 in rural India).</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The <strong>Rangarajan</strong> Commission was criticized for selecting the food component arbitrarily, the emphasis on food as a source of nutrition overlooks the contribution of sanitation, healthcare, access to clean water, and prevalence of pollutants.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Importance of poverty estimation</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Poverty numbers matter because central schemes like Antyodaya Anna Yojana (which provides subsidided foodgrains to households living below the poverty line) and Rashtriya Swasthya Bima Yojana (health insurance for BPL households) use the definition of poverty given by the NITI Aayog or the erstwhile Planning Commission. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The Centre allocates funds for these schemes to states based on the numbers of their poor. Errors of exclusion can deprive eligible households of benefits.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Other methods of estimation of poverty</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Oxford University researchers Sabina Alkire and James Foster devised the <strong>multidimensional poverty index</strong> (MPI) to capture poverty using 10 indicators: nutrition, child mortality, years of schooling, school attendance, ownership of assets, and access to proper house, electricity, drinking water, sanitation, and clean cooking fuel.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The MPI is a more comprehensive measure of poverty because it includes components that capture the standard of living more effectively. It uses “outcomes” rather than expenditure, the presence of an undernourished person in the household will result in it being classified as “poor”, regardless of the expenditure on nutritious food.</span></span></p>
</li>
</ul>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 3808,
'title' => 'Effect of Coronavirus on global market',
'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Global markets went down as investors stampeded out of stocks and commodities and rushed to the relative safety of government bonds, prompted by fears of a global recession due to the spread of the coronavirus<strong>.</strong></span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Indices across the world, beginning with Tokyo’s Nikkei, Seoul’s Kospi and European indices such as the FTSE 100 in London and Frankfurt’s DAX, were all bathed in red as investors rushed to dump shares.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The BSE Sensex sank by 1,448.37 points, or 3.64%, to close at 38,297.29. This is its sixth straight session of loss, and the index is now 3,976 points lower than its high of 42,273.87 points registered on January 20 this year.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Reflecting the turmoil in the stock markets, the rupee hit a six-month low against the dollar, at ?72.27, before recovering marginally to close at ?72.21.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Yields on U.S. Treasury bills fell sharply as investors embraced its relative safety over stocks. The bond markets displayed an inverted yield curve where short-term bills yield more than long-term ones, signifying nervousness over economic prospects.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Yields on the 10-year Treasury bills fell to 1.17%, even as that on the 3-month bill remained at 1.43%. General economic wisdom holds that an inverted yield curve is the harbinger of a recession.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Oil prices experienced their worst week since 2016, with the prices of the benchmark Brent crude falling to as low as $50.51 a barrel. Elsewhere in the commodity markets, metal prices fell by up to 6%.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Global borrowings benchmark Libor experienced its worst single-day drop in a decade, falling to 1.46275%, as the markets raised their bets on accelerated rate cuts in the U.S. as a response to the economic turmoil.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Ratings agency Moody’s warned that the impact of disruptions in global supply chains, investment pullbacks by companies and slowing travel could trigger a global recession in the first half of 2020.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Government bonds</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A government bond is a debt security issued by a government to support government spending. Government bonds can pay periodic interest payments called coupon payments. Government bonds are considered <strong>low</strong>-<strong>risk</strong> investments since the issuing government backs them.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Government bonds are issued by governments to raise money to finance projects or day-to-day operations. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">However, government-backed bonds, particularly those in emerging markets, can carry risks that include country risk, political risk, and central-bank risk, including whether the banking system is solvent.</span></span></p>
</li>
</ul>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 3940,
'title' => 'Export registers growth',
'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India’s exports rose for the first time in seven months in February growing by 2.91% to $27.65 billion, according to the commerce ministry data.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Exports declined seven months of 11 in the current fiscal year, for which the data is available. Trade deficit declined to $143.12 billion in the first 11 months of FY20, against $173 billion a year ago.</span></span></p>
<p style="margin-right:0in"> </p>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">All the major foreign exchange earners such as <a href="https://www.business-standard.com/topic/petroleum" target="_blank">petroleum </a>products, engineering goods, and electronic items registered expansion in the month year-on-year.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Imports too grew by 2.48% to $37.5 billion, leaving a trade deficit of $9.85 billion as against $9.72 billion in February 2019.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Oil imports jumped by 14.26% to $10.76 billion in February compared to 9.41 billion in the year-ago month.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The impact of the coronavirus, the decline in crude oil prices, and constrained demand for gold are likely to contribute to a small current account surplus in Q4FY20.</span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong> Trade deficit</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:12pt"><span style="background-color:white"><span style="font-family:"Times New Roman",serif"><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">A trade deficit occurs when a country's </span></span><a href="https://www.investopedia.com/terms/i/import.asp"><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">imports</span></span></a><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif""> exceed its </span></span><a href="https://www.investopedia.com/terms/e/export.asp"><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">exports</span></span></a><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif""> during a given time period. A trade deficit represents an outflow of domestic currency to foreign markets. It is also referred to as a negative balance of trade (</span></span><a href="https://www.investopedia.com/terms/b/bot.asp"><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">BOT</span></span></a><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">).</span></span></span></span></span></p>
</li>
</ul>
<p style="margin-right:0in"><span style="font-size:12pt"><span style="background-color:white"><span style="font-family:"Times New Roman",serif"><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">Trade Deficit = Total Value of Imports – Total Value of Exports</span></span></span></span></span></p>
<ul>
<li>
<p><span style="font-size:12pt"><span style="background-color:white"><span style="font-family:"Times New Roman",serif"><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">A “trade deficit” or net amount can be calculated on different categories within an international transaction account. These include goods, services, goods and services, current account, and sum of current and capital account.</span></span></span></span></span></p>
</li>
<li>
<p><span style="font-size:12pt"><span style="background-color:white"><span style="font-family:"Times New Roman",serif"><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">The current account includes goods and services, plus primary and secondary income payments. Primary income includes payments (a.k.a., returns) from direct investment (greater than 10% ownership of a business), portfolio investment (financial markets) and other. </span></span></span></span></span></p>
</li>
<li>
<p><span style="font-size:12pt"><span style="background-color:white"><span style="font-family:"Times New Roman",serif"><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">Secondary income payments include government grants (foreign aid) and pension payments, and private remittances to households in other countries (e.g., sending money to friends and relatives).</span></span></span></span></span></p>
</li>
<li>
<p><span style="font-size:12pt"><span style="background-color:white"><span style="font-family:"Times New Roman",serif"><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">The capital account includes exchanges of assets such as insured disaster-related losses, debt cancellation, and transactions involving right (e.g., mineral, trademark, or franchise).</span></span></span></span></span></p>
</li>
</ul>
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'tag' => 'Basics of Economics',
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'title' => 'Government raises excise duty cap on fuel',
'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The government has raised the cap on special additional excise duty on petrol and diesel to Rs 18 and Rs 12 per litre, respectively, as per the amendments in the Finance Bill passed in the Parliament.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This move which would help the government to raise excise duty on fuel further in future. The change in the cap will enable the government to raise duties on petrol and diesel by another Rs 8 per litre each.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Every rupee hike in excise duty is expected to yield roughly Rs 13,000-14,000 crore annually. The slump in global crude oil prices enables the government to raise these duties substantially without immediately putting the burden on the consumer. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">But there is expected to be a demand slowdown for fuels with a nearly country wide lockdown in the wake of coronavirus. With airlines, railways, trucks and passenger cars going off the roads, petrol, diesel and ATF (aviation turbine fuel) consumption is expected to fall drastically.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The excise duties on petrol and diesel include basic excise duty, special additional excise duty, and road and infrastructure cess, which is levied as additional excise duty.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Government is increasing duties on petrol and diesel to raise revenues in view of a tight fiscal situation. Slump in global crude oil prices, alongside possibility of a global economic recession, has forced the government to look for avenues to raise revenues to support growth. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">With major companies going for production shut downs, industry players have suggested the government to boost fiscal stimulus in the wake of demand collapse triggered by the coronavirus.</span></span></p>
</li>
<li>
<p><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">Saudi Arabia had triggered the crash in prices by announcing a sharp increase in oil production after Russia declined to reduce oil supply to contain a fall in oil prices due to declining demand in a meeting of petroleum exporting countries.</span></span></p>
</li>
</ul>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 4162,
'title' => 'India’s service sector under contraction',
'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India’s services sector activity contracted during March as the COVID-19 pandemic dented demand, particularly in overseas markets, according to a monthly survey.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The headline figure fell by over 8 points, undoing the strong gains in growth momentum seen throughout 2019. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Business activity was reduced in response to weaker demand and firms responded by reducing their workforces as intakes of new business were insufficient to maintain payroll numbers.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The survey further noted that there were widespread reports of new business receipts struggling due to the COVID-19 outbreak, deterring discretionary spending. A number of firms also mentioned lower sales as a result of liquidity issues.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Meanwhile, the Composite PMI Output Index that maps both the manufacturing and services sector fell to 50.6 in March, down 7 points from February’s 57.6 to signal a sharp slowdown in private sector output growth and bringing an abrupt end to the recent strong upward-moving expansion trend.</span></span></p>
</li>
</ul>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Service sector</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The Service Sector, also called <strong>tertiary</strong> sector, is the third of the three traditional economic sectors. The other two are the primary sector, which covers areas such as farming, mining and fishing; and the secondary sector which covers manufacturing and making things. </span></span></p>
</li>
<li>
<p><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">The service sector provides services, rather than producing material commodities. Activities in the service sector include retail, banks, hotels, real estate, education, health, socialwork, computer services, recreation, media, communications, electricity, gas and water supply.</span></span></p>
</li>
</ul>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 4225,
'title' => 'Helicopter money',
'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Telangana Chief Minister K. Chandrashekhar Rao has urged that RBI should implement quantitative easing policy by modifying FRBM Act and allow helicopter money.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Observing that there is a fall in revenues of both the state and central governments against the backdrop of the coronavirus pandemic, Rao said a policy of Quantitative Easing (QE) is the only way to deal with the situation.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Explaining the issue, he said if funds are pumped into the society, there is a possibility of getting some relief and reviving the system.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This will facilitate the states and financial institutions to accrue funds. We can come out of the financial crisis. Release 5 percent of funds from the GDP through Quantitative Easing Policy.</span></span></p>
</li>
</ul>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Helicopter money</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This is an unconventional monetary policy tool aimed at bringing a flagging economy back on track. It involves printing large sums of money and distributing it to the public.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Unexpectedly dumping money onto a struggling economy with the intention to shock it out of a deep slump.Under such a policy, a central bank directly increase the money supply and, via the government, distribute the new cash to the population with the aim of boosting demand and inflation.</span></span></p>
</li>
<li>
<p><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">Quantitative easing also involves the use of printed money by central banks to buy government bonds. But not everyone views the money used in QE as helicopter money. It sure means printing money to monetise government deficits, but the govt has to pay back for the assets that the central bank buys.</span></span></p>
</li>
</ul>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 4267,
'title' => 'Effect of pandemic on gold prices',
'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Much before Covid-19’s impact reverberated across economies and led to a crash in global stock markets, gold prices had started their upward move to culminate into a nearly 40 per cent jump in less than a year.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"> The present gold prices in India are even higher, as they jumped from around Rs 32,000 per 10 grams to nearly Rs 46,800 per 10 gram during the same period, a nearly 45 per cent return.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Since gold is mostly imported commodity into India, the depreciation of the rupee vis-a-vis the US dollar of around 7 per cent since last September pushed the gold prices in India even higher.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">There have been intermittent reports based on economic indicators suggesting that the US economy could enter into recession after a record 11 years of economic surge since the global financial crisis of 2008. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This expectation of recession sowed the seeds of the gold rally, and the Covid-19 impact, which has virtually led to a shutdown of major economies across the world, added momentum to the rising gold prices as a major global recession now looks certain.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Apart from this, major gold buying leading central banks of China and Russia over the last two years supported higher gold prices. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">While gold by itself does not produce any economic value, it is an efficient tool to hedge against inflation and economic uncertainties. It is also more liquid when compared with real estate and many debt instruments which come with a lock-in period.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The empirical findings suggest that gold prices fall with a rise in equity prices. Gold prices also move in tandem with heightened economic policy uncertainty, thereby indicating the safe haven feature of the asset.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Given the economic uncertainty, gold is expected to touch a new all time high, which will be over $1900 an ounce. In India, the prices will also be supported by any further weakness in the Indian rupee.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">As an when economic recovery picks up pace, which is now expected in late 2021 only, investors will start allocating more funds to risk assets like stocks, real estate and bonds and pull out money from safe havens such as gold, US dollar, government debt and Japanese yen. </span></span></p>
</li>
<li>
<p><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">As per historical trends, when equity and risk assets start an upward trend, gold typically falls significantly as was the case from 2011 till 2015.</span></span></p>
</li>
</ul>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 4314,
'title' => 'Effect of COVID-19 pandemic on Rupee exchange rate',
'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The economic disruption due to the spread of the novel Coronavirus disease (COVID-19) over the past few months has adversely affected various aspects of the Indian economy.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">One could look at the growth rates of gross domestic product and gross value added. Or, in the absence of such data, one could treat other high-frequency data like sales of automobiles etc. as a proxy. In this regard, the exchange rate of the rupee can also be an apt marker on the state of the Indian economy’s competitiveness.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Essentially, a currency’s exchange rate vis-a-vis another currency reflects the relative demand among the holders of the two currencies. This demand, in turn, depends on the relative demand for the goods and services of the two countries. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">If the US dollar is stronger than the rupee, then it shows that the demand for dollars (by those holding rupee) is more than the demand for rupees (by those holding dollars).</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Typically, stronger economies have stronger currencies. For instance, the US economy is relatively stronger than India’s and this is reflected in one US dollar being equal to around 76 rupees. The rupee has been losing value (or depreciating or weakening) against the dollar over the past few months.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The Reserve Bank of India tabulates the rupee’s Nominal Effective Exchange Rate (NEER) in relation to the currencies of 36 trading partner countries. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This is a weighted index — that is, countries with which India trades more are given a greater weight in the index. A decrease in this index denotes depreciation in rupee’s value; an increase reflects appreciation.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">There is one more measure that is even better at capturing the actual change. This is called the Real Effective Exchange Rate (REER) and is essentially an improvement over the NEER because it also takes into account the domestic inflation in the various economies.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Even in REER terms, the rupee has depreciated in March and fallen to its lowest level since September 2019. As the graph shows, the difference between trends of NEER and REER was due to India’s domestic retail inflation being lower relative to the other 36 countries. As domestic inflation started rising, the REER, too, started depreciating like the NEER.</span></span></p>
</li>
</ul>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>REER </strong>and<strong> NEER</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The real effective exchange rate (REER) is the weighted average of a country's currency in relation to an index or basket of other major currencies. The weights are determined by comparing the relative trade balance of a country's currency against each country within the index.</span></span></p>
<p style="margin-right:0cm"> </p>
<p><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">The nominal effective exchange rate (NEER) is an unadjusted weighted average rate at which one country's currency exchanges for a basket of multiple foreign currencies. The nominal exchange rate is the amount of domestic currency needed to purchase foreign currency.</span></span></p>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 4346,
'title' => 'Printing currency',
'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The COVID-19 spread has meant that the Indian economy, which was already slowing down rapidly over the past couple of years, has completely stalled. There is pressure on the government to expand the economy by printing more currency.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">With a nationwide lockdown, incomes have fallen and so have consumption levels. In other words, the demand for goods and services in the economy has gone down. Most estimates suggest that India’s GDP (gross domestic product) will barely grow in the current financial year.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The Reserve Bank of India (RBI) has been trying to boost the liquidity in the financial system. It has bought government bonds from the financial system and left it with money. Most banks, however, are unwilling to extend new loans as they are risk-averse.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The government’s finances were already overextended going into this crisis, with its fiscal deficit (the total amount of borrowings to bridge the gap between its spending and revenues) way over the permissible limit.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Under normal circumstances, just because the economy has stalled and the government will not be getting its revenues, the general government fiscal deficit is expected to shoot up to around 15% of GDP when the permissible limit is only 6%.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">On top of that, if the government was to provide some kind of a bailout or relief package, it would have to borrow a huge amount. The fiscal deficit will go through the roof.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Data show that savings of domestic households have been faltering and are barely enough to fund the government’s existing borrowing needs. Foreign investors, too, have been pulling out and rushing to “safer” economies like the US, and are unwilling to lend in times of such uncertainty.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">So there isn’t enough money in the market for the government to borrow. Moreover, as the government borrows more from the market, it pushes up the interest rate.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">There can be a situation where the government deals with the RBI directly and asks it to print new currency in return for new bonds that the government gives to the RBI. Now, the government would have the cash to spend and alleviate the stress in the economy.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This is different from the “indirect” monetising that RBI does when it conducts the so-called Open Market Operations (OMOs) and/ or purchases bonds in the secondary market.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Direct monetisation of deficit is a highly contested issue. Ideally, this tool provides an opportunity for the government to boost overall demand at the time when private demand has fallen. But if governments do not exit soon enough, this tool also sows the seeds for another crisis.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A little increase in inflation is healthy as it encourages business activity. But if the government doesn’t stop in time, more and more money floods the market and creates high inflation.</span></span></p>
</li>
<li>
<p><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">The other argument against direct monetising is that governments are considered inefficient and corrupt in their spending choices — for example, whom to bail out and to what extent.</span></span></p>
</li>
</ul>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 4693,
'title' => 'State of Indian economy through GDP numbers',
'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The Ministry of Statistics and Programme Implementation (MoSPI) released the data for the<strong> </strong>fourth quarter (January to March) of the last financial year (2019-20) as well as the provisional estimates of the full-year GDP growth rate.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This sharp deceleration in nominal GDP growth shows the continued weakening of India’s growth momentum even before it was hit by the Covid-19 induced lockdown in the last week of March.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The provisional figure states that the Indian economy grew by 4.2% in 2019-20. This is the lowest annual growth rate of GDP registered under the new GDP data series which uses 2011-12 as the base year.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This is not only a far cry from the 8.5% growth that the government expected in July 2019 when it presented the Budget for that year but also significantly lower than the 5% that the Second Advance Estimates suggested at the end of February earlier this year.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A similar fall can be seen in the trajectory of the nominal GDP, which is the observed variable. Real GDP is arrived at by subtracting the nominal GDP growth by the inflation level.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">At the time of the 2019-20 Budget presentation in July, nominal GDP was expected to grow by 12%-12.5%. By the end of it, provisional estimates peg it at just 7.2%. In 2018-19, the nominal GDP grew by 11%.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The nominal GDP growth rate is the base of all fiscal calculations in the country. A sharp divergence in nominal GDP growth rate basically upsets all other calculations in the economy. For instance, a sharp fall means the government does not get the revenues it had hoped for and, as such, it can’t spend as much as it wanted to.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The substantial deceleration in nominal GDP growth reflects poorly on the government’s fiscal marksmanship. In other words, it shows that the government was not able to assess the magnitude of economic growth deceleration that was underway.</span></span></p>
</li>
<li>
<p><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">The provisional GDP estimates for 2019-20 support the notion that the growth deceleration since 2016-17 simply became worse as the last financial year progressed.</span></span></p>
</li>
</ul>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 4965,
'title' => 'Expenditure rationalisation',
'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The government has extended its expenditure rationalisation for the second quarter of this financial year, giving rise to concerns that it may end up spending much lower than the budgeted levels.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Lower revenue stream and the rising debt levels of central and state governments on account of enhanced borrowing to deal with the COVID-19 pandemic-related expenditure have also led to concerns of the debt-GDP ratio breaching the notional red line of 80 percent from the levels of 70 percent seen last fiscal.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The expenditure rationalization is being done presumably to allow enough to manage the stimulus package announced last month, especially as revenues are expected to be sharply lower than estimates this year. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Direct taxes have declined by over 25 percent in the first quarter, while GST collections have been only 45 percent of the monthly target. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Economists point to several key elements of the stimulus package such as the distribution of funds to Micro, Small and Medium Enterprises under the 100%</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Emergency Credit Line Guarantee Scheme struggling to take off, thereby worsening the impact of the government expenditure compression that is currently underway.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Several rating agencies and economists have projected the debt-GDP ratio rising to 84-85 percent of the GDP. Even as debt sustainability and fiscal consolidation are always a matter of concern, some economists point out that holding down debt levels should not compromise on GDP growth.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">An aggressive fiscal policy at this juncture is being seen as necessary for economic revival, with some economists emphasising that since the revenue slippage estimates are already high, fiscal deficit is anyway going to get pushed to significantly higher levels.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The IMF’s latest projections for debt numbers, published in April, showed that debt-GDP levels are expected to worsen for almost all emerging markets this year.</span></span></p>
</li>
</ul>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Fiscal deficit</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A fiscal deficit is a shortfall in a government's income compared with its spending. The government that has a fiscal deficit is spending beyond its means.</span></span></p>
<p><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">A fiscal deficit is calculated as a percentage of gross domestic product (GDP), or simply as total money spent in excess of income. </span></span></p>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 5142,
'title' => 'Rising of Indian markets',
'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The Covid-19 curve has hardly flattened and uncertainty prevails over economic revival with India staring at its worst growth performance in four decades. Despite this, stock markets have rebounded to March levels.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">It was expected that the Indian market will contract due to fears caused by the Covid-19 pandemic but instead, the market is going strong as indicated by the trend.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The market always looks at the future. At the current level of the Sensex, the Street is discounting that India will be the current account surplus in FY21 due to lower oil imports, lower gold imports, and reduction in imports from China.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The market is pricing in the resumption of normal economic activities, with a medical solution to the Covid-19 pandemic around the corner.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">If the actual scenario in the coming days is better than what is priced by the market, the index can rise from here. If the actual scenario is worse than what is priced by the market, the index will fall from the current level.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The shares of companies had fallen too much, expecting companies to shut down. They have bounced back as their fears have been proven unfounded. Companies have found innovative ways to cut costs and survive the downturn. This boosted the confidence of investors in smaller companies.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">There are a couple of factors driving retail investors to the stock markets. Many young people have recognised the importance of savings and would like to invest for a rainy day.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Many are chasing lower-priced shares in the Z group. Their frenzied buying has pushed prices higher, giving them instant gains.</span></span></p>
</li>
<li>
<p><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">Markets will need strong earnings in FY22, apart from steady flows from both local and global investors. The markets will need lower oil prices, a lower trade deficit with China, and lower gold imports to see India becoming current account surplus in FY21.</span></span></p>
</li>
</ul>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 5182,
'title' => 'Arresting GDP slide through deficit funding',
'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A report by the State Bank of India has recommended direct monetization as a possible way of funding the Centre’s deficit at lower rates, without increasing inflation and affecting debt sustainability. </span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This is seen as crucial at a time when the country’s debt levels are rising, amid a likely contraction in GDP and falling government revenues.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The report notes that bringing growth back is the only mantra to a sustainable debt trajectory, and in this light, it has suggested the government raise funds directly from the Reserve Bank of India through the issuance of “COVID perpetual bonds” or such instruments.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Monetisation means that the RBI directly funds the central government’s deficit. Until 1997, the government used to sell securities — ad hoc Treasury-Bills — directly to the RBI, and not to financial market participants. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This allowed the government to technically print equivalent amounts of currency to meet its budget deficit. This practice was stopped over its inflationary impact and in favour of fiscal prudence.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The report argues that the Fiscal Responsibility and Budget Management (FRBM) Act allows direct monetisation of deficit in certain exceptional circumstances, the COVID pandemic being one such. It expects this not to be inflationary, given the stagnant demand.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Most agencies expect India’s GDP to contract by more than 5 percent this year, with April-June being the hardest hit. Shrinking revenues as a result of slump in economic activity mean the government will run far short of its revenue targets, forcing it to raise debt from the markets.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Monetisation of the deficit would mean the Centre will be able to raise funds at a lower cost without putting pressure on the bond markets.</span></span></p>
</li>
<li>
<p><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">Low interest rates and high GDP are crucial for debt sustainability, as higher growth means government’s revenue expansion will outstrip any spike in debt repayment.</span></span></p>
</li>
</ul>
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'tag' => 'Basics of Economics',
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'title' => 'Production linked incentive scheme',
'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Global companies such as Samsung, Pegatron, Flex, and Foxconn are in the final stages of negotiations to benefit from the Ministry of Electronics and Information Technology’s (MeitY) production linked incentive (PLI) scheme for making mobile phones and certain other specified electronic components.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">As a part of the <strong>National Policy on Electronics</strong>, the IT ministry had on April 1 notified a scheme which would give incentives of 4-6 percent to electronics companies which manufacture mobile phones and other electronic components such as transistors, diodes, thyristors, resistors, capacitors and nano-electronic components such as micro electromechanical systems.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Companies that make mobile phones which sell for Rs 15,000 or more will get an incentive of up to 6 percent on incremental sales of all such mobile phones made in India.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In the same category, companies which are owned by Indian nationals and make such mobile phones, the incentive has been kept at Rs 200 crore for the next four years.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The scheme, according to officials, will on one hand attract big foreign investment in the sector, while also encouraging domestic mobile phone makers to expand their units and presence in India.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The PLI scheme will be active for five years with financial year (FY) 2019-20 considered as the base year for calculation of incentives. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This means that all investments and incremental sales registered after FY20 shall be taken into account while computing the incentive to be given to each company.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">All electronic manufacturing companies which are either Indian or have a registered unit in India will be eligible to apply for the scheme. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">These companies can either create a new unit or seek incentives for their existing units from one or more locations in India.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Any additional expenditure incurred by companies on the plant, machinery, equipment, research and development and transfer of technology for the manufacture of mobile phones and related electronic items will be eligible for the incentive scheme.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">However, all investments done by companies on land and buildings for the project will not be considered for any incentives or determine the eligibility of the scheme.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Apart from companies such as LG India, which already have manufacturing units in India have also shown interest in the scheme.</span></span></p>
</li>
<li>
<p><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">In the budget-category phone segment also, companies such as Lava, Dixon, and Karbonn have applied.</span></span></p>
</li>
</ul>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 5342,
'title' => 'Link between inflation rate and interest rate',
'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The Reserve Bank of India, decided to keep the benchmark interest rates of the economy unchanged. The decision was taken after three days of deliberations by the Monetary Policy Committee of the RBI.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">There was an expectation for the RBI to cut the repo rate given the increasingly worsening forecast about India’s economic growth.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">To be sure, forecasts for India’s gross domestic product (GDP) growth have been rolled back sharply ever since Covid-19 disruption hit the economy.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">At present, most experts expect the economy to contract sharply in the current financial year. There were others who expected the RBI to stay put and avoid cutting the repo rate because retail inflation had been above the RBI’s comfort zone for most of this calendar year.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">As more and more money chases the existing set of goods, prices of such goods rise. In other words, inflation (which is nothing but the rate of increase in prices) spikes.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">To contain inflation, a country’s central bank typically nudges up the interest rates in the economy. By doing so, it incentivises people to spend less and save more because saving becomes more profitable as interest rates go up. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">As more and more people choose to save, money is sucked out of the market and inflation rate moderates.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">When growth contracts, as was happening right through 2019, then typically, people’s incomes also get hit. As a result, less and less money is chasing the same quantity of goods.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In such situations, a central bank nudges down the interest rates so as to incentivise spending and by that route boost economic activity in the economy. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Lower interest rates imply that it is less profitable to keep one’s money in the bank or any similar saving instrument. As a result, more and more money comes into the market, thus boosting growth and inflation.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">RBI is facing an odd situation at present: GDP is contracting even as inflation is rising. This is happening because the pandemic has reduced demand, on the one hand, and disrupted supply on the other.</span></span></p>
</li>
<li>
<p><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">It is true that for containing inflation, RBI should raise interest rates. And under normal circumstances, it would have done just that. But raising interest rates at this stage would be catastrophic for India’s GDP growth.</span></span></p>
</li>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 5302,
'title' => 'GST revenue sharing',
'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The distribution of GST proceeds has triggered a new flashpoint in Centre-state relations amid fresh indications of delayed compensation payments and dues to the states.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The concerns started surfacing in October last year when the payments to states got delayed as GST revenues came in lower than expected. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The Covid-19 pandemic has deepened the economic slowdown and impacted revenues, with GST collections recording a 41% decline in the April-June quarter.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In the ongoing financial year, the SGST (state GST) revenue for June has been Rs 23,970 crore, while monthly protected revenue is Rs 63,706 crore, leaving a gap of Rs 39,736 crore Only Rs 14,675 crore has been collected as compensation cess in April-June, including Rs 7,665 crore in June.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The Centre has cleared compensation dues for FY20 of Rs 1.65 lakh crore, while the collection under the compensation cess fund was only Rs 95,444 crore, implying the payments were over 70% higher than the collection.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The gap was partly bridged by money from the compensation fund that had remained unutilised in the first two years of GST, along with Rs 33,412 crore that was ploughed back from Consolidated Fund of India to the compensation fund.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">At present, the cess levied on sin and luxury goods such as tobacco and automobiles flows into the compensation fund. In the GST Council meetings in early 2017, states had suggested alternative sources of revenue for the compensation fund in case of a shortfall.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Market borrowing has been discussed in the GST Council as one of the possible solutions, although the legality of the Council in borrowing will need to be explored. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">There is also an emerging view among states in favour of hiking the GST rates or restructuring the GST slabs.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">While Kerala backs such a move and Bihar opposes it, all states are unanimous on sticking to the 14% assured rate for compensation. </span></span></p>
</li>
<li>
<p><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">Some states are also of the view that the compensation period should be extended beyond the stated period of five years.</span></span></p>
</li>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 5571,
'title' => 'India’s GDP growth contracts',
'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The GDP growth in the first quarter of the fiscal year showed a contraction of 23.9% from the previous quarter. This is one of the biggest fall in India’s growth rate.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Since economic liberalisation in the early 1990s, Indian economy has clocked an average of 7% GDP growth each year. This year, it is likely to turn turtle and contract by 7%.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The total value of goods and services produced in India in April, May and June this year is 24% less than the total value of goods and services produced in India in the same three months last year.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Almost all the major indicators of growth in the economy, be it production of cement or consumption of steel, show deep contraction. Even total telephone subscribers saw a contraction in this quarter.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Because of the widespread lockdowns, the data quality is sub-optimal and most observers expect this number to worsen when it is revised in due course.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">With GDP contracting by more than what most observers expected, it is now believed that the full-year GDP could also worsen. A fairly conservative estimate would be a contraction of 7% for the full financial year.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In terms of the gross value added by different sectors of the economy, data show that barring agriculture, where GVA grew by 3.4%, all other sectors of the economy saw their incomes fall.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The worst affected were construction (–50%), trade, hotels and other services (–47%), manufacturing (–39%), and mining (–23%). It is important to note that these are the sectors that create the maximum new jobs in the country. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The total demand for goods and services are generated by factors such as consumption from private individuals, demand from private sector business, government spending and difference between exports and imports.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Private consumption, the biggest engine driving the Indian economy has fallen by 27%. In money terms, the fall is of Rs 5,31,803 crore over the same quarter last year.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The second biggest engine, investments by businesses has fallen even harder it is half of what it was last year same quarter. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">So the two biggest engines, which accounted for over 88% of Indian total GDP, Q1 saw a massive contraction.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The NX or the net export demand has turned positive in this Q1 because India’s imports have crashed more than its exports. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Government’s expenditure went up by 16% but this was nowhere near enough to compensate for the loss of demand (power) in other sectors (engines) of the economy.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Under the circumstances, there is only one engine that can boost GDP and that is the government.</span></span></p>
</li>
<li>
<p><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">Only when government spend more either by building roads and bridges and paying salaries or by directly handing out money can the economy revive in the short to medium term.</span></span></p>
</li>
</ul>
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'metatitle' => 'India’s GDP growth contracts',
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'metadescription' => 'The GDP growth in the first quarter of the fiscal year showed a contraction of 23.9% from the previous quarter. This is one of the biggest fall in India’s growth rate.',
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(int) 54 => object(Cake\ORM\Entity) {
'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 5602,
'title' => 'Factors that will determine course of India’s economy',
'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The first-quarter GDP growth contraction by 24% was on expected lines and shows that the Indian economy has slumped sharply due to the lockdown.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Growth for the full year is likely to be in the region of (—) 6.4 percent, which is premised on a low negative growth number for the first two quarters.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">It has been observed that with the economy moving from the stage of a total lockdown to a gradual opening up of the windows in May and June, the movement from one stage to another did reflect in the macro-economic numbers such as the Index of Industrial Production (IIP).</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">While it is reasonable to assume that the “Unlock” process will be positive for the economic sectors, there is no assurance that there will not be localised lockdowns.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The lockdown affects economic activity as supply chains, which span the entire country, get impacted sharply. Also, business units are not confident about starting or expanding their business.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">So far, support from the government has been more through the indirect route, where food relief for the poor has been combined with more aggressive lending by the financial system with guarantees in different forms.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">To boost growth presently, there should ideally be some additional capital expenditure by the government which goes beyond what has been provided in the budget.</span></span></p>
</li>
<li>
<p><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">By increasing capital expenditure, the government can begin a virtuous cycle of creating assets as well as providing employment.</span></span></p>
</li>
</ul>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 5631,
'title' => 'Decoding GDP contraction',
'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The first-quarter GDP data and the contraction by 23.9%. The measures to be taken to improve growth numbers is of high priority.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The income split showed growth in agriculture, minor declines in financial services, utilities (like electricity and water) and public administration, and major declines in retail, transportation, manufacturing, hotels, and construction.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The expenditure split showed growth in government spending, private consumption was down by a quarter, and investments nearly halved. On both fronts there was little surprise in the GDP release.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The first lockdown curtailed nearly two-thirds of GDP, and while this proportion came down in subsequent phases, till the end of May activities adding up to nearly a fifth of GDP were still restricted. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">While the economic trajectory going forward would be affected by the wealth and income losses seen in the past five months, the decline in the June quarter was almost entirely due to activity restrictions. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This release should also allow the government to calibrate its fiscal response. With a steady recovery in growth rates till the end of the year, the full year decline would be around 10 percent or a loss of about Rs 20 lakh crore.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The worst affected would be informal firms and low-income households, which would exit the pandemic with fewer assets or higher debt. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This could impair their economic potency for a long time, unless the government intervenes fiscally.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The effects of the weak economy in the last five months will now start showing up. Some businesses have shuttered, and the sharp increase in economic uncertainty that we saw since March would have changed savings and investment behaviour for many others.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">There is a need to socialise at least some of the losses for the smaller and informal firms and low-income households. Given weak financial penetration in India, monetary steps are likely to have limited impact on these entities.</span></span></p>
</li>
<li>
<p><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">State governments have fiscal stress, but they also have more administrative control. They should look to permit as many activities as possible.</span></span></p>
</li>
</ul>
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(int) 56 => object(Cake\ORM\Entity) {
'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 6856,
'title' => 'Mutual Funds risk-o-meter',
'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Capital markets regulator Securities and Exchange Board of India (SEBI) has made it mandatory for mutual funds to assign a risk level to schemes, based on certain parameters.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The regulator made it mandatory for mutual fund houses to characterise the risk level of their schemes on a six-stage scale from “Low” to “Very High”.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">All mutual funds shall assign a risk level to their schemes at the time of launch, based on the scheme’s characteristics.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The risk-o-meter must be evaluated on a monthly basis. Fund houses are required to disclose the risko-o-meter risk level along with the portfolio disclosure for all their schemes. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This will have to be displayed on their own websites as well as the website of the Association of Mutual Funds in India (AMFI) within 10 days of the close of each month.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Any change in the risk-o-meter reading with regard to a scheme shall be communicated to the unit-holders of that scheme.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">For measuring the liquidity risk of schemes, listing status, credit rating, and structure of debt instruments is considered.</span></span></p>
</li>
</ul>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Previous risk assessment</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The earlier schemes simply showed the risk level of the category that they belonged to. They did not reflect the riskiness of individual schemes and their respective portfolios.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Fund houses must now assign a risk level out of six available levels after calculating their risk value from their respective portfolios. The “Very High” category is new.</span></span></p>
</li>
</ul>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Significance</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The risk-o-meter will now provide a more objective assessment of the riskiness of a particular scheme to potential investors.</span></span></p>
</li>
<li>
<p><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">If one scheme is generating a higher return than others in the same category, investors will be able to figure out if it is taking a higher risk than others for generating these superior returns.</span></span></p>
</li>
</ul>
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(int) 57 => object(Cake\ORM\Entity) {
'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 6957,
'title' => 'Asset sale targets',
'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Finance Minister Nirmala Sitharaman created a surprise when she announced a disinvestment target of Rs 2.1 lakh crore.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The size of target was three to four times the usual targeted amount. Given its size, it was a vital element in the government’s strategy to keep its fiscal deficit under check. </span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The Union government invests in several public sector undertakings (PSUs) such as Air India, Bharat Petroleum, Delhi Metro Rail Corporation etc. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Since it is the majority shareholder (meaning that it owns more than 51% of the shares), the Centre can raise money through the liquidation of its shareholding in these PSUs.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Such asset sales can either reduce the government’s share or it can also transfer the ownership of the firm altogether to the highest bidder.</span></span></p>
</li>
</ul>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Reasons for disinvestments</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">One is to improve the overall efficiency of their functioning. As PSUs, they are managed by the government on a daily basis. But in doing so, there are chances of political considerations overshadowing economic and corporate interests.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">By disinvesting (or reducing the government stake), an attempt is made to make such a PSU more efficient as it would not be accountable to people and entities other than the government. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The underlying hope is that private or corporate ownership will result in more efficient management.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The second factor is the government’s need to plug its deficit. Indian governments perennially run budget deficits. It is unable to meet its expenditures just from its tax revenues. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In times of extreme monetary stress, governments have thought of selling off their stake in PSUs to raise funds and meet the gap between its expenses and revenues.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Post-liberalisation, reducing government stake, especially in sectors where government presence is not necessary, disinvestment is welcomed. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">With the proceeds of these sales, the government can reduce its debt liabilities and raise money for investments in other parts of the economy — such as building infrastructure or increased spending on providing welfare to the poor and needy in the country.</span></span></p>
</li>
</ul>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Generation of revenue</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The Department of Investment and Public Asset Management (DIPAM) under the Ministry of Finance is tasked with managing the Centre’s investments in the PSUs. Sale of the Centre’s assets falls within the mandate of DIPAM.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Each year, the Finance Minister sets a “disinvestment target”. Accordingly, bids are invited, or public offerings are made and the PSU is privatised partially or fully.</span></span></p>
</li>
</ul>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Disinvestment</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Disinvestment is the action of an organization or government selling or liquidating an asset or subsidiary. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Disinvestment also refers to capital expenditure (CapEx) reductions, which can facilitate the re-allocation of resources to more productive areas within an organization or government-funded project.</span></span></p>
</li>
<li>
<p><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">Disinvestment is carried out for a variety of reasons, such as strategic, political, or environmental.</span></span></p>
</li>
</ul>
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(int) 58 => object(Cake\ORM\Entity) {
'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 6799,
'title' => 'Petrol prices hit record high',
'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Petrol price in the national capital hit an all-time high of Rs 84.2 per litre after hike in prices by marketing companies.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Oil marketing companies had also hiked the prices of petrol by 26 paise per litre and that of diesel by 25 paise per litre recently after holding prices constant for 30 days.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Brent crude is currently priced at $54 per barrel, its highest level since the crash in crude oil prices due to the Covid-19 pandemic in March.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A decision by Saudi Arabia to cut crude oil output by one million barrels per day in February and March has also contributed to the hardening of crude oil prices.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Central and state levies currently account for about 62% of the retail price of petrol and around 57% of the retail price of diesel in the national capital.</span></span></p>
</li>
</ul>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Reasons for the hike</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The key reasons behind the high prices of petrol and diesel despite relatively low crude oil prices are hikes in government levies over the past year.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The central government hiked the excise duty on petrol to Rs 32.98 per litre from Rs 19.98 per litre at the beginning of 2019, increased the excise duty on diesel to Rs 31.83 per litre from Rs 15.83 over the same period to boost government revenues as economic activity fell due to the pandemic.</span></span></p>
</li>
<li>
<p><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">A number of state governments also hiked value-added taxes to boost revenues which were hit by low economic activity due to Covid-19 related restriction on movement of goods and people.</span></span></p>
</li>
</ul>
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(int) 59 => object(Cake\ORM\Entity) {
'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 6820,
'title' => 'K-shaped economic recovery',
'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Economists have sated the prospects of a K-shaped recovery from COVID are increasing both in India and across the world.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A K-shaped recovery happens when different sections of an economy recover at starkly different rates.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Households at the top of the pyramid are likely to have seen their incomes largely protected, and savings rates forced up during the lockdown, increasing future consumption. Meanwhile, households at the bottom are likely to have witnessed permanent hits to jobs and incomes.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">These differences are already visible. Passenger vehicle registrations (proxying upper-end consumption) have grown about 4 percent since October while two-wheelers have contracted 15 percent.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Upper-income households have benefitted from higher savings for two quarters. The current consumption is a result of those savings, which may slowdown after a period of time.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Since households at the bottom have experienced a permanent loss of income in the forms of jobs and wage cuts, this will be a recurring drag on demand, if the labour market does not heal faster.</span></span></p>
</li>
</ul>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Effects of COVID-19</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">COVID has triggered an effective income transfer from the poor to the rich, which will be demand-impeding because the poor have a higher marginal propensity to consume (they tend to spend a much higher proportion of their income instead of saving).</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">If COVID-19 reduces competition or increases the inequality of incomes and opportunities, it could impinge on trend growth in developing economies by hurting productivity.</span></span></p>
</li>
<li>
<p><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">Policy will, therefore, need to look beyond the next few quarters and anticipate the state of the macro-economy post the current rush.</span></span></p>
</li>
</ul>
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'title' => 'Rising fuel and farm operations',
'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Escalating fuel prices are set to put a strain on the pocket of already stressed farming community.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In Punjab, there are around 11 lakh farm households which own 5.20 lakh tractors, nearly 17,000 combine harvesters including nearly 6,000 with an attachment of Straw Management System (SMS).</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Apart from this the state owns 75,000 stubble management machines, over one lakh other farm implements. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">All these machines are diesel operated and mostly tractors mounted and are used to cultivate nearly 42 lakh hectares area in Punjab. Apart from this there are 1.50 lakh diesel operated tubewells too in the state.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In Punjab the consumption of diesel is 2.5 times higher than the petrol approximately out of which nearly 40 percent consumption of diesel is in the agri sector.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Tractor mounted machines to prepare the fields for sowing to harvesting and post harvesting and every operation will see an increase of 28.3 percent in diesel consumption.</span></span></p>
</li>
<li>
<p><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">The total cost of field preparation for one crop after normal combine-harvesting would be Rs 3,000 per acre, then it will go up to Rs 3,800 to 3,900 if the higher diesel costs are factored in.</span></span></p>
</li>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 7137,
'title' => 'Rise of petrol and diesel fuel prices',
'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Fuel prices continue to skyrocket successively for petrol and diesel. The incessant fuel hike has created problems for the consumers and is affecting their lives in many ways.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Indian consumers have been facing the wrath of rising fuel prices that has led to severe criticism of the government.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Fuel prices vary from state to state and taxes are levied on them by both central as well as the state governments.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">International oil prices have been on the rise since Saudi Arabia pledged additional voluntary output cuts of 1 million barrels per day under a deal between the OPEC and its allies, OPEC+. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Both state and central governments have hiked central excise duty and sales tax to boost revenues after the lockdown period.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In Delhi for instance, state and central taxes amount to 180 percent and 141 percent of the base value of diesel.</span></span></p>
</li>
</ul>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Effects of higher fuel prices</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Higher fuel prices could dent overall budget by not only increasing your spending on fuel but also essential commodities. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The fuel price hike can lead to cost escalation at both wholesale and retail markets, which will affect the consumers.</span></span></p>
</li>
<li>
<p><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">In rural areas, weak monsoons may impact cost of farming as farmers may have to spend on diesel powered motors for irrigation.</span></span></p>
</li>
</ul>
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'tag' => 'Basics of Economics',
'keyword' => 'basics-of-economics',
'id' => (int) 7169,
'title' => 'GDP registers positive growth',
'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"> The economy expanded 0.4% in the December quarter to emerge from a pandemic-induced recession. </span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The recovery is expected to strengthen as the country’s vaccination programme gathers steam and consumers become more confident to travel, dine out and shop.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Data released by the National Statistical Office (NSO) showed GDP contractions for June and September quarters were revised to 24.4% and 7.3%, respectively, against earlier estimates of 23.9% and 7.5%. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The return to economic growth was helped by the resumption of economic activity as the government lifted lockdown restrictions and boosted spending. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The government’s final consumption expenditure rose after contracting in the first two quarters, supporting economic recovery.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">While crude oil, natural gas, refinery products, and cement output continued to contract in January, steel and electricity output continued to expand. </span></span></p>
</li>
</ul>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>GDP</strong></span></span></p>
<ul>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced in a specific time period. </span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">GDP provides an economic snapshot of a country, used to estimate the size of an economy and growth rate.</span></span></p>
</li>
<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">GDP can be calculated in three ways, using expenditures, production, or incomes. It can be adjusted for inflation and population to provide deeper insights.</span></span></p>
</li>
</ul>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Nominal GDP</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Nominal GDP measures a country's gross domestic product using current prices, without adjusting for inflation. </span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Real GDP</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Real GDP is a measure of a country's gross domestic product that has been adjusted for inflation. </span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>GDP at PPP</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Purchasing power parity (PPP) allows for economists to compare economic productivity and standards of living between countries.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Recession</strong></span></span></p>
<p><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">A recession is a situation of declining economic activity. Declining economic activity is characterized by falling output and employment levels. </span></span></p>
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'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"> The economy expanded 0.4% in the December quarter to emerge from a pandemic-induced recession. </span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The recovery is expected to strengthen as the country’s vaccination programme gathers steam and consumers become more confident to travel, dine out and shop.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p>
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<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Data released by the National Statistical Office (NSO) showed GDP contractions for June and September quarters were revised to 24.4% and 7.3%, respectively, against earlier estimates of 23.9% and 7.5%. </span></span></p>
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<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The return to economic growth was helped by the resumption of economic activity as the government lifted lockdown restrictions and boosted spending. </span></span></p>
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<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The government’s final consumption expenditure rose after contracting in the first two quarters, supporting economic recovery.</span></span></p>
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<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">While crude oil, natural gas, refinery products, and cement output continued to contract in January, steel and electricity output continued to expand. </span></span></p>
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<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>GDP</strong></span></span></p>
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<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced in a specific time period. </span></span></p>
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<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">GDP provides an economic snapshot of a country, used to estimate the size of an economy and growth rate.</span></span></p>
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<li>
<p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">GDP can be calculated in three ways, using expenditures, production, or incomes. It can be adjusted for inflation and population to provide deeper insights.</span></span></p>
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<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Nominal GDP</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Nominal GDP measures a country's gross domestic product using current prices, without adjusting for inflation. </span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Real GDP</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Real GDP is a measure of a country's gross domestic product that has been adjusted for inflation. </span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>GDP at PPP</strong></span></span></p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Purchasing power parity (PPP) allows for economists to compare economic productivity and standards of living between countries.</span></span></p>
<p style="margin-right:0cm"> </p>
<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Recession</strong></span></span></p>
<p><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">A recession is a situation of declining economic activity. Declining economic activity is characterized by falling output and employment levels. </span></span></p>
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ecology', 'metadescription' => 'Best Ecology Current affairs - Get the ecology topic current affairs for all the govt exams preparation with best studyiq faculties and also get free ecology topic pdf on daily basis ', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'cacategories' } ] $breadcrumb = [ (int) 0 => [ 'name' => 'Home', 'link' => 'https://currentaffairs.studyiq.com/' ], (int) 1 => [ 'name' => 'Basics of Economics', 'link' => 'https://currentaffairs.studyiq.com/tags/basics-of-economics' ] ] $currentaffairs = [ (int) 0 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 249, 'title' => 'RBI formalizes $75-billion swap agreement with Japan', 'description' => '<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">Reserve Bank of India (RBI) and Bank of Japan have formalised $75-billion swap agreement signed between both countries in October 2018 during Prime Minister Narendra Modi’s visit to Japan. The agreement is essentially for exchange and re-exchange a maximum amount of US $75 Billion for domestic currency, for purpose of maintaining an appropriate level of balance of payments for meeting short-term deficiency in foreign exchange. Earlier in 2013, Japan had offered $50-billion currency swap to India and before that for $3 billion in 2008.</span></span></span></p> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">India-Japan swap agreement</span></strong></span></span></p> <ul> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">This arrangement will help to bring in greater stability to foreign exchange and capital markets in India as it will enable availability of $75-billion in foreign capital for use as and when the need arises.</span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It will serve as second line of defence as India has about $400 billion foreign exchange reserves to cushion sudden dollar outflows.</span></span></span></li> </ul> <ul> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It will act as cushion against any sharp swings in local currency whenever international financial markets turn volatile. </span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It will make it easier for India to pay for its imports and aid in addressing challenge of depreciation of rupee. </span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It will help to bring down cost of capital for Indian entities while accessing foreign capital market. It will also improve confidence in Indian market.</span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">Moreover, it will help to deter speculative attacks on domestic currency and greatly enhance RBI’s ability to manage exchange rate volatility.</span></span></span></li> </ul> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">What is Currency swap?</span></strong></span></span></p> <ul> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It is foreign exchange agreement between two parties to exchange given amount of one currency for another and after specified period of time to give back original amount that is swapped.</span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">In it, holder of unwanted currency exchanges that currency for equivalent amount of another currency to improve market liquidity of currency owned or to obtain bank financing at lower rate.</span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It is considered to be foreign exchange transaction and is not required by law to be shown on the balance sheet.</span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It involves trading in local currencies and countries can pay for imports and exports through their own currencies rather than involving third country currency.</span></span></span></li> </ul> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">Benefits of Currency swap</span></strong></span></span></p> <ul> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It makes easier to improve liquidity conditions.</span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It helps in savings of foreign exchange when economy is not looking in good shape.</span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It contributes towards stabilising country’s balance of payments (BoP) position.</span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It does away with charges involved in multiple currency exchanges.</span></span></span></li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'rbi-japan-formalizes-75-billion-swap-agreement', 'image' => 'https://www.mediafire.com/convkey/d5e2/eedec1bso2k9mgz6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/d5e2/eedec1bso2k9mgz6g.jpg', 'metatitle' => 'RBI formalizes $75-billion swap agreement with Japan', 'metakeyword' => 'In Economy Current Affairs, Reserve Bank of India, Bank of Japan, formalises, $75-billion swap agreement signed between both countries ', 'metadescription' => 'Reserve Bank of India (RBI) and Bank of Japan have formalised $75-billion swap agreement signed between both countries in October 2018', 'author' => 'Nikhil Paigude', 'downlaodpdf' => 'http://www.mediafire.com/file/pr1fh29r1r86do6/25feb_RBI_formalizes_%252475-billion.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 1 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 445, 'title' => 'Government to raise Rs. 3,500 crore via CPSE ETF sale', 'description' => '<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">Union Finance Ministry will launch additional offering of CPSE-Exchange Traded Fund (ETF) on March 19, 2019 to raise at least Rs. 3,500 crore. This ETF sale through follow-on fund offer will come with option of retaining up to Rs. 5,000 crore via green shoe option.</span></span></span></p> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">Previous CPSE-ETF offerings</span></strong></span></span></p> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">In November 2019, Government had raisead up Rs 17,000 crore. It was biggest disinvestment transaction through ETF. The proceeds from this ETF sale will help Government to achieve Rs. 80,000-crore disinvestment target set for this fiscal. As on February 2019, Government has realized Rs.56,473.32 crore as disinvestment proceeds.</span></span></span></p> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">Greenshoe option</span></strong></span></span></p> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">In security issues, it is over-allotment option. It is provision in underwriting agreement that grants underwriter right to sell investors more shares than originally planned by issuer if demand for security issue proves higher than expected.</span></span></span></p> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">Exchange-traded fund (ETF) </span></strong></span></span></p> <ul> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It is essentially index funds that are listed and traded on exchanges like stocks. </span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It is basically basket of securities that are traded, like individual stocks, on an exchange. Each stock in it is assigned weights that reflects composition of index. </span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It is similar to mutual funds in certain manner but is more liquid as it can be sold quickly on stock exchanges like shares. </span></span></span></li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'gov-raise-3500-crore-cpse-etf-sale', 'image' => 'https://www.mediafire.com/convkey/ebb3/yodoebt3cwast3k6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/ebb3/yodoebt3cwast3k6g.jpg', 'metatitle' => 'Government to raise Rs. 3,500 crore via CPSE ETF sale', 'metakeyword' => 'In Economy Current Affairs, Government to raise Rs. 3,500 crore via CPSE ETF sale, Disinvestment, ', 'metadescription' => 'Union Finance Ministry will launch additional offering of CPSE-Exchange Traded Fund (ETF) on March 19, 2019 to raise at least Rs. 3,500 crore', 'author' => 'Nikhil Paigude', 'downlaodpdf' => 'https://www.mediafire.com/file/qmcpujx1ia962nf/13Mar_Government_to_raise_Rs._3%2C500_crore.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 2 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 684, 'title' => 'CBDT enters into 18 Advance Pricing Agreements', 'description' => '<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">Central Board of Direct Taxes (CBDT) entered into 18 Advance Pricing Agreements (APAs) including three Bilateral APAs (BAPAs) in March 2019. These 18 APAS cover international transactions in sectors pertaining to manufacturing, software development services, other services, royalty payment for technology and brand, trading and payment of interest. With this, total number of APAs entered into by CBDT so far has increased to 271, including 31 BAPAs. In FY 2018-19, CBDT had signed 52 APAs, including 11 BAPAs</span></span></span></p> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">Advance Pricing Agreement (APA)</span></strong></span></span></p> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It is agreement entered between taxpayer and tax authority determining <strong>Transfer Pricing methodology</strong> for pricing tax payer’s international transactions for future years. In this case, transfer pricing is setting of price for goods and services sold between related legal entities or subsidiaries within enterprise. </span></span></span></p> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">APAs can be of three types</span></strong></span></span></p> <ul> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">Unilateral:</span></strong><span style="font-family:"Quicksand",serif"> It involves only taxpayer and tax authority of country where taxpayer is located.</span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">Bilateral:</span></strong><span style="font-family:"Quicksand",serif"> It involves tax payer, associated enterprise (AE) of taxpayer in foreign country, tax authority of country where taxpayer is located and foreign tax authority of AE.</span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">Multilateral:</span></strong><span style="font-family:"Quicksand",serif"> involves taxpayer, two or more AEs of tax payer in different foreign countries, tax authority of country where taxpayer is located and tax authorities of AEs.</span></span></span></li> </ul> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">India’s APA scheme</span></strong></span></span></p> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It was launched by Government aims to provide certainty to taxpayers in domain of transfer pricing by specifying methods of pricing and setting prices of international transactions in advance. Its provision was introduced in Income-Tax (IT) Act, 1961 in 2012. Further rollback provision was added to in 2014. It aims gives certainty to taxpayers (including MNCs) agreed by them on certain principles in valuation of their cross-border transactions. It also provides them with alternate dispute resolution mechanism with respect to transfer pricing. </span></span></span></p> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">Benefits of APA</span></strong></span></span></p> <ul> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It helps in determining arm’s length price of international transactions in advance for max period of five future years. </span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It provides certainty with respect to tax outcome of tax payer’s international transactions.</span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It also seeks to strengthen Government’s resolve of fostering non-adversarial tax regime. </span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It has significantly contributed towards improving ease of doing business in India. </span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">India’s APA regime is appreciated nationally and internationally for being able to address complex transfer pricing issues in a fair and transparent manner.</span></span></span></li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'cbdt-enters-into-18-advance-pricing-agreements', 'image' => 'https://www.mediafire.com/convkey/4a8b/eybnmjhyfmq1sri6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/4a8b/eybnmjhyfmq1sri6g.jpg', 'metatitle' => 'CBDT enters into 18 Advance Pricing Agreements', 'metakeyword' => 'In Business and Economy Current Affairs, CBDT enters into 18 Advance Pricing Agreements', 'metadescription' => 'CBDT enters into 18 Advance Pricing Agreements, CBDT entered into 18 Advance Pricing Agreements (APAs) including three Bilateral APAs (BAPAs) in March 2019', 'author' => 'Nikhil Paigude', 'downlaodpdf' => 'https://www.mediafire.com/file/61hr5n9qll9i3g5/CBDT_enters_into_18.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 3 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 679, 'title' => 'ADB lowers India’s growth projection for FY20 to 7.2%', 'description' => '<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">Asian Development Bank (ADB) in its recently released Asian Development Outlook (ADO) 2019 has lowered growth forecast of India for 2019-20 fiscal to 7.2% from 7.6% estimated earlier. The downgrade is attributed to moderation in global demand and likely shortfall in revenue on domestic front. H<strong>owever, India will remain one of the fastest-growing major economies in 2019-20</strong></span></span></span></p> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">ADB Projections</span></strong></span></span></p> <ul> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">For 2018-19, ADB has cut growth estimate to 7% from 7.3% projected in December 2018. </span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">The reasons for growth cut are weaker agricultural output and consumption growth curtailed by higher global oil prices and lower government expenditure.</span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">Growth is expected to rebound to 7.2% in 2019 and 7.3% in 2020 as policy rates are cut expected and farmers receive income support, bolstering domestic demand.</span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">This growth will reverse two years of declining trend as reforms to improve business and investment climate take effect.</span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">However, India’s growth faces some downside risks such as moderation in global demand as financial conditions tighten, uncertainty arising out of global trade tensions, and the weak economic outlook in industrial countries<strong>.</strong></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">On the domestic front, growth could suffer if tax revenue falls short or any disruption affects ongoing resolution of twin problems of bank and corporate balance sheets/</span></span></span></li> </ul> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">Asian Development Bank (ADB)</span></strong></span></span></p> <ul> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It is multilateral lending agency based in Manila, Philippines. It was established on 19 December 1966.</span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It is collectively owned by its members. It has total 67 members – 48 from Asia-Pacific region (including India) and 19 from outside.</span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It is modeled closely on World Bank and has similar weighted voting system where votes are distributed in proportion with members' capital subscriptions.</span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It envisions prosperous, inclusive, resilient, and sustainable Asia and Pacific, while sustaining its efforts to eradicate extreme poverty in the region.</span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It assists its members, and partners, by providing loans, technical assistance, grants and equity investments to promote social and economic development</span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It provides finance to both sovereign countries as well as to private entities. It provides soft loans to poorer countries and hard loans to middle-income countries.</span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">Most of its lending is concentrated in five operational areas viz. education, environment, climate Change & disaster management, finance sector development, regional cooperation & integration and private sector lending.</span></span></span></li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'adb-lowers-indias-growth-projection-fy20', 'image' => 'https://www.mediafire.com/convkey/db34/eolvk97e6ftpbj76g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/db34/eolvk97e6ftpbj76g.jpg', 'metatitle' => 'ADB lowers India’s growth projection for FY20 to 7.2%', 'metakeyword' => 'In Business and Economy Current Affairs, Asian Development Bank, ADB,Asian Development Outlook, 2019,lowers growth forecast of India for 2019-20 fiscal to 7.2% from 7.6% estimated earlier', 'metadescription' => 'Asian Development Bank (ADB) in its recently released Asian Development Outlook (ADO) 2019 has lowered growth forecast of India for 2019-20 fiscal to 7.2% from 7.6% estimated earlie', 'author' => null, 'downlaodpdf' => 'https://www.mediafire.com/file/z8bbhb922j1gcji/ADB_lowers_India_s_growth.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 4 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 755, 'title' => 'Indian firms foreign investment rises 18% to $2.69 billion in March 2019: RBI', 'description' => '<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">According to Reserve Bank of India (RBI) data on outward foreign direct investment, Indian companies' foreign investment abroad grew 18% to $2.69 billion in March 2019 as compared to the year-ago period. The domestic firms had made investment of $2.28 billion in their subsidiaries and wholly-owned units abroad during March 2018. In February 2019, investment by Indian firms was $1.71 billion, </span></span></span></p> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Quicksand",serif">March 2019 Outward investments </span></strong></span></span></p> <ul> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">Of the total investment overseas in March 2019, US $1.68 billion was in form of loan, $564.97 million as equity while rest $443.71 million was in the form of issuance of guarantee.</span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">Major investors included Tata Steel, which invested $1.15 billion in its subsidiary in Singapore.<strong> </strong></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">It was followed by JSW Cement with $82 million investment in its wholly-owned subsidiary in the UAE,</span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-family:"Quicksand",serif">IONGC Videsh Ltd also made investment worth $70.37 million in various joint ventures in Myanmar, Russia and Vietnam.</span></span></span></li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'indian-firms-foreign-investment-rises-march-2019-rbi', 'image' => 'https://www.mediafire.com/convkey/bcd3/dt49hxec7whdy7g6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/bcd3/dt49hxec7whdy7g6g.jpg', 'metatitle' => 'Indian firms' foreign investment rises 18% to $2.69 bn in March ', 'metakeyword' => 'In Business and Economy Current Affairs, RBI data, outward foreign direct investment, foreign investment of Indian companies abroad grew 18% to $2.69 billion in March 2019', 'metadescription' => 'RBI data on outward foreign direct investment, Indian companies' foreign investment abroad grew 18% to $2.69 billion in March 2019 ', 'author' => 'Nikhil Paigude', 'downlaodpdf' => 'https://www.mediafire.com/file/53iwvwbsg9saata/Indian_firms.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 5 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 1078, 'title' => 'Industrial output contracts 0.1% in March 2019', 'description' => '<p style="margin-left:0in; margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">Factory output, as measured in terms of Index of Industrial Production (IIP) contracted by-0.1</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">in March 2019. It is lowest in 21 months, mainly due to slow down in manufacturing sector due to contraction in consumption, as well as investment. IIP’s previous low was recorded in June 2017, when output shrank by 0.3</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">.</span></span></span></span></p> <p style="margin-left:0in; margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">In February 2019, IIP was almost flat, growing at 0.1</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">%.</span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif""> It had expanded 5.3</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">in March 2018. During entire 2018-19 fiscal, it had witnessed 3.6 </span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">growth as against 4.4</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">in the previous fiscal. </span></span></span></span></p> <p style="margin-left:0in; margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">Breakaway of IIP in March 2019</span></span></strong></span></span></p> <ul> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">Manufacturing sector:</span></span></strong><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif""> Constituting 77.63</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">of IIP, contracted by 0.4</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">in March 2019 as compared to 5.7</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">expansion in the year-ago month.</span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">Capital goods output</span></span></strong><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">: It declined by 8.7</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif""> as against 3.1</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">contraction in March 2018.</span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">Power sector growth</span></span></strong><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">: It slowed to 2.2</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">in March 2019 as compared to 5.9</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif""> a year ago. </span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">Mining sector</span></span></strong><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif""> <strong>growth</strong>: It also dropped to 0.8</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">in March 2019 compared to 3.1</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">expansion a year ago.</span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">Use-based classification growth rates in March 2019</span></span></strong><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">: 2.5</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">in primary goods, (-) 2.5</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif""> in intermediate goods and 6.4</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">in infrastructure/ construction goods. Similarly, consumer durables and consumer non-durables have recorded growth of (-) 5.1</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">and 0.3</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif""> respectively.</span></span></span></span></li> </ul> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif""><img alt="" src=" https://www.mediafire.com/convkey/c9e6/lb7m2s21hkletb26g.jpg" /></span></span></span></span></p> <p style="margin-left:0in; margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">Index of Industrial Production (IIP)</span></span></strong></span></span></p> <ul> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">It is composite indicator that measures short-term changes in volume of production of basket of industrial products during given period with respect to chosen base period.</span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">It is released on monthly basis by Central Statistical Organization (CSO), Ministry of Statistics and Programme Implementation (MoSPI). Base year is 2011-12.</span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">It comprises 407 individual items and sector wise, these items fall into three categories-Manufacturing (405 items), Mining (1 items) & Electricity (1 item).</span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">The separate weightages of the three sectors are 77.63</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">, 14.37</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">, 7.9</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif""> respectively. In IIP, combined weightages of eight core Industries is 40.27</span></span><span style="font-size:10.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">.</span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">In use wise composition, these 407 individual items are divided into capital goods, basic goods, intermediate goods and consumer goods.</span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:10.0pt"><span style="font-family:"Quicksand","serif"">Further, consumer goods are divided into consumer durables and consumer non-durables. In it, maximum weight is of basic goods, followed by Consumer Goods, followed by Intermediate and Capital Goods.</span></span></span></span></li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'iip-contracts-march-2019', 'image' => 'https://www.mediafire.com/convkey/a2f8/2cq3sjchkp4hx5j6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/a2f8/2cq3sjchkp4hx5j6g.jpg', 'metatitle' => 'Industrial output contracts 0.1% in March 2019', 'metakeyword' => 'In Economy and Business Current Affairs, Factory output, as measured in terms of Index of Industrial Production (IIP) contracted by-0.1% in March 2019.', 'metadescription' => 'Factory output, as measured in terms of Index of Industrial Production (IIP) contracted by-0.1% in March 2019.', 'author' => 'Nikhil Paigude', 'downlaodpdf' => 'https://www.mediafire.com/file/9q7p6pnixl1rtoi/Industrial_output.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 6 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 1293, 'title' => 'SEBI proposes framework for regulatory sandbox', 'description' => '<p style="margin-left:0in; margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Market regulator Securities and Exchange Board of India (SEBI) has proposed framework for Regulatory Sandbox for financial institutions for fintech testing in its recently released discussion paper.</span></span></span></span></p> <p style="margin-left:0in; margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">SEBI’s Framework for Regulatory sandbox</span></span></strong></span></span></p> <ul> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Definition of Regulatory sandbox:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> It is defined as live, testing environment where new products, processes, services and business models can be deployed on limited set of eligible customers for specified period of time, with certain relaxations in the regulations and guidelines.</span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Objective of sandbox:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> It is intended to serve as testing ground for new business models and technologies that benefits investors, Indian markets and Indian economy at large.</span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Eligibility:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> To begin with, all market participants registered with SEBI will be eligible to test within sandbox. At a later stage, it will be expanded to fintech start-ups and other fintech firms as well.</span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Risks:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> The applicant should provide adequate disclosure of potential risks to users participating in sandbox and seek prior confirmation from such users that they fully understand and accept the attendant risks. </span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Reports:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> Participant must submit interim reports on the progress of the test to SEBI after receiving approval for conducting tests.</span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Duration of the sandbox testing:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> It is proposed to be maximum of nine months with maximum extension (upon request) of three months. </span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">After completion of testing, SEBI shall decide whether to permit the product, process, service, or solution to be introduced in the market on a wider scale.</span></span></span></span></li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'sebi-framework-regulatory-sandbox', 'image' => 'https://www.mediafire.com/convkey/c032/6iogi4kugcarjaa6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/c032/6iogi4kugcarjaa6g.jpg', 'metatitle' => 'SEBI proposes framework for regulatory sandbox', 'metakeyword' => 'SEBI) has proposed framework for Regulatory Sandbox for financial institutions for fintech testing in its recently released discussion paper.', 'metadescription' => 'SEBI) has proposed framework for Regulatory Sandbox for financial institutions for fintech testing in its recently released discussion paper.', 'author' => 'Nikhil Paigude', 'downlaodpdf' => 'https://www.mediafire.com/file/56h36x5qcuvzs61/SEBI_proposes_framework_for_regulatory_sandbox.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 7 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 1373, 'title' => 'CII launches Fiscal Performance Index to assess Central, state budget', 'description' => '<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Industry body Confederation of Indian Industry (CII) has launched 'Fiscal Performance Index' to assess quality of budgets presented by the Centre and state governments. It is innovative tool that will examine quality of Budgets at the Central and State levels using multiple indicators.</span></span></span></span></p> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Fiscal Performance Index</span></span></strong></span></span></p> <ul> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It has been constructed using UNDP's Human Development Index (HDI) methodology. It comprises six components for holistic assessment of the quality of government budgets.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Six components are </span></span></strong></span></span></li> </ul> <ol style="list-style-type:lower-roman"> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Quality of revenue expenditure: </span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">measured by the share of revenue expenditure other than interest payments, subsidies, pensions and defence in GDP. </span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Quality of capital expenditure:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> measured by share of capital expenditure (other than defence) in GDP. </span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Quality of revenue:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> ratio of net tax revenue to GDP (own tax revenue in case of States).</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Degree of fiscal prudence I:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> fiscal deficit to GDP.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Degree of fiscal prudence II</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">: revenue deficit to GDP.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Debt index:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> Change in debt and guarantees to GDP.</span></span></span></span></li> </ol> <ul> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It will also consider expenditure on infrastructure, education, healthcare and other social sectors can be considered beneficial for economic growth. </span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It will also consider tax revenues are sustainable sources of revenue for the government as compared to one-time income sources.</span></span></span></span></li> </ul> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Comment</span></span></strong></span></span></p> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">The index take into consideration holistic performance of all entities viewed from all angles of expenditure quality, revenue receipts quality, and fiscal prudence. It moves away from existing mechanism of assess Central, state budget from narrow and sole view of Fiscal Responsibility and Budget Management (FRBM) Act which sets targets for the governments to reduce fiscal deficits.</span></span></span></span></p> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">About Confederation of Indian Industry (CII)</span></span></strong></span></span></p> <ul> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It is an association of Indian businesses which works to create environment conducive to growth of industry in India. </span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It is a non-government, industry-led and industry-managed, not-for-profit organization. It was founded in 1895 and is headquartered in New Delhi.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It has over 9,000 members, from private as well as public sectors, including SMEs and MNCs and indirect membership of over 300,000 enterprises from around 265 national and regional sectoral industry bodies.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It works with Government on policy issues. It also has been catalyst of change in India’s economic policy reforms.</span></span></span></span></li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'cii-launches-fiscal-performance-index', 'image' => 'https://www.mediafire.com/convkey/d8ad/w6f8cxa62wf3jx96g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/d8ad/w6f8cxa62wf3jx96g.jpg', 'metatitle' => 'CII launches Fiscal Performance Index', 'metakeyword' => ' Confederation of Indian Industry, CII, launches, Fiscal Performance Index,assess quality of budgets, presented, Centre , state governments.', 'metadescription' => 'Industry body Confederation of Indian Industry (CII) has launched 'Fiscal Performance Index' to assess quality of budgets presented by the Centre and state governments.', 'author' => 'Nikhil Paigude', 'downlaodpdf' => 'https://www.mediafire.com/file/3hk54pzbmsd0w8w/CII_launches.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 8 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 1375, 'title' => 'India to grow at 7.5% in FY 20: World Bank ', 'description' => '<p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">According to recently released World Bank’s Global Economic Prospects, India is projected to grow at 7.5</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">in the next three years supported by robust investment and private consumption. With this India will continue to retain position of being the fastest growing emerging economy in the world.</span></span></span></span></p> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Key Highlights of report</span></span></strong></span></span></p> <ul> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">China’s growth rate:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> It was 6.6</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">in 2018.In in 2019, it is projected to be dropped to 6.2</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> and then subsequently to 6.1</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">in 2020 and 6</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">in 2021. Whereas India’s growth by 2021 is projected to be 1.5</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">more than China’s 6</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">India’s Growth:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> India is estimated to have grown 7.2</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">in fiscal year (FY) 2018/19, which ended March 2019. Slowdown in government consumption will be offseted by solid investment, which benefitted from public infrastructure spending.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It is projected at 7.5</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">in Fiscal Year 2019/20 (April 1, 2019 to March 31, 2020), unchanged from the previous forecast, and to stay at this pace through the next two fiscal years.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Private consumption and investment will benefit from strengthening credit growth amid more accommodative monetary policy, with inflation having fallen below RBI’s target.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">India’s urban consumption was supported by pickup in credit growth, whereas rural consumption was hindered by soft agricultural prices.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">On production side, robust growth was broad-based, but there was slight moderation in services and agricultural activity accompanied by acceleration in industrial sector. </span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Weakening agricultural production reflected subdued harvest in major crops on the back of less rainfalls.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Services activity has softened mainly due to slowing trade, hotel, transport, and communication activity. Industrial sector will be benefited from strong construction and manufacturing with solid demand for capital goods. </span></span></span></span></li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'india-to-grow-in-fy-20-world-bank ', 'image' => 'https://www.mediafire.com/convkey/c9f2/6q747loqydbi8cd6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/c9f2/6q747loqydbi8cd6g.jpg', 'metatitle' => 'India to grow at 7.5% in FY 20: World Bank ', 'metakeyword' => ' World Bank, Global Economic Prospects, India to grow at 7.5% in the next three years, robust investment, private consumption', 'metadescription' => 'According to recently released World Bank’s Global Economic Prospects, India is projected to grow at 7.5% in the next three years supported by robust investment and private consumption', 'author' => 'Nikhil Paigude', 'downlaodpdf' => 'https://www.mediafire.com/file/lhvil3e3k9mllzl/India_to_grow.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 9 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 1425, 'title' => 'SEBI proposes informant mechanism to curb insider trading', 'description' => '<p style="margin-left:0in; margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Market Regulator Securities and Exchange Board of India (SEBI) has invited public comments on its recently released Discussion Paper on amendment to SEBI (Prohibition of Insider Trading) Regulations, 2015 to provision for informant mechanism for insider trading. It proposes mechanism to formalize process of receiving information from whistle-blowers who expose insider trading violations. It also suggests measures to protect and award such informants.</span></span></span></span></p> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Background</span></span></strong></span></span></p> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">The insider trading has been defined in SEBI (Prohibition of Insider Trading) Regulations, 2015. It defines it as means for trading of securities while in possession of unpublished price sensitive information (‘UPSI’). Insiders usually indulge in insider trading through proxy to whom relevant information is communicated. Direct evidence of such communication is seldom available, thus detection and prosecution of insider trading remains challenge. In this background, SEBI has proposed amendments to The SEBI (PIT) Regulations, 2015 which would include the following features.</span></span></span></span></p> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Proposed amendments</span></span></strong></span></span></p> <ul> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">The new framework rewards and protects individuals who bring forward instances of violations of insider trading norms.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">If such information leads to final order by SEBI with minimum disgorgement of Rs.</span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">5 crore, then monetary award of 10</span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">%</span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> of money coll</span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">ected by SEBI, subject to cap of </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Rs.1 crore, can be given to informant. The reward will be paid from Investor Protection and Education Fund (IPEF). </span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It mandates informant to fill Voluntary Information Disclosure Form (VIDF) with credible, complete and original information related to insider trading, including those pertaining to unpublished price-sensitive information.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It proposes establishment of Office of Informant Protection (OIP). It will be independent of the investigation and inspection wings of SEBI. </span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It will make policy related to receipt and registration of VIDF, deciding on issue of grant of reward to informant upon completion of enforcement action and other related issues.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It mandates informant to disclose his or her identity at time of submission of complaint in the official format. It also allows filing of anonymous complaint through authorised representative who is practising advocate.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It mandates all listed companies and intermediaries to include provisions in their code of conduct to ensure that such individuals are not discharged, terminated, demoted, suspended, threatened or discriminated against, directly or indirectly. This is to protect complainants against victimization.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">However, incase complaint is found to be frivolous, it allows SEBI can initiate actions against the informant.</span></span></span></span></li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'sebi-informant-mechanism-curb-insider-trading', 'image' => 'https://www.mediafire.com/convkey/4c68/687v57o7qbhyezk6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/4c68/687v57o7qbhyezk6g.jpg', 'metatitle' => 'SEBI proposes informant mechanism to curb insider trading', 'metakeyword' => 'SEBI has invited public comments on its recently released Discussion Paper on amendment to SEBI (Prohibition of Insider Trading) Regulations, 2015', 'metadescription' => 'SEBI) has invited public comments on its recently released Discussion Paper on amendment to SEBI (Prohibition of Insider Trading) Regulations, 2015', 'author' => 'Nikhil Paigude', 'downlaodpdf' => 'https://www.mediafire.com/file/oqadwhez9wdqnla/SEBI_proposes.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 10 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 1494, 'title' => '20th Meeting FSDC held in New Delhi', 'description' => '<p style="margin-left:0in; margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">The 20th Meeting of the Financial Stability and Development Council (FSDC) was held under the Chairmanship of the Union Minister of Finance and Corporate Affairs Nirmala Sitharaman. It reviewed current global and domestic economic situation and financial stability issues including, inter-alia, those concerning Banking and NBFCs.</span></span></span></span></p> <p style="margin-left:0in; margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">20th Meeting of FSDC</span></span></strong></span></span></p> <ul> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It appraised of progress made towards setting-up of Financial Data Management Centre (FDMC) to facilitate integrated data aggregation and analysis as also Computer Emergency Response Team (CERT-Fin) towards strengthening cyber security framework for the financial sector.</span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It also held consultations to obtain inputs and suggestions of financial sector regulators for Budget. All the regulators presented their proposals for the Union Budget 2019-20.</span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It also took note of activities undertaken by FSDC Sub-Committee Chaired by Governor, RBI and action taken by members on the decisions taken in earlier meetings.</span></span></span></span></li> </ul> <p style="margin-left:0in; margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">About Financial Stability and Development Council (FSDC)</span></span></strong></span></span></p> <ul> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It is super regulatory body (non-statutory) for regulating financial sector consisting of all regulators and Ministry Finance.</span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It was setup in 2010 by Indian Government as an executive body for bringing healthy and efficient financial system in economy of the country. It had replaced High Level Coordination Committee on Financial Markets (HLCCFM).</span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Objective:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> Strengthen and institutionalise mechanism for maintaining financial stability, enhancing inter-regulatory coordination and promoting financial sector development.</span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Mandate:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> It deals with issues relating to financial stability, inter–regulatory coordination, financial sector development, financial inclusion, financial literacy and macro prudential supervision of economy including functioning of large financial conglomerates.</span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Composition:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> Union Finance Minister of India is chairman of FSDC. The other 12 members are Governor RBI, Chairman SEBI, Chairman IRDA, Chairman PFRDA, Minister of state (MoS) responsible for the Department of Economic Affairs (DEA), Secretary of Department of Electronics and Information Technology’, Revenue secretary, Finance Secretary and/or Secretary, Department of Economic Affairs, Secretary Department of Financial Services, Secretary Ministry of Corporate Affairs, Chief Economic Adviser (CEA) and Chairperson of Insolvency & Bankruptcy Board of India (IBBI).</span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Sub-committee of FSDC:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> It has been set up under Chairmanship of Governor RBI. It discusses and decides on issues relating to financial sector development and stability.</span></span></span></span></li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => '20th-meeting-fsdc-new-delhi', 'image' => 'https://www.mediafire.com/convkey/5f3f/9ch54m1pscxkku56g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/5f3f/9ch54m1pscxkku56g.jpg', 'metatitle' => '20th Meeting FSDC held in New Delhi', 'metakeyword' => 'The 20th Meeting of the Financial Stability and Development Council (FSDC) was held under the Chairmanship of the Union Minister of Finance and Corporate Affairs Nirmala Sitharaman', 'metadescription' => 'The 20th Meeting of the Financial Stability and Development Council (FSDC) was held under the Chairmanship of the Union Minister of Finance and Corporate Affairs Nirmala Sitharaman', 'author' => 'Nikhil Paigude', 'downlaodpdf' => 'https://www.mediafire.com/file/u2eigeigrhb59n5/20th_Meeting.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 11 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 1554, 'title' => 'Ramesh Chand Working Group to revise WPI', 'description' => '<p style="margin-left:0in; margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Union Ministry of Commerce & Industry has constituted 18 member Working Group for the revision of the current series of Wholesale Price Index (Base 2011-12). <strong>Ramesh Chand (Member, NITI Aayog) will be chairman of the Working Group.</strong> Office of Economic Adviser, Department for Promotion of Industry & Internal Trade (DPIIT) will be the nodal office for the Working Group and will process its report and recommendation for further necessary action. </span></span></span></span></p> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Terms of Reference of the Working Group are: </span></span></strong></span></span></p> <ul> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Select most appropriate Base Year for preparation of new official series of Index Numbers of Wholesale Price (WPI) and Producer Price Index (PPI) in India.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Review commodity basket of current series of WPI and suggest additions or deletions of commodities in the light of structural changes in the economy witnessed since 2011-12.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Review existing system of price collection in particular for manufacturing sector and suggest changes for improvement.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Decide on computational methodology to be adopted for monthly WPI/PPI. It may also recommend roadmap for switch over from WPI to PPI.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Examine existing methodology of compilation of PPI approved by Technical Advisory Committee on Series of Prices and Cost of Living and suggest further improvement in compilation and presentation. </span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Examine method of computing linking factor adopted so far and suggest appropriate change in method of computing linking factor, if necessary.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Suggest any other improvements as may be necessary for enhancing reliability of official series of WPI / PPI.</span></span></span></span></li> </ul> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">About Whoseale Price Index (WPI)</span></span></strong></span></span></p> <ul> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It is also known as the headline inflation rate (in India). It measures average change in the prices of commodities for bulk sale at level of early stage of transactions. </span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Its basket covers commodities falling under three major groups namely Primary Articles, Fuel and Power and Manufactured products. (The index basket of the present 2011-12 series has total of 697 items including 564 items for Manufactured Products, 117 items for Primary Articles and 16 items for Fuel & Power). <strong>WPI basket does not cover services.</strong></span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">WPI prices tracked are ex-factory price for manufactured products, mandi price for agricultural commodities and ex-mines prices for minerals. Weights given to each commodity covered in WPI basket is based on value of production adjusted for net imports. </span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Office of Economic Advisor (OEA), Department for Promotion of Industry & Internal Trade (DPIIT), Union Ministry of Commerce and Industry calculates the WPI.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">The main uses of WPI are:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> (i) Provide estimates of inflation at wholesale transaction level for the economy as a whole. This helps in timely intervention by the Government to check inflation in particular, in essential commodities, before the price increase spill over to retail prices. (ii) It is used as deflator for many sectors of the economy including for estimating GDP by Central Statistical Organisation (CSO). (iii) It is also used for indexation by users in business contracts. (iv) Global investors also track WPI as one of the key macro indicators for their investment decisions.</span></span></span></span></li> </ul> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Need of revision of WPI</span></span></strong></span></span></p> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">The current series of WPI with base year 2011-12 was introduced in May 2017. Since 2011-12 base year, Indian econmy has seen significant structural changes. Therefore, it has become necessary to examine coverage of commodities, their weightages and related issues pertaining to existing series of index numbers of WPI.</span></span></span></span></p> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'ramesh-chand-working-group-revise-wpi', 'image' => 'https://www.mediafire.com/convkey/27c2/nxi7aznbmbaompd6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/27c2/nxi7aznbmbaompd6g.jpg', 'metatitle' => 'Ramesh Chand Working Group to revise WPI', 'metakeyword' => 'Union Ministry of Commerce & Industry has constituted 18 member Working Group for the revision of the current series of Wholesale Price Index (Base 2011-12). Ramesh Chand', 'metadescription' => 'Union Ministry of Commerce & Industry has constituted 18 member Working Group for the revision of the current series of Wholesale Price Index (Base 2011-12). Ramesh Chand', 'author' => 'Nikhil Paigude', 'downlaodpdf' => 'https://www.mediafire.com/file/z46w54n2oy3gllm/Ramesh_Chand_Working_Group_to_revise_WPI.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 12 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 1651, 'title' => 'Economic Survey 2019 highlights', 'description' => '<p style="margin-left:0in; margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Union Finance Minister Nirmala Sitharaman tabled her first Economic Survey ahead of full fledged Union Budget 2019. It was prepared by Chief Economic Adviser Krishnamurthy Subramanian. It lays out roadmap for Union Government's next five years. </span></span></span></span></p> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">The theme of Economic Survey 2019 is about enabling “shifting of gears" to sustained economic growth for objective of $5 trillion by 2024-25. It departs from traditional thinking by advocating growth model for India that views economy as being either in virtuous or vicious cycle, and thus never in equilibrium.</span></span></span></span></p> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">State of the Economy in 2018-19: A Macro View</span></span></strong></span></span></p> <ul> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">India still the fastest growing major economy in 2018-19.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Growth of GDP moderated to 6.8 % in 2018-19 from 7.2 % in 2017-18.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Inflation contained at 3.4 % in 2018-19.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Non-Performing Assets (NPAs) as%age of Gross Advances reduced to 10.1 % at end December 2018 from 11.5 % at end March 2018.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Current account deficit manageable at 2.1 % of GDP.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Fiscal deficit of Central Government declined from 3.5 % of GDP in 2017-18 to 3.4 % in 2018-19.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Provisional estimate of 2.9% growth rate for the agriculture, forestry and fishing sector.</span></span></span></span></li> </ul> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Highlights from the Economic Survey 2019</span></span></strong></span></span></p> <ul> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Private Investment: It is key driver of simultaneous growth in demand, jobs, exports & productivity, capacity, labor productivity, new technology, creative destruction and job creation.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Government proposes to increase retirement age.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Data should be of the people, by the people, for the people.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Government proposes complete overhaul of minimum wages in India. </span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Dwarfs (firms with less than 100 workers) account for more than 50% of all organized firms in manufacturing by number. Contribution of dwarfs to employment is only 14% and to productivity is a mere 8%.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">To achieve vision of $5 trillion economy by 2024, India needs to shift its gears to accelerate and sustain a real GDP growth rate of 8%.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Using insights from behavioral economics to create aspirational agenda for social change.</span></span></span></span></li> </ul> <ol> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">From ‘Beti Baco Beti Padhao’ to ‘BADLAV’ (Beti Aapki Dhan Lakshmi Aur Vijay Lakshmi).</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">From ‘Swachh Bharat’ to ‘Sundar Bharat’</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">From ‘Give it up" for the LPG subsidy to ‘Think about the Subsidy’.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">From ‘Tax evasion’ to ‘Tax compliance’.</span></span></span></span></li> </ol> <ul> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Behavioral economics provides insights to ‘nudge’ people towards desirable behavior.</span></span></span></span></li> </ul> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Key principles of behavioral economics:</span></span></strong></span></span></p> <ol> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Emphasizing the beneficial social norm.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Changing the default option.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Repeated reinforcements.</span></span></span></span></li> </ol> <ul> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Swachh Bharat mission: 93.1% of the households have access to toilets. 96.5% of those with access to toilets are using them in rural India.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">India still the fastest growing major economy in 2018-19. Growth of GDP moderated to 6.8 per cent in 2018-19 from 7.2 per cent in 2017-18.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Accommodative RBI policy will help to cut real lending rates.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Political stability may push animal spirits of economy</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">January-March 2019 economic slowdown due to election related activity.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">NBFC sector stress reason for FY19 slowdown.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Oil prices seen declining in Financial Year 2020.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Declining in NPA should push up capital expenditure cycle.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Government policies expected to further lift restrictions on FDI inflows.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">2019-20 GDP growth seen picking up on robust consumption and higher private investment.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Exports may be hit by lower global growth, increased uncertainty over trade tension.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Investment rate picking up in FY2020 on higher credit growth and improved demand.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Working-age population will grow by about 97 lakhs per year in the upcoming decade.</span></span></span></span></li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'economic-survey-2019-highlights', 'image' => 'https://www.mediafire.com/convkey/a7d9/nal27r132gc2ajt6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/a7d9/nal27r132gc2ajt6g.jpg', 'metatitle' => 'Economic Survey 2019 highlights', 'metakeyword' => 'Union Finance Minister Nirmala Sitharaman tabled her first Economic Survey ahead of Union Budget 2019. It was prepared by Chief Economic Adviser Krishnamurthy Subramanian', 'metadescription' => 'Union Finance Minister Nirmala Sitharaman tabled her first Economic Survey ahead of Union Budget 2019. It was prepared by Chief Economic Adviser Krishnamurthy Subramanian', 'author' => 'Nikhil Paigude', 'downlaodpdf' => 'https://www.mediafire.com/file/9bshlnlhcastl31/Economic_Survey_2019_highlights.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 13 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 1701, 'title' => 'IIP records slowdown in May 2019', 'description' => '<p style="margin-left:0in; margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">According to data released by Central Statistics Office (CSO), factory output measured in terms of Index of Industrial Production (IIP) slowed to 3.1</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">in May 2019, weighed down by muted growth in mining and manufacturing sectors. It had expanded by 3.8</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">in May 2018. It had rose to 4.3</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">in April 2019 after a sharp decline of 0.4</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">in March 2019.</span></span></span></span></p> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Breakaway of May 2019 IIP</span></span></strong></span></span></p> <ul> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Mining and quarrying sector:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> It was one of only major sectors that saw growth accelerating, from contraction of 0.39% in December 2018 to growth of 3.9% in January. 2019.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Manufacturing sector:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> It eased to 2.5</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Electricity sector:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> It saw growth slowing to 0.8% from 4.45% over the same period</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Capital goods sector:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> It slowed to 0.8</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">against 2.5</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> growth in April 2019.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Primary goods</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">: It slowed to 2.5</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> in May against 5.2%in April 2019.</span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Consumer sector:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> Production of consumer durables contracted 0.1</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">in May 2019 against healthy 2.4</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">% </span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">growth in April 2019. Production of consumer non-durables grew to 7.7</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> in the same period against a 5.2</span></span><span style="font-size:9.0pt"><span style="font-family:"Times New Roman","serif"">%</span></span><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> growth in April 2019.</span></span></span></span></li> </ul> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">About Index of Industrial Production (IIP)</span></span></strong></span></span></p> <ul> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It is composite indicator that measures short-term changes in volume of production of basket of industrial products during given period with respect to chosen base period.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It is released on monthly basis by Central Statistical Organization (CSO), Ministry of Statistics and Programme Implementation (MoSPI). Base year is 2011-12.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">It comprises 407 individual items and sector wise, these items fall into three categories-Manufacturing (405 items), Mining (1 items) & Electricity (1 item).</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">The separate weightages of the three sectors are 77.63%, 14.37%, 7.9% respectively. In IIP, combined weightages of eight core Industries is 40.27%.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">In use wise composition, these 407 individual items are divided into capital goods, basic goods, intermediate goods and consumer goods.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Further, consumer goods are divided into consumer durables and consumer non-durables. In it, maximum weight is of basic goods, followed by Consumer Goods, followed by Intermediate and Capital Goods.</span></span></span></span></li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'ipp-records-slowdown', 'image' => 'https://www.mediafire.com/convkey/4015/2bax6pc672c2t3k6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/4015/2bax6pc672c2t3k6g.jpg', 'metatitle' => 'IIP records slowdown in May 2019', 'metakeyword' => 'factory output measured in terms of Index of Industrial Production (IIP) slowed to 3.1% in May 2019, weighed down by muted growth in mining and manufacturing sectors', 'metadescription' => 'factory output measured in terms of Index of Industrial Production (IIP) slowed to 3.1% in May 2019, weighed down by muted growth in mining and manufacturing sectors', 'author' => 'Nikhil Paigude', 'downlaodpdf' => 'https://www.mediafire.com/file/i44h1bdr2bb1vhv/IIP_records_slowdown_in_May_2019.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 14 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 1702, 'title' => 'India’s foreign exchange reserves rise to record high of US $429.91 billion', 'description' => '<h2 style="margin-left:0in; margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">According to recently released Reserve Bank of India (RBI) data, India’s foreign exchange (forex) reserves rose by US$ 2.23 billion to reach record high US$ 429.91 billion in week ended 05 July 2019. The rise was on account of rise in value of gold and currency assets</span></span></span></span></h2> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Breakaway of forex reserves (in the reporting week)</span></span></strong></span></span></p> <ul> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Foreign currency assets:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> It is major component of the overall reserves. It increased by US $906.8 million to US $400.809 billion,</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Gold reserves:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> It increased by US $1.345 billion, taking total to US $24.304 billion.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Special drawing rights (SDRs) with International Monetary Fund:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> It came down by US $4.7 million to US $1.451 billion.</span></span></span></span></li> <li style="text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Reserve position with IMF:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> It also dipped by US $15.3 million to US $3.346 billion.</span></span></span></span></li> </ul> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Forex Reserve</span></span></strong></span></span></p> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">They are reserve assets held by central bank of the country in foreign currencies. These reserve acts as buffer to be used in challenging times. They are also used as back liabilities and also to influence monetary policy. Almost all countries in world, regardless of size of their economy, hold significant forex reserves.</span></span></span></span></p> <p style="margin-left:0in; margin-right:0in; text-align:justify"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif"">Components of India’s FOREX Reserves:</span></span></strong><span style="font-size:9.0pt"><span style="font-family:"Quicksand","serif""> Foreign currency assets (FCAs), Special Drawing Rights (SDRs), Gold Reserves and RBI’s Reserve position with International Monetary Fund (IMF). FCAs constitute largest component of India’s forex Reserves. It is expressed in dollar terms and includes effect of appreciation/depreciation of non-US units like the euro, pound and the yen held in the reserves.</span></span></span></span></p> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'indias-foreign-exchange-reserves', 'image' => 'https://www.mediafire.com/convkey/6e04/dzxm8ne4yzaxauj6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/6e04/dzxm8ne4yzaxauj6g.jpg', 'metatitle' => 'India’s foreign exchange reserves rise to record', 'metakeyword' => 'India’s foreign exchange (forex) reserves rose by US$ 2.23 billion to reach record high US$ 429.91 billion in week ended 05 July 2019', 'metadescription' => 'India’s foreign exchange (forex) reserves rose by US$ 2.23 billion to reach record high US$ 429.91 billion in week ended 05 July 2019', 'author' => 'Nikhil Paigude', 'downlaodpdf' => 'https://www.mediafire.com/file/591sm2ihnwraytl/India%C6s_foreign_exchange_reserves_rise.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 15 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 2061, 'title' => 'India records slowest GDP growth', 'description' => '<p><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Times New Roman","serif"">Issue</span></strong></span></p> <p> </p> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="background-color:white"><span style="font-family:"Times New Roman","serif""><span style="color:black">The Central Statistics Office released the </span></span></span><strong><span style="background-color:white"><span style="font-family:"Times New Roman","serif"">Gross Domestic Product</span></span></strong><span style="background-color:white"><span style="font-family:"Times New Roman","serif""><span style="color:black"> numbers for April-June quarter, which showed India’s GDP expanded 5% in the quarter through June , the slowest pace in six and half years.</span></span></span></span></span></p> <p> </p> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:12.0pt"><span style="font-family:"Times New Roman","serif"">Background</span></span></strong></span></span></p> <p> </p> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="background-color:white"><span style="font-family:"Times New Roman","serif""><span style="color:black">As consumer demand and private investment slowed at a time when global trade frictions have dampened business sentiment, Indian econoimy grew at a pace less than 6% in the current quarter of the financial year 2018-19.</span></span></span></span></span></p> <p> </p> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:12.0pt"><span style="font-family:"Times New Roman","serif"">Details </span></span></strong></span></span></p> <ul> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="color:black">Manufacturing’ sector</span></strong><span style="background-color:white"><span style="font-family:"Times New Roman","serif""><span style="color:black"> grew by 0.6 percent as compared to growth of 12.1 per cent in Q1 2018-19. </span></span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="color:black">GVA </span></strong><span style="background-color:white"><span style="font-family:"Times New Roman","serif""><span style="color:black">for </span></span></span><strong><span style="color:black">‘Agriculture, Forestry and Fishing’ </span></strong><span style="background-color:white"><span style="font-family:"Times New Roman","serif""><span style="color:black">sector grew by 2 percent as compared to growth of 5.1 percent in Q1 2018-19. </span></span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"> <strong><span style="color:black">‘Mining and Quarrying’</span></strong><span style="background-color:white"><span style="font-family:"Times New Roman","serif""><span style="color:black"> sector grew by 2.7 percent as compared to growth of 0.4 percent in Q1 2018-19.</span></span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"> <strong><span style="color:black">Electricity,Gas, Water Supply and Other Utility Services’ sector grew by 8.6 % as opposed to 6.7 % in Q1 2018-19.</span></strong></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="color:black">Trade, Hotels, Transport, Communication and Services</span></strong><span style="background-color:white"><span style="font-family:"Times New Roman","serif""><span style="color:black"> grew by 7.1 percent as compared to growth of 7.8 percent in Q1 2018-19. </span></span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="color:black">Financial, Real Estate and Professional Service</span></strong><span style="background-color:white"><span style="font-family:"Times New Roman","serif""><span style="color:black">s grew by 5.9 percent as compared to growth of 6.5 percent in Q1 2018-19. </span></span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"> <strong><span style="color:black">Public Administration, Defence and Other Services</span></strong><span style="background-color:white"><span style="font-family:"Times New Roman","serif""><span style="color:black"> grew by 8.5 percent as compared to growth of 7.5 percent in Q1 2018-19. </span></span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-family:"Times New Roman","serif""><span style="color:black">Construction sector</span></span></strong><span style="font-family:"Times New Roman","serif""><span style="color:black"> grew by 5.7 % as compared to 9.7 % in Q1 of 2018-19.</span></span></span></span></li> </ul> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong><span style="font-size:12.0pt"><span style="font-family:"Times New Roman","serif"">Measures to boost growth</span></span></strong></span></span></p> <ul> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="background-color:white"><span style="font-family:"Times New Roman","serif""><span style="color:black">The RBI has cut the key lending rate four times in succession by a total of 110 basis points. This move is expected to increase cash flow in the market.</span></span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="background-color:white"><span style="font-family:"Times New Roman","serif""><span style="color:#212121">Public sector banks will get an immediate recapitalization of ?70,000 crore to ease the liquidity crisis, which is hurting big and small traders.</span></span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="background-color:white"><span style="font-family:"Times New Roman","serif""><span style="color:#212121">Simplifying the goods and services tax (GST) further, besides providing relief to the ailing auto sector, which is grappling with the worst slump in passenger vehicle sales in nearly two decades. </span></span></span></span></span></li> <li><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><span style="background-color:white"><span style="font-family:"Times New Roman","serif""><span style="color:#212121">The government has allowed 100% FDI in coal and associated sectors to attract investments and boost growth.</span></span></span></span></span></li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'india-records-slowest-gdp-growth', 'image' => 'https://www.mediafire.com/convkey/8728/0suga99luer293l6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/8728/0suga99luer293l6g.jpg', 'metatitle' => 'India records slowest GDP growth', 'metakeyword' => 'India records slowest GDP growth', 'metadescription' => 'The Central Statistics Office released the Gross Domestic Product numbers for April-June quarter, which showed India’s GDP expanded 5% in the quarter', 'author' => null, 'downlaodpdf' => 'https://www.mediafire.com/file/957wctanzrxu1bi/India_records_slowest_GDP_growth.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 16 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 2145, 'title' => 'Imported inflation', 'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The Indian rupee breached the 72-a-dollar mark last week, due to weak local and global economic indicators. The weakening of the domestic currency in the past two months has renewed concerns of a return of imported inflation.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Imported Inflation</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">When the general price level rises in a country due to the rise in prices of imported commodities like petroleum, gold , fertilisers etc , inflation is termed imported. Inflation may also rise due to depreciation of the domestic currency, which pushes up the rupee cost of imported items.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Largest contributors to Indian imports</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Petroleum and related products</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Precious stones</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Organic chemicals</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Vegetable oil</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Plastics</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India is a net importer on economic front. If the rupee depreciation is sustained, there will be an impact on inflation.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Imported inflation has sustained mainly through the fuel component. Any sustained increase in oil prices past the $65-per-barrel mark can be a concern. The price of gold, another key contributor to India’s imports, is hovering at $1540 an ounce.This can be a concern too.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The rupee is among the worst performing Asian currencies and has depreciated around 2.72% this year. Analysts believe that rupee to be range-bound around 71-73 per dollar in the near term. This could elevate the problem of inflation.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Way ahead</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The experts are have not pressed the panic button on imported inflation yet but a fragile global economy and trade tensions require a close watch on this indicator.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India’s Current Account Deficit is below 2% and hence India’s external position is expected to remain manageable.</span></span></p> </li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'imported-inflation', 'image' => 'https://www.mediafire.com/convkey/63c8/u4wjwlwclhrayw16g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/63c8/u4wjwlwclhrayw16g.jpg', 'metatitle' => 'Imported inflation', 'metakeyword' => 'Imported inflation', 'metadescription' => 'The Indian rupee breached the 72-a-dollar mark last week, due to weak local and global economic indicators. The weakening of the domestic currency', 'author' => null, 'downlaodpdf' => 'https://www.mediafire.com/file/xk6jxku72jr9fsg/Imported_inflation.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 17 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 2233, 'title' => 'WPI inflation', 'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p> <p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India's wholesale price inflation remained unchanged at 1.08% in August as inflation for manufactured items fell to 0%, which showed the reduction of pricing power of producers.</span></span></p> <p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>WPI</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>The Wholesale Price Index</strong> (WPI) is the price of a <strong>representative basket of wholesale goods. </strong></span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The WPI is published by the <strong>Economic Adviser in the Ministry of Commerce and Industry.</strong></span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The Wholesale Price Index focuses on the price of goods traded between corporations, rather than goods bought by consumers, which is measured by the Consumer Price Index.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"> The purpose of the WPI is to monitor price movements that reflect supply and demand in industry, manufacturing and construction. This helps in analyzing both macroeconomic and microeconomic conditions.</span></span></p> </li> </ul> <p style="margin-right:0cm"> </p> <p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Many manufactured items has seen negative inflation or deflation including vegetable and animal oils, leather and apparel products, paper, rubber, chemicals, steel, basic metals among others.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Fuel inflation also fell into negative territory. However, this may be short-lived due to disruption in crude oil supply from Saudi Arabia.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Food inflation accelerated to 7.67% in August from 6.15% a month ago.</span></span></p> </li> </ul> <p style="margin-right:0cm"> </p> <p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Implications</strong></span></span></p> <p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Although RBI does not consider WPI inflation for implementing its monetary policy, low level of retail inflation and sagging growth conditions may force RBI to cut policy rate for fifth consecutive time.</span></span></p> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'wpi-inflation', 'image' => 'https://www.mediafire.com/convkey/6f0d/tg1sfsggq04ixny6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/6f0d/tg1sfsggq04ixny6g.jpg', 'metatitle' => 'WPI inflation', 'metakeyword' => 'India's wholesale price inflation remained unchanged at 1.08%', 'metadescription' => 'India's wholesale price inflation remained unchanged at 1.08% in August as inflation for manufactured items fell to 0%, which showed the reduction of pricing power of producers.', 'author' => null, 'downlaodpdf' => 'https://www.mediafire.com/file/4abnifz12z1y24n/WPI_inflation.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 18 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 2292, 'title' => 'Fiscal deficit', 'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p> <p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">NITI Ayog vice-chairman Rajiv Kumar has said that the ?1.45 lakh crore tax giveaway is unlikely to widen fiscal deficit as the shortfall will be met through increased tax collections due to higher growth.</span></span></p> <p style="margin-right:0cm"> </p> <p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p> <p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The government had announced tax cuts for corporates by 10-12% points, bringing down the effective corporate tax to 25.17% inclusive of all cess and surcharges for domestic companies.</span></span></p> <p style="margin-right:0cm"> </p> <p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Budget had estimated fiscal deficit at 3.3% of the GDP for the current fiscal but many analysts say it will be overshooting by at least 70 bps to 4.1% as the quantum of the giveaways is worth 0.7% of the GDP.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">It is said that India’s tax buoyancy has been very good. Therefore, both direct and in direct tax collections will go up with growth after the tax cuts. The higher revenue from tax and non-tax fronts will help the government finance the fiscal deficit.</span></span></p> </li> </ul> <p style="margin-right:0cm"> </p> <p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Fiscal Deficit</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The difference between total revenue and total expenditure of the government is termed as fiscal deficit. It is an indication of the total borrowings needed by the government.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A fiscal deficit occurs when a government's total expenditures exceed the revenue that it generates, excluding money from borrowings.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A deficit is usually financed through borrowing from either the central bank of the country or raising money from capital markets by issuing different instruments like treasury bills and bonds.</span></span></p> </li> </ul> <p style="margin-right:0cm"> </p> <p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Impact of Fiscal deficit</strong></span></span></p> <p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"> Budget deficits crowd out private borrowing, manipulate capital structures and interest rates, decrease net exports, and lead to either higher taxes, higher inflation or both.</span></span></p> <p style="margin-right:0cm"> </p> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'fiscal-deficit', 'image' => 'https://www.mediafire.com/convkey/58c0/lb3okae0fns0ajj6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/58c0/lb3okae0fns0ajj6g.jpg', 'metatitle' => 'Fiscal deficit', 'metakeyword' => ' Budget deficits crowd out private borrowing, manipulate', 'metadescription' => ' Budget deficits crowd out private borrowing, manipulate capital structures and interest rates, decrease net exports, and lead to either higher taxes', 'author' => null, 'downlaodpdf' => 'https://www.mediafire.com/file/vxmcixymz7yjxnh/Fiscal_deficit.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 19 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 2395, 'title' => 'Current Account deficit narrows down', 'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India’s current account deficit (CAD) narrowed to 2% of Gross Domestic Product (GDP) during April-June quarter from 2.3% during the same period a year ago according to data released by the Reserve Bank of India.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">CAD is one of the key indicators of an economy’s health and measures the difference between the value of the goods and services a country imports and the value of its exports.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Net services receipts rose 7.3% year-on-year in quarter ended June due to rise in net earnings from travel, financial services and telecommunications, computer and information services. </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Private transfer receipts, an indicator of remittances by Indians employed overseas, grew 6.2% on-year to $19.9 billion.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Healthy growth in the surplus of services and secondary income, as well as lower crude oil prices helped to restrain the size of the current account deficit in Q1 FY2020 (April-June), despite a sharp increase in gold imports.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Net foreign direct investment was $13.9 billion in April-June as compared with $9.6 billion during the same period a year ago.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Net inflow of foreign portfolio investment was $4.8 billion in the quarter ended June as compared to $8.1 billion a year ago, due to net purchases in both debt and equity markets.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The government expect the current account deficit to decline substantially to $10-11 billion in Q2FY20 (July-September) from $19 billion in Q2 FY2019 (July-September), on the back of moderate crude oil prices and a weak demand for gold imports.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Current Account Deficit</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A country's current account is one of the two components of its balance of payments, the other being the capital account (also known as the financial account). </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The current account consists of the <strong>balance of trade, net primary income or factor income</strong> (earnings on foreign investments minus payments made to foreign investors) and <strong>net cash transfers</strong>, that have taken place over a given period of time. </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The current account balance is one of two major measures of a country's foreign trade (the other being the net capital outflow). </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A current account surplus indicates that the value of a country's net foreign assets (i.e. assets less liabilities) grew over the given period, and a current account deficit indicates that it shrank.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A positive current account balance indicates the nation is a net lender to the rest of the world, while a negative current account balance indicates that it is a net borrower from the rest of the world. </span></span></p> </li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'current-account-deficit-narrows-down', 'image' => 'https://www.mediafire.com/convkey/bfc6/5demvd0sp4o5m3g6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/bfc6/5demvd0sp4o5m3g6g.jpg', 'metatitle' => 'Current Account deficit narrows down', 'metakeyword' => 'Current Account deficit narrows down', 'metadescription' => 'India’s current account deficit (CAD) narrowed to 2% of Gross Domestic Product (GDP) during April-June quarter from 2.3% during the same period', 'author' => null, 'downlaodpdf' => 'https://www.mediafire.com/file/r1hwzk9j4o8idhj/Current_Account_deficit_narrows_down.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 20 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 2661, 'title' => 'CMIE report on unemployment', 'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India's unemployment rate in October rose to 8.5%, the highest since August 2016, according to data released by the Centre for Monitoring Indian Economy (CMIE).</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The unemployment rate is defined as the percentage of unemployed workers in the total labour force. Workers are considered unemployed if they currently do not work, despite the fact that they are able and willing to do so. The total labour force consists of all employed and unemployed people within an economy.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">According to CMIE, the urban unemployment<strong> </strong>rate stood at 8.9%, slightly higher than the rural unemployment rate of 8.3%.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Among States, Tripura and Haryana saw unemployment levels of over 20% (the highest), while Tamil Nadu saw the lowest unemployment rate of 1.1%. Rajasthan saw its unemployment rate double between 2018 and 2019.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The data also comes on the back of other indicators showing a downturn in the economy such as a decline in growth of automobile sales and August's industrial output shrinking at its fastest rate in more than six years.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Researchers estimate that between 2011-12 and 2017-18, employment declined by an unprecedented nine million (2% drop), with agricultural employment declining by 11.5%.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In the same period, employment in the service sector increased by 13.4%, while manufacturing employment dipped by 5.7%.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The data in the paper also shows that while employment has been declining, those who are not in Labour Force, Education and Training have continued to increase.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Types of Unemployment</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Frictional unemployment</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Unemployment is due to economic frictions arising from changes in employers’ demands for different types of labour.</span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Seasonal unemployment</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This type of unemployment occurs due to the seasonal nature of some industries. In some industries the demand for goods or services fluctuates seasonally. For example, hotels, restaurants, and ice-cream factories are fully staffed by employees during the summer but many of those workers are laid off during the winter.</span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Technological unemployment</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Im­provements in technology have reduced the demand for labour. In the long run, improvements in technology and the resultant increases in produc­tivity will create jobs by leading to an expansion of the economy.</span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Residual unemployment</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Some people who are not willing to work but get their names registered with employment exchanges in order to receive com­pensation from the government. This classification also includes those people who are unable to work because of physical or mental disabilities.</span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Structural unemployment</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This type of unemployment oc­curs due to a change in the structure of the economy. For example, the setting up of large mechanized man­ufacturing units in India led to the decline of handi­crafts.</span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Cyclical unemployment</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This form of unemployment arises from the trade cycle and is sometimes referred to as mass unemployment. Cyclical unemployment is characterized by a general deficiency of demand and consequently af­fects all industries at one and the same time, produc­ing widespread unemployment.</span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Disguised unemployment</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In this type, people are hired to work but net productivity from their efforts is zero. There is no benefit from their service.</span></span></p> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'cmie-report-on-unemployment', 'image' => 'https://www.mediafire.com/convkey/41ff/hcwyfy7jhz0ud146g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/41ff/hcwyfy7jhz0ud146g.jpg', 'metatitle' => 'CMIE report on unemployment', 'metakeyword' => 'CMIE report on unemployment', 'metadescription' => 'India's unemployment rate in October rose to 8.5%, the highest since August 2016, according to data released by the Centre for Monitoring Indian Economy (CMIE).', 'author' => null, 'downlaodpdf' => 'https://www.mediafire.com/file/ks8nn7kkh9ub1h3/CMIE_report_on_unemployment.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 21 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 2697, 'title' => 'Government to decide on new base year for GDP', 'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The Ministry of Statistics and Programme Implementation (MOSPI) will decide on a new base year for calculating the Gross Domestic Product (GDP) in the next few months.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Though 2017-18 is under consideration as the new base year, no final decision has been taken as the committees of experts are awaiting some more data before finalising their opinion.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The economic growth slowed to over six-year low of 5 per cent in April-June this fiscal. The government has been taking steps to boost investment and perk up the sagging economy.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The industrial production for September has seen a decline after core sector output contracted 5.2 per cent during the recent month according to experts.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>GDP</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Gross Domestic Product (GDP) is the total monetary or market value of all the finished goods and services produced within a country's borders in a specific time period. </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">As a broad measure of overall domestic production, it functions as a comprehensive scorecard of the country’s economic health.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">GDP can be calculated in three ways, using expenditures, production, or incomes. It can be adjusted for inflation and population to provide deeper insights.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Types of GDP</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Nominal GDP</strong> is the measurement of the raw data.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Real GDP</strong> takes into account the impact of inflation and allows comparisons of economic output from one year to the next and other comparisons over periods of time.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>GDP growth rate </strong>is the increase in GDP from quarter to quarter.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>GDP per capita</strong> measures GDP per person in the national populace; it is a useful way to compare GDP data between various countries</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Selection of base year</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A base year is the first of a series of years in an economic or financial index. It is typically set to an arbitrary level of 100.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">New, up-to-date base years are periodically introduced to keep data current in a particular index. Any year can serve as a base year, but analysts typically choose recent years.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A base year is used for comparison in the measure of a business activity or economic index.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Current method of GDP calculation</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India's Central Statistic Office calculates the nation's gross domestic product (GDP).</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India's GDP is calculated with two different methods, one based on economic activity (at factor cost), and the second on expenditure (at market prices).</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The <strong>factor cost</strong> method assesses the performance of eight different industries.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The <strong>expenditure-based </strong>method indicates how different areas of the economy, such as trade, investments, and personal consumption, are doing.</span></span></p> </li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'government-to-decide-on-new-base-year', 'image' => 'https://www.mediafire.com/convkey/7835/6m23dcc9ispc7pp6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/7835/6m23dcc9ispc7pp6g.jpg', 'metatitle' => 'Government to decide on new base year for GDP', 'metakeyword' => 'Government to decide on new base year for GDP', 'metadescription' => 'The Ministry of Statistics and Programme Implementation (MOSPI) will decide on a new base year for calculating the Gross Domestic Product (GDP)', 'author' => null, 'downlaodpdf' => 'https://www.mediafire.com/file/m46bks8wfc1m4hj/Government_to_decide_on_new_base_year_for_GDP.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 22 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 2817, 'title' => 'Rural demand may slip', 'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">All the indicators which point out the health of rural economy have been showing decline. The consumption pattern shows that the meltdown of economy has indeed impacted rural growth patterns.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The government had decided to withhold the findings of the rural household survey, which had shown diverse results. The data indicated that the consumer demand had fallen to a 40 year low.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">All the indicators of rural demand such as sales of FMCG, and of tractors and two-wheelers, in non-cities show they are still in decline.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Other indicators, such as a sharp fall in gold imports in the last four months (half of gold demand is rural-driven) also point to slackening demand.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The most critical factor behind rural stress is not just the fall in nominal wage rates of labour. </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">With CPI rising for rural labourers, real wages since March have also seen a decline. The real wage growth, adjusted for CPI-RL (Consumer Price Index-Rural Labourers), has seen the sharpest erosion in August. </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">With CPI-RL at 6.23%, even if nominal wages increased 3.4% in August, real wages eroded by 2.83%.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">While some economists say excess and late monsoon in a few large states like Rajasthan, Madhya Pradesh, Karnataka, Maharashtra and Gujarat has suppressed farm incomes, others argue otherwise.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Lack of jobs due to poor or no investment over the years has meant poor incomes and rural to urban migration for work has hardly matched addition to work force.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Rural India accounts for roughly about 38-40 per cent of the total FMCG market. The slowdown in rural India is far more pronounced than in big cities and metros. </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">If the urban segment is growing 10 per cent, rural is growing five per cent and this may drop further to 3-4 per cent.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Consumer demand</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Consumer demand is the willingness and ability of consumers to purchase a quantity of products in a given period of time, or at a given point in time.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Demand curve</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In economics, a demand curve is a graph depicting the relationship between the price of a certain commodity (the y-axis) and the quantity of that commodity that is demanded at that price (the x-axis). </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Demand curves may be used to model the price-quantity relationship for an individual consumer (an individual demand curve), or more commonly for all consumers in a particular market.</span></span></p> </li> </ul> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><img alt="Rural demand may slip 1 daily current affairs 18 april" src="https://www.mediafire.com/convkey/b313/7k5n9j6zw0l36b46g.jpg" style="height:207px; width:325px" /></span></span></p> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><img alt="Rural demand may slip 2 daily current affairs 18 November" src="https://www.mediafire.com/convkey/2bc7/i0nhmldfdrv4wyx6g.jpg" style="height:207px; width:325px" /></span></span></p> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'rural-demand-may-slip', 'image' => 'https://www.mediafire.com/convkey/7e41/n56ambcsyvwdtdj6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/7e41/n56ambcsyvwdtdj6g.jpg', 'metatitle' => 'Rural demand may slip', 'metakeyword' => 'Rural demand may slip', 'metadescription' => 'All the indicators which point out the health of rural economy have been showing decline. The consumption pattern shows that the meltdown of economy ', 'author' => null, 'downlaodpdf' => 'https://www.mediafire.com/file/0fezomlf1asl6ye/Rural_demand_may_slip.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 23 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 2801, 'title' => 'Wholesale and retail inflation', 'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The official data showed that the wholesale inflation in the country for October grew by just 0.16 per cent. In October last year, it grew by 5.5 per cent. The rate of wholesale inflation has been falling steadily.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This deceleration in wholesale prices has happened despite a significant jump in wholesale food prices.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">WPI food inflation rose to 7.6 per cent. The spike was essentially led by an almost 40 per cent surge in vegetable prices and a 17 per cent surge in the price of pulses. Increases in prices of spices and cereals, too, contributed to increasing wholesale food inflation</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The WPI inflation for October has touched a 40-month low. But retail inflation in the country for the same month has touched a 16-month high.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Food articles have a much higher weight ,over 45 per cent in CPI or retail inflation index.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In WPI, their weight is less than 30 per cent. So even a similar spike in prices will show up a much higher impact in the retail inflation index than the wholesale inflation index.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Similarly, fuel and energy have a much higher weight in WPI inflation. A spike in these prices obviously bumps up only the retail inflation while leaving the wholesale inflation unaffected.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Inflation</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Inflation is the increase in the prices of goods and services over time.</span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Inflation increases your cost of living. Inflation reduces the purchasing power of each unit of currency.</span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Deflation</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Deflation is a decrease in the general price level of goods and services. Deflation occurs when the inflation rate falls below 0%.</span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Disinflation</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Disinflation is a decrease in the rate of inflation , a slowdown in the rate of increase of the general price level of goods and services in a nation's gross domestic product over time. It is the opposite of reflation. </span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Recession</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Recession is a slowdown or a massive contraction in economic activities. A significant fall in spending generally leads to a recession. Such a slowdown in economic activities may last for some quarters thereby completely hampering the growth of an economy.</span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Reflation</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Reflation is the act of stimulating the economy by increasing the money supply or by reducing taxes, seeking to bring the economy (specifically price level) back up to the long-term trend, following a dip in the business cycle.</span></span></p> <p style="margin-right:0in"> </p> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'wholesale-and-retail-inflation', 'image' => 'https://www.mediafire.com/convkey/fc62/ljxvi7se2s83cxw6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/fc62/ljxvi7se2s83cxw6g.jpg', 'metatitle' => 'Wholesale and retail inflation', 'metakeyword' => 'Wholesale and retail inflation', 'metadescription' => 'The official data showed that the wholesale inflation in the country for October grew by just 0.16 per cent. In October last year, it grew by 5.5 per cent.', 'author' => null, 'downlaodpdf' => 'https://www.mediafire.com/file/iy91j5ilg7agj07/Wholesale_and_retail_inflation.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 24 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 2799, 'title' => 'Government witholds household spending report', 'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The government<strong> </strong>has decided not to release the household consumer expenditure survey results of 2017-18 due to data quality issues.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">It is alleged that the report has been suppressed because it showed that consumer demand declined in 2017-18 for the first time in more than 40 years.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The Ministry of statistics and program implementation has said that the report cited in the media was a draft and should not be considered the final report.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">They said that they were planning the next consumer expenditure survey in 2021-22 after data quality refinement in the survey process.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Household spending</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Household spending is the amount of final consumption expenditure made by resident households to meet their everyday needs, such as food, clothing, housing (rent), energy, transport, durable goods (notably cars), health costs, leisure, and miscellaneous services.</span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">There are two components of consumer spending: <strong>induced consumption and autonomous consumption</strong>.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Induced consumption</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Induced consumption is the portion of consumption that varies with disposable income. When a change in disposable income “induces” a change in consumption on goods and services, then that changed consumption is called “induced consumption”.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Autonomous consumption</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Autonomous consumption is the consumption expenditure that occurs when income levels are zero. Such consumption is considered autonomous of income only when expenditure on these consumables does not vary with changes in income<span style="font-size:9.5pt"><span style="background-color:white"><span style="font-family:"Arial","sans-serif""><span style="color:#222222">.</span></span></span></span></span></span></p> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'government-witholds-household-spending-report', 'image' => 'https://www.mediafire.com/convkey/b1f6/19isxq0n9jmpr396g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/b1f6/19isxq0n9jmpr396g.jpg', 'metatitle' => 'Government witholds household spending report', 'metakeyword' => 'Government witholds household spending report', 'metadescription' => 'The government has decided not to release the household consumer expenditure survey results of 2017-18 due to data quality issues.', 'author' => null, 'downlaodpdf' => 'https://www.mediafire.com/file/bhqct1dycrj0d7a/Government_witholds_household_spending_report.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 25 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 2935, 'title' => 'GDP growth dips to lowest in 6 years', 'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India's annual growth in gross domestic product or GDP fell to 4.5% for the quarter ended September 30, down from 5% in the previous three months and 7% for the corresponding period of 2018.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The government has taken several steps, including a big cut in corporate tax rate in September, to boost investments and bolster economic growth. But the economic growth has failed to recover big time.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">According to the data released by National Statistical Office (NSO), the gross value added (GVA) growth in the manufacturing sector contracted by 1% in the second quarter of this fiscal from 6.9% expansion a year ago.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Similarly, farm sector GVA growth remained subdued at 2.1%, down from 4.9% in the corresponding period of the previous fiscal.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Construction sector GVA growth too slowed to 3.3% from 8.5% earlier. Mining sector growth was recorded at 0.1% as against 2.2% contraction a year ago.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Trade, hotel, transport, communication and services related to broadcasting growth was also down to 4.8% in the second quarter from 6.9% a year ago.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">On the other hand, public administration, defence and other services reported improvement with an 11.6% rise during the quarter under review from 8.6% a year earlier.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India's fiscal deficit in the first seven months through October stood at ?7.2 lakh crore, or 102.4% of the budgeted target for the current fiscal year.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Reasons </strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The credit market has been in tatters after IL&FS collapse. The NBFCs that lend to companies have stopped lending to wholesale segment.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The commercial banks have reduced their lending significantly due to accumulating bad loans.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The growth in collections from Goods and Services Tax and Direct Taxes has reduced for the full year, the Central government has been staring at a shortfall of a Rs 2.7 lakh crore in 2019-20.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Measures</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Government spending can create demand in the market and boost consumption. The increased consumption pattern is set to help manufacturing sector to recover.</span></span></p> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'gdp-growth-dips-to-lowest-in-6-years', 'image' => 'https://www.mediafire.com/convkey/7853/wk7jrvg48djqcsd6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/7853/wk7jrvg48djqcsd6g.jpg', 'metatitle' => 'GDP growth dips to lowest in 6 years', 'metakeyword' => 'GDP growth dips to lowest in 6 years', 'metadescription' => 'India's annual growth in gross domestic product or GDP fell to 4.5% for the quarter ended September 30, down from 5% in the previous three months ', 'author' => null, 'downlaodpdf' => 'https://www.mediafire.com/file/whutfvjjnzigdv8/GDP_growth_dips_to_lowest_in_6_years.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 26 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 2967, 'title' => 'Credit flow and growth', 'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India’s nominal GDP in Q2FY20 is the <a href="https://indianexpress.com/article/explained/explained-why-gdp-rate-at-4-5-pc-now-makes-rbi-projection-hard-to-achieve-6143112/">lowest in more than 16 years</a> at 6.1 %. The slowdown has been exaggerated by the extraordinarily low inflation and the 4.5% y-o-y growth in GDP is the lowest since Q4FY13.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The nominal GDP has grown by just 6.1% y-o-y in a quarter when nominal government spending jumped 18.9% y-o-y, the biggest increase in 30 quarters. But the government spending likely to be constrained due to poor tax collections.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The government has cited weakening global growth as a reason for India’s sharper-than-expected growth slump.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">But India is a relatively closed economy, and domestic factors have played a bigger role in lowering the growth numbers.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">when the economy is slowing, it is expected that tax collections too, will slow. And since the denominator, the nominal GDP, will be lower, the deficit-to-GDP will go up even more.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The fiscal deficit for the April-October period is at 102% of GDP. Much of the increase in the deficit is because the government has spent more , Rs 16.55 lakh crore versus Rs 14.55 lakh crore in the corresponding period of 2018-19.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The output of the core sector contracted 5.8% y-o-y in October, slightly more than it did in September. Demand for cars was subdued in the festival month, and has fallen in November. </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Sales of two-wheelers fell 14% y-o-y in October, suggesting poor rural demand. Also, sales of commercial vehicles were weak, crashing by 23% y-o-y.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Consumers are not willing to spend, especially on big ticket items such as homes. Since there is no quick fix for the compression in credit growth, the growth in Q3 and Q4 will not be meaningfull.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">One big reason why consumption demand has tapered off is rural stress. With prices of agri goods collapsing, farm incomes have been badly hurt. Unless many more jobs are created, it is hard to see consumption getting a boost.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The services sector is in big trouble since the financials of a couple of large telcom players are fragile following adverse regulation. These companies are laying off people in large numbers.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The biggest challenge is to unclog credit flows to industry both small and large. This looks virtually impossible because banks have turned risk averse and are staying cautious in due to an extremely tough environment . This year has seen more than 3,300 companies being downgraded so far.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The lending by NBFCs has slowed sharply over the past year at 34% y-o-y in Q2FY20, with several of them in financial trouble.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">With credit flows tight, more companies are likely to default on loan obligations, which, in turn, means rising loan losses.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">There is the danger of many small and mid-sized businesses closing down, leading to more job losses<span style="font-size:13.5pt"><span style="background-color:white"><span style="font-family:"Arial","sans-serif""><span style="color:black">.</span></span></span></span></span></span></p> </li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'credit-flow-and-growth', 'image' => 'https://www.mediafire.com/convkey/a359/cv1m9t2zkg1jccv6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/a359/cv1m9t2zkg1jccv6g.jpg', 'metatitle' => 'Credit flow and growth', 'metakeyword' => 'Credit flow and growth', 'metadescription' => 'India’s nominal GDP in Q2FY20 is the lowest in more than 16 years at 6.1 %. The slowdown has been exaggerated by the extraordinarily low inflation and the 4.5%', 'author' => null, 'downlaodpdf' => 'https://www.mediafire.com/file/zv1lrc7zf7mfnbl/Credit_flow_and_growth.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 27 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 3116, 'title' => 'Why Indian economy is losing its growth momentum?', 'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Indian economy is losing its momentum and going towards slowdown at this point. But until March 2017, the Indian economy was not only growing at a progressively rapid pace but was also the fastest-growing major economy in the world.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In a new working paper published by Harvard University’s Center for International Development, Arvind Subramanian, who was India’s chief economic advisor and Josh Felman, former IMF resident representative to India, give a detailed understanding of how the Indian economy lost its way.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">They argue that Indian economy is facing both <strong>structural</strong> (that is, more long-term issues related to the overall framework of the economy such as the flexibility or inflexibility of labour laws etc.) and <strong>cyclical</strong> (that is, more short-term issues such as a bad monsoon that disrupts production of food articles etc.) challenges.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Since the causes are both structural and cyclical, arresting this economic slowdown is proving to be so difficult as the measures that would have alleviated a cyclical slowdown fail because structural reasons are also involved.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">They also highlight the twin-balance sheet (TBS) problem that India faced since 2014. They show that as the years rolled by the TBS problem morphed into a “four balance sheet challenge” for the economy.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Authors pointed out that the balance sheets of Indian banks were burdened by a high proportion of non-performing loans and the balance sheet of corporates were clogged because they had over-borrowed and were unable to pay.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">When the economy was growing at near double digits, companies borrowed heavily from the market hoping for a future profit.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The banks, especially the government-owned ones, too, ignored prudential norms and lent a lot of money to companies in the hope that this would help boost economic growth.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">As it happened, economic prospects collapsed quite sharply after the<strong> Global Financial Crisis </strong>(GFC) and a high proportion of companies found that their projects were no longer viable. </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The end result was that the companies were left with huge loans they could not pay back in time and the banks were left with huge loans that had turned duds.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">But unlike in the developed world, where such companies would have been declared bankrupt and liquidated or where such banks would have sunk, in India, both the companies and the banks survived. This created a long term burden on economy.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The GDP kept increasing even after TBS because, during 2015 and 2016, international crude oil prices fell to a third of what they were in 2014. This essentially meant that Indians could spend more, that boosted the GDP.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India’s growth was boosted by a lending spree provided by non-banking financial companies (<strong>NBFCs</strong>) like IL&FS and DHFL.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">NBFCs took over the leading role of lending to the economy because banks were still struggling with NPAs and were largely unwilling to lend directly to businesses.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>How did the slowdown start?</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">There are two broad but interlinked reasons. One, the unresolved TBS problem, and two, the fall of NBFCs and the real estate sector. Together, they make for the Four Balance Sheet Challenge for the Indian economy.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The unresolved TBS problem provided a progressively weakening ecosystem of banks and companies, the collapse of some of the leading NBFCs has proven to be trigger for the sharp growth deceleration.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Most of the funding from NBFCs was challened to one sector, the real estate. Due to global financial crisis the demand for flats went down leading to failure of real estate sector to pay back loans to NBFCs.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Solutions</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Structural changes to economic condition including solving the Twin Balance Sheet problem. </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Increasing consumption so as to boost the economic growth and GDP through measures like tax cut.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Encouraging investments in major sectors such as real estate in order to kickstart stuck up projects.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Keeping government spending intact so that core industries like cements, steel remain functioning.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Encouraging foreign investments so that short term liquidity crisis can be effectively tackled.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Twin Balance Sheet Problem</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Twin balance sheet problem refers to the stress on balance sheets of banks due to non-performing assets (NPAs) or bad loans on the one hand, and heavily indebted corporates on the other.</span></span></p> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'why-indian-economy-is-losing-its-growth-momentum', 'image' => 'https://www.mediafire.com/convkey/a49b/f7fillg6v6n67dd6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/a49b/f7fillg6v6n67dd6g.jpg', 'metatitle' => 'Why Indian economy is losing its growth momentum?', 'metakeyword' => 'Why Indian economy is losing its growth momentum?', 'metadescription' => 'Indian economy is losing its momentum and going towards slowdown at this point. But until March 2017, the Indian economy was not only growing ', 'author' => null, 'downlaodpdf' => 'https://www.mediafire.com/file/1du01ajycwww9zm/Why_Indian_economy_is.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 28 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 3137, 'title' => 'India on the verge of stagflation?', 'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"> With fast decelerating economic growth and sharply rising inflation, there is a growing belief about India facing stagflation.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Stagflation is said to happen when an economy faces stagnant growth as well as persistently high inflation.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Typically, inflation rises when the economy is growing fast. That’s because people are earning more and more money and are capable of paying higher prices for the same quantity of goods. When the economy stalls, inflation tends to dip as well because there is less money now chasing the same quantity of goods.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Its because with stalled economic growth, unemployment tends to rise and existing incomes do not rise fast enough and yet, people have to contend with rising inflation. So people find themselves pressurised from both sides as their purchasing power is reduced.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Over the past six quarters, economic growth in India has decelerated with every quarter. In the second quarter (July to September), for which the latest data is available, the GDP grew by just 4.5%.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In October inflation was a 16-month high and the November inflation, at 5.54%, is at a three-year high. Inflation for the rest of the financial year is expected to stay above the RBI’s comfort level of 4%.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Are these indications of stagflation?</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">It may appear India is facing stagflation but there are some broad reasons to believe otherwise:</span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Although India is not growing as fast as we have in the past or as fast as we could, India is still growing at 5% and is expected to grow faster in the coming years. India’s growth hasn’t yet stalled and declined. Year on year, our GDP has grown in absolute number, not declined.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Retail inflation has been quite high in the past few months, yet the reason for this spike is temporary because it has been caused by a spurt in agricultural commodities after some unseasonal rains.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Retail inflation has been well within the RBI’s target level of 4% for most of the year. A sudden spike of a few months, which is likely to flatten out in the next few months, it is still early days before one claims that India has stagflation.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Tackling stagflation</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The Central Bank could use Monetary policy to try and reduce inflation. Higher Interest rates increase the cost of borrowing and this will reduce aggregate demand (AD). This will be effective for reducing inflation, but, it will cause a bigger fall in GDP.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Another solution to stagflation is to increase aggregate supply through supply-side policies, for example, privatisation and deregulation to increase efficiency and reduce costs of production.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The best policy measure is to reduce personal and business taxes because they tend to reduce labour costs and raise demand for labour. Similarly, sales tax and excise duties should be reduced in order to prevent the price level from rising.</span></span></p> </li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'india-on-the-verge-of-stagflation', 'image' => 'https://www.mediafire.com/convkey/93c6/4lblbpsvo832xih6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/93c6/4lblbpsvo832xih6g.jpg', 'metatitle' => 'India on the verge of stagflation?', 'metakeyword' => 'India on the verge of stagflation?', 'metadescription' => ' With fast decelerating economic growth and sharply rising inflation, there is a growing belief about India facing stagflation.', 'author' => null, 'downlaodpdf' => 'https://www.mediafire.com/file/a2afm5ep9uovxw9/India_on_the_verge_of_stagflation.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 29 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 3179, 'title' => 'Steps to kick-start economy', 'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India’s Growth rate has plumeted from the level of 8.1% in the fourth quarter of 2017-18 to 4.5% in the second quarter of 2019-20, a fall of 3.6 percentage points. This steady decline will have had an adverse impact on employment and poverty reduction.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Analysts have been trying to decode whether the slowdown is structural or cyclical. If it is cyclical, the expectation is that there is a chance for upturn soon. If it is purely structural, it will take time until the structural rigidities are removed.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">As far as India’s case is concerned there is plenty of evidence to indicate that the decline is cyclical due to reduced demand.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Several important sectors such as automobiles, consumer durables and housing show a slackening of demand. This is also reflected in the low capacity utilisation of several industries.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">On the structural side while the reform agenda has been carried forward, there are segments such as agricultural marketing, land and labour markets which are still waiting for reforms.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">One sector which needs immediate reforms is the financial system, more particularly the banking system and within it the public sector segment. </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Even as the policy makers address the problem of non-performing assets, attention has to be paid to defining the relationship between governments and boards of public sector banks and on their respective roles in management.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">One significant factor in the current scene is the steep fall in investment rate (gross fixed capital formation rate) from 34.3% in 2011-12 to 27.8% in the second quarter of 2019-20. This results in a sharp decline in the potential rate of growth by 1.6 percentage points.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Data shows a weakening of private consumption expenditure. But our efforts to raise demand is dependent on income.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Measures</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The three autonomous elements that can be used as levers to raise demand are government consumption expenditure, government investment and exports. </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Private investment can be treated as autonomous only to a limited extent. However, private foreign investment can be an independent factor which can be leveraged.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The three autonomous elements that can be used as levers to raise demand are government consumption expenditure, government investment and exports.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"> Private investment can be treated as autonomous only to a limited extent. However, private foreign investment can be an independent factor which can be leveraged. But at present economy across the world is not booming. This leaves place for only government expenditure.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In the present context, the emphasis should be given to ensure that the entire increase in government expenditure is diverted towards capital expenditure and not short term gains.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">As far as monetary policy is concerned, the central bank will have to take steps to quicken the resolution process of bad loans and help banks to move to a more healthy situation. </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Reforms in fiscal policy may have to wait till the economy turns around. The GST has to become more manufacturer and trader friendly to increase benefits for the government.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The banking system, currently, has become a burden. Quickening of the resolution process along with the recapitalisation of public sector banks has to take priority.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The cleansing of the financial system which also includes finding solutions to the problems of non-banking financial companies will help to push the economy up. </span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Way ahead</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The reasonably good monsoon may lead to an improvement in agricultural production and rural demand. </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Exports can help a bit if there is strong effort and if the global trade environment improves.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Private investment can pick up provided the growth rate begins to look up. Restoring financial institutions like banking and non-banking to a healthy state when they can begin to lend confidently is the most essential prerequisite for faster growth.</span></span></p> </li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'steps-to-kick-start-economy', 'image' => 'https://www.mediafire.com/convkey/099d/f7y5tbv8gvqdxu26g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/099d/f7y5tbv8gvqdxu26g.jpg', 'metatitle' => 'Steps to kick-start economy', 'metakeyword' => 'Steps to kick-start economy', 'metadescription' => 'India’s Growth rate has plumeted from the level of 8.1% in the fourth quarter of 2017-18 to 4.5% in the second quarter of 2019-20, a fall of 3.6 percentage', 'author' => null, 'downlaodpdf' => 'https://www.mediafire.com/file/a620kgxk3r9cbal/Steps_to_kick-start_economy.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 30 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 3307, 'title' => 'Nominal GDP', 'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The National Statistical Office (NSO) released the first advance estimates of the national income that projected growth in India’s GDP at market prices for 2019-20 at 4.98% in “real” terms.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The rate is lowest since the 3.89% in the global financial crisis year of 2008-09. But even more significant was the estimated growth of 7.53% in “nominal” terms, which is the lowest since the 7.35% for 1975-76.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Real and Nominal GDP</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">GDP is the total market value of all goods and services produced in the economy during a particular year, inclusive of all taxes and subsidies on products. </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The market value taken at current prices is the nominal GDP. The value taken at constant prices, that is prices for all products taken at an unchanged base year is the real GDP.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In simple terms, real GDP is nominal GDP stripped of inflation. Real GDP growth thus measures how much the production of goods and services in the economy has increased in actual physical terms during a year. </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Nominal GDP growth, on the other hand, is a measure of the increase in incomes resulting from rise in both production and prices.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Importance of Nominal GDP</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In the normal course, real growth is what one would ordinarily look at. But the current fiscal year seems extraordinary because the gap between nominal and real GDP growth is just 2.6 percentage points.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In 2019-20, not only is real GDP growth expected to be the lowest in 11 years, but also the implied inflation (also called GDP deflator, or the increase in prices of all the goods and services produced in the economy) is just 2.6%. Simply put, producers have not gained from either higher output or higher prices.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Implications of low Nominal GDP rate</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Listed companies have seen their turnover double in five years or so, which comes with a nominal year-on-year growth of 14-15%. If the latter falls to 7-8%, the same doubling would take 9-10 years.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This would mean that value of their inputs, including salaries paid to employees, would also be rising at a slower rate. This will have profound effect on demand and production.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">For government low nominal GDP growth is a matter of concern because their budgets normally assume double-digit increases in revenues.</span></span></p> </li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'nominal-gdp', 'image' => 'https://www.mediafire.com/convkey/ab74/3zggy6ap3qu3ox56g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/ab74/3zggy6ap3qu3ox56g.jpg', 'metatitle' => 'Nominal GDP | The National Statistical Office ', 'metakeyword' => 'Nominal GDP, The National Statistical Office ', 'metadescription' => 'The National Statistical Office (NSO) released the first advance estimates of the national income that projected growth in India’s GDP at market prices for 2019', 'author' => null, 'downlaodpdf' => 'https://www.mediafire.com/file/p0fbs6iiasvcr6n/Nominal_GDP.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 31 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 3309, 'title' => 'Government predicts lower GDP growth', 'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">According to the data released by the Ministry of Statistics and Programme Implementation (MoSPI), India’s gross domestic product will grow by just 5 per cent in the current financial year (2019-20). Last financial year, 2018-19, the Indian economy grew at 6.8 per cent.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The First Advance Estimates (FAE) released computes a variety of data, such as the Index of Industrial Production, the financial performance of listed companies, first advance estimates of crop production etc., for the first 7 to 8 months to arrive at the annual figure.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The gross value added (GVA), which maps the economic activity from the income side as against the GDP which maps it from the expenditure side, is expected to grow by 4.9 per cent in 2019-20 as against 6.6 per cent in 2018-19.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The approach for compiling the Advance Estimates is based on Benchmark-Indicator method. The sector-wise Estimates are obtained by extrapolation of indicators like</span></span></p> </li> </ul> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Index of Industrial Production (IIP) of first 7 months of the financial year</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">financial performance of Listed Companies in the Private Corporate sector available upto quarter ending September, 2019</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">1st Advance Estimates of Crop production</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">accounts of Central & State Governments, information on indicators like Deposits & Credits, Passenger and Freight earnings of Railways, Passengers and Cargo handled by Civil Aviation, Cargo handled at major Sea Ports, Sales of Commercial Vehicles, etc., available for first 8 months of the financial year.</span></span></p> </li> </ul> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">There are four main drivers of the GDP. <strong>One</strong>, the private consumption expenditure, that is the expenditure that we make in our personal capacity. This category has grown by just 5.7 per cent in 2019-20 while it grew by 8 per cent last financial year.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The <strong>second</strong> driver is the expenditure made by the Government. This grew by 10.5 per cent, which is higher than the rate of growth (9.2 per cent) in the last financial year.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The <strong>third</strong> is the growth in business investments. This driver, which is the key to sustainable long-term growth, grew by less than 1 per cent whereas in last financial year it grew by 10 per cent.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Almost all sectors have witnessed slower growth in economic activity. Only Public Administration, Defence and Other Services,which essentially measures how the government did, grew by 9.1 per cent. All other sectors saw a GVA growth that was slower than the average growth in the last financial year.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The sectors which registered growth rate of over 4.9 per cent are, ‘Electricity, Gas, Water Supply and Other Utility Services’, ‘Trade, Hotels, Transport, Communication and Services related to Broadcasting’, ‘Financial, Real Estate and Professional Services.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The worst performing sectors are ‘Agriculture, Forestry and Fishing’, ‘Mining and Quarrying’, ‘Manufacturing’ and ‘Construction’, which are expected to see a GVA growth of less than 3%.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Gross Value Added</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Gross value added (GVA) is the measure of the value of goods and services produced in an area, industry or sector of an economy. </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Gross value added provides a dollar value for the amount of goods and services that have been produced in a country, minus the cost of all inputs and raw materials that are directly attributable to that production.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">GVA thus adjusts gross domestic product (GDP) by the impact of subsidies and taxes (tariffs) on products.</span></span></p> </li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'government-predicts-lower-gdp-growth', 'image' => 'https://www.mediafire.com/convkey/fbb5/vl7db1ql3jutbj66g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/fbb5/vl7db1ql3jutbj66g.jpg', 'metatitle' => 'Government predicts lower GDP growth', 'metakeyword' => 'Government predicts lower GDP growth', 'metadescription' => 'According to the data released by the Ministry of Statistics and Programme Implementation (MoSPI), India’s gross domestic product will grow by just 5', 'author' => null, 'downlaodpdf' => 'https://www.mediafire.com/file/wo9e8gzue5j2kuf/Government_predicts_lower_GDP_growth.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 32 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 3376, 'title' => 'Wholesale inflation increases to 2.59%', 'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Wholesale prices based inflation surged to 2.59% in December, as against 0.58% in November due to increase in prices of food articles like onion and potato.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The annual inflation, based on monthly wholesale price index (WPI), was at 3.46% during the same month a year ago (December 2018).</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The rate of price rise for food articles rose to 13.12% during December as against 11% a month earlier, while for non-food articles it rose nearly four-fold to 7.72% from 1.93% in November.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Among food articles, vegetable prices surged by 69.69% mainly on account of onions, which witnessed 455.83% jump in prices, followed by potato at 44.97%.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The consumer price index based retail inflation spiked to over a 5-year high of 7.35% in December due to costlier food products.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Wholesale inflation</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Wholesale inflation is the rate of increase in wholesale prices gauged by the Wholesale Price Index.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Wholesale Price Index (WPI)</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Wholesale Price Index, or WPI, measures the changes in the prices of goods sold and traded in bulk by wholesale businesses to other businesses. WPI is unlike the Consumer Price Index (CPI), which tracks the prices of goods and services purchased by consumers. The WPI tracks prices at the factory gate before the retail level.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The numbers are released by the Economic Advisor in<strong> the Ministry of Commerce and Industry</strong>. An upward surge in the WPI print indicates inflationary pressure in the economy and vice versa.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Even as the WPI is used as a key measure of inflation in some economies, the <a href="http://www.financialexpress.com/tag/rbi/" target="_blank">RBI</a> no longer uses it for policy purposes, including setting repo rates. </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The central bank currently uses CPI or retail inflation as a key measure of inflation to set the monetary and credit policy.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Major components of WPI</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Primary articles is a major component of WPI, further subdivided into Food Articles and Non-Food Articles.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Food Articles include items such as Cereals, Paddy, Wheat, Pulses, Vegetables, Fruits, Milk, Eggs, Meat & Fish, etc.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Non-Food Articles include Oil Seeds, Minerals and Crude Petroleum.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The next major basket in WPI is Fuel & Power, which tracks price movements in Petrol, Diesel and LPG.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The biggest basket is Manufactured Goods. It spans across a variety of manufactured products such as Textiles, Apparels, Paper, Chemicals, Plastic, Cement, Metals, and more.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Manufactured Goods basket also includes manufactured food products such as Sugar, Tobacco Products, Vegetable and Animal Oils, and Fats.</span></span></p> </li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'wholesale-inflation-increases-to-2-59', 'image' => 'https://www.mediafire.com/convkey/4b28/4mvws14d5g19ot96g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/4b28/4mvws14d5g19ot96g.jpg', 'metatitle' => 'Wholesale inflation increases to 2.59%', 'metakeyword' => 'Wholesale inflation increases to 2.59%', 'metadescription' => 'Wholesale prices based inflation surged to 2.59% in December, as against 0.58% in November due to increase in prices of food articles like onion and potato.', 'author' => null, 'downlaodpdf' => 'https://www.mediafire.com/file/nvyto8iep9i9jkt/Wholesale_inflation_increases.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 33 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 3388, 'title' => 'Fiscal deficit', 'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Former Economic Affairs Secretary S C Garg has stated, in his blog dated January 14, that the true fiscal deficit for 2018-19 is 4.7%, more than a full percentage point than the number claimed by Finance Minister Nirmala Sitharam’s Budget in July.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India’s fiscal deficit, which essentially maps how much money the Indian government has to borrow to make up the gap between its expenditure and its revenues, was just 3.4 per cent of the gross domestic product (GDP) for 2018-19. </span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">For the current year, the Union Budget presented in July expected the fiscal deficit to be 3.3 per cent of the GDP.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">It has been suspected that the official figures hide the true fiscal deficit. That’s because some of the government’s expenditure was funded by the so-called “off-budget” items. </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">As a result, while this extra expenditure did not figure in the official calculations, it did mean that the true fiscal deficit or borrowing by the public sector was higher than the level presented in the Budget.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Fiscal deficit</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Fiscal Deficit is the difference between the Revenue Receipts plus Non-debt Capital Receipts (NDCR) and the total expenditure.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In other words, fiscal deficit is reflective of the total borrowing requirements of Government.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Significance</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In the economy, there is a limited pool of investible savings. These savings are used by financial institutions like banks to lend to private businesses and the governments.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">If this ratio is too high, it implies that there is a lesser amount of money left in the market for private entrepreneurs and businesses to borrow. Lesser amount of this money, in turn, leads to higher rates of interest charged on such lending.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A high fiscal deficit and higher interest rates at a time like this would also mean that the efforts of the Reserve Bank of India to reduce interest rates are undone.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Way forward</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">There is no set universal level of fiscal deficit that is considered good. Typically, for a developing economy, where private enterprises may be weak and governments may be in a better state to invest, fiscal deficit could be higher than in a developed economy.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In developing economies, governments also have to invest in both social and physical infrastructure upfront without having adequate avenues for raising revenues.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In India, the Fiscal Responsibility and Budget Management Act requires the central government to reduced its fiscal deficit to 3 per cent of GDP. India has been struggling to achieve this mark.</span></span></p> </li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'fiscal-deficit', 'image' => 'https://www.mediafire.com/convkey/9d2b/4fbnyweezdtr97r6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/9d2b/4fbnyweezdtr97r6g.jpg', 'metatitle' => 'Fiscal deficit | Former Economic Affairs Secretary S C Garg', 'metakeyword' => 'Fiscal deficit, Former Economic Affairs Secretary S C Garg', 'metadescription' => 'Former Economic Affairs Secretary S C Garg has stated, in his blog dated January 14, that the true fiscal deficit for 2018-19 is 4.7%, more than a full percentage', 'author' => null, 'downlaodpdf' => 'https://www.mediafire.com/file/lmko5kfovrv4t02/Fiscal_deficit.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 34 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 3541, 'title' => 'The Annual Budget', 'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Union Finance Minister Nirmala Sitharaman will present the Annual Budget of the government on 1st of February.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A government budget is a document prepared by the government or other political entity presenting its anticipated revenues and proposed spending for the coming financial year.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">According to <strong>Article 77 (3)</strong>, the Union Finance Minister has been made responsible by the President to prepare the budget also called as the annual financial statement and pilot it through the parliament. </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Introduction and voting on Demands for Grants is confined only to the Lok Sabha. The Lok Sabha has the power to assent, refuse to assent and even to reduce the amount of the Demand for Grant. </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In Rajya Sabha, there is only general discussion of the budget. The upper house does not vote on the Demands for Grants.</span></span></p> </li> </ul> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In parliament, the budget goes through 5 stages</span></span></p> </li> </ul> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Presentation of budget with Finance Minister’s speech</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">General discussion of the budget. After this, there is an adjournment of houses so that standing committees scrutinises the demand for grants for a month.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Voting on demand for grants in Lok Sabha</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Passing of appropriation bills</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Passing of Finance bills.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Discussion</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Discussion of Budget is done in two stages. In the <strong>first</strong> stage, broad outlines of the budget, principle and policies underlying it are to be discussed in general discussion of the budget which lasts for about 4-5 days. </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">In <strong>second</strong> stage discussion is held based on reports of concerned Departments/Ministries standing committees, which is usually done after a month of a general discussion of the budget. Standing committees submit reports to the house which are persuasive in nature.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Cut motions</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Cut motions are motions for reduction in various demands for grants. Cut motions seek a reduction of an amount of demands of grants.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Economy cut</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Economy cut motion demands reduction of a specified amount from the demand for Grant representing the welfare of the economy.</span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Policy cut</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The demand for a grant is reduced to Re.1 representing the disapproval of the policy underlying the demand. A member giving such notice should indicate precise terms, the particulars of the policy which he proposes to discuss. </span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Token cut</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Token cut motion is used to voice a grievance. In token cut, the amount of the Demand for Grant is reduced by Rs.100 in order to express a specific grievance.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Budgetary terms</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Disinvestment Receipts</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The term refers to the money raised by the Government through disinvestment, or the sale of its equity stake in companies it owns.</span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Fiscal Responsibility and Budget Management Act</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The Act is an attempt to make the Government adhere to a phased plan to reduce fiscal deficit, which denotes an excess of expenditure over revenue.</span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Dividend Distribution Tax</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This is a tax levied on companies that pay out dividends to its shareholders, i.e. share a portion of earnings with them.</span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Venture Capital Funds</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">These are funds that invest in start-ups, a financially riskier proposition than investing in established companies.</span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Securities Transaction Tax</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">It is a tax on all transactions done over the stock exchanges involving securities such as shares, derivatives, and equity-linked mutual funds.</span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Wholesale Price Index (WPI)</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">It is a measure of inflation, or price change, arrived at after regularly measuring the prices of a slew of wholesale goods.</span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Consumer Price Index (CPI)</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">It is a measure of inflation, or price change, arrived at after regularly measuring the prices of a slew of household goods and services.</span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Capital Gains Tax</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">It is a tax on the gains that ensue when an asset is sold for a price higher than what it was bought for.</span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Ad Valorem Tax</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This is charged as a percentage of the value of a good or service, not at a specific rate per unit.</span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Advance Pricing Agreement (APA)</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">It is an agreement between a taxpaying entity and the taxman that indicates how the former will price transactions with its associates.</span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Fiscal Policy</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">It is what a Government does to influence the course of an economy through decisions on taxes and spending.</span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Monetary Policy</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">It is what a central bank does to influence the course of an economy through decisions on money supply and interest rate.</span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Direct Tax</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A tax such as the income-tax, which has to be borne by the person it or entity it is imposed on.</span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Indirect Tax</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A tax on goods and services, typically, levied on an entity but paid by another.</span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>External Commercial Borrowing (ECB)</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">ECBs refer to commercial loans with a minimum three-year maturity that can be raised from lenders from overseas where interest rates are lower than in India.</span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Fiscal Consolidation</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The term refers to the things a Government does to maintain good fiscal health — cut debt and wasteful expenditure and improve revenue opportunities.</span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Current Account Deficit</strong></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">It is a trade measure that shows the value of a country’s imports of goods and services to be higher than the value of its exports.</span></span></p> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'the-annual-budget', 'image' => 'https://www.mediafire.com/convkey/4b41/5akegai35epsoxv6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/4b41/5akegai35epsoxv6g.jpg', 'metatitle' => 'The Annual Budget | Budget | Budget 2020', 'metakeyword' => 'The Annual Budget, Budget, Budget 2020, India Budget', 'metadescription' => 'Union Finance Minister Nirmala Sitharaman will present the Annual Budget of the government on 1st of February.', 'author' => null, 'downlaodpdf' => 'https://www.mediafire.com/file/0a37ijul77g78sv/The_Annual_Budget.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 35 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 3552, 'title' => 'Rebooting economy', 'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The fine print of the Union Budget for 2020-21 of the government seems to be to boost the disposable incomes of the Indian consumers.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Typically, there are four engines of GDP (gross domestic product) growth. These are as follows: Consumption of the private individuals (or C), Demand for goods from the government (G), investments from the businesses (I) and the net demand from exports and imports (NX).</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong> GDP = C + G + I + NX</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Corporate investments (I) engine has been slowing down since 2013. Thanks to domestic bottlenecks and a sombre global demand, net exports (NX) too were not of much help. That left only C and G – that is private consumption and government expenditure.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">For the past two years, even private consumption started faltering and this has aggravated in the past one year, as witnessed in the slump in sales across the board. </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">With a sharp fall in revenues, there is no way the government can spend without gravely flouting the Fiscal Responsibility and Budget Management (FRBM) Act targets.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>How will the new strategy work?</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The government’s strategy is that leaving people with more money will help boost their consumption levels, which are at present quite low, as witnessed in the slump in sales of goods and services across the board.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Higher consumption will bring down the inventories in the economy and incentivise businesses to invest again. The ground has been prepared to make investments attractive for businesses as the government has already cut the corporate tax rate last year.</span></span></p> </li> </ul> <p><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">Once the business activity recovers, the government would have more taxes coming to it and would be in a better position in the coming years to spend more prolifically.</span></span></p> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'rebooting-economy', 'image' => 'https://www.mediafire.com/convkey/f885/kfpx1st9g600wdr6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/f885/kfpx1st9g600wdr6g.jpg', 'metatitle' => 'Rebooting economy', 'metakeyword' => 'Rebooting economy', 'metadescription' => 'The fine print of the Union Budget for 2020-21 of the government seems to be to boost the disposable incomes of the Indian consumers.', 'author' => null, 'downlaodpdf' => 'https://www.mediafire.com/file/6eygx1nsq080ewf/Rebooting_economy.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 36 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 3708, 'title' => 'Imported food inflation', 'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Is food inflation in India influenced by global price movements? On account of certain evidences it appears that international inflation influences domestic prices too.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Retail and wholesale food inflation rates for December 2019 were the highest since November 2013 and December 2013 respectively. Simply put, since October or so, food inflation has made a comeback, both in India and globally.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The United Nations Food and Agriculture Organisation’s (FAO’s) food price index, which is a measure of the change in international prices of a basket of major food commodities with reference to a base period (2002-04), touched 182.5 points in January 2020, the highest since the 185.8 level of December 2014.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Also, the year-on-year inflation rate based on this index has risen steadily from 1.13% in August 2019 to 2.86% in September, 5.58% in October, 9.33% in November, 12.22% in December, and now, 11.33% for January 2020.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This sharp surge in global food prices is reflected in trends in India as well. Annual consumer food price index (CFPI) inflation stood at just 2.99% in August 2019, before climbing to 5.11%, 7.89%, 10.01%, 14.19% and 13.63% in the succeeding five months.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">While the recent rise in domestic food prices has been blamed largely on “local” factors like poor rainfall during the first half (June-July) of the monsoon season and too much of it thereafter till about mid-November, some of it is also “<strong>imported</strong>”.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">While global prices can be transmitted to the domestic market too through exports, traders would sell abroad if realisations are better relative to the local market.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Way forward</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The first is the novel coronavirus epidemic that has reduced Chinese buying of everything from palm oil and soyabean to milk powder and meat. Palm oil prices in Malaysia have plunged from 2,922 ringgit ($719) to 2,725 ringgit ($658) over the last one month.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The second is crude oil. Brent crude prices had touched $70 per barrel after the January 3 United States airstrike that killed Iran’s top military commander, but have dropped since, closing at $57.67/barrel.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The third is the prospect of a bumper rabi (winter-spring) crop in India. The kharif harvest turned out to be not so good because of excess and unseasonal rain. That same rain, though, has helped boost rabi acreage by 9.5% compared to last year. </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The arrival of this crop in the mandis from March should cool down prices, especially of vegetables and pulses, which showed the highest year-on-year retail inflation of 50.19% and 16.71% in January.</span></span></p> </li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'imported-food-inflation', 'image' => 'https://www.mediafire.com/convkey/3fab/shffk1kqjn8z18b6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/3fab/shffk1kqjn8z18b6g.jpg', 'metatitle' => 'Imported food inflation', 'metakeyword' => 'Imported food inflation', 'metadescription' => 'Is food inflation in India influenced by global price movements? On account of certain evidences it appears that international inflation influences domestic', 'author' => null, 'downlaodpdf' => 'https://www.mediafire.com/file/evts0c3gngw9az4/Imported_food_inflation.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 37 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 3778, 'title' => 'Ways to measure poverty in India', 'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">President Donald Trump praised India for having lifted over 270 million people out of poverty in a single decade, and said that “12 Indian citizens are lifted out of extreme poverty every single minute of every single day”.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Poverty can be defined as a condition in which an individual or household lacks the financial resources to afford a basic minimum standard of living.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The official poverty line is the expenditure incurred to obtain the goods in a “poverty line basket” (PLB). Poverty can be measured in terms of the number of people living below this line (with the incidence of poverty expressed as the head count ratio). The “depth” of poverty indicates how far the poor are below the poverty line.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Six official committees have so far estimated the number of people living in poverty in India,<strong> the working group of 1962</strong>;<strong> V N Dandekar and N Rath in 1971</strong>;<strong> Y K Alagh in 1979</strong>;<strong> D T Lakdawala in 1993</strong>;<strong> Suresh Tendulkar in 2009</strong>; <strong>and C Rangarajan in 2014</strong>. </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The government did not take a call on the report of the Rangarajan Committee and therefore, poverty is measured using the Tendulkar poverty line. As per this, 21.9% of people in India live below the poverty line.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The PLB comprises goods and services considered essential to a basic minimum standard of living, food, clothing, rent, conveyance, and entertainment. The price of the food component can be estimated using calorie norms or nutrition targets.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Until the 1990s, the calorie norms method was used — it was based on the minimum number of calories recommended by the Indian Council of Medical Research (ICMR) for a household of five members.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The <strong>Lakdawala</strong> Committee assumed that health and education is provided by the state, therefore, expenditure on these items was excluded from the consumption basket it proposed.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Since expenditure on health and education rose significantly in the 1990s, the <strong>Tendulkar</strong> Committee included them in the basket. As a result of revisions to the basket and other changes in the method of estimation, the percentage of people living below the poverty line in 1993-94 rose from 35.97% to 45.3%.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Expenditure on health and education were not considered until the Tendulkar Committee, which was criticized for setting the poverty line at just Rs 32 per capita per day in urban India (and at Rs 27 in rural India).</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The <strong>Rangarajan</strong> Commission was criticized for selecting the food component arbitrarily, the emphasis on food as a source of nutrition overlooks the contribution of sanitation, healthcare, access to clean water, and prevalence of pollutants.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Importance of poverty estimation</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Poverty numbers matter because central schemes like Antyodaya Anna Yojana (which provides subsidided foodgrains to households living below the poverty line) and Rashtriya Swasthya Bima Yojana (health insurance for BPL households) use the definition of poverty given by the NITI Aayog or the erstwhile Planning Commission. </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The Centre allocates funds for these schemes to states based on the numbers of their poor. Errors of exclusion can deprive eligible households of benefits.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Other methods of estimation of poverty</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Oxford University researchers Sabina Alkire and James Foster devised the <strong>multidimensional poverty index</strong> (MPI) to capture poverty using 10 indicators: nutrition, child mortality, years of schooling, school attendance, ownership of assets, and access to proper house, electricity, drinking water, sanitation, and clean cooking fuel.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The MPI is a more comprehensive measure of poverty because it includes components that capture the standard of living more effectively. It uses “outcomes” rather than expenditure, the presence of an undernourished person in the household will result in it being classified as “poor”, regardless of the expenditure on nutritious food.</span></span></p> </li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'ways-to-measure-poverty-in-india', 'image' => 'https://www.mediafire.com/convkey/c681/y0kqhvyh8mpit516g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/c681/y0kqhvyh8mpit516g.jpg', 'metatitle' => 'Ways to measure poverty in India', 'metakeyword' => 'Ways to measure poverty in India', 'metadescription' => 'President Donald Trump praised India for having lifted over 270 million people out of poverty in a single decade, and said that “12 Indian citizens are lifted out of extreme poverty', 'author' => null, 'downlaodpdf' => 'https://www.mediafire.com/file/1n5euan72s98dro/Ways_to_measure_poverty_in_India.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 38 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 3808, 'title' => 'Effect of Coronavirus on global market', 'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Global markets went down as investors stampeded out of stocks and commodities and rushed to the relative safety of government bonds, prompted by fears of a global recession due to the spread of the coronavirus<strong>.</strong></span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Indices across the world, beginning with Tokyo’s Nikkei, Seoul’s Kospi and European indices such as the FTSE 100 in London and Frankfurt’s DAX, were all bathed in red as investors rushed to dump shares.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The BSE Sensex sank by 1,448.37 points, or 3.64%, to close at 38,297.29. This is its sixth straight session of loss, and the index is now 3,976 points lower than its high of 42,273.87 points registered on January 20 this year.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Reflecting the turmoil in the stock markets, the rupee hit a six-month low against the dollar, at ?72.27, before recovering marginally to close at ?72.21.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Yields on U.S. Treasury bills fell sharply as investors embraced its relative safety over stocks. The bond markets displayed an inverted yield curve where short-term bills yield more than long-term ones, signifying nervousness over economic prospects.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Yields on the 10-year Treasury bills fell to 1.17%, even as that on the 3-month bill remained at 1.43%. General economic wisdom holds that an inverted yield curve is the harbinger of a recession.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Oil prices experienced their worst week since 2016, with the prices of the benchmark Brent crude falling to as low as $50.51 a barrel. Elsewhere in the commodity markets, metal prices fell by up to 6%.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Global borrowings benchmark Libor experienced its worst single-day drop in a decade, falling to 1.46275%, as the markets raised their bets on accelerated rate cuts in the U.S. as a response to the economic turmoil.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Ratings agency Moody’s warned that the impact of disruptions in global supply chains, investment pullbacks by companies and slowing travel could trigger a global recession in the first half of 2020.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Government bonds</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">A government bond is a debt security issued by a government to support government spending. Government bonds can pay periodic interest payments called coupon payments. Government bonds are considered <strong>low</strong>-<strong>risk</strong> investments since the issuing government backs them.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Government bonds are issued by governments to raise money to finance projects or day-to-day operations. </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">However, government-backed bonds, particularly those in emerging markets, can carry risks that include country risk, political risk, and central-bank risk, including whether the banking system is solvent.</span></span></p> </li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'effect-of-coronavirus-on-global-market', 'image' => 'https://www.mediafire.com/convkey/e1f0/mvp4tkh463dg5be6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/e1f0/mvp4tkh463dg5be6g.jpg', 'metatitle' => 'Effect of Coronavirus on global market', 'metakeyword' => 'Effect of Coronavirus on global market', 'metadescription' => 'Global markets went down as investors stampeded out of stocks and commodities and rushed to the relative safety of government bonds, prompted by fears of a global recession due', 'author' => null, 'downlaodpdf' => 'https://www.mediafire.com/file/37r6n4wd6e9vj2s/Effect_of_Coronavirus_on_global_market.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 39 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 3940, 'title' => 'Export registers growth', 'description' => '<p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India’s exports rose for the first time in seven months in February growing by 2.91% to $27.65 billion, according to the commerce ministry data.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Exports declined seven months of 11 in the current fiscal year, for which the data is available. Trade deficit declined to $143.12 billion in the first 11 months of FY20, against $173 billion a year ago.</span></span></p> <p style="margin-right:0in"> </p> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">All the major foreign exchange earners such as <a href="https://www.business-standard.com/topic/petroleum" target="_blank">petroleum </a>products, engineering goods, and electronic items registered expansion in the month year-on-year.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Imports too grew by 2.48% to $37.5 billion, leaving a trade deficit of $9.85 billion as against $9.72 billion in February 2019.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Oil imports jumped by 14.26% to $10.76 billion in February compared to 9.41 billion in the year-ago month.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The impact of the coronavirus, the decline in crude oil prices, and constrained demand for gold are likely to contribute to a small current account surplus in Q4FY20.</span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong> Trade deficit</strong></span></span></p> <ul> <li> <p><span style="font-size:12pt"><span style="background-color:white"><span style="font-family:"Times New Roman",serif"><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">A trade deficit occurs when a country's </span></span><a href="https://www.investopedia.com/terms/i/import.asp"><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">imports</span></span></a><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif""> exceed its </span></span><a href="https://www.investopedia.com/terms/e/export.asp"><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">exports</span></span></a><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif""> during a given time period. A trade deficit represents an outflow of domestic currency to foreign markets. It is also referred to as a negative balance of trade (</span></span><a href="https://www.investopedia.com/terms/b/bot.asp"><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">BOT</span></span></a><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">).</span></span></span></span></span></p> </li> </ul> <p style="margin-right:0in"><span style="font-size:12pt"><span style="background-color:white"><span style="font-family:"Times New Roman",serif"><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">Trade Deficit = Total Value of Imports – Total Value of Exports</span></span></span></span></span></p> <ul> <li> <p><span style="font-size:12pt"><span style="background-color:white"><span style="font-family:"Times New Roman",serif"><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">A “trade deficit” or net amount can be calculated on different categories within an international transaction account. These include goods, services, goods and services, current account, and sum of current and capital account.</span></span></span></span></span></p> </li> <li> <p><span style="font-size:12pt"><span style="background-color:white"><span style="font-family:"Times New Roman",serif"><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">The current account includes goods and services, plus primary and secondary income payments. Primary income includes payments (a.k.a., returns) from direct investment (greater than 10% ownership of a business), portfolio investment (financial markets) and other. </span></span></span></span></span></p> </li> <li> <p><span style="font-size:12pt"><span style="background-color:white"><span style="font-family:"Times New Roman",serif"><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">Secondary income payments include government grants (foreign aid) and pension payments, and private remittances to households in other countries (e.g., sending money to friends and relatives).</span></span></span></span></span></p> </li> <li> <p><span style="font-size:12pt"><span style="background-color:white"><span style="font-family:"Times New Roman",serif"><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">The capital account includes exchanges of assets such as insured disaster-related losses, debt cancellation, and transactions involving right (e.g., mineral, trademark, or franchise).</span></span></span></span></span></p> </li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'export-registers-growth', 'image' => 'https://www.mediafire.com/convkey/76e8/6oeekqg4bscpp966g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/76e8/6oeekqg4bscpp966g.jpg', 'metatitle' => 'Export registers growth', 'metakeyword' => 'Export registers growth', 'metadescription' => 'India’s exports rose for the first time in seven months in February growing by 2.91% to $27.65 billion, according to the commerce ministry data.', 'author' => null, 'downlaodpdf' => 'https://www.mediafire.com/file/whoo002ycnipssa/3.Circuit_breaker_in_stock_market.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 40 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 4025, 'title' => 'Government raises excise duty cap on fuel', 'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p> <p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The government has raised the cap on special additional excise duty on petrol and diesel to Rs 18 and Rs 12 per litre, respectively, as per the amendments in the Finance Bill passed in the Parliament.</span></span></p> <p style="margin-right:0cm"> </p> <p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong></span></span></p> <p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">This move which would help the government to raise excise duty on fuel further in future. The change in the cap will enable the government to raise duties on petrol and diesel by another Rs 8 per litre each.</span></span></p> <p style="margin-right:0cm"> </p> <p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Details</strong></span></span></p> <ul> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Every rupee hike in excise duty is expected to yield roughly Rs 13,000-14,000 crore annually. The slump in global crude oil prices enables the government to raise these duties substantially without immediately putting the burden on the consumer. </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">But there is expected to be a demand slowdown for fuels with a nearly country wide lockdown in the wake of coronavirus. With airlines, railways, trucks and passenger cars going off the roads, petrol, diesel and ATF (aviation turbine fuel) consumption is expected to fall drastically.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">The excise duties on petrol and diesel include basic excise duty, special additional excise duty, and road and infrastructure cess, which is levied as additional excise duty.</span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">Government is increasing duties on petrol and diesel to raise revenues in view of a tight fiscal situation. Slump in global crude oil prices, alongside possibility of a global economic recession, has forced the government to look for avenues to raise revenues to support growth. </span></span></p> </li> <li> <p><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">With major companies going for production shut downs, industry players have suggested the government to boost fiscal stimulus in the wake of demand collapse triggered by the coronavirus.</span></span></p> </li> <li> <p><span style="font-size:11.0pt"><span style="font-family:"Calibri","sans-serif"">Saudi Arabia had triggered the crash in prices by announcing a sharp increase in oil production after Russia declined to reduce oil supply to contain a fall in oil prices due to declining demand in a meeting of petroleum exporting countries.</span></span></p> </li> </ul> ', 'created_date' => object(Cake\I18n\FrozenDate) {}, 'posturl' => 'government-raises-excise-duty-cap-on-fuel', 'image' => 'https://www.mediafire.com/convkey/5dbf/emm48kndrj9f9ow6g.jpg', 'fbimage' => 'https://www.mediafire.com/convkey/5dbf/emm48kndrj9f9ow6g.jpg', 'metatitle' => 'Government raises excise duty cap on fuel', 'metakeyword' => 'Government raises excise duty cap on fuel', 'metadescription' => 'The government has raised the cap on special additional excise duty on petrol and diesel to Rs 18 and Rs 12 per litre, respectively, as per the amendments', 'author' => null, 'downlaodpdf' => 'http://www.mediafire.com/file/2m4d6ayhnylpl92/1Government_raises_excise_duty_cap_on_fuel.pdf/file', '[new]' => false, '[accessible]' => [ [maximum depth reached] ], '[dirty]' => [[maximum depth reached]], '[original]' => [[maximum depth reached]], '[virtual]' => [[maximum depth reached]], '[errors]' => [[maximum depth reached]], '[invalid]' => [[maximum depth reached]], '[repository]' => 'currentaffairs' }, (int) 41 => object(Cake\ORM\Entity) { 'tag' => 'Basics of Economics', 'keyword' => 'basics-of-economics', 'id' => (int) 4162, 'title' => 'India’s service sector under contraction', 'description' => '<p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Issue</strong></span></span></p> <p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif">India’s services sector activity contracted during March as the COVID-19 pandemic dented demand, particularly in overseas markets, according to a monthly survey.</span></span></p> <p style="margin-right:0cm"> </p> <p style="margin-right:0cm"><span style="font-size:11pt"><span style="font-family:Calibri,sans-serif"><strong>Background</strong>&