Home Daily Updates IMPORTANT CURRENT AFFAIRS & DAILY NEWS UPDATES : 01 - MARCH - 2016
IMPORTANT CURRENT AFFAIRS & DAILY NEWS UPDATES : 01 - MARCH - 2016
Tuesday, 01 March 2016 03:15

 

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DAILY NEWS UPDATES

01-MARCH- 2016

 

MUMBAI WON RANJI TROPHY FOR THE 41ST TIME

Mumbai won the Ranji Trophy with an innings and 21 run victory over Saurashtra. It won the trophy for the first time in three seasons.

With this, they have 41 titles in 45 finals with 10 of them being an innings victory. Karnataka stands second in the overall Ranji standings with eight titles.

It was a repeat of the 2012-13 final where Mumbai had made short work of Saurashtra with an innings and 125-run victory.

Mumbai made 371 runs in 82.2 overs in their first innings and in reply Saurashtra managed 235 and 115 runs in first and second innings respectively.

Mumbai pacer Shardul Thakur shackled opposition batting in the second innings and claimed five wickets for 26 runs in 13.2 overs to took his match tally to eight.

Shreyas Iyer was named man of the match for his 117 runs in Mumbai's only innings of the match. He ended the season as the leading run-getter with 1321 runs at 73.38 including four centuries and seven fifties.

In 2015, the trophy was Karnataka which was their eighth title. In the final, Karnataka defeated Tamil Nadu.

ECONOMIC SURVEY 2015-16: SECTORAL OVERVIEW - I

Union Finance Minister Arun Jaitely presented Economic Survey of India 2015-16 in the Parliament.

The Survey reviews the developments in the Indian economy over the previous 12 months, summarises the performance on major development programmes and highlights the policy initiatives of the government and the prospects of the economy in the short to medium term.

GDP Growth

• India registered robust growth of 7.2 per cent in 2014- 15 and 7.6 per cent in 2015-16, thus becoming the fastest growing major economy in the world.

CSO released Advance Estimates of National Income 2015-16

• India’s growth is impressive because global growth averaged 3.1 per cent in 2015, declining from 3.4 per cent registered in 2014.

India’s increasing importance to global growth

• India’s share in world GDP has increased from an average of 4.8 per cent during 2001-07 to 6.1 per cent during 2008-13 and further to an average of 7.0 per cent during 2014 to 2015 in current PPP terms.

• India’s contribution to global growth in PPP terms increased from an average of 8.3 per cent during the period 2001 to 2007 to 14.4 per cent in 2014.

• India vs USA: During the 1990s, the USA’s contribution to the global GDP growth in PPP terms was, on an average, around 16 percentage points higher than India’s.

• The picture changed dramatically in 2013 and 2014 when India’s contribution was higher than that of the USA by 2.2 and 2.7 percentage points respectively.

Aggregate Demand

Three visible changes are taking place in aggregate demand.

1) With improving growth in private consumption, its contribution to GDP growth is getting aligned to its GDP share.

2) Aided by the growth in capital goods, the growth of fixed capital formation has picked up.

3) The substantial erosion of global demand for Indian output, manifest in loss of Indian Exports, acts as a drag on domestic growth.

Against this backdrop, India’s ambitious growth targets in the near future will be met on the strength of domestic consumption which increased from 56.2 per cent in 2011-12 to 59.8 per cent in 2015-16.

Growth in Gross Value Added

• The Gross Value Added (GVA), which broadly reflects the supply or production side of the economy, registered an increase in the growth rate from 5.4 per cent in 2012-13 to 7.1 per cent in 2014-15. For 2015-16 it is pegged at 7.3 per cent.

• Growth rate of GDP at market prices for the years 2012-13, 2013-14 and 2014-15 is currently estimated to be 5.6 per cent, 6.6 per cent and 7.2 per cent respectively.

• The difference between GDP and GVA is product taxes net of product subsidies and indicates net indirect taxes (NIT).

• NIT growth is consistently higher than GVA growth (both at constant prices) thereby placing GDP growth higher than GVA growth in the recent quarters.

Share of Public Sector in GVA

• The public sector constitutes about a fifth of the Indian economy in terms of GVA at basic prices, while the private corporate sector a little above one-third. The household sector contributes the rest.

• One conspicuous change over the four-year period from 2011-12 to 2014-15 was the decline in the shares of the public and household sectors in total GVA, which was fully taken over by the private corporate sector.

Per capita Income

Per capita income, defined as Net national income (NNI) divided by the estimated population, recorded a healthy growth rate between 2013 and 2015 and the trend was reinforced in 2015-16.

The Saving-Investment Balance

• The gross domestic savings rate in the economy declined by 1.6 percentage points of the GDP from 2011-12 to 2014-15.

• In tandem with the trends in gross savings, fixed investment as proportion of GDP declined by 3.5 percentage points from 2011-12 to 2014-15.

Public Finance

• The Budget 2015-16 sought to contain the fiscal deficit at 5.56 lakh crore rupees (3.9 per cent of GDP) as against 5.13 lakh crore rupees (4.1 per cent of GDP) in 2014-15.

• In spite of the challenges posed by the lower-than-projected nominal GDP growth, the fiscal deficit target of 3.9 per cent of GDP seems achievable.

Prices and Monetary Management

Prices

• Consumer Price Index: Headline inflation, based on the CPI (combined for rural and urban areas) series, dipped to 4.9 per cent during April-January 2015-16 as against 5.9 per cent in 2014-15.

• Food inflation in terms of the Consumer Food Price Index (CFPI) declined to 4.8 per cent during April-January 2015-16 as compared to 6.4 per cent in 2014-15.

• CPI-based core (non-food, non-fuel) inflation also remained range-bound, inching marginally upwards from 4.2 per cent in March 2015 to 4.7 per cent in January 2016.

• Wholesale Price Index: Headline (WPI) inflation declined following the global trend of declining commodity and producers prices.

• The substantial decline in price of the Indian basket of crude oil, through its direct and second round effects, partly contributed to the decline in general inflation for the second successive year.

• The astute policies and management of inflation by the government through buffer stocking, timely release of cereals and import of pulses and moderate increase in MSPs of agricultural commodities helped in keeping prices of essential commodities under check during 2015-16.

Monetary Developments

• With the easing of inflation and moderation in inflationary expectations, the RBI reduced the repo rate by 100 basis points between January and September 2015.

• The RBI kept the repo rate unchanged at 6.75 percent in its most recent and the sixth bi-monthly monetary policy statement on 2 February 2016.

New initiatives in the Banking sector

The performance of Scheduled Commercial Banks (SCB) during the current financial year remained subdued.

The sluggish growth of bank credit can be attributed to following factors

• Incomplete transmission of the monetary policy as banks have not passed on the entire benefit to borrowers

• Unwillingness of the banks to lend credit on account of rising Nonperforming Assets/NPAs

• Worsening of corporate balance sheets, forcing them to put their investment decisions on hold

• Interest rates in the bond market being more attractive to borrowers

However, on the positive note, there was considerable increase in the opening of basic savings bank deposit accounts during 2015-16 underthe Pradhan Mantri Jan Dhan Yojana.

ECONOMIC SURVEY 2015-16: SECTORAL OVERVIEW - II

Union Finance Minister Arun Jaitely presented Economic Survey of India 2015-16 in the Parliament.

The Survey reviews the developments in the Indian economy over the previous 12 months, summarises the performance on major development programmes and highlights the policy initiatives of the government and the prospects of the economy in the short to medium term

Agriculture

• The contribution of agriculture and allied sectors to the GVA (at 2011-12 prices) has been declining.

• The growth rates in agriculture have been fluctuating at 1.5 per cent in 2012-13, 4.2 per cent in 2013-14, (-) 0.2 per cent in 2014-15 and a likely growth of 1.1 per cent in 2015-16.

• The uncertainties in growth in agriculture are explained by the fact that 60 per cent of agriculture in India is rainfall dependent and there have been two consecutive years of less than normal rainfall in 2014-15 and 2015-16.

Food grains production during 2015-16, estimated at 253.16 million tonnes, is expected to be higher by 1.14 million tonnes over the production of 252.02 million tonnes during 2014-15.

The survey suggested following measures to increase productivity in agriculture sector:

• Need to scale up investments to expand water efficient irrigation to achieve ‘more crop per drop’ to improve productivity in agriculture.

• The low and skewed distribution of irrigated area needs to be corrected through appropriate policy measures.

• Effective use of other inputs like fertilizers, quality seeds and pesticides is also required, along with irrigation, to reach optimal agricultural potential of India.

• The success of dairy, an allied sector, has been the result of an integrated cooperative system of milk collection, transportation, processing and distribution.

• In order to minimize the seasonal impact on suppliers, the diversification of the produce through value added products, as happened in the dairy industry, should be adopted by allied sectors in agriculture.

• Reducing post-harvest losses through investments in storage facilities and drying facilities will also help ensure food security for the population.

Industrial, Corporate and Infrastructure Performance

• Overall growth: The industrial sector has continued to perform well in the wake of various reforms measures undertaken by the government in recent years.

• The growth is expected to strengthen further to 7.3 per cent for 2015-16 as per the AE released by the CSO.

• Within the industrial sector, manufacturing is expected to register a growth of 9.5 per cent.

• In the first nine months of 2015-16, the growth rate in terms of the IIP was 3.1 per cent as compared to 2.6 per cent in the corresponding period of 2014-15.

• The eight core infrastructure-supportive industries in IIP, which have a 38 percent, registered a cumulative growth of 1.9 per cent during April-December 2015-16 as compared to 5.7 per cent during April-December 2014-15.

• After the launch of the initiatives in September 2014, there was nearly 40 per cent increase in FDI inflows during October 2014 to June 2015 over the corresponding period of the previous year.

• Foreign Direct Investment: During April-November 2015-16, total FDI inflows were 34.8 billion US dollars as compared to 27.7 billion US dollars during April-November 2014-15, showing a 26 per cent increase.

• The FDI equity inflows also increased from 18.9 billion US dollars during April-November 2014- 15 to 24.8 billion US dollars during April-November 2015-16, showing a 31 per cent growth.

• Electricity: During 2014-15, electricity generation was 1048.4 billion units (BU) as against a target of 1023 BU, registering Y-O-Y growth of 8.4 per cent.

• A total of 3030 MW of grid-connected power generation capacity from renewable energy sources like solar and wind has been added during April – December 2015. With this, the cumulative generation capacity reached 38820 MW from these sources.

• Roads: Under the National Highways Development Project (NHDP), total length of 26, 177 km road has been completed as on 31 December 2015.

• Civil aviation: This sector witnessed an improvement of 20.4 per cent in domestic traffic and 7.8 per cent in international passenger traffic during April - November 2015-16 over the same period of the previous year.

Services Sector

• National level: It has emerged as the most dynamic sector globally and remains the key driver of India’s economic growth.

• In 2015-16, the services sector registered a growth of 9.2 per cent (constant prices), mainly due to the lower growth of 6.9 per cent in public administration, defence and other services vis-à-vis 10.7 per cent growth achieved in 2014-15.

• India’s services sector growth in the pre-crisis period (Before 2009) was 9.3 per cent which declined to 8.6 per centin the post crisis period.

• In States: The share of services in the Gross State Domestic Product (GSDP) varies across states.

• Out of the 23 states and union territories (UT), the services sector accounted for 87.5 per cent of Delhi’s GSDP, followed by Maharashtra at 63.8 per cent, with growth rates of 8.2 per cent and 5.7 per cent respectively.

• On the other extreme, services sector accounted for only 30.2 per cent of the GSDP in Arunachal Pradesh in 2014-15.

• Exports: India’s services exports increased from 16.8 billion US dollars in 2001 to 155.6 billion US dollars in 2014, making the country the eighth largest services exporter in the world.

• The share of India’s services exports in global services exports, at 3.2 per cent in 2014, is nearly double that of its merchandise exports in global merchandise exports at 1.7 per cent.

• Foreign Tourist Arrivals: FTAs registered a growth of 10.2 per cent and there was nearly 9.7 per cent growth in Foreign Exchange Earnings (FEE) in 2014.

• However, It decelerated to 4.5 per cent in terms of FTAs and fell by 2.8 per cent in terms of FEEs in 2015.

ECONOMIC SURVEY 2015-16: SECTORAL OVERVIEW - III

Union Finance Minister Arun Jaitely presented Economic Survey of India 2015-16 in the Parliament.

The Survey reviews the developments in the Indian economy over the previous 12 months, summarises the performance on major development programmes and highlights the policy initiatives of the government and the prospects of the economy in the short to medium term.

Exports & Imports

• Exports and imports together constitute 42 per cent of the GDP, even at the reduced levels in 2015-16.

• After reaching unsustainably high levels, trade and current account deficits moderated on import restrictions in 2013-14 and continued so in 2014-15.

• India’s merchandise exports have been declining continuously since December 2014, which is in line with the performance of export growth in different countries.

• During April-January 2015-16, India’s exports declined year-on-year by 17.6 per cent to 217.7 billion US dollars and this decline was broad-based.

• The decline in India’s exports owed to sluggish global demand and low global commodity prices, particularly petroleum.

• In keeping with the global trends of slow growth, imports have declined by 15.5 per cent in 2015-16 (April-January) to 324.5 billion US dollars.

• Lower imports of petroleum, oil and lubricants (POL) were the main reason for the decline in total imports.

• The moderation in trade deficit continues through in 2015-16 with further decline in global crude oil prices, with trade deficit in 2015-16 (April- January) placed at 106.8 billion US dollars.

• The composition and direction of trade is undergoing changes and sectors that are resilient are accounting for higher proportions to total trade and also changing the trade direction.

• During 2015-16 (April-December), there was a broad-based decline in exports to Europe, America, Africa, Asia and the CIS.

• Imports from all five regions declined, with the highest decline of 21.5 per cent in imports from America in 2015-16 (April-December).

Trade Scenario

Balance of Payments

• Despite the decline in merchandise exports during the first half (H1) of 2015-16, India’s BoP position remained comfortable.

• Some of the salient external sector developments are - lower trade deficit and modest growth in invisibles resulted in lower CAD, continued increase in FDI inflows and NRI deposits and net outflow of portfolio investment.

• Although, there was a net outflow under portfolio investment, capital/financial flows were in excess of the CAD and the absorption of the same by the RBI led to an accretion in reserves.

• Trade deficit (on BoP basis) declined from 74.7 billion US dollars in 2014-15 (April- September) to 71.6 billion US dollars in 2015-16 (April-September).

• The surplus of net invisibles increased by around 1 billion US dollars to 57.2 billion US dollars in the first half of 2015-16.

• Moderate growth in invisibles surplus coupled with lower trade deficit, resulted in a lower CAD of 26.8 billion US dollars (1.3 per cent of GDP) in 2014-15 and 14.4 billion US dollars (1.4 per cent of GDP) in H1 of 2015-16.

• Net portfolio investment recorded an outflow of 8.7 billion US dollars in H1 of 2015-16 as against net inflow of 22.2 billion US dollars in H1 of 2014-15.

• Net FDI reached the level of 16.7 billion US dollars in H1 of 2015-16 (15.1 billion US dollars in H1 of 2014-15).

• During H1 of 2015-16, net capital/finance flows was 24.9 billion US dollars as against 36.5 billion US dollars in H1 of 2014-15.

Foreign exchange reserves

• India’s foreign exchange reserves at 351.5 billion US dollars, as on 5 February 2016, mainly comprised foreign currency assets amounting to 328.4 billion US dollars, accounting for about 93.4 per cent of the total.

• With an increase in reserves in 2015-16, all traditional reserve-based external sector vulnerability indicators, namely foreign exchange cover for imports and short-term debt, have improved.

• Low levels of CAD coupled with moderate rise in capital inflows resulted in accretion in foreign exchange reserves of 10.6 billion US dollars in H1 of 2015-16.

Exchange rate

• During 2015-16 (April-January), the average exchange rate of the rupee depreciated to 65.04 rupees per US dollar as compared to 60.92 rupees per US dollar in 2014-15 (April-January).

• This was mainly on account of the fact that the dollar strengthened against all the major currencies because of stronger growth in the USA.

• This trend was also due to the fact that China’s growth and currency developments this year deteriorated, impacting the outlook on other emerging markets owing to risk-aversion perceptions of global investors.

• However, on the positive side, the rupee has performed better than the currencies of most of other emerging markets (except the Chinese yuan).

External debt

• India’s external debt stock increased by 8.0 billion US dollars (1.7 per cent) to 483.2 billion US dollars at end-September 2015 over end-March 2015.

• This rise in external debt occurred on account of long-term debt, particularly commercial borrowings and NRI deposits.

• India’s external debt has remained in safe limits, with an external debt to GDP ratio of 23.7 per cent and a debt service ratio of 7.5 per cent in 2014-15.

• India’s foreign exchange reserves provided a cover of 72.5 per cent to total external debt stock at end-September 2015 vis-à-vis 71.9 per cent at end-March 2015.

ECONOMIC SURVEY 2015-16: SECTORAL OVERVIEW - IV

Union Finance Minister Arun Jaitely presented Economic Survey of India 2015-16 in the Parliament.

The Survey reviews the developments in the Indian economy over the previous 12 months, summarises the performance on major development programmes and highlights the policy initiatives of the government and the prospects of the economy in the short to medium term.

Expenditure on Social Infrastructure

• Expenditure on education as a proportion of GDP has hovered around 3 per cent during the period 2008-09 to 2014-15.

• Similarly, there has not been any significant change in the expenditure on health as a proportion of GDP, which has remained stagnant at less than 2 per cent during the same period.

Education

• Though India has made considerable progress in education over the years, there still persist inequalities in access and achievements across regions and populations.

• There has been perceptible improvement in the education of girls, with the Gender Parity Index becoming favourable at all levels of school education, except for SC students in higher education and ST students at all levels of education, for which special efforts have to be made.

Employment Scenario

• As per the fourth Annual Employment-Unemployment Survey conducted by the Labour Bureau during the period January 2014 to July 2014, the Labour Force Participation Rate (LFPR) (usual principal status) is 52.5 for all persons.

• The LFPR of women is significantly lower than that of males in both rural and urban areas.

• A notable aspect of the employment situation in India is the large share of informal employment and growth in informal employment in the organized sector.

• The share of informal employment in total employment has remained above 90 per cent throughout the period 2004-05 to 2011-12.

Health and Sanitation

• According to the World Bank’s Universal Health Coverage (UHC) Index 2015, India’s level of immunization is very low.

• With the aim of covering all those children who are either unvaccinated, or are partially vaccinated, against seven vaccine-preventable diseases by 2020, Mission Indradhanush was launched in December 2014 and has covered 352 districts of the country so far.

• Swachh Bharat Mission: More than 122 lakh toilets have already been constructed in rural areas since the beginning of the Swachh Bharat Mission (Gramin).

Poverty

• The incidence of poverty declined from 37.2 per cent in 2004-5 to 21.9 per cent in 2011-12 for the country as a whole with a sharper decline in the number of rural poor.

• The estimates were based on the Tendulkar Committee methodology using household consumption expenditure survey data collected by the NSSO in its 68th round (2011-12).

Technology for Efficient Delivery of Services

• The government has introduced the game changing potential of technology-enabled Direct Benefits Transfers (DBT), namely the JAM (Jan Dhan-Aadhaar-Mobile) Number Trinity solution.

• It offers possibilities for effectively targeting public resources to those who need them most, and including all those who have been deprived in multiple ways.

• It is paving way for expenditure rationalization and is ensuring the removal of, so far undetected, fake and duplicate entities from the beneficiary lists.

• So far, it resulted in substantial savings of public money for giving renewed focus on social welfare schemes.

Climate Change and Sustainable Development

• In tune with Sustainable Development Goals and Paris Climate Accord at the global level, many initiatives have been taken by India at the domestic level.

• India has submitted ambitious targets in its Intended Nationally Determined Contribution (INDC) in the renewable energy sector, mainly from solar and wind energy.

• India’s INDC is comprehensive and covers all elements, i.e. adaptation, mitigation, finance, technology and capacity building.

• With a potential of more than 100 GW, the aim is to achieve a target of 60 GW of wind power as well as

• 100 GW of solar power installed capacity by 2022.

• India has also taken the initiative of setting up an International Solar Alliance (ISA), an alliance of 121 solar-resource-rich countries, lying fully or partially between the Tropic of Cancer and Tropic of Capricorn.

Outlook for Indian Economy

Overall Growth

• With improved industrial growth supplementing the buoyant services sector, overall economic growth has also picked up in recent months. This trend is expected to continue in near future.

• Amidst uncertainties at the global level, the Indian economy stands out as a haven of macroeconomic stability, resilience and optimism.

• India’s GDP growth could be in the range of 7.0 to 7.75 per cent during the 2016-17 financial year.

• With focus on reforms in key sectors coupled with stable macroeconomic conditions, the above growth prospect for the economy in the next year appears reasonable.

• However, the outlook will be conditioned by a number of factors and strongest of them being weak global demand.

• In the short run, Indian growth may fall short of its growth potential of 8-9 per cent. Yet, the economy could continue weathering the global sluggishness with resilience and consolidate the gains in macroeconomic stability in 2016-17.

External sector

• As a proportion of GDP, the CAD is likely to be in the low range of 1-1.5 per cent.

• India’s external sector outcome continues to be strong and sustainable because of strong macroeconomic fundamentals and low commodity prices.

• As such, while export slowdown may continue for a while before picking up in 2016-17, continuance of low global commodity prices augurs well for sustaining low trade and current account deficits.

• In 2015-16, the rupee values of exports and imports (of goods and non-factor services) are both projected to decline. Notably, such a dual decline would be the first since 1965-66.

• While export decline will be on account of the sluggish global demand and imports decline due to steep decline in international crude oil prices.

RANVEER SINGH SELECTED FOR DINANATH MANGESHKAR AWARD

Actor Ranveer Singh was selected for Pandit Dinanath Mangeshkar award. The award will be bestowed upon Ranveer by Lata Mangeshkar at a function to be held in Pune.

The award is annually conferred on artists on 24 April to commemorate Pandit Dinanath Mangeshkar’s death anniversary.

About Pandit Dinanath Mangeshkar Award

Pandit Dinanath Mangeshkar award was instituted in 1999 in the memory of Dinanath Mangeshkar, father of Lata Mangeshkar. Since then it is awarded annually to persons for their outstanding contributions to music and movies.

The award carries monetary award of 101001 rupees, a memento and a citation.

OIL, GLOBAL POLITICS AND INDIAN ECONOMY

Oil is one of the most important commodities in recent times. Much of the economy depends on oil and this is why prices of oil matter to almost every economy including India.

India is one of the largest importers of oil in the world. It imports nearly 70 percent of its total oil needs which accounts for one third of its total imports. For this reason, the price of oil affects India a lot.

Global crude oil prices fell 17 percent to 46.59 US dollars per barrel in 2015 after sliding 47 percent in 2014. Experts are predicting a fall towards 30 US dollars per barrel in 2016.

Reasons for fall in oil prices

• The escalating tensions between the Sunni dominated Saudi Arabiaand Shia dominated Iran – the two top oil producing nations in the World - is said to be the primary reason behind falling crude prices.

• Slowing demand, especially in Asia where the biggest economy and energy consumer, China, is seeing the slowest economic growth in a generation.

• Large overhang that has left storage tanks around the world struggling to cope with the excess oil. Domestic crude production in the USA reached 9.6 million barrels in July 2015. Canada experienced a similar sharp surge in production, as heavy investment in tar sands began to pay off.

• Shale gas revolution in the USA, in recent years led to lesser dependence on crude oil imports. This revolution is of importance for the global oil market as the USA consumes around 20 percent of the oil production in the world.

Impact on Global politics

• Political realignment: Given the centrality of oil in the global power equation, this is bound to translate into a profound shakeup in the political order, with petroleum-producing states from Saudi Arabia to Russia losing both prominence and geopolitical clout.

• Relevance of OPEC: Oil is not a scarce resource any more. The geopolitical battle is not over access to resources but about global market share. Saudi Arabia seems to flood global markets to push out higher-cost producers, especially in the US. Further Iran has little interest in cooperating with the Saudis on oil. That means that OPEC looks unlikely to be revived.

• Role of Saudi Arabia: It is no longer the swing producer in the global oil market. It is producing at full tilt even though the oil price has collapsed. In the past, Saudi Arabia’s balancing role meant that both low-cost and high-cost producers would supply the market at an elevated price that guaranteed an income stream for all producers.

• Role of the USA: If the country’s domestic shale industry manages to maintain production at lower prices, America will be heading towards self-sufficiency in oil and gas. Its interest in guaranteeing stability in the Middle East might wane accordingly thus increasing geopolitical tensions.

Benefits to India

As a major oil importing nation in the world, India will have the following benefits due to reduced oil prices in the global market.

• Current account balance: India, one of the largest importers of crude oil, is saving billions of dollars due to falling prices of crude oil. Fall in prices would drive down the value of its imports. This helps in narrowing India's current account deficit.

• Inflation: Oil price affects the entire economy, especially because of its use in transportation of goods and services. A fall in oil price also leads to fall in prices of all petroleum by products like tyre, paints, etc. It also benefits many industries because of decreased input costs.

• Oil subsidy and fiscal deficit: The government fixes the price of fuel at a subsidised rate which is relative to the market price. Hence, fall in oil prices leads to reduced government fund transfers to oil marketing companies on account of subsidies and thereby, low fiscal deficit.

• As per the 2015-16 Economic Survey, decline in global crude oil prices majorly helped in restricting the petroleum subsidy bill to 30000 crore rupees in 2015-16 against 57769 crore rupees spent in 2014-15.

• Rupee exchange rate: Low oil price means favourable exchange rate for Indian rupee in the Indian rupee because of reduced dependence on reserved currencies like the dollar for oil payments.

• However, the downside is that the dollar strengthens every time the value of oil falls. This negates any benefits accruing to India due to lower oil prices as it is a major service exporter in the world.

• As per the Economic Survey 2015-16India exported 155.6 billion US dollars worth services in 2014 making the country the eighth largest services exporter in the world.

Downsides for India

The fall in global oil prices may be beneficial to India, but it still has its downsides which are as follows -

• Petroleum producers: It affects the exporters of petroleum producers in the country. India is the sixth largest exporter of petroleum products in the world. Any fall in oil prices negatively impacts exports.

• Moreover, a lot of India's trade partners and buyers of its exports are net oil exporters. A fall in oil price may impact their economy, and hamper demand for Indian products.

• Remittances: As per the World Bank’s Migration and Development Brief 2015, India is the World’s largest remittance recipient with 72 billion US dollars. Majority of this money comes from Indians staying in Gulf countries.

• Hence, any fall in oil prices adversely impacts the economic prospects of GCC and thereby, remittances to India which plays an important role to fund the Current Account Deficit (CAD).

Fallout for rest of the world

• Drop in revenue: Major decline in oil export revenues forced countries like Russia, Saudi Arabia and Venezuela to cut public spending which will have long term impact on human development.

• Fall in investments: When crude oil price was over 100 dollars a barrel it made sense to spend on exploration in out-of-the-way provinces, such as the Arctic, West Africa and deep below the saline rock off the coast of Brazil.

• This trend has been reversed in recent times as prices have tumbled, so has the investment. Projects worth 380 billion US dollars of investment in oil exploration activities have been put on hold.

• Political order: The fall in global crude prices has shifted the global political order that once rested on oil’s soaring price. With concern over climate change growing globally couple with the predominance of renewable energy sources the demand for oil is sure to decline in future.

Conclusion

According to the International Energy Agency (IEA), prices might not again reach the 50 to 60 dollars per barrel range until the 2020s.While this trend may mean hardship for some, especially the citizens of export-dependent States like Russia and Venezuela, it could help others like China and India because of reduced import bill.

India should seize the opportunities provided by the low oil price regime and use its good offices to negotiate long term strategic deals with major oil exporting nations before the market enters into the phase of correction.

SURVEY CALLS FOR REFORMS AND WELFARE SCHEMES

  • Shunning last year’s “over-optimism”, Economic Survey 2015-16 projects that the real GDP growth for the current financial year and for 2016-17 will be in the range of 7-7.75 per cent.
  • The Central Statistics office estimates that growth this year will be 7.6 per cent, lower than the 8.1- 8.5 per cent projected in the last Survey.
  • There is anxiety that the economy is not realising its full growth potential, which in the long run is still around 8-10 per cent, says the survey.
  • Improved investments in education and health, where India fares the worst among BRICS nations, the survey says, and adequate attentionto agriculture could realise the potential.
  • The medium-term potential can be realised over the next two to five years, if the “retrievable setbacks” andthe “unfinished agenda” are undertaken.
  • In the unfinished agenda, he listed the Goods and Services Tax, strategic disinvestment, de-stressing of the balance sheet of both banks and private companies, and the rationalisation of subsidies.
  • Stretched corporateand bank balance sheets are affecting prospects for reviving private investments, and so the underlying stressed assets must be sold or rehabilitated.
  • The survey makes a case for unpopular reforms, such as bringing agricultural incomes in the tax net, rationalisation of fertiliser subsidies estimated at Rs. 75,000 crore (excluding arrears) and the withdrawal of tax benefits which, he argued, benefit mainly the rich.

PRESIDENT CALLED FOR REVISION OF INDIAN PENAL CODE

  • President Pranab Mukherjee has called for a “thorough revision” of the Indian Penal Code (IPC) for meet- ing the “changing needs of the 21st century.”
  • Mr. Mukherjee pointed out that “the IPC has undergone very few changes in the last 155 years. Very few crimes have been added to the initial list and declared punishable.”
  • Even now, here are offences in the code which were en- acted by the British to meet their colonial needs.
  • Mr. Mukeherjee said the century “witnessed the proliferation of technology in wider spaces of human interaction and transaction.
  • It has resulted in greater conveniences but, at the same time, has led to the occurrences of newer types of offences.”

SURVEY SAYS PRIVATE SECTOR HELP NECESSARY TO TACKLE CLIMATE CHANGE

  • The Economic Survey finds that India will find it hard to meet its variety of obligations to tackle climate change without substantial help from the private sector.
  • Successful implementation of the Paris Agreement, the Sustainable Development Goals (SDGs) and the ambitious targets set out in the Intended Nationally Determined Contributions (INDCs) will require huge financial resources which cannot be met through budgetary sources alone.
  • Leveraging private finance along with public fi- nance, both international and national, will be critical.
  • The SDGs set by the United Nations last September lay the onus on countries to make significant progress on a wide range of goals including end- ing poverty and hunger and combating climate change.
  • The INDCs are plans by governments communicated to the United Nations climate change council regarding the steps they will take to address climate change domestically.
  • As part of its domestic climate commitments, India has said it would source nearly 60,000MW of its energy by wind- power and 1,00,000 MW mega- watts via solar power by 2022.
  • The latter is extremely ambitious considering that as of to- day only 5% of this proposed solar capacity has been in- stalled.
  • The Survey also notes that a mission on Climate Change and Health — mooted since early 2015 — is being developed and a National Expert Group on Climate Change and Health has been constituted.

SUPREME COURT ASKS CENTRE TO BAN CHILD PORN

  • An anguished Supreme Court told the Centre to take steps and frame rules to stop access to websites featuring child pornography, classifying them as “obscene” and a threat to social morality.
  • The court said technical glitches and jurisdictional niggles were not excuses forthe Centre’s inaction in this regard.
  • Innocent children can’t be made prey to this kind of situations and a nation cannot afford to carry on any kind of experiment with its children in the name of liberty.
  • The court directed the Centre to file an affidavit on ways and means to curb free access to child pornography on the Internet and asked the government to reply whether there could be a ban on watching porn “of any form” in pub- lic places.

FIRST ELECTION IN IRAN AFTER LIFTING OF SANCTIONS

  • Millions of Iranians voted in high-stake elections that could shift the balance of power within the hardline-controlled Islamic elite by ushering in a reformist comeback or help conservatives tighten their grip on power.
  • The contest is seen by some analysts as a make-or-break moment that could shape the future for the next generation, in a country where nearly 60 per cent of the 80 million population is under 30.
  • At stake is control of the 290-seat Parliament and the 88-member Assembly of Ex- perts, the body that has thepower to appoint and dismiss the supreme leader, Iran’s most powerful figure.
  • Both are currently in the hands of hardliners. During its next eight-year term it could name the successor to Mr. Khamenei, who is 76 and has been in power since 1989.

NEW DEVELOPMENT BANK WILL FOCUS ON RENEWABLE ENERGY PROJECTS

  • The New Development Bank (NDB) — a multi- lateral lender with a focus on the Global South of the of the (BRICS) grouping — is all set to fund more than a dozen projects this year that will focus on renewable energy.
  • Lending, which will commence in April, would fund a project each from the five member grouping. But NDB president K.V.Kamath added that 10-15 projects are in the pipeline for the remaining part of the year.
  • The NDB would include market borrowing to raise capital, but stressed that bonds in local currency, rather than hard currency, would be favoured.
  • The NDB’s initial capital has been fixed at $50 billion, and the total paid in capital would be $10 billion.
  • On the eve of its operational launch, the NDB has bagged a AAA institutional rating from domestic credit rating agencies in China, where the China Development Bank and the Bank of China have been appointed as rating advisers.

SURVEY SAYS ONLY 5.5% PAY TAXES

  • India is far from being a full tax-paying democracy with about 5.5 per cent of the people who earn paying tax and only 15.5 per cent of the net national income being reported to the tax authorities, according to the Economic Survey tabled in the Parliament.
  • The survey estimated that just four per cent India’s voters are taxpayers, though it should be closer to 23 per cent, and 85 per cent of the net national income fall outside the tax net.
  • The tax to GDP ratio at 16.6%, as a result, is well below that of the emerging market economies of 21 per cent and OECD average of 34 per cent.
  • The survey, however, pointed out that the democracies withhigher ratiostook a long timeto strengthen tax capacity.
  • On the expenditure side, India’s spending on human capital, education and health, to the GDP ratio is the lowest among BRICS and lower than the OECD and emerging market economies averages.
  • To widen the tax net and raise revenue for spending on India’s human capital development, the survey called for bringing rich farmers into the tax net, raising property tax rates and phasing out tax exemptions.
  • If the UPA Government had not raised in the 2012- 13 the threshold level of personal income tax, the survey calculated that an additional 1.65 crore in- come tax payers would have got incorporated.
  • The tax-GDP ratio would have been 0.32% higher as Rs.31,500 crore additional tax revenue would have been collected.
  • According to the survey fast growing years in the 2000s were in fact associated with rising inequality at the very top end of the Indian income distribution.

INDIA IS GETTING MORE AND MORE TECHNOLOGICAL START UPS

  • Within a year, the number of technology start ups in the country has grown by 40 per cent to over 4,200, making India the third largest base of technology start-ups in the world, according to the Economic Survey 2015-16.
  • This has further helped create about 80,000-85,000 jobs during 2015.
  • As of January 2016, there were 19,400 technology-enabled start-ups in India, of which 5,000 had been started in 2015 alone.
  • The survey added no lessthan 2000 of the start-ups have been backed by venture capital/angel investors since 2010, of which 1005 were created in 2015 alone.

SURVEY LOOKING FOR FASTER LABOUR REFORMS

  • The economic survey criticised the slow pace of reforms in labour laws, arguing that firms “negotiate” regulatory hurdles imposed to protect employees who get poor quality jobs as a consequence and suggested easier retrenchment norms and low- er statutory deductions from salaries to create ‘good’ jobs.
  • The slow pace of labour reform has encouraged firms to resort to other strategies to negotiate regulatory cholesterol.
  • Noting that contract labour hiring grew faster in states with relatively more rigid labour laws.
  • The Industrial DisputesAct 1947 requires firms with more than 100 workers to seek government’s approval before retrenching workers.
  • The law has encouraged factories to employ contract workers to stay out of the rule books even though entrepreneurs feel‘contract labour is not the ideal solution’ for them.

GIANNI INFANTINO BECOMES FIFA CHIEF

  • Swiss football executive Gianni Infantino vowed to lead FIFA, the sport’s world governing body, out of years of corruption and scandal after being elected president to succeed Sepp Blatter.
  • He now inherits a very different job from that inhabited by his compatriot Blatter, who toured the world like a head of state for 17 years.
  • Before the election, the Congress had overwhelmingly passing a set of reforms intended to make it more transparent, professional and accountable.

 

 

 

Life teach us lessons , some are more costly than others, you never waste your time, you learn, no expectations on others makes a huge difference, you'll perceive things differently. And if you spent this time on certain people it's because at some point you decided to open your heart, nobody should be blamed for it, the world needs more acts of kindness....

Remember to rely on yourself, always, and everything must be alright and sweet... even though It's necessary to cut certain people out, but there's a lesson to be learned with everyone you meet. Everyone comes across our life teach us something so that we can learn and grow as a person. it's a trial & error process, so enjoy it n be great full.
‪#‎RAY‬ - ‪#‎Empowering‬ ‪#‎Talent‬ ‪#‎Since‬ 1971
www.rosemaryinstitute.com

Last Updated on Wednesday, 02 March 2016 03:29
 

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