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(Current Affairs For SSC Exams) Economic Issues,Nov. 2012 - Other Topics

Economic Issues

November 2012

Topic : Other Topics

14 FDI PROPOSALS WORTH 113.35 CRORE RUPEES APPROVED

The Union Government of India approved fourteen foreign direct investment (FDI) proposals, which would bring in the capital inflow of 113.35 Crore Rupees. The major portion of 81.05 crore Rupees investments accounts to the three clearances made in the Pharmaceutical Sector. Approval of these proposals was made in accordance to recommendations made by the Foreign Investment Promotion Board (FIPB) during the meeting held on 18 September 2012. The FIPB is headed by Arvind Mayaram, the Secretary of Department of Economic Affairs (DEA). Proposals of the companies approved include Dashtag, Neo Capricorn Plaza Ltd., Pipavav Defence and Offshore Engineering Company Ltd., Prime Surgical Centers Private Ltd., Calyx Chemicals and Pharmaceuticals Limited, Egon Software Pvt. Ltd. and Alburaq Trading LLP. Datsang got an approval to hike its foreign equity of value 68.22 crore Rupees with a nod of carrying out the pharmaceutical business especially in products related to antibiotics, anti-histamines, dermatology and oncology. Prime Surgical Centers Private Ltd. is allowed for setting-up of the Limited Liability partnership (LLP) for carrying put and setting up the business of establishing centers for short stray surgery in India. The company will have its flagship center at Pune and bring in an investment of 14 crore Rupees. Neo Capricorn Plaza Limited a Mumbai based company was allowed with post-facto approvals to carry out its business of constructing five-star hotels. Pipavav Defence and Offshore Engineering Company Limited is allowed to issue foreign currency convertible bonds (FCCBs) for raising its foreign equity and carrying out the businesses of ship repairs, ship building and production of offshore assets.

AIRPORT DEVELOPMENT FEE TO BE OMITTED

The Civil Aviation Ministry on 16 October 2012 announced to abolish the airport development fee on Delhi and Mumbai Airports, from 1 January 2013. The ministry directed the operators of the two airports to stop levying the charges for Airport Development Fee from the travellers from next year and also asked the Airport Authority of India to infuse equity in form of joint venture firms that operates the two largest airports of the nation. The Civil Aviation Minister Ajit Singh asked the DIAL (Dial International Airport Ltd) and MIAL (Mumbai International Airport Ltd) to submit proposals for stopping the Airport Development Fee to the Airports Economic Regulatory Authority (AERA). Charges paid by domestic fliers in Delhi and Mumbai are 200 rupees and 100 rupees and for international fliers it is 1300 rupees and 600 rupees respectively.

DEVELOPMENT OF PEOPLE FRIENDLY ROADS APPROVED

C.P. Joshi, the Union Minister of Road Transport and Highways on 11 October 2012, approved two pilot projects for development of People Friendly Roads. This project will involve construction of National highways on corridor redevelopment and spot improvement concepts. This will help in reducing the financial burden from the government making it public friendly. The pilot projects in this regard will be experimented at the Hero Honda chowk on the Delhi Gurgaon Expressway for its spot improvement concept and Delhi-Dasna Section of NH-24 will be used for implementation of corridor redevelopment concept. Additional features like premium cluster, higher education cluster, business cluster, Social Economic Zone (SEZ) and specialty cluster will be provided in the corridor redevelopment concept at Delhi-Dasna section of NH-24. The concept just not focus upon, development of the Highways but also have a prime objective of developing livelihood spaces and residential complexes, for people whose lands will be acquired.

CHIDAMBARAM FOR RATIONAL PRICING OF PETRO-GOODS

Worried over rising oil subsidy, Finance Minister P. Chidambaram, on Wednesday, pitched for a rational energy pricing mechanism and correction of distortion in petrol and diesel prices resulting from unequal taxation. “With less than adequate pass-through, subsidies on these (petroleum) products have burgeoned.

The problem is that these are clearly not sustainable, and we must devise ways and means of correcting price distortions,” he said while addressing the valedictory session of PetroTech-2012. The Minister also made a case for introducing a rational and transparent energy pricing mechanism to prevent leakages while protecting the interest of poor and vulnerable sections of the society. Referring to the impact of high oil prices on the world economy, Chidambaram said “the relentless rise in crude oil prices is hurting growth ... In the last few years, all economies are under pressure. India is no exception”.

India imports about 75 per cent of its crude oil requirement. This has resulted in widening of current account deficit (CAD), while the rising subsidy bill increased the government’s fiscal deficit. “Tighter product markets, rising prices and growing demand could slow and indeed have slowed economic growth and has serious implications ... and consequently a major challenge for the policy makers,” Mr. Chidambaram said. Indian economy was growing at 9 per cent plus rate before the global economic crisis struck in 2008. The economic growth has slowed to a nine-year low of 6.5 per cent in 2011-12. “Our macro economic outcome in 2008-09 (the year of global financial crisis) and 2011-12 (which witnessed the eurozone crisis) were significantly impacted by the rise in global prices of crude oil,” he said. While the government subsidises oil marketing companies (OMCs) for selling diesel, kerosene and LPG at below market rates, the price of petrol is fixed by the OMCs themselves. At present, petrol price in Delhi hovers around Rs. 67.90 a a litre, while subsidised diesel costs Rs.46.95 a litre.

Mr. Chidambaram said the single most fiscal risk not only to India but to all developing countries was the burgeoning subsidy bill. “While some provision is being made under oil subsidy year after year, we have found that provision is always way off the mark as oil prices are globally determined,” he said. Referring to price disparities on account of unequal taxation between petroleum products, he said it results due to in-efficient substitution of one fuel with the other.


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