(Current Affairs For SSC Exams) Economic December: 2014

December-2014

Mallya resigns from Mangalore Chemicals Board (MCFL)

In a surprise move the UB Group Chairman Vijay Mallya has resigned from the Board of Directors of Mangalore Chemicals and Fertilizers Ltd (MCFL) with immediate effect.
What prompted this move is still not known. The company has intimated this development to the stock exchanges. Soon after the announcement MCFL stock prices rose sharply on the stock markets.
The prices moved from Rs. 80 range to around Rs. 92. The volume was as high as nine lakh shares in early morning trade.
MCFL is amidst a takeover battle between Deepak Petrochemicals and Fertilizers and Zuari Agro Chemicals and Fertilizers. Mr. Mallya had sided with Zuari to ward off the takeover bid of Deepak Fertilizers.
Recently, Deepak's bid to acquire 26 per cent addition stake had failed and Dr Mallya had retained control over the company.
Currently Deepak holds 32 per cent stake in the company, Zuari 16 per cent, UB Group 22 per cent and the rest by public shareholders.

Reliance Industries signs agreement with Mexican company for oil and gas

Reliance Industries has signed an agreement with Mexican state-owned company, Petroleos Mexicanos (PEMEX) for cooperation in upstream oil and gas production as well as in refining business.
As per the Memorandum of Understanding (MoU) “RIL will cooperate with PEMEX for assessment of potential upstream oil and gas business opportunities in Mexico and jointly evaluate value added opportunities in international markets,” a company statement said.
RIL and PEMEX will also share expertise and skills in the relevant areas of oil and gas industry, including for deep—water oil and gas exploration and production.
“The MoU envisages sharing of RIL’s pioneering expertise in deep-water development and best practices in East Coast of India and RIL’s experience in shale gas in United States,” it said.
RIL will also provide technical support and share experience with PEMEX for refining value maximisation and other technical optimisation strategies.
“RIL’s cooperation with PEMEX is in line with its growth strategy to explore opportunities to expand its international asset base in regimes having internationally attractive competitive terms.
“The company hopes to leverage its organisational capabilities and expertise to create long-term value for Exploration and Production Business and for RIL on the whole,” it added.

Govt. relaxed FDI policy for investors in construction sector

To help attract foreign funds in construction of townships, hospitals and hotels, the government relaxed the FDI policy for this sector by easing exit norms and reducing built-up area and capital needs.
The revised norms relating to construction development sector has been notified by the Department of Industrial Policy and Promotion (DIPP). India allows 100 per cent FDI in the sector through the automatic route.
The new policy has done away with the three-year lock-in period for repatriation of investment.
“The investor will be permitted to exit on completion of the project or after development of trunk infrastructure, that is, roads, water supply, street lighting, drainage and sewerage,”

Shome panel: Tax cash withdrawal beyond limit in a day

A high-level official panel proposed levying of banking transaction tax on withdrawal of cash beyond a specified limit in a day to check black money, and was not in favour of the tax amnesty scheme.
A report by the Parthasarathi Shome Committee, appointed by the previous UPA government, suggested taxing farmers with large land holdings in addition to a host of measures to widen the net.
“Taxpayers keep waiting for amnesty schemes to be announced and take advantage of these schemes to build their capital

More steps to rationalise subsidies: Jaitley

Assuring India Inc. of the National Democratic Alliance’s commitment to economic reforms, Union Finance Minister Arun Jaitley said that the government would announce more steps to rationalise subsidies.
“I had a series of meetings with the Expenditure Management Commission. In the next few months ... maybe earlier than that, they will come out with some interim recommendations so that we can proceed with rationalisation,” Mr. Jaitley said.
Recalling the government’s decision to link the diesel price with the market price, the Minister told the India Economic Conclave, organised by the television channel ET Now, it would help reduce the subsidy burden.

Kisan Vikas Patra, re-launch with very few justifications

Despite some criticism and misgivings in certain quarters, the government has decided to re-introduce the Kisan Vikas Patra (KVP), a savings instrument that was discontinued three years ago.
Positioned as a savings instrument in line with other continuing ‘small savings schemes’ such as the Public Provident Fund (PPF) and the National Savings Certificates (NSCs), the new KVP, like its predecessor, has certain advantages as well as disadvantages over these. Most ordinary investors will compare the new KVP with bank deposits and other debt instruments.
Broad features of the new KVP
* Interest: 8.7 per cent.
* Tenure: eight years and four months (100 months).
* Investment doubles in 100 months.
* Minimum lock-in period two years and six months.
Liquidity
* Can be encashed in eight equal monthly instalments after the lock-in period
* Can be transferred to another person by endorsement and delivery
* Can also be given as collateral for loans by banks
* Minimum investment Rs.1,000. Thereafter, in denominations of Rs.5,000, Rs.10,000 and Rs.50,000. There is no maximum limit.
* Taxability: fully taxable
* Mode of investment: cash or cheque
* Know your customer (KYC) norms: PAN not required but identity/address proof required
* Will be sold initially through post offices across the country, but later through some government-owned banks also.
Taking three other relevant traits — liquidity, convenience and tax advantage — the new KVP is reasonably liquid. Investors can come out after the minimum lock-in period in eight equal instalments. The KVP can also be given as collateral. Unlike PPF and NSCs, the KVP does not have a tax advantage. Interest on it is fully taxable.
Bank deposits are superior to KVP in terms of returns — three year fixed deposits offer 9 per cent and some banks even more. The argument that deposit rates are set to fall over the medium-term is no doubt valid, but one expects the banks to safeguard their depositors’ concerns by floating innovative schemes.
It is also certain that the corporate bond market will revive and be a conduit for infrastructure finance. This will matter to senior citizens and others who want a fixed, steady return in the form of investment in infrastructure bonds.
Bank deposits are liquid, absolutely secure and highly accessible to most middle-class investors. They have a minimum tax advantage — practically restricted to interest on savings accounts.

Dubai will invest $32-billion to build world’s largest airport

To further secure its position as the world’s aviation hub, Dubai Airports is building a whopping USD 32—billion greenfield airport at the upcoming Dubai World Central, 30 km off the present international airport which already is the second busiest in the world.
The proposed new airport will become the world’s largest aviation facility on completion and will have five runways which all will be simultaneously operational, all A380-compatible with a length of 4.5 km each.
“We are planning a USD 32—billion brand new airport at the Dubai World Central at Al Maktoum, 30 km off the present Dubai facility.

Inflation declined to 4.38% in November

Declining for the fifth consecutive month, retail inflation dropped to 4.38 per cent in November, the lowest since the new series of data was introduced in January, 2012, on the back of high-base effect of last year and softening of prices of food items.
The Consumer Price Index-based inflation or retail inflation stood at 5.52 per cent in October, while it was 11.16 per cent in November, 2013.
Incentivise domestic savings to boost economy: RBI Chief
Reserve Bank Governor Raghuram Rajan cautioned the government on Prime Minister Narendra Modi’s ‘Make in India’ mantra, suggesting that India would have to look for regional and domestic demand for growth — to make in India primarily for India.
Dr. Rajan said that at this stage, an exports-push strategy for growth would be ineffective; as the industrial world stagnated, many emerging markets were rethinking their export-led growth model, he said.
“There is a danger when we discuss ‘Make in India’ of assuming it means a focus on manufacturing, an attempt to follow the export-led growth path that China followed … But the world as a whole is unlikely to be able to accommodate another export-led China,” Dr. Rajan said.
Since the global economy was still weak, he argued, it would be much less likely to be able to absorb a substantial additional amount of imports in the foreseeable future.
“Export-led growth will not be as easy for India as it was for the Asian economies that took that path before.”
He also cautioned the Modi government against picking a particular sector such as manufacturing for encouragement, simply because it had worked well for China.
CII demanded clarity and stability in tax policy
In pre-budget consultations with Revenue Secretary Shaktikanta Das and other officers of the Finance Ministry, the Confederation of Indian Industry (CII) emphasised the need for the government to implement steps for reviving the economy.
It also demanded a bunch of tax concessions. The CII demanded simplicity, clarity and stability in the tax policy regime and technology based e-governance initiatives on procedural simplification at the meeting, according to a press release.
To boost the investor sentiment, the CII demanded that the government take the ‘Make in India’ initiative to a new level and galvanise the economy to a higher and inclusive growth path.
The CII team was led by past President Arun Bharat Ram. He stated that the CII was deliberating in a constructive manner on the possible solutions for fundamental design issues on Goods and Services Tax (GST) and asked for opportunities for regular interaction with the officials dealing with the reform.

India sees ‘clear pick-up’ in growth momentum says OECD

Reflecting improved prospects, India is the only major economy seeing a ‘clear pick up in growth momentum’ while mixed trends are predicted for developed countries, according to Paris-based think tank Organisation for Economic Co-operation and Development (OECD).
The OECD said growth would continue to lose momentum in Europe. For other major economies, the outlook is for stable growth momentum.
The readings, for the month of October, are based on composite leading indicator (CLI), which is designed to anticipate turning points in economic activity relative to trend.
“India is the only major economy where the CLI points to a clear pick-up in growth momentum,” OECD said in a statement.
The country’s CLI rose to 99.6 in October from 99.4 in the previous month. Last month, the OECD said the Indian economy was expected to see an average growth of 6.7 per cent over the 2015-19 period, while a further boost would depend on reform plans of the government.
In October, the International Monetary Fund and the World Bank projected 5.6 per cent growth rate for India this year, citing renewed confidence in the market due to a series of economic reforms pursued by the new government.

SEBI barred 260 entities for suspected money laundering

In its biggest ever crackdown for suspected tax evasion and laundering of black money through stock trading platforms, the Securities and Exchange Board of India barred 260 entities, including individuals and companies, from the securities markets.
While SEBI would further probe these cases, it has also decided to refer the matter to the I-T Department, the Enforcement Directorate, the Financial Intelligence Unit, among other agencies, for necessary actions on their part.
Through two separate interim orders, SEBI said that these 260 entities would be restrained from accessing the securities market and from buying, selling or dealing in securities, either directly or indirectly, with immediate effect till further directions
It has also asked stock exchanges and the depositories to ensure that all its directions are strictly enforced. While 152 entities have been barred in one case relating to an entity, named First Financial Services Ltd, another 108 entities have faced the action in a case related to Radford Global Limited
The action comes at a time when the government has sharpened its focus on unearthing black money stashed abroad and within the country, while SEBI also recently tightened its surveillance of shell companies .
In the first case, the suspected dealings took place on the stock market for almost two years till March 31, 2014, while the second case relates to a period of little more than a year starting January, 2013.

Existing account enough to avail ‘Jan Dhan’ benefits: govt.

Government said persons already having bank account need not to open a fresh one to avail benefits of the Pradhan Mantri Jan Dhan Yojana (PMJDY).
“A person who is already having a bank account with any bank need not have to open a separate account under PMJDY. He/she will just have to get issued a RuPay card in his existing account to get benefit of accidental insurance,” a Finance Ministry statement said.
The overdraft facility can be extended in existing account, it said. Accidental insurance of Rs 1 lakh will be available to all RuPay card holders between 18-70 years. They will need to use their RuPay card once in 45 days of receipt of the card to get the benefit.
The accidental claim intimation should be given to bank within 30 days from the date of accident, it added. For life insurance coverage, one person per family will get a single cover of Rs 30,000 on one card only despite having multiple accounts/cards.
“The claim of Rs 30,000 is payable to the nominee of account holder who need to submit necessary documents to the nodal branch of the concerned bank,” the Ministry said.