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August 03, 2012

March - Current Affairs - Economy

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India's First Infrastructure Debt Fund Launched

Four banking and financial services giants ICICI, LIC,Citicop Finance and Bank of Baroda on 5 March 2012 joined together to launch India’s first Infrastructure debt fund (IDF) to be structured as a non- banking finance company. This (IDF) was signed in the presence of the finance minister, Mr.Pranab Mukerjee. The company will have initial equity share of Rs capital of 300 crore

Brazil Economy Overtakes UK

Brazil claimed that the UK’s spot as the largest economy globally, after official figured its economy rose by 2.7% last year against the UK’s 0.8%. France remains in fifth place behind Germany, Japan, China and the US. The per capita income of Brazillian’s is at $11,000 per head.

RBI Cuts CRR By 75 bps

The Reserve Bank Of India on 9 March 2012, cut the cash reserve ratio by 75 basis points. The move to cut the amount of cash that banks need to perk with RBI was from 5.50% to 4.75% of deposits is aimed at easing the persistent liquidity crunch being faced by banks

World Bank Okays $ 50 million Credit For Assam

The World Bank has approved a $50-million additional credit for an ongoing agricultural project in Assam. The Assam agricultural competitiveness project aims at the increasing the productivity, profitability and market access of the farming community in the state.

Indian Railway Budget 2012-13 (Read the COMPLETE VERSION of Railway Budget Here)

The Indian Railways run the fourth largest railroad network in the world spread over some by 64,000km, with 12,000 passengers and 7,000 freight trains each day from as many as 7,083 stations to carry 23million travellers and 2.65million tonnes of goods.  Former Union Railway Minister Mr. Dinesh Trivedi, who presented his Railway Budget for the financial year 2012, had proposed 8.33% raise to improve  the state of rail finance.

Railways plan to barrow Rs. 15,000crore from the market.

Gross rail traffic targeted to increased by Rs.28.635crore to Rs. 1,32,552crore in 2012-13.

To hire more than one lakh persons in 2012-13.

All unmanned level crossing to be abolished in the next five years.

2paise per km for subarbun and ordinary second class, 3paise per km for mail-express second class, 5paise per km for sleeper class, 10paise per km for AC chair car, AC 3tier and first class, 15paise per km for Ac 2 tier 30paise per km for AC1 tier.

Minimum fare and platform ticket to cost Rs. 5

75 new express trains to be introduced, along with 21 new passengers services, nine DEMU services and eight Memu service trains.

Outlay of Rs.60,100crore during 2012-13

Passenger earning to increase to Rs. 36,200crore.

Indian Railway Station Development Corporation to be set up to redevelop stations and maintain them like airports.

The open discharge toilets on trains to be replaced with green toilets.

Double decker container trains to be introduced.

Steps to improve cleanliness and hygiene on trains and stations.

A special house keeping body to be set up to take care of both stations and trains.

To set up an independent Railway Safety Authority as a statutory body.

On-board passengers displays indicating the next halt station and arrival time to be introduced.

Introduction of regional cuisine, book a meal scheme to provide meals through SMS.

Specially designed coaches for differently disabled persons to be provided in each mail and express trains.

Stress on strengthening safety.

Signalling to be improved over 19,00km more

To provide rail connectivity to neighbouring countries.

World Bank Approves $4.3billion Aid To India

The World Bank had announced $ 4.3billion financial aid to India through a new innovative and flexible financing arrangement to help the country to fight against poverty. This arrangement, while facilitating a $ 4.3billion increase in support to India’s, is designed to maintain International Bank For Reconstruction and Development (IBRD) .Which is lending its arms net- exposure within the limit of $ 17.5billion established by it.

Economic Survey 2011-12 (Read the COMPLETE VERSION of  Economic Survey 2011-12 Here)

The Economic Survey by the Union Finance Minister Pranab Mukherjee on 15 March 2012. Indian economy was estimated to grow by 6.9% in 2011-12, mainly due to weakening industrial growth. The survey state that despite dip in the economic growth India remains among the fastest growing economies of the world country’s sovereign credit rating was stated to have risen by a substantial 2.98% in 2011-12. The economic survey stressed the need for fiscal consolidation to tame inflation. The survey estimates the economy to grow at 7.35% to 7.85%, during 2012-13 against 6.9% in the current fiscal year

GDP growth rate pegged at 6.9% this fiscal, for 2012-13 7.6% and for 2013-14 at 8.6%.

Agriculture growth forecast at 2.5%

Service sector grows by 9.4%, its share in GDP rises to 59%.

Industrial growth pegged at 4.6%, expected to improve and performed poorly a share of 27% of the GDP.

Inflation to low down by year end, fiscal consolidation on track- saving and capital formation expected to rise.

Exports grew at 40.5% in the first half of current fiscal and imports grew 30.4%.

Forex reserves rise to nearly to cover the entire extended debt stock.

Central spending on social services hiked to 18.5% this fiscal .

MNREGA coverage rises to 5.49crore household in 2010-11

Sustainable development and climate change concern high on priority.

Overall growth during April-December 2011 reached 3.6% compared to 8.3% in the corresponding period of the previous year.

Union Budget 2012-13  (Read the COMPLETE VERSION of   Union Budget 2012-13  Here)

Union Finance Minister Pranab Mukharjee on 16 March 2012, announced the union budget in the parliament for the financial year 2012-13. Mukharjee, who presented the fourth annual budget seemed to focus on the recovery of the domestic economy. The budget 2012-13 aims at achieving the rapid growth for the economy which remained on a downward all through out the fiscal year 2011-12. The budget estimated the Indian economy to grow at 7.6% in the fiscal year 2012-13.

Highlights of the budget 2012-13

Total expenditure in 2012-13 seen at 14.9trillion rupees, up by 29%

Plan expenditure budgeted at 521.25billion rupees in 2012-13, up by 18%

Economy expected to grow at 7.6% in 2012-13, plus or minus 0.25%

Income tax exemption limit raised to 2 lakh rupees from 1,80,000 rupees

Fiscal deficit seen at 5.1% of GDP in 2012-13

Net market borrowing seen at 4.80trillion rupees in 2012-13

Proposes to raise service tax rate to 12% from 10%

Gross tax receipts seen at 10.8trillion rupees in 2012-13

Non tax revenue seen at 1.64trillion rupees in 2012-13

Proposes to levy tax on all services expect 17 items in the negative list from  2012-13

No change in corporate tax rates

Signs of economy turning around in March quarter

Allow external commercial borrowing of upto 1billion dollar to raise working capital for airlines industry for 1 year

To allow qualified foreign investors in Indian corporate debt markets

To allow external commercial borrowing to part finance rupee debt in power projects.

To award contracts to build 8.800km of roads in 2012-13

Allocate 1.94trillion rupees for defense in 2012-13 up from 1.64trillion rupees for defense in 2011-12

Government doubles allocation for tax free bonds to 600billion rupees for financing infrastructure projects 2012-13

Disinvestment target in 2012-13 of 300billion rupees

Expects country to become self sufficient in urea production in five years.

Proposes to raise agricultural credits targets in 2012-13 to 5.75trillion rupees

To keep 2012-13 subsides under 2% of GDP

To inject 159billion rupees to capitalize state run banks in 2012-13

Current account deficit seen at 3.6% of GDP in 2011-12

How India Compares To Other Countries ?

India fares favourably on the income inequality front when compared to other countries measures in terms of Gini Coefficient on scale of 1 to 100. India ranks better than China and the US on the income inequality front, it ranks on par with Japan and below UK on the front, with a score of 66.9. For wealth inequality, it only lags behind the US and UK, where the wealth is distributed unequally. India has managed to be the second fastest growing economy in the world next to China with 6.9%.

India & The World Bank Signed An IDA Credit of $152million

India and the World Bank on 21 March 2012 signed an IDA credit of 152million US dollars to finance the Indian Government’s efforts to help and improve the efficiency, equality and accountability of health services in Uttar pradesh. The project will include two main components first, it will focus an improving the department of health’s management and accountability system. Th project will seek to improve, planning capacities, information flows and data inputs to enable policy-makers to improve monitor and manage service delivery in U.P, Secondly, the project will help the state Government to improve the department of health’s capacity to perform its quality assurance role and manage more effectively with private sectors.

World Bank Approves $500million For Secondary Education Project

In a progress to make quality education accessible to young people at the secondary level, the World Bank had approved $500million credit to support Indian’s secondary education project. The project will give support to all activities as envisioned in the $12.9billion Rastriya Madhyamik Shiksha Abhiyan (RMSA) programme.

Interest Rates, High of 0.5% On Post Office Operated Small Saving

The Union Government on 26 March raised interest rates on post office operated small savings like Monthly Income Scheme (IMS) and Public provident Fund (PPF) by 0.5% Interest rates on term deposits of one or two years were increased by 0.5% each to 8.2% and 8.3%, while rates for popular (MIS)were increased by 0.3% to 8.5%. The new rates will be effective from 1 April 2012 and will valid during 2012-13

World Bank Approved 109million Dollar Grant For (RACP)

The World Bank on 28 March 2012 approved a 109million dollar-grant fund to Rajasthan Agriculture Competitiveness Project. The project is aimed at promoting water efficient agriculture through sustainable and efficient use of resources in Rajasthan. The project is likely to benefit about 1,55,000 farmers mainly those with small land holdings in the state the project in line with the stake water policy of 2010 will help farmers more from low value and water -gazzling crops to high value farming.

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