Current Affairs August 2020 - Economic

1 - Index of Eight Core Industries for June 2020 declined by 15%

The Office of Economic Adviser, Department for Promotion of Industry and Internal Trade released Index of Eight Core Industries for June 2020.

Highlights are:

Growth rate of Index of 8 Core Industries for June 2020 declined by 15.0 %. Its cumulative growth during April to June, 2020-21 was -24.6%.
Final growth rate of Index of Eight Core Industries for March’2020 is revised at -8.6%.
8 core industries comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP).

2 - FPIs remain net buyers for 2^nd consecutive month in July

Foreign portfolio investors remained net buyers for the second consecutive month in July by pumping in Rs 3,301 crore in Indian markets. According to the depositories data, a net sum of Rs 7,563 crore rupees was invested in equities while Rs 4,262 crore were withdrawn by FPIs in July.

FPIs had put in a net Rs 24,053 crore in Indian markets in the month of June 2020. The investment was majorly motivated due to a surge in markets, which provided FPIs good profit-booking opportunity as well as with rising hopes of a coronavirus vaccine.

3 - GST collections stand at Rs 87,422 crore in July

The gross GST revenue collected in the month of July 2020 is 87422 crore rupees of which CGST is 16147crore, SGST is 21418 crore and IGST is 42592 crore rupees. It also includes 20324 crore collected on import of goods and Cess is 7265 crore rupees.

The total revenue earned by Central Government and the State Governments after regular settlement in the month of July is 39467crore rupees for CGST and 40256crore for the SGST.

4 - Apple becomes world’s most valuable company

Apple Inc. became the world’s most valuable company after its share price jumped 10% in the wake of better-than-expected earnings and touched a record market capitalization of $1.817 trillion.

Apple surpassed Saudi Arabia’s national oil company which is valued at $1.76 trillion. Apple's share price has gone up by 44% this year and it posted a 11% year-over-year growth in the third quarter earnings. Aramco’s stock is down 6.4% since the end of December.

5 - Government imposed import restrictions on colour TV sets

The Directorate General of Foreign Trade (DGFT) announced that the government has imposed restrictions on colour TV imports. This move is aimed at promoting local manufacturing and also to cut shipments coming in from China.

The restrictions have been imposed on TV sets with screen sizes starting from 36cm (14 inches approx) up to 105cm (41 inches approx) and bigger including on liquid crystal display television set of screen size below 63cm (24 inches approx).

6 - Byju's acquired WhiteHat Jr in $300mn deal

India’s largest online learning firm, Byju's, has acquired WhiteHat Jr in a all-cash deal for $300 million. WWhitehat Jr helps kids aged 6 to 14 years build commercial-ready games, animations and apps online using the fundamentals of coding, all taught online.

WhiteHat Jr is growing 100% month-on-month in India as well as the US. Byju’s has added 15 million new students on its platform and earned Rs 500 crore in revenue in July 2020.

7 - India's forex reserves surge by USD 3.623 billion to reach a new all-time high

India's foreign exchange reserves have surged by USD 3.623 billion to reach a new all-time high of USD 538.191 billion in the week ended 7^th August 2020. Foreign currency assets, a major part of the overall reserves, rose by USD 1.464 billion to USD 492.293 billion.

Gold reserves went up by USD 2.160 billion to end at USD 39.785 billion. India's special drawing rights with the International Monetary Fund rose by USD 6 million to reach USD 1.481 billion, while the country's reserve position, however declined by USD 7 million to USD 4.632 billion.

8 - Government released Rs 6,195 cr to 14 states as 5^th EMI under 15^th Finance Commission recommendation

Government has released Rs 6195 crore to 14 states as the 5^th equated monthly instalment of the Post Devolution Revenue Deficit Grant as recommended by the 15^th Finance Commission. The Finance Commission provides a mechanism for the Centre to compensate for any revenue loss incurred by states, which is referred to as post devolution revenue deficit grant.

These States are Andhra Pradesh, Assam, Himachal Pradesh, Kerala, Manipur, Meghalaya, Mizoram, Nagaland, Punjab, Tamil Nadu, Tripura, Uttrakhand, West Bengal and Sikkim.

9 - Industrial production declined by 16.6 % in June

Industrial production declined by 16.6% in June, mainly due to lower output of manufacturing, mining and power generation. According to the Index of Industrial Production (IIP) data, manufacturing sector production registered a decline of 17.1%, while the output of mining fell 19.8% and power fell 10%.

However, on a monthly basis, the Index of Industrial Production has shown improvement. The index, which was 53.6 in April, improved to 89.5 in May and 107.8 in June.

10 - Retail inflation rose to 6.93% in July

Retail inflation rose to 6.93% in July, mainly on account of higher prices of food items. The food inflation, according to the Consumer Price Index (CPI) data, increased to 9.62% in July.

The retail inflation in June was 6.23% while the food inflation stood at 8.72%.

The government has mandated the central bank to restrict the inflation at 4% (plus, minus two per cent). The central bank mainly factors in retail inflation while arriving at its bi-monthly monetary policy.

11 - CCI approved joint venture between HAMCL and HL

The Competition Commission of India (CCI) has approved proposed combination filed jointly by Keihin Corporation, Nissin Kogyo Co., Ltd., Showa Corporation and Hitachi Automotive Systems, Ltd. The proposed combination pertains to Keihin Corporation(“KC”), Nissin Kogyo Co., Ltd.(“NKCL”), Showa Corporation (“SC”) and Hitachi Automotive Systems, Ltd.(“HIAMS”) forming a Joint Venture between Honda Motor Co. Limited (“HAMCL”) and Hitachi Limited(“HL”).

HAMCL is primarily engaged in the business of automobiles and two-wheeled motor vehicles. HIAMS is engaged in the manufacture, marketing, sale and service of automotive components.

12 - Wipro acquired Brazilian IT firm IVIA Servios

Wipro has successfully acquired Brazilian IT firm IVIA Serviços de Informatica Ltda for $22.4 million (about Rs 169 crore). IVIA provides IT solutions including system development, maintenance, consulting and project management services to clients in Brazil.

The acquisition will help Wipro set up delivery centres in the northeast of Brazil. IVIA had reported net revenue of $13.5 million for the year ended December 31, 2019. Wipro had signed the agreement with IVIA in July 2020.

13 - Wholesale price-based inflation stands at -0.58% in July

The wholesale price-based inflation stood at -0.58% in July, remaining in the negative zone for the fourth straight month even as vegetables and other food items turned costlier. WPI inflation in June was minus 1.81%, while for the month of May it was 3.37% in negative territory and April it was -1.57%.

Inflation in food articles was at a four-month high level of 4.08% in July, mainly due to sharp rise in vegetable prices. Inflation in vegetables stood at 8.20%, against minus 9.21% in June. Retail inflation was 6.93% in July.

14 - India’s Foreign Trade: July 2020

India’s overall exports (Merchandise and Services combined) in April-July 2020-21 are estimated to be USD 141.82 billion, exhibiting a negative growth of 21.99% over the same period last year. Overall imports in April-July 2020-21 are estimated to be USD 127.76 billion, exhibiting a negative growth of (-)40.66% over the same period last year.

Merchandise: Total exports was USD 74.96 billion down 30.21% while total imports was USD 88.91 billion down 46.70%. The trade deficit was USD 13.95 billion.

Services: Total exports was USD 66.86 billion down 10.11% while total imports was USD 38.85 billion down by 19.86%. The net of services was USD 28.01 billion.

Overall Trade: Total exports was USD 141.82 billion down by 21.99% while total imports was USD 127.76 billion down 40.66%. The trade surplus was USD 14.06 billion.

15 - Exports of agricultural commodities during March to June increased by 23.24%

Exports of agricultural commodities during March to June 2020 have increased by 23.24% compared to corresponding period in 2019. The exports of Agri commodities during March to June were Rs 25,552.7 Crore against an export of Rs 20734.8 Crores during the same period in 2019.

The agricultural exports as a percentage of India’s agricultural GDP has increased from 9.4% in 2017-18 to 9.9% in 2018-19. While the agricultural imports as a percentage of India’s agricultural GDP has declined from 5.7% to 4.9%.

16 - Retail inflation for farm, rural workers drops to 6.58%, 6.53% in July

Retail inflation, based on the CPI-AL (Consumer Price Index-Agricultural Labourers) and CPI-RL (Consumer Price Index-Rural Labourers), for farm and rural workers decreased to 6.58% and 6.53% respectively in July 2020. It was 7.16% and 7%, respectively in June.

Inflation based on food index of CPI-AL and CPI-RL was recorded at 7.83% and 7.89%, respectively in July 2020. The all-India consumer price index numbers for agricultural labourers and rural labourers (base:1986-87=100) for the month of July 2020 increased by 3 and 4 points to stand at 1,021 and 1,028 points, respectively.

17 - CCI approved proposed acquisition of C&S Electric Limited by Siemens Limited

The Competition Commission of India (CCI) approved proposed acquisition of C&S Electric Limited by Siemens Limited. The proposed combination envisages acquisition of 100% of the share capital of C&S Electric Limited (C&S) by Siemens Limited (Siemens India).

Siemens India focuses on the areas of power generation and distribution, intelligent infrastructure for buildings and distributed energy systems, and automation and digitalization in the process and manufacturing industries. C&S manufactures a range of electrical switchgear, power protection and electrical distribution products.

18 - Flipkart signed MoU with IIT Patna for academic collaboration

Flipkart has announced an MoU with IIT Patna to strengthen Flipkart’s academic collaboration. The MoU will help create industry focused applied research in the areas of Artificial Intelligence (AI), Natural Language Processing (NLP) and Machine Learning (ML).

As a part of this MoU, IIT Patna will undertake a number of programs such as joint research activities, writing research papers, organizing seminars, internship/mentorship opportunities to name a few.

19 - Reliance acquired majority stake in Netmeds

Reliance Retail Ventures Ltd (RRVL) has acquired a majority equity stake in ‘Netmeds’ for a cash consideration of approximately ₹620 crore. RRVL has acquired 60% holding in the equity share capital of Vitalic Health Pvt. Ltd. and 100% direct equity ownership of its subsidiaries, viz: Tresara Health Private Ltd, Netmeds Market Place Ltd and Dadha Pharma Distribution Pvt Ltd.

Netmeds, one of the subsidiaries of Vitalic, runs an online pharmacy platform. The investment will improve RRVL’s ability to provide affordable health care products and services.

20 - Businesses with annual turnover of up to Rs 40 lakh are GST exempt

The Ministry of Finance announced that businesses with an annual turnover of up to Rs 40 lakh are GST exempt. Initially, this limit was Rs 20 lakh. Additionally those with a turnover up to Rs 1.5 crore can opt for the Composition Scheme and pay only 1% tax.

While the housing sector has been placed at the 5% tax rate, GST on affordable housing has been reduced to 1%. The numbers of assessee covered by GST now exceeds 1.24 crore.

21 - RBI projected India's growth rate at (-) 4.5 % for 2020-21

The Reserve Bank has projected India's growth rate at (-) 4.5% in its annual report for 2020-21. RBI projected global growth rate between (-) 6.0% and (-) 7.6%. It is estimated that inflation will remain elevated in the current quarter, but likely to ease in the second half of the fiscal.

The report highlighted that government consumption spending has provided a measure of relief, with the central government's revenue expenditure, having risen by 33.7% in the first quarter. The decline in economic activity reached its trough in April-June quarter of 2020-21. It adds that the growth is likely to turn positive from January-March quarter 2020-21.

22 - CCI approved acquisition of PharmEasy by Lightstone Fund

The Competition Commission of India (CCI) has approved a stake acquisition by Lightstone Fund in 91^streets Media Technologies, which runs online drug delivery service PharmEasy. Lightstone Fund is an investment unit of private equity firm LGT Lightstone.

CCI also approved Lightstone’s stake acquisition in five companies. This includes Ascent Health and Wellness Solutions, API Holdings, Aahaan Commercials and Lokprakash Vidhya. The Lightstone Group, founded by David Lichtenstein, is a diversified privately held real estate company, headquartered in New York.

23 - Index of Eight Core Industries July 2020

The output of eight core sectors of the Indian industry – coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity stood at 119.90 in July, 2020 which declined by 9.6% compared to the index of July, 2019. Its cumulative growth during April to July 2020-21 was -20.5%. Final growth rate of Index of Eight Core Industries for April’2020 is revised at -37.9%.

The data on production of eight core industries of India is published monthly by the Ministry of Commerce and Industry. The current base year for the index of the series is 2011-12=100. These eight industries comprise 40.27% of the weight of the items included in the Index of Industrial Production.

24 - Reliance Industries to buy Big Bazaar

Reliance Industries announced the acquisition of the retail, wholesale, logistics and warehousing businesses of Kishore Biyani’s Future Group for Rs 24,713 crore through the company’s subsidiary Reliance Retail Ventures.

Post the deal Reliance Retail Ventures (RRVL) will hold 13.14% stake in Future Enterprises Ltd and will take over debt of ₹12,500 crore. As part of the deal, the Retail & Wholesale Undertaking is being transferred to Reliance Retail and Fashion Lifestyle Limited (RRFLL). The Logistics & Warehousing Undertaking is being transferred to RRVL.

25 - Estimates of GDP for Q1 2020-21

The National Statistical Office (NSO) has released the estimates of Gross Domestic Product (GDP) for the first quarter (April-June) Q1 of 2020-21.

GDP at Constant (2011-12) Prices in Q1 of 2020-21 is estimated at Rs 26.90 lakh crore, as against Rs 35.35 lakh crore in Q1 of 2019-20, showing a contraction of 23.9% as compared to 5.2% growth in Q1 2019-20.
Quarterly GVA at Basic Price at Constant (2011-12) Prices for Q1 of 2020-21 is estimated at Rs 25.53 lakh crore, as against Rs 33.08 lakh crore in Q1 of 2019-20, showing a contraction of 22.8%.
GDP at Current Prices in the year Q1 2020-21 is estimated at Rs 38.08 lakh crore, as against Rs 49.18 lakh crore in Q1 2019-20, showing a contraction of 22.6% as compared to 8.1% growth in Q1 2019-20.
GVA at Basic Price at Current Prices in Q1 2020-21, is estimated at Rs 35.66 lakh crore, as against Rs 44.89 lakh crore in Q1 2019-20, showing a contraction of 20.6%.