Current Affairs December 2016 - Economic

News 1 - India's GDP grows at 7.3% in the Q2 of 2016-17

As per the data published by the Central Statistical Office (CSO), India’s Gross Domestic Product (GDP) grew at 7.3% in the second quarter (July-September) of 2016-17 but stayed lower than 7.6% in the corresponding period of the last year.

Growth rate, as measured by Gross Value Added (GVA), declined to a three-quarter low of 7.1% during the months of July-September. Gross fixed capital formation was only 29 percent of the GDP in Q2 of this financial year as compared with the 32.9 percent in the Q2 of 2015-16.

News 2 - Morgan Stanley lowers India’s growth forecast to 7.3% for FY’17

Morgan Stanley lowered its growth forecast of India for FY’17 to 7.3% from 7.7% earlier because of the demonetization. It also rolled out our F2019 growth forecast at 7.9%.

The demonetization is expected to affect domestic demand in view of disruption in cash transactions until the end of December. It is also expected that consumers will hold back spending on big-ticket items in the near term and property spending in the medium term.

News 3 - Government approved 6 new SEZs

The Board of Approval (BoA), headed by Commerce Secretary Rita Teaotia, has approved six proposals from four developers to set up new special economic zones (SEZs). These SEZs will be set up across three states in areas such as IT and biotechnology.

Vaxenic India − Biotechnology and bio pharmaceuticals SEZ in Telangana.
EON Kharadi Infrastructure − IT/ITeS special economic zones in Pune.
KRC Infrastructure − IT/ITeS special economic zones in Pune.
GAR Corporation − Will set up two IT/ITeS zones in Telangana.

News 4 - India received over 300 billion US dollar Foreign Direct Investment (FDI) milestone

India has received over 300 billion US dollar Foreign Direct Investment (FDI) milestone between April 2000 and September 2016. About 33% of the FDI came through the Mauritius route. India received 101.76 billion US dollars from Mauritius between April 2000 and September 2016, as per the data compiled by the Department of Industrial Policy and Promotion. The cumulative FDI inflows during the period amounted to 310.26 billion dollars.

The other big investors have been from Singapore, the US, UK and the Netherlands.

News 5 - Amazon launched a global start up program “Launchpad” in India

Amazon.in launched Amazon Launchpad in India. The global program will be an exclusive corner and will help startups in the country to launch, market and distribute their products to Amazon customers across India and around the world via a dedicated store.

Amazon India has tied up with Department of Industrial Policy and Promotion (DIPP)’s Start Up India and Nasscom for its initiative. The global program is present in seven different countries and has helped over 1,200 startups launch products.

News 6 - Joint Communique issued at the end of two-day BRICS Revenue meet

The two-day BRICS meeting of Revenue heads and Tax experts held from 5-6 December 2016 was concluded at Mumbai, India. A Joint Communique was issued at the end of the meeting.

This meeting resolved to support other developing nations in increasing their tax administrations' capacity to implement the OECD/G20 standard on Automatic Exchange of Information (AEOI). All heads vowed to share tax information automatically and adopt global standards on tax transparency to check cross border tax evasion.

News 7 - Enforcement Directorate summons AirAsia India officials for FEMA Violations

The Enforcement Directorate has issued summons to officials of Air Asia India for alleged violations of the Foreign Exchange Management Act (FEMA) regulations for alleged fraudulent transactions of Rs22 crore involving non-existent parties in India and Singapore.

The fraudulent transactions were detected by a forensic audit of AirAisa conducted by Deloitte India. AirAsia India is a joint venture between Malaysian carrier AirAsia Bhd and Tata Sons. The main instigator of the investigation has been Cyrus Mistry.

News 8 - Mobile banking service SIMsePAY launched in Arunachal Pradesh

The Arunachal Pradesh State Co-operative Apex Bank launched a Mobile Banking Service named SIMsePaY in collaboration with the Yes Bank Ltd aimed at helping bank customers’ in their cash crunch problem.

The SIMsePAY service allows any account holder to do money transfers, pay utility bills and other mobile banking services without the need for smartphones or internet. The offering is based on a frugal “sim-sleeve” technology, in association with Taisys Technologies.

News 9 - IOC, BPCL, HPCL join hands to set up India's biggest oil refinery

Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation signed a pact to build India's biggest oil refinery (60-million tonnes a year) on the west coast in Maharashtra. It will cost $30 billion or Rs. 2 lakh crores.

IOC is leader of the consortium with 50% stake while BPCL and HPCL will have 25 per cent each. The refinery will produce petrol, diesel, LPG, ATF and feedstock for petrochemical plants in plastic, chemical and textile industries in Maharashtra. The biggest refinery in India till date is at Jamnagar in Gujarat built by Reliance Industries.

News 10 - ADB curtailed India's growth forecast from 7.4% to 7%.

ADB reviewed and curtailed its GDP forecast for India from 7.4% to 7% for 2016-17. As per the Asian Development Bank, due to cash shortage post demonetization in India, GDP of the country may be affected. However, structural reforms will enhance productivity and domestic demand will keep the growth momentum in pace.

As per the reports, less cash availability has affected weak investments and has caused a slow-down in the agricultural sector. However, the GDP forecast for 2017-18 is estimated at 7.8%.

News 11 - Retail inflation by CPI fell to a two-year low at 3.63 %

The Central Government’s decision of November 8 to remove high-value bank notes caused a massive cash crunch and depressed consumer demand in the market. This move impacted on the consumer price index and retail inflation fell to a two year low at 3.63%. Food articles inflation fell from October’s 3.32 % to 2.11 % in the month of November.

The overall CPI inflation had come in at 5.41 percent in November last year and it was 4.20 percent in October 2016. The rural retail inflation stood at 4.13 percent and urban retail inflation stood at 3.05% in November.

News 12 - November WPI inflation at 3.15%

The Wholesale Price Index (WPI)-based inflation for November 2016 came in at a five-month low of 3.15 %, lower than 3.39 % in the October month. The September WPI inflation has been revised from 3.57 % to 3.8 %.

The Wholesale Price Index (WPI) is the price of a representative basket of wholesale goods. Some countries use WPI changes as a central measure of inflation. But now India has adopted a new CPI to measure inflation.

News 13 - Micromax and Uber announced partnership

Micromax and Uber announced a partnership that will help Micromax customers book an Uber ride on their phones without having to download the application. Micromax devices offer an integrated experience with Uber over the next three years.

As a part of this partnership, the Uber app will come in-built in close to 100 million Micromax smartphones.

Micromax is a mobile phone brand while Uber is taxi-hailing service provider.

News 14 - India becomes the world’s 6^th largest economy

As per a report published in the Forbes magazine, India has surpassed Britain to become world’s sixth-largest economy in GDP terms. The top five in the list are United States, China, Japan, Germany and France.

Britain's 2016 GDP was $2.29 trillion compared to India's $2.30 trillion. Furthermore, this gap is expected to widen as India grows at 6 to 8% per annum as compared to UK’s growth of 1 to 2% until 2020, and likely beyond. Britain's economy and currency are struggling post-Brexit.

News 15 - Amul to invest Rs. 200 crores in Bengal

Amul is all set to invest in Bengal with a ‘Centralized Milk Processing Plant’ at Sankrail Food Park in Howrah. The project is worth about 200 crore rupees. The proposed plant will manufacture UHT milk, yoghurt and ghee besides normal milk.

The Kandua Food Park, at Howrah’s Sankrail, has been developed by WBIDC. As per the Food Agriculture Integrated Development Action (FAIDA) report of McKinsey, Bengal is one of the three leading states in India in the food and agro-processing sector.

News 16 - Bio Ethanol plants to be set up in each district of Punjab

Bio Ethanol plants will be set up in each district of Punjab to solve pollution problem originating from burning of paddy straw. The foundation stone of first Bio-Ethanol plant in the state was laid at village Tarkhan Wala in Bathinda district.

Hindustan Petroleum Corporation will set up 12 such plants in the country and this is the first one. In this plant 400 tonnes of paddy straw (Prali) will be used daily to produce 100 kilolitres of Ethanol. The total production during the year will be 3.20 crore litres of ethanol which will cater for 26% of the total ethanol requirement of Punjab.

News 17 - Foreign investors pull out $3.4 billion in December

Foreign investors have pulled out 3.4 billion dollars from the domestic capital market in December 2016, following the rate hike by the US Federal Reserve.

The Nett withdrawal by foreign portfolio investors from equities stood at 3,744 crore rupees between December 1 and 23, while withdrawals from the debt market stood at 19,027 crore rupees. The latest FPI outflows follow a withdrawal of over 49,700 crore rupees, on a net basis, from the capital market, including both equity and debt, in the October and November. Before that, FPIs had poured in 46,000 crore rupees into the capital markets in preceding three months of July to September.

News 18 - India’s External Debt at end-September 2016 stock stood at US$ 484.3 billion

At end-September 2016, India’s external debt stock stood at US$ 484.3 billion, recording a decline of US$ 0.8 billion (0.2 per cent) over the level at end-March 2016. The fall in external debt during the period was due to commercial borrowings and short term external debt. However, on a sequential basis, total external debt at end-September 2016 increased by US$ 4,768 million from the end-June 2016 level.

At September-end 2016, long-term external debt accounted for 83.2 percent of India’s total external debt.

News 19 - India to Supply Additional 80 MW TO Nepal from 1^st January 2017

Beginning 1^st January, 2017, additional power transfer of 80MW to Nepal is expected to commence. With this, the total supply of electricity to Nepal from India will be about 400 MW.

Besides reviewing cooperation and expanding ties between the two countries in the power/energy sector, Minister of Energy of Nepal requested for an additional supply of 80 MW from India to alleviate power shortage in Nepal due to seasonal reduction in supply from domestic hydro projects in winter months.