ECONOMY AFFAIRS FEBRUARY 2010

ECONOMY AFFAIRS FEBRUARY 2010

• Highlights of 2010/11 budget
  Need to review stimulus
  Challenge to return to 9% growth, then double-digit
  Final FY10 GDP figure maybe higher than estimate of 7.2%
  Need to move towards fiscal consolidation
  Fiscal deficit seen at 6.9 pct of GDP in 2009/10
  Fiscal deficit seen at 5.5 pct of GDP in 2010/11 (Reuters poll 5.6 pct)
  Fiscal deficit seen at 4.8 pct of GDP in 2011/12; 4.1 pct in 2012/13
  Total expenditure in 2010/11 11.87 trillion rupees (USD 256.75 billion)
  2009/10 revised estimate for tax collection 7.47 trillion rupees (USD 161.58 billion) Need to review public spending
  Roadmap within six months to cut public debt
  Government will be in a position to implement direct tax code from April 2011
  Aims to introduce GST in April 2011
  Since December have been signs food prices pressures transmitting to non-food items.
  Government to simplify FDI policy
• In one of the biggest recalls recorded in the Indian automobile industry, leading car maker Maruti Suzuki India announced that it had recalled nearly one lakh 'A - Star' cars, the company's flagship export model, to replace a faulty fuel pump gasket.
• The recommendations of the Thirteenth Finance Commission,headed by Vijay Kelkar are:
  Asked the government to extend specific grants such as Rs. 24,000 crore for elementary education and 15,000 crore for environment.
  Suggested the government earmark 87,000 crore exclusively for local bodies.
  Targeted the fiscal deficit at 3 percent by 2013 - 14 for the current level of 6.8 percent and the elimination of revenue deficit b y 2013 - 14 from the current level of 4.8 percent this fiscal.
  The States would get 32 percent of its tax revenue along with Rs 3.19 lakh crore as grant for the next five fiscal years (2010 - 15)
• The Reserve Bank of India (RBI)has cleared a proposal made by the state Government of Andhra Pradesh to give loans upto Rs 1 crore to SC/ST entrepreneurs with out collateral security to encourage them as industrialists.
• 13th Finance commission recommendations for the state of Andhra Pradesh:
  The State was likely to get Rs 1 lakh crore as its share in Central taxes and another Rs. 13,802 crore as grants - in - aid over the next five year period.
  The divisible pool of Central taxes had been increased from 30.5 percent to 32 percent of which the state's share was 6.93 percent.
• Economic survey 2009-10 tabled by Finance Minister Pranab Mukherjee in the Lok Sabha: -

  Projection of GDP expansion	- 8.75 Percent growth in 2010–11
  	- 9 Percent growth in 2011-11

  	2008-09	2009-10
  GDP Growth	6.7*	7.2**
  Industrial Growth	2.6	8.6*
  Forex Reserves	$ 252 billion	$ 283.5 billion
  Food grains
  Production	230.8 Million tonnes	233.9* Million tonnes
  Gross Fiscal
  Deficit	5.9* percent of GDP	6.58 percent GDP
  * - Quick estimates ** - Advance Estimates

  
  
• Andhra Pradesh was the first state to get the centre's approval for setting up the Petroleum, Chemicals and Petro Chemicals Investment Region (PCPIR)proposed between Visakhapatnam and Kakinada, as said by the Chief Minister of Andhra Pradesh.
• Economic Advisory council to the Prime Minister under the Chairmanship of C. Rangarajan released the ''Review of the Economy 2009-10''. It suggested that the Government have to initiate fiscal consolidation in the coming fiscal year (2010 - 11) to ensure fiscal sustainability, enable greater flexibility in monetary policy calibration, contain interest in payments and to avoid upward pressure on interest rates and to curtail the expansion of the base of service tax in Government's expenditure.
• A World Class Seed Vault has been established on the Siachen Glacier to preserve India's biological wealth for future generations. The vault, which has a natural temperature between –20 and –40 Celsius, will hold samples of rice, pulses, peas and beans and can be used for building food programmes across the nation.
• Tata Sons and Italian defence major Agusta Westland signed an agreement for formation of a joint venture company, which will establish a final assembly line for AW-119 helicopters for the Indian army and the global market. The AW-119 has been offered to India by Agusta for army's requirement for 197 choppers to replace its ageing fleet of Cheetah and Chetak light helicopters.
• The Reserve Bank of India (RBI) issued a notification introducing a new category of Non - Banking Finance Companies (NBFCs) as "Infrastructure Finance Companies (IFCs)'' with a view to encouraging larger flow of funds to infrastructure. The existing categories of NBFCs are Asset Finance Companies (AFCs), Loan Companies (LCs) and Investment Companies (ICs)
• India's IT - BPO market (including exports) could touch $285 billion in 2020, said the report prepared by KPMG and ASOCIO (Asian Oceanian Computing Industry Organisation).
• The Union Cabinet liberalised the Foreign Direct Investment (FDI) policy further by allowing the Foreign Investment Promotion Board (FIPB) to clear proposals from overseas entities worth up to Rs.1,200 Crore, against the existing limit of Rs.600Crore.
• World's largest manufacturer and marketer of fertilizers in the cooperative sector, Indian Farmers Fertilizer Cooperative (IFFCO) announced a strategic alliance with Canadian Company Grow Max Agri Corp to make its foray into Potash Project and Oil and gas exploration.
• East India company, the trading company with a 400 - year history will soon open outlets to sell tea, coffee, spices and fabrics. It was bought in 2004 by Indian - Origin businessman Sanjiv Mehta.
• The Central Statistical Organisation in its advance estimates pegged economic growth at 7.2 percent in 2009-10. It was higher than 6.7 percent recorded a year ago.
• The Securities and exchange board of India (SEBI) has constituted a committee headed by former Reserve Bank of India Governor Bimal Jalan to review the structures of the stock exchanges as their role as self - regulatory bodies and functions as profit entities are sometimes conflicting in nature. The committee may also look into the listing-related matters of the stock exchanges.
• GAIL (India) has been shortlisted as one of the 15 companies having qualified for the ambitions $30 billion National Gas Master Development Plan and its implementation in Nigeria.
• The National Mission onEnhanced Energy Efficiency would soon be launched to unlock the $15 - billion energy efficiency market. The initiate would reduce carbon emissions by almost 99 million tonnes.
• A Report of the Export Group on "A Viable and sustainble system of pricing of petroleum products'' headed by Kirit.S.Parikh was submitted. The recommendations of the committee are 
  1. Complete decontrol of the petrol and diesel prices.
  2. Hike of Rs. 100 per domestic LPG cylinder and an increase of Rs. 6 for liter kerosene