ECONOMY AFFAIRS JUNE 2014

ECONOMY AFFAIRS JUNE 2014

• Air India on 24 June joined Star Alliance and the membership will help Air India gain nearly five percent raises in its revenues.The board of the 26 Star Alliance members agreed to allow Air India into its fold at a meeting held in London. Air India's revenue currently stands at around Rs.19,000 crore per annum, and it is expected to rise 4-5 percent following the move. This increase is expected to take the overall revenue to about Rs.23, 000 per annum. Air India became the 27th member after a wait of nearly seven years. Currently, most of the passengers on Air India's flights to the US and Europe do not get connecting flights to other destinations which are farther apart. This will change as other Star Alliance members will be able to provide single ticket travel to these destinations on their flights.
  
  • Air India's Chairman and Managing Director- Rohit Nandan
  • Star Alliance is the biggest congregation of 26 leading airlines offering worldwide reach and smoother travel experience. The network offers 21,900 daily flights to 1328 airports in 195 countries.
    
• In a major liberalisation programme, the government on 26 June allowed manufacturing of several hundreds of equipment and products in the defence sector without licence.Manufacture of products such as sub-assemble items, components, castings, night-visions and surveillance would not require an industrial licence. Simplifying the licensing process, a Commerce and Industry Ministry order listed four categories of products that would require prior permission and freed the rest from any licence condition. Industrial licences would now be required only to make items such as tanks and other armoured fighting vehicles; defence aircraft, spacecraft and parts; warships of all kinds; and arms and ammunition and allied items of defence equipment, parts and accessories. This is a major breakthrough which would enhance defence manufacturing in the country.
  
• The department of Public Enterprises on 27 June granted Navratna status to National Buildings Construction Corporation Limited (NBCC) and Engineers India Limited (EIL).NBCC is a CPSE under the ministry of urban development, whereas the EIL is a PSU under the ministry of petroleum and natural gas. The status came into effect from June 23. NBCC became the 15th and EIL 16th Navratna Company amongst 250 Central Public Sector Undertakings in the country. NBCC provides civil engineering construction services in wide gamut of projects of varied nature, complexities and at socio-political geographical locations, both at home and overseas. Engineers India Ltd (EIL) is one of the leading design and engineering organizations in South Asia. Established in 1965, EIL provides engineering consultancy and EPC services principally focused on the oil and gas and petrochemical industries.
  
  • List of Navaratna PSUs:
    Bharat Electronics Limited
    Bharat Petroleum Corporation Limited
    Engineers India Limited
    Hindustan Aeronautics Limited
    Hindustan Petroleum Corporation Limited
    Mahanagar Telephone Nigam Limited
    National Aluminium Company Limited
    National Buildings Construction Corporation Limited
    NMDC Limited
    Neyveli Lignite Corporation Limited
    Oil India Limited
    Power Finance Corporation Limited
    Power Grid Corporation of India Limited
    Rashtriya Ispat Nigam Limited
    Rural Electrification Corporation Limited
    Shipping Corporation of India Limited
    
    
• The World Bank has lowered India's GDP growth forecast to 5.5 per cent for 2014-15, from the earlier forecast of 5.7 per cent.The World Bank report, however, said that India's growth would accelerate to 6.3 per cent in 2015-16, and 6.6 per cent in 2016-17.It attributed the acceleration in growth rate to rising global demand, the expected rebound in domestic investment and pick-up in manufacturing activities.
  
• The Union Minister for MSMEs Mr. Kalraj Mishra on 16 June launched the “Online Finance Facilitation Centre” which is an initiative by CII. It is with an objective to facilitate access to finance and credit for SMEs. This centre will operate as a one-stop-shop, aggregating financing options for SMEs from various major financial institutions. SME Members across India can easily access this facility online for their credit requirement and it will facilitate the SMEs with documentation and preparation of bankable project proposals.
  
• Indian Railways on 20 June 2014 increased the passenger fare by 14.2 percent in all classes and freight charges by 6.5 percent.The revised rates will be effective from 25 June 2014.Under the passenger fare hike, there was a flat 10 percent increase in all classes and an additional 4.2 percent increase under fuel adjustment component (FAC)-linked revision scheme has been made. With this the Indian railways will be able to garner Rs. 8000 crore annually through the pre-budget decision.
  
• The World Bank on 11th June 2014 released Global Economic Prospects (GEP) Report and revised downwards the economic growth forecast for developing world in 2014 to 4.8 percent from 5.3 percent estimated in January 2014. It also highlighted that the growth in 2015 and 2016 at 5.4 and 5.5 percent, respectively. In its forecast, the World Bank also claimed that developing nations should make economic reforms to promote growth. In context of India the report claimed that weakness will be due to subdued manufacturing activity and sharp slowing of investment in the country. Growth in India is projected at 5.5 percent in FY2014-15, accelerating to 6.3 percent in 2015-16 and 6.6 percent in 2016-17.
  • Jim Yong Kim is the President of World Bank.
    
• Chinese Foreign Minister Wang Yi visited India and held talks with Union External Affairs Minister Sushma Swaraj on 7th June in New Delhi. They decided to inject new momentum in their economic ties with both countries pushing for exploring untapped opportunities. They also decided to set up industrial parks to take the bilateral trade beyond existing US $ 65 billion annually. The two countries deliberated extensively on economic engagement and agreed to intensify business and trade relations. 
  • China is the biggest trading partner of India with bilateral trade stand at US $ 65 billion.
    
• Vishal Sikka on 11th June 2014 was appointed as Chief Executive Officer (CEO) of Infosys. He will succeed the current Chief Executive and Managing Director S. D. Shibulal. It is for the first time that the Infosys did not choose one of its founders for the role. Earlier, he worked as non-founder Chief Executive Officer of SAP AG and a former executive board member of SAP AG. Company founders N.R. Narayana Murthy and S. Gopalakrishnan will step down as Executive Chairman and Executive Vice-Chairman on 14 June 2014. However both the co-founders will continue on the board to ensure smooth transition till 10 October 2014 in non-executive roles.
  
• The Reserve Bank of India (RBI) announced second Bi-Monthly Monetary Policy Statement on 3 June 2014. RBI in its second bi-monthly monetary policy statement has kept the policy rates unchanged. The Bank Rate is at 9.0 percent. The cash reserve ratio (CRR) is unchanged at 4.0 percent of net demand and time liabilities (NDTL). The repo rate under the liquidity adjustment facility (LAF) unchanged at 8.0 percent. The statutory liquidity ratio (SLR) of scheduled commercial banks has been reduced by 50 basis points from 23.0 percent to 22.5 percent of their NDTL with effect from 14 June 2014.The reverse repo rate under the LAF remained unchanged at 7.0 percent and the marginal standing facility (MSF) rate. and the Bank Rate at 9.0 percent.
  
• India has improved its ranking as per the recent data released on 2 May, ‘UN Comtrade’ in Global Textiles as well as Apparel Exports. In Global Textiles Exports, India now stands at 2nd place while China still retains its no.1 position. India’s share in Global Textiles has increased by 17.5% in the year 2013 compared to the previous year. Currently India’s textiles exports to the world are US$ 40.2 billion. This growth is phenomenal as the global textiles growth rate is only 4.7% compared to India as it has registered the growth of 23% beating China and Bangladesh which has registered 11.4% and 15.4%, respectively.
  
  Total global textiles exports are to the tune of US$ 772 billion with India commanding 5.2% of the share. This growth in the increase in share of the Textiles Exports from India is largely attributed to the growth in the Apparel and Clothing sector as it accounts for the almost 43% of the share alone. India’s apparel exports, was to the tune of US$ 15.7 billion in 2013, as against US$ 12.9 billion in 2012. India’s Apparel Exports growth was highest registering 21.8% growth during the year 2013. Apparel exports from India accounts for 3.7% of share in the global readymade garment exports.
  • In Global Textiles Exports, India now stands at 2nd place. China is in no.1 position. ·
  • Total global textiles exports are to the tune of US$ 772 billion with India having 5.2% share. ·
  • The Apparel Exports ranking has also improved from 8th position in 2012 to 6th position in 2013.