Post on 17-Aug-2020
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ARTH (1stMAY-10th MAY)- Vol 17
These supplements are designed to help you in preparing from UPSC prelims and main
paper III, RBI Gr B prelims and ESI/Finance, SEBI/NABARD GA, and IBPS. These
supplements are free and can be downloaded from Maggubhai/economic affairs
1. Coronavirus is pulling millions back into poverty- World Bank
According to World Bank’s new forecasts, global poverty (the share of the world’s
population living on less than $1.90/day) is projected to increase from 8.2% in 2019 to
8.6% in 2020. Another way to put this is that the estimates suggest that COVID-19 will
push 49 million people into extreme poverty in 2020.
Keypoints-
• The World Bank estimates sub-Saharan Africa will see its first recession in 25
years & South Asia its worst downturn in 40 years. The gains the world was
making in fighting poverty are now at grave risk.
• The World Bank says that for the first time since 1998, global poverty rates will
rise.
• By the end of the year, 8% of the world’s population which constitutes half a
billion people -could be pushed into destitution, largely because of the wave of
unemployment brought by virus lockdowns.
• The developing world will be hardest hit like some of the biggest gains were
made in India, where 210 million people were lifted out of poverty from 2006 to
2016. Since 2000, Bangladesh lifted 33 million people which are 10% of its
population out of poverty.
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2. India 53rd in budget transparency, accountability in IBP survey
According to the Open Budget Survey,India has been placed at 53rd position among
117 nations in terms of budget transparency and accountability. The Open Budget
Survey is part of the International Budget Partnership's Open Budget Initiative, a global
research and advocacy program to promote public access to budget information and the
adoption of accountable budget systems.
Keypoints-
• The survey is conducted by International Budget Partnership (IBP).It has
provided India's Union Budget process a transparency score of 49 out of 100. It
is higher than the global average of 45.
• New Zealand tops the chart with a score 87.
• Some of the other large developing countries, with the exception of China, have
got much higher transparency scores compared to India.
• South Africa (87), Mexico (82) and Brazil (81) are among the top six countries
providing extensive information to public for scrutiny.
• India performs well in publishing timely and relevant information in the audit
reports and in-year reports and has scored well and above many other countries.
• However, the survey observed that absence of a published Pre-Budget
Statement and not bringing out a Mid-Year Review in 2018-19 pulled down the
transparency score for the Union Budget of India.
• Centre for Budget and Governance Accountability (CBGA), which contributed
research inputs towards developing an assessment of budget transparency for
the efforts by the Union Government, noted that IBP draws attention to the
importance of enhancing budget transparency and strengthening accountability
for government budgets.
• The survey rates the level of budget transparency across countries on a scale of
0-100, based on several normative, internationally comparable indicators.
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• It evaluates for each country, the availability of eight key budget documents of
the Central or Federal Government, and assesses whether these are made
public, in a timely manner, and provide comprehensive information.
• Providing adequate space for public participation for priority setting in its budgets
is also flagged by the OBS (Open Budget Survey) as an area of improvement
required for India. The CBGA said budget transparency is always an important
parameter of fiscal governance.
3. IEA: global energy demand to plunge in 2020 as a result of the biggest shock
since the Second World War
A new report released by the International Energy Agency provides an almost real-time
view of the COVID-19 pandemic’s extraordinary impact across all major fuels. Based on
an analysis of more than 100 days of real data so far this year, the IEA’s Global Energy
Review includes estimates for how energy consumption and carbon dioxide (CO2)
emissions trends are likely to evolve over the rest of 2020.
Keypoints-
• Amidst Corona’s pandemic the plunge in demand for nearly all major fuels is
staggering, especially for coal, oil and gas. Only renewables are holding up
during the previously unheard-of slump in electricity use.
• The report projects that energy demand will fall 6% in 2020 – seven times the
decline after the 2008 global financial crisis. In absolute terms, the decline is
unprecedented – the equivalent of losing the entire energy demand of India, the
world’s third largest energy consumer.
• Advanced economies are expected to see the biggest declines, with demand set
to fall by 9% in the US and by 11% in the EU.
• IEA found that each month of worldwide lockdown at the levels seen in early
April reduces annual global energy demand by about 1.5%.
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• Coal is particularly hard hit, with global demand projected to fall by 8% in 2020,
the largest decline since the Second World War.
• Renewables are set to be the only energy source that will grow in 2020, with their
share of global electricity generation projected to jump thanks to their priority
access to grids and low operating costs.
• Nuclear power, another major source of low-carbon electricity, is on track to drop
by 3% this year from the all-time high it reached in 2019.
4. Companies prefer pre-litigation mediation to force majeure
A swelling list of corporates has begun pre-litigation mediation discussions with law
firms for faster resolution and to save costs. Many are no longer keen on using force
majeure or the Doctrine of Frustration clauses, seeking the cheaper option instead.
Keypoints-
• Companies in the manufacturing, services and real estate sectors are looking at
mediation to end disputes with suppliers, vendors, consumers and even lenders.
• The Commercial Courts Act, 2015, allows corporates to settle disputes through
this.
Source-ET
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5. India's R&D expenditure on the rise
According to the R&D Statistics and Indicators 2019-20 based on the national S&T
survey 2018 brought out by the National Science and Technology Management
Information (NSTMIS), Department of Science and Technology (DST), India’s gross
expenditure in R&D has tripled between 2008 & 2018 driven mainly by Govt sector and
scientific publications have risen placing the country internationally among the top few.
The report shows that with the rise in publication, the country is globally at the
3rd position on this score as per the NSF database, 3rd in the number of Ph.D. in
science & engineering. The number of researchers per million population has doubled
since 2000.
6. RCEP urges India to return to negotiating table as Covid-19 wrecks economies
Regional Comprehensive Economic Partnership (RCEP) in the backdrop of Covid that
has wreaked havoc on economies has stated that it would welcome India’s return to the
negotiating table for entering the trade bloc.
Keypoints-
• The 29th RCEP Trade Negotiating Committee Meeting was held via video
conference attended by 15 RCEP Participating Countries (RPCs), that is, the
Member States of the Association of Southeast Asian Nations (ASEAN),
Australia, China, Japan, Korea, and New Zealand.
• The 15 RPCs reaffirmed their commitment to sign the RCEP agreement in 2020,
stressing that as a region-wide free trade area, RCEP will provide a more stable
and predictable economic environment to support the much-needed recovery of
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trade and investment in the region, which has been adversely affected by the
COVID-19 pandemic.
• The 15 RPCs also agreed to step up cooperation and accelerate global efforts to
enable a swift and resilient economic recorvery from the crisis brought about by
the COVID-19.
• Against this backdrop, the 15 RPCs reaffirmed their commitment to continue
working with India to address its outstanding issues, as instructed by RCEP
Leaders at the 3rd RCEP Summit.
India pulled out of the RCEP in November 2019 after years of negotiations. India has a
trade deficit with 11 out of the 15 RCEP countries. India decided to stay out of RCEP
because concerns about getting swamped by imports under the agreement.That will put
its domestic industry and agriculture at risk.
7. 5 more states including Bihar, Punjab join ‘One Nation-One Ration Card’
scheme
Five more states, including Bihar,Punjab,UP, Punjab, Himachal Pradesh and Daman
and Diu, have joined the ‘One Nation-One Ration Card’ system, taking the total ration
card portability to 17 states and Union territories helping 60 crore beneficiaries.
Under the ‘One Nation-One Ration Card’ initiative, eligible beneficiaries would be able
to avail their entitled foodgrains under the National Food Security Act (NFSA) from any
Fair Price Shop in the country using the same ration card.
Keypoints-
• 12 states were integrated among each other and now 17 states are on integrated
management of the public distribution system (PDS), also called ration shops/fair
price shops.
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• Andhra Pradesh, Telangana, Gujarat, Maharashtra, Haryana, Rajasthan,
Karnataka, Kerala, Madhya Pradesh, Goa, Jharkhand and Tripura are 12 states
where ration card portability has been implemented. The beneficiaries can lift 50
per cent of their entitlement.
8. Nearly 60% Indians see economy recovering in next 2-3 months: Survey
According to a survey by McKinsey & Company, Indian consumers are being careful
with their spending and are cutting back across most categories. McKinsey & Company
carried out a consumer sentiment survey in India over three different periods. Each
survey highlights a different aspect. The latest survey was conducted from April 10-13,
prior to this it was conducted from April 2-6 and from March 27-30 as the extent of the
virus began to unfold globally
Keypoints-
• Data suggests that with each passing week, consumer confidence is rising as
the economy recovers after novel coronavirus, or COVID-19, led lockdown.
• As per the latest survey, nearly 60 percent Indians are optimistic about an
economic recovery in two-to-three months.
• Over 50 percent Indians continue to feel that there will be a loss in income and
cut in savings while spending shrink further.
• Indian consumers expect to spend more time engaging with live news, movies,
reading news online and video content.
• Over 85 percent of surveyed Indians believes that the personal and financial
impact of COVID-19 will last longer than two months.
• Data suggest that In India, the safety of family and overall public health is one of
the top five concerns related to coronavirus.
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9. China is testing new digital currency
China’s central bank has started testing its official digital currency, pressing ahead with
its plan to roll out a virtual money payment system, days after Facebook-backed Libra
scaled back its ambitions to become a global currency.
The Digital Currency Research Institute of the People’s Bank of China (PBC), China’s
central bank, said that the research and development work of China’s official digital
currency, dubbed as DC/EP, is proceeding steadily, and the internal pilot tests are
carried out in four cities. China’s official digital currency is undergoing testing and has
not been officially released.
10. Niti Aayog questions Australian institute’s terror ranking of India
A report compiled by Niti Aayog has questioned the methodology adopted by an
Australian based institute to rank India as the seventh worst terrorism affected country
ahead of conflict-ridden countries such as the Democratic Republic of Congo, South
Sudan, Sudan, Burkina Faso, Palestine and Lebanon. Niti Aayog is going to track 32
such global indices to see how they could help drive reforms and growth. The GTI
report issued by the IEP is based primarily on the Global Terrorism Database (GTD)
collated by the National Consortium for the Study of Terrorism and Responses to
Terrorism (START) at the University of Maryland
Keypoints-
• India has moved to the seventh position from the previous year’s eighth in the
annual Global Terrorism Index (GTI) 2019. The countries ahead of it are
Afghanistan, Iraq, Nigeria, Syria, Pakistan and Somalia.
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• GTI scores are directly used in the Global Peace Index, the Global Slavery
Report published by the Walk Free Foundation, and indirectly used in computing
country scores in the World Economic Forum’s Travel and Tourism
Competitiveness and Global Competitiveness Indices and compilation of Safe
Cities Index by the Economist Intelligence Unit.
11. Co-operative banks can use Sarfaesi Act to recover dues: Supreme Court
A five-judge Constitution Bench of the Supreme Court (SC) ruled that all co-operative
banks in the country could make use of the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act (Sarfaesi) to make recovery
against defaulting persons.
Keypoints-
• The apex court held that all such cooperative banks involved in the activities
related to banking are covered within the meaning of ‘banking company’.
• The cooperative banks cannot carry on any activity without compliance of the
provisions of the Banking Regulation Act, 1949 and any other legislation
applicable to such banks relatable to banking.
• While there have been calls to notify non-scheduled urban cooperative banks as
‘financial institutions’ so they could make use of IBC to recover monies, the
government had clarified any institution which was owed money by any corporate
could approach the NCLT either as a financial or an operational creditor.
SARFAESI Act,2002
The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act,
2002 (also known as the SARFAESI Act) is an Indian law. It allows banks and other financial institution to
auction residential or commercial properties (of Defaulter) to recover loans.
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12. Over 5 million people internally displaced in India in 2019- UNICEF
The ‘Lost at Home’ report, published by the UN Children’s Fund (UNICEF), said that
almost 33 million new displacements were recorded in 2019 — around 25 million were
due to natural disasters and 8.5 million as consequence of conflict and violence.
Keypoints-
• Of these, there were 12 million new displacements involving children, including
around 3.8 million of them caused by conflict and violence, and 8.2 million due to
disasters linked mostly to weather-related events.
• More than five million people were internally displaced in India due to natural
disasters, conflict and violence in 2019, constituting the highest number of new
internal displacements in the world during the period followed by the Philippines,
Bangladesh and China.
• The report said that natural disasters resulted in more new displacements than
conflict and violence.
• Almost 10 million new displacements in 2019 were recorded in East Asia and the
Pacific (39 %) — and almost the same number in South Asia (9.5 million).
13. RBI clears fog on special provisioning
The Reserve Bank of India (RBI) has cleared the fog on ‘special provisioning’ of loans
which are under moratorium — a clarification that has come as a relief to many banks.
The provisioning should be considered only for loans where principal or interest
payments are overdue between 61 and 90 days as on March 1, 2020. Such loans are
categorised as SMA2 — or, special mention accounts (SMA) -2. According to an
analyst’s estimate, total SMA loans were around ₹3.2 lakh crore in end September 2019
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— of which, SMA0 was ₹1.45 lakh crore. The normal provisioning of NPA is 15% for
secured loans and 25% of unsecured loans.
Source-ET
SMA loans — divided into three baskets (0, 1 and 2) — is a classification brought in by
the RBI five years ago to detect early signs of stress among bank borrowers and
monitor accounts which run the risk of turning into bad loans or non-performing assets
(NPAs).
SMA1 are loans where interest or principal is overdue between 31 and 60 days; while
SMA0 are loans where principal and interest are overdue for less than 31 days or
showing initial signs of stress.
14. 600 universities, 25,000 colleges are not accredited in India
According to the accreditation process of National Assessment and
Accreditation Council (NAAC), possibility of poor grades is the reason behind non-
participation of 22% of higher education institutions in the accreditation process of
National Assessment and Accreditation Council (NAAC) while 26% of institutions don’t
apply as they lack permanent faculty and 5.5% for not having a permanent head of the
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institution.
Keypoints-
• It said 72% of institutions are currently in the process of improving their quality
and resources to apply for NAAC accreditation.
• The government rolled out the revised accreditation framework (RAF) in 2017,
which came into effect in 2018 and has so far accredited 74 universities and
1,485 colleges.
• According to HRD ministry sources, at present there are 600 unaccredited
universities and 25,000 unaccredited colleges in the country.
• NAAC accreditation is a diagnostic tool. It helps institutions to understand
themselves and improve. The government had taken a good step by putting up
State -Level Quality Assurance Cell (SLQAC). State-level incentive for
accreditation will go a long way.
15. Daily usage of Aadhaar-enabled payment system doubles to 11.3 million in
lockdown
The average usage of Aadhaar-enabled payment system (AePS) doubled to 11.3
million per day during the lockdown period as one of the preferred banking modes for
beneficiaries of direct cash transfer under the Rs 1.7 lakh crore Prime Minister Garib
Kalyan Yojana (PMGKY). Total 430 million transactions worth Rs 16,101 crore has
taken place so far since the lockdown. The government has so far disbursed Rs 32,300
crore in bank accounts of 34 crore beneficiaries since the launch of Rs 1.7 lakh crore
welfare scheme under PMGKY.
AePS
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AePS is a payment service that uses a customer’s Aadhaar identity to access his or her
bank account and perform basic banking transactions such as balance enquiry, cash
deposit, cash withdrawal, Aadhaar to Aadhaar fund transfer and remittances through a
business correspondent (BC) in remote areas.
PMGKY
PMGKY scheme includes free distribution of wheat, rice and pulses, three cooking gas
cylinders and cash assistance to the poor for three months starting from April. It also
offers Rs 500 per month to 20 crore women Jan Dhan account holders for three months
so that they can run their households in the lockdown period without any disruption.
16. Delhi ranks top in Internet penetration, Kerala comes second
According to a study by Internet and Mobile Association of India (IAMAI), Delhi has
registered the highest Internet penetration, while Kerala ranks second.
Keypoints-
• While Delhi retains top spot in terms of penetration, at a city level, Mumbai has
highest number of Internet users at estimated 13 million, with Delhi coming is
second with 11.3 million.
• Significantly, eastern states together have seen a 24 per cent increase in the
Internet population in November 2019 compared with March 2019.
• In terms of age-wise demographics, two-third of Internet users in India are in the
age group of 12-29 years and this age group corresponds to more than 70 per
cent of Internet users in the rural.
17. DBS Bank slashes India’s FY21 GDP forecast to 1%
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Singapore-based DBS Bank has cut India’s FY21 GDP forecast to 1 per cent vis-a-vis
1.5 per cent projected on April 9. The report cautioned that the general government (the
Centre and States) deficit is likely to rise to 10-10.5 per cent of GDP in FY21 vs around
6 per cent of GDP earlier. This would entail the public debt level to rise from 70 per cent
of GDP to 75-80 per cent, with the shrinking GDP (denominator effect) also ballooning
the debt burden.
18. RBI cancels Mumbai-based CKP Co-op Bank's license
The RBI said the licence of The CKP Co-operative Bank Ltd., Mumbai, has been
cancelled with effect from the close of business on April 30, 2020. Consequent to the
cancellation of its licence, the Bank is prohibited from conducting the business of
‘banking’ which includes acceptance of deposits and repayment of deposits as defined
in the Banking Regulation Act, 1949 with immediate effect.The Reserve Bank of India
(RBI) said 99.2 per cent of the depositors of The CKP Co-operative Bank Ltd., Mumbai,
whose license has been cancelled, will get full payment of their deposits from the
Deposit Insurance and Credit Guarantee Corporation (DICGC).
19. Over $90-b support from central banks underscores systemic risks posed by
mutual funds, says Fitch Ratings
According to estimates by Fitch Ratings, central banks around the world have provided
facilities in excess of $90 billion to support mutual funds amid the coronavirus
pandemic. The scale of support shows regulators’ sensitivity to the potential systemic
risks that funds pose through potential spill-over effects to financial markets. However,
Fitch is sceptical about how effective the Reserve Bank of India’s support to MFs via the
special liquidity facility will be as India's banks have low capital headroom and could be
reluctant to extend liquidity to funds, given the lack of capital relief on the facilities.
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20. Amazon is world’s most valuable global brand, says BrandZ report
The third annual BrandZ ranking said Amazon has once again ranked as the world’s
most valuable global brand, followed by Alibaba and McDonald’s.
21. PhonePe launches Super Funds to help users in long-term wealth creation
PhonePe has launched Super Funds, which will help investors identifying top equity,
gold and debt funds of mutual fund companies. PhonePe has partnered with Aditya
Birla Sun Life Mutual Fund (ABSLMF), one of the leading investment managers in India
to launch this product.
22. Suryoday SFB launches new working capital product
Suryoday Small Finance Bank has rolled out a working capital product with a small
overdraft (OD) limit on a pilot basis in two branches – Trichy (Tamil Nadu) and Cuttack
(Odisha) to help its customers meet the urgent liquidity requirements during the
lockdown.To begin with, the bank has set a limit of ₹5,000 for this working capital
product.
23. SOLV launches Covid-19 emergency credit line for MSMEs
SOLV, a B2B digital platform for MSMEs backed by the Standard Chartered Group, has
launched a ‘COVID-19 Emergency Credit Line Program’ for Micro, Small and Medium
Enterprises (MSMEs). The programme had been launched in association with FICCI-
CMSME (Federation of Indian Chambers of Commerce & Industry’s Confederation of
Micro, Small and Medium Enterprises).
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24. Govt appoints Tarun Bajaj as Director on RBI Central Board
The government has appointed Economic Affairs Secretary Tarun Bajaj as a director on
the central board of Reserve Bank of India (RBI).
25. Nabard refinances close to Rs 13,000 crore to state co-op banks and RRBs to
assit farmers deal on-going lockdown
Nabard has disbursed Rs 12,767 crore to State Cooperative Banks (StCBs) and
Regional Rural Banks (RRBs) across the country to augment their resources during the
ongoing lockdown conditions for extending credit to farmers. It has extnded this facility
in 15 states so far including Andhra Pradesh, Bihar, Chhattisgarh, Haryana, Karnataka,
Kerala, Madhya Pradesh, Odisha, Tamil Nadu, Telangana, Uttar Pradesh and West
Bengal.
26. Covid-19 crisis has highlighted e-commerce importance,cooperation in cross-
border goods, services movement: WTO
The World Trade Organization (WTO) has asked its members if there is a need to
consider new and practical e-commerce solutions to enable fast and secure cross
border movement of goods and services to help economic recovery and job creation
after the Covid-19 pandemic. The organisation has also raised questions related to the
assistance it can offer developing countries and LDCs to reduce the digital divide, aid
MSMEs and promote economies that are more resilient to possible future crises or
shock.
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27. Chhattisgarh tops states giving MGNREGS jobs amid COVID-19 lockdown
According to the Rural Development Ministry data,Chhattisgarh has emerged as the
best-performing state in the country when it comes to providing jobs under the
Mahatma Gandhi National Rural Employment Guarantee Scheme amid the
nationwide lockdown. It has generated employment for 18.52 lakh labourers as the
state stressed on extensive work to revive rural economy and safeguard the
livelihood of the people. Chhattisgarh accounts for nearly one-fourth of the total
MGNREGS jobs.
28. Mercom India Research has released a data report
India Solar Market Leaderboard 2020, which reveals the solar industry market leaders
that emerged during the calendar year (CY) 2019, features the industry’s leaders as
well as their market share and shipment rankings across the Indian solar supply chain.
India installed 7.3 GW of solar capacity in 2019 and secured its spot as the world’s
third-largest solar market in the world.
29. SIDBI Launches SME Service Platform To Boost Digitisation, Credit Access
The Small Industries Development Bank of India (SIDBI) is launching an SME service
platform to facilitate the digitisation of small businesses and make access to credit
easier for those caught in a cash crunch owing to the Covid-19 pandemic. The platform
would also include several features to help micro, small and medium enterprises
(MSMEs) resume their operations remotely.
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30. Private equity firm Silver Lake to invest Rs 5,655.75 crore in Reliance Jio
Platforms
US private equity firm Silver Lake will invest Rs 5,655.75 crore ($747 million) in Jio
Platforms for a 1.15% stake, the second deal after Facebook’s share acquisition plan.
31.IIT Hyderabad to collaborate with Hong Kong firm to create venture ecosystem
The Indian Institute of Technology (IIT), Hyderabad is going to collaborate with New
Frontier Capital Management, a financial firm based in Hong Kong with offices in Tokyo
and Singapore, to establish a global network for ventures as well as to create a venture
ecosystem.The core objective of this partnership will be to promote innovation, research
and incubation.
32.CAIT to launch national e-commerce marketplace 'bharatmarket' for retail
traders
Traders' body Confederation of All India Traders (CAIT) has announced to launch a
national e-commerce marketplace 'bharatmarket' soon for all retail traders in
collaboration with several technology partners. CAIT said the marketplace will
integrate capabilities of various technology companies to provide end-to-end
services in the logistics and supply chains from manufacturers to end consumers,
including deliveries at home. E-commerce portal will include a nationwide
participation by retailers and aims to bring 95 per cent of retail traders onboard the
platform, who would exclusively run the portal.
33.Public Sector Banks sanction loans worth Rs 5.66 lakh cr for more than
4181000 accounts during March-April
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Public Sector Banks have sanctioned loans worth 5.66 lakh crore rupees for more
than 41 lakh 81 thousand accounts during March-April this year. These borrowers
are from MSME, Retail, Agriculture and Corporate sectors, waiting for disbursal
soon after lockdown lifts. More than 27 lakh customers have contacted from March
20 and 2.37 lakh cases have been sanctioned loans worth 26,500 crore rupees.
34. SBI cuts benchmark lending rate by 15 basis points
The country's largest lender, State Bank of India slashed benchmark lending rate
by 15 basis points and introduced Special Deposit Scheme for senior citizens with
higher interest rate. With that, the marginal cost of funds based lending rate comes
down to 7.25 per cent, from 7.40 per cent with effect from 10th of May. But, to
safeguard the interests of senior citizens, the bank has introduced a new product
'SBI Wecare Deposit' in the retail term deposit segment. Under this new product,
an additional 30 basis points premium will be payable for senior citizen's retail term
deposits with Five Years and above tenure only.
35. SEBI, AMFI plan to deepen debt market
The Association of Mutual Funds in India plans to work with capital market regulator
SEBI to deepen debt markets to improve investor protection and participation. SEBI in
consultation with AMFI and Mutual Fund Advisory Committee had proposed calibrated
reduction in limits for investment in unlisted securities of mutual fund schemes. Listing
guidelines were suitably modified to facilitate listing for instruments such as commercial
paper which hitherto were always unlisted. Global experience has proved that listing on
exchange platform create better dissemination of information resulting in efficient price
discovery and improve liquidity in secondary markets.
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36.200 new mandis from seven states join e-NAM for marketing of agricultural
produce
Two hundred new mandis from seven states joined the e-NAM platform for
marketing of Agricultural produce. This will bring the total number of e-NAM mandis
in the country to 785. It is for the first time that Karnataka has been added to the
list of e-NAM states
37. Govt amends I-T rules for faster resolution of multinational corporations' tax
disputes under MAP
The government has amended income tax rules as per which Indian authorities would
"endeavour" to resolve mutual agreement procedure (MAP) disputes within a timeframe
of 24 months, a move aimed at speedy settlement of cases of multinational corporations
that have opted the alternative dispute resolution process. The Central Board of Direct
Taxes (CBDT) has amended Rule 44G dealing with application and procedure for giving
effect to MAP agreement, and also revised Form 34F with respect to making application
to the competent authority for invoking MAP.
MAP is an alternative dispute resolution process under the tax treaties, under which
competent authorities of two countries enter into discussions to resolve tax-related
disputes.
38. Energy efficiency schemes led to savings of around ₹90,000 crore: PWC
report
A report titled ‘Impact of energy efficiency measures for the year 2018-2019’ by PWC
Limited, who was engaged by the Bureau of Energy efficiency (BEE), that the
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implementation of energy efficiency schemes has led to savings worth about ₹90,000
crore in the FY19.
Keypoints-
• This study estimates that various energy efficiency measures have translated
into savings worth ₹89,122 crore (approximately) against last year’s (2017-2018)
savings of ₹53,627 crore.
• These efforts have also contributed in reducing 151.74 million tonnes (MT) of
CO2 emissions, whereas last year the emissions were lower by 108 MT of CO2.
39. India has more internet users in rural areas than urban: IAMAI report
According to the ‘Digital in India’ report by the Internet & Mobile Association of India
(IAMAI), internet users in rural areas surpassed those in urban areas for the first time.
Keypoints-
• As of last November, there were 227 million active internet users in rural areas
which is 10% more than around 205 million in urban areas. In total, India had 504
million active internet users.
• The report showed that in rural India, the number of people actively accessing
the internet on a daily basis increased by 30 million since March last year.
• However, the time spent on the internet is higher in urban India compared to the
rural areas.
• Almost 70% of the active internet users in India are daily users where nine out of
10 in urban India access it at least once a week.
• Accessibility to affordable devices and cheap data plans were a major boost
behind the growth of India’s internet users. Also, the preferred device for
accessing the internet was mobile in both urban and rural areas.
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• Another highlight from the report is that the increase in female internet users (26
million) was more than that of male internet users. It was an increase of 21%
which is much higher than the 9% increase in male internet users.
40. Fitch downgrades viability ratings of SBI, BoB, ICICI, Axis Bank
Fitch Ratings downgraded the viability ratings (VR) of State Bank of India (SBI), ICICI
Bank and Axis Bank to 'bb' from 'bb+' on account of deteriorating operating environment
for banks amid the COVID-19 pandemic. The global rating agency also downgraded
Bank of Baroda's (BOB) VR by one notch to 'bb-', from 'bb'. The agency affirmed the
long-term issuer default ratings (IDR) of SBI and BOB at 'BBB-' and those of ICICI Bank
and Axis Bank at 'BB+'. For SBI and BOB, the VR downgrades reflect the heightened
risks that weakening asset quality will pose to their less-than-satisfactory loss-
absorption buffers.
41.Defaults among fragile emerging market firms set to rise: Moody's
According to Moody, defaults by weaker emerging market companies will rise in 2020
and 2021 as the effect of the COVID-19 pandemic hampers business activity.The
ratings agency said the trailing 12-month speculative-grade default rate for emerging
market firms would rise to between 7.8% and 11.2% by the end of 2020, from the low
level of 2.2% in March. The rate will then rise further by March 2021 to the 8.3% to
13.7% range. The global spread of the coronavirus has led to business closures and
restrictions on social interactions in many countries. The collapse in domestic aggregate
demand and export demand has weakened EM (emerging market) corporate
profitability and liquidity.
42. Lockdown impact: Services PMI in April at all-time low of 5.4
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Services followed manufacturing in touching a historical low as the Purchasing
Managers’ Index (PMI) for Services dipped to a mere 5.4 in April as against 49.3 in
March. This is the largest contraction on a monthly basis since the collection of data
began 14 years ago.Based on PMI for manufacturing and services, the fear is that the
Indian economy would have contracted by at least 15 per cent on an annualised basis.
Source- Newspaper
43.COVID-19: NBFCs ask RBI for one-time restructuring of all loans till Mar 2021
Non-banking financial companies (NBFCs) have asked the Reserve Bank of India to
allow them one-time restructuring of all loans till March 2021, as their borrowers are
facing funding issues amid the coronavirus pandemic and the subsequent lockdown.
NBFCs have also demanded for extension of the Reserve Bank of India's moratorium to
them, relaxation on provisioning norms and additional funding from Small industrial
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Development Bank of India (SIDBI) and National Bank for Agriculture and Rural
Development (NABARD) through refinance mechanism. NBFCs want that the one-time
restructuring should be allowed for all other borrowers as well.
44. China-backed AIIB approves $500 million loan for India's COVID-19 response
Beijing-backed Asian Infrastructure Investment Bank (AIIB) had approved a $500 million
loan to India to help the country navigate the coronavirus pandemic. The loan is
intended to help India's government strengthen its public health system, prepare for
future outbreaks, and limit the transmission of cases, a statement from AIIB. The
project, which will be cofinanced by the World Bank, will also support medical
equipment purchases and research. The loan is part of a $10 billion funding facility the
AIIB has announced to help public and private sector entities deal with the pandemic.
45. Moody’s cuts India FY21 growth projection to 0%
Moody’s Investors Service revised downward its growth projection for India to 0% for
FY21 and cautioned that the country’s sovereign rating could be downgraded if its fiscal
metrics weaken materially. This follows similar warning from Fitch Ratings. This would
probably happen in the context of a prolonged or deep slowdown in growth, with only
limited prospects that the government would be able to restore stronger output through
economic and institutional reforms. Moody’s had revised its outlook for India’s sovereign
rating from stable to negative. Moody’s credit rating of Baa2, the second-lowest
investment grade score, is better than those of other agencies, such as S&P and Fitch,
which have assigned the lowest investment grade to India with a stable outlook.
46. Coir Board ropes in IIT-Madras for R&D
The Coir Board has signed an MoU with the Indian Institute of Technology-Madras to
establish a Centre of Excellence for the application of coir exclusively or in combination
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with other natural fibres.The IIT-Madras had earlier validated the research studies so far
were undertaken by the Coir Board and other agencies in India on Coir Geo-Textiles
(CGT) and recommended that CGT can be successfully used to prevent soil erosion in
slopes/embankments, river embankments, mine slope dumps stabilisation etc.
47. Nomura predicts Indian GDP to contract by 5.2% in FY21, more rate cuts
Nomura and Goldman Sachs have cut their growth projections for India in financial year
2020-21 (FY21) and expect the Reserve Bank of India (RBI) to cut rates sharply to stem
the economic rout caused by the national lockdown to contain
the coronavirus pandemic. Analysts at Nomura have lowered their GDP growth forecast
for India to a negative 5 per cent / 5 per cent contraction y-o-y (from -0.5 per cent
forecast earlier) for 2020, but raised it to 7.9 per cent (from 7.3 per cent forecast earlier)
for 2021.
48. Cash in circulation in January-April higher than in all of 2019: Report
According to a report of the Business Standard, rising economic uncertainty has seen
people hoard more cash in the first four months of 2020 than they did in all of 2019. The
Reserve Bank of India’s report said the increase in currency in circulation (CIC)
between January and May was Rs 2.66 trillion against Rs 2.4 trillion in 2019.
The RBI till May 5 held Rs 8.53 trillion as excess liquidity from banks despite interest
rate being a low 3.75 percent (largely due to long-term repo operations (LTRO).
49 . Bank credit up 6.74% to Rs 102.69 lakh crore; deposits rise 9.82%
According to the latest data, bank credit and deposits grew by 6.74 percent and 9.82
percent to Rs 102.69 lakh crore and Rs 137.11 lakh crore in the fortnight ended April
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24. In the year-ago fortnight, bank loans had stood at Rs 96.20 lakh crore and deposits
at Rs 124.83 lakh crore. In the previous fortnight which ended on April 10, 2020, bank
credit had grown by 7.20 percent and deposits by 9.45 percent. In March 2020, non-
food bank credit growth slowed to 6.7 percent from 12.3 percent in the year-ago month
due to a sharp decline in advances given by banks to industries and services sectors.
50. Centre to borrow ₹4.20-lakh crore more; fiscal deficit may widen to 5.4%
The government announced raising its borrowing by over 50 per cent of Budget
Estimate during the current fiscal. Additional borrowing means fiscal deficit during the
current fiscal could go up by 200 basis points (100 basis points is equal to 1 percentage
point). The estimated gross market borrowing in 2020-21 will be ₹12 lakh crore in place
of ₹7.80 lakh crore as per BE 2020-21. The government has also revised the borrowing
calendar for the first half period (April-September) and raised it to ₹6 lakh crore,
from ₹4.88 lakh crore. The Reserve Bank of India, in consultation with the Government
of India, reserves the right to exercise the green-shoe option to retain additional
subscription up to ₹2,000 crore each against any one or more of the above security,
which will be indicated in the auction notification
51. Amend RBI Act for non-collateralised reverse repo operations: SBI report
According to State Bank of India’s economic research report, ‘Ecowrap’, the time has
come to make amendments to the RBI Act so that the conduct of reverse repo and term
reverse repo operations are completely non-collateralised.
Keypoints-
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• As lending to the central bank has no credit risk, there is no need to provide
government securities as collateral when a market participant places its funds
with the RBI.
• Further, the report underscored, as the RBI inventory of government papers is
getting depleted and it is unable to increase the stock due to fiscal ramifications,
a low remunerated standing deposit facility needs to be introduced. This will
require amendment to the RBI Act and may replace reverse repo in the long run.
• Emphasising that complete non-collateralisation of reverse repo and term
reverse repo operations will have multiple benefits, the report said that,
1. non-receipt of government securities in reverse repo and term reverse
repo will boost the overall demand for government securities for
maintenance of requisite statutory liquidity ratio (SLR), since securities
obtained under reverse repo are eligible for SLR.
2. Second, this move might also ensure a lower supply of government bonds
through less issuance of CMBs (cash management bills).
3. Third, absorption of additional surplus liquidity at a lower rate through SDF
(standing deposit facility) will pull down the entire interest rate structure.