July 2013

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Current Affairs Economy July 2013

il and Natural Gas Corp (ONGC) on 2 July, has lost the giant Kashagan oilfield to the Chinese after Kazakhstan blocked its $5-

billion deal to buy U.S. energy major ConocoPhillips stake in the Caspian Sea oilfield.ONGC Videsh, the overseas

investment arm of ONGC, had, in November last, struck a deal to buy ConocoPhillips 8.4 per cent stake in Kazakhstans biggest oilfield, Kashagan for $5 billion.

he focus of this years GII makes it a valuable guide for the policy makers to develop specific strategies relevant

to their local innovation eco-system, said CII Director General Chandrajit Banerjee. India ranked 1st in the Central and South Asia region followed by Kazakhstan and Sri Lanka, and 11th overall in innovation efficiency ratio. (Innovation efficiency reflects the innovation output per unit of innovation input in the economy).India ranked poor in areas such as political stability (rank 123), ease of starting business (rank 128) knowledge absorption (rank 122) among others. As per the report, despite the economic crisis, innovation is alive and well.

ndia has ranked 66th in the Global Innovation Index (GII) 2013, an index that is published by Cornell University, INSEAD, World Intellectual Property Organization (WIPO) and the

Confederation of Indian Industry (CII) as a knowledge partner. The study ranked 142 economies across the world on their innovation capacity and efficiency. This years report casts additional light on the local dynamics of innovation, an area which has remained under-measured globally.

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Current Affairs Economy July 2013

It shows the emergence of original innovation eco-systems, and signals a needed shift from the usual tendency to try and duplicate previously successful initiatives, CII said in a statement. The local dynamics of innovation varies across the globe and influences from innovation the local

measurement.

Learning

innovation systems adds newer dimensions to existing measurement approaches.

T
So,

he Oil India Ltd. (OIL) plans to tie-up with the Assam government to start a co-operative dairy business along the lines of Gujarats successful Amul model. The project named Kamdhenu

envisages setting up of a milk production facility in Upper Assam to establish the dairy business in 3-5 years, OIL said inj is a Guwahati milk-deficient on 2

July.Assam

state.

Availability of good milk is a big issue here. as part of our corporate social

responsibility, we have decided to join hands with the state government to start a co-operative dairy business here, OIL Chairman and Managing Director Sunil Kumar Srivastava told reporters. The model and OILs role are being studied to see how the company can support it. We are an oil company and milk production is not our business. We will tie-up with the government and see how we can implement this plan, Mr. Srivastava said. The company was assessing options such as giving cows to farmers in villages, setting up collection centers, and establishing a distribution network, he said. The co-operative might supply milk to the entire North East in future, he said. OIL has started the ground work for the project, and has initiated talks with the Assam government.

he National Cyber Policy in order to create a secure cyber ecosystem has planned to set-up a National Nodal Agency to coordinate all matters related to cyber security in the country. The

nodal agency has clearly defined roles and responsibilities. The policy will also establish a mechanism for sharing information as well as identifying and responding to cyber security incidents and for

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Current Affairs Economy July 2013

cooperation in restoration efforts. The National Cyber Security Policy has been prepared in consultation with all relevant stakeholders, user entities and public.

he Telecom Commission has approved the enhancement of the foreign direct investment (FDI) limit in the telecom sector

from 74 per cent to 100 per cent on 2 July. The Telecom Commissions decision will now be submitted to the Union Cabinet for its approval. The move comes on the eve of Finance Minister P. Chidambarams visit to the U.S. on July 11, followed by the Telecom Minister Kapil Sibals weeklong visit to the U.S. starting July 15. The announcement also comes on the heels of new balance of payment challenges; with the rupee at an all-time low of nearlyRs. 60 per one US dollar. The announcement has multiple implications for India. Mr. Sibal said in a statement that, he expected the move to reenergize the telecom industry out of its legacy debt issues by bringing in at least $10-15 billion of FDI. By improving connectivity through the highest quality of connectivity and competition, it will further empower the aam aadmi of the country in a meaningful manner, Mr. Sibal said. He further asserted that security concerns surrounding telecom networks would also be addressed with a firm hand.

T
National

he Union Government of India on 1 July 2013 launched the National

Cyber Security Policy 2013 at New Delhi with an aim to protect information and build capabilities to prevent Cyber Security cyber attacks. The Policy 2013 to

safeguard both physical and business assets of

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Current Affairs Economy July 2013

the country. The Policy has outlined the roadmap for creation of a framework for comprehensive, collaborative and collective responsibility to deal with cyber security of the country. The policy has ambitious plans for rapid social transformation and inclusive growth and India's prominent role in the IT global market. It will cater to the cyber security requirements of government and non-government entities at the national and international levels. The policy will help in safeguarding the critical infrastructure like Air Defense system, nuclear plants, banking system, power infrastructure, telecommunication system and many more to secure country's economic stability.

oftware giant TCS has replaced its group firm Tata Steel as the country's most admired company, as per a Fortune list released on 9th July. TCS is followed by Hindustan Unilever, ITC, Infosys and SBI in the top-five, while last year's top-ranked firm Tata Steel has slipped to seventh

position in the list of India's 50 most admired companies. Both ITC and Infosys have shared the third spot. The rankings have taken into account various factors such as corporate governance, innovativeness, corporate social responsibility and leadership. There are a total of four Tata group companies on the list. Besides Tata Consultancy Services (TCS) and Tata Steel, other Tata group firms in the list are Tata Motors at the 12th spot and Tata Power at 50th. As many as ten public sector units (PSUs) have made it to the rankings, global business magazine Fortune's Indian edition said. Among state-run enterprises, SBI and ONGC are in the top ten, ranked at fifth and eighth positions, respectively. L&T (6th rank), Maruti Suzuki (9th) and ICICI Bank (10th) feature in the top ten. Staterun oil major Indian Oil Corp was placed at 11th rank, while SAIL (22nd), Bharat Petroleum (25th), NTPC (28th), HPCL (31st), GAIL (34th), ONGC Videsh (47th) and Coal India (48th) also made the cut. Other companies who made it to the list include Microsoft India (15th), Colgate Palmolive (16th), IBM India (17th), Samsung India Electronics (18th), Bharti Airtel (19th), Cadbury (23rd), Dell India (32nd), Siemens (36th), Intel India (38th), Nokia India (42nd) and Sony India (44th).

he Cabinet Committee on Economic Affairs (CCEA), on 10th July, has approved the Modified Industrial Infrastructure Upgradation Scheme (MIIUS) with an approved outlay of Rs. 1030 crore for the 12th Five Year Plan period consisting of Rs. 450 crore for committed liability and

the remaining Rs. 580 crore for taking up 14 to16 new projects including a minimum 2 projects in the North Eastern Region (NER) for up gradation of infrastructure in existing or Greenfield industrial clusters. The CCEA further approved that at least 10 percent outlay will be set aside for the minimum two projects in the NER. All States are covered under the scheme. However projects are likely to be

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Current Affairs Economy July 2013

undertaken in only 14 to 16 States/Districts due to limitation of outlay in the 12th Plan. After notification of the MIIUS, the Project Management Agency

(PMA) would be appointed. The IIUS was launched in 2003 as a Central enhance Sector Scheme to of

competitiveness

industry by providing quality infrastructure through a public private partnership in selected functional clusters with central assistance up to 75 percent of the project cost subject to a ceiling of Rs. 5 crore. The Scheme was recast in February, 2009 based on the recommendation of an independent evaluation.

he Cabinet Committee on Economic Affairs (CCEA) on 10 July, approved disinvestment of government stake in State Trading Corporation (STC) and India Tourism Development

Corporation (ITDC), which would fetch around Rs 30 crore to the exchequer. The Disinvestment Department had sought Cabinet nod to offload 5 per cent stake in ITDC and 1.02 per cent in STC through the Offer For Sale (OFS) route. The government expects the sale of 5 per cent stake or 42.88 crore shares in ITDC to fetch Rs 23.58 crore. Besides, it aims to garner about Rs. 10 crore through disinvestment of 1.02 per cent, or 6.13 crore shares, in STC. Government currently holds 92.11 per cent stake in ITDC and 91.02 per cent stake in STC. The stake sale would help both the companies meet the minimum 10 per cent public holding norm of market regulator Securities and Exchange Board of India (SEBI). The government is required to bring down its stake in these two companies to 90 per cent by August 8.

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Current Affairs Economy July 2013

T
will

he government cleared a proposal to replace Directorate General of Civil Aviation (DGCA) with a new aviation regulator with full operational and financial autonomy on 11th July. The new

regulatory body would be called the Civil Aviation Authority (CAA) and it would replace the DGCA. It administer and regulate civil aviation safety and manage safety

oversight over air transport operators and operators of The DGCA had limited powers and hence was adequate structural

operators, air service navigation other civil aviation facilities. delegation incapable of of financial making

changes to meet the civil aviation sector. This replacement with CAA administrative with the and

demands of a dynamic necessitated its

that would have more financial powers to deal aviation scenario.CAA, like matters relating to financial stress on

fast-changing

DGCA, would also deal with safety of air operations, as

witnessed in connection with the bankrupt Kingfisher Airlines in October last year.CAA is being established to meet the standards set by UNs International Civil Aviation Organization (ICAO) and in line with aviation regulators in other countries like the Federal Aviation Administration of the US and the UKs CAA.

E
of

conomic ties between India and Vietnam are on track and may cross $7 billion by 2015, External Affairs Minister Salman Khurshid said on 11 July. Speaking to the media after the 15th meeting India-Vietnam Joint

the

Commission, the Minister said investments by Indian companies total about $936 million in 86 projects in sectors such as oil and gas exploration, and mineral processing, agro-

exploration sugar

manufacturing,

chemicals, IT, and agricultural processing.

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Current Affairs Economy July 2013

Khurshid said Vietnam had recently chosen Tata Power as the developer for a $1.8-billion 2X660 MW Long Phu 2 Thermal Power Project in Soc Trang province in southern Vietnam, despite strong competition from Korean and Russian companies. It will be the single largest Indian investment in Vietnam when it comes through and will enhance our economic co-operation and strategic partnership. The MoU between the two central banks Reserve Bank of India and the State Bank of Vietnam signed in 2012, will enable Bank of India and Indian Overseas Bank to upgrade their representative offices that they opened in Ho Chi Minh City in February 2003 and March 2008, respectively, into full-fledged branches in the near future, Khurshid said. India has extended 17 letters of credit (LoCs) totaling $164.5 million, including a $19.5-million LoC for setting up Nam TraiIV hydropower project and Binh Bo Pumping station, which was signed on 11 July. India has also agreed to consider earmarking $100 million under buyers credit under the National Export Insurance Account for use by Vietnam.

atyam formally merged with Tech Mahindra on 15th July. After debuting on the stock market in 1995, Satyam soon went on to become one of the country's top five IT companies and its share

price was trading Rs. 250 level in late 2008. It came to be known by January 2009 that Satyam was home to India's biggest ever corporate scam. Satyam is a Sanskrit word that means truth. A quick revival, however, followed with its takeover by Tech Mahindra through a governmentmonitored auction process and its name was changed to Mahindra Satyam. Tech Mahindra on 12 July 2013 announced the completion of allocation of its shares to the shareholders of Satyam Computer Services, raising the issued capital of the firm from 129 million shares to 232 million. Many changes have come through under Mahindras and the group finally decided to amalgamate the two IT companies under its fold. Shares of Mahindra Satyam are no longer traded on the bourses. They last traded at a level close to 120 rupees a piece and the value of each erstwhile Satyam share is now equivalent to about 130 rupees a piece, taking into account Tech Mahindra's current share price of 1120 rupees. As per the merger ratio, two Tech Mahindra shares have been given for every 17 shares held by Satyam investors. Experts say it made sense for the new owner to drop the Satyam brand name from the business, given its infamous past. Following the integration, Tech Mahindra is now amongst the

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Current Affairs Economy July 2013

top-5 IT companies of India with revenues of 2.7 billion US dollars and expects it to rise to 5 billion US dollars by 2015. The integration of two entities makes it a much larger software company and will also aid in cracking and winning larger outsourcing contracts.

low progress of economic reforms is expected to pull down India's growth to 5.8 per cent in the 2013 calendar year from 6 per cent projected earlier, an Asian Development Bank (ADB) report

said on 16th July. "In India...slow progress in pushing through the reforms needed to ease business bottlenecks means growth is likely to be 5.8 per cent this year, slower than the previously forecast 6.0 per cent," the report 'Asian Development Outlook Supplement' said.

he Reserve Bank of India (RBI) opened a special liquidity window for commercial banks to meet the cash requirements of mutual funds (MFs) on 17th July. The special liquidity window was

opened taken into concern the Mutual Funds which faced heavy redemption pressure in debt-oriented MF schemes following a series of steps taken by the RBI to shore up the faltering currency.Keeping all this into consideration the RBI opened a special three-day repo window that will allow banks to borrow a total of 25000 crore Rupees at a rate of 10.25%. Banks can borrow this money to lend onwards to MFs. RBI will conduct the first repo auction under the special facility on 19 July 2013.The second auction is scheduled for 23 July 2013 and the subsequent operations at an interval of three days. Individual banks will be allocated funds in proportion to their bids, subject to the overall ceiling of 25000 crore, Rupees. The RBI is also planning to sell bonds worth 12000 crore Rupees in the secondary market on 18 July 2013 for another liquidity draining measure.

he Reserve Bank of India (RBI), on 15 July, penalized 22 banks by imposing fines for violating Know-Your-Customer (KYC) norms and anti-money laundering guidelines. The list includes

banks such as SBI, Bank of Baroda and Canara Bank all of whom were fined Rs.3 crore each. The RBI said that it came to the conclusion that some of the violations were substantiated and warranted imposition of monetary penalty. The central bank also issued cautionary letters to seven other banks including Citibank, Standard Chartered and Barclays as no violation of serious nature by them was established. The violations by the public sector banks were revealed in a sting operation by online

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Current Affairs Economy July 2013

portal, Cobra post, reported in May. Though it imposed penalties, the RBI said that its investigation did not reveal any prima facie evidence of money laundering. Any conclusive inference in this regard can be drawn only by an end to end investigation of the transactions by tax and enforcement agencies, the central bank statement said.

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Current Affairs Economy July 2013

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overnment of India signed an agreement with Asian Development Bank (ADB) on 19 July, for a $60 million loan for improving urban services and strengthen municipal and project

management capacity in several towns in North Karnataka. The agreement is for the 3rd Project under the overall facility of $270 million for the North Karnataka Urban Sector Investment Program (NKUSIP). The third tranche loan under the North Karnataka Urban Sector Investment Program will develop sewerage networks in six towns, and help the rehabilitation and expansion of potable water systems in two more towns. More than 100,000 households will benefit from the improvements. Nilaya Mitash, Joint Secretary, Department of Economic Affairs, Ministry of Finance signed the agreement on behalf of Government of India and Mr. Hun Kim, Country Director of ADBs India Resident Mission, signed the agreement on behalf of ADB. ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth and regional integration. Established in 1966, it is owned by 67 members 48 from the region. In 2012, ADB assistance totaled $21.6 billion, including co-financing of $8.3 billion.

he Cabinet on 17th July approved amendment to the SEBI Act, which is expected to arm the stock market regulator Securities and Exchanges Board of India (SEBI) to crack down on

collective investment schemes such as the Saradha scam in West Bengal. The Cabinet had given the nod to the proposal to provide powers to market regulator to help investigate and punish fly-by night operators of p. SEBI will be able to summon any person or entity to assist in an investigation into a chit fund or a para-banking operation. It also provides powers to the stock market regulator to undertake "search and seizure" operations and help them access call records.

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Current Affairs Economy July 2013

"This will enhance regulation of collective investment schemes," said a senior government official. The changes in the Act are also likely to plug regulatory loopholes and clearly detail the jurisdiction of the stock market regulator on such schemes. SEBI will be able to impose "disgorgement orders" on a company that defaults on its commitments or makes illegal gains. The regulator will use its "inherent powers" to recover ill-gotten gains that will then be utilized to promote "investor protection and education".

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n yet another step to contain the current account deficit, the Reserve Bank of India imposed restrictions on gold imports by banks and other authorized agencies on 22nd July. As per the new

norms, all banks and authorized agencies will have to ensure that at least 20 per cent of the imported gold is made available for exports and a similar amount is retained with the customs. "It shall be incumbent on all nominated banks/nominated agencies to ensure that at least one fifth of every lot of import of gold (in any form/purity including import of gold coins/dore) is exclusively made available for the purpose of export," the RBI said in a notification. It further added that such imports should be linked to financing of exporters by the nominated agencies. The banks and other entities will also be required to retain 20 per cent of the imported quantity of the gold in customs bonded warehouses. The restrictions are meant to contain gold imports, which in addition to oil, is putting pressure on the current account deficit that soared to a record high of 4.8 per cent in 2012-13. The RBI and the government had earlier imposed other restrictions on import of gold to check CAD.

n a major upgrade of powers given to SEBI, the government has allowed it to pass orders like search and seizure, attachment of properties, arrest and detention of defaulters and pass

disgorgement directions to recover the wrongful gains made in contravention of laws.At the same time, the government has also allowed the market regulator to seek information from other regulators within India and abroad with retrospective effect, paving way for collection of details pertaining to cases pending for over 15 years now

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Current Affairs Economy July 2013

In another retrospective change, which forms part of the Securities Laws Amendment Ordinance promulgated by the President of India last week, the individuals and companies being probed by SEBI can settle their pending investigations. Such settlements can be undertaken in cases that are currently pending for more than six years.

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o tackle the growing menace of ponzi schemes being floated as Collective Investment Schemes (CIS), the rules have also been amended to classify any money collection of Rs. 100 crore or

more as CIS operation. SEBI has been given powers to crack down on illegal investment schemes floated by individuals as well, as against companies only as of now. However, all government-notified schemes would be out of the Collective Investment Scheme framework. The changes are part of as many as 22 amendments made by the government in three main Acts governing SEBI and its operations -- the Securities and Exchange Board of India (SEBI) Act, the Securities Contracts Regulation Act (SCRA) and the Depositories Act -- through a 16-page Ordinance. Among others, SEBI has also been given powers to pass disgorgement orders for amount equivalent to wrongful gains or to losses averted by contravention of regulations. Besides, the regulator can now enter and search buildings, places, vessels, vehicles and aircraft of defaulters. Its officers can also break open the lock of any door, box, locker, safe almirah, etc to get information from suspected entities. At the same time, the defaulters can seek settlement of pending cases with SEBI with retrospective effect from April 20, 2012.

roviding a big boost to the power sector, Coal India Limited (CIL) on 26 July, has signed 82 FSAs as on 25 July, 2013, with power stations with a includes Venture 16 power stations (JVs). 11

capacity of 34,793 MW. This belonging to NTPC and its Joint more FSAs are ready to be JVs, while another 23 FSAs entities are in the pipeline. FSAs for a capacity of 60,678 sign in February, 2012. This

companies

signed shortly with NTPC or its with State and private sector These FSAs were part of the 131 MW which CIL was directed to will substantially increase the

power generation during the current and subsequent years. In yet another fillip to the power sector,

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Current Affairs Economy July 2013

Ministry of Coal has issued another Presidential Directive to CIL on 17.07.2013 for signing of FSAs for a capacity of 78,000 MW instead of the earlier 60,678 MW. This will not only increase the power generation further but will also fast track several power projects which are under development.

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s part of its CSR initiative, Rural Electrification Corporation (REC), a Central Public Sector Enterprise under the Ministry of Power, has committed financial assistance to provide free one

year residential JEE/IIT coaching and mentoring 20 underprivileged meritorious students from Chhattisgarh, Odisha, Bihar, J&K and Delhi under the 'Abhayanand Super 30' initiative. Inaugurating the Delhi chapter of the 'National Super 100' programme on 18 July, Rajeev Sharma, CMD, REC, hoped that the Programme will help the aspiring students to successfully compete and gain admission in prestigious engineering colleges of the country. This initiative, co-founded by Shri Abhayanand, presently Director General of Police, Bihar, for providing free coaching to 30 students of Bihar, has achieved high success rates, and over the years, has expanded to become the 'National Super 100', by providing coaching to 100 students from underprivileged sections of society in seven centres across the country, with the vision of transforming the lives of deserving children with little or no means. The selection of the students is done through transparent procedure.

overty ratio in the country has declined to 21.9 per cent in 2011-12 from 37.2 per cent in 200405 on account of increase in per capita consumption, said the Planning Commission. According

to the Commission, in 2011-12 for rural areas, the national poverty line by using the Tendulkar methodology is estimated at Rs. 816 per capita per month in villages and Rs. 1,000 per capita per month in cities. This would mean that the persons whose consumption of goods and services exceed Rs. 33.33 in cities and Rs. 27.20 per capita per day in villages are not poor. The Commission said that for a family of five, the all India poverty line in terms of consumption expenditure would amount to Rs. 4,080 per month in rural areas and Rs. 5,000 per month in urban areas. The poverty line however will vary from state to state. The percentage of persons below poverty line in 2011-12 has been estimated at 25.7 per cent in rural areas, 13.7 per cent in urban areas and 21.9 per cent for the country as a whole, a Commissions press statement said. The percentage of persons below poverty line in 2004-05 was 41.8 per cent in rural areas, 25.7 per cent in cities and 37.2 per cent in the country as a whole.

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Current Affairs Economy July 2013

In actual terms, there were 26.93 crore people below poverty line in 2011-12 as compared to 40.71 crore in 2004-05.This ratio for 2011-12 is based on the methodology suggested by Suresh Tendulkar Committee which factors in money spent on health and education besides calorie intake to fix a poverty line. The Commission said the decline in poverty is mainly on account of rising real per capita consumption figures which are based on 68th round of National Sample Survey on Household Consumer Expenditure in India in 2011-12. Earlier, a committee was appointed under Prime Ministers Economic Advisory Council Chairman C Rangarajan to revisit the Tendulkar Committee methodology for tabulating poverty. The Committee is expected to submit its report by mid 2014. State-wise, the Commission said the poverty ratio was highest in Chhattisgarh at 39.93 per cent followed by Jharkhand (36.96%), Manipur (36.89%), Arunachal Pradesh (34.67%) and Bihar (33.47%). Among the union territories, the Dadra and Nagar Haveli was the highest, with 39.31 per cent people living below poverty line followed by Chandigarh at 21.81 per cent. Goa has the least percentage of people living below poverty line at 5.09 per cent followed by Kerala (7.05%), Himachal Pradesh (8.06%), Sikkim (8.19%), Punjab (8.26%) and Andhra Pradesh (9.20%).

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ndia achieved a record production of 18.45 million tones of pulses in the 2012-13 crop year ended June 2013. This augurs well for the country which is dependent on imports to meet the shortfall of

around 3 to 4 million tones. Higher support price prompted farmers to grow pulses. According to the 4th advance estimates released, overall food grain production is projected at 255.36 million tones, which is lower than the record 259.29 million

tones achieved in the previous crop year. In food grains category, rice production has been

revised upward to 104.4 million tones from

104.22 million tones and coarse cereals to 40.06 million tones from 39.52 million tones in the third estimates. However, wheat output has been revised downward to 92.46 million tones from 93.62 million tones.

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