#Economy Current Affairs (October 20th - 26th 2014) Centre gives nod to defence projects worth Rs. 80,000 cr Defence projects worth a whopping Rs. 80,000 crore were on 25th October cleared by the government which decided that six submarines will be made indigenously and over 8,000 Israeli anti-tank guided missiles and 12 upgraded Dornier surveillance aircraft will be purchased. The decisions were taken following a meeting of the Defence Acquisition Council, chaired by Defence Minister Arun Jaitley the bulk of the decisions went in favour of the Navy that was in dire need of up gradation and capability enhancement. The big ticket step was the decision to build six submarines in India at a cost of about Rs. 50,000 crore rather than source it from outside. The other major decision was to purchase 8,356 Anti Tank Guided Missile of Israel worth Rs. 3,200 crore rather than the US’ Javelin missile for the Indian Army. The Army will also purchase 321 launchers for the missile. Another 12 Dornier surveillance aircraft with enhanced sensors will also be bought from the Hindustan Aeronautics Ltd at a cost of Rs. 1,850 crore. The DAC also decided to buy 362 infantry fighting vehicle from the Ordinance Factory Board, Medak in West Bengal for Rs. 662 crore. The submarines will be Air Independent Propulsion (AIP) capable that will enable them to stay underwater for longer than a conventional submarine besides having enhanced stealth features. The Navy currently has 13 operational submarines and the target set in 1999 was to have 24 by 2030.The previous UPA government had gone in for six Scorpene submarines and the first is likely to be delivered only in 2016. Six submarines to be ‘made in India’: All six submarines will be built in a single Indian shipyard within the country under the “Make in India” category with foreign collaboration. The council has decided to set up a committee to decide on the shipyards to be issued the Request for Proposal (RFP). The shipyards compliant will be identified within two months. These submarines will have air-independent propulsion for extended submergence, land attack missile capability and stealth features. The Navy is currently making do with 14 submarines. The deal includes 8,000-plus missiles, 300-plus launchers and requisite technology transfer to Bharat Dynamics Ltd. (BDL) to build them indigenously. Spike is a third-generation, fire-and-forget, man-portable anti-tank missile. It is intended to equip the 382 Infantry battalions and subsequently the mechanised forces. The major deals include 363 new BMP-2/2k infantry vehicles to be built by the Ordnance Factory in Medak, Telangana, at a cost of Rs. 1,800 crore and a repeat order of 12 Dorniers, with enhanced sensors, for the Navy to be built by Hindustan Aeronautics Ltd. (HAL) at a cost of Rs. 1,850 crore. The Navy currently operates over 40 of them. An amount of Rs. 740 crore was allotted for 1,768 critical rolling stock wagons used to transport equipment by the Army to replace the existing ones which are more than 30 years old. Five and 7.5 tonne radio relay containers, which are mounted on vehicles with communication equipment, worth Rs. 662 crore were cleared for which Acceptance of Necessity (AON) will be issued soon to domestic manufacturers. Four clusters created Reserve Bank of India governor Raghuram Rajan has finalized organizational restructuring of the central bank by reassigning responsibilities of deputy governors under four new clusters. A key element of RBIs restructuring has been the separation of supervision and regulatory functions. It also involves the merging of some departments but the central bank has made it clear that there will not be any redundancies. The RBI is also expected to induct some lateral talent as part of its skill-building attempt. Deputy governor H R Khan will be responsible for the organizational cluster that has been defined as financial markets and infrastructure. These include departments like external investment, government accounts, payments and settlements, foreign exchange and internal debt management. Deputy governor Urjit R Patel continues to hold charge of monetary policy and research, which will include departments of communication, economic and policy research, financial market operations, and monetary policy department. The newly christened department of banking regulation, which comes under the regulation and risk management cluster, is part of deputy governor R Gandhis portfolio. Gandhi is also responsible for regulation of finance companies, deposit insurance, financial stability unit, currency management and risk monitoring. Deputy Governor S S Mundra will oversee department of banking supervision, consumer education and protection, financial inclusion, human resource and development and cooperative bank supervision. India set to become $2tn economy this year India is poised to become a USD two trillion economy this year, while its GDP size would cross another milestone of USD three trillion after five years in 2019, according to IMFs latest world economic outlook. Indias ranking would also improve to seventh largest economy in the world, while measured on current prices basis in US dollar, in 2019 from its tenth position currently. Latest data from the International Monetary Fund (IMF) show that Indian economy is set to be worth USD 2.05 trillion this year, increasing its size from USD 1.88 trillion in 2013. Last year too, India was among the ten largest economies in the world. Going by the IMF, United States would remain the worlds largest economy with a size of USD 17.42 trillion, followed by China at USD 10.35 trillion. Meanwhile, India is all set to cross the USD 3 trillion milestone in 2019 with a size of USD 3.18 trillion, surpassing Russia, Brazil and Italy. This would also make India the worlds seventh largest economy. At that time, Brazilian economy is estimated to be worth USD 2.89 trillion while Russian and Italian economies would have a size of USD 2.59 trillion and USD 2.45 trillion, respectively. The United States would remain the worlds largest economy in 2019 with a size of USD 22.15 trillion, followed by China (USD 15.52 trillion) and Japan (USD 5.43 trillion). In 2019, other economies in the top ten segments would be Germany (USD 4.55 trillion), the United Kingdom (USD 3.7 trillion) and France (USD 3.39 trillion). Indias economic growth was below 5 per cent in the past two financial years. Cabinet clears ordinance to re-auction coal blocks Putting to end the uncertainty on coal mining in the country, the Centre on 20th October decided to promulgate an Ordinance to allow e-auction of blocks to the end users. The end users in round one of the auctions will be power, steel and cement. But the Government has also left an enabling provision in the Ordinance by which it can decide on additional commercial use at a later date. The Supreme Court judgment of September 24, cancelling all coal block allocations between 1993 and 2010, which will lead to complete de-allocation of 204 blocks by March 31, 2015, had left the Government with little time to put in place a foolproof system. To begin the process of auctions, end-users in the power, cement and steel sectors will have to put in their requirements and a sufficient number of mines will be put for auction, in a pool. In the case of 37 mines which are producing, five that are about to start operations and 32 where significant development work has happened, the winning bidders will need to pay a compensation amount to the existing allocatee. While the private sector will bid for the blocks, NTPC and State Electricity Boards will be allocated blocks as per their requirement. Currently, nearly $20 billion tonnes of coal are imported and this can come down if the mines start production after the e-auctions, said Jaitley. Synopsis of Whole Issue Jun ’93: Coal Mines (Nationalisation) Amendment Act to allow captive coal mining passed 1993 to 2009: Govt allocates 201 blocks to private, public sector firms for captive use Aug 17, ’12: CAG says govt extended undue gains to firms by not auctioning 57 blocks allocated between 2006 and 2011 Aug 27, ’12: PM tells Parliament CAG’s assessment of Rs 1.86-lakh-crore loss to exchequer due to allocation not justified Sep ’12: CBI begins questioning in the alleged coal scam after CVC forwards complaints; raids are conducted, FIRs filed Jun ’13: FIR filed against JSPL Chairman Naveen Jindal; former minister Dasari Narayan Rao also named an accused Oct ’13: FIR filed against industrialist Kumar Mangalam Birla and ex-coal secretary P C Parakh for alleged criminal conspiracy and abuse of official position Aug ’14: SC terms allocations made between 1993 and 2010 illegal Sep ’14: SC cancels 214 block allocations, directs CIL to take over these mines Oct ’14: Govt says it will promulgate ordinance to resolve issues related to Supreme Court’s order de-allocating coal blocks Validity of industrial licenses increased to seven years The Government has increased the validity of industrial licenses to seven years from the existing validity period of three years. The Department of Industrial Policy & Promotion (DIPP) said that it has been decided to give two extensions of two years each in the initial validity of three years of the industrial license. It has also been decided to deregulate the annual capacity for defense items for industrial license. However, the licensee shall submit half yearly production return to DIPP and Department of Defense Production (DoDP), Ministry of Defense in the prescribed format, which will be notified separately. Centre orders merger of scam-hit NSEL with FTIL The Centre on 21st October announced that the crisis-ridden National Spot Exchange Ltd (NSEL) would have to merge with its holding company, Financial Technologies (India) Ltd (FTIL). The Ministry of Corporate Affairs issued a draft order invoking Section 396 of the Companies Act for the merger. This is the first time that a listed entity in the private sector is involved in a Section 396 order of the Central Government. NSEL was embroiled in a Rs 5,600-crore payment crisis. Govt. eases norms for private defense firms In a move expected to rake in investments into the defense sector, the government on 20th October allowed private defense manufacturing firms to sell equipment to state-run entities without prior approval. However, permission would be required to sell to non-government entities, the Ministry of Commerce and Industry said. The Ministry also removed the cap on the annual production capacity for defense-related equipment. However, licensed firms would be required to submit their production returns to the government every six months. Think tank to draft national IPR policy At a time when India’s intellectual property rights (IPR) regime is facing flak, particularly from the US, the Department of Industrial Policy & Promotion (DIPP) under the commerce ministry has set up a six-member think tank to draft a National Intellectual Property Rights Policy. The entity, to be chaired by Prabha Sridevan, would identify the areas in IPR that needed further study and furnish its views in this regard to the ministry The think tank will provide views on the possible implications of the demands of negotiating partners in this regard and prepare periodic reports on best practices in other countries, according to the terms of reference. 20 FDI proposals worth Rs 988 crore cleared The finance ministry has cleared 20 FDI proposals including 6 in the pharma sector envisaging a total inflow of Rs 988.3 crore. At the same time, 8 proposals including four from the pharma sector was rejected.
Posted on: Thu, 30 Oct 2014 09:55:08 +0000
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