India's forest cover has declined by 367 sq km between 2007 and 2009. While the figure may not seem alarming, it runs counter to the impression that afforestation and conservation programmes are yielding results.
The largest dip in forest cover was in the northeast which lost 550 sq km. This loss was very partially made up elsewhere, even as there was an overall negative growth in green cover. There was better news from states like Punjab, Jharkhand, Tamil Nadu and Rajasthan where social forestry projects seem to have worked to some extent.
The 2011 report of the Dehradun-based Forest Survey of India accessed by TOI has been submitted to the ministry of environment and forests (MoEF) and is to be released soon.
The news for Delhiites is not encouraging. There has been no change in the forest cover although Delhi government has been repeatedly claiming that forest areas are increasing. With civic agencies pointing to unchecked encroachments in the Ridge, the FSI report is not a surprise.
Maximum reduction in forest cover has been reported from insurgency-hit Manipur, totaling 190 sq km. Nagaland comes next with at least 146 sq km forest being lost between 2006 and 2008. The trend is equally worrying in Mizoram, Arunachal Pradesh and Meghalaya.
The last FSI report in 2009 showed forest cover in the northeast had increased from 1,69,825 sq km in 2005 to 1,70,423 sq km in 2007 -- an annual increase of 299 sq km over two years.
Citing reasons behind the sharp fall in forest cover, a retired conservator of forests said some forest areas in the region were inhabited by tribals and locals practised Jhum cultivation by clearing out huge swathes of forest areas. There was also the threat of organized wood smugglers and mafia.
But there have been some positive indicators elsewhere. Forest cover has increased by 100 sq km during these two years in Punjab, sources in the FSI said. "This is primarily because the government is pushing agro forestry activities. If satellite imagery establishes at least 10% area in an hectare is under forest, we designate it as forest cover," said an official associated with preparation of FSI reports.
Sources said that while Haryana and Himachal Pradesh reported slight increase in forest cover - 14 and 11 sq km respectively. "We expect the forest cover will be more in Haryana in the next report which will be out in 2013 considering the positive impact of Supreme Court ban on mining in Aravallis," said an official posted at FSI.
Tuesday, January 10, 2012
European crisis more dangerous than 2008 financial crisis: George Soros
Europe's debt crisis is more dangerous than the 2008 global financial crisis, billionaire investor George Soros said.
"We now have a crisis, which in my opinion is even more serious than the crash of 2008," Soros said on Monday at a business event in the southern Indian city of Bangalore .
"You had the institutions that were necessary to control the situation (in 2008), a functioning central bank, the Federal Reserve system, and a functioning
T reasury," he said. "In the case of the e uro, you have a European Central Bank but you don't have an European treasury. That institution is missing , " he said.
Soros, who made investment history by earning $1 billion with a bet against the British pound two decades ago, said last week that a collapse of the euro and break-up of the European Union would have catastrophic consequences for the global financial system.
He was speaking as French President Nicolas Sarkozy and German Chancellor Angela Merkel prepared to meet to discuss ways to boost growth and improve fiscal coordination in the euro zone.
"We now have a crisis, which in my opinion is even more serious than the crash of 2008," Soros said on Monday at a business event in the southern Indian city of Bangalore .
"You had the institutions that were necessary to control the situation (in 2008), a functioning central bank, the Federal Reserve system, and a functioning
T reasury," he said. "In the case of the e uro, you have a European Central Bank but you don't have an European treasury. That institution is missing , " he said.
Soros, who made investment history by earning $1 billion with a bet against the British pound two decades ago, said last week that a collapse of the euro and break-up of the European Union would have catastrophic consequences for the global financial system.
He was speaking as French President Nicolas Sarkozy and German Chancellor Angela Merkel prepared to meet to discuss ways to boost growth and improve fiscal coordination in the euro zone.
Friday, December 23, 2011
Indian Economy - Socio-economic Planning
(Planned economy is one in which the state owns (partly or wholly) and directs the economy. )While such a role is assumed by the State in almost every economy, in planned economies, it is pronounced: (for example in communist and socialist countries- former USSR and China till the 1970's.) In such a case a planned economy is referred to as command economy or centrally planned economy or command and control economy. (In command economies, state does the following
(Indicative plan (see ahead) is one where there is a mixed economy with State and market playing significant roles to achieve targets for growth that they together set.) (It is operated under a planned economy but not command economy.)
The difference between planned economy and (command economy is that in the former there may be mixed economy and while in the latter Government owns and regulates economy to near monopolistic limit.)
(Command economies) were set up in China and USSR, mainly for rapid economic growth and social and economic justice but have been dismantled in the last two decades as (they do not create wealth sustainably and are not conducive for innovation and efficiency.) (Cuba and North Korea are still command economies.)
Economic development refers to growth that includes redistributive aspects and social justice. GDP shows growth and welfare and human development aspects like education, access to basic amenities, environmental quality, freedom, or social justice. (Economic growth is necessary for development but not sufficient).
Growth is expected to [spread to all sections and regions; raise resources for the Government to spend on socio-economic priorities etc. (It takes a long time for growth to trickle down to all people and regions. Therefore, State plans for an expeditious process of inclusive growth.)
(Modernization is improvement in technology. It is driven by innovation and investment in R and D.) Education is the foundation of modernization. (The more modernized the economy, the greater the value created by it).
(Self-reliance means relying on the resources of the country and not depending on other countries and the MNCs for investment and growth.) India embarked on the goal partly due to the colonial experience and partly due to the goal of orienting growth to development and poverty eradication. (Nehru-Mahalanobis model of growth that closed Indian economy and relied on basic industries is the main plank for self-reliance.)
The term (self-reliance) should not be confused with self-sufficiency - the former means depending on resources of the country) and avoid dependence on external flows); the latter means that the country has all the resources it needs. No country can be self-sufficient. Social justice means inclusive and equitable growth where inequalities are not steep and benefits of growth reach allrural- urban ,man-woman; caste divide and interregional divides are reduced.
While the above four are the long term goals of the planning process, each five year plan has specific objectives and priorities.
The First Plan stressed more on agriculture, in view of large scale import of foodgrains and inflationary pressures on the economy. Other areas of emphasis were power and transport. The annual average growth rate during the First Plan was estimated as 3.61% as against a target of 2.1%. Renowned economist KN Raj, who died in 2010was one of the main architects of India's first five-year plan.
Second Plan (1956-61)
With agricultural targets of previous plan achieved, major stress was on the establishment of heavy industries. Rate of investment was targeted to increase from 7% to 11%. The Plan achieved amore than targeted growth rate of 4.32%. This Plan envisaged to give a big push to the economy so that it enters the take off stage. It was based on Nehru-Mahalanobismodel- self-reliance and basicindustry driven growth.
Third Plan (1961-66)
It tried to balance industry and agriculture. The aimof Third Plan was to establish a self sustaining economy. For the first time, India resorted to borrowing from IMF. Rupee was also devalued for the first time in 1996. India's conflict with Pakistan and repeated droughts also contributed in the failure of this Plan.
Annual Plan
As the Third Plan difficulties on the external front (war with China in 1962 and Pakistan in 1965); and the economic troubles mounted on the domestic front- inflation, floods, forex crisis- the Fourth Plan could not be started from 1966. There were three annual plans till 1969. This period is called plan holiday- that is when five year plans are not implemented. The Annual Plans were: 1966-67, 1967-68 and 1968-69.
Forth Plan (1969-74)
The main objective of this Plan was growth with stability. The Plan laid special emphasis on improving the condition of the under-privileged and weaker sections through provision of education and employment. Reducing the fluctuations in agricultural production was also a point of emphasis of this Plan. The Plan aimed at a target growth of 5.7% and the achievement against this was 3.21 %.
Fifth Plan (1974-79)
The main objective of the Plan was Growth for Social Justice. The targeted growth rate was 4.4% and we achieved 4.8%. It was cut short by the Janata Party that came to power in 1977.
Sixth Plan (1980-1985)
Removal of poverty was the foremost objective of Sixth Plan. Another area of emphasis was infrastructure, which was to be strengthened for development of both industry and agriculture. The achieved growth rate of 5.7% was more than the targeted one. Direct attack on poverty was the main stress of the Plan.
Seventh Plan (1985-90)
This Plan stressed on rapid growth in food-grains production and increase in employment opportunities. The growth rate of 5.81% achieved in this Plan was more than targeted one. The plan was more than the targeted. The plan saw the beginnings of liberalization of Indian economy. The 8th Plan could not start in 1990 due to economic crisis and political instability. There were two annual plans- plan holiday.
Eighth Plan (1992-1997)
This Plan was formulated keeping in view the process of economic reforms and restructuring of the economy. The main emphasis of this Plan were
The Plan was based on Rao-Manmohan Singh model of liberalization.
Ninth Five Year Plan (1997-2002)
The salient features of the Ninth Five Year Plan are a target annual average growth rate of 6.5 per cent for the economy as a whole, and a growth rate of 3.9 per cent for agriculture sector, among others. The key strategies envisaged to realise this target rest on attaining a high investment rate of 28.2 per cent of GDP at market prices. The domestic saving rate, which determines the sustainable level of investment, is targeted at 26.1 per cent of the GDP. Care has been taken to ensure achievement of a sustainable growth path in terms of external indebtedness as well as fiscal stability, Rate of growth achieved was 5.4%
Tenth Plan (See ahead)
Growth Performance in the Five Year Plans (per cent per annum)
The economy is expected to expand by 9% per cent in 2010-11- having achieved 8.9% real growth in the first half of 2010-2011. It may rise to 10 per cent in the terminal year of the 11th Plan. Government set an average annual growth target of 9 per cent for the 11th Plan - beginning with 8.5 per cent in the first year and closing with 10 per cent In 2011-12. The MTA document said the economy exceeded expectations in 2007-08, with a growth rate of 9 per cent, but the momentum was interrupted in 2008-09 because of the global financial crisis. Following the globalmeltdown, the growth rate slipped to 6.7 per cent in 2008-09 from over 9 per cent in the preceding three years. In the year 2009-10. the growth rate was 7.6%.
The 1950 resolution setting up the Planning Commission outlined its functions as to:
(The Deputy Chairman and the full time Members of the Planning Commission function as a composite body in the matter of detailed plan formulation. (They provide advice and guidance to the subject Divisions of the Commission in the various exercises undertaken for the formulation of Approach to the Five Year Plans, and Annual Plans). Their expert guidance is also available to the subject Divisions formonitoring and evaluating the Plan programmes, projects and schemes.
The Planning Commission functions through several technical/subject Divisions. Each Division is headed by a Senior Officer designated as Pr. Adviser/Adviser/Addl. Adviser/Jt. Secretary/Jt. Adviser.
The various Divisions in the Commission fall under two broad categories:
The Commission is a corner-stone of our federal structure, a think-tank ; helps to balance the priorities and expenditures of the Ministries of the Union Government ; throws up ideas on policies for structural and perspective changes ; and is a reservoir of research."
It is true that the quantitative aspects of planning in terms of control over economy are being selectively phased out and the nature of planning process is undergoing a qualitative change. Planning is important for the following reasons in the era of liberalization
(Since 1991, India adopted the indicative planning model, away fromthe kind of centralised planning on the Soviet model envisaged by Jawaharlal Nehru). Now Ministries and Departments, as well as the corporate entities in the private sector, enjoy a lot of functional, financial and operational autonomy.
In the era of liberalisation, the economic players should properly be left to decide for themselves what they consider to be the appropriate courses of action on the various issues coming up before them, whether they relate to policies, schemes or investments.
- Control all major sectors of the economy
- Legislate on their use and about the distribution of income
- State decides on what should be produced and how much; sold at what price
- Private property is not allowed)
(Indicative plan (see ahead) is one where there is a mixed economy with State and market playing significant roles to achieve targets for growth that they together set.) (It is operated under a planned economy but not command economy.)
The difference between planned economy and (command economy is that in the former there may be mixed economy and while in the latter Government owns and regulates economy to near monopolistic limit.)
(Command economies) were set up in China and USSR, mainly for rapid economic growth and social and economic justice but have been dismantled in the last two decades as (they do not create wealth sustainably and are not conducive for innovation and efficiency.) (Cuba and North Korea are still command economies.)
History of Economic Planning in India: The beginnings
India being devastated economically after more than 2 centuries of colonial exploitation resulting in chronic poverty, eradication of poverty was the driving force for the formulation of various models of growth before Independence.
(In 1944 leading businessmen and industrialists (including Sir Purshotamdas Thakurdas, JRD Tata, GD Birla and others) put forward "A Plan of Economic Development for India" -popularly known as the 'Bombay Plan".) It sawIndia's future progress based on further expansion of the textile and consumer industries already flourishing in cities like Bombay and Ahmedabad. It saw an important role the State in post-Independent India: to provide infrastructure, invest in basic industries like steel, and protect Indian industry from foreign competition.
(Visionary engineer Sir Mokshagundam Visvesvarayya. pointed to the success of Japan and insisted that 'industries and trade do not grow of themselves, but have to be willed, planned and systematically developed') - (in his book titled "Planned Economy for India"(1934)) Expert economists and businessmen were to do the planning. The goalwas poverty eradication through growth.
(The Indian National Congress established a National Planning Committee under the chairmanship of Jawaharlal Nehru.) It (1938) stated the objective of planning for development ("was to ensure an adequate standard of living for the masses, in other words, to get rid of the appalling poverty of the people"). It advocated heavy industries that were essential both to build other industries, and for Indian self- efence; heavy industries had to be in public ownership, for both redistributive and security purposes; redistribution of land away fromthe big landlords would eliminate rural poverty.
(During the 1940's, the Indian Federation of Labour published its People's Plan by MN Roy) that stressed on employment and wage goods). (S.N. Agarwala, follower of Mahatma Gandhi published Gandhian Plan that emphasized on decentralization; agricultural development; employment; cottage industries etc.)
Planning Goals
After Independence in 1947, India launched the year plan for rapid growth. (Planning has the following long term goals).- Growth
- Modernization
- Self-reliance and
- Social justice
Economic development refers to growth that includes redistributive aspects and social justice. GDP shows growth and welfare and human development aspects like education, access to basic amenities, environmental quality, freedom, or social justice. (Economic growth is necessary for development but not sufficient).
Growth is expected to [spread to all sections and regions; raise resources for the Government to spend on socio-economic priorities etc. (It takes a long time for growth to trickle down to all people and regions. Therefore, State plans for an expeditious process of inclusive growth.)
(Modernization is improvement in technology. It is driven by innovation and investment in R and D.) Education is the foundation of modernization. (The more modernized the economy, the greater the value created by it).
(Self-reliance means relying on the resources of the country and not depending on other countries and the MNCs for investment and growth.) India embarked on the goal partly due to the colonial experience and partly due to the goal of orienting growth to development and poverty eradication. (Nehru-Mahalanobis model of growth that closed Indian economy and relied on basic industries is the main plank for self-reliance.)
The term (self-reliance) should not be confused with self-sufficiency - the former means depending on resources of the country) and avoid dependence on external flows); the latter means that the country has all the resources it needs. No country can be self-sufficient. Social justice means inclusive and equitable growth where inequalities are not steep and benefits of growth reach allrural- urban ,man-woman; caste divide and interregional divides are reduced.
While the above four are the long term goals of the planning process, each five year plan has specific objectives and priorities.
History of Planning
First Plan (1951-56)The First Plan stressed more on agriculture, in view of large scale import of foodgrains and inflationary pressures on the economy. Other areas of emphasis were power and transport. The annual average growth rate during the First Plan was estimated as 3.61% as against a target of 2.1%. Renowned economist KN Raj, who died in 2010was one of the main architects of India's first five-year plan.
Second Plan (1956-61)
With agricultural targets of previous plan achieved, major stress was on the establishment of heavy industries. Rate of investment was targeted to increase from 7% to 11%. The Plan achieved amore than targeted growth rate of 4.32%. This Plan envisaged to give a big push to the economy so that it enters the take off stage. It was based on Nehru-Mahalanobismodel- self-reliance and basicindustry driven growth.
Third Plan (1961-66)
It tried to balance industry and agriculture. The aimof Third Plan was to establish a self sustaining economy. For the first time, India resorted to borrowing from IMF. Rupee was also devalued for the first time in 1996. India's conflict with Pakistan and repeated droughts also contributed in the failure of this Plan.
Annual Plan
As the Third Plan difficulties on the external front (war with China in 1962 and Pakistan in 1965); and the economic troubles mounted on the domestic front- inflation, floods, forex crisis- the Fourth Plan could not be started from 1966. There were three annual plans till 1969. This period is called plan holiday- that is when five year plans are not implemented. The Annual Plans were: 1966-67, 1967-68 and 1968-69.
Forth Plan (1969-74)
The main objective of this Plan was growth with stability. The Plan laid special emphasis on improving the condition of the under-privileged and weaker sections through provision of education and employment. Reducing the fluctuations in agricultural production was also a point of emphasis of this Plan. The Plan aimed at a target growth of 5.7% and the achievement against this was 3.21 %.
Fifth Plan (1974-79)
The main objective of the Plan was Growth for Social Justice. The targeted growth rate was 4.4% and we achieved 4.8%. It was cut short by the Janata Party that came to power in 1977.
Sixth Plan (1980-1985)
Removal of poverty was the foremost objective of Sixth Plan. Another area of emphasis was infrastructure, which was to be strengthened for development of both industry and agriculture. The achieved growth rate of 5.7% was more than the targeted one. Direct attack on poverty was the main stress of the Plan.
Seventh Plan (1985-90)
This Plan stressed on rapid growth in food-grains production and increase in employment opportunities. The growth rate of 5.81% achieved in this Plan was more than targeted one. The plan was more than the targeted. The plan saw the beginnings of liberalization of Indian economy. The 8th Plan could not start in 1990 due to economic crisis and political instability. There were two annual plans- plan holiday.
Eighth Plan (1992-1997)
This Plan was formulated keeping in view the process of economic reforms and restructuring of the economy. The main emphasis of this Plan were
- to stabilize the adverse balance of payment scenario sustainably.
- improvement in trade and current account deficit.
- human development asmain focus of planning.
The Plan was based on Rao-Manmohan Singh model of liberalization.
Ninth Five Year Plan (1997-2002)
The salient features of the Ninth Five Year Plan are a target annual average growth rate of 6.5 per cent for the economy as a whole, and a growth rate of 3.9 per cent for agriculture sector, among others. The key strategies envisaged to realise this target rest on attaining a high investment rate of 28.2 per cent of GDP at market prices. The domestic saving rate, which determines the sustainable level of investment, is targeted at 26.1 per cent of the GDP. Care has been taken to ensure achievement of a sustainable growth path in terms of external indebtedness as well as fiscal stability, Rate of growth achieved was 5.4%
Tenth Plan (See ahead)
Growth Performance in the Five Year Plans (per cent per annum)
| Target | Actual | |
| 1. First Plan (1951-56) | 2.1 | 3.61 |
| 2. Second Plan (1956-61) | 4.5 | 4.32 |
| 3. Third Plan (1961-66) | 5.6 | 3.21 |
| 4. Fourth Plan (1969-74) | 5.7 | 4.80 |
| 5. Fifth Plan (1974-79) | 4.4 | 5.69 |
| 6. Sixth Plan (1980-85) | 5.2 | 5.81 |
| 7. Seventh Plan (1985-90) | 5.0 | 6.7 |
| 8. Eighth Plan (1992-97) | 5.6 | 5.35 |
| 9. Ninth Plan (1997-2002) | 6.5 | 7.8% |
| 10. Tenth Plan(2002-2007) | 8% | |
| 11. Eleventh Plan( 2007-12) | 8.1 (revised 2010) |
Planning Commission
(The Planning Commission was constituted in March, 1950 by a Resolution of the Government of India, and works under the overall guidance of the National Development Council). (The Planning Commission consults the Central Ministries and the State Governments while formulating Five Year Plans and Annual Plans and also oversees their implementation). (The Commission also functions as an advisory body at the apex level).The 1950 resolution setting up the Planning Commission outlined its functions as to:
- Make an assessment of the material, capital and human resources of the country, including technical personnel, and investigate the possibilities of augmenting such of these resources as are found to be deficient in relation to the nation's requirement;
- Formulate a Plan for the most effective and balanced utilisation of country's resources;
- On a determination of priorities, define the stages in which the Plan should be carried out and propose the allocation of resources for the due completion of each stage;
- Indicate the factors which are tending to retard economic development, and determine the conditions which, in view of the current social and political situation, should be established for the successful execution of the Plan;
- Determine the nature of the machinery which will be necessary for securing the successful implementation of each stage of the Plan in all its aspects;
- Appraise from time to time the progress achieved in the execution of each stage of the Plan and recommend the adjustments of policy and measures that such appraisal may show to be necessary; and
- Make such interim or ancillary recommendations as appear to it to be appropriate either for facilitating the discharge of the duties assigned to it, or on a consideration of prevailing economic conditions, current policies, measures and development programmes or on an examination of such specific problems as may be referred to it for advice by Central or State Governments.
(The Deputy Chairman and the full time Members of the Planning Commission function as a composite body in the matter of detailed plan formulation. (They provide advice and guidance to the subject Divisions of the Commission in the various exercises undertaken for the formulation of Approach to the Five Year Plans, and Annual Plans). Their expert guidance is also available to the subject Divisions formonitoring and evaluating the Plan programmes, projects and schemes.
The Planning Commission functions through several technical/subject Divisions. Each Division is headed by a Senior Officer designated as Pr. Adviser/Adviser/Addl. Adviser/Jt. Secretary/Jt. Adviser.
The various Divisions in the Commission fall under two broad categories:
- General Divisions which are concerned with aspects of the entire economy; and
- Subject Divisions which are concerned with specified fields of development.
- Development Policy Division,
- Financial Resources Division, .
- International Economics Division,
- Labour, Employment andManpower Division;
- Perspective Planning Division,
- Plan Coordination Division,
- Project Appraisal and Management Division,
- Socio-Economic Research Unit,
- State Plan Division, including Multi Level Planning, Border Area Development Programme, Hill Area Development and North Eastern Region (NER), and Statistics and Surveys Division,
- Monitoring Cell.
- Agriculture Division,
- Backward Classes Division,
- Communication & Information Division,
- Education Division,
- Environment and Forests Division,
- Health & Family Welfare Division,
- Housing, Urban Development & Water Supply Division,
- Industry & Minerals Division,
- Irrigation & Command Area Development Division,
- Power & Energy Division (including Rural Energy, Non-Conventional Energy Sources and Energy Policy Cell)
- Rural Development Division,
- Science & Technology Division,
- Social Welfare & Nutrition Division,
- Transport Division,
- Village & Small Industries Division, and
- Western Ghats Secretariat.
The Commission is a corner-stone of our federal structure, a think-tank ; helps to balance the priorities and expenditures of the Ministries of the Union Government ; throws up ideas on policies for structural and perspective changes ; and is a reservoir of research."
Relevance of Planning
There has been a national debate about the relevance of planning in the era of liberalization where the state controls and regulations are dismantled to a great extent andmarket forces are given larger role. (The investment of the government for the five year plans is also on decline). (The trend began in the 7th plan and strengthens into the Eleventh Plan).It is true that the quantitative aspects of planning in terms of control over economy are being selectively phased out and the nature of planning process is undergoing a qualitative change. Planning is important for the following reasons in the era of liberalization
- (In a federal democracy like ours, the principal task of planning is to evolve a shared vision among not only the federal units but also among other economic agents so that the efforts of all the actors become convergent towards the national priorities, the role of planning is to develop a common policy stance for center and states. Also, (the task of federal policy coordination is central to Indian Planning). For example, the need to invite foreign investment in infrastructure areas like power need center - state coordination as the necessary legislation and administrative changes involve both.
- While the growth process can be made the responsibility of the corporate sector to a greater degree, its direction and distribution are to be steered by planned public intervention so that regional imbalances are reduced and socio economic inequities are set right. For example, `directing the growth of the large industry into the backward areas and technology intensive areas to realize national goals.
- The nature of instruments available to planners in the implementation has changed. Quantitative controls have yielded place to qualitative ones .The planning process has to focus on the need for planning for policy.
- Planning at the grass roots level that is participatory is very crucial for improving the delivery systems and proper use of the resources. The role of the government is thus to facilitate participatory planning.
- Environmental priorities are a major concern of planning is necessary for the sectors like energy, communication, transport and so on as private sector needs to be guided into the national plan.
- In the era of globalization where corporates are not expected to plan beyond the growth of a particular unit, the (role of safeguarding national interest is that of planning by the State). For example, being subjected to various discriminative trade practices by EU, USA and so on, (the Indian farmers,manufacturers and exporters have to fight sophisticated battles in the WTO for which the legal services and information and building up bargaining power are best provided by the State).
- Federal cooperation and coordination
- Equitable growth
- Environment friendly development
- Defending national interest in the age of globalization
- Inter-sectoral balance in growth
Changing Role of Planning Commission
(From a highly centralized planning system, the Indian economy is gradually moving onwards indicative planning where hard planning is no longer undertaken). The role of the (Planning Commission) accordingly changes. The Commission concerns itself with the building of a long term strategic vision of the future and decide on priorities of nation. (It works out sectoral targets and provides promotional stimulus to the economy to grow in the desired direction).
Planning Commission plays an integrative role in evolving a national plan in critical areas of human and economic development. (In the social sector, Planning Commission helps in schemes which require coordination and synergy like rural health, drinking water, rural energy needs, literacy and environment protection).
When planning in a vast federal country like India involves multiplicity of agencies, a high powered body like the PC can help in evolution of an integrated approach for better results atmuch lower costs.
In our transitional economy, (Planning Commission attempts to play a systems change role and provide consultancy within the Government for developing better systems). It has to ensure smooth management of the change and help in creating a culture of high productivity and efficiency in the Government.
In order to spread the gains of experience more widely, Planning Commission also plays an information dissemination role.
With the emergence of severe constraints on available budgetary resources, the resource allocation system between the States and Ministries of the Central Government is under strain. This requires the Planning Commission to play a mediatory and facilitating role, keeping in view the best interest of all concerned.
From Planning Commission to Systems Reforms Commission
There has been a significant change in the role of the PC since its inception in 1950. In the beginning, Planning Commission was all powerful and had the final say and the veto over every aspect - related to growth and socio-economic development- of the functioning of the Union Ministries and the State Governments: The manner of raising and utilising resources; specific allocations to particular schemes and programmes; location of enterprises; expansion and reduction of capacities; application of technologies; sources of supplies; modalities of implementation; priorities, phasing, pricing, targets and timeframes; nature of the instrumentalities; qualifications and strength of personnel of organisations; staff emoluments etc.(Since 1991, India adopted the indicative planning model, away fromthe kind of centralised planning on the Soviet model envisaged by Jawaharlal Nehru). Now Ministries and Departments, as well as the corporate entities in the private sector, enjoy a lot of functional, financial and operational autonomy.
In the era of liberalisation, the economic players should properly be left to decide for themselves what they consider to be the appropriate courses of action on the various issues coming up before them, whether they relate to policies, schemes or investments.
Saturday, December 17, 2011
RBI releases Mid Quarter Monetary Policy Review
Monetary Measures
On the basis of the current macroeconomic assessment, it has been decided to:
- keep the cash reserve ratio (CRR) unchanged at 6 per cent; and
- keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 8.5 per cent.
Consequently, the reverse repo rate under the LAF will remain unchanged at 7.5 per cent and the marginal standing facility (MSF) rate at 9.5 per cent.
Introduction
Since the Reserve Bank’s Second Quarter Review (SQR) of October 25, 2011, the global economic outlook has worsened significantly. The recent European Union (EU) summit agreement did not assuage negative market sentiments, thereby increasing the likelihood of persistent financial turbulence as well as a recession in Europe. Both factors pose threats to emerging market economies (EMEs), including India. Significantly, despite these developments, crude oil prices remain elevated.
On the domestic front, growth is clearly decelerating. This reflects the combined impact of several factors: the uncertain global environment, the cumulative impact of past monetary policy tightening and domestic policy uncertainties.
Both inflation and inflation expectations are currently above the comfort level of the Reserve Bank. However, reassuringly, inflationary pressures are expected to abate in the coming months despite high crude oil prices and rupee depreciation. The growth deceleration is contributing to a decline in inflation momentum, which is also being helped by softening food inflation.
Global Economy
The global economic situation continues to be fragile with no credible solution as yet to the immediate euro area sovereign debt problem. At the EU summit on December 8-9, the European leaders agreed on a new fiscal compact, involving stronger coordination of economic policies to strengthen fiscal discipline. While the agreement is necessary for medium and long-term sustainability of the euro area, its ability to resolve short-term funding pressures was questioned by markets. Q3 euro area growth, at 0.8 per cent, was anaemic and 2012 growth is now expected to be weaker than earlier projected. Reflecting these projections, the European Central Bank (ECB) cut its policy rate twice in the last two months, and also implemented some non-standard measures. By contrast, growth in the US in Q3 of 2011 was better than in Q2, although still substantially below trend.
Growth in EMEs is also moderating on account of sluggish growth in advanced economies and the impact of monetary tightening to contain inflation. In view of the slowing down of their economies, Brazil, Indonesia, Israel and Thailand cut their policy rates, while China cut its reserve requirements. EME currencies have also come under varying degrees of downward pressure as a result of global risk aversion and financial stress emanating from the euro area.
Domestic economy
Growth
GDP growth moderated to 6.9 per cent in Q2 of 2011-12 from 7.7 per cent in Q1 and 8.8 per cent in the corresponding quarter a year ago. The deceleration in economic activity in Q2 was mainly on account of a sharp moderation in industrial growth. On the expenditure side, investment showed a significant slowdown. Overall, during the first half (April-September) of 2011-12, GDP growth slowed down to 7.3 per cent from 8.6 per cent last year.
Industrial performance has further deteriorated as reflected in the decline of the index of industrial production (IIP) by 5.1 per cent, y-o-y, in October 2011. This was mainly due to contraction in manufacturing and mining activities. The contraction was particularly sharp in capital goods with a y-o-y decline of 25.5 per cent, reinforcing the investment decline story emerging from the GDP numbers.
Other indicators also suggest a similar tendency, though by no means as dramatic as the IIP. The HSBC purchasing managers' index (PMI) for manufacturing suggested further moderation in growth in November 2011. However, PMI-services index recovered in November from contractionary levels in the preceding two months. Corporate margins in Q2 of 2011-12 moderated significantly as compared with their levels in Q1. The decline in margins was largely on account of higher input and interest costs. Pricing power is evidently declining.
On the food front, the progress of sowing under major rabi crops so far has been satisfactory, with area sown under foodgrains and pulses so far being broadly comparable with that of last year.
Inflation
On a y-o-y basis, headline WPI inflation moderated to 9.1 per cent in November from 9.7 per cent in October, driven largely by decline in primary food articles inflation. Fuel group inflation went up marginally. Notably, non-food manufactured products inflation remains elevated, actually increasing to 7.9 per cent in November from 7.6 per cent in October, reflecting rising input costs. The new combined (rural and urban) consumer price index (base: 2010=100) rose further to 114.2 in October from 113.1 in September. Inflation in terms of other consumer price indices was in the range of 9.4 to 9.7 per cent in October 2011. Reassuringly, headline momentum indicators, such as the seasonally adjusted month-on-month and 3-month moving average rolling quarterly inflation rate, show continuing signs of moderation.
External sector
Merchandise exports growth decelerated sharply to an average of 13.6 per cent y-o-y in October-November from an average of 40.6 per cent in the first half of 2011-12. However, as imports moderated less than exports, the trade deficit widened, putting pressure on the current account. This, combined with rebalancing of global portfolios by foreign institutional investors and the tendency of exporters to defer repatriating their export earnings, has led to significant pressure on the rupee.
As on December 15, 2011, the rupee had depreciated by about 17 per cent against the US dollar over its level on August 5, 2011, the day on which the US debt downgrade happened. In the face of this, several measures were taken to attract inflows. Limits on investment in government and corporate debt instruments by foreign investors were increased. The ceilings on interest rates payable on non‐resident deposits were raised. The all‐in‐cost ceiling for external commercial borrowings was increased. Further, a series of administrative measures that discourage speculative behaviour were also initiated. The Reserve Bank is closely monitoring the developments in the external sector and it will respond to the evolving situation as appropriate.
Fiscal Situation
The central government’s key deficit indicators worsened during 2011-12 (April-October), primarily on account of a decline in revenue receipts and increase in expenditure, particularly subsidies. The fiscal deficit at 74.4 per cent of the budgeted estimate in the first seven months of 2011-12 was significantly higher than 42.6 per cent in the corresponding period last year (about 61.2 per cent if adjusted for more than budgeted spectrum proceeds received last year). The likely slippage in this year’s fiscal deficit has inflationary implications.
Money, Credit and Liquidity Conditions
The y-o-y money supply (M3) growth moderated from 17.2 per cent at the beginning of the financial year to 16.3 per cent on December 2, 2011, although still higher than the projected trajectory of 15.5 per cent for the year. Y-o-y non-food credit growth at 17.5 per cent on December 02, 2011, however, was below the indicative projection of 18 per cent.
Consistent with the stance of monetary policy, liquidity conditions have remained in deficit during this fiscal year. However, the deficit increased significantly beginning the second week of November 2011. The average borrowings under the daily LAF increased to around ` 89,000 crore during November-December (up to December 15, 2011) from around `49,000 crore during April-October 2011. The Reserve Bank conducted open market operations (OMOs) on three occasions in November-December 2011 for an amount aggregating about ` 24,000 crore to ease liquidity conditions.
There are currently no significant signs of stress in the money market. The overnight call money rate is stable around the policy repo rate and liquidity facilities such as marginal standing facility (MSF) remain unutilised. However, in view of the fact that borrowings from the LAF are persistently above the Reserve Bank's comfort zone, further OMOs will be conducted as and when seen to be appropriate.
Outlook
Global growth for 2011 and 2012 is now expected to be lower than earlier anticipated. Increased strains in financial markets on the back of growing concerns over euro area sovereign debt, limited monetary and fiscal policy manoeuvrability, high unemployment rates, weak housing markets and elevated oil prices are all contributory factors. These factors have also contributed to moderating growth in the EMEs. As a consequence of all-round slower growth, inflation has also started declining, both in advanced countries and EMEs.
On the domestic front, agricultural prospects look promising on the back of expected record kharif output and satisfactory progress on rabi sowing. However, industrial activity is moderating, driven by deceleration in investment, which is a matter of serious concern. Overall, the growth momentum in the economy is clearly moderating. Further, considering the global and domestic macroeconomic situation, the downside risks to the Reserve Bank’s growth projection, as set out in the SQR, have increased significantly.
Between the First Quarter Review (FQR) and the SQR, while non-oil commodity prices had declined significantly, the rupee too had depreciated sharply. Consequently, the headline inflation projection at 7 per cent for March 2012, as set out in the FQR, was retained in the SQR. With moderation in food inflation in November 2011 and expected moderation in aggregate demand and hence in non-food manufactured products inflation, the inflation projection for March 2012 is retained at 7 per cent.
The Reserve Bank will make a formal numerical assessment of its growth and inflation projections for 2011-12 in the third quarter review of January 2012.
Guidance
While inflation remains on its projected trajectory, downside risks to growth have clearly increased. The guidance given in the SQR was that, based on the projected inflation trajectory, further rate hikes might not be warranted. In view of the moderating growth momentum and higher downside risks to growth, this guidance is being reiterated. From this point on, monetary policy actions are likely to reverse the cycle, responding to the risks to growth.
Tuesday, December 6, 2011
A monetary juggle
The Reserve Bank of India (RBI) is clearly in no mood to loosen its current tight monetary policy stance. An indication of it came from the Deputy Governor, Dr Subir Gokarn, who, on Saturday, made a distinction between the central bank's ‘monetary stance' (a view on the cost of money) and its ‘liquidity stance' (a view on availability of money for genuine productive use). The RBI, it would seem, is prepared to be accommodative of the latter, given tightening domestic liquidity conditions. Leaving aside for the moment the broader question of whether the RBI can, if at all, isolate the effects of its injection of liquidity into the system from the impact on the cost of funds, its latest observation has a practical dimension. The RBI's forthcoming mid-quarter policy review on December 16 is unlikely to see any reduction in its repo (lending) rate or even the cash reserve ratio (CRR) requirements for banks. The central bank's daily purchases of securities in ‘repo' auctions, besides outright open market operation (OMO) purchases since mid-November, have been somewhat successful in addressing the liquidity problem. Yields on benchmark 10-year government paper have fallen from 8.9 to below 8.7 per cent in the last 10 days.
Dr Gokarn's observations would, nevertheless, come as a disappointment to the markets that were seeing the RBI's resort to OMOs, after nearly a year, as a precursor to an easing of its monetary policy. A one per cent cut in CRR — the proportion of banks' deposits compulsorily kept with the RBI — seemed a logical next step, as it would have freed up about Rs 80,000 crore of lendable funds even without involving a lowering of the central bank's own policy rates. A CRR reduction looked all the more likely in the light of the People's Bank of China's recent move in this direction. But all these hopes have now been dashed, with Dr Gokarn saying that any action on CRR would “straddle the divide between liquidity and monetary management, which, at the current juncture, we are intent on maintaining”. This was as opposed to OMOs that do not entail a “change in any policy stance, real or perceived”.
That raises the question of how effective this conservative monetary stance would be, going forward. If the past is any guide, the outlook doesn't seem promising. Since March 2010, the RBI has hiked its repo rate 13 times by a cumulative 350 basis points. Yet, the wholesale inflation rate has remained at over 9 per cent since December 2010 and above 8 per cent from January 2010. The interest rate increases have, however, hit investment — as confirmed by the Government's own GDP data for July-September — by eating into the profits of firms and disincentivising them from augmenting productive capacity. In the process, they may have undermined the RBI's own battle with inflation.
Private Sector Lender HDFC Bank launched Premium Credit cards Exclusively for Women
Private sector lender HDFC Bank launched premium credit cards exclusively for women on 30 November 2011. HDFC expects to add 4 million credit card customers in the next two years. The bank has about six million credit card customers. Of this, 1.5 million customers are women.
The card Solitaire introduced exclusively for women has a credit limit of up to 2 lakh. The bank also launched a special card, Solitaire Premium, with a credit limit of Rs 5 lakh for women. Solitaire will provide unmatched lifestyle offers, its wellness aspects will help women take holistic care of themselves in the midst of a busy career.
Solitaire is expected to fulfil a long-standing need of women who are pursuing a successful career, travelling the world and are at the forefront of the global consumption story.
The bank, which is the biggest issuer of credit cards in the country decided to come out with new credit card products including co-branded card every quarter.
The card Solitaire introduced exclusively for women has a credit limit of up to 2 lakh. The bank also launched a special card, Solitaire Premium, with a credit limit of Rs 5 lakh for women. Solitaire will provide unmatched lifestyle offers, its wellness aspects will help women take holistic care of themselves in the midst of a busy career.
Solitaire is expected to fulfil a long-standing need of women who are pursuing a successful career, travelling the world and are at the forefront of the global consumption story.
The bank, which is the biggest issuer of credit cards in the country decided to come out with new credit card products including co-branded card every quarter.
SEBI issued Regulations for Uniform Know Your Client KYC Registration Agency (KRA)
Securities and Exchange Board of India (SEBI) put forth the regulations for uniform Know Your Client KYC Registration Agency (KRA) on 2 December 2011. The move is expected to benefit investors as it would save them the trouble of repeating the KYC process while investing in various financial products.
The regulator allowed stock exchanges, depositories or any other Self Regulatory Organisation (SRO) to form wholly-owned subsidiaries that could be registered as a KRA. SEBI will consider applications to grant certificates of initial registration to a wholly owned subsidiary of a recognised stock exchange that have a nation-wide network of trading terminals, a wholly owned subsidiary of a depository or any other intermediary registered with the Board.
The certificates of initial registration of KRA granted under sub-regulation would be valid for a period of five years from the date of its issue to the applicant.
What is KRA?
A KRA will make life simpler for investors who have to go through the entire KYC procedures each time they want to register with a new broker or a fund house. The role of a KRA will involve completion of the KYC procedures for a client and make it available to all capital market intermediaries that avail of its services. If there is more than one KRA, inter-operability will have to be put in place to avoid duplicacy. The KRA will be required to maintain a net worth of at least R25 crore on a continuous basis.
SEBI mentioned that the KRA will be responsible for storing, safeguarding and retrieving the KYC documents and it will also have to retain the original KYC documents of the client, in both physical and electronic form.
KRAs have the responsibility to appoint a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulations, notifications, guidelines and instructions issued by the board or the central government and for redressal of client’s grievances. The compliance officer will immediately and independently report to the Sebi board any non-compliance observed by him.
The regulator allowed stock exchanges, depositories or any other Self Regulatory Organisation (SRO) to form wholly-owned subsidiaries that could be registered as a KRA. SEBI will consider applications to grant certificates of initial registration to a wholly owned subsidiary of a recognised stock exchange that have a nation-wide network of trading terminals, a wholly owned subsidiary of a depository or any other intermediary registered with the Board.
The certificates of initial registration of KRA granted under sub-regulation would be valid for a period of five years from the date of its issue to the applicant.
What is KRA?
A KRA will make life simpler for investors who have to go through the entire KYC procedures each time they want to register with a new broker or a fund house. The role of a KRA will involve completion of the KYC procedures for a client and make it available to all capital market intermediaries that avail of its services. If there is more than one KRA, inter-operability will have to be put in place to avoid duplicacy. The KRA will be required to maintain a net worth of at least R25 crore on a continuous basis.
SEBI mentioned that the KRA will be responsible for storing, safeguarding and retrieving the KYC documents and it will also have to retain the original KYC documents of the client, in both physical and electronic form.
KRAs have the responsibility to appoint a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulations, notifications, guidelines and instructions issued by the board or the central government and for redressal of client’s grievances. The compliance officer will immediately and independently report to the Sebi board any non-compliance observed by him.
RBI approved Creation of Separate Category of Non-banking Financial Companies for MFI Sector
The Reserve Bank of India (RBI) on 2 December 2011 approved the creation of a separate category of non-banking financial companies for the microfinance institution (MFI) sector. The central bank also specified that such institutions need to have a minimum net owned fund of Rs 5 crore.
An RBI-appointed panel headed by YH Malegam had earlier recommended setting up of a special category of NBFCs operating in the micro finance sector. The panel had suggested a minimum net worth of 15 crore for an entity to qualify as an NBFC-MFI.
The RBI highlighted that the NBFC-MFIs should have a minimum net worth of Rs 5 crore. However, for those operating in the North-Eastern states, the slab was kept at Rs 2 crore.
The RBI had in its second quarter policy review in October 2011 approved of setting up of this category of specialised financial companies which would cater to low-income groups.
An RBI-appointed panel headed by YH Malegam had earlier recommended setting up of a special category of NBFCs operating in the micro finance sector. The panel had suggested a minimum net worth of 15 crore for an entity to qualify as an NBFC-MFI.
The RBI highlighted that the NBFC-MFIs should have a minimum net worth of Rs 5 crore. However, for those operating in the North-Eastern states, the slab was kept at Rs 2 crore.
The RBI had in its second quarter policy review in October 2011 approved of setting up of this category of specialised financial companies which would cater to low-income groups.
IRDA launched Two Online Initiatives to Safeguard the Interest of Insurance-seekers
The Insurance Regulatory and Development Authority (IRDA) announced two online initiatives to safeguard the interest of insurance-seekers. The first of the two online initiatives is the extensive guidelines pertainining to web aggregators and the second one relates to the launch of a mobile application to compare unitlinked insurance policies (ULIPS) from various companies and their premium rates.
Guidelines to web aggregators
Web aggregators are sites like policybazaar.com, i-save.com, medimanage.com and click2insure.in that provide information on insurance products from various companies. The information so collated can help insurance-seekers compare premium rates for life, health, travel and motor insurance. Most portals just generate leads and not all offer the option to purchase a product online.
However, some do facilitate an online buying process to the extent possible, usually by directing the insurance-seekers to the companies’ website. However, aggregators often sell visitors’ personal information to several insurers, resulting in customers being bombarded with sales calls from the companies or their agents. IRDA therefore directed the aggregators not to pass visitor’s information on to companies on the site’s home page.
To ensure that aggregators do no indulge in promoting products, the insurance regulator has decreed that they cannot display ratings, rankings, endorsements or bestsellers of insurance products on their websites. Similarly, they have been barred from commenting on insurers or their products.
In addition, aggregators will from here on be required to highlight links to the product comparison charts and tables for each category of products covered by them. Items to be displayed include premiums quoted by each insurer as per age and other personal details, policy and premium term, sum assured, default underwriting requirements such as medical examination, diagnostics, etc, and key features of the product chosen. The diktat also puts the onus of safeguarding and securing the entire process on the aggregators.
Launch of the mobile application
The launch of the mobile application, is intended to help insurance-seekers compare ULIPs launched after 1 September 2010. The tool, which works on Android, iPhone, Nokia and Blackberry platforms, has been termed a mobile application and can be accessed even via a personal computer.
Users can search products for comparison through three options – By company, Policy type and Keywords. Up to three products can be selected at a time for comparison, with the criteria listed being benefits offered, premium-paying term, tenure, charges and so on.
Guidelines to web aggregators
Web aggregators are sites like policybazaar.com, i-save.com, medimanage.com and click2insure.in that provide information on insurance products from various companies. The information so collated can help insurance-seekers compare premium rates for life, health, travel and motor insurance. Most portals just generate leads and not all offer the option to purchase a product online.
However, some do facilitate an online buying process to the extent possible, usually by directing the insurance-seekers to the companies’ website. However, aggregators often sell visitors’ personal information to several insurers, resulting in customers being bombarded with sales calls from the companies or their agents. IRDA therefore directed the aggregators not to pass visitor’s information on to companies on the site’s home page.
To ensure that aggregators do no indulge in promoting products, the insurance regulator has decreed that they cannot display ratings, rankings, endorsements or bestsellers of insurance products on their websites. Similarly, they have been barred from commenting on insurers or their products.
In addition, aggregators will from here on be required to highlight links to the product comparison charts and tables for each category of products covered by them. Items to be displayed include premiums quoted by each insurer as per age and other personal details, policy and premium term, sum assured, default underwriting requirements such as medical examination, diagnostics, etc, and key features of the product chosen. The diktat also puts the onus of safeguarding and securing the entire process on the aggregators.
Launch of the mobile application
The launch of the mobile application, is intended to help insurance-seekers compare ULIPs launched after 1 September 2010. The tool, which works on Android, iPhone, Nokia and Blackberry platforms, has been termed a mobile application and can be accessed even via a personal computer.
Users can search products for comparison through three options – By company, Policy type and Keywords. Up to three products can be selected at a time for comparison, with the criteria listed being benefits offered, premium-paying term, tenure, charges and so on.
Monday, November 28, 2011
Centre for Monitoring Indian Economy (CMIE) scaled down India’s GDP forecast to 7.8% for 2011-12
Leading research firm, Centre for Monitoring Indian Economy (CMIE) in November 2011 scaled down India’s GDP forecast to 7.8% for 2011-12 from the earlier forecast of 7.9%.
Downward revision in the forecast for the mining index from 4.4% to 3.2%, manufacturing sector from 7.5% to 6.9% and electricity from 9 to 8.7% led to a further decline in GDP forecast for this fiscal. the Reserve Bank had also reduced its forecast for real GDP growth sharply from 8 to 7.6%. The rating agency Crisil had revised its growth estimate from 7.7-8% to 7.6%.
The index of industrial production growth slowed down to 2-4% and the wholesale price index-based inflation growth remained riveted to 9.5% despite sustained efforts by the RBI to rein in inflation by raising interest rates.
The lack of availability of coal in 2011-12 pulled down the mining index and led to delay of thermal projects. As a result the electricity generation forecast was revised.
Analysis
The research firm warned that the economy is headed towards stagflation due to persistent fall in the IIP (Index of Industrial Production) and the high inflation.
The growth in sales of companies, which grew by a handsome 25% in the first half of 2011 was however robust.
Sales of manufacturing companies adjusted for inflation indicated that the IIP under-estimates growth in the manufacturing sector by about 33%. CMIE also noted thatr in the first half, the real sales of manufacturing companies grew by about 9%, indicating robust demand for industrial goods.
Though profit margins of the corporates later declined because of an increase in raw material cost and interest rates, it is still robust and way above the low margins seen in the years 1999 to 2002. The net profit margin of the listed non-finance companies fell to 6.4% in June 2011, but between March 1999 and December 2002 they never touched 6%.
Growth in corporate sales indicates that consumption demand continues to grow well. Kharif sowing this year was higher than last season.
Agricultural production was estimated to grow by 2.9% after a robust 6.6% growth in 2010. Estimation of growth in agricultural production indicated robust domestic consumption demand in in 2011-12.
Downward revision in the forecast for the mining index from 4.4% to 3.2%, manufacturing sector from 7.5% to 6.9% and electricity from 9 to 8.7% led to a further decline in GDP forecast for this fiscal. the Reserve Bank had also reduced its forecast for real GDP growth sharply from 8 to 7.6%. The rating agency Crisil had revised its growth estimate from 7.7-8% to 7.6%.
The index of industrial production growth slowed down to 2-4% and the wholesale price index-based inflation growth remained riveted to 9.5% despite sustained efforts by the RBI to rein in inflation by raising interest rates.
The lack of availability of coal in 2011-12 pulled down the mining index and led to delay of thermal projects. As a result the electricity generation forecast was revised.
Analysis
The research firm warned that the economy is headed towards stagflation due to persistent fall in the IIP (Index of Industrial Production) and the high inflation.
The growth in sales of companies, which grew by a handsome 25% in the first half of 2011 was however robust.
Sales of manufacturing companies adjusted for inflation indicated that the IIP under-estimates growth in the manufacturing sector by about 33%. CMIE also noted thatr in the first half, the real sales of manufacturing companies grew by about 9%, indicating robust demand for industrial goods.
Though profit margins of the corporates later declined because of an increase in raw material cost and interest rates, it is still robust and way above the low margins seen in the years 1999 to 2002. The net profit margin of the listed non-finance companies fell to 6.4% in June 2011, but between March 1999 and December 2002 they never touched 6%.
Growth in corporate sales indicates that consumption demand continues to grow well. Kharif sowing this year was higher than last season.
Agricultural production was estimated to grow by 2.9% after a robust 6.6% growth in 2010. Estimation of growth in agricultural production indicated robust domestic consumption demand in in 2011-12.
CHOGM 2011
The 2011 Commonwealth Heads of Government Meeting (CHOGM) was held at Perth, Australia. India was represented by Vice-President Hamid Ansari.
world population to reach from 6 to 7-billion mark
It has taken just 12 years for the world population to reach from 6 to 7-billion mark. World population did not reach 1 billion mark until 1804. It took 123 years to reach the 2-billion mark in 1927, 33 years to reach 3 billion in 1960, 14 years to reach 4 billion in 1974, 13 years to reach 5 billion in 1987 and 12 years to reach 6 billion in 1999. World population is projected to nearly stabilise at just above 10 billion after 2200. China (19%) and India (17%) together make up 36% of the world population.
India Human Development Report, 2011
On October 21, 2011, the Planning Commission released the second India Human Development Report (HDR) 2011, which records controversial claims and a few surprises on income, education, health, literacy and sanitation. The last India-specific report had come out in 2000.
The report claims that poverty, unemployment and child labour are declining, inter-State disparities are getting narrower and that the improved Human Development Index has been driven by strides made in education. It does concede, however, that the absolute number of the poor (27 per cent according to the report) stood at 302 million, compared to 320 million in 1973. Sixty per cent of the poor are still concentrated in Bihar, it holds.
Prepared by the Institute of Applied Manpower Research of the Commission, the report claims that between 2000 and 2007, the Human Development Index rose by 21 per cent, higher than 17 per cent recorded by China during the same period and the 18 per cent estimated by the Global Human Development Report, 2010.
The top five slots, states the report, were occupied by Kerala, Delhi, Himachal Pradesh, Goa and Punjab (same as in the last India HDR 2000). Haryana slipped two places from 7 to 9 while Jammu and Kashmir and Uttarakhand improved a notch to finish 9th and 14th, respectively.
For the six lowest HDI states—Bihar, Andhra Pradesh, Chhattisgarh, Madhya Pradesh, Orissa and Assam—HDI improvement has been considerably above the national average.
Education (mainly primary level enrolment of 96 pc) is the big gain for India. There has been an improvement of 28.5 per cent in Education Index between 1999 and 2008. Health Index rose by just 13 pc over the period of study.
Gujarat fares poorly on hunger index, ranked 13th out of 17. The eight poor States (Bihar, UP, MP, Orissa, Rajasthan, Jharkhand, Uttrakhand, Chhattisgarh) which are home to 48 percent of all SCs, 52 pc of all STs and 44 pc of all Muslims, have posted HDI improvements across groups and States doing well are doing so across board.
Muslims posted the sharpest decline in total fertility rate among all social groups and the highest increase in contraception prevalence rate. Muslims fare better than SCs and STs on other human development indicators. A higher percentage of the minority group has access to toilets too.
The report claims that poverty, unemployment and child labour are declining, inter-State disparities are getting narrower and that the improved Human Development Index has been driven by strides made in education. It does concede, however, that the absolute number of the poor (27 per cent according to the report) stood at 302 million, compared to 320 million in 1973. Sixty per cent of the poor are still concentrated in Bihar, it holds.
Prepared by the Institute of Applied Manpower Research of the Commission, the report claims that between 2000 and 2007, the Human Development Index rose by 21 per cent, higher than 17 per cent recorded by China during the same period and the 18 per cent estimated by the Global Human Development Report, 2010.
The top five slots, states the report, were occupied by Kerala, Delhi, Himachal Pradesh, Goa and Punjab (same as in the last India HDR 2000). Haryana slipped two places from 7 to 9 while Jammu and Kashmir and Uttarakhand improved a notch to finish 9th and 14th, respectively.
For the six lowest HDI states—Bihar, Andhra Pradesh, Chhattisgarh, Madhya Pradesh, Orissa and Assam—HDI improvement has been considerably above the national average.
Education (mainly primary level enrolment of 96 pc) is the big gain for India. There has been an improvement of 28.5 per cent in Education Index between 1999 and 2008. Health Index rose by just 13 pc over the period of study.
Gujarat fares poorly on hunger index, ranked 13th out of 17. The eight poor States (Bihar, UP, MP, Orissa, Rajasthan, Jharkhand, Uttrakhand, Chhattisgarh) which are home to 48 percent of all SCs, 52 pc of all STs and 44 pc of all Muslims, have posted HDI improvements across groups and States doing well are doing so across board.
Muslims posted the sharpest decline in total fertility rate among all social groups and the highest increase in contraception prevalence rate. Muslims fare better than SCs and STs on other human development indicators. A higher percentage of the minority group has access to toilets too.
National Manufacturing Policy cleared
On October 25, 2011, the UPA government cleared its ambitious national manufacturing policy (NMP) that seeks to create a massive 100 million additional jobs in the manufacturing sector by 2025, as well as create large sized industrial zones with easier compliance and labour laws.
The new policy seeks to boost the stagnating manufacturing sector to contribute at least 25 per cent of the national GDP by 2025.
The share of manufacturing in India’s GDP has stagnated at 15 to 16 per cent since 1980 while the share in comparable economies in Asia, like China, South Korea, Indonesia and Malaysia, is much higher at 25 to 34 per cent. Also, the manufacturing sector has a multiplier effect in creation of two to three additional jobs in the allied sectors.
The policy also seeks to empower rural youth by imparting necessary skill sets to make them employable. Sustainable development and technological value addition in manufacturing have received special focus.
The policy will be a partnership between the Central and State governments. The former will create the policy framework, provide incentives for infrastructure development on a public private partnership basis through appropriate financing instruments, while State governments will identify the suitable land and be equity holders in the national investment and manufacturing zones (NIMZs).
A defining feature of the policy has been the endeavour to improve the business regulatory environment by providing single window clearances. In order to protect the interests of labour in the eventuality of a closure of a unit, a suitable mechanism has been devised using innovative job loss policy and sinking fund to insure workers against such loss.
Green manufacturing has received a special attention. Also, small and medium enterprises will be given access to the patent pool, up to a maximum of Rs 20 lakh, for acquiring patented technologies.
The new policy seeks to boost the stagnating manufacturing sector to contribute at least 25 per cent of the national GDP by 2025.
The share of manufacturing in India’s GDP has stagnated at 15 to 16 per cent since 1980 while the share in comparable economies in Asia, like China, South Korea, Indonesia and Malaysia, is much higher at 25 to 34 per cent. Also, the manufacturing sector has a multiplier effect in creation of two to three additional jobs in the allied sectors.
The policy also seeks to empower rural youth by imparting necessary skill sets to make them employable. Sustainable development and technological value addition in manufacturing have received special focus.
The policy will be a partnership between the Central and State governments. The former will create the policy framework, provide incentives for infrastructure development on a public private partnership basis through appropriate financing instruments, while State governments will identify the suitable land and be equity holders in the national investment and manufacturing zones (NIMZs).
A defining feature of the policy has been the endeavour to improve the business regulatory environment by providing single window clearances. In order to protect the interests of labour in the eventuality of a closure of a unit, a suitable mechanism has been devised using innovative job loss policy and sinking fund to insure workers against such loss.
Green manufacturing has received a special attention. Also, small and medium enterprises will be given access to the patent pool, up to a maximum of Rs 20 lakh, for acquiring patented technologies.
Saving Bank Interest rate decontrol
Reserve Bank of India (RBI) has freed interest rates on savings deposits. As per a rough estimate, about Rs 13 lakh crore of funds are parked in savings bank. The interest on these accounts had been fixed at 4% even as inflation was two-and-a-half times that level. Now savings rate deregulation gives people an opportunity to shift to banks that come up with better deals.
Although savings deposits can be withdrawn without notice and interest rates are calculated on daily basis, a part of these deposits are perpetual, partly because amounts withdrawn are replenished by monthly earnings and partly because banks mandate a minimum balance ranging between Rs 5,000 to Rs 10,000 in savings accounts.
Banks that are short of retail deposits, like Yes Bank and IDBI Bank, are in a better position to offer higher rates as their overall cost will not rise to that extent. Larger banks, such as SBI and HDFC Bank, may resist initially, preventing their overall cost of funds from rising. But if their customers respond to higher rates offered by rivals, they may be forced to follow suit. Given that the deregulation has come at a time when the interest rate cycle is close to its peak and banks are paying 8.5% for overnight money, it is likely that return on savings deposit will rise. But if there is a slowdown in the economy and demand for credit slips, banks may even lower deposit rates from current levels.
An increase in Saving Bank account rates will put pressure on bank margins. Even if rates go up by only one percentage point, the cost of funds will go up by 0.25% for a bank that has 25% of its resources coming from savings deposits.
Although savings deposits can be withdrawn without notice and interest rates are calculated on daily basis, a part of these deposits are perpetual, partly because amounts withdrawn are replenished by monthly earnings and partly because banks mandate a minimum balance ranging between Rs 5,000 to Rs 10,000 in savings accounts.
Banks that are short of retail deposits, like Yes Bank and IDBI Bank, are in a better position to offer higher rates as their overall cost will not rise to that extent. Larger banks, such as SBI and HDFC Bank, may resist initially, preventing their overall cost of funds from rising. But if their customers respond to higher rates offered by rivals, they may be forced to follow suit. Given that the deregulation has come at a time when the interest rate cycle is close to its peak and banks are paying 8.5% for overnight money, it is likely that return on savings deposit will rise. But if there is a slowdown in the economy and demand for credit slips, banks may even lower deposit rates from current levels.
An increase in Saving Bank account rates will put pressure on bank margins. Even if rates go up by only one percentage point, the cost of funds will go up by 0.25% for a bank that has 25% of its resources coming from savings deposits.
Monday, November 21, 2011
SOCIO ECONOMIC DEVELOPMENTS MCQs
1. A major Financial Newspaper while writing about the present status of economy in India wrote “the outlook in the agricultural sector gives room for optimism”. What does it really mean ?
[Pick up most appropriate statement(s)]
1. Agricultural Sector which was not playing any significant role in Indian economy is now growing very fast and significantly.
2. Agricultural sector is not going to play any major role in economy as its progress is still very slow.
3. Govt. will not require to provide any boost up package to agricultural sector as it is likely to be satisfactory this year.
(A) Only 1
(B) Only 2
(C) Only 3
(D) Either 1 or 3
(E) None of these
2. While addressing a conference of Bankers and top Industrialists, the Prime Minister made a statement that “Domestic Credit Flow for Productive Needs had to be maintained at a reasonable Cost”. What does it really mean ?
(Pick up the most appropriate statements).
1. Banks should further raise their deposit base and provide very low cost credit to Industry which is badly in need of the same.
2. Banks should neither reduce their lending rates further nor increase the rates on deposits as this may create a critical imbalance in the financial/money market of the country.
3. Banks should see that ample credit is provided to the industries at an affordable cost without diluting the credit norms.
(A) Only 1
(B) Only 2
(C) Only 3
(D) Both 1 and 2 only
(E) None of these
3. Which of the following taxes is not levied by the Union Govt. ?
(A) Customs
(B) Corporate Tax
(C) Land Revenue
(D) Income Tax
(E) Surcharge on Income Tax
4. Service Tax was introduced in India for the first time in the year ……….
(A) 1990-91
(B) 1991-92
(C) 1994-95
(D) 1980-81
(E) 2000-01
5. The Govt. of India allowed the Income Tax Department to set up its centralized IT processing centre in ……….
(A) Bangalore
(B) Chennai
(C) Mumbai
(D) Kolkata
(E) Hyderabad
6. As per news reports MTNL launched it “3G Services” and became the first telecom operator to launch the same in India. What is the full form of ‘G’ in 3G ?
(A) Global
(B) Generation
(C) Growth
(D) Gravity
(E) None of these
7. We very frequently read about the activities of the Foreign Exchange Market in newspapers/magazines. Which of the following is/are the major functions of the same ?
1. Transfer of purchasing power from domestic to foreign market.
2. Providing credit for financing foreign trade.
3. Power to purchase gold from foreign countries as most of the nations still work on Gold Standards.
(A) Only 1
(B) Only 2
(C) Only 3
(D) Both 1 and 2 only
(E) Both 2 and 3 only
8. Which of the following is/are the components of the Fiscal Deficit ?
1. Budgetary Deficit
2. Market Borrowings
3. Expenditure made from Pradhan Mantri Rahat Kosh
(A) Only 1
(B) Only 2
(C) Only 3
(D) All 1, 2 and 3
(E) None of these
9. Which of the following is not a Welfare scheme launched by the Govt. of India ?
(A) Village Grain Bank Scheme
(B) Sampoorna Gramin Rozgar Yojana
(C) Annapurna Scheme
(D) Midday Meal Scheme
(E) Bharat Nirman Yojana
10. Which of the following are the instruments of Credit Control in the hands of the RBI ?
1. Lowering or raising the discount and interest rates.
2. Raising the minimum support price of the major agro products.
3. Lowering or raising the minimum cash reserves maintained by the commercial banks.
(A) Only 1
(B) Only 2
(C) Only 3
(D) Both 1 and 3 only
(E) Both 2 and 3 only
11. Which of the following programmes was launched to further improve the facilities of irrigation in rural India ?
(A) National Social Assistance programme
(B) Construction of Kiosks for poor
(C) Sampoorna Grameen Rozgar Yojana
(D) Annapurna Scheme
(E) National Watershed Development Programme
12. Which of the following bodies is responsible for the distribution of revenues between the Centre and the States?
a) Planning Commission
b) Finance
c) Inter-State Council
d) National Development Council
13. How far does the Exclusive Economic Zone of a country extend from its coast?
a) 120 km
b) 220 km.
c) 320 km.
d) 420 km.
14. Which of the following agencies recently laid down guidelines for foreign companies who wish to raise money from the Indian Capital Markets?
(1) RBI
(2) IRDA
(3) Registrar of Companies
(4) SEBI
(5) None of these
15. More and more banks in India these days are setting up their ATMs and discourage people to visit their branches for transaction.
Which of the following is/are the limitation(s) of the ATMs which force people to go to branch for transactions?
(A) Lack of human interface
(B) Communication gap
(C) Limited cash dispensing ability
(1) Only (A) (2) Only (B)
(3) Only (C) (4) (A) and (B)
(5) (A), (B) and (C)
16. Which of the following is NOT one of the core areas identified under the Bharat Nirman Programme?
(1) Irrigation
(2) Rural electrification
(3) Drinking water supply
(4) Computer Education in schools
(5) None of these
17. The Basel II Accord for Banking Industry is based on three pillars. Which of the following is/are NOT included in the same?
(A) Minimum Capital Requirement
(B) Supervisory Review
(C) Market Discipline
(D) Credit Risk
(1) Only (A)
(2) Both (A) and (C)
(3) Only (D)
(4) (A), (B) and (C)
(5) None of these
18. ‘Sheqel’ is the currency of:
(1) Israel
(2) Kenya
(3) Iraq
(4) Iran
(5) None of these
19. Which of the following countries has largest stock of foreign exchange reserves in the world?
(1) USA
(2) China
(3) Japan
(4) India
(5) None of these
20. As per the reports published in the newspapers which of the following countries is first in production of Gold Jewellery?
(1) China
(2) India
(3) Turkey
(4) Italy
(5) None of these
21. Golden revolution refers to the development of—
(1) Oilseeds
(2) Pulses
(3) Horticulture
(4) Cereals
(5) Fodder
22. Commission for Agricultural Costs and Prices (CACP) recommends—
(1) Comfort Price
(2) State Advised Price
(3) Minimum Support Price
(4) Minimum Export Price
(5) Statutory Minimum Price
23. National Agricultural Cooperative Marketing Federation is known as—
(1) NIAM
(2) NAFED
(3) MARKFED
(4) NACMF
(5) NACOM
24. Which insect is known as farmers' enemy No.1?
(1) Bollworm
(2) Desert locust
(3) Aphids
(4) Stem borer
(5) Fruit fly
25. Which of the following statements are true about the Foreign Trade Policy 2009-14?
A. The new Foreign Trade Policy, coming in the backdrop of a 30 per cent contraction in exports in the last 10 months, seeks to identify 26 new markets for trade that would be eligible for sops. These include 16 in Latin America and 10 in Asia and Oceania.
B. At present, India's $ 168-b exports are highly concentrated in Europe (36 per cent), the US (18 per cent and Japan (16 per cent), and these are the worst hit by the biggest financial crisis since the 1930s.
C The new policy has sought to give special focus to help the gems and jewellery sector, one of the worst hit, by allowing duty drawback on exports. The handloom and handicrafts sector would be helped under the Market Development Scheme, while the government also announced the continuation of the DEPB scheme till December 2010.
D. These export-oriented units would be encouraged to look for new markets and they could be given incentives and tax sops to create a new basket of exports. In the short-term, the relief measures Include providing dollar credit to exporters that will be overseen by a high-level committee, comprising
Finance Secretary, Commerce Secretary, and the Indian Banks Association, to insulate the small-and medium-scale exporters
l) OnlyA,B&C
2)OnlyB,C&D
3)OnlyC&D
4) Only A, C & D
5) All the above
26. Which of the following is decided by commercial banks? .
1) Bank rate
2)CRR
3) SLR
4)BPLR
5) None of these
27. The Reserve Bank of India, which made third-party ATM transactions free from April, 2010 said not more than Rs 10,000 can be withdrawn each time they are used and limited the number of such transactions to _ _ a month.
1)2
2)5
3)10
4)15
5) None of these .
28. Which of the following is not a Navaratna (PSU) company?
a) Air India
b) BHEL
c) GAIL
d) IOC
e) Power Finance Corporation Ltd.
29. What is the expansion of BEE?
a) Bureau of Energy Efficiency
b) Bureau of Efficient Engineers
c) Bureau of Employess Efficiency
d) Bureau of Employers’ Efficiency
e) None of these.
30. A per the news published in the major financial newspapers/journals/magazines, India’s exports and imports both have come down in the last few years. Which of the following is/are the probable reason(s) for the same?
A) As per the new policy of the WTO, India can import only those commodities, which are not grown/produced in the country in adequate quantity/volume to meet its total demand. Commodities, which India needs to import, are very few. Hence import has gone down.
B) Since all the countries are required to pay for their imports partly by exporting some goods in exchange to other countries, exports from India have gone down.
C) This slowdown in imports/exports is only because there is a global economic crisis. This is why India’s exports and imports both have come down.
a) Only A
b) Only C
c) Only B
d) All A, B & C
e) None of these
31. The Economic and Social Commission for Asia and Pacific in one of its recently published reports has said some positive things about India’s economic resilience. What are these points? (The report was published in various newspapers/journals).
A) India has played the role of a sheet anchor behind the economic stability of the South Asian region.
B) India is helping other economies or the region to fight the global financial crisis better than some other more open economies of Asia Pacific Region.
C) India is likely to become the second largest economy of the world in the next five years, as it has been the most favourite destination for Foreign Direct Investment for almost 90% of the countries of the World.
a) Only A
b) Only B
c) Both A & B
d) All A, B & C
e) None of these
32. Which of the following schemes was launched to give a boost and incentives to increase public investment to achieve 4% growth in the area of agriculture and allied sectors during the 11th plan period?
a) National Technological Mission
b) National Bamboo Mission
c) Rashtriya Krishi Bima Yojana
d) National Rural Employment Guarantee Scheme
e) Rashtriya Krishi Vikas Yojana
33. Which of the following statements is/are correct about the Sampoorna Grameen Rozgar Yojana?
A) The scheme was launched in 2001 by merging some of the schemes running that time.
B) In this scheme preference is given to Below Poverty Line families for the jobs.
C) The wages under the scheme are paid partly in cash and partly by giving foodgrains.
a) Only A
b) Only B
c) Only C
d) All A, B & C
e) None of these
34. Which of the following Acts help(s) Union Govt control its fiscal deficit?
a) Finance Act
b) Fiscal Responsibility and Budget Management Act
c) Banking Companies Act
d) Both (1) and (2)
e) None of these
35. Which of the following housing schemes was/were launched by HUDCO to give special emphasis on the development of rural areas of the country?
A) Indira Awas Yojana
B) Adarsh Gram/Adarsh Basti Yojana
C) Pradhan Mantri Gram Sadak Yojana
a) Only A
b) Only B
c) Only C
d) All A, B & C
e) None of these
36. Many a time we read in financial newspapers about Public Debt. Which of the following is / are the components of Public Debt?
A) Market loans
B) External loans
C) Outstanding against saving schemes/provident funds.
a) Only A
b) Only B
c) Both A & B
d) Only C
e) All A, B & C
37. As agriculture is the mainstay of the Indian Economy, what is the contribution of agriculture and allied sectors in the total Gross Domestic Product of India? About.
a) 10%
b) 15%
c) 22%
d) 36%
e) 48%
38. As we know, the National Rural Employment Guarantee Act was implemented by Govt. of India. Now Govt has made certain changes in the Act so that it can boost up its policy of Financial Inclusion of the beneficiaries. Which of the following changes is/are done for this purpose?
A) NREGA functionaries are being trained to conduct social audits and public disclosure of the works undertaken by State Govts and Panchayats.
B) Workers who are engaged for various jobs under the scheme are paid their wages through post office and/or bank accounts.
C) Wages paid to the beneficiaries are revised and it is strengthening their livelihood resources.
a) Only A
b) Only B
c) Only C
d) All A, B & C
e) None of these
39. Which of the following is/are the major roles of the Union Ministry of Environment and Forests?
A) Prevention and control of pollution B) Ensuring the welfare of animals
C) Afforestation and regeneration of degraded area
a) Only A
b) Only B
c) Only C
d) All A, B&C
e) None of these
40. Which of the following schemes is NOT a part of National Social Assistance programme?
A) National Old Age Pension Scheme B) National Family Benefit Scheme
C) Services for the Poor programme
a) Only A b) Only B
c) Both A & B
d) Both B & C
e) None of these
41. How many banks were nationalized in 1969?
(1) 16
(2) 14
(3) 15
(4) 20
(5) None of these.
42. The Reserve Bank of India was established in :
(1) 1820
(2) 1920
(3) 1935
(4) 1940
(5) None of these.
43. The first Indian Bank was :
(1) Traders Bank
(2) Imperial Bank
(3) Presidency Bank of Calcutta
(4) Indian Bank
(5) None of these.
44. The rupee coin was first minted in India in :
(1) 1542
(2) 1601
(3) 1809
(4) 1677
(5) None of these.
45. The Export-Import (EXIM) Bank was set up in :
(1) 1980
(2) 1982
(3) 1981
(4) 1989
(5) None of these.
46. Planning Commission is :
(1) Advisory body
(2) Executive body
(3) Government body
(4) Autonomous body
(5) None of these.
47. The Community Development Programme was launched in :
(1) 1950
(2) 1952
(3) 1956
(4) 1960
(5) None of these.
48. The highest body which approves the Five-Year Plan is the :
(1) Finance Ministry
(2) Lok Sabha
(3) Rajya Sabha
(4) National Development Council
(5) None of these.
49. Which of the following commodities earn maximum foreign exchange for India?
(1) Jute
(2) Iron and Steel
(3) Tea
(4) Sugar
(5) None of these
50. The one rupee note bears the signature of :
(1) Secretary, Ministry of Finance
(2) Governor, Reserve Bank of India
(3) Finance Minister
(4) Prime Minister
(5) None of these.
ANSWERS:
1. (C) 2. (C) 3. (C) 4. (C) 5. (A) 6. (B) 7. (D) 8. (A) 9. (E) 10. (C)
11. (E) 12. (B) 13. (D) 14. (1) 15. (3) 16. (4) 17. (4) 18. (1) 19. (2) 20. (2)
21. (3) 22. (3) 23. (2) 24. (3) 25. (5) 26. (4) 27. (2) 28. (A) 29. (C) 30. (B)
31. (A) 32. (E) 33. (D) 34. (B) 35. (A) 36. (C) 37. (B) 38. (D) 39. (D) 40. (E)
41. (2) 42. (3) 43. (3) 44. (1) 45. (2) 46. (1) 47. (2) 48. (4) 49. (3) 50. (1)
[Pick up most appropriate statement(s)]
1. Agricultural Sector which was not playing any significant role in Indian economy is now growing very fast and significantly.
2. Agricultural sector is not going to play any major role in economy as its progress is still very slow.
3. Govt. will not require to provide any boost up package to agricultural sector as it is likely to be satisfactory this year.
(A) Only 1
(B) Only 2
(C) Only 3
(D) Either 1 or 3
(E) None of these
2. While addressing a conference of Bankers and top Industrialists, the Prime Minister made a statement that “Domestic Credit Flow for Productive Needs had to be maintained at a reasonable Cost”. What does it really mean ?
(Pick up the most appropriate statements).
1. Banks should further raise their deposit base and provide very low cost credit to Industry which is badly in need of the same.
2. Banks should neither reduce their lending rates further nor increase the rates on deposits as this may create a critical imbalance in the financial/money market of the country.
3. Banks should see that ample credit is provided to the industries at an affordable cost without diluting the credit norms.
(A) Only 1
(B) Only 2
(C) Only 3
(D) Both 1 and 2 only
(E) None of these
3. Which of the following taxes is not levied by the Union Govt. ?
(A) Customs
(B) Corporate Tax
(C) Land Revenue
(D) Income Tax
(E) Surcharge on Income Tax
4. Service Tax was introduced in India for the first time in the year ……….
(A) 1990-91
(B) 1991-92
(C) 1994-95
(D) 1980-81
(E) 2000-01
5. The Govt. of India allowed the Income Tax Department to set up its centralized IT processing centre in ……….
(A) Bangalore
(B) Chennai
(C) Mumbai
(D) Kolkata
(E) Hyderabad
6. As per news reports MTNL launched it “3G Services” and became the first telecom operator to launch the same in India. What is the full form of ‘G’ in 3G ?
(A) Global
(B) Generation
(C) Growth
(D) Gravity
(E) None of these
7. We very frequently read about the activities of the Foreign Exchange Market in newspapers/magazines. Which of the following is/are the major functions of the same ?
1. Transfer of purchasing power from domestic to foreign market.
2. Providing credit for financing foreign trade.
3. Power to purchase gold from foreign countries as most of the nations still work on Gold Standards.
(A) Only 1
(B) Only 2
(C) Only 3
(D) Both 1 and 2 only
(E) Both 2 and 3 only
8. Which of the following is/are the components of the Fiscal Deficit ?
1. Budgetary Deficit
2. Market Borrowings
3. Expenditure made from Pradhan Mantri Rahat Kosh
(A) Only 1
(B) Only 2
(C) Only 3
(D) All 1, 2 and 3
(E) None of these
9. Which of the following is not a Welfare scheme launched by the Govt. of India ?
(A) Village Grain Bank Scheme
(B) Sampoorna Gramin Rozgar Yojana
(C) Annapurna Scheme
(D) Midday Meal Scheme
(E) Bharat Nirman Yojana
10. Which of the following are the instruments of Credit Control in the hands of the RBI ?
1. Lowering or raising the discount and interest rates.
2. Raising the minimum support price of the major agro products.
3. Lowering or raising the minimum cash reserves maintained by the commercial banks.
(A) Only 1
(B) Only 2
(C) Only 3
(D) Both 1 and 3 only
(E) Both 2 and 3 only
11. Which of the following programmes was launched to further improve the facilities of irrigation in rural India ?
(A) National Social Assistance programme
(B) Construction of Kiosks for poor
(C) Sampoorna Grameen Rozgar Yojana
(D) Annapurna Scheme
(E) National Watershed Development Programme
12. Which of the following bodies is responsible for the distribution of revenues between the Centre and the States?
a) Planning Commission
b) Finance
c) Inter-State Council
d) National Development Council
13. How far does the Exclusive Economic Zone of a country extend from its coast?
a) 120 km
b) 220 km.
c) 320 km.
d) 420 km.
14. Which of the following agencies recently laid down guidelines for foreign companies who wish to raise money from the Indian Capital Markets?
(1) RBI
(2) IRDA
(3) Registrar of Companies
(4) SEBI
(5) None of these
15. More and more banks in India these days are setting up their ATMs and discourage people to visit their branches for transaction.
Which of the following is/are the limitation(s) of the ATMs which force people to go to branch for transactions?
(A) Lack of human interface
(B) Communication gap
(C) Limited cash dispensing ability
(1) Only (A) (2) Only (B)
(3) Only (C) (4) (A) and (B)
(5) (A), (B) and (C)
16. Which of the following is NOT one of the core areas identified under the Bharat Nirman Programme?
(1) Irrigation
(2) Rural electrification
(3) Drinking water supply
(4) Computer Education in schools
(5) None of these
17. The Basel II Accord for Banking Industry is based on three pillars. Which of the following is/are NOT included in the same?
(A) Minimum Capital Requirement
(B) Supervisory Review
(C) Market Discipline
(D) Credit Risk
(1) Only (A)
(2) Both (A) and (C)
(3) Only (D)
(4) (A), (B) and (C)
(5) None of these
18. ‘Sheqel’ is the currency of:
(1) Israel
(2) Kenya
(3) Iraq
(4) Iran
(5) None of these
19. Which of the following countries has largest stock of foreign exchange reserves in the world?
(1) USA
(2) China
(3) Japan
(4) India
(5) None of these
20. As per the reports published in the newspapers which of the following countries is first in production of Gold Jewellery?
(1) China
(2) India
(3) Turkey
(4) Italy
(5) None of these
21. Golden revolution refers to the development of—
(1) Oilseeds
(2) Pulses
(3) Horticulture
(4) Cereals
(5) Fodder
22. Commission for Agricultural Costs and Prices (CACP) recommends—
(1) Comfort Price
(2) State Advised Price
(3) Minimum Support Price
(4) Minimum Export Price
(5) Statutory Minimum Price
23. National Agricultural Cooperative Marketing Federation is known as—
(1) NIAM
(2) NAFED
(3) MARKFED
(4) NACMF
(5) NACOM
24. Which insect is known as farmers' enemy No.1?
(1) Bollworm
(2) Desert locust
(3) Aphids
(4) Stem borer
(5) Fruit fly
25. Which of the following statements are true about the Foreign Trade Policy 2009-14?
A. The new Foreign Trade Policy, coming in the backdrop of a 30 per cent contraction in exports in the last 10 months, seeks to identify 26 new markets for trade that would be eligible for sops. These include 16 in Latin America and 10 in Asia and Oceania.
B. At present, India's $ 168-b exports are highly concentrated in Europe (36 per cent), the US (18 per cent and Japan (16 per cent), and these are the worst hit by the biggest financial crisis since the 1930s.
C The new policy has sought to give special focus to help the gems and jewellery sector, one of the worst hit, by allowing duty drawback on exports. The handloom and handicrafts sector would be helped under the Market Development Scheme, while the government also announced the continuation of the DEPB scheme till December 2010.
D. These export-oriented units would be encouraged to look for new markets and they could be given incentives and tax sops to create a new basket of exports. In the short-term, the relief measures Include providing dollar credit to exporters that will be overseen by a high-level committee, comprising
Finance Secretary, Commerce Secretary, and the Indian Banks Association, to insulate the small-and medium-scale exporters
l) OnlyA,B&C
2)OnlyB,C&D
3)OnlyC&D
4) Only A, C & D
5) All the above
26. Which of the following is decided by commercial banks? .
1) Bank rate
2)CRR
3) SLR
4)BPLR
5) None of these
27. The Reserve Bank of India, which made third-party ATM transactions free from April, 2010 said not more than Rs 10,000 can be withdrawn each time they are used and limited the number of such transactions to _ _ a month.
1)2
2)5
3)10
4)15
5) None of these .
28. Which of the following is not a Navaratna (PSU) company?
a) Air India
b) BHEL
c) GAIL
d) IOC
e) Power Finance Corporation Ltd.
29. What is the expansion of BEE?
a) Bureau of Energy Efficiency
b) Bureau of Efficient Engineers
c) Bureau of Employess Efficiency
d) Bureau of Employers’ Efficiency
e) None of these.
30. A per the news published in the major financial newspapers/journals/magazines, India’s exports and imports both have come down in the last few years. Which of the following is/are the probable reason(s) for the same?
A) As per the new policy of the WTO, India can import only those commodities, which are not grown/produced in the country in adequate quantity/volume to meet its total demand. Commodities, which India needs to import, are very few. Hence import has gone down.
B) Since all the countries are required to pay for their imports partly by exporting some goods in exchange to other countries, exports from India have gone down.
C) This slowdown in imports/exports is only because there is a global economic crisis. This is why India’s exports and imports both have come down.
a) Only A
b) Only C
c) Only B
d) All A, B & C
e) None of these
31. The Economic and Social Commission for Asia and Pacific in one of its recently published reports has said some positive things about India’s economic resilience. What are these points? (The report was published in various newspapers/journals).
A) India has played the role of a sheet anchor behind the economic stability of the South Asian region.
B) India is helping other economies or the region to fight the global financial crisis better than some other more open economies of Asia Pacific Region.
C) India is likely to become the second largest economy of the world in the next five years, as it has been the most favourite destination for Foreign Direct Investment for almost 90% of the countries of the World.
a) Only A
b) Only B
c) Both A & B
d) All A, B & C
e) None of these
32. Which of the following schemes was launched to give a boost and incentives to increase public investment to achieve 4% growth in the area of agriculture and allied sectors during the 11th plan period?
a) National Technological Mission
b) National Bamboo Mission
c) Rashtriya Krishi Bima Yojana
d) National Rural Employment Guarantee Scheme
e) Rashtriya Krishi Vikas Yojana
33. Which of the following statements is/are correct about the Sampoorna Grameen Rozgar Yojana?
A) The scheme was launched in 2001 by merging some of the schemes running that time.
B) In this scheme preference is given to Below Poverty Line families for the jobs.
C) The wages under the scheme are paid partly in cash and partly by giving foodgrains.
a) Only A
b) Only B
c) Only C
d) All A, B & C
e) None of these
34. Which of the following Acts help(s) Union Govt control its fiscal deficit?
a) Finance Act
b) Fiscal Responsibility and Budget Management Act
c) Banking Companies Act
d) Both (1) and (2)
e) None of these
35. Which of the following housing schemes was/were launched by HUDCO to give special emphasis on the development of rural areas of the country?
A) Indira Awas Yojana
B) Adarsh Gram/Adarsh Basti Yojana
C) Pradhan Mantri Gram Sadak Yojana
a) Only A
b) Only B
c) Only C
d) All A, B & C
e) None of these
36. Many a time we read in financial newspapers about Public Debt. Which of the following is / are the components of Public Debt?
A) Market loans
B) External loans
C) Outstanding against saving schemes/provident funds.
a) Only A
b) Only B
c) Both A & B
d) Only C
e) All A, B & C
37. As agriculture is the mainstay of the Indian Economy, what is the contribution of agriculture and allied sectors in the total Gross Domestic Product of India? About.
a) 10%
b) 15%
c) 22%
d) 36%
e) 48%
38. As we know, the National Rural Employment Guarantee Act was implemented by Govt. of India. Now Govt has made certain changes in the Act so that it can boost up its policy of Financial Inclusion of the beneficiaries. Which of the following changes is/are done for this purpose?
A) NREGA functionaries are being trained to conduct social audits and public disclosure of the works undertaken by State Govts and Panchayats.
B) Workers who are engaged for various jobs under the scheme are paid their wages through post office and/or bank accounts.
C) Wages paid to the beneficiaries are revised and it is strengthening their livelihood resources.
a) Only A
b) Only B
c) Only C
d) All A, B & C
e) None of these
39. Which of the following is/are the major roles of the Union Ministry of Environment and Forests?
A) Prevention and control of pollution B) Ensuring the welfare of animals
C) Afforestation and regeneration of degraded area
a) Only A
b) Only B
c) Only C
d) All A, B&C
e) None of these
40. Which of the following schemes is NOT a part of National Social Assistance programme?
A) National Old Age Pension Scheme B) National Family Benefit Scheme
C) Services for the Poor programme
a) Only A b) Only B
c) Both A & B
d) Both B & C
e) None of these
41. How many banks were nationalized in 1969?
(1) 16
(2) 14
(3) 15
(4) 20
(5) None of these.
42. The Reserve Bank of India was established in :
(1) 1820
(2) 1920
(3) 1935
(4) 1940
(5) None of these.
43. The first Indian Bank was :
(1) Traders Bank
(2) Imperial Bank
(3) Presidency Bank of Calcutta
(4) Indian Bank
(5) None of these.
44. The rupee coin was first minted in India in :
(1) 1542
(2) 1601
(3) 1809
(4) 1677
(5) None of these.
45. The Export-Import (EXIM) Bank was set up in :
(1) 1980
(2) 1982
(3) 1981
(4) 1989
(5) None of these.
46. Planning Commission is :
(1) Advisory body
(2) Executive body
(3) Government body
(4) Autonomous body
(5) None of these.
47. The Community Development Programme was launched in :
(1) 1950
(2) 1952
(3) 1956
(4) 1960
(5) None of these.
48. The highest body which approves the Five-Year Plan is the :
(1) Finance Ministry
(2) Lok Sabha
(3) Rajya Sabha
(4) National Development Council
(5) None of these.
49. Which of the following commodities earn maximum foreign exchange for India?
(1) Jute
(2) Iron and Steel
(3) Tea
(4) Sugar
(5) None of these
50. The one rupee note bears the signature of :
(1) Secretary, Ministry of Finance
(2) Governor, Reserve Bank of India
(3) Finance Minister
(4) Prime Minister
(5) None of these.
ANSWERS:
1. (C) 2. (C) 3. (C) 4. (C) 5. (A) 6. (B) 7. (D) 8. (A) 9. (E) 10. (C)
11. (E) 12. (B) 13. (D) 14. (1) 15. (3) 16. (4) 17. (4) 18. (1) 19. (2) 20. (2)
21. (3) 22. (3) 23. (2) 24. (3) 25. (5) 26. (4) 27. (2) 28. (A) 29. (C) 30. (B)
31. (A) 32. (E) 33. (D) 34. (B) 35. (A) 36. (C) 37. (B) 38. (D) 39. (D) 40. (E)
41. (2) 42. (3) 43. (3) 44. (1) 45. (2) 46. (1) 47. (2) 48. (4) 49. (3) 50. (1)
Sunday, November 20, 2011
IBPS CLERKS EXAM GENERAL AWARENESS MCQs
1. Which Committee has been constituted to examine the appropriateness of the telecom policies and allocation of spectrum from 2001 to 2009?
(a) Justice Shivaraj V. Patil Committee
(b) Justice M M Punchhi Committee
(c) Justice Bhagwati Committee
(d) Justice Vahanvati Committee
2. Who’s temporary home, the property title of ‘Gyuto Monastery’ has been transferred in the Himachal Pradesh state government’s name?
(a) 17th Karmapa
(b) 16th Karmapa
(c) 18th Karmapa
(d) 15th Karmapa
3. The Egyptian military constituted a panel of legal experts, including a member of the outlawed Muslim Brotherhood, to suggest amendments to the Mubarak-era constitution, headed by Tareq al-Bishry, who is a -
(a) politician
(b) economist
(c) judge
(d) social activist
4. Who has invented and claimed that he has made a flying car with the help of India’’s first small car, Maruti, which was the star attraction at the Aero India 2011 air show in Bangalore?
a) A.K. Vishwanath
(b) K. Uday Kumar
(c) J. Ramesh
(d) T. Kuppuswami
5. With which country India proposed a $9 billion ‘revolving fund’ jointly to finance and start implementation of the crucial Delhi Mumbai Industrial corridor (DMIC) link to address the infrastructure concerns?
(a) South Korea
(b) Japan
(c) Russia
(d) South Africa
6. World Philatelic Exhibition Indipex-2011 was held recently in which of the following place?
(a) Bangkok
(b) London
(c) New Delhi
(d) New York
7. Which among the following is the world’s oldest postal organisation?
(a) India Post
(b) U.S. Postal Service
(c) Mexican postal sevice
(d) The Royal Mail from Britain
8. Which country vetoed a UNSC resolution that would have condemned illegal” Israeli settlements, despite all other states in the 15-member body, including India, voting for it?
(a) USA
(b) Great Britain
(c) China
(d) Russia
9. India signed a comprehensive economic cooperation agreement (CECA) with which of the following country, which gives its doctors,accountants , two-wheelers, cotton garments and basmati rice greater access to its market?
(a) USA
(b) Malaysia
(c) Austria
(d) Iran
10. Reserve Bank of India (RBI) has recently said that Malegam panel’s suggestion of capping lending rate at 24% for micro finance institutions (MFI) will be implemented from:
(a) May 1, 2011
(b) April 1,2011
(c) November 1, 2011
(d) April 1, 2012
11. Global Governance Report 2025, an assessment report,is prepared by-
(a) United States National Intelligence Council
(b) European Union Institute for security studies
(c) a and b both
(d) World Bank
12. In a bid to preserve and promote Tibetan culture, which university is planning to set up a centre for Tibetan studies at Dharamshala?
(a) Indira Gandhi National Open University
(b) Jawaharlal Nehru University
(c) Aligarh Muslim University
(d) None of the above
13. What is the name of the District Collector of Malkangiri district of Orissa, who was abducted and later released by cadres of the Communist Party of India (Maoist) recently?
(a) S.V. Naidu
(b) Sumit Sharma
(c) R.V. Krishna
(d) Navin Kumar
14. Who among the following has been selected for the Y. Nayudamma Memorial Award for 2010?
(a) V. Shanta
(b) Arvind Kejriwal
(c) Kiran Bedi
(d) Anna Hazare
15. Which is the largest brackish water lagoon in the country?
(a) Pulicat Lake
(b) Chilika Lake
(c) Sambhar Lake
(d) None of the above
ANSWERS:
1 a 2 a 3 c4 a 5 b 6 c 7 d 8 a 9 b 10 b 11 c 12 a 13 c 14 a 15 b
Tuesday, November 15, 2011
SBI, ICICI Bank lead peers in global branch network
State Bank of India and ICICI Bank appropriated to themselves the credit of running the most extensive global networks from among the country's public and private sector banks.
State Bank of India (SBI) owns the largest network of foreign offices (64) as at August-end, says the Report on Trend and Progress of Banking in India 2010-11.
Bank of Baroda followed with 60. Together, these two accounted for 51 per cent of total foreign offices of banks. SBI also undertook the largest expansion of foreign operations by opening five new offices abroad during the year under reference.
ICICI Bank (19) led the private sector banks in terms of largest foreign presence.
FOREIGN BANKS
The number of foreign banks operating here is 38 (34 a year ago). The number of branches too rose to 321 (315). Another 47 (45) banks had representative offices.
Standard Chartered had the largest network, followed by HSBC, Citibank and the Royal Bank of Scotland.
Permission was granted to National Australia Bank, Industrial and Commercial Bank of China, Rabobank International and Woori Bank to open one branch each.
Besides, Sumitomo Mitsui Banking Corporation was allowed to open a representative office.
Foreign operations of Indian banks expanded to a network of 244 offices as compared with 233 offices in the previous year.
Women use their debit cards less frequently, reveals RBI survey
This piece of information may give you some insight into how women deal with money. The Reserve Bank of India, in a survey, has found that they use their debit cards less frequently.
What one could deduce from this finding is that women prefer to use credit cards for shopping to avail themselves of the 45-day credit period. But when it comes to hard cash for daily needs, it is the hubby who swipes the debit card at an ATM.
“Women may be smarter when it comes to money matters. The 45-day free credit period that comes with shopping with a credit card is an irresistible attraction,” said Mr Sanjay Sharma, Managing Director IDBI Intech, a banking and financial service technology provider.
The number of debit and credit cards outstanding as at September-end 2011 was 25 crore and 1.76 crore respectively. Some of the other findings of the RBI's survey to assess customer satisfaction in the usage of ATMs across the country are: the use of cards for shopping was more among the youth; the use of debit cards for shopping was the highest in Maharashtra and Andhra Pradesh.
Further, debit cards were mainly used for withdrawing cash or shopping purposes and the use of these cards for bills payment/ticket purchase was still low. The survey covered 600 ATMs distributed proportionately over metro, urban, semi-urban and rural regions, constituting one per cent of the total number of 60,000 ATMs in the country.
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