Providing More Employment to Women in Textile Sector

Ministry of Women and Child Development, under the National Mission for Empowerment of Women (NMEW) (a Centrally Sponsored Scheme), is in the process of setting up State Resource Centres for Women (SRCW) in all States and Union Territories to carry out activities of the Mission including convergence between Ministries and Departments of Central and State Governments on women`s issues. The Mission is mandated to pilot convergence and facilitation centres for women in the village, block and district levels in 32 selected districts across the country to demonstrate convergence. However, there is no specific plan for linking with institutions in the textile sector.

EPFO may give more than 8.25% interest this fiscal

Retirement fund body EPFO’s interest rate for its over 50 million subscribers for this fiscal could be higher than 8.25 per cent provided during 2011-12, the Labour Minister, Mr Mallikarjun Kharge said.

“Suppose if our income goes up, it may be beyond 8.25 per also,” Mr Kharge told reporters when asked whether the Employees Provident Fund Organisation has decided to pay 8.6 per cent rate this fiscal.

The Minister said: “We will distribute interest (among subscribers) based on our income...this is what I said in Rajya Sabha. We will see what our total revenue is and based on that we can give.’’

A section of the media had reported last week that the EPFO has decided to pay 8.6 per cent rate of return this fiscal to its account holders, based on the Minister’s reply to a debate on labour issues in the Rajya Sabha.

The Minister explained that he had spoken about the 8.6 per cent rate of return in the context of the Government’s decision to increase the rate of return on Special Deposit Scheme.

The EPFO has parked about Rs 55,000 crore in the SDS. Its total corpus is around Rs 3 lakh crore.

There was a hue and cry when the EPFO had last month slashed the interest rate on PF deposits to 8.25 per cent for 2011-12 from 9.5 per cent in 2010-11.

As per practice, the rate of return on PF deposits is announced by the EPFO’s apex decision making body, the Central Board of Trustees (CBT), headed by the Labour Minister.

The CBT’s decision on interest rate is based on the EPFO’s income projections for a financial year. The decision is finally implemented after the Finance Ministry’s concurrence.

International Monetary Fund (IMF) lowered India’s Economic Growth Forecast to 6.9% in 2012

The International Monetary Fund (IMF) in its World Economic Outlook (WEO), released ahead of the IMF-World Bank Spring Meetings, marginally lowered India’s economic growth forecast to 6.9% in 2012, from 7% projected earlier. The IMF projected world economic growth rate to slump to 3.5% in 2012 from 3.9% in 2011. It pegged India’s growth during the 2013 calendar year at 7.3%.

The WEO pointed out that in emerging Asia, including India, strengthening domestic demand will require improving the conditions for private investment by addressing infrastructure bottlenecks and enhancing governance and public service delivery. The WEO while referring to the declining growth rate stated that domestic factors also contributed to the slowdown, as deterioration in business sentiment weakened investment and policy tightening raised borrowing costs.

According to the estimates of India’s Central Statistical Organisation (CSO), the growth rate during the financial year 2011-12 slipped to a 3-year low of 6.9%. The Union government projected a growth rate of 7.6% for 2012-13 fiscal year. The Reserve Bank of India however expects it to be 7.3%.

The WEO highlighted that fiscal consolidation would continue to remain a priority in India, to anchor confidence and rebuild room to meet future challenges.

India registered Highest Ever Trade Deficit of $184.9 billion in 2011-12

Commerce Secretary on 19 April 2012 announced that India surpassed the export target of $300 billion for 2011-12. India was able to surpass the trade target of $300 billion despite slowdown in demand in its traditional markets of the U.S. and Europe. Exports increased by 21 per cent to $303.7 billion in 2011-12 powered by a strong growth in petroleum, pharmaceuticals and engineering products.

However, imports surged by 32.1 per cent to $488.6 billion thereby leaving the highest-ever trade deficit of $184.9 billion.
Engineering exports grew by 16.9 per cent to $58.2 billion. Exports of petroleum and oil products surged by 38.5 per cent to $57.5 billion and gems and jewellery exports increased to $45.9 billion.

Other sectors which showed healthy performance with respect to export include drugs and pharmaceuticals up 21.9 per cent at $13.1 billion; leather (up 22.5 per cent) at $4.2 billion; electronics (up 9.2 per cent) at $9 billion; cotton yarn and fabric made-up (up 17.4 per cent) at $7.2 billion, readymade garments yarns and fabrics (up 18 per cent) at $13.7 billion and marine products (up 31.4 per cent) at $3.4 billion.

Imports also registered a huge surge with petroleum, oil and lubricants moving up by a steep 46.9 per cent to $155.6 billion largely due to increased prices in international markets. Imports of gold and silver jumped by 44.4 per cent to $61.5 billion while that of coal surged by 80.3 per cent to $17.6 billion.

Imports of machinery increased by 27.7 per cent to $35.4 billion; electronics goods by 23 per cent to $32.7 billion; iron and steel by 15 per cent to $11.9 billion; vegetable oil by 47.5 per cent to $9.7 billion; and fertilizer by 59 per cent to $11 billion.

However, imports of gems and jewellery fell by 10.6 per cent to $31 billion.

Standard & Poor's cut India’s Credit Rating Outlook to Negative

Standard & Poor's downgraded credit rating outlook for India to negative from stable on 25 April 2012. The cut in credit rating is the reflection of India's widening fiscal and current account deficits.
The negative outlook jeopardises India's long-term rating of BBB-, the lowest investment grade rating, and sent Indian bonds, stocks and the rupee lower.
India has no sovereign global bond issues, but a downgrade would increase borrowing costs for local companies and make it harder to refinance debt, and may have a further chilling effect on foreign investor confidence in the country in general.
India's fiscal deficit widened to 5.9% of gross domestic product in the fiscal year 2011-12, starkly higher than the government's target of 4.6%. The country is performing equally bad on the front of foreign institutional investment as it witnessed a sharp decline in the FII over the past few months.  India has drawn nearly 171.8 million dollar FII so far in April 2012 against more than 5 billion dollar in February 2012.
The credit rating downgrading indicates that the government will now have to contemplate seriously over the long-pending economic reforms and push them through as soon as possible.

India's GDP Growth to make the Indian Banking Industry Third Largest in the World by 2025

A study titled Being five star in productivity  road map for excellence in Indian banking was released FICCI-IBA-BCG on 22 August 2011, the eve of IBA-FICCI annual banking conference. The theme for the banking conference was decided to be Productivity Excellence.

According to the study, India's gross domestic product (GDP) growth will make the Indian banking industry third largest in the world by 2025. The report chalked out an action agenda for banks, based on insights from an extensive productivity benchmarking exercise conducted across 40 banks.

The report highlighted that banks have to strive for excellence on five dimensions: branch sales and service, new channels, lean operations, organisation design and bad debt management.

The report stated that branches of banks can generate higher levels of revenue for the banks. Indian banks deploy 62 per cent of staff in customer facing roles as against the benchmark of 82 per cent observed by BCG globally.

Break-out growth in usage of new channels will characterise the next decade in Indian banking. Among the new channels, mobile phones, propelled by 3G and smart phone technology, will emerge as an undisputed winner by 2020 accounting for 20-30 per cent of total transactions. ATMs have seen exponential growth in usage but are far from maturity with just about 50 per cent adoption even in metros.  New channels will not only enhance the productivity but can be a source of new customer acquisition.

Indian banks, the report mentioned were to be doing well overall with industry cost-income ratio below 50 per cent.

However, there remained plenty of scope for betterment. On an average, Indian banks have about 20 per cent of staff deployed in back-office processing (for some banks, as high as 40 per cent) as against a global best of 10 per cent observed by BCG. Process re-engineering and operating model change if employed could help reduce costs, improve service, and contain operating risks.

Public sector banks were found to be under-investing in technology with spends at about 25 per cent of global benchmarks. An Indian banks average administrative overhead at about 11 per cent of the total staff is in line with what BCG has observed globally.

The banking industry was holding low headcount in HR and finance roles. Variable pay at 2 per cent of fixed compensation is far below the 12-15 per cent that is optimal for incentive compensation. The public sector as per the report urgently needed an adjustment in its compensation structure. The industry has an impressive bad debt performance and the bad debt levels in priority sectors of MSME and agriculture are significantly high.
The report suggested major overhaul of NPA management processes at banks. Some banks have alarmingly high NPA levels in relatively safe products such as home loans.

The report stressed on a whole new paradigm for risk management encompassing operating model, technology, experience and expertise retention, and minimum critical size of book.

Goa topped the List of States with Highest Per Capita Income

Goa topped the list of the states with highest per capita income in the country with a total per capita income of 192652 rupees.
Delhi with a total per capita income of 1.75 lakh rupees  in 2011-12 secured second spot in the list, followed by Haryana with per capita income of 109227 rupees.
The national average was estimated at 38005 rupees in 2011-12 against 35993 rupees in 2010-11. The estimates WERE prepared as per methodology prescribed by the Central Statistical Organisation on the basis of provisional data provided by it and other government sources.

GSM subscriber base touches 664.08 m in March

GSM telecom operators added 6.87 million subscribers in March, taking the total user base to 664.08 million.

The GSM subscriber base stood at 657.21 million at the end of February.

Bharti Airtel added the most 2.5 million users, taking its total subscriber base to 181.28 million, according to the data released by the Cellular Operators Association of India (COAI).

It had a market share of 27.3 per cent by March-end.

Rival Vodafone Essar, with a 22.66 per cent market share, added 1.02 million new subscribers, taking its subscriber to 150.47 million.

Uninor, which has seen significant growth in user base in the previous months, added 1.29 million new customers. Its user base was at 42.43 million by March-end. Aditya Birla group firm Idea Cellular added 2.01 million users to take its total user base to 112.72 million.

Aircel lost 0.68 million customers and its subscriber base was at 62.57 million. Reliance Telecom added 59,829 new users to take its user base to 31.84 million at the end of March.

State-run telecom firms BSNL and MTNL added 0.89 million and 62,399 million new users, respectively, taking their subscriber base to 94.67 million and 5.59 million, respectively.

Leading GSM operators seemed to have cornered a major chunk of users of new telecom operators, which announced closing operations after the Supreme Court order cancelling their licences through mobile number portability (MNP).

Operators such as S Tel, Etisalat DB and Loop Telecom have announced shutting down of services and are now helping their users move to other operators through MNP.

The Supreme Court had in February cancelled 122 licences that were allotted in 2008.

Coastal States must look at offshore wind farms for energy

India's coastal States should look at offshore wind farms to generate energy. With a coastline of over 7,500 km, India has a natural advantage to go for offshore wind energy, said Mr Swaminathan Krishnamurthy, Associate Director, Climate Change and Sustainable Services, Ernst & Young India.

In Europe, nearly 3 gigawatt (GW) of power is generated from offshore. Why not in India? In fact, a few months ago one company was willing to put up offshore wind farms in Tamil Nadu to generate nearly 500 MW. However, this did not happen, he said at the India Wind Energy Summit organised by Lnoppen India.

Mr Krishnamuthy said that as on March 31, 2012, the total installed power capacity was 199.63 GW. Of this, the renewable energy's contribution was only 23 GW or 12.5 per cent of the total power generation, which is very low looking at natural resources available in the country.

Even within the renewable energy, nearly 70 per cent of it is comes from wind energy. “How are we going to meet international requirements that require use more of renewable energy,” he said.

In the wind energy sector, there is a major chunk of old machines, which are of around 250 kW capacity. There is a huge scope to refurbish this to generate more energy. However, this is a major challenge to overcome, he said.

India has the fifth largest installed wind power capacity in the world. It is estimated that 6 GW of additional wind power capacity will be installed in India by this year, taking the total installed capacity beyond 15GW.

The total potential for wind power in India was first estimated by the Centre for Wind Energy Technology at 45 GW, and recently increased to 48.5 GW. With larger turbines, greater land availability and expanded resource exploration, the potential could be as high as 100 GW. This potential for wind energy significantly widens the attractiveness of the Indian wind energy segment.

ABOUT INDIA

India has emerged as one of the most attractive destination not only for investment but also for doing business in the recent years. One of the fastest growing economies in the world which has not only sustained global downturn of 2008-09, India is slated to grow at consistently higher rates during next few decades. Some of the reasons which make India as a magnate of investments are:

• Large and fast growing middle class & graduation of poor to middle class and hence growing domestic consumption
• Indian Government’s constantly evolving investor friendly policy
• Lower cost of production due to lower labour rates
• Availability of skilled manpower
• Abundant natural resources
• English as one of the major business languages
• Government’s emphasis on infrastructure improvement
• India’s location, close to markets of South East Asia, Middle East and also Europe.

India is likely to become one of the largest economies of the world by the year 2025 as per projections made by internationally renowned consultants and IMF. Businesses around the world do not like to miss the growth opportunities offered by Indian markets and hence some of them are already stepping up their investments and rest eying India for investments in coming years.
Socio economic structure
India has a large sized middle class, which is further expanding substantially, offering a big fat market for foreign products and services. In fact, if India continues its recent growth trend, average household incomes will triple over the next two decades and it will become the world’s fifth largest consumer economy by the year 2025, according to a McKinsey report in 2010. The consistent economic growth in India has been an important factor that has contributed towards the decline in poverty.
India’s per capita income is estimated to be US$ 1223.45 in 2010-11, at current prices, which is higher by 17.9 percent from the per capita income in 2009-10.
In just eleven years, from 1993-94 to 2004-2005 the percentage of people below poverty line has declined from 36% to 28%, according to a survey conducted by National Sample Survey Organization (NSSO).
Governance
India has a Federal Republic Government, established in 1947 after it became independent.
The Indian political system is supported by Executive, Legislative and Judicial branches.
The political governance system in India was established by the ‘Constitution of India’ in the year 1950. It has given India’s Union Government the governing authority of all its administrative divisions, which comprise of 28 states and 7 union territories.
The Executive branch is constituted by India’s President, Prime Minister and the Council of Ministers.
The Legislative branch is made up of the dual functioning of Lok Sabha or the House of the People and the Rajya Sabha or the Council of States.
The Judicial branch is composed of the Supreme Court, High Courts and subordinate courts. India follows the British law which has been amended to suit local conditions.
The infrastructure
Road - India’s total road network spans 3.34 million KM which is second largest in the world. This road network consists of 65,589 KM of highways.
Rail - Indian rail route is 63,028 KM long which is largest in Asia and second largest in the world under one management. Indian Railways have 222,147 freight wagons for use in movement of freight to any corner of the country.
Ports - There are 13 major ports and 187 minor/intermediate ports along the coast line of the country. Total capacity of Indian ports in the year 2010-11 was 616.73 million tons. Ports handle over 90% of India’s international trade.
Airports - India has a total of 125 Airports, which include 11 International Airports.
SEZs - With a view to attract larger foreign investments in India, the Special Economic Zones (SEZs) Policy was announced in April 2000 by Indian Government. There are 133 special economic zones operating presently all over India.
Locational advantage
Located in south Asia, India has its border countries as China, Bhutan and Nepal on north-west side, Myanmar and Bangladesh on East side and Afghanistan & Pakistan on its North-West side. The great Himalaya Mountains divide India from rest of Asia in its North side. Some of the emerging and established markets such as Middle-East and South East countries are also closely located.
Naturally connected via the sea route from the other three sides, India is surrounded by Bay of Bengal, Arabian Sea and Indian Ocean which facilitates most its overseas trade in all directions.
Total area of the country is about 3.3 million square kilometers, 90% of which is land area. India is the seventh largest country in the world in area. India’s coast line spreads over a length of 7,517 kilometers on three sides.
Resources
Population and work force
One out of every six people in the world is an Indian! In 2011, India’s population is estimated at 1.21 Bllion people, against the total world population which is 6.9 Billion. Moreover, India’s biggest asset is huge size of its young and working population class. The proportion of population in the working age-group 15-59 years is expected to rise from 57.7 percent in 2001 to 64.3 percent in 2026. This is going to positively impact India’s growth in the coming years. According to the National Population Commission, India will add 173 Million people in working-age population by the year 2026. In fact, by this time, India will have the largest working age population in the world. This will act as a vital point in making India a world leader in coming years.
Education strata and manpower resources
India can boast of remarkably strong manpower resources with one of the most developed higher education systems across the globe. India’s size of education system ranks third in the world, after US and China.
The literacy rate in India is 74 percent in 2011, with English being understood and used commonly as a medium of spoken and written communication.
India had 409 university level institutions in 2008-09. The total number of colleges is 25,990 and that of polytechnics was 1742.
Total number of annual enrolment for various postgraduate courses is as high as 18.6 Million in the nation.
[update]India has 1522 degree-granting engineering colleges with an annual student intake of 582,000.
The number of student enrolled each year to become doctors is as large as 273,366 in India.
The number of graduates from other courses like management, law, architecture, hotel, travel and tourism management are also growing fast.
Material resources
India can boast of being rich in a variety of natural resources. Some of them are coal, iron ore, manganese ore, mica, bauxite, petroleum, titanium ore, chromite, natural gas, magnesite, limestone, arable land, dolomite, barytes, kaolin, gypsum, apatite, phosphorite, steatite and fluorite.
The distinctive India
India is a country rich in history, culture, religion and diversity. There are 22 officially recognized languages spoken here. People from all religions live harmoniously here who comprise of the Hindus, Muslims, Sikhs, Christians, Buddhists, Jains and many more.

SOCIO ECONOMIC STRUCTURE:
India has a large sized middle class, which is further expanding substantially, offering a big fat market for foreign products and services. In fact, if India continues its recent growth trend, average household incomes will triple over the next two decades and it will become the world’s fifth largest consumer economy by the year 2025, according to a McKinsey report in 2010. The consistent economic growth in India has been an important factor that has contributed towards the decline in poverty.

• India’s per capita income is estimated to be US$ 1223.45 in 2010-11, at current prices, which is higher by 17.9 percent from the per capita income in 2009-10.
• In just eleven years, from 1993-94 to 2004-2005 the percentage of people below poverty line has declined from 36% to 28%, according to a survey conducted by National Sample Survey Organization (NSSO).

INFRASTRUCTURE:

Road - India’s total road network spans 3.34 million KM which is second largest in the world. This road network consists of 65,589 KM of highways.
Rail - Indian rail route is 63,028 KM long which is largest in Asia and second largest in the world under one management. Indian Railways have 222,147 freight wagons for use in movement of freight to any corner of the country.
Ports - There are 13 major ports and 187 minor/intermediate ports along the coast line of the country. Total capacity of Indian ports in the year 2010-11 was 616.73 million tons. Ports handle over 90% of India’s international trade.
Airports - India has a total of 125 Airports, which include 11 International Airports.
SEZs - With a view to attract larger foreign investments in India, the Special Economic Zones (SEZs) Policy was announced in April 2000 by Indian Government. There are 133 special economic zones operating presently all over India.

Population and work force
One out of every six people in the world is an Indian! In 2011, India’s population is estimated at 1.21 Bllion people, against the total world population which is 6.9 Billion.
Moreover, India’s biggest asset is huge size of its young and working population class. The proportion of population in the working age-group 15-59 years is expected to rise from 57.7 percent in 2001 to 64.3 percent in 2026.
This is going to positively impact India’s growth in the coming years. According to the National Population Commission, India will add 173 Million people in working-age population by the year 2026. In fact, by this time, India will have the largest working age population in the world. This will act as a vital point in making India a world leader in coming years.

Material Resources

India can boast of being rich in a variety of natural resources. Some of them are coal, iron ore, manganese ore, mica, bauxite, petroleum, titanium ore, chromite, natural gas, magnesite, limestone, arable land, dolomite, barytes, kaolin, gypsum, apatite, phosphorite, steatite and fluorite.

Govt allocates Rs 23,000 cr for disaster management

With an aim to effectively manage disasters in the country, the Government has allotted Rs 23,000 crore for developing disaster management infrastructure at State, district and panchayat levels across the country.

The National Disaster Management Authority Vice-Chairman, Mr M. Shasidhar Reddy, said the 13th Finance Commission has allocated huge amount for developing infrastructure across the country to help manage disasters in a better way.

“Out of the Rs 23,000 crore, Rs 15,000 crore will be given to the States and local bodies as direct grant and Rs 8,000 crore will be performance grant,” he said, after releasing guidelines for scaling, type of equipment and training of fire services.

The guidelines recommend the need for revamping of fire services such as emergent needs, improvement of outreach of fire services to rural areas, achieving and restricting the response time in urban areas between 3 and 5 minutes and preparation of fire hazard response and mitigation plan.

Mr Reddy said since the country's population is increasing, its vulnerability to fire is also on the rise and fire services have a major role to play in emergency services.

Admitting that there are “deficiencies” in managing disasters, Mr Reddy said over the years the country will reach certain amount of efficiency.

He also released the handbook for training and capacity building of civil defence and sister organisation.

India's first telecom incubator

Startup Village, the country’s first telecom business incubator on public-private partnership, will be inaugurated at Kochi on April 15.

Mr Kris Gopalakrishnan, Infosys Co-founder, will formally open Startup Village at Kinfra Hi-tech Park, Kalammassery.

Startup Village seeks to emulate Silicon Valley by transforming Kerala into Silicon Coast and begin a search for a billion dollar tech startup out of Indian campuses.

It is being set up jointly by the National Science and Technology Entrepreneurship Development Board (NSTEDB) and the Kerala Government-run Technopark, in collaboration with MobME Wireless, a private firm.

The Village is being projected by the DST, Centre and state governments as the largest national attempt to scale up innovation in the country through incubators in collaboration with the private sector.

The objective is to tap huge potentials unfolding in the telecom sector and transform students as successful job-creators instead of job-seekers. India’s telecom and IT industry is supporting the initiative in different capacities.

The facility is equipped with full 4G network, telecom labs, innovation zones, legal and intellectual property services, fully furnished offices spaces and video conference rooms.

Startup Village will give a host of perks from three-year service tax holiday to funding opportunities for tech startups to build, break and innovate to start the search for a billion dollar campus startup from India.

Mr Sanjay Vijayakumar, Chairman of the Board of Governors of Startup Village, said the new initiative is an attempt to create a complete technology ecosystem by changing the education policy, incubating ideas, accelerating them with specific industry support and angel funding at one location for the first time in India.

Nationalised banks to speed up processing of corporate loans

Indian companies can hope for a faster turnaround when they submit loan proposals to nationalised banks.

Nationalised banks have set up credit approval committees (CACs) at their respective head-offices to speed up decisions on loan requests from companies.

Realising that private sector and foreign banks have a competitive edge when it comes to decision making on loans, the Finance Ministry has pushed for a CAC in each of the 20 nationalised banks.

Punjab National Bank, Canara Bank, Bank of Baroda, and Bank of India, among others, are classified as ‘nationalised banks'. They are governed by the Banking Companies (Acquisition and Transfer of Undertakings) Act.

Until a few months back, large loan proposals could only be cleared in management committee meetings (MCMs) of the boards.

“The MCM is convened only once in 20-30 days. Presence of the bank chairman and managing director, executive directors, RBI nominee director, Finance Ministry representative and two other directors is a must in the meeting.

“Sometimes, this requirement leads to pile up of loan proposals for clearance,” said a senior banker.

However, things appear to be changing for the better following the constitution of CACs.

The CAC, comprising the chairman and managing director, executive directors, and chief general manager/general manager in-charge of credit, finance and risk management, can meet as and when loan proposals need to cleared, said a public sector bank official.

That loan approval mechanism has been put on the fast-track is underscored by the fact that the quorum for a meeting of the CAC is just three members. The meeting has to be attended by the CMD and one of the EDs.

In the case of Category ‘A' banks, with business of Rs 3-lakh crore or more, the CAC is empowered to take decisions on loan proposals up to Rs 400 crore. In the case of Category ‘B' banks, with business less than Rs 3-lakh crore, the CAC can take decisions on loan proposals up to Rs 250 crore. However, loans proposals exceeding the limits of the CAC will have to be cleared at the MCM.

Given the powers conferred on the CAC, companies will not have to wait for a month to hear from banks about the fate of their loan application. If there is merit in the proposal, the bank could clear it even in a day or two.

Installed Capacity Crosses 2 lakh MW Mark

The installed capacity in the country has crossed 2 lakh MW mark with the commissioning of a 660 MW Unit of a power plant in Jhajjar in Haryana this week. With this the total installed capacity has reached 2,00,287 MW. It includes 1,32,013 MW capacity in thermal sector, 38,991 MW in hydro sector, 4,780 MW in nuclear sector and 24,503 MW in renewable energy sector. At the end of the 11th Plan, i.e. on 31st March 2012 the total installed capacity stood at 1,99,627 MW. 

There has been an unprecedented growth in capacity addition during the 11th Plan with addition of 54,964 MW of fresh capacity showing a growth of 159% over the 10th Plan period during which 21,180 MW capacity was added. During the 9th Plan the capacity addition stood at 19,010 MW. The year 2011-12 also saw new benchmarks created in the capacity addition. A record capacity of 20,501 MW was added in 2011-12, out of which 5,482 MW was added in the month of March 2012 alone. 

The improved performance in capacity addition during the 11th Plan period has been recorded across all sectors including the central, state and private sectors. 

Government Constitutes Advisory Committees on FMC

The rise in prices of certain agricultural commodities, including some essential commodities, in recent months have come to the notice of the Government. There have been complaints in some quarters that excessive speculation in futures markets have also contributed to this price rise. 

The fundamentals of demand and supply in the physical market decide the prices of commodities. And futures market only acts as a platform for price discovery and price risk management for the physical market participants. The Forward Markets Commission (FMC) is keeping a watch on the situation and has been asked to use all the regulatory tools available to keep a check on the excessive speculation in the futures trading in commodities and specifically agricultural commodities. The Commission has already implemented higher margin requirements for trading in agri-commodities and has also reduced position limits for essential commodities. These are steps in the right direction. 

Ministry of Consumer Affairs, Public Distribution and Food has also asked the Commission to take the following steps: 

(1) The Commission would keep a very close watch on the situation and would continue to take all necessary steps to see that there is no excessive speculation in the futures market. 

(2) The Secretary, Department of Consumers is already conducting an enquiry into the recent fluctuations in the commodity futures market for guar seed and guar gum and the report is expected to be received within a fortnight. 

(3) To advise the Government and the FMC, it has been decided to form advisory committees for all commodities including agri-products which would consist primarily of physical market participants such as representatives of farmers, producers, processors, exporters, domain experts and other stakeholders. These advisory committees would advise the Government and the FMC on how to bring about better alignment between the physical markets and the futures market so that the farmers and hedgers are substantially benefited from the futures trading which is its primary purpose. An advisory committee has already been constituted to study various issues in rubber futures trading. 

(4) FMC has been asked to ascertain whether there have been attempts to hoard commodities to influence the futures markets and if so, how this activity is being financed. 

It may be noted that the Forward Markets Commission is an independent regulator. However, the Chairman, FMC keeps the Government fully informed of all the important developments in the market.

International Operations of CPSEs

The Central Public Sector Enterprises (CPSEs) are increasingly into ‘International Trade’ in goods and services, which has a bearing on the Balance of Payments of the country.  During the year 2010-11, as many as 140 CPSEs out of the 220 operating CPSEs either had foreign exchange earnings (FEE) or foreign exchange expenditure(FEE).  As many as 39 CPSEs were net foreign exchange earners.  Out of these 39 CPSEs, 10 CPSEs, namely, ONGC VideshLtd., Air India Ltd., National Aluminium Company Ltd., Airports Authority of India Ltd., Bharat Heavy Electricals Ltd., Shipping corporation of India Ltd., Kudremukh Iron Ore Company Ltd., IRCON International Ltd., Cochin Shipyard Ltd. and RITES Ltd. earned net foreign exchange of more than Rs. 200 crore during 2010-11. 

Foreign Exchange Earnings

15 CPSEs namely, Indian Oil Corporation Ltd., Mangalore Refinery & Petrochemicals Ltd., Bharat Petroleum Corpn. Ltd., Bharat Heavy Electricals Ltd., Air India Ltd., ONGCVidesh Ltd., Hindustan Petroleum Corpn. Ltd., Oil & Natural Gas Corporation Ltd., Shipping Corporation of India Ltd., MMTC Ltd., National Aluminium Company Ltd., Ircon International Ltd., Airports Authority of India Ltd., PEC Ltd. and  Air India Charters Ltd. had gross foreign exchange earnings of more than Rs. 1000 crore, during 2010-11.  Out of these fifteen CPSEs namely, Air India, BHEL, ONGC Videsh, NALCO, SCIL, IRCON International Ltd. and Airport Authority of India Ltd. have been net foreign exchange earners.  Hindustan PetroleumCorpn. Ltd. and PEC Ltd.  have shown reduction in their foreign exchange earnings during 2010-11.  The remaining CPSEs have  had foreign exchange expenditure more than their foreign-exchange earnings.  This is particularly so in the case of Oil Marketing Companies (OMCs).

Sources of Foreign Earnings

Export of goods and merchandise, income from Royalty & Consultancy Services and interest earnings are the major sources of foreign exchange earnings.  Export of merchandise was the major source of foreign exchange earnings in both the years 2009-10 and 2010-11.  Its share in total earnings, however, decreased from 89.08% of the total in 2009-10 to 88.40% of the total in 2010-11.

Foreign Exchange Expenditure

In terms of growth and change in foreign exchange expenditure during 2010-11 over 2009-10 there was a significant increase in foreign expenditure in the case of MMTC Ltd., Handicrafts & Handloom Exports Corporation of India Ltd., GAIL(India) Ltd. and Oil & Natural Gas Corporation Ltd.  In the case of other CPSEs, like MSTC Ltd., ONGC VideshLtd., Shipping Corporation of India Ltd., Power Grid Corporation of India Ltd., Bharat Electronics Ltd. and Rashtriya Chemicals and Fertilizers Ltd., on the other hand, there was a general reduction in the foreign exchange expenditure. 

            There was a big increase in foreign expenditure of Handicrafts & Handloom Exports Corporation of India Ltd. during 2010-11 due to increased trading in bullion.  The Oil Marketing Companies (IOCL, BPCL, MRPL, CPCL, ONGC and GAIL) and others, namely, MMTC, SAIL, BHEL, RINL, SCI, BEL, HHEC, NTPC also incurred increase in gross foreign exchange expenditure during 2010-11.  Import of ‘raw materials’ and ‘capital goods’ have been the major items of  foreign exchange expenditure in both the years. 

            The share of ‘raw materials’/crude oil continued to claim the largest share (around 90%) of gross foreign exchange expenditures in both the years of 2009-10 and 2010-11. Exchange rate fluctuation and change in commodity prices have been also impacting the earnings and expenditures of CPSEs.

International Finance & Investment

Sources of Funds

International finance refers mainly to external commercial borrowings, supplier’s credit, funds raised through the equity market abroad.  Shares of MTNL (ADR) are listed on the New York Stock Exchange and GAIL (GDR) and SAIL(GDR)  are listed on the London Stock Exchange. 

Foreign Investments by CPSEs

Investment comprise off-shore investment by CPSEs through establishment of Indian subsidiaries abroad joint ventures (JVs) and mergers and acquisitions (M&A).  Several CPSEs have set up subsidiaries abroad for marketing their products, procuring raw materials and consolidating their international operations.  ONGC Videsh, in particular, has been successful in acquiring oil and gas assets abroad.  As on March 31, 2011, OVL has participation directly or through wholly owned subsidiaries/joint ventures in 33 exploration and production projects in 14 countries, comprising 9 producing assets, 4 assets under development and 19 exploration assets.  During 2010-11, the company produced 9.45 MMTOE, which accounted for 10.5 per cent of India’s total domestic oil and gas production.  The other CPSEs are following the lead given by OVL in international investments.  SAIL, CIL, RINL, NMDC and NTPC have together formed a JV in International Coal Ventures Pvt. Ltd. for acquisition of coal assets abroad.

Mega and Major Projects under Implementation by CPSEs

• Central Sector Projects- In the central sector there were altogether 607 projects under implementation as on 31 March, 2011  of which 157 projects  were  Mega projects (each costing Rs. 1,000 crore and above), 450 Major projects  (each costing between Rs. 100 crore and Rs. 1000 crore).  The total estimated cost of these 607 projects works out to be Rs. 7,76,715.89 crore.  The total expenditure incurred on 607 Mega and Major projects stands at Rs. 3,55,698.64 crore as on 31 March, 2011.   
• CPSEs Projects - Out of these 607 projects in the central sector, 170 projects (costing Rs. 500 crores and above) belonged to Central Public Sector Enterprises (CPSEs).  Of these 170 projects, 113 were Mega projects and 57 were Major projects. The total estimated cost in respect of these 210 projects of CPSEs stood at Rs. 4,59,799crore, while the revised/anticipated cost is equal to Rs. 5,07,459 crore. 
• Atomic Energy - There were 4 projects in atomic Energy sector under implementation as on 31 March, 2011.  These projects belonged to the Nuclear Power Corporation of India Limited, Uranium Corporation of India Ltd. and Bhavini Limited and cost above Rs. 500  crore. 
• Civil Aviation - There were 9 projects in the civil aviation sector under implementation, as on 31 March, 2011.  Of these, 2 were in Mega category, 7 in Major category.  All these projects belonged to Airport  Authority of India Limited.
• Coal - There were 45 projects in the coal sector under implementation, as on 31 March, 2011.  Of these, 7 were in Mega category, 38 in Major category.  These projects belonged to Central Coal Fields Limited, South-Eastern Coal Fields Limited, Northern Coal Fields Limited, Singareni Colliers Company Limited and Neyveli Lignite Corporation Ltd. 
• Fertilizers - There were 6 projects in the fertilisers sector under implementation as on 31 March, 2011.  Of these, 3 were in Mega category, 3 in Major category.  All these projects belonged to National Fertilisers Limited.  
• Mines -  There was only one Mega project in the mining sector as on 31 March, 2011.  This belonged to National Aluminium Company Limited. 
• Petroleum -  There were 82  projects in the petroleum sector under implementation, as on 31 March, 2011.  Of these, 40 were in Mega category and 42 in Major category. These projects belonged to Bharat Petroleum Corporation Limited, Bongaigaon Refinery & Petrochemicals Ltd., Gas Authority of India Limited, Hindustan Petroleum Corporation Limited, Indian Oil Corporation Limited and Oil & Natural Gas Corporation Limited.  
• Power -  There were 87 projects in the power sector under implementation, as on 31 March, 2011.  Of these, 44 were in Mega category and 43 in Major category.  All these projects belonged to National Hydro-Electric Power Corporation, National Thermal Power Corporation, North East Electric Power Corporation, Satluj Jal Vidyut Nigam Limited, Power Grid Corporation of India Limited, and Tehri Hydro Development Corporation Limited. 
• Shipping & Ports - There were 26 projects in the Shipping & Ports sector under implementation, as on 31 March, 2011.  Of these, 7 were in Mega category and 19 in Major category.  These belonged to Mumbai Port Trust and Shipping Corporation of India. 
• Steel -  There were 19 projects under implementation in the steel sector, as on 31 March, 2011.  Of these, 6 were in Mega category and 13 in Major category.  These projects belonged to National Mineral Development Corporation, Rastriya Ispat Nigam Limited and Steel Authority of India. 
• Telecommunication - There were 41 projects under implementation in the telecommunication sector as on 31 March, 2011.  Of these, 3 were in Mega category and 38 in Major category.  These projects belonged to Bharat Sanchar Nigam Limited. 
• CPSEs Under Construction - There are some CPSEs which yet to go on regular production on a commercial scale as they are at construction stage.  Many of these CPSEs are subsidiary companies set up by (Holding) CPSEs.   Some of these subsidiary companies are ‘shell companies’ which have been set up tentatively to facilitate the establishment of Ultra Mega Power Projects (UMPP) or similar other Projects.   The objective of ‘shell companies’ for UPMM is to develop large capacities of power generation in the different parts of the country.  It brings in the potential investors in UMPP after obtaining the necessary clearances.  The Power Finance Corporation Limited (PFCL) was selected as the Nodal Agency for the development of  such power projects by the Central Electricity Authority.  Many of the ‘shell companies’ are subsidiary companies of PFCL.  As on 31 March, 2011, there were altogether 28 CPSEs ‘under construction’, as against 32 as on 31 March, 2010.  While seven CPSEs ‘under construction’ existing in 2009-10 have been left out, three CPSEs have been added to this list during the financial year 2010-11.

Supreme Court upheld the Constitutional Validity of the RTE Act, 2009

The Supreme Court of India on 12 April 2012 upheld the constitutional validity of the Right to Education Act, 2009, which mandates 25 per cent free seats to the poor in government and private unaided schools uniformly across the country. The apex court clarified that its judgment will come into force from 12 April 2012. However, the act will apply uniformly to government and unaided private schools except unaided private minority schools.

A three-judge bench of Chief Justice S H Kapadia and justices K S Radhakrishnan and Swantanter Kumar gave the ruling.

The   bench had reserved its verdict on 3August 2012 on a batch of petitions by private unaided institutions which had contended that the  section 12 (1)(c) of RTE Act violates the rights of private educational institutions under Article 19(1) (g) which provided autonomy to private managements to run their institutions without governmental interference.
 Right to Education Act (RTE) was passed by the Indian parliament on 4 August 2009.The act came into force on 1 April 2010. It  has the provision of free and compulsory education for children between 6 and 14 in India under Article 21A of the Indian Constitution. India became one of 135 countries to make education a fundamental right of every child.
Section 12(1)(c) of the RTE act says that every recognized school imparting elementary education is obliged to admit underprivileged children even if it is not aiaded by the government to meet its expenses.

India, one of the top clean-energy economies

India continued its ascent as a top destination for private clean energy investment, according to a research report released by The Pew Charitable Trusts, a non-profit organisation.

The country’s ‘National Solar Mission,’ with a goal to have 20 GW of solar power installed by 2020, helped drive the seven-fold jump in solar energy investments to $4.2 billion, the report said. India received $4.6 billion and an additional 2.8 GW of capacity was installed over the course of the year. India now has 22.4 gigawatts of installed clean energy generating capacity.

According to the report, India’s clean energy sector continued to flourish in 2011, with private investment increasing 54 per cent to $10.2 billion, placing the country at sixth position among the G-20 nations. This was the second highest growth rate among the G-20 nations.  

“Clean energy investment, excluding research and development, has grown by 600 per cent since 2004 on the basis of effective national policies that create market certainty,” said Ms Phyllis Cuttino, Director of Pew’s Clean Energy Program.

“On a number of measures, India has been one of the top performing clean energy economies in the 21{+s}{+t} century, registering the fifth highest five-year rate of investment growth and eighth highest in installed renewable energy capacity,” the report said. 

Globally, investment grew to a record $263 billion in 2011, a 6.5 per cent increase over the previous year. The US reclaimed the top spot among all G-20 nations and attracted $48 billion.

However, with $45.5 billion in private investments, China continued to be a hub of clean energy activity — leading the world in wind energy investment and deployment as well as wind and solar manufacturing.

Germany received $30.6 billion, ranking third among G-20 nations. The combination of falling prices and growing investments accelerated installation of clean energy generating capacity by a record 83.5 GW in 2011 bringing the total to 565 GW globally. This represents almost 50 per cent more than installed nuclear power capacity.

Bloomberg New Energy Finance is Pew’s research partner.

Economy - Terms and definitions

Adam Smith (1723 – 1790) Regarded as the father of modern Economics. Author of Wealth of Nations.

Aggregate monetary resources Broad money without time deposits of post office savings organisation (M3).

Automatic stabilisers Under certain spending and tax rules, expenditures that automatically increase or taxes that automatically decrease when economic conditions worsen, therefore, stabilizing the economy automatically.

Autonomous change A change in the values of variables in a macroeconomic model caused by a factor exogenous to the model.

Autonomous expenditure multiplier The ratio of increase (or decrease) in aggregate output or income to an increase (or decrease) in autonomous spending.

Balance of payments A set of accounts that summarise a country’s transactions with the rest of the world.

Balanced budget A budget in which taxes are equal to government spending.

Balanced budget multiplier The change in equilibrium output that results from a unit increase or decrease in both taxes and government spending.

Bank rate The rate of interest payable by commercial banks to RBI if they borrow money from the latter in case of a shortage of reserves.

Barter exchange Exchange of commodities without the mediation of money.

Base year The year whose prices are used to calculate the real GDP.

Bonds A paper bearing the promise of a stream of future monetary returns over a specified period of time. Issued by firms or governments for borrowing money from the public.

Broad money Narrow money + time deposits held by commercial banks and post office savings organisation.

Capital Factor of production which has itself been produced and which is not generally entirely consumed in the production process.

Capital gain/loss Increase or decrease in the value of wealth of a bondholder due to an appreciation or reduction in the price of her bonds in the bond market.

Capital goods Goods which are bought not for meeting immediate need of the consumer but for producing other goods.

Capitalist country or economy A country in which most of the production is carried out by capitalist firms.

Capitalist firms These are firms with the following features (a) private ownership of means of production (b) production for the market (c) sale and purchase of labour at a price which is called the wage rate (d) continuous accumulation of capital.

Cash Reserve Ratio (CRR) The fraction of their deposits which the commercial banks are required to keep with RBI.

Circular flow of income The concept that the aggregate value of goods and services produced in an economy is going around in a circular way. Either as factor payments, or as expenditures on goods and services, or as the value of aggregate
production.

Consumer durables Consumption goods which do not get exhausted immediately but last over a period of time are consumer durables.

Consumer Price Index (CPI) Percentage change in the weighted average price level. We take the prices of a given basket of consumption goods.

Consumption goods Goods which are consumed by the ultimate consumers or meet the immediate need of the consumer are called consumption goods. It may include services as well.

Corporate tax Taxes imposed on the income made by the corporations (or private sector firms).

Currency deposit ratio The ratio of money held by the public in currency to that held as deposits in commercial banks.

Deficit financing through central bank borrowing Financing of budget deficit by the government through borrowing money from the central bank. Leads to increase in money supply in an economy and may result in inflation.

Depreciation A decrease in the price of the domestic currency in terms of the foreign currency under floating exchange rates. It corresponds to an increase in the exchange rate.

Depreciation Wear and tear or depletion which capital stock undergoes over a period of time.

Devaluation The decrease in the price of domestic currency under pegged exchange rates through official action.

Double coincidence of wants A situation where two economic agents have complementary demand for each others’ surplus production.

Economic agents or units Economic units or economic agents are those individuals or institutions which take economic decisions.

Effective demand principle If the supply of final goods is assumed to be infinitely elastic at constant price over a short period of time, aggregate output is determined solely by the value of aggregate demand. This is called effective demand principle.

Entrepreneurship The task of organising, coordinating and risk-taking during production.

Ex ante consumption The value of planned consumption.

Ex ante investment The value of planned investment.

Ex ante The planned value of a variable as opposed to its actual value.

Ex post The actual or realised value of a variable as opposed to its planned value.

Expenditure method of calculating national income Method of calculating the national income by measuring the aggregate value of final expenditure for the goods and services produced in an economy over a period of time.

Exports Sale of goods and services by the domestic country to the rest of the world.

External sector It refers to the economic transaction of the domestic country with the rest of the world.

Externalities Those benefits or harms accruing to another person, firm or any other entity which occur because some person, firm or any other entity may be involved in an economic activity. If someone is causing benefits or good externality to another, the latter does not pay the former. If someone is inflicting harm or bad externality to another, the former does not compensate the latter.

Fiat money Money with no intrinsic value.

Final goods Those goods which do not undergo any further transformation in the production process.

Firms Economic units which carry out production of goods and services and employ factors of production.

Fiscal policy The policy of the government regarding the level of government spending and transfers and the tax structure.

Fixed exchange rate An exchange rate between the currencies of two or more countries that is fixed at some level and adjusted only infrequently.

Flexible/floating exchange rate An exchange rate determined by the forces of demand and supply in the foreign exchange market without central bank intervention.

Flows Variables which are defined over a period of time.

Foreign exchange Foreign currency, all currencies other than the domestic currency of a given country.

Foreign exchange reserves Foreign assets held by the central bank of the country.

Four factors of production Land, Labour, Capital and Entrepreneurship. Together these help in the production of goods and services.

GDP Deflator Ratio of nominal to real GDP.

Government expenditure multiplier The numerical coefficient showing the size of the increase in output resulting from each unit increase in government spending.

Government The state, which maintains law and order in the country, imposes taxes and fines, makes laws and promotes the economic wellbeing of the citizens.

Great Depression The time period of 1930s (started with the stock market crash in New York in 1929) which saw the output in the developed countries fall and unemployment rise by huge amounts.

Gross Domestic Product (GDP) Aggregate value of goods and services produced within the domestic territory of a country. It includes the replacement investment of the depreciation of capital stock.

Gross fiscal deficit The excess of total government expenditure over revenue receipts and capital receipts that do not create debt.

Gross investment Addition to capital stock which also includes replacement for the wear and tear which the capital stock undergoes.

Gross National Product (GNP) GDP + Net Factor Income from Abroad. In other words GNP includes the aggregate income made by all citizens of the country, whereas GDP includes incomes by foreigners within the domestic economy and excludes incomes earned by the citizens in a foreign economy.

Gross primary deficit The fiscal deficit minus interest payments.

High powered money Money injected by the monetary authority in the economy. Consists mainly of currency.

Households The families or individuals who supply factors of production to the firms and which buy the goods and services from the firms.

Imports Purchase of goods and services by the domestic country to the rest of the world.

Income method of calculating national income Method of calculating national income by measuring the aggregate value of final factor payments made (= income) in an economy over a period of time.

Interest Payment for services which are provided by capital.

Intermediate goods Goods which are used up during the process of production of other goods.

Inventories The unsold goods, unused raw materials or semi-finished goods which a firm carries from a year to the next.

John Maynard Keynes (1883 – 1946) Arguably the founder of Macroeconomics as a separate discipline.

Labour Human physical effort used in production.

Land Natural resources used in production – either fixed or consumed.

Legal tender Money issued by the monetary authority or the government which cannot be refused by anyone.

Lender of last resort The function of the monetary authority of a country in which it provides guarantee of solvency to commercial banks in a situation of liquidity crisis or bank runs.

Liquidity trap A situation of very low rate of interest in the economy where every economic agent expects the interest rate to rise in future and consequently bond prices to fall, causing capital loss. Everybody holds her wealth in money and
speculative demand for money is infinite.

Macroeconomic model Presenting the simplified version of the functioning of a macroeconomy through either analytical reasoning or mathematical, graphical representation.

Managed floating A system in which the central bank allows the exchange rate to be determined by market forces but intervene at times to influence the rate.

Marginal propensity to consume The ratio of additional consumption to additional income.

Medium of exchange The principal function of money for facilitating commodity exchanges.

Money multiplier The ratio of total money supply to the stock of high powered money in an economy.

Narrow money Currency notes, coins and demand deposits held by the public in commercial banks.

National disposable income Net National Product at market prices + Other Current Transfers from the rest of the World.

Net Domestic Product (NDP) Aggregate value of goods and services produced within the domestic territory of a country which does not include the depreciation of capital stock.

Net interest payments made by households Interest payment made by the households to the firms – interest payments received by the households.

Net investment Addition to capital stock; unlike gross investment, it does not include the replacement for the depletion of capital stock.

Net National Product (NNP) (at market price) GNP – depreciation.

NNP (at factor cost) or National Income (NI) NNP at market price – (Indirect taxes – Subsidies).

Nominal exchange rate The number of units of domestic currency one must give up to get an unit of foreign currency; the price of foreign currency in terms of domestic currency.

Nominal (GDP) GDP evaluated at current market prices.

Non-tax payments Payments made by households to the firms or the government as non-tax obligations such as fines.

Open market operation Purchase or sales of government securities by the central bank from the general public in the bond market in a bid to increase or decrease the money supply in the economy.

Paradox of thrift As people become more thrifty they end up saving less or same as before in aggregate.

Parametric shift Shift of a graph due to a change in the value of a parameter.

Personal Disposable Income (PDI) PI – Personal tax payments – Non-tax payments.

Personal Income (PI) NI – Undistributed profits – Net interest payments made by households – Corporate tax + Transfer payments to the households from the government and firms.

Personal tax payments Taxes which are imposed on individuals, such as income tax.

Planned change in inventories Change in the stock of inventories which has occurred in a planned way.

Present value (of a bond) That amount of money which, if kept today in an interest earning project, would generate the same income as the sum promised by a bond over its lifetime.

Private income Factor income from net domestic product accruing to the private sector + National debt interest + Net factor income from abroad + Current transfers from government + Other net transfers from the rest of the world.

Product method of calculating national income Method of calculating the national income by measuring the aggregate value of production taking place in an economy over a period of time.

Profit Payment for the services which are provided by entrepreneurship.

Public good Goods or services that are collectively consumed; it is not possible to exclude anyone from enjoying their benefits and one person’s consumption does not reduce that available to others.

Purchasing power parity A theory of international exchange which holds that the price of similar goods in different countries is the same.

Real exchange rate The relative price of foreign goods in terms of domestic goods.

Real GDP GDP evaluated at a set of constant prices.

Rent Payment for services which are provided by land (natural resources).

Reserve deposit ratio The fraction of their total deposits which commercial banks keep as reserves.

Revaluation A decrease in the exchange rate in a pegged exchange rate system which makes the foreign currency cheaper in terms of the domestic currency.

Revenue deficit The excess of revenue expenditure over revenue receipts.

Ricardian equivalence The theory that consumers are forward looking and anticipate that government borrowing today will mean a tax increase in the future to repay the debt, and will adjust consumption accordingly so that it will have the
same effect on the economy as a tax increase today.

Speculative demand Demand for money as a store of wealth.

Statutory Liquidity Ratio (SLR) The fraction of their total demand and time deposits which the commercial banks are required by RBI to invest in specified liquid assets.

Sterilisation Intervention by the monetary authority of a country in the money market to keep the money supply stable against exogenous or sometimes external shocks such as an increase in foreign exchange inflow.

Stocks Those variables which are defined at a point of time.

Store of value Wealth can be stored in the form of money for future use. This function of money is referred to as store of value.

Transaction demand Demand for money for carrying out transactions.

Transfer payments to households from the government and firms Transfer payments are payments which are made without any counterpart of services received by the payer. For examples, gifts, scholarships, pensions.

Undistributed profits That part of profits earned by the private and government owned firms which are not distributed among the factors of production.

Unemployment rate This may be defined as the number of people who were unable to find a job (though they were looking for jobs), as a ratio of total number of people who were looking for jobs.

Unit of account The role of money as a yardstick for measuring and comparing values of different commodities.

Unplanned change in inventories Change in the stock of inventories which has occurred in an unexpected way.

Value added Net contribution made by a firm in the process of production. It is defined as, Value of production – Value of intermediate goods used.

Wage Payment for the services which are rendered by labour.

Wholesale Price Index (WPI) Percentage change in the weighted average price level. We take the prices of a given basket of goods which is traded in bulk.