Indian Economy - Current Affairs for December, 2017

The Asian Development Bank (ADB) in its Asian Development Outlook Supplement has lowered India's economic growth forecast for current fiscal i.e. FY 2017-18 by 0.3% to 6.7% from earlier 7%. The reasons cited for this downward revision of growth forecast of largest economy South Asia are lingering effect of demonetisation, transitory challenges to Goods and Services Tax (GST) and weather-related risks to agriculture. ADB Forecast: Know More

• ADB has also revised downwards India's gross domestic product (GDP) outlook for next fiscal beginning from March 2018 to 7.3% from 7.4% mainly due to rising global crude oil prices and soft growth in private sector investment.
• However, it expects growth to pick up in remaining two quarters of FY 2017-18 as Government is implementing measures to ease compliance with new GST as well as bank recapitalisation.
• Inflation in India has remained subdued in first seven months of 2017-18, averaging 2.7%, with low food prices and demand still not out of woods because of demonetisation.
• However, inflation had picked up since July 2017 on price uptick for food, especially pulses and vegetables. Fuel prices also inched up in response to rising global crude oil prices.
• It has now projected inflation to average 3.7% in 2017-18, somewhat below the 4% earlier forecast.

Schemes such as BPO Promotion and Common Services Centres have helped us create digital inclusion and equitable growth. Growth of IT sector in India has traditionally remained confined to a few select urban clusters. The India BPO Promotion Scheme was conceived t change this. Given the special focus of the Government to develop the North East regions of India, the North East BPO Promotion Scheme was also conceived simultaneously. The schemes provide special incentives of upto Rs. 1 lakh per seat in the form of Viability Gap Funding (VGF). Disbursement of financial support under these schemes is directly linked with employment generation. These schemes provide special incentives for employment to women and Divyang, setting up operations in towns other than capital towns, generating employment beyond target and promoting local entrepreneurship. There are also special provisions for the Himalayan states of Jammu & Kashmir, Himachal Pradesh and Uttarakhand. A total of 48,300 seats under India BPO Promotion Scheme and 5000 seats under North East BPO Promotion Scheme have been distributed across different states in proportion to their populations. Some of the locations where BPOs have commenced operations in the North East are Guwahati, Jorhat, Kohima, Imphal etc.

India's first Electronic Manufacturing Cluster (EMC) will be coming to Andhra Pradesh. EMC has been designed and developed for providing facilities and amenities for manufacturing mobiles and allied products. The Union Government, through Ministry of Electronics and Information Technology (MeiTY) in 2012 had announced about setting up EMC in India, with grant-in-aid for establishing such clusters. In 2015, Andhra Pradesh Government had announced first exclusive mobile and electronic manufacturing cluster in the new capital city Amaravati. State Government had allotted 113.27 acres of land for new cluster, through Andhra Pradesh Industrial Infrastructure Corporation (APIIC). For this purpose, a Special Purpose Vehicle (SPV) called Sri Venkateswara Mobiles and Electronics Manufacturing Hub Private Limited was formed. Besides, an anchor unit has been formed in name of Seven Hills Digital Park Private Limited (SHDPPL) for three companies. The EMC will generate around 50,000 jobs every year.

The Federal Reserve raised interest rates by a quarter of a percentage point on December 13, as anticipated, but left its rate outlook for the coming years unchanged even as policymakers projected a short-term acceleration in US economic growth. Having raised its benchmark overnight lending rate three times this year, the Fed projected three more hikes in each of 2018 and 2019 before a long-run level of 2.8% is reached. That is unchanged from the last round of forecasts in September. Gross domestic product is expected to grow 2.5% in 2018, up from the 2.1% forecast in September, while the unemployment rate is seen falling to 3.9% next year, compared to 4.1% in the last set of projections. But inflation is projected to remain shy of the Fed's 2% goal for another year, with weakness on that front remaining enough of a concern that policymakers saw no reason to accelerate the expected pace of rate increases. Policymakers do see the federal funds rate rising to 3.1% in 2020, slightly above the 2.8% "neutral" rate they expect to maintain in the long run. That indicates possible concerns about a rise in inflation pressures over time. As it stands, inflation is expected to remain below the Fed's target in the near term and is being monitored "closely" by policymakers. The Fed also said that, as of January, it would raise the amount of Treasury bonds and mortgage-backed securities that it would not reinvest on a monthly basis to $12 billion and $8 billion, respectively. That is consistent with its balance sheet reduction plan.

The Ministry of Micro, Small and Medium Enterprises (MSME) launched Public Procurement Portal 'MSME Sambandh' for Public Procurement Portal for MSMEs. The objective of the portal is to monitor the implementation of the Public Procurement from MSEs by Central Public Sector Enterprises (CPSEs). It will help MSMEs in participating in the procurement process. Besides, it will help Ministries and the CPSEs can assess their performance in procurement process as stipulated in Procurement Policy, 2012. The Procurement Policy launched in 2012 mandates the Central Government Departments, CPSEs to procure necessarily from MSEs. It means that every Central Ministry, Department, PSU shall set an annual goal for procurement from MSE sector at beginning of year. Its objective is to achieve overall procurement goal of minimum of 20% of the total annual purchases of the products or services produced or rendered by MSEs.

The agriculture ministry has announced India is second largest fish producer in the world. Overall fish production has increased from 0.75 million tonne of 1950-51 to 11.41 million tonne in 2016-17. Besides, this sector provides employment and livelihood support to more than 15 million people of in the country. The announcement was at the Aqua Goa Mega Fish Festival, 2017, organized at SAG Campal Ground, Panaji, Goa. Fisheries is a fast growing sector in India, which provides nutrition and food security to a large population of the country as well as providing income and employment to fishermen and fish farmers. Fisheries development in India is not only meeting the protein requirements of the country, but it is also making significant contribution of about 6.2 percent in the fish production of the world. Blue Revolution in India

• Government has merged all the schemes of fisheries sector into an umbrella scheme of Blue Revolution: Integrated Development and Management of Fisheries and approved with the outlay of Rs. 3000 crores.
• Blue Revolution is focusing to foster use of new and modern technology, training and capacity building of fishers and fish farmers, adoption of scientific advises & methods, species diversification and proper fish health management etc.
• The main aim of Government is to double the income of fishers and fish-farmers by 2022 through implementation of Blue Revolution"
• Mariculture has been taken up under Blue Revolution to further enhance production from marine sector. Coastal States are provided with financial and technical support including training and capacity building.
• Government of India has taken an important step on 9th March, 2017 by adding a new component under the Blue Revolution to promote tradition fishers in the Deep Sea Fishing.
• Under the said component, the Government of India is providing 50% financial assistance i.e., upto Rs.40 lakh to the traditional fishers, their Self Help Groups, Societies and Organizations in acquisition of deep sea fishing vessels equipped with modern technology, which costs approximately, Rs.80 lakh per vessel.

Half a billion people have gained access to electricity in India since 2000, almost doubling the country's electrification rate, according to the World Energy Access report released on Dec 6, 2017 by the International Energy Agency (IEA). This "remarkable" growth puts India on course to achieving access to electricity for all in the early 2020s, the report added. The number of people without access to electricity fell to 1.1 billion in 2016 from 1.7 billion in 2000. It is on track to decline to 674 million by 2030, with India reaching universal access well before then. Since 2012, more than 100 million people per year have gained electricity access, an acceleration from the rate of 62 million people per year seen between 2000 and 2012. Our analysis in the World Energy Outlook confirms that India is emerging as a major driving force in global energy trends, with all modern fuels and technologies playing a part. Half a billion people have gained access to electricity in India since 2000, almost doubling the country's electrification rate. This remarkable growth puts India on course to achieving access to electricity for all in the early 2020s - a colossal achievement. Rate of Electrification: Know More

• Coal has fuelled about 75% of the new electricity access since 2000, with renewable sources accounting for around 20%, according to the report.
• However, 239 million people remained without electricity access in 2016, about a quarter of the worldwide total.
• The report added that India is expected to reach universal electricity access in the early-2020s. Progress has also been made on clean cooking, although 830 million people in India still lack access.
• There are clear indications however that government policy efforts targeting LPG have begun to take hold.
• The share of the population relying primarily on biomass for cooking fell to 59% in 2015 from 66% in 2011.
• By 2030, the promotion of LPG and improved biomass cookstoves by the government means that more than 300 million people gain access to clean cooking facilities, but still more than one-in-three people remain without

The monetary policy committee of the Reserve Bank of India on Dec 6 2017 decided to keep the repo rate unchanged at 6%, for the second consecutive meeting. RBI did so while maintaining its neutral stance. This means banks are unlikely to revise their home or car loan rates anytime soon. While observing that moderation in inflation (excluding food and fuel) observed in Q1 of 2017-18 had, 'by and large', 'reversed', the six-member committee said inflation may continue to accelerate in the near term. The RBI revised its inflation projection to the range of 4.3-4.7% for the last two quarters of the current financial year. The central bank had projected an inflation range of 4.2-4.6% in the last policy meeting held in October. On growth, while observing that Q2 growth for the quarter ended September was lower than that projected in its October resolution, the central bank has retained the full-year GVA growth projection at 6.7%. RBI Repo Rate: Know More

• Repo (Repurchase) rate also known as the benchmark interest rate is the rate at which the RBI lends money to the banks for a short-term (max. 90 days).
• When the repo rate increases, borrowing from RBI becomes more expensive. If RBI wants to make it more expensive for the banks to borrow money, it increases the repo rate similarly, if it wants to make it cheaper for banks to borrow money it reduces the repo rate.
• If the repo rate is increased, banks can't carry out their business at a profit whereas the very opposite happens when the repo rate is cut down.
• Generally, repo rates are cut down whenever the country needs to progress in banking and economy.
• Currently, the new RBI Governor Sri Urjit Patel has cut the previous Repo rate to 6.00% for facilitation of India's economy.
• In its fifth bi-monthly Monetary policy review on 6 December 2017, RBI unchanged Repo Rate and kept at 6 %.

The 3rd edition of the Dialogue between the NITI Aayog and the Development Research Council of China, the DRC- NITI Aayog Dialogue was held in Beijing on Dec 5, 2017. The meeting was co-chaired by Vice Chairman NITI Aayog, Dr. Rajiv Kumar, and Mr Li Wei, President (Minister), DRC. The Indian delegation led by Vice Chairman, NITI Aayog included senior officials from NITI Aayog as well as Ministries of New & Renewable Energy and Food Processing. The Chinese delegation comprised of researchers and officials from DRC as well as the Chinese Ministries of Finance, Commerce, Foreign Affairs, and the National Development & Reform Commission. The DRC-NITI Dialogue provides an important platform for both sides to discuss key macro- economic issues impacting both countries and areas of mutual interest. The 3^rd Dialogue enabled an in-depth interaction between the two delegations on the world economic prospects, India-China economic cooperation and practices for sustainable growth. Both sides exchanged views on policies and measures to address the challenges for attaining sustainable growth. In-depth discussions were held on sharing of experiences and best practices in the areas of Electric mobility, Clean energy, Higher education and Special Economic Zones (SEZs). The two sides agreed that the 4^th NITI Aayog - DRC Dialogue will be convened in India in 2018. MoU Between DRC and NITI Aayog

• The dialogue took place under the MOU between NITI Aayog and the Development Research Centre (DRC), State Council of the China.
• The MoU was signed during the visit of Prime Minister Shri Narendra Modi to China in May 2015.
• This was the 3^rd Dialogue between the two sides. The 2^nd Dialogue was held in New Delhi in November, 2016.