1. Odisha Govt announces Rs 200 crores relief for drought hit distressed farmers
Tags: Economy/Finance State News
Odisha Chief Minister Naveen Patnaik on 15 November 2022 announced an input Assistance of Rs 200 crores for the distressed farmers of the drought-affected areas of the state. The entire expenditure would be borne by the State Government.
About 2,63560 hectares of cropland in 12 districts have suffered crop loss of 33 percent and above due to the drought in the state . According to the Odisha government many affected farmers have not yet received their Crop Insurance dues from the Insurance companies.
To help the farmers of the state the Chief Minister has decided to provide assistance out of the state’s own resources.
Pradhan Mantri Fasal Bima Yojana (PMFBY)
- The Government of India launched Pradhan Mantri Fasal Bima Yojana (PMFBY) in 2016 to provide a comprehensive insurance cover against the failure of the crops.
- The scheme has replaced the National Agricultural Insurance Scheme and Modified National Agricultural Insurance Scheme.
- The scheme is being administered by the Union Ministry of Agriculture and Family Welfare.
- The insurance facilities to the farmers are provided by approved Insurance companies .
- The scheme has been made optional to the farmers since the 2020 Kharif season.
Premium to be paid for crop insurance by the farmers
Government has fixed the premium which has to be paid by the farmers. They are as follows:
- For the Kharif crops (all food grains and oil seeds) the farmer has to pay 2% of the premium.
- For the Rabi crops (all food grains and oil seeds) the farmers will pay 1.5% of the premium.
- For the annual (Rabi and Kharif) horticulture and commercial crops the farmers will pay 5% of the premium.
- The rest of the premium amount is shared by the Central government and the concerned state government.
2. Jeff Bezos Amazon Company becomes the first company in history to lose $1 trillion market capitalisation
Tags: Economy/Finance International News
Jeff Bezos’s company Amazon has become the first publicly listed company in the world to lose a trillion dollars in market value as a combination of fear of recession, rising inflation, tightening monetary policies and slowdown in the earnings updates triggered a historic selloff in the stock.
Shares in the e-commerce and cloud company have been declining in October and November month pushing its market value to about $879 billion from a record close at $1.88 trillion in July 2021.
The Big five Tech companies of America, Intel, Microsoft, Alphabet (owner of Google),Meta (formerly Facebook) and Amazon share prices are falling in the United States as their growth prospects look uncertain in an economy plagued by fear of recession.
The top five US technology companies by revenue have lost nearly $4 trillion in market value this year.
In October 2022, Amazon projected the slowest revenue growth for a holiday quarter in the company’s history as shoppers reduce their spending in the face of economic uncertainty. That sent its market value below $1 trillion for the first time.
What is Market capitalisation or M-cap?
Market capitalisation refers to the total number of free floating shares of a company in the market multiplied by the current market price of each share.
Explanation
Suppose there is a company called Tata motors and its promoter is Mr Ratan Tata. The company has 100 shares and all the shares of the company are with Ratan Tata. Ratan Tata decides that he needs money. He decided to sell 20 shares of Tata motors to the public through the Tata Motors Initial Public offering (IPO) at Rs 10 per share. People will buy the shares and the Tata motors company will be listed on an Indian Stock Exchange like BSE after the completion of the process.
Now Ratan Tata has only 80 shares of the company.
Keep in mind only 20 shares of the company will be listed on BSE as the company has sold only 20 shares to the public. In Stock market language it will be said that the Tata motors free float is 20 shares not 100.
Now suppose the price of the Tata motors in the market is Rs 100 then the Market capitalization of the Tata Motors will be: Free floating share of the company X market price of the company’s single share.
Thus it will be 20X Rs 100= Rs 2000
Types of Market capitalisation
In India on the basis of market capitalization companies are classified into Large Cap, Mid-Cap and Small Cap. Here cap means capitalisation.
Publicly listed companies which have a market capitalization of Rs 20,000 crore or more are called as Large Cap companies.
Mid-Cap: Publicly listed companies which have a market capitalization of less than Rs 20,000 crores and up to Rs 5000 crore.
Small Cap: Publicly listed companies which have a market capitalization of less than Rs 5,000 crores.
3. Central government releases Rs 13,000 crore from Contingency Fund for Pradhan Mantri Awas Yojana -Gramin
Tags: National Economy/Finance Government Schemes
The Union Finance Ministry has authorized release of Rs 13,000 crore from the Contingency Fund of India to meet the additional financial demand for implementing the Government of India's flagship Pradhan Mantri Awas Yojna-Gramin (PMAY-G) programme in 2022-23. This amount is in addition to the Rs 20,000 crore allocated for the programme in the Union Budget 2022-23.
Reason for such unusual step
The Government of India under the PMGY-G has set a target of building 52.78 lakh houses under the scheme in 2022-23.
In the first seven months (April-October 2022), the Union Rural Development Ministry has utilized Rs 16,785 crore which is about 84 per cent of the Rs 20,000 crore under the PMAY-G scheme.
With several states demanding extra funds for construction of rural houses, the Union Rural Development Ministry had approached the Ministry of Finance way back in June for additional allocation
Funding pattern of the PMAY-G and Central government share
Under the PMAY-G scheme, the government provides financial assistance of Rs 1.20 lakhs per beneficiary for construction of houses in rural areas in plain areas and in the North East and Hilly areas the assistance amount is Rs 1.30 lakhs per beneficiary.
The financial assistance shared between the Center and the States are as follows:
- In the plain areas the ratio of the Center and States is 60:40.
- In the hilly areas (8 Northeastern states, Himachal Pradesh and Uttarakhand) the ratio of the Center and States is 90:10.
- In the Union Territories the centre’s share is 100%.
PMAY-G and financial obligation of the Central Government for the remaining period
- The Narendra Modi government when it came to power in 2014 changed the name of the Indira Awas Yojana to Pradhan Mantri Awas Yojna-Gramin (PMAY-G) and it was re- launched on 20 November 2016.
- It set a target of providing “Housing to All” for rural areas to eligible beneficiaries by 2022 which was later extended to 2024. A total of 2.95 crore houses were to be constructed under the scheme.
- According to the government a total of 2.02 crore houses have been built till 15 August 2022.
- The government has set a target to build 52.78 lakh houses in 2022-23 and 57.34 lakh houses in 2023-24.
- According to the estimates of the Union Ministry of Rural Development which is implementing the scheme, a Central share of Rs 48,422 crore would be required to complete the target of 52.78 lakh houses in 2022-23.
- However only Rs 20,000 crore was allocated in the Budget 2022-23. Thus the Union Rural Development Ministry asked the Union Finance Ministry to release the additional fund otherwise it will not be able to release the Centre’s share of the fund to the state government and the scheme will not be able to achieve the target.
Why Release of Funds from Contingency Fund?
- In the Union Budget the government mentions how much money is allocated to a Union Ministry and for which purpose. If the ministry’s need for funds is more than those allocated in the budget then permission of the Parliament is needed.
- For this purpose a supplementary demand for grants is brought before the Parliament requesting for extra funds. The Parliament authorizes the extra expenditure by passing the supplementary grants.
- In this case the Parliament's next winter session is expected to start in December 2022. The Rural development ministry wanted the extra fund now so that the scheme can achieve its target in time. The Finance Ministry agreed and released the fund from the
- Contingency fund of India.
What is the Contingency Fund of India?
- Article 267 of the constitution provides for a Contingency Fund of India for the central government and for each state government. Parliament can set the fund for the Government of India and the concerned state legislature set up for its state government.
- The Contingency fund of India was set up under the Contingency Fund of India act 1950.
- Its corpus was increased from Rs 500 crore to Rs 30,000 crore in 2021-22. This fund is used to meet unforeseen expenditure like natural calamities etc.
- The Secretary, Ministry of Finance manages this fund on behalf of the President of India. There is no need for prior approval from the Parliament to spend the money from the Contingency Fund of India.
Union Minister for Finance: Nirmala Sitharaman
Union Minister for Rural Development: Giriraj Singh
4. Government announces Framework for issuance of Sovereign Green Bonds
Tags: Environment Economy/Finance
The Central government has issued a framework for its proposed Sovereign Green Bonds .Nirmala Sithraman in her budget speech had proposed the issuance of Sovereign Green Bond in the 2022-23 financial year. The government said later it proposes to issue Rs 16,000 crore worth of bonds in the second half of the current financial year.
What is a Sovereign Green Bond?
Sovereign means Government of India. Bond means that it is a debt instrument which is issued to raise capital or fund and it creates debt on the issuer. Here Green means that the fund raised from the sale of the bonds will be used for environment friendly projects.
Main features of the Sovereign Green Bond
Committee to select eligible project
The government will set up a ‘Green Finance Working Committee' headed by the Chief Economic Advisor Dr V. Anantha Nageswaran. The committee will select eligible projects for financing.
The committee will meet at least twice a year and will include members from relevant ministries, the Ministry of Environment, Forests and Climate Change, NITI Aayog, and the Budget Division of the finance ministry's Department of Economics and others.
Projects to be financed
The projects eligible to be financed or re-financed by the proceeds of Green Bond issuances fall under the following nine categories:
- renewable energy,
- energy efficiency,
- clean transportation,
- climate change adaptation,
- sustainable water and waste management,
- pollution prevention and control,
- green buildings,
- Sustainable management of living natural resources and land use, and terrestrial and aquatic biodiversity conservation.
Projects which are not eligible
- The funds raised through the green bonds, however, won’t be used to finance hydropower plants that are larger than 25 MW,
- nuclear projects and
- Any biomass-based power generation with biomass originating from protected areas.
Which type of government spending will qualify for the Green sovereign bonds?
Spending that will qualify for the green financing includes government expenditure in the form of investment, subsidies, grant-in-aids, or tax foregone or select operational spending and R&D expenditures in public-sector projects for reducing the carbon intensity of the economy. Investment in equity, by using the green bond proceeds, is allowed only in case of metro projects.
Expenditures directly related to fossil fuel won’t qualify for green financing. However investment or spending aimed at a relatively cleaner Compressed Natural Gas (CNG) is allowed if it’s used in public transportation projects only.
The Framework has been rated Medium Green
According to the Finance Ministry the framework has been termed “medium green” by CICERO.
CICERO is a leading global independent reviewer of green bond investment architecture.
This is the best grade after “dark green”, assigned by CICERO for a green bond that aligns with a low-carbon climate resilient future.
Points to remember
First Green bond in the world was issued by the European Investment Bank in 2007.
The World Bank issued green bonds for the first time in 2008.
India’s first green bond was issued by Yes Bank in 2015.
5. India International Trade Fair begins at Pragati Maidan in New Delhi
Tags: Festivals Economy/Finance National News
The 41st India International Trade Fair (IITF) began on November 14, 2022 at Pragati Maidan in New Delhi.
Important facts
Commerce and Industry Minister Piyush Goyal inaugurated the fair, which will run till November 27.
The theme of the year 2022 trade fair is 'Vocal for Local, Local to Global'.
This 14 day mega event has a special significance as it coincides with the celebration of 'Azadi Ka Amrit Mahotsav'.
Twenty nine states and union territories are participating in this program. Bihar, Jharkhand and Maharashtra are the partner states in the fair while Uttar Pradesh and Kerala are participating as focus states.
Twelve countries including Afghanistan, Bangladesh, Bahrain, Belarus, Iran, Nepal, Thailand, Turkey, UAE and UK are participating in the fair.
Around 2500 domestic and foreign exhibitors are participating in the trade fair to showcase their products and services.
The first five days (November 14-18) of the trade fair are exclusively reserved for business days.
'General public day' is reserved from 19 to 27 November.
About India International Trade Fair
It is an annual fair organised by India Trade Promotion Organization (ITPO) at Pragati Maidan, Delhi.
This fair was first organised in Delhi in the year 1980 and since then, it is an annual event which is much awaited by the people all over the country.
The fair provides a platform to the manufacturers, traders, exporters and importers of the country to showcase their products.
6. Tata Motors to delist American depository receipts from NYSE from January 2023
Tags: Economy/Finance
India’s leading motor company TATA motors has announced that it will delist its American Depository Receipts (ADR) from the world’s largest stock exchange, New York Stock Exchange (NYSE) in the United States of America from January 2023.
Tata motors issued ADR in 2004 with the objective to raise foreign shareholders participation in the company and raise foreign capital. Tata Motors said that at present the company has a considerable foreign investment in the company and interest in its ADR is declining. Hence the company has decided to delist the ADR.
Infosys was the first Indian company to issue an ADR in 1999. The Infosys ADR was listed at the American stock exchange NASDAQ.
What is an American Depository Receipts (ADR)?
It is a derivative instrument issued by an American depository to the American investor and listed on an American stock exchange. It is issued against the equity shares of a non-American company. The ADR are traded like a share and the ADR holder has all the rights which are enjoyed by the equity shareholder of the company, except voting rights.
How does it works?
For example Tata Motors wants to issue ADR so as to raise foreign capital and increase foreign participation in the company.
Tata Motors for example will either create new 10,000 shares or use the existing shares of the company. It approaches an American depository, in this case Citibank and asks it to deposit its 10000 shares with it.
The Citibank will accept the Tata motors shares and will issue a recipient on behalf of the Tata motors deposited shares. Suppose for one share one receipt is issued. Thus a total of 10,000 receipts will be issued by Citibank. The receipts will be sold to the American investor for say $10 per receipts.
Thus $10, 00, 00 worth of receipts will be sold and the depository after deducting its commission will give the rest of the amount to Infosys.
Here the Tata motors shares remain deposited with the American depository and the American investors hold the receipts issued by the depository. That is why receipts are a derivative instrument.
The Receipts will be listed on an American stock exchange and traded like ordinary shares.
The receipts issued by an American depository is known as American Depository Receipts.
The holder of the ADR will get all the benefits enjoyed by the Tata motors Indian shareholder except voting rights. Voting rights are not given to the ADR holder as still India doesn't have full Capital account convertibility.
New York Stock Exchange (NYSE)
It is the world's largest stock exchange located in New York City , United States of America .
It is also famous as Wall Street . Wall Street is the name of the place where the building which hosts the NYSE is located.
The Index of the NYSE is Dow Jones Industrial Average or Dow Jones . It was the first stock market index in the world . The BSE index Sensex is based on the Dow Jones model.
ICICI was the first Indian company to be listed on NYSE in 1999.
NYSE was set up on 17 May 1792.
7. US Treasury removes India from its Currency Monitoring List
Tags: Economy/Finance
The US Department of Treasury (American Finance Ministry) on 11 November 2022 has removed India along with Italy, Mexico, Thailand and Vietnam from its Currency Monitoring List.
China, Japan, Korea, Germany, Malaysia, Singapore, and Taiwan are the seven economies that are a part of the current monitoring list, the Department of Treasury said in its biannual report to the American Congress (American Parliament).
India was for the first time put in the currency monitoring list in 2018 and was later on removed later on. But it was again put in the list in April 2021.
The countries that have been removed from the list have met only one out of three criteria for two consecutive reports, it said.
What is Currency Monitoring List?
Under the 2015 act of the United States the department of Treasury has to submit a semi-annual report to the United States Congress(American Parliament) in which it mentions major trading partners of the United States which it believes enjoy unfair trade advantage due to currency manipulation.
Currency manipulation means that the country deliberately keeps the value of its currency low as compared to its competitors so as to keep the price of its exported goods low and hence boost its exports.
An economy meeting two of the three criteria in the 2015 Act is placed on the Monitoring List. These criteria are as follows:
- The country shall have a large trade surplus with the United States.
- The country persistently intervenes in the foreign exchange market and buys foreign exchange in at least six out of 12 months and the net purchase of foreign currency shall be higher than 2% of country’s gross domestic product (GDP).
- The country shall have a current account surplus of at least 3% of GDP.
8. Moody's cuts India's economic growth projections to 7% for 2022 as world recession looms
Tags: Economy/Finance
Moody's Investors Service on 11 November 2022 has cut India's GDP growth projections for 2022 to 7 per cent from its earlier forecast of 7.7 per cent as the global slowdown and rising domestic interest rates will adversely affect the economic growth . Moody considers calendar years (January-December) for its forecast while India's financial year is from April-March.
This is the second time that Moody's Investors Service has cut India's growth estimates. In September, it had cut projections for the current year to 7.7 per cent from 8.8 per cent estimated in May.
In its Global Macro Outlook 2023-24 released on 11 November 2022 Moody highlighted “higher inflation, high-interest rates in India and slowing global growth “as a factor that has led it to revise the Indian growth rate to 7 % in 2022.
Moody's expects growth to decelerate to 4.8 per cent in 2023 and then to rise to around 6.4 per cent in 2024.
Grim outlook for Global economy
It said the global economy is on the verge of a downturn amid extraordinarily high levels of uncertainty amid persistent inflation, monetary policy tightening, fiscal challenges, geopolitical shifts and financial market volatility.
Global growth will slow in 2023 and remain sluggish in 2024. Still, a period of relative stability could emerge by 2024 if governments and central banks manage to navigate their economies through the current challenges.
Recession
When there is a negative growth in the economy for the two consecutive quarters then the economy is declared to be in recession.
Forecast for Indian Economy Growth Rate by various agencies (till 11 November 2022)
Agency /Institutions | Forecast for 2022-23 |
RBI | 7.0% |
World Bank | 6.5% |
International Monetary Fund | 6.8% |
Asian Development Bank | 7.0% (2022) |
SBI | 6.8% |
Moody Investor Service | 7.0%(2022) |
India Rating | 6.9% |
Standard and Poor Rating | 7.3% |
UNCTAD | 5.7 %(2022) |
OECD | 6.9% |
Fitch rating | 7% |
9. PM to inaugurate the RFCL fertilizer plant at Ramagundam in Telangana
Tags: place in news Economy/Finance State News
In an effort to boost local production of fertilizer in the country, Prime Minister Narendra Modi will on 12 November 2022 inaugurate the RFCL fertilizer plant at Ramagundam in Peddapalli district of Telangana. The plant which started commercial production in 2021 has been revived at a cost of Rs 6,338 crore.
The Prime Minister will also inaugurate 54.1 km of railway line from Bhadrachalam Road to Sattupalli built with a budget of Rs 990 crore.
Government effort to become self-sufficient in Urea by 2024
India is a big importer of Urea and meets around 30% of its 35 million tonnes of annual urea requirement from imports. China, Oman, UAE, Egypt and Ukraine were the main source of Urea in 2021-22.
India aims to end imports of urea from 2025 by boosting its local production capacity with the commissioning of new plants.
According to the Union Fertilizers and Chemical ministry, the government plans to commission and revive five new plants at Gorakhpur in Uttar Pradesh, Ramagundam in Telangana, Talcher in Odisha, Barauni in Bihar and Sindri in Jharkhand. These plants are expected to add an additional capacity of 6.5 million tonnes of urea every year.
RFCL fertilizer plant
The Ramagundam Fertilizers and Chemical limited (RFCL) was set up in 2015 to set up a natural gas based ammonia urea complex along at Ramagundam, Telangana with design capacity of 2,200 MTPD(metric tonnes per day ) Ammonia Unit and 3,850 MTPD Urea Plant.
RFCL is a joint venture of National Fertilizers Limited (NFL), Engineers India Limited (EIL), Fertilizer Corporation of India Limited (FCIL) and Telangana government.
Gas Authority of India (GAIL) and HTAS Consortium (consisting of HT Ramagundam A/S, IFU and Danish Agribusiness Fund, Denmark) have also invested in the project.
10. Kerala becomes first state to implement uniform price of gold across the state
Tags: Economy/Finance State News
In November 2022, Kerala became the first state in India to implement a uniform price of gold across the state by the government.
Important Facts:
Kerala is the first state in the country to introduce uniform price trading of gold on the basis of bank rate.
In a meeting between officials of Malabar Gold and Diamonds, one of the country's largest gold and diamond retail chains and key members of All Kerala Gold and Silver Merchants' Association, it was decided to keep the price of 22 carat gold of 916 purity uniform. Is.
This step of the government will prove to be helpful in protecting the interest of consumers across the state and bringing price transparency in the business.
In Malabar Gold & Diamonds, the state with its 'One India One Gold Rate' policy has taken the initiative to introduce uniform gold price across all its stores in the country.
Basis for applying uniform price of gold at the national level
According to M P Ahmed, Chairman, Malabar Gold and Diamonds Group, “Kerala being a top gold consuming state in the country can set the stage for a uniform gold price across the country.
MP Ahmed also demanded that the selling price of gold everywhere in the country should be integrated.
The price of gold across the country should be based on the bank rate. It is worth mentioning in this context that in most states the price of gold is Rs 150-300 per gram higher according to the bank rate.
Kerala
Capital: Thiruvananthapuram
Governor: Arif Mohammad Khan
Chief Minister: Pinarayi Vijayan
