Comprehensive News Analysis - 14 January 2016

Table of Contents:

A. GS1 Related:

B. GS2 Related:

C. GS3 Related:

1. Centre clears new crop insurance scheme

2. Beaching of Whales: Explained

3. Features of Defence Procurement Purchase (DPP)

4. Some nice Numbers

D. Important Editorials: A Quick Glance

The Hindu:

Indian Express:

1. Rise & Fall: New IIP and CPI Data

Others:

1. Financial Express: Kill inflation Targeting?

2. Mint: Risky Agriculture

3. Business Line: Shankar Acharya: Predicting 2016: Ten Points!

E. Concepts-in-News: Related Concepts to Revise/Learn

F. Practice Questions

G. Archive

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Topic: Economy, Paper III

Category: Inflation, Industry

Key points:

– industrial production: contracted by 3.2 per cent in November — the lowest level in over four years.

– Much of the blame goes to the weak performance of the manufacturing sector

– consumer price inflation: rose to 5.6 per cent for December, even though it remains within the RBI’s January target level of 6 per cent.

– The main reason here was the higher food price inflation. Taken together, the data paints a contradictory picture.

– What to do now? if the government tries to jump-start the economy through higher expenditure, it will further worsen its fiscal deficit and increase inflation!

– If the RBI tries to reduce interest rates in order to incentivise investment, it may fuel inflation and not meet its targets!

– Best Option? – Try to improve quality of investment (not just quantity) – channel in right way!

On Inflation Targeting:

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Topic: Economy, paper III

Category: Insurance, Agriculture, Financial Inclusion

Key Points:

– A new crop insurance scheme approved

– If implemented well, it could help delink agriculture from the associated uncertainties.

– The scheme, covering all crops, will merge all farm-related insurance schemes and provide cover for production-related risks and price volatility.

– QUOTABLE QUOTE: The fundamental problem with Indian agriculture is that farmers face yield risks as much as they face price risks. No other sector can claim this level of uncertainty at almost every level of operation—the risk of monsoon failure and infestations during crop growth, the risk of lower prices after harvest, compromise in quantity and quality during storage and distribution, the list goes on. These risks assume higher proportions given productivity and technology lacunae and affects the economy as a whole through the agriculture sector’s extensive linkages.

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20 predictions for the year – 10 for India, and 10 for the world:

– World:

1. Global economic growth will continue to be tepid at 2.5 per cent or less;

2. China to grow slower;

3. China to remain under party rule;

4. Less political stability in Europe due to refugee crisis, etc.;

5. West Asia will remain unstable;

6. Brent crude will be trading at $50 per barrel (or higher) by December;

7. Hilary Clinton will win

– India:

1. Growth in the order of seven per cent only;

2. Consumer price inflation will stay below six per cent annual rate throughout the year, and probably below five per cent in the second half of the year. The Reserve Bank of India (RBI) will reduce the policy rate by 25-50 basis points, but this will have little impact on investment and growth;

3. The previous year’s poor export performance will persist. The rupee to US dollar rate is likely to be in the range of 70-75 by December;

4. Fiscal consolidation will be paused due t pressure;

5. GST will pass;

6. NPA will still stress-out PSU Banks;

7. Pakistan-sponsored terrorism will continue to thwart any serious improvement in bilateral relations

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Question 1: Consider these statements:

Question 2: RBI's effective policy inflation target for 2016 would be:

a) 4 %

b) 6 %

c) 2 %

d) undecided

Question 3: Consider the statements below about BS VI norms:

1. The SC imposed Euro norms on India in 1999

2. All of India has access to BS VI grade fuel

3. The harmful emissions that are identified for regulations in different Bharat Stages (BS) are carbon monoxide (CO), unburnt hydrocarbons (HC), Nitrogen Oxides (NOx) and Particulate matter (PM)

Answer choices:

a) Only 1 is true

b) Only 2 and 3 are true

c) Only 1 and 3 are true

d) All of the above are true

Question 4: Which of the following is true about India's Defence Procurement Policy?

a) Under DPP all capital acquisitions are categorized into: Buy(Indian), Buy & Make (Indian), Make, Buy & Make, Buy (Global).

b) ‘Buy (Indian)’ is the most preferred category, followed by ‘Buy and Make (Indian)’, ‘Make (Indian)’, ‘Buy and Make’ and ‘Buy (Global)’.

c) Buy (Indian) – means minimum of 30% indigenous content is required

d) All of the above

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Check Your Answers

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