Economy This Week (25th Sep to 1st Oct 2021)

Economy is an important part of the UPSC prelims and mains exams; this series titled ‘Economy This Week’ has been initiated to address the need to read and analyse economic articles in various business-related newspapers. The round-up of the Economy/Business section news for 25th Sep to 1st Oct 2021 is given below. Business news is essential for IAS exam preparation.

TABLE OF CONTENTS

1. Quarterly Employment Survey (QES) (IE 28/9/21)
2. RBI allows banks to sell ‘fraud loans’ to ARCs (BL 25/9/21)
3. Govt withdraws the spending curbs (BL 25/9/21)
4. Govt notifies mechanism to issue duty credit for goods exported under RoDTEP scheme (BL 25/9/21)
5. Cost effective micro ATMs gain traction (BL 25/9/21)
6. Natural gas prices hiked by 62% (IE 1/10/21)
7. Panel to fix minimum wage reconstituted (ET 29/9/21)

1. Quarterly Employment Survey (QES) (IE 28/9/21)

  • Organised employment in nine sectors has increased to 3.08 Cr from 2.37 Cr in 2013-14 (base year based on the 6th economic census).
    • Employment has grown by 29% overall and annually by 4%.
  • The nine sectors chosen are –
    • Construction
    • Manufacturing
    • IT/BPO
    • Trade
    • Transport
    • Education
    • Health
    • Accommodation and restaurant
    • Financial services
  • The QES (April to June 2021) of All India Quarterly Establishment based Employment Survey (AQEES), will help in:
    • Data based policymaking
    • Execution based on statistics
  • Due to the pandemic, employment has decreased by 27% in establishments.
  • Overall participation of female workers has reduced from 31% to 29%.

2. RBI allows banks to sell ‘fraud loans’ to ARCs (BL 25/9/21)

  • RBI has allowed the banks to transfer the loans classified as fraud to the Asset Reconstruction Companies (ARCs).
  • Banks have reported fraud accounts of ₹ 3.95 lakh Cr between FY19 and FY21.
  • Stressed assets which are in default for over 60 days or classified as NPAs can be transferred to ARCs.
  • Transfer of such accounts however will not absolve the transferor/banks from fixing the accountability for issuing such a loan.
    • Until now if an account is declared as fraud then the banks were to make provision for 100%, now the banks can recover some amount by selling these assets to ARCs.

3. Govt withdraws the spending curbs (BL 25/9/21)

  • Tax collections have shown a rising trend and with this, the govt has withdrawn the spending curbs it had imposed on various ministries and departments.
  • On June 30th, the govt had imposed restrictions on expenditure under 82 of the 101 demands for grants for a three month period starting from July 1.
    • The ministries having these 82 demands for grants were asked to restrict their expenditure to 20% of the BE 2021-22 in the 2nd quarter.
    • The remaining 19 demands for grants had no curbs on the expenditures (health, fertiliser, railways, MSMEs, etc).
  • Accordingly, now the ministries or departments can spend as per their monthly or quarterly expenditure plan for the remaining period.
  • With this, the expenditures of the various ministries/departments are expected to increase in the remaining part of the fiscal.

4. Govt notifies mechanism to issue duty credit for goods exported under RoDTEP scheme (BL 25/9/21)

  • The exporters are to realise and repatriate the sale proceeds within a time period prescribed under FEMA (as on date it is within six months). If they fail to do so then based on the direction given by an authority/officer or by themselves they will have to repay the amount of duty credit along with interest.
  • Under RODTEP, the exporters are given duty credit (amount of credit of duty allowed against the claims under the scheme).
  • The rebate under this would be provided in the form of transferable duty credit/electronic scrips (e-scrip) which will be maintained in an electronic ledger by CBIC.
  • These scrips can be used to pay only the customs duty.
  • The export sectors ineligible such as SEZ, FTWZ, EOUs have also been notified.

5. Cost effective micro ATMs gain traction (BL 25/9/21)

  • The traditional ATMs face issues related to cost and infrastructure. The Micro ATMs are gaining favourability.
  • The micro ATMs –
    • Are portable devices that are used by merchants or business correspondents.
    • These can be used to connect to the bank, authenticate users and perform transactions.
    • These do not hold/store any cash but can be used by the merchant to authenticate the customer and then physically hand over the cash to the customer or collect deposits.
    • Many fin tech companies and banks are partnering to provide banking services and cash withdrawals through these.
  • As per RBI data micro ATMs have increased by over 60% to reach 4.94 lakh by August end (from 3.07 lakh a year ago).
  • In contrast to this there were 2.41 lakh ATMs by August end and have increased by just 3.4% from 2.33 lakh during the corresponding period.
  • Micro ATMs are cost effective.

6. Natural gas prices hiked by 62% (IE 1/10/21)

  • Govt has hiked the price of domestically produced natural gas by 62% to $2.9 mn British thermal units (mmbtu).
  • This is on account of the North American and European gas prices climbing up because of lower production and higher demand.
  • The new prices will be effective for six months starting October 1.
  • This could have adverse impacts –
    • For power and fertiliser industries
    • Spike inflation
    • Strain current account
    • It may also lead to higher fertiliser prices if the govt does not hike the subsidy.
  • The domestic gas prices are linked to weighted average price of four global benchmarks.

7. Panel to fix minimum wage reconstituted (ET 29/9/21)

  • The Labour Ministry has reconstituted the expert group set up for fixing national floor level wage.
  • This has been constituted under the Code on Wages.
  • The panel was headed by Ajit Mishra and now will be headed by S P Mukherjee.
  • Three more members have been added to the committee.

Economy This Week (25th Sep to 1st Oct 2021):- Download PDF Here

Download the PPT of the video lecture from the link below:

ETW (25th Sep to 1st Oct 2021):- Download PPT Here

For more business news videos and PDFs, keep visiting the ‘Economy This Week’ segment regularly.

 

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