Economy

Economy
Inflation Indexed beginning October - will be reserved April, 2012, it was 7.50 percent. This
Bonds (IIBs) to be launched exclusively for retail investors. is the lowest level of inflation since
WPI Inflation eased to 4.89 November, 2009 when it was 4.78
Percent percent.

The RBI (Reserve Bank of India)

decided to launch Inflation Indexed
Bonds (IIBs). The first tranche of the
IIBs 2013-2014 for 1000 to 2000
crore rupees will be issued on 4
June 2013. The maturity period of
these bonds will be 10 years. The
total issue size will be 12000 to
15000 crore rupees in 2013 to 14.
The RBI will do on monthly basis to
attract household savings of up to As per official data released on The major data are given as
15000 crore rupees so as to 14 May 2013, WPI Inflation eased to following:
discourage investments in gold. 4.89 percent in April 2013. Declining WPI inflation in the
After the first tranche, bonds price of food items, including fruits manufactured items category
will be issued on the last Tuesday of and vegetables caused a three and a declined to 3.41 percent in
every month. While the first series of half year low. Inflation based on the April from 4.07 percent in
the bonds will be open for all class of Wholesale Price Index (WPI) stood March.
investors, the second series issue - at 5.96 percent in March 2013. In

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Economy

Also, inflation in food articles power category, it was lower number of APL families at the rate of
category, which has a 14.34 at 8.84 percent in April as 15 kg per family per month in 22
percent share in the WPI compared to 10.18 percent in States/ UTs and at the rate of 35 kg
basket, came down to 6.08 March 2013. per family per month in 13 States/UTs
percent. Inflation in this cat- CCEA approved the Same under TPDS since June 2011.
egory was at 8.73 percent in Scale of Allocation to APL RBI directed Banks to follow
March 2013.
Families Clean Note Policy
The easing in food inflation
was helped by a sharp drop
in prices of vegetables.
Inflation in vegetables stood at
(-) 9.05 percent in
April 2013, against (-)0.95
percent in March 2013.
The inflation in fruits declined
to 0.71 percent during April
2013 as compared to 4.71
percent in March 2013.
However, the rate of price rise The Cabinet Committee on The Reserve Bank of India (RBI)
in onion was high at 91.69 Economic Affairs (CCEA) on 16 May directed banks to follow the Clean
percent for the month of April, 2013 approved the continuation of Note Policy strictly and issue clean
as against inflation rate of the same scale of allocation to APL currency notes to public. RBI issued
94.85 percent in the previous families during 2013-14 (at the rate a notification that also asked the banks
month. of 15-35 kg monthly per family) under to do away the process of stapling
Inflation for February was the Targeted Public Distribution Sys- the currency notes and to secure the
revised upwards to 7.28 tem (TPDS). As on 1 April, 2013, the note packets with paper bands. In
percent from 6.84 percent as total stocks of rice and wheat in the its notification to the banks, the RBI
per provisional estimates. The Central Pool is 596.75 lakh tonnes also directed to sort notes into re-
retail inflation, as measured by comprising 354.68 lakh tonnes of rice issuable and non-issuable notes and
consumer price index, came and 242.07 lakh tonnes of wheat. The to withdraw soiled notes from
down to single digit at 9.39 procurement during the year is ex- circulation in the market. Banks have
percent in April after many pected to be 401.3 lakh tonnes for also been asked to stop writing of any
months, indicating rice and 441.21 lakh tonnes for wheat. kind on watermark window of bank
that inflationary ex- Thus it is expected that there will be notes as it disfigures the watermark
pectation is on de- sufficient stock of foodgrains in the impression and recognition becomes
clining trend. Central Pool. difficult. As per RBI, on an average
Inflation in wheat eased to The CCEA has accordingly 20 percent of notes is disposed off
13.89 percent in April, as approved additional allocation of after getting soiled every year and in
against 19.87 percent in the 41.89 lakh tonnes of wheat and 19.84 the fiscal year 2012-13 that ended
previous month. Potatoes too lakh tonnes of rice at APL issue prices on 31 March 2013 the number of such
saw decline to (-)2.42 percent, to States/Union Territories (UTs) for soiled currency bills stood at over 13
from 20.06 percent in March. ensuring a minimum allocation of 15 billion units.
Inflation rate in rice and kg per APL family per month in 22 IMF approved 1.3 bn Dollars
cereals eased to 17.09 percent States/UTs and 35 kg per family per loan for Cyprus
and 15.63 percent, month in 13 States/UTs. They are
respectively, in April 2013. Manipur, Assam, Meghalaya, Tripura, The International Monetary
Pulses prices declined Nagaland, Arunachal Pradesh, Fund on 15 May 2013 approved a
marginally to 10.28 percent Mizoram, Sikkim, Uttarakhand, three-year, 1.3 billion dollars loan for
during the month. While the Jammu and Kashmir, Himachal supporting Cyprus attempts to
inflation rate in egg, meat and Pradesh, Lakshdweep and Andaman stabilize its financial sector and to
fish category stood at 10.44 & Nicobar Islands. The Government bring the Governments deficit under
percent, for milk it was 4.04 of India has been making allocation control and restore economic
percent. For the fuel and of foodgrains to the accepted growth. The IMF loan to Cyprus is

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 Economy

basically a part of a rescue package Exports in India grew up by 2013-14 set by the Union
of 10 billion euros (12.9 billion dol- 1.6 percent in April 2013 Government is 325 billion US dollar.
lars) counterfeit in March 2013 with CCEA approved Exchange
Exports in the month of April
the eurozones bailout fund. The Trade Fund for PSU stocks
2013 recorded a growth of 1.6
loan was approved by IMFs execu-
percent and stood at 24.16 billion US
tive board which also includes an
Dollar as against 23.7 billion US dollar
immediate disbursement of 110.7
in April 2012.
million dollars.
The surge in gold imports

The Cabinet Committee on

Economic Affairs (CCEA) cleared
the government proposal to set up
an exchange traded fund backed by
a basket of PSU stocks, commonly
referred as CPSEETF. The basic idea
behind setting up of fund is that
among other benefits, PSU
divestments could be carried out in
a much less disturbing
manner for the market and
can also incentivize retail investors.
An empowered group of ministers
would take this forward. The
government plans to float such a fund
so that, The CPSEETF will comprise a
basket of shares of different PSUs
Counting the IMF pushed the trade deficits to 17.7 which would track an index, but will
disbursement, Cyprus has received billion US dollar. trade like a stock on the exchange.
about 2.7 billion dollars in the third ICICI Securities is the adviser to the
week of May 2013 from its interna- ETF and Goldman Sachs is learnt to
tional lenders. The Luxembourg- be the fund manager. The release
based European Stability Mechanism, on CPSEETF noted that each stock
which is a eurozone bailout fund, on would have a fixed weightage in the
13 May 2013, announced that it had basket and the ETF will give discount
approved its first bailout tranche for to investors. It is important here to
Cyprus and transferred an initial 2 note that the Selling a mutual fund at
billion euros (2.6 billion dollars). The a discount to its NAV is a new concept
rest of the tranche up to 1 billion in the Indian market, and would
euros will be transferred by 30 This is the fourth consecutive
month that exports have witnessed require some rule change by the
June 2013. market regulator SEBI.
The loans approved by the growth. Imports of gold and silver in
European Stability Mechanism help April 2013 doubled by 138 percent Stronger Powers proposed to
to 7.5 billion US dollar from 3.1 billion SEBI for tackling Ponzi
to maintain financial stability in the
US dollar in April 2012. The Schemes
euro area and buy time for Cyprus. It
merchandize imports rose by 10.9
is important here to note that in the The Union Government in
percent to 41.95 billion US dollar
eurozones long-running fiscal crisis, Month of May 2013 has proposed
bringing up the trade deficit by more
Cyprus followed Greece, Ireland and Stronger Powers to (Securities and
than 72 percent from March.
Portugal to become the fourth Exchange Board of India) SEBI
Widening of trade deficit attributed
eurozone country since 2010 to enabling it to carry out search and
to the high gold imports. The
agree to a full bailout. seizure operations and for attachment
targeted exports for the current fiscal

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 Economy

of assets. With this a Special power following investors, rather than from plan projects under Indian Institute
has also been proposed to SEBI with profit earned by the individual or of Pulses Research (IIPR), Kanpur and
which it can seek information on organization running the operation. All India Coordinated Research
telephone call data records, from any The Ponzi scheme generally tempts Project on Chickpea. In past three
persons or entities in respect to any new investors by offering higher years, thirteen types of high yielding
securities transaction being exam- returns than other investments, in the varieties of chickpeas have been
ined by it. form of short-term returns that are released in India.
It is worth mentioning here that either abnormally high or unusually Creation of basic and strategic
Proposals to make required amend- consistent. research for development of location
ments in the SEBI Act and other India is the largest Producer specific climate supporting high
relevant regulations have been yielding chickpea varieties and
and Consumer of Chickpeas in
finalised after detailed consultations improved production and protection
World
with the market regulator and are
being presented before the Union
Cabinet for its approval.

A Cabinet note in this regard has

also been circulated by the
Department of Economic Affairs to
other departments in the Finance
Ministry, as also to the Corporate
Affairs, Home, Law and Telecom min- technologies are the major steps
Food & Agriculture included in the research program.
istries, Reserve Bank of India, Planning
Organization (FAO) in its latest report Several Crop development schemes
Commission and Prime Ministers Of- for 2011 claimed that India is the like Food Security Mission (NFSM-
fice for their comments and feedback largest consumer and producer of Pulses), Rashtriya Krishi Vikas Yojana
on the proposals. The Government is Chickpeas in the world. The second (RKVY) and others are implemented
planning to introduce the Securities advance estimates for 2012-13 by the Government of India in order
Laws (Amendment) Bill, 2013 in
marked a record production of to increase the production and pro-
Parliament to carry out the proposed Chickpea is 8567.8 thousand ductivity of Pulses including
changes for grant of stronger powers tonnes. Production details of Chickpeas. Special Plan to achieve
to SEBI. The Government has come Chickpeas in India as compared to more than 19 million tonnes of pulse
up with the decision of accepting the World Chickpea producing production during 2012-13 has also
most of the proposals made by SEBI
nation: been initiated.
in this regard and the amendments
Country Production (000 tonnes) BSE launched broad-based
would be carried out after the Cabi-
India 8221.10 Islamic Equity Index
net approves them and the required Australia 513.34
amendment Bill is passed by Myanmar 466.74 The Bombay Stock Exchange
Parliament. Turkey 487.48 (BSE) on 30 April 2013 launched an
What is Ponzi Schemes? Ethiopia 322.84 Islamic equity index based on the
A Ponzi scheme is basically a Systematic and concentrated wide-measure S&P BSE 500 index.
fraudulent investment operation that research on Chickpeas is undertaken It will provide a new benchmark for
pays returns to its investors from their by Indian Council of Agricultural Islamic investors in one of the worlds
own money or the money paid by Research (ICAR) through its on-going largest stock exchanges. The new

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 Economy

index includes the largest 500 CCEA approved Proposal to doing away the heavy maintenance
companies in the BSE, out of more set-up 2 Major Ports dredging activity.
than 5000 listed. These companies Port of Andhra Pradesh: It
fulfill Islamic finance principles such will facilitate the economic
as bans on investing in alcohol, development of Andhra Pradesh as
tobacco and gambling-related busi- the rapid industrialization across
nesses. Visakhapatnam Port has created a
The BSE had launched the necessity of a new port in the state.
countrys first Islamic index in 2010 21 New Textile Parks
after tracking the 50 largest and most Launched
liquid stocks. Indias Islamic banking
industry has made slow progress
because banking rules need lenders The Cabinet Committee on
to declare the rates of interest they Economic Affairs (CCEA) on 9 May
charge customers. This condition it 2013 approved the proposal of the
at odds with Islamic banks which Ministry of Shipping for setting up of
base their products on profit rates two major ports in the country. The
instead. In this regard to satisfy the two ports will be set up through a
needs of Muslims in India, the industry Public Private Partnership Mode in The Union Minister for
is trying to develop investment West Bengal and Andhra Pradesh Commerce, Industry and Textiles,
products. each. As per the proposal approved Anand Sharma on 23 April 2013,
SC upheld 51 Percent FDI in the port will be developed at Sagar launched 21 New Textile Parks
Multi-brand Retail Island in West Bengal after obtaining approved under Scheme for
environmental clearances and Integrated Textile Parks (SITP). With
following exact procedures for the launch of these new textile
development of the project. The parks, the total number of parks
cabinet also agreed for appointment reaches 61 because 40 parks were
of the transaction advisers and legal already sanctioned.
consultants and finalization of the The Scheme for Integrated
project structure in consultation Textiles Parks (SITP)
with the State Government of West The Scheme for Integrated
Bengal and the Planning Textiles Parks (SITP) plays a
The Supreme Court of India on Commission. In case of Andhra vital and instrumental role in
1 May 2013 upheld the constitutional Pradesh, the Cabinet identified the development of wide
validity of Governments decision al- Dugarajapatnam location for range of models for green field
lowing 51 percent foreign direct development of the port and looked clusters from a 1000 acre FDI
Investment in the multi-brand retail forward to find out the techno-eco- driven integrated cluster, to a
sector. nomic feasibility report for 100 acre powerloom cluster
A bench of Justices R M Lodha, commissioning of the port. and a 20 acre handloom
Madan B Lokur and Kurian Joseph Benefits of setting-up the cluster.
gave the ruling. The bench observed two Ports Sagar Port in West Under this scheme, a total
that there was no harm in giving the Bengal: At present Kolkata has number of 61 parks have been
policy a chance. It saw merit in the facilities of two ports namely Kolkata sanctioned. 40 projects out of
policy that it would eliminate Docks at Kolkata and Haldia Dock these began in 11th Five Year
middlemen and help provide farmers Complex at Haldia. Both these ports Plan and another 21 projects
a better price for their produce. It being reverine face limitations of are scheduled to be
dismissed the petition filed against draught due to the morphological implemented in 12th Five Year
the 51 percent FDI in multi-brand changes (change in river platform) in Plan.
retail. As per the court, the policy will Hooghly because of siltation. Out of these 21 parks, six are
affect the lives of only 13.3% of the Development of Sagar Port will in Maharashtra, four in
countrys population living in 53 provide a deep draught port for Rajasthan, two each in Andhra
cities. handling the large size vessels by Pradesh and Tamil Nadu and

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 Economy

one each in Uttar Pradesh, West import of gold on consignment basis tonnes for 2012-13, over earlier
Bengal, Tripura, Karnataka, by banks, only to meet the genuine expectation of 254.24 million tonnes
Gujarat, Himachal Pradesh and needs of exporters of gold jewellery. due to the higher output of wheat,
Jammu & Kashmir. The RBI stated that the decision is rice and coarse cereals. With this
Out of 40 parks which were based on the recommendations of revision the total cereal output esti-
sanctioned earlier under this the Working Group on Gold that had mation has gone up to 255.36 million
scheme, 25 Textile Parks are suggested aligning gold import tonnes. The wheat and rice
operational already. regulations with the rest of the production pegged at 93.62 million
Most of the parks under this imports for creating a level playing tonnes and 104.22 million tonnes
will be completed during 2013- field between gold imports and other respectively. The earlier estimate set
14 financial year. imports. The restrictions have come for the foodgrains for the year was
The estimated employment into effect immediately. 254.24 million tonnes. The third
generation is more than 10 advance estimate that was officially
325-billion Dollars
lakh people with total released on 3 May 2013 estimated
estimated investment of 27562 Export Target Set for 2013-14
that the total foodgrain production
crore Rupees. The Union Government for the year will be lower by 3.96
It is important to note that in announced an export target of 325 million tonnes from the previous year
2013-14 Union Budget, the billion dollars for the current 2011-12 ecord production of 259.24
Union Finance Minister had financial year 2013-14 to support the million tonnes. As the total output for
announced an additional slowdown in the global markets. It is wheat and rice in 2011-12 were 94.98
amount of up to 10 crore due to the global slowdown in million tonnes and 105.31 million
Rupees per park for developed regions like that of US tonnes respectively. While for 2012-
establishment of the apparel and Europe, the exports of India 13 it is estimated to be 93.62 million
manufacturing units for the went down for the first time in three tonnes and 104.22 million tonnes re-
projects under the SITP years with a dip of 1.8 per cent to spectively.
scheme. 300.6 billion Dollars in 2012-13,
States that Lacked in Production
On the occasion of launch, making the trade deficit to a record
Anand Sharma also released a high level of 191 billion dollars. It is Due to Environmental Issues
coffee table book on SITPs. This important here to note that, the Delayed monsoon and drought
coffee table book encapsulates the Government had set an export target in different parts of states like
broad features of various ITPs set up of 360-billion dollars for the financial Maharashtra, Gujarat, Karnataka,
all over India. The book gives an year 2012-13. According to the Andhra Pradesh, Tamil Nadu and
insight into the physical and pictorial provisional figures, export Rajasthan had an impact on the
status of each ongoing Park approved registered an increase of 0.8 per production of pulses and coarse
under SITP. cent for the month of January 2013 cereal during Kharif season.
RBI imposed Restrictions on after a permanent fall during May, Backward Region Grant Fund
Gold Import by Banks June, July, August, September, Entitlement for Uttar Pradesh
October, November and December Hiked
2012.
Foodgrains Output for 2013
Exceeded its Target

The RBI on 12 May 2013

imposed restrictions on gold import The Union Government of
by banks in order to moderate the India on 3 May 2013 revised the
demand of gold for domestic use. production estimates of the The Union Government of India
The RBI decided to restrict the foodgrains upwards by 5.22 million on 15 May 2013 announced

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 Economy

increment in the Backward Region SEBI approved Keralas Start- The new Platform launched is
Grant Fund (BRGF), entitled to Uttar up Village Angel Fund of 10 awaiting the market regulator SEBIs
Pradesh. The fund has gone up to million Dollars guidelines for allowing participation
818.17 crore rupees for 2013-14 from of mutual funds, insurance compa-
initial 667 crore rupees. To release Market regulator SEBI in May nies and pension funds. NSE had
the funds for Uttar Pradesh, the Union 2013 had approved an angel fund of recently received approval from SEBI
10 million Dollars to address the
Ministry of Panchayati Raj has directed to launch the debt segment.
problem of resource crisis for start-
the state Government to submit its
up companies across the country.
annual plan by 25 June 2013. 35
The fund could go up to 20 million
districts of Uttar Pradesh are entitled
dollars with an over-allotment
for the BRGF Scheme. In 2012-13,
option that would focus on telecom
Uttar Pradesh failed to get its share of
and internet firms. The Fund is
BRGF grants as the Government supposed to start investing once the
ordered a probe into the alleged
initial close of 2 million Dollars is
irregularities that was committed achieved. Consultancy KPMG is the
during the Mayawati regime and it advisor and ILFS is trustee of the fund
stopped the work which was being based at Start-up Village which is the
carried on in the BRGF beneficiary countrys first telecom incubator. Function of the Debt Trading
districts. Platform
About Village Angel Fund
IMG approved 10% Equity The debt trading platform is
The angel fund will be
Sale in Coal India Limited investing not only in the most supposed to provide retail
investors an opportunity to
promising start-ups located in
Start-up Village but also in invest in corporate bonds on a
liquid and transparent
similar enterprises across the
country. exchange platform.
Banks and primary dealers are
Infosys co-founder and Start-
up Village chief mentor Kris the first to enter and they will
provide enough liquidity in the
Gopalakrishnan, MobME, the
countrys first campus debt segment.
The mutual funds, in-
telecom start-up, Ravi Pillai,
founder of the.16000-crore surance companies and
An Inter-Ministerial Group pension funds are also
Rupees Bahrain-based RP
(IMG) on 10 May 2013 approved 10 Group and other leading angel expected to participate after
percent equity sale of Coal India guidelines for the same are is-
investors in India will be part of
Limited. This equity sale is likely to the fund. sued.
fetch, about 17000 crore rupees to The Debt Trading exchange
The Village angel fund will act
the Union Government. Union like a shot in the arm for Start- platform is an innovation, which has
Governments holds over 90 percent been launched after intensive
up Village, which would
stake in Coal India at present. The feedback from market participants.
become the first incubator in
Inter-Ministerial Group was headed It is similar to RBIs NDS-OM, where
India to have its own in-house
by Ravi Mathur, the Disinvestment Government securities are traded on
fund.
Secretary and it is guiding the a transparent platform
The fund will help the internet-
process of disinvestment of telecom incubator to get the Indias Services Growth hit 18-
Governments Equity in CIL. The CIL most conducive ecosystem month low
with a cash balance of 60000 crore for product start-ups. As per the survey undertake by
rupees is the biggest disinvestment
NSE Launched HSBC, in the month of May 2013,
for the Government in the current
Debt Trading Platform Indias services sector grew at its
fiscal year 2013-14 and Union slowest pace in one and half years
Government is in the plan to National Stock Exchange, the during the month of April 2013 as
generate 40000 crore rupees with Leading bourse on 11 May 2013 costs for raw materials, petrol and
sales of PSUs stakes in the current launched the countrys first labour increased considerably. It is
fiscal. dedicated debt trading platform. important here to note that the pace

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Economy

of hiring by private sector companies The seasonally adjusted HSBC both manufacturers and service
was also slowest in seven months, as Business Activity Index providers.
per a monthly HSBC India survey of declined to 50.7 in April from Despite the fact that new
services sector managers. 51.4 in the previous month. businesses placed at services
Highlights of the Report Input prices saw further and manufacturing firms in
The HSBC India Composite increase in April 2013 the India increased last month, the
trend continued for the 49th rates of expansion eased.
Output Index fell to 50.5 in
April from 51.4 in March. consecutive month and The manufacturers cited
cost of raw material, petrol power cuts while service
The latest reading indicated
and labour were higher, HSBC providers mentioned extreme
that activity increased
noted. weather and challenging
marginally and at the slowest
pace since October 2011. The rates of increase in average market conditions for such a
selling prices were slower at trend.

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