Year end review-2015: Department of Economic Affairs, Ministry of Finance

Year End Review: Highlights of the Acheivements of the Department of Economic Affairs, Ministry of Finance

Ques: In 2015, (April-October), Wholesale Price Index (WPI) inflation stood at :

(a) -3.5 percent

(b) 3.5 percent

(c) 2.5 percent

(d) 5.3 percent

Ans: (a)

Related facts:

  • In December 16, 2015 Year end review has been released by Department of Economic Affairs, Ministry of Finance, Government of India.

INFLATION

  • Wholesale Price Index (WPI) inflation stood at 2 percent in FY 2014-15.
  • WPI inflation stood at -3.5 percent in 2015, (April-October).
  • WPI stood at -3.8percent during October, 2015.
  • WPI Food inflation stood at 1.7percent during October, 2015.
  • Inflation in Fuel & power decreased to -16.3 percent in October 2015 as compared to -11.0 per cent in January 2015.
  • Inflation for Manufactured products decreased to -1.7 per cent in October 2015 as compared to 1.0 per cent in January 2015.
  • Consumer Price Index (CPI) inflation stood at 5.9 percent in 2014-15.
  • CPI inflation stood below from 5.5 percent in January, 2015.
  • Average CPI inflation stood at 4.7 percent in 2015, (April-October).
  • Average CPI inflation stood at 5.0 percent in October 2015.
  • Inflation in terms of Consumer Food Price Index (CFPI) stood at 5.2 per cent in October, 2015.
  • Inflation based on CPI-Industrial Workers for September, 2015 stood at 5.1 percent as compared to 7.2 percent in January, 2015.
  • Inflation based on CPI-Agricultural Labour and CPI-Rural Labour declined to 3.5 percent and 3.7 percent respectively in September, 2015 as compared to 6.2 percent and 6.5 percent in January, 2015.

Following measures has been taken by the government to control inflation –

  • Advising states to allow free movement of fruits and vegetables by delisting them from the APMC Act.
  • Banning of export of all pulses (except kabuli channa and organic pulses and lentils upto certain quantity).
  • Zero import duty on pulses and onion.
  • Empowering States/UTs to impose stock limits in respect of onion, pulses, edible oil, and edible oilseeds under the Essential Commodities Act.
  • Modest increase in minimum support prices in last two years.
  • Global oil and commodity prices have also contributed towards achieving low inflation.

MONETARY POLICY

  • During 2015, policy (Repo) rate has been cut by 125 basis points.
  • Taking into account the continuous decline in inflation and with a view to spur growth, the last cut in the policy rates by 50 basis points to 6.75 percent was undertaken by the RBI on September 29, 2015.
  • Government of India and RBI have signed a Monetary Policy Framework agreement in February, 2015.
  • The objective of this framework is to primarily maintain price stability, while keeping in mind the objective of growth.
  • As per the agreement, RBI would set the policy interest rates and would aim to bring inflation below 6 percent by January 2016.

BANKING

  • Permission has been accorded by RBI for setting up Payment Banks and Small Finance Banks to improve financial inclusion.
  • RBI has accorded in principle approval to 11entities to form Payment Banks in August, 2015.
  • RBI has accorded in principle approval to 10 entities to form ‘Small Finance Banks’ in September, 2015.
  • The minimum paid-up equity capital for Payments Banks shall be Rs. 100 crore, of which the promoter’s contribution would be minimum 40 percent of paid-up equity capital for the first 5 years of commencement of the business.
  • n amount of Rs.12,000 crore has already been provided n the Supplementary Demand passed by the Parliament, in addition to Rs.7,940 crores already provided in the budget of FY 2015-16.
  • Government announced Mission Indradhanush in August, 2015, which attempts to revamp public sector banks and to address problems impacting their performance including governance, accountability and capitalization.

FINANCIAL SECTOR

  • Approval accorded for setting up of the proposed Rs 20,000-crore National Investment and Infrastructure Fund (NIIF).
  • Approval given for foreign investment in the Alternative Investment Funds (AIF).
  • RBI has set out the medium term framework (MTF) for FPI limits in debt securities.
  • Forward Market Commission (FMC) was merged with Securities Exchange Board of India (SEBI) on September 28, 2015 with a view to strengthen the regulation of commodity forward markets.

TAX-FREE BONDS

  • Government of India has allowed the issuance of Tax-free bonds of Rs 40000 crore during the Financial Year 2015-16.
  • These Bonds are issued for ten (10) or fifteen (15) or twenty (20) years.
  • Central Public Sector Enterprise (CPSE) such as National Highways Authority of India (NHAI), Indian Railways Finance Corporation (IRFC), Housing and Urban Development Corporation (HUDCO), Indian Renewable Energy Development Agency (IREDA), Power Finance Corporation Limited (PFC), Rural Electrification Corporation Limited (REC), National Thermal Power Corporation Limited (NTPC).
  • The 11th India- Saudi Arabia Joint Commission Meeting (JCM) was held during 26-28th May, 2015 at New Delhi.
  • The Financial Stability and Development Council (FSDC) had held two meetings on May 15, 2015 and 5th November, 2015.
  • New Development Bank has been established by BRICS countries in Shanghai, China.
  • K.V. Kamath, has taken over as the first President of the Bank.
  • The Governing Council Procedural Rules and Standing Committee Procedural Rules were approved by the Governing Council in its inaugural meeting held on September 4, 2015.
  • The 7th Meeting of SAARC Finance Ministers and Finance Secretaries were held on 19th and 20th of August, 2015.
  • Government of India has on 16thSeptember, 2015 approved a scheme for providing a concessional financing scheme to support Indian companies bidding for strategically important infrastructure projects abroad.
  • India along with other countries signed the Articles of Agreement of the Bank on June 29th, 2015.

Gold Monetization Scheme

  • On November 5, 2015 Gold Monetization Scheme was launched by Prime Minister Narendra Modi.
  • The scheme will benefit the manufacturers of gold jewellery who are largely small and medium scale enterprises, by making gold available to them.
  • It will also benefit the common man by allowing him/her to earn interest on their holdings of gold.

Sovereign Gold Bond Scheme

  • On November 5, 2015 Sovereign Gold Bond Scheme was launched by Prime Minister Narendra Modi.
  • The scheme was announced in Budget 2015-16 with the view to provide a new financial instrument of investment to public at large and for reducing the demand for physical gold.

Indian Gold Coin

  • On November 5, 2015 Indian Gold Coin was launched by Prime Minister Narendra Modi.
  • The scheme was announced in Budget 2015-16 with the view to promote indigenously minted national gold coins.

Reference:

http://pib.nic.in/newsite/PrintRelease.aspx?relid=133324