Business & Economy Current Affairs 2017

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India’s GDP Growth Forecast for 2017 Revised Downward by UN

In the report titled, World Economic Situation and Prospects, the UN has projected a 7.3% growth for India in 2017. Earlier in the report’s January edition, UN had forecasted a growth of 7.7% for the year. The revised report also has predicted an impressive 7.9% GDP growth for the year 2018 which is an increase from its January estimate of 7.6%.

Salient Highlights

According to the report, despite India’s growth being revised downward, India remains one of the fastest growing developing economy which is ahead of China. China is projected to grow at 6.5% in 2017 and 2018.
The report has observed that despite temporary disruptions caused by the demonetization policy, economic conditions underpinned by sound fiscal and monetary policies remain robust. However, the report has warned that the stressed balance sheets of the Indian banks is likely to have an adverse impact on investment rebound in the country.

World gross product is likely to expand by 2.7% in 2017 and 2.9% in 2018. This is an improvement over 2.3% growth experienced in 2016.

The report expects a recovery in world industrial production and global trade backed by rising import demand from East Asia.

The report expects firmer growth in developed economies and economies in transition, especially in East and South Asia which is likely to remain as the world’s most dynamic regions supported by robust domestic demand and supportive macroeconomic policies.

As a way forward, the report calls for renewed global commitments to deepen international policy coordination in key areas such as aligning the multilateral trading system with the 2030 Agenda for Sustainable Development; enlarging official development aid; supporting climate finance and clean technology transfer; and addressing the challenges posed by large movements of refugees and migrants etc. 

World Economic Situation and Prospects

World Economic Situation and Prospects is UN/DESA’s flagship report on the state of the global economy. It is a result of the joint work of the United Nations Department of Economic and Social Affairs (UN/DESA), the United Nations Conference on Trade and Development (UNCTAD) and the five United Nations regional commissions: Economic Commission for Africa (ECA), Economic Commission for Europe (ECE), Economic Commission for Latin America and the Caribbean (ECLAC), Economic and Social Commission for Asia and the Pacific (ESCAP) and Economic and Social Commission for Western Asia (ESCWA). Apart from the above organizations, the United Nations World Tourism Organization (UNWTO) also contributs to the report.

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Sensex and Nifty at new Record Highs

The 30-share BSE Sensex has reached an all-time intra-day high of 30,567 breaching its previous intra-day high of 30,366.43 touched on May 11. The technology, power, FMCG, IT, consumer durables and healthcare that leads the BSE sectoral indices had made gains up to 0.66 %.

The National Stock Exchange index Nifty did not disappoint either by gaining 0.39% to reach a new high of 9,507.40 surpassing its previous intra-day high of 9,450.65 reached  on May 11.

The good performance of the indices were due to upbeat sentiments backed by robust foreign fund inflows and encouraging earnings by some blue-chip companies, besides the overnight gains in Europe and the US markets.

Stock Market Index

A share market Index shows how a specified portfolio of share prices is moving in order to give an indication of market trends. It is a basket of securities and the average price movement of the basket of securities indicates the index movement, whether upwards or downwards. BSE Sensex is one index. The BSE SENSEX is a free-float market capitalization-weighted stock market index of 30 well-established and financially sound companies listed on Bombay Stock Exchange.

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New IIP, WPI Series Introduced

The government has released new-look index of industrial production (IIP) and the wholesale price index (WPI) , which have been built on the new series of data. The new IIP and WPI series has been released by Chief Statistician of India and Secretary, Ministry of Statistics & Programme Implementation, and Secretary, Department of Industrial Policy and Promotion to usher in greater accuracy and improved synchronisation leading to better policies.  

Salient Highlights

Instead of the earlier 2004-05, base year for the IIP and the WPI will be 2011-12. Already, the Consumer Price Index (CPI), the Gross Domestic Product (GDP) and gross value addition etc., have 2011-12 as the base year. The common base year of 2011-12 is aimed at reducing discrepancies.

IIP

The new series of IIP  will include 809 manufacturing products and 55 mining products that are re-grouped into 521 item groups. The new series of IIP will include technology items like smart phones, tablets, LED television etc. A technical review committee has also been established to identify new items by ensuring that the series remains relevant. The committee is slated to meet at least once a year.

WPI

The  number of items covered in the new series of the WPI has increased from 676 to 697. Overall, 199 new items have been added and 146 old items have been dropped.

Under the primary articles, new vegetables and fruits like radish, carrot, cucumber, bitter gourd, mosambi (sweet lime), pomegranate, jackfruit, and pear have been added. Under the mineral group, new items like copper concentrate, lead concentrate and garnet have been added and other items like copper ore, gypsum, kaolin, dolomite, and magnesite have been dropped. Under the manufacturing items, 173 new items including conveyer belt, rubber tread, steel cables, tissue paper, and wooden splint have been added, while 135 items like khandsari, poppadom, and video CD players have been taken out.

Under the new series of WPI, weight of manufactured items has decreased to 64.2 per cent from 64.9 per cent in old series. Similarly, the weight of fuel and power has decreased to 13.1 per cent from 14.9 per cent. On the other hand, the weight of primary items have increased to 22.6 per cent from 20.1 per cent.

Significance

The IIP has been revised after a gap of 13 years and the obsolete items which are no longer in production in the index have been replaced with contemporary products in the new index making it to be more comprehensive in nature.

Introduction of the new series would make all the key macroeconomic indicators such as IIP, WPI, CPI and national accounts to have a common base of 2011-12, paving way for easier comparisons among them.

The new series indices have painted a healthier picture of the Indian economy in 2016-17 than that of the old series.

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