Business & Economy Current Affairs 2017

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RBI Keeps the Repo Rate Unchanged

The Reserve Bank of India has kept repo rate unchanged at 6.25% in its second bi-monthly monetary policy review.

Reverse Repo rate has been kept unchanged at 6%.

The RBI has cut the Statutory Liquidity Ratio (SLR) by 50 basis points to 20%.

RBI has projected the headline inflation in the range of 2.0-3.5% in the first half of 2017-18 and 3.5-4.5% in the second half. According to the central bank, the implementation of GST is not expected to have material impact on overall inflation. It has observed that the 7th Pay Commission allowances, geo political, financial risk pose upside risk to inflation.

RBI has reduced the growth projection for the current fiscal to 7.3% from 7.4%.

The monetary policy decision has been taken by the six-member monetary policy committee (MPC).

The RBI has also revised its target for gross value added (GVA) by 10 basis points to 7.3%.


SLR is the portion of bank deposits that have to be invested in government bonds. Components of SLR include cash in hand, gold owned by the bank, balance with RBI, Net balance in current account & Investment in Government securities. SLR has to be maintained at the close of business on every day.

Repo rate, or repurchase rate, is the rate at which RBI lends to banks for short periods. This is done by RBI buying government bonds from banks with an agreement to sell them back at a fixed rate. The objective of Repo is to inject liquidity in the system. If RBI wants to make it more expensive for banks to borrow money, it increases the repo rate. Similarly, if it wants to make it cheaper for banks to borrow money, it reduces the repo rate.
Reverse repo rate is the rate of interest at which the RBI borrows funds from other banks in the short term. This is done by RBI selling government bonds / securities to banks with the commitment to buy them back at a future date.
GVA is another measure for economic growth.


India Secures Top Position in Global Retail Development Index

The 2017 Global Retail Development Index (GRDI) titled ‘The Age of Focus‘ has placed India at the top position among 30 developing countries on ease of doing business in the retail sector. This is the 16th edition of the Global Retail Development Index (GRDI).

Salient Highlights

The index has placed China at the second place. However, it has been stated that the China’s market size and the continued evolution of retail still make it one of the most attractive markets for retail investment.

India’s rapidly expanding economy, relaxation of FDI rules and the consumption boom are said to be the key drivers for India’s top ranking in the GRDI. India’s retail sector is witnessing a growth at an annual rate of 20%. In addition, the retail sector is expected to double its size by 2020. Further, the retail sector has also derived benefits from the rapidly growing e-commerce. It is estimated that the sector would grow 30 percent annually and reach USD 48 billion by 2020. Rapid urbanisation and growing middle class is expected to boost the consumption across the country.

The government has relaxed FDI regulations in key areas of the retail sector. Last year, the government took a decision to permit 100% ownership in B2B e-commerce businesses and for retailers that sell food products.

In addition, the government’s effort to boost cashless payments and reform indirect taxation with a nationwide goods and services tax (GST) are also expected to boost adoption of formal retail.


The GRDI is annually published by London-based business consultancy A T Kearney. The study is unique as it identifies the markets that are most attractive in present and also helps to identify those that offer future potential. The index ranks the 30 developing countries for retail investment worldwide and analyses 25 macroeconomic and retail-specific variables. 


World Bank: India to grow at 7.2% in 2017

The World Bank’s Global Economic Prospects (GEP) has projected a growth rate of 7.2% for India in the financial year 2017 as against 6.8% growth in 2016. Also, the bank in its report expects India’s growth rate to remain at 7.5% in 2018 and 7.7% in 2019.

Salient Highlights

The World Bank has kept the global growth forecast in 2017 and 2018 at 2.7% and 2.9% respectively. The bank has cited stronger demand from major advanced economies, increased trade flows to and from China, and a diminished drag from weak demand from commodity exporters  to be the reason for recovery in trade growth in 2017.

The bank has noted that India is recovering from the temporary adverse effects of demonetisation. Despite the slowdown in the growth rate, the world bank has stated that India still remains the fastest growing major economy in the world. According to the bank, the growth projections for China remained unchanged at 6.5% for 2017 and then 6.3% for the next two years 2018 and 2019.

The report has stated that the domestic demand is expected to remain robust in India supported by ongoing policy reforms, especially the introduction of the Goods and Services tax (GST).

World Bank

World Bank is one of five institutions created at the Breton Woods Conference in 1944. World Bank is part of the United Nations system, but its governance structure is different. World Bank’s headquarter is situated at Washington DC.
World Bank provides loans to developing countries for capital programmes. World Bank comprises only two institutions viz. the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). In contrast, World Bank Group comprises three more viz. International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA), and International Centre for Settlement of Investment Disputes (ICSID).