Business, Economy & Banking Current Affairs - 2020

Business, Economy and Banking in Current Affairs 2019 with latest news and current affairs in Agriculture, Industry, Banking, Capital Markets, Import and Export and Government schemes in commercial sector.

DPIIT notifies 100% Foreign Direct Investment in Insurance Intermediaries

The Department for Promotion of Industry and Internal Trade (DPIIT) operating under Ministry of Commerce and Trade has amended the FDI (Foreign Direct Policy) to allow 100% foreign investment for insurance intermediaries. This includes insurance companies, third party administrators, insurance brooking, loss assessors and surveyors.

Highlights

Initially DPIIT had allowed only 49% of FDI in the insurance sector. This has now been increased to 100% to increase Ease of doing business in the insurance sector. With this move, the foreign companies shall easily buy stakes in Indian Insurance Companies.

Background

The 100% FDI in Insurance Sector was announced by Finance Minister Nirmala Sitaraman in the Budget 2020-21. This is essential because, according to UNCTAD (United Nations Conference on Trade and Development) World Investment Report, 2019, India faced third consecutive annual decline in terms of FDI in 2019.

UNCTAD

UNCTAD is a UN Body that deals with trade and investment. It was established in 1964. It also measures the Sustainable Development Goal set out by the member countries of the United Nations.

What is Counter Cyclical Fiscal Policy of GoI?

The Government of India has adopted “Counter Cyclical Fiscal Policy” in order to decrease the Economic Slow Down in the country. The Economic Chief Advisor Subramanian at the Express Adda event in Mumbai highlighted that Counter Cyclical Fiscal Policy is the only way forward to create additional fiscal headroom

Highlights

The GoI is in the path of achieving 5 trillion USD economy. According to the Economic Survey 2019-20, Wealth Creation is the only way to achieve the target. Alongside Wealth Creation, the GoI has planned to adopt more counter-cyclical Fiscal measures to arrest the economic slowdown.

Counter-Cyclical Fiscal Policy

It is the strategy adopted to counter recession or boom through fiscal measures. During recession, the Counter cyclical fiscal policy aims at reducing taxes and increasing expenditure. It aims to create demand in the country to bring an upswing in the country. On the other hand, during boom in an economy, the counter-cyclical fiscal policy aims at increasing taxes and reducing public expenditure. This is because, allowing amplification of boom can be disastrous. This is because, it may increase inflation and debt crisis.

Pro Cyclical Fiscal Policy

This was acknowledged by the Economic Survey 2017. It goes in line with the current mode of a business. For instance, during a boom, Government may increase its expenditure to allow further growth of the boom.