February 2012 Economic Affairs

The Reserve Bank of India (RBI) panel on priority sector lending headed by M. V. Nair, Chairman, Union Bank of India ,on 21 February 2012 proposed increment in the target (priority sector) for foreign banks to 40% of net bank credit from the current level of 32 per cent with sub-targets of 15 per cent for exports and 15 per cent for the MSE sector. The target of domestic scheduled commercial banks for lending to the priority sector is to be retained at 40 per cent of net bank credit.

As per the first nationwide retail inflation data released by the Centre of Statistical Office on 21 February 2012, inflation based on the all India Consumer Price Index stood at 7.65 per cent in January 2012. The annual consumer price index (CPI) data released for the first time measures retail prices in major food groups, fuel, clothing, housing and education across rural and urban India.Consumer price inflation for rural India (CPI-R) was recorded at 7.38%, for urban India (CPI-U), it stood at 8.25%.Inflation as measured by the WPI eased to a 26-month low of 6.55% in January 2012.Beginning 21 February 2012, the union government will release the nation-wide Consumer Price Index (CPI) on a monthly basis for better reflection of retail price movement as well as help the Reserve Bank take effective monetary policy steps to tackle inflation. The new CPI will eventually replace the Wholesale Price Index (WPI) for policy actions to deal with the price situation.

The Prime Minister's Economic Advisory Panel (PMEAC) on 22 February 2012 projected 7.5 - 8 per cent growth rate for the fiscal 2012-13. The economy recorded a growth rate of 8.4 per cent in 2010-11, which according to the CSO estimates is expected to moderate to 6.7 per cent in the current fiscal 2011-12.

The New Telecom Policy was announced by communications minister Kapil Sibal on 15 February 2012.The key policy measures are aimed at reassuring incumbent operators who had been seeking clarity in rules at a time when the government is making every possible effort to put the scam-tainted telecom sector back on track. Telcome companies operating in the same region will be allowed to share 2G spectrum. All future allocation of airwaves will only be through auctions. Also, future licences will be delinked from spectrum and companies must buy bandwidth at market rates.

The Empowered Group of Ministers (EGoM) headed by Finance Minister Pranab Mukherjee on 15 February 2012 approved the auction route for selling 5 per cent stake in state-run oil major ONGC before the end of the current fiscal 2011-12.

The government of India on 9 February 2012 approved setting up of a National Centre for Cold Chain Development, NCCD, as a society under the Societies Registration Act, 1860. The NCCD will be having a Governing Council under the Chairmanship of Secretary with 22 members, covering government officials, Confederation of Indian Industry, Federation of Indian Chambers of Commerce and Industry, FICCI and other stake holders. The move comes in the wake of post harvest losses to the tune of 50000 crore rupees annually in absence of proper storage facilities.

The Central Empowered Committee (CEC) set up by the Supreme Court to investigate illegal mining in Karnataka submitted its final report on 4 February 2012. The committee recommended the cancellation of leases of 49 mines that have violated the terms of their licence. It also recommended the auction of these leases.

The Union Government of India on 1 February 2012 gave its approval for setting up a National Council for Senior Citizens. It will be headed by the Minister of Social Justice and Empowerment. The Council will comprise of 20 members including the Minister of State for Social Justice and Empowerment along with the oldest members from both the Houses of Parliament and distinguished personalities from different fields. It will advice the Central and State Governments on issues related to welfare of senior citizens. The Council will suggest special policies and programmes for the physical and financial security of the senior citizens in the country.

As per the latest Sample Registration System (SRS) bulletin, December 2011 it is revealed that, Infant Mortality Rate (IMR) has dropped further by 3 points from 50 to 47 infants deaths per 1000 live births during 2010. The IMR for rural areas has dropped by 4 points from 55 to 51 infant deaths per 1000 live births while the Urban rate now stands at 31 from the previous 34/1000. State of Goa still has the lowest IMR of 10 infant deaths followed by Kerala with 13 infant deaths per 1000 live births. Bihar, Chandigarh, Haryana, Rajasthan, Meghalaya still have IMRs more than the national average of 47.

The Supreme Court observed that the allocation of 2G spectrum under former telecom minister A. Raja was wholly arbitrary and contrary to public interest apart from being violative of the doctrine of equality favour some companies at the cost of the public exchequer. The Supreme Court cancelled all the 122 2G licenses. According to the verdict, telecom regulator TRAI is to make fresh recommendations on the grant of licenses.

input from sakshi