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Topics for Indian Economy

Foreign Exchange Management Regulation, 2024

  • The Reserve Bank of India (RBI) has proposed new draft regulations to streamline export-import transactions, particularly aimed at easing business operations for small exporters and importers.
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India's Balance of Payments

  • Balance of Payments (BoP) is a systematic statement of all economic transactions between a country and the rest of the world during a specific period, usually a year.

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Economic Survey

  • The Economic Survey of India is an annual flagship document presented by the Ministry of Finance, usually a day before the Union Budget is announced. It provides a detailed account of the state of the Indian economy over the past year, along with insights into various macroeconomic trends, challenges, and future prospects.

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Ways and Means Advances (WMA)

  • The Reserve Bank of India (RBI) has increased the Ways and Means Advances (WMA) limits for State governments and Union territories by 28%.
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Producer Price Index

  • The Department for Promotion of Industry and Internal Trade (DPIIT) is finalizing a new model of the Producer Price Index (PPI) to capture input prices in the economy better
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Stable Coins

  • Recent volatility in the stablecoin market, such as the collapse of TerraUSD, has drawn attention to the challenges facing these digital assets.
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Inverse ETF

  • The Securities and Exchange Board of India (SEBI) has proposed a new asset class specifically for high-risk investors.
  • This move is expected to provide access to advanced financial strategies, including:
    • Long-short equity funds
    • Inverse ETFs (Exchange-Traded Funds)
  • The proposal aims to expand investment opportunities and allow sophisticated investors to hedge risks more effectively.
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Global Capability Centres (GCCs)

  • Global Capability Centres (GCCs) are offshore units of multinational companies (MNCs) that provide various services such as IT, engineering, research & development (R&D), and business process management (BPM).
  • They have become a vital part of India’s economy, contributing over 1% to the GDP and significantly enhancing service exports.
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Greenium

  • India’s sovereign green bonds have not received significant green premiums (Greenium) from private investors, impacting the financing of green transition projects (Economic Survey 2023-24).
  • Despite India’s highly rated green bond framework, actual capital flow for the energy transition in emerging markets remains below potential.
  • The Economic Survey urges developed nations to provide more accessible and affordable financial resources, aligned with UNFCCC and Paris Agreement commitments.
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Liquidity Coverage Ratio (LCR)

  • The Reserve Bank of India (RBI) has introduced draft guidelines requiring banks to hold more liquid assets to manage potential bank runs.
  • The move aims to enhance financial stability but may slow credit growth as banks shift towards safer investments like government securities.
  • The guideline includes digital deposit outflows in LCR calculations, addressing risks similar to the Silicon Valley Bank collapse.
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Middle Income Trap

  • The World Bank Report 2024 report offers a roadmap to help developing countries escape the Middle-Income Trap, where countries with GDP per capita between $1,136 and $13,845 face growth slowdowns and struggle to reach high-income levels
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Repo Rate

Banking Laws (Amendment) Bill, 2024

  • The Banking Laws (Amendment) Bill, 2024 was recently introduced in the Lok Sabha. It proposes crucial reforms in India’s banking legislation, focusing on governance, transparency, depositor protection, and modernization of banking norms.
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Predatory Pricing

  • Union Commerce Minister Piyush Goyal expressed concern over the rapid expansion of e-commerce in India, highlighting potential social disruptions and questioning predatory pricing by giants like Amazon
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