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Topics: European emission standards, European Federation for Transport and Environment Pages: 59 (10328 words) Published: May 23, 2014
[Current] April-Week1-P1: Economy-Monetary Policy update,GI Tagging for Kanauj Attar,Predatory Pricing by Spicejet, BIS new labelling guidlines for electronics 1. [Act 1] Economy
2. E1: RBI: Monetary Policy April 2014
3. E2: GI Tagging & EC model code
1. #1: Dharmavaram Pattu Silk Sarees: Andhra
2. #2: Kannauj Attar, UP
3. #3: Muradabad Metal craft UP
4. #4: Saharanpur woodcraft, UP
5. #5: Firozabad Glassware, UP
4. E3: Predatory pricing by Aviation Companies
5. E4: BIS New labelling guidelines for Electronics

[Act 1] Economy
Current Affairs for April week 1 (1st to 7th April). Total three parts 1. Part 1/3: Economy= You’re here. (bank license topic discussed separately) 2. Part 2/3: Environment, Biodiversity, Polity and Culture click me 3. Part 3/3: Diplomacy-international relations (click me)

E1: RBI: Monetary Policy April 2014
Make sure you know the theory of repo, reverse repo, LAF, MSF, CRR, SLR, if not then click me 28th Jan 2014: Monetary policy (and Rajan said he’d update it after two months = Feb, March) 1st April 2014: monetary policy update

Key rates unchanged:

Bank Rate
9%

Marginal standing facility (MSF)
9%
LAF
Repo rate (policy rate)
8%

Reverse Repo rate
7%
Reserve ratios
Cash Reserve ratio (CRR)
4%

Statutory liquidity ratio (SLR)
23%
These rates are one and same like previous update (Feb 2014). Rajan did not change the policy rate (repo rate) for the following reasons

1. Yes, inflation has declined but not sufficient enough where repo rate should be reduced. 2. Rajan fears that even in 2015, (CPI) inflation will not go below 8%, because… 3. Geo-political developments (like Ukrain) and their (negative) impact on crude oil, gold & other international commodity prices. 4. El Nino effect = less monsoon = less food production

5. fuel, fertilizer and electricity subsidies = more money supply (from government’s side) 6. MSP (Minimum support prices) on foodgrains. = more money supply (from government’s side) Other measures

1. Accepted some recommendations of Urjit Patel Committee, like targeting CPI (combined) inflation. Detailed coverage of Urjit Patel, pros/cons discussed already in earlier article click me. 2. KYC norms are being simplified for Foreign Portfolio Investors. (FIIs) 3. To reduce volatility of FII investment in Government securities (G-Sec), Rajan made new rule- those FIIs can only invest in G-sec only with maturity of one year or above. 4. will allow more companies /entities to get Banking correspondence (BC) license. Rajan’s other projections:

2013-14
2014-15
GDP growth rate%
5
5-6
CAD as % of GDP
-
2%
Minimum Balance
Rajan asked banks not to levy penal charges on customer, if he doesn’t maintain minimum balance. (but bank may suspend his facilities on until he puts money) Counter argument:= since banks have to incur expenses for record maintenance, staff salary even on such non-minimum balance dormant accounts. So banks will raise the charges on ATM, Debit card etc. on all customers, to cover those losses and keep profit margin same. Table: Penalty rates at the moment:

Bank
Min. Balance necessary (monthly)
penalty (Urban)
Penalty (rural)
SBI
1000
204
102
ICICI
10000 (Urban)
5000 (rural)
250-350
250-350
HDFC

KOTAK MAHINDRA

HSBC
1.5 lakh
350
Citibank
2 lakh
500
E2: GI Tagging & EC model code

What is Geographical indicator tag, what benefit does it offer? = already covered in my old article Click ME Geographical indications (GI) registry is one type of quasi-judicial body. But as per Election commission’s model code of conduct, even they had to pause giving new GI-registration. Following is the list of product awaiting GI registration:

Dharmavaram handloom silk sari
Andhra
Firozabad glass
UP
Kannauj perfume
UP
Moradabad metal craft
UP
Saharanpur woodcraft
UP
These places/items become important at two places
MCQ : theory / static content
GS Mains Paper 1: (Geography) location...
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