Current Account Deficit narrows to 1.2% of GDP
- The Reserve Bank of India released data which indicated that the Current Account Deficit (CAD) of India had narrowed to $6.2 billion or 1.2% of the Gross Domestic product(GDP).
- The country’s balance of payments (BoP) stood at a surplus of $11.4 billion in the first quarter of this fiscal , unchanged from a year ago , but lower than $30 billion seen in the previous squarter.
- The CAD shrank owing to outflow of profits , dividend and interest earned by foreign interest.
- Dollar inflows fall and Dollar outflow increased due to External commercial borrowings and bank loans.
- Exports fell for an eight straight month mainly due to China’s economic slowdown which is currently impacting global growth.
Veteran socialist Jeremy Corbyn elected as leader of Labour Party
- Veteran socialist Jeremy Corbyn was elected as leader of British Labour Party . This move is signals the shift of Labour party completely towards the left.
- Corbyn’s leftist agenda stems from his opposition to Britain’s nuclear submarine program Trident and his views that Britain must withdraw from the NATO.
- He was also one of the strongest critics of the war in Iraq and Syria where Britain plays an integral part in providing air cover and special forces operations .He also has criticized PM Cameron ‘s policy for denying refugees from the war asylum.
- PM Cameron has called Corbyn ‘s elevation to leader of the labour party as a threat to national security and that his socialist views also threaten the economic security of the country.
Germany reimposes border controls
- Interior minister of Germany stated that , Germany was reinforcing border controls as the country is buckling under pressure from a record influx of refugees.
- He stated that the aim of this measure is to stop the current influx to return Germany and to return to an orderly process with the refugees who are already present in Germany to be provided for.
- The announcement comes on the eve of an EU Interior Minister’s meet which calls for discussion of proposals to redistribute about 160,000 refugees across the European Union.
- The Minister also stated that Germany will no longer allow refugees to pick which European country will host them.
- Germany ‘s negative birth rate and extremely low fertility rate is the sole reason behind Germany allowing many refugees from Syria as they are highly qualified , having a diverse outlook and can bolster the German workforce.
Jayant Sinha pitches for lower interest rates
- Minister of State for Finance , Jayant Sinha has stated that RBI should take into account various factors including while low inflation while deciding on the monetary policy.
- He also stressed on the need to make exports more competitive by bringing down the cost of capital and the cost of manufacturing following heavy competition in the market from cheap Chinese imports that have got even cheaper following the renminbi devaluation.
- He also pitched for reducing the cost of production of manufactured goods and that infrastructure and logistical backlogs were driving up the cost of goods.
- It is essential for Indian exports to be competitive as exports alone can help the Current Account Deficit in staying as a surplus.
- He stated that RBI was confronted with conflicting data as WPI is in negative , GDP deflator is at zero but the Consumer Price Index that indicated retail inflation was rising.
- Besides the record 82,000 crore envisaged as public funds for construction and maintenance of highways in the current fiscal , the road ministry has asked for an additional 8,800 crores as budgetary support.
- The ministry move is as per PM Narendra Modi’s advice that funds should be sought sufficiently in advance so that projects don’t suffer due to their paucity.
- Awarding of new highway projects had picked up since the last fiscal and construction has gained momentum in the recent months
- The ministry stated in its report that over 2,000 km of highways have been built in April – August 2015 .
Srilankan PM to begin 3 day visit to India.
- Sri Lankan PM Ranil Wickremesinghe begins his 3 day state visit to India on Monday.
- The focus of the visit would be more on optimising the ties between the two countries.
- His visit to India comes after PM Modi ‘s visit to Sri Lanka 6 months earlier.
- 4 Memoranda of understanding (MoUs) are expected to be signed pertaining to a SAARC satellite , launch of emergency ambulance health protection services on the lines of Indian “108 Emergency response services” and provision of medical equipment to hospitals in Vavuniya.
- However the Comprehensive Economic Partnership Agreement (CEPA) would not be taken up as he stated that both the countries had “moved on “
GK Questions for the day
1.One of the strategic passes in Central Asia , it served as a gateway to the Indian Subcontinent from Afghanistan through the massive Himalayan ranges. Timur , Babur and a majority of the invaders used this pass to enter . What is it??
a)Khardung la Pass
d) Chang La
2. RBI decision to increase the interest rate by 50 basis points has what impact on the Indian Economy ?
a) Decreases Money supply in the economy
b) Increases the value of Rupee , making exports costlier
c) Makes imports cheaper
d)All of the above.
3) Consider the following statements
1. The government is obligated to lay down treaties made with foreign governments to be ratified by the parliament.
2. The Parliament is required ratify monetary grants to the Centre to complete its overseas obligations.
Which of the following is true??
a) Only 1
c) Both 1 and 2
Answers 1 b , 2 d , 3 b