RBI decides to discontinue I-CRR
Why in news?
- The Reserve Bank of India (RBI) has decided to discontinue the Incremental Cash Reserve Ratio (I-CRR) in a phased manner.
Rationale behind the measure
- The measure was intended to absorb surplus liquidity generated by various factors, including the return of ₹2000 notes to the banking system.
- Based on an assessment of current and evolving liquidity conditions, it was decided that the amounts impounded under the I-CRR would be released in stages.
- So that system liquidity is not subjected to sudden shocks and money markets function in an orderly manner.
- While 25% of the I-CRR maintained would be released on September 9, another 25% would be released on September 23 and the balance would be released on October 7.
- The RBI had announced earlier that scheduled banks must maintain an I-CRR of 10% on the increase in their net demand and time liabilities between May 19 and July 28.
GS PAPER – III
China slows fertiliser exports, raising concerns in India
Why in news?
- Around half a million metric tons of urea are held up at Chinese ports after the country curbed exports following a price surge.
Chinese curb on exports
- CNAMPGC Holding Ltd., one of China’s top fertiliser exporters, said it would proactively decrease exports and “make every effort” to ensure domestic supply and price stability.
- State-owned China National Offshore Oil Company (CNOOC) has also urged its subsidiaries to prioritise urea supply to the domestic market ahead of the autumn sowing season.
Concerns in India
- These curbs have triggered fears of a rise in global prices and spending by Indian companies.
- India imports about 30% of urea needed annually and China was its second-largest supplier last year.
GS PAPER – III
Trade unions allege mismatch in claims by Power, Coal Ministries
Why in news?
Trade unions in the power sector have alleged that recent directions and statements of the Union government related to the import of coal for thermal power generation are contradictory, misguiding, deceitful, and against the interest of the energy consumers, people, and the nation.
Ministry’s circular
- The Power Ministry directed all domestic coal-based (DCB) power generation companies (Central, State and Independent) to mandatorily import and blend 4% coal through open-bidding process till March 31, 2024.
- It reasoned that the supply of coal was not commensurate with the requirement.
Trade Union’s concerns
- The All India Coal Workers’ Federation (AICWF) and the Electricity Employees Federation of India (EEFI), the two federations comprising several unions in the power and coal mining sectors, said that these moves allegedly favoured one or two private companies.
- The federations are also mulling legal action against the decision of the government.
- But the unions argued that the Coal Ministry, on the other hand, said in a press release that the country had adequate coal to meet increasing energy demand.
- The unions said the Power Ministry circular was contradictory, misguiding and deceitful.
- The unions said imported fuel cost went up ₹7-₹ 8 per unit in comparison to the ₹2 per unit cost from domestic Coal India Ltd.
- Strikingly the Public sector flagship Power Producer NTPC has reported more than 7% dip in its consolidated net profit for the September 2022 quarter due to the cost of this imported coal.
GS PAPER: II
G20 Leaders’ Summit in New Delhi: A Primer
Why in the news?
The 2023 G20 New Delhi summit is the eighteenth meeting of the G20 (Group of Twenty) Group.
- The Summit is the culmination of India’s year-long Presidency of the G20 and will conclude with the adoption of a G20 Leaders’ Declaration.
About G-20 Group:
The G20 comprises 19 countries — Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States — and the European Union.
- The G20 represents around 85% of global GDP, more than 75% of global trade, and is home to about two-thirds of the world’s population.
Major Objectives of the G-20:
- Coordinate policy among members to achieve global economic stability and sustainable growth.
- Promote financial regulations that reduce risks and prevent future financial crises.
- Create a new international financial architecture.
Origin of the G-20 Group:
The G20 was created in 1999 in the wake of the Asian financial crisis.
- The crisis had shown the need for a more informal forum for the world’s major economies to discuss and coordinate economic policy.
- The annual Leaders’ Summit of the G20 began in 2008 in response to the global financial crisis.
- The G20 is an informal grouping, which means it has no permanent secretariat or staff.
- The Presidency rotates annually among its members, and is responsible for bringing together the G20 agenda, organising its workings and hosting summits.
- G-20 Troika: At the G20, the member holding the presidency every year, works together with its predecessor and successor, together known as Troika, to ensure the continuity of the agenda. Currently, Italy, Indonesia, and India are the Troika countries.
Analysis:
The G20 Leaders’ Summit in New Delhi is a major opportunity for the world’s economies to come together and discuss how to address the global economy’s challenges. The summit is expected to focus on issues such as climate change, trade, and investment.
GS PAPER – III
RBI to discontinue Incremental cash reserve ratio
Why in news?
Recently, the Reserve Bank of India (RBI) has decided to discontinue the Incremental cash reserve ratio (I-CRR) in a phased manner.
- The RBI will release the first 25% and then the remaining 75% will be released in two tranches.
- The RBI’s decision to release the I-CRR in a phased manner is aimed at easing liquidity conditions in the banking system.
What is I-CRR?
- The I-CRR is an additional cash balance that RBI can ask banks to maintain over and above the cash reserve ratio.
- The I-CRR was introduced by the RBI in August 2023 to absorb surplus liquidity in the banking system. The I-CRR required banks to maintain an additional 10% of the increase in their net demand and time liabilities (NDTL) between May 19, 2023 and July 28, 2023.
- The RBI had said that the I-CRR was necessary to prevent the build-up of excess liquidity in the banking system.
I-CRR during demonetisation:
- The I-CRR was last used by the RBI in November 2016 after the demonetisation of Rs 500 and Rs 1,000 banknotes. The RBI had imposed the I-CRR to absorb the surplus liquidity that had entered the banking system due to the demonetisation.
Do You Know?
- The cash reserve ratio is the minimum amount of the total deposits that banks have to keep with the central bank — for a specific period.
GS PAPER – II
World Electric Vehicle Day
Why in news?
Recently, the World EV Day celebrated on September 9th to raise awareness about the benefits of electric vehicles (EVs).
- It was initiated by the Sustainability Media Company GreenTV in 2020.
- The number of EVs on the road is growing rapidly. In 2021, there were over 10 million EVs worldwide, and this number is expected to reach 125 million by 2030.
Benefits of EVs:
- EVs produce zero emissions, which helps to reduce air pollution and combat climate change.
- EVs are also more fuel-efficient than traditional gasoline-powered vehicles, which can save drivers money on fuel costs.
- EVs are quieter than traditional gasoline-powered vehicles, which can help to reduce noise pollution.
- EVs are easier to maintain than traditional gasoline-powered vehicles, which can save drivers money on maintenance costs.
GS PAPER – II
India Showcases PM Gati Shakti at ADB RCI Conference
Why in news?
India recently showcased its PM GatiShakti Plan for Multi-modal Connectivity at the 2023 Regional Cooperation and Integration (RCI) Conference organized by the Asian Development Bank (ADB) in Tbilisi, Georgia.
About ADB – RCI
- The ADB RCI Conference is an annual event that brings together policymakers and experts from across Asia and the Pacific to discuss regional cooperation and integration.
- The theme of the 2023 conference was “Strengthening Regional Cooperation and Integration through Economic Corridor Development (ECD).”
- The conference focused on ways to integrate spatial transformation/area-centric approach with the ECD and strengthen regional cooperation through a broader approach. There was also knowledge sharing on the application of the ECD framework and operational guidelines for investable projects.
What is PM Gati Shakti?
- The PM GatiShakti plan is a major initiative of the Government of India to improve the country’s infrastructure and logistics network.
- It aims to create a unified and seamless network of transportation, including roads, railways, waterways, and airways, to facilitate the movement of people and goods across the country.
- The Ministry of Commerce has announced that 14 social sector ministries have been added to the PM GatiShakti National Master Plan (NMP) platform to enhance its reach for socio-economic development.
- The plan also includes a focus on digitalization, with the use of GIS and other technologies to improve planning and coordination.
About Asian Development Bank (ADB)
The Asian Development Bank (ADB) is a regional development bank headquartered in Manila, Philippines.
- It was established in 1966 to promote economic development and cooperation in Asia and the Pacific.
- ADB has 68 members, including 49 from the region and 19 from outside the region.
- ADB provides loans, grants, and technical assistance to its members to support projects in a wide range of sectors, including infrastructure, energy, education, health, and social protection.
- ADB also works to promote regional cooperation and integration.
Other Government of India Initiatives for Logistics Sector
- The National Logistics Policy (NLP), which aims to create a world-class logistics sector in India.
- The Multimodal Transportation of Goods Act, 1993, which provides a legal framework for multimodal transportation.
- Multi Modal Logistics Parks (MMLPs), which are being developed to provide integrated logistics facilities.
- The LEADS Report, which provides a roadmap for improving the logistics sector in India.
- Dedicated Freight Corridors (DFCs), which are being built to improve the movement of freight.
- Sagarmala Projects, which are being implemented to develop India’s maritime infrastructure.
- Bharatmala Project, which is a major road infrastructure project.
These initiatives are expected to help improve the efficiency of the logistics sector in India and to make it more competitive. This will have a positive impact on the country’s economy as a whole.