Monthly Current Affairs on Economics(ESI)

Monthly Current Affairs on Economics(ESI)

Resource Efficiency (RE)

  • Resource efficiency or resource productivity is the ratio between a given benefit or result and the natural resource use required for it.
  • Resource efficiency very simply put is making more with fewer materials.
  • In India GDP per Domestic Material Consumption is used to measure RE.
  • life-cycle approach: Resource efficiency means strategy of efficient use of material through the entire life-cycle of products:

Mining/Extraction à Design à Manufacturing/Production à Use/Consumption à Disposal/Recovery

  • Resource Efficiency and Circular Economy
    • Transforming ‘waste’ into ‘resources’ fostering circular economy, and strengthening resource security

RE Strategy


  • 2007: United Nations Environment Programme (UNEP) established the International Resource Panel (IRP) as a central institution to provide independent scientific assessments on sustainable use of natural resources and their environmental impacts and policy approaches.
  • Many of the countries have taken the cue from it and taken various steps in this direction
    • German Resource Efficiency Programme (ProgRess),
    • European Commission’s Roadmap to a Resource Efficient Europe
  • Apr 2017 : Indian Resource Efficiency Programme (IREP) was launched by Indian Ministry of Environment, Forests and Climate Change (MoEFCC) and Indian Resource Panel (InRP)
    • Objective : to make use of natural resources economically and environmentally sustainable way
    • Major focus sector in initial Phase: Use of abiotic material resources, excluding fossil fuels, in two strategic sectors- Construction & Mobility
      • Reason: These sectors have witnessed high growth rate, are biggest consumers of materials, contribute significantly to GDP and employment in the country
    • After that focus will be in other sectors
  • It is also inline with Sustainable Development Goal (SDG) given by United Nation and 11th 5 year plan
    • SDG:12- Responsible consumption and production

Recent Development

  • NITI Aayog and EU delegation to India release the Strategy on Resource Efficiency (RE) on Nov 2017.
  • The strategy paper was unveiled by the Principal Adviser to NITI Aayog, Shri Ratan P.Watal, Indian resource panel member Dr. Tishyarakshit Chatterjee, Ms. Henriette Faergemann, EU Counsellor, Environment, Energy & Climate change. A
  • RE Strategy emphasizes on Sustainable Public Procurement (SSP)
  • The document is developed with the recommendations from the Indian Resource Efficiency Programme (IREP), launched by the Indian Ministry of Environment, Forests and Climate Change (MoEFCC) and Indian Resource Panel (InRP)
  • Strategy will be implementation by the European Union (EU) funded Resource Efficiency Initiative (EU-REI) led by GIZ in the consortium with TERI, CII and Adelph
    • GIZ= Deutsche Gesellschaftfür Internationale Zusammenarbeit (GIZ) GmbH,
    • TERI = The Energy and Resources Institute
    • CII = Confederation of Indian Industry (CII)

WTO Ministerial Conference 11 (WMC-11)

11th Ministerial Conference (MC11) took place in December 2017 in Buenos Aires, Argentina.


Refer the WTO lecture


Fishery subsidies:

  • Member nations committed to securing a deal on fisheries subsidies for prohibiting subsidies for illegal, unreported and unregulated (IUU) fishing which delivers on Sustainable Development Goal 14.6 by the end of 2019.

Also committed to improving the reporting of existing fisheries subsidy programmes.

Public Stockholding:

  • No outcome on public stockholding for food security purposes or on other agriculture issues. As a result, India’s food security programmes and its current public distribution system will not be impacted.
  • However, to use the peace clause, India has to give information to WTO about the size of its food subsidy bill till last year.


  • Another outcome was to continue the 1998 work programme on e-commerce. While there was a strong push by some countries to initiate negotiations on this issue, this was resisted by India.

Non Trade issues: ( no agreement)

  • Developed nations strived to bring into the discussions a stream of issues from rules for small and medium enterprises to gender rights in global trade, which goes against India interest
  • The work programme on special safeguard mechanism (SSM) for developing countries to curb unforeseen surges in imports of agricultural products from these countries
  • The work programme on 10 agreement-specific proposals for improvements in special and differential treatment of developing countries
  • Cotton issue, calling for elimination of export subsidies, since the 2005 Hong Kong Ministerial Conference

Buenos Aires Women and Trade Declaration

  • To seeks women’s economic empowerment by expeditiously removing barriers to trade.
  • spearheaded by the governments of Iceland and Sierra Leone,
  • First time members attending a WTO Ministerial Conference have issued a declaration calling for greater inclusion of women in trade
  • Inline with Sustainable Development Goal (SDG) of United Nation
  • SDG 5 : to achieve gender equality through the empowerment of women and girls
  • India does not endorse this declaration.


India will call a meeting of some World Trade Organization (WTO) members in February 2018 to muster support for food security and other issues.

Foreign Trade Policy (FTP)


Ever 5 year foreign trade policy is made which gives a roadmap to enhance the export. The present FTP is for period 205- 2020. To understand it background and its provision refer the FTP lecture series. In month of December the mid-term review of FTP had been done.

FTP Review

  • Under MEIS/SEIS scheme incentive has been increased from 2% to 4% for labour intensive MSME e.g. Textiles Sector
  • Increase in the validity period of duty-free credit scrips to 24 months from 18 months to enhance their utility in the GST framework
  • A single point of contact on foreign trade.
  • Data Based Policy Action: It proposes to set up a logistics arm in the commerce ministry and a trade analytics division for data-based policy actions
  • An e- wallet is also proposed to be set up to address the liquidity problems faced by exporters.
  • Exporters will self-certify the requirement of duty free raw materials/ inputs under Authorized Economic Operators (AEOs).
  • Encouraging export of agricultural products
  • Allowing Specified Nominated Agencies to import Gold without payment of IGST
  • Support to Export Credit Guarantee Corporation is also being enhanced to increase insurance cover to exporters particularly MSMEs exploring new or difficult markets.
  • Help of professional team to handhold, assist and support exporters in their export related problems.

Effect of GST on exports = Negative

  • Filing large number of returns
  • Withdrawal of duty draw back scheme (except on custom duty),
  • No refund mechanism of unutilised input tax credit under GST for cotton fibre and man-made textile
  • Deemed Exporter has not been recognised under GST framework

Recommendation of Parliamentary committee on Impact of GST on Export

  • Automatic system for claiming refunds
  • Formal mechanism for grievance redressal of exporters
  • Continuing duty drawback rates as before the introduction of GST till Jun 30, 2018 or till the Department of Revenue works out revised duty drawback rates
  • Clarification about the qualifying supplies as deemed exports, and extend export related benefits to them
  • Remove Reverse Charge mechanism and bring some alternate mechanism for SEZ
    • Normally, the supplier of goods or services pays the tax on supply. In the case of Reverse Charge, the receiver becomes liable to pay the tax, i.e., the chargeability gets reversed.
    • Generally done when supply from an Unregistered dealer to a Registered dealer occurs

RBI’s Financial Stability Report



  • Released its bi-annual financial stability report (FSR)
  • 16th Edition


Overall assessment of systemic risks

  • India’s financial system remains stable.
  • Commodities space is firming up.
  • Increased geopolitical risks imply likely volatility in commodity prices.
  • Notwithstanding the efforts to normalise monetary policy by the Federal Reserve and the Bank of England, financial conditions in the advanced economies remain accommodative

Global and domestic macro-financial risks

  • Picking up Export. With picking up of global economy growth, in the emerging market, exports are growing at their fastest clip in six years on the back of a pick-up in global growth.
  • Structural changes: Information technology-led growth is possibly making the world a lot more unequal.
  • Rebounding Domestic growth in 2017-18:Q2 after initial hiccups due to GST and Demonetization
  • Investment climate ( factors may have +ve effect )
    • ‘the decline in number and cost of stalled projects in 2017-18:Q2’,
    • ‘the efforts to improve the quality of government expenditure’,
    • ‘ease of doing business ranking’,
    • ‘India’s sovereign rating upgrade by Moody’s’
    • ‘bank recapitalisation announcement’
  • Fund Flow
    • Large fund flow to both equity and debt mutual funds.
    • Foreign portfolio investment (FPI) flows into the capital market also remained buoyant with a greater preference for debt

Financial Institutions: Performance and risks

  • Risk banking sector remained elevated due to asset quality concerns

Credit Growth

  • Credit growth of scheduled commercial banks (SCBs) showed an improvement between March and September 2017,
  • Public sector banks (PSBs) continued to lag behind their private sector peers.
  • Gross non-performing advances (GNPA) ratio and the stressed advances ratio of the banking sector increased between March 2017 and September 2017.
    • Between March and September 2017, GNPA ratio of SCB increased from 9.6% to 10.2% and the stressed advances ratio marginally increased from 12.1% to 12.2%.
    • Public sector banks (PSBs) registered GNPA ratio at 13.5 per cent and stressed advances ratio at 16.2 per cent in September 2017.
    • Stress Test suggest that GNPAs ratio of the banking sector may rise from 2% in September 2017 to 10.8% in March 2018 and further to 11.1% by September 2018
    • Major contribution in GNPA is from industries. 2nd highest contributor i.e. Agriculture is no-where near to it.

Minning is the biggest contributor in NPA

  • Share of large borrowers both in total SCBs’ loans as well as GNPAs declined between March and September 2017.
  • GNPAs of the NBFC sector as a percentage of total advances increased between March 2017 and September 2017.
  • Stress loans to agriculture have risen since March 2017 indicating rural distress.


  • SCB’s ROA = 0.4% ( remained unchanged between March and September 2017)
  • PSB’s ROA = -ve

Capital to risk-weighted assets ratio (CRAR)

  • Improved from 13.6% to 13.9% between March 2017 and September 2017.

Degree of Interconnectedness

  • The network analysis indicates that the degree of interconnectedness in the banking system has decreased gradually since 2012.
  • The joint solvency-liquidity contagion analysis shows that the losses due to a default of a bank have declined.
  • Banking Stability Index (BSI): “the expected number of banks that could become distressed given that at least one bank has become distressed”-> It has decreased.

Size in Financial System in term of bilateral exposure:

  • SCBs (47%) > AMC-MFs > NBFCs > insurance companies > HFCs > AIFIs

*AMC-MFs = Asset Management Companies Managing Mutual Funds; NBFCs =Non-Banking Financial Companies; HFCs – Housing Finance Companies and AIFIs= All-India Financial Institutions

Leave a Comment

Your email address will not be published. Required fields are marked *