ECONOMY by VIVEK SINGH

2021-06-05 07:39:23 Source: Indian Express
It is to be noted that now "Bank rate" is not used by RBI for lending purpose. This rate is just used to impose penalty (penal rate) in case banks fall short of reserves.
"Accommodative stance" means going forward RBI may reduce repo rate or use other measures/tools to pump more liquidity in the economy to "revive and sustain growth" because of the covid-19 induced slowdown. Open / Comment

2021-06-04 18:16:04 Source: RBI Annual Report 2020-21
If a bank is solvent (has not gone bankrupt) but facing liquidity (cash) problems then only RBI acts as Lender of Last Resort.
If a bank has gone bankrupt then RBI may not protect it.
In RBI's various manuals its just written that RBI will act as lender of last resort for BANKS, nowhere its written that it will act as lender of last resort for NBFCs. But two years back RBI's Deputy Governor made a statement that RBI may act as lender of last resort for NBFCs. Open / Comment

2021-06-03 16:52:30 Attached is the Lecture Plan for the Economy Module course which is starting on 14th June 2021.

You can check the details of the programme on the following link and take admission:
https://www.shubhraviraj.in/course-infomation/fbf22873-04cd-467a-8eb9-6100488af1dd Open / Comment

2021-06-03 07:11:29 Based on the above figures of Ministry of Commerce,
Exports (goods & services) in 2020-21 = 291 + 205 = $496 Billion
Imports (goods & services) in 2020-21 = 393.6 + 118.4 = $512 Billion
Total Trade (exports + imports) = $ 1.008 Trillion

GDP of India (2020-21) = Rs. 197 lakh cr = $2.7 Trillion

Exports = $496/$2700 = 18.37% of GDP
Imports = $512/$2700= 18.97% of GDP
Trade = $1008/$2700 = 37.3% of GDP Open / Comment

2021-06-03 07:01:55 Open / Comment

2021-06-03 07:01:28 Open / Comment

2021-06-02 06:30:22 There are two articles in Hindu today opposite the editorial page titled "What explains the surge in FDI inflows" and "The economic toolkit revealed". These are irrelevant and can be skipped.

Just for information:
In a circular in April 2018, RBI had imposed a virtual ban on crypto currency trading in India and had directed all entities which fall under its purview (i.e. regulated by) to not deal in virtual currencies or provide services to those who want to deal in it. In March 2020 the Supreme Court has set aside (quashed) the order, allowing trade in digital assets/currencies.
So, bitcoins are not legal tender in India but anyone can hold/posses and trade bitcoins. Open / Comment

2021-06-01 06:43:07 The above is news from Hindu. A general news but few analysis.

1) The GDP growth has contracted by 7.3% in FY 2020-21 which is the maximum contraction (negative growth) in the post independence history of India. The first two quarters of FY 2020-21 saw negative (real GDP) growth of -24.4% and -7.4% respectively which led to declaration of "Technical Recession" in Indian economy. (the technical definition of recession is at least two consecutive quarters of negative real GDP growth).

The growth figure of -7.3% is also provisional which may get revised later.

2) India has faced negative growth in real GDP four times previously (after Independence) in 1957-58 (-1.2%) [Drought], 1965-66 (-3.66%) [drought/war], 1972-73 (-0.32%) [drought/Oil crisis] and 1979-80 (-5.2%) [Drought/political instability].

3) Earlier most of the agencies has projected -7.7% growth for 2020-21 and 10.5% growth for 2021-22. So, the 10.5% projected growth (which could be highest ever growth) for 2021-22 was basically because of BASE effect. BUT now since the contraction in 2020-21 is less (-7.3%) than expected (-7.7%), SO the impact of base effect on 2021-22 will be less and it has to be revised and now the growth for 2021-22 can be less than 10.5%. The other reason for less than 10.5% growth in 2021-22 will be the second covid-19 wave.

4) Only two sectors has experienced positive growth in 2020-21 one is agriculture, forestry and fishing and the other is electricity, gas, water supply and other services.

No need to go into too much analysis of various sectors of GDP growth and no need to remember all this data. Open / Comment

2021-06-01 06:23:37 Open / Comment

2021-05-31 17:48:30 The answer to the above question is (c). The explanation is:

If the lockdown continues and Govt. will give fiscal stimulus which means govt may reduce tax or give subsidies or cash to the people or businessmen then it will increase aggregate (total) demand in the economy. But if this demand is not met by producing/supplying the goods and services by unlocking the economy/businesses then it will definitely result in inflation.

If the aggregate (total) demand in the economy increases by 10% and supply (of goods and services) also increases by 10% then there will not be an increase in effective demand and the inflation will not increase. But if the aggregate demand increases by 10% and supply just increases by 6% then there will be effective demand of 4% in the economy and this results in inflation. That demand which is not met by supply results in effective demand. Effective demand increase in the economy necessarily increases inflation.

In the above question as the lockdown is continuing and govt giving stimulus so, aggregate demand as well as effective demand both will increase resulting in inflation. Open / Comment