ECONOMY by VIVEK SINGH

2021-05-29 15:51:19 The above is article from Indian Express. An article for general reading, but some facts you need to have a look.

1) The domestic demand of edible oil is around 24 Million Tonnes (MT) while we produce only 11 MT, resulting in imports of around 13 MT. So, more than 50% of our requirements are being met through imports. The major imports are palm oil (Indonesia, Malaysia), Soyabeen oil (Argentina, Brazil), and Sunflower oil (Ukraine, Argentina).

2) The prices of edible oil (groundnut, mustard, vanaspati, soya, sunflower and palm) have increased 50% in the last one year. And the increase is mostly due to the international factors. Even if we do not import mustard oil but since the edible oils are "close substitutes", and an increase in price of one or two major categories will result in an increase in prices in all the categories as people start shifting consumption to other categories due to cheaper prices).

3) One main reason of increase in prices is the shift in usage of edible oils from food to fuel. Other reasons are more buying by China, labour issues in Malaysia, Impact of laNina on palm and soya producing areas and other weather changes and imposition of export duty on crude palm oil in Indonesia and Malaysia

4) What we can do immediately to reduce the prices. The answer is to reduce the import duty which has increased because of imposition of cess after the budget.

5) Imports can be categorized under different categories like "free" and "restricted". In case of "free" you do not require any approval for imports other wise a permission is required.

6) The last para is quite confusing and I think they have mixed few things and its confusing and you can leave it. Open / Comment

2021-05-29 15:33:42 Open / Comment

2021-05-29 08:11:40 The above is news from Indian Express. Let us understand few points. Read it carefully.

1) The currency swap agreement between two countries (say A and B) happens at Central Bank Level. Country A gives its currency to country B and country B will give its own currency to country A. And the countries will keep on paying the interest on the currency which they have taken from the other country. And after a fixed period the swap is again reversed which means country A will get the principal amount from B and country B will get the principal amount of its currency from A. This is a kind of Standard agreement.

But now there can be certain deviations in such agreements depending on mutual agreement like:

(a) Country A takes the currency of B but B does not require/take the currency of A. See it will not impact BECAUSE country A will keep on paying the interest on the currency and amount which it has taken from B and after a fixed period country A will return the principal amount also to B. So, in this case B did not take anything from A BUT it does not matter because A has kept on paying interest on the money taken and then paid the principal. So, this is a kind of credit/loan facility for country A because B did not take any currency from A. That is why in this case it is called an (open ended) credit/loan facility. Why open ended because two countries can sign such agreements for a certain period but they will use only when required.

(b) This swap agreement can also be in the form of third currency. Now in the above news, Sri Lanka wants dollars but not Bangladeshi currency and Bangladesh do not require at all any Sri Lankan currency. So, in this swap agreement a third currency has been offered. So, Bangladesh will offer dollars (from its dollar reserves just for help) to Sri lanka and Sri lanka will keep on paying interest in dollars and after a fixed period Sri Lanka will return the (principal amount) dollars. So, ideally Sri Lanka should pay interest in dollars because it has taken dollar currency from Bangladesh but upon request of Sri Lanka, Bangladesh may allow Sri Lanka to pay interest in Sri Lankan currency. So there can be variations/exceptions and accordingly calculations can be done. Since Sri Lanka will keep on paying interest on the amount taken from Bangladesh and will return the principal amount (in dollars) too after the fixed period, SO it does not matter even if Bangladesh did not take any currency from Sri Lanka or not. AND if Sri Lanka is not able to pay the dollars (principal) amount they both the countries can adjust this in trade (imports from Sri Lanka into Bangladesh).

2) If Sri Lanka will borrow the same amount of dollars from the market, it will have to pay much higher interest rate. If Sri lank sells its own currency and purchase dollars in the forex market then its currency may start depreciating a lot. So, in such situations, currency swap agreements become helpful because these are OUT OF MARKET transactions at country level.

3) So, currency swap agreements are quite helpful in case a country's forex reserve is declining and it has obligations which can be settled only in dollars/forex like repayment of external loan or imports of some essential. Open / Comment

2021-05-29 07:50:08 Open / Comment

2021-05-28 06:55:34

Open / Comment

2021-05-27 07:09:46 Open / Comment

2021-05-26 20:35:37 As per the advance estimate of Ministry of Agriculture, India's estimated production of Food grains, wheat and rice is going to be maximum in in 2020-21 (crop year).

Food grains = 305 MT
Wheat = 108 MT
Rice =121 MT

Food grains include wheat, rice, pulses and coarse grains Open / Comment

2021-05-25 08:13:10 In Today's Hindu it is reported that FDI inflows into India in 2020-21 is $81 billion. But one week back on 18th May there was a news that FDI inflows is $54.6 billion in 2020-21. (https://t.me/VivekSingh_Economy/2984). Pls do not get confused.

Actual inflow is $54.6 billion in 2020-21. But the accumulated FDI over the past years gives profit to the foreign investors which they can take out of India or Reinvest in India. Once we include the reinvested earnings then it becomes $81 billion and sometimes referred as gross FDI. Both the data is reported depending on the context, but generally reinvested earnings are excluded.

Maximum FDI received from Singapore> US> Mauritius
Maximum FDI received state wise Gujarat> Maharashtra> Karnataka
Maximum FDI received sector wise Computer Software and hardware> Infrastructure construction > services Open / Comment

2021-05-24 08:08:56 Nothing relevant in the newspapers. There is an article on editorial page in HINDU today titled "Recalibrate growth, reprioritise expenditures" by C Rangarajan is not relevant and you can ignore. These days mostly Covid related news is being reported, if something relevant comes for economy will definitely post it. Open / Comment

2021-05-22 15:39:10 Support the farmers but there is a proper way which should be sustainable in the long run. Thirty years back our village water was so pure that we used to drink the borewell water/pump water as it is directly. But now urea has brought color, smell, taste... to that water and the poor villagers are being forced to purchase RO or bottles....This is not at all sustainable development. Open / Comment