Topic 1: RBI becomes a net seller of US dollars in FY23
- After remianing a net purchaser of US dollar for three consecutive years, RBI became the net seller of US dollar in FY2023.
- RBI sold $25.52 billion on a net basis in the spot foreign exchange market in FY 2023.
- The rupee came under heavy pressure due to the Russia-Ukraine conflict and interest rate hikes by the US Federal Reserve.
- The sale of dollars by the RBI was aimed to curb the volatility in the rupee.
Why RBI become a net seller of US dollars?
- The rupee depreciated to 82 levels against the dollar as on March, 2023, from 76 in April 2022.
- Higher import bills due to a surge in oil prices after the Ukraine war had put pressure on the domestic currency.
- The rupee was depreciating primarily on the widening of the current account as oil prices rose due to the Ukraine war, therefore RBI went in for sale of dollars.
- The rupee also declined as foreign investors pulled out money from the domestic market after the US Federal Reserve raised interest rates to check inflation.
What was the value of dollars sold by the RBI?
- On a gross basis, the RBI sold $212.57 billion in the spot market and, at the same time, it purchased $187.054 billion.
- Therefore, on a net basis, the RBI sold $25.516 billion in the spot market.
- In March 2023, the central bank was a net buyer of $750 million after it purchased $6.91 billion and sold $6.16 billion in the spot market.
What was the impact on Indian Economy?
- The RBI booked a huge profit in FY2023 by selling dollars as they were bought at lower levels and sold at higher levels.
- As the RBI made a huge profit, its dividend payout to the Central Government in FY2023 was also higher.
- The RBI Central Board approved a transfer of Rs 87,416 crore as surplus or dividend to the Central Government for the accounting year 2022-23. This is a 188 percent jump from the last year’s (2021-22).
Source: The Indian Express
Topic 2: Foodgrains, Oilseed harvests set to break records
Context: According to the Agricultural Ministry, India will achieve foodgrain production of 3305.34 Lakh Metric Tonnes (LMT) in the current agricultural year
- According to the third advance estimates of production of major crops, government is estimating record production of rice, wheat, maize, soybean, rapeseed and mustard, and sugarcane.
- The total foodgrain production is likely to be higher by 149.18 LMT as compared to 2021-22.
- The increase in rice could be 60.71 LMT and in wheat, it will be 50.01 LMT.
- The Centre expects the production of 275.04 LMT of pulses.
- The production of Moong is estimated at 37.40 LMT which is higher by 5.74 LMT when compared to the previous year’s production.
- The production of soybean and rapeseed and mustard is estimated at 149.76 LMT and 124.94 LMT respectively, which is higher by 19.89 LMT and 5.31 LMT respectively than the production in 2021-22.
- Total oil seeds production in the country during 2022-23 is estimated at a record 409.96 LMT which is higher by 30.33 LMT than the previous year’s oilseeds production.
- Total production of Sugarcane in the country is also likely to hit record levels of 4942.28 LMT.
- The Production of Cotton is estimated at 343.47 lakhbales (of 170 kg each) and production of Jute & Mesta is estimated at 94.94 lakhbales (of 180 kg each).
Source: The Hindu
Topic 3: India’s exports and imports shrink across many nations for most items
Context: In continuation of the declining trend that has been observed since June last year, India’s exports and imports continue to shrink across many nations for most items.
- The imports have declined more than the exports thus narrowing the trade deficit.
- While the decline in exports was widespread, affecting most of the major items, the decline in imports was also recorded across all major commodities.
- However it should be noted that the fall in imports and exports was not limited to India, many nations have recorded similar declines, pointing to slowing global demand.
Predictions of Global Slowdown:
- The 2022-23 Indian Economic Survey had warned that the ‘slowing global demand will weigh on India’s merchandise exports’.
- The International Monetary Fund (IMF)’s forecast had also warned that global growth will slow down in 2022 and 2023.
- According to IMF if the financial sector stress in the U.S. triggered by the sudden collapse of three regional banks is not contained, then the world would see “weakest growth since the global downturn of 2001. (barring the initial COVID-19 crisis in 2020 and the glo
bal financial crisis in 2008-09).
- The Economic Survey had also said that the “non-oil, non-gold imports, which are growth-sensitive may not witness a significant slowdown as Indian growth continues to be resilient.
- The contraction of India’s merchandize export has also been broad-based.
Due to internal demand slowdown and external geo-political tensions, both imports and exports of many developed and developing countries have been contracting in 2023.
Source: The Hindu
Topic 4: Bima Sugam: All-in-One Insurance Plan for India
Context: Insurance Regulatary Development Authority (IRDA) is devising an all in one affordable single policy that covers health, life, property and accident risks to give citizens protection, expedite claim settlements by linking death registries onto one industry platform.
- IRDA is devising a new affordable bundled product to give citizens protection against multiple risks, and seeking to expedite claim settlements by linking death registries onto a common industry platform.
- It is an ambitious bid by IRDA to expand the poor insurance penetration in the country.
- These initiatives are part of a broader overhaul to attract more investments through differentiated licences similar to the banking sector.
- It aims to make insurance “available, affordable and accessible” to citizens with a ‘Gram Sabha- to district- to State-level’ approach.
- IRDA believes these changes could double the number of jobs in the insurance sector to 1.2 crore.
Is this a UPI like moment for Insurance sector?
- Huge protection gaps exist even today in almost all the lines of the insurance, be it life, health, motor, property or crops.
- A new Bima Sugam platform will integrate insurers and distributors on to one platform to make it a one-stop shop for customers.
- This portal at a later stage can be used to pursue service requests and settlement of claims through the same portal.
- IRDA is simultaneously developing a lynchpin product ‘Bima Vistar’ that will be a bundled risk cover for life, health, property and casualties or accidents.
- IRDA also envisages a women-centric workforce of Bima Vaahaks (carriers) in each Gram Sabha that will meet the women heads of each household to convince them that a composite insurance product like Bima Vistar.
- Since most of the States are digitising their birth and death registries, the IRDA platform, if integrated with those registries, could help settle claims as fast as in a day.
How the policy would be a game changer?
- The policy would be instrumental in providing insurance cover for all by 2047.
- IRDA is also looking to form State-level insurance committees similar to the ones prevalent in the banking sector, and rope in State governments to formulate district-level plans.
- IRDA has also proposed amendments to the insurance laws which will allow differentiated capital requirements for niche insurers so as to attract more investments.
- The amendments will also enable the entry of new players in the form of micro, regional, specialised players and even composite licences.
- Therefore, the new policy would cater to the needs of different geographies and the different strata of the population.
Source: The Hindu
Topic 5: Government to beef up seed stocks as part of El Nino contingency plan
Context: The Government is increasing Kharif seed reserves to 4% of total seeds in the country up from the usual 1% level as part of contingency plan for drought like situation amid El Nino.
- Government sets annual target for states to keep seeds of various crops under the National Seed Reserve Scheme in the event of droughts or any other exceptional weather event.
- These stocks in the reserve are not distributed until 15 August, as the sowing with normal seeds goes on till 15 August for the kharif season.
- After that if a drought like situation arises, government through the National Seed Corporation and state seed corporation distributes short duration crop seed varieties to farmers.
- Government maintains varieties of seeds for all crops, including paddy, soyabean, cotton and millets like ragi and sorghum in the kharif season.
- The share in the reserve is 1% in Kharif season and 1% in rabi season.
- The target for the 2023-24 (April-September) kharif season seed reserves is 640O.110 quintals.
- The reserves ensure that there is no shortage of seeds for sowing in any part of the country. They act as a buffer to take care of farmers sowing requirements.
- Indian Meteorological Department (IMD) predicts El Nino conditions to form in July and to be felt in second half of June-September.
- As part of its drought management plan amid forecasts of El Nino compromising monsoon rains, the agriculture department has formulated contingency plan in 650 districts.