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Insights Daily Current Events, 07 October 2015

Insights Daily Current Events, 07 October 2015

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Paper 3 Topic: Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth.

e-commerce likely to be $80 billion industry by 2020: report

According to a report released by Snapdeal and KPMG, the e-commerce sector in India is projected to cross $80 billion by 2020, and grow further to $300 billion by 2030. This growth will mainly be driven by growing adoption of smartphones and increasing Internet penetration.

  • The report is titled, ‘Impact of e-commerce on SMEs in India’.

What the report says?

  • Around 85% of small and medium enterprises (SMEs), which adopt e-commerce, believe that it was a cost effective medium to grow sales.
  • SMEs using Internet for business have seen 51% higher revenues and 49% more profit.
  • About 73% SMEs feel that e-commerce enables them to understand their markets better and 46% SMEs have seen increase in business through listings on online marketplaces.
  • e-commerce-enabled SMEs also reported 60-80% reduction in distribution, marketing and sales spend to get incremental business.

The report also points out patchy Internet connectivity due to underdeveloped infrastructure, a general lack awareness about the benefits that e-commerce offers and a lack of trust among organisations considering to go online, are some of the key challenges faced by the e – commerce sector.

Challenges for SMEs:

  • Inadequate financing is one of the major challenges for small and medium enterprises. Approximately 41% of SMEs in India do not have access to bank loans or other products offered by financial institutions, with a financing gap of more than Rs.2.93 trillion in the SME sector.

This fast paced growth of the ecommerce industry in India represents an unprecedented opportunity for the sector.

Sources: the hindu.

 

Paper 3 Topic: indigenization of technology.

INS Astradharini commissioned

The Indian Navy has commissioned the first indigenously-designed and built torpedo launch and recovery vessel INS Astradharini.

About the Vessel:

  • INS Astradhani is an advanced replacement for Astravahini which was decommissioned on July 17 this year.
  • It can operate at high sea states and has a large deck area with Torpedo Launchers for deploying and recovering various kinds of torpedos during the trials. It has a length of 50 m.
  • It has modern power generation and distribution, navigation and communication systems.Astradharini
  • The unique hull form of the ship demonstrates the country’s ship design and shipbuilding capabilities. The catamaran hull configuration significantly reduces the power requirement of the ship that is capable of attaining 15 knots.
  • The unique design of the vessel is a collaborative effort of Naval Science and Technological Laboratory (NSTL), IIT Kharagpur and Shoft Shipyard.
  • INS Astradhani will be used to carry out the technical trials of underwater weapons and systems developed by NSTL.
  • It reflects the capability of our scientists and manufacturing facilities and would go a long way in the ‘Make in India’ campaign.

sources: pib.

 

Paper 3 Topic: Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth.

IMF cuts India’s growth forecast for FY16 to 7.3%

In its latest World Economic Outlook (WEO), the IMF has forecast global growth of 3.1% this year and 3.6% in 2016.

  • The IMF has forecast a lower global growth this year citing modest pickup in advanced economies and a slowdown in emerging markets, primarily reflecting weakness in some large developing nations and oil-exporting countries.

What the WEO says?

  • The new forecasts mark down expected near-term growth marginally. Moreover, downside risks to the world economy appear more pronounced than they did just a few months ago. Hence, the WEO underlines the need for policymakers to raise actual and potential growth.
  • Growth in advanced economies is projected to increase modestly this year and next.
  • This year’s pickup reflects primarily a strengthening of the modest recovery in the eurozone and a return to positive growth in Japan, supported by declining oil prices, accommodative monetary policy, and improved financial conditions, and in some cases, currency depreciation.
  • While growth prospects in emerging markets and developing economies vary across countries and regions, the outlook in 2015 is generally weakening, with growth for these economies as a group projected to decline from 4.6% in 2014 to 4% in 2015.
  • The fifth straight year of slowing growth reflects a combination of factors – weaker growth in oil exporters, a slowdown in China with less reliance on commodity-intensive investment, adjustment in the aftermath of credit and investment booms, and a weaker outlook for exporters of other commodities, including in Latin America, following declines in their export prices.

Some experts say that these forecasts reflect a world economy that is at the intersection of at least three powerful forces. First, China’s economic transformation away from export- and investment-led growth and manufacturing, in favour of a greater focus on consumption and services; second, and related, the fall in commodity prices; and third, the impending increase in US interest rates, which can have global repercussions and add to current uncertainties.

Sources: BS.

 

Paper 3 Topic: Science and Technology- developments and their applications.

Kajita, McDonald win physics Nobel for neutrino work

Takaaki Kajita of Japan and Arthur McDonald of Canada have won the 2015 Nobel Prize in physics for discovering the “chameleon-like” nature of neutrinos, work that yielded the crucial insight that the tiny particles have mass.

  • The two researchers had made key contributions to experiments showing that neutrinos change identities as they whiz through the universe at nearly the speed of light.
  • Kajita showed in 1998 that neutrinos captured at the detector underwent a metamorphosis in the atmosphere. Three years later McDonald found that neutrinos coming from the sun also switched identities.
  • The winners will split the 8 million Swedish kronor (about $960,000) prize money. Each winner also gets a diploma and a gold medal at the prize ceremony on December 10.

What are neutrinos?

Neutrinos are miniscule particles created in nuclear reactions, such as in the sun and the stars, or in nuclear power plants. There are three kinds of neutrinos.

  • Neutrinos interact with matter via the weak force. The weakness of this force gives neutrinos the property that matter is almost trans- parent to them.
  • Since they rarely interact, these neutrinos pass through the Sun, and even the Earth, unhindered. There are many other natural sources of neutrinos including exploding stars (supernovae), relic neutrinos, natural radioactivity, and cosmic ray interactions in the atmosphere of the Earth.
  • The neutrino was proposed by Wolfgang Pauli in 1930; but it took another 26 years for it to be actually detected. In 1956 Reines and Cowan found evidence of neutrino interactions by monitoring a volume of cadmium chloride with scintillating liquid near to a nuclear reactor. Reines was jointly awarded the Nobel Prize in Physics in 1995 in part for this revolutionary work.

sources: the hindu, wiki.

 

Paper 3 Topic: Investment models.

7,500 km of BOT highway projects at risk: CRISIL

According to CRISIL Ratings, around 7,500 km of highway projects in India— 5,100 km under construction and 2,400 km operational — awarded between FY10 and FY12 on a build, operate, transfer (BOT) basis — are at high risk.

  • CRISIL’s analysis shows around 50% of the projects under construction are at high risk of not being completed because of significant cost overruns and weak wherewithal of sponsors.
  • However, CRISIL Ratings considers the recent government move to ensure 80% ‘right of way’ before a project is awarded to be constructive.

How the situation can be improved?

  • The removal of restriction on exit clause can allow developers to sell stakes in some projects and raise about Rs 5,000 crore. These funds can be used to turn around stressed projects, meet existing commitments and also as growth capital.
  • A change of promoter in projects sold could also open up access to better refinancing terms and further financial support.
  • Developers with operational projects can also securitize receivables to either raise additional debt to support fund commitments or to improve project viability by realigning debt repayment and reducing cost of borrowing. Around Rs 15,000 crore of debt can be refinanced through capital market including through Infrastructure Debt Funds (IDFs).

About Build–operate–transfer (BOT):

It is a form of project financing, wherein a private entity receives a concession from the private or public sector to finance, design, construct, and operate a facility stated in the concession contract.

  • BOT finds extensive application in infrastructure projects and in public–private partnership.

How it operates?

In the BOT framework a third party, delegates to a private sector entity to design and build infrastructure and to operate and maintain these facilities for a certain period. During this period the private party has the responsibility to raise the finance for the project and is entitled to retain all revenues generated by the project and is the owner of the regarded facility. The facility will be then transferred to the public administration at the end of the concession agreement, without any remuneration of the private entity involved.

However, in such projects the private entity bears a substantial part of the risk. Some types of the most common risks involved:

  • Political risk: especially in the developing countries because of the possibility of dramatic overnight political change.
  • Technical risk: construction difficulties, for example unforeseen soil conditions, breakdown of equipment.
  • Financing risk: foreign exchange rate risk and interest rate fluctuation, market risk (change in the price of raw materials), income risk (over-optimistic cash-flow forecasts), cost overrun risk.

sources: bs, wiki.