Daily Current affairs
India’s real Gross Domestic Product (GDP) at constant prices is estimated at 5% in 2019-20, compared to 6.1% in 2018-19.
In 2019-20, nominal GDP (at prices including inflation) is estimated at Rs 204 lakh crore, as against Rs 190 lakh crore in 2018-19, a growth of 7.5%.
The per capita income in 2019-20 is estimated to be Rs 95,706 (at constant prices), an increase of 3.9% from 2018-19.
Industrial Production in 2019-20
The Index of Industrial Production (IIP) looks at the volume of production in the sectors of manufacturing, mining, and electricity in the economy.
The IIP assigns a weight of 78% to the manufacturing sector, 14% to the mining sector, and 8% to the electricity sector.
During the period between April 2019 and February 2020, overall growth rate was 0.9% (year-on-year).
During this period, mining, manufacturing, and electricity sectors saw a growth rate of 1.9%, 0.6%, and 1.5% respectively.
Balance of Payments
The Balance of Payments account reflects the transactions of a country with the rest of the world. It consists of the current account (exports of goods and services, remittances, and dividend payments) and the capital account (flow of funds through equity investments and borrowings).
The surplus of the capital account is generally used to finance the current account deficit (CAD). The CAD narrowed to 1.0% of GDP in April-December 2019- 20 from 2.6% in the corresponding period of 2018-19 due to a reduction in the trade deficit.
Trade deficit reduced from USD 145.1 billion in April-December 2018-19 to USD 118.9 billion in April-December 2019-20.
Monetary Policy Decisions
The Monetary Policy Committee of RBI announces monetary policy decisions through bi-monthly policy statements. In view of the COVID-19 pandemic, the Monetary Policy Committee advanced its meeting for April 2020 to March 2020.
To address the stress in financial conditions caused by COVID-19, various policy rates were further reduced in March 2020. The Committee took the following decisions over the course of 2019-20:
The repo rate (rate at which RBI lends money to commercial banks) was reduced on four occasions between April and October from 6.25% to 5.15%. The repo rate was again reduced to 4.4% in March 2020, due to the COVID-19 pandemic.
Similarly, the reverse repo rate (rate at which RBI borrows money from commercial banks) was reduced on four occasions between April and October from 6.0% to 4.9%. In March 2020, this rate was reduced to 4.0%.
The marginal standing facility rate (under which banks can borrow additional money) and bank rate (at which RBI buys or rediscounts bills of exchange) were reduced in sync with the repo rate (staying 0.25% above the repo rate) through the year.