Banking, Financial and Economic Awareness of 08 and 09 May 2020

1. Trade unions planning to oppose labour law amendments

• Trade unions are planning to oppose action of state governments to amend labour laws through ordinances.
• Earlier, Uttar Pradesh government has suspended 38 labour laws for 1,000 days through an ordinance.
• Trade unions think that central government may also bring ordinance to pass pending labour codes as Parliament is not functioning due to Covid-19 lockdown.
• Other states which have changed their labour laws are Haryana, Punjab, Rajasthan and Madhya Pradesh.
• Article 123 of the Constitution provides the President ordinance making power.
• Article 213 provides ordinance making power to governor.
• The ordinance can be promulgated by President or Governor if the Parliament or state legislature is not in session.

2. Government announces increase in its borrowings

• Government has announced that its gross market borrowings for 2020-21 are estimated to increase from Rs 7.80 lakh crore to Rs 12 lakh crore.
• Government needs to borrow money means that government's income is less than the expenditure. Borrowings also mean that government's fiscal deficit will increase.
• Due to the announced increase in estimated borrowings, government's fiscal deficit is likely to increase to 5.4% from Budget 2020-21 estimates of 3.5% of GDP.
• In Budget 2020-21, government applied escape clause of FRBM act to take a 0.5% relaxation in fiscal deficit target. This time government may bring in an ordinance to revise target for fiscal deficit.
• FRBM act was legislated in 2003. In 2004, FRBM rules were notified. FRBM act was amended in 2012.
• FRBM act fixes fiscal deficit targets for the government. As per the FRBM act, government cannot borrow from RBI.

3. RBI receives more than the notified amount from auction of government security

• RBI has received more than the notified amount from auction of government security maturing in 2030.
• RBI had applied green shoe option worth RS. 2,000 crore and gave Rs 12,000 crore worth government security instead of notified Rs 10,000 crore.
• RBI also used green shoe option worth Rs 2,000 crore in case of government security having maturity date in 2022.
• RBI also received more than the notified amount from the government security having maturity date in 2060.
• Green shoe option allows RBI to receive maximum RS 2,000 crore more than notified amount of the security. RBI does this in consultation with central government.

4. M&M's digital sales platform, Own-Online

• Mahindra & Mahindra Ltd (M&M Ltd) has launched a digital sales platform, named as Own-Online.
• Own-Online platform integrates Mahindra's dealers and touch points from all over India.
• Earlier, customers were allowed to book vehicles by using external websites.
• Own-Online platform has facilities for financing, insuring, exchanging and owning a Mahindra vehicle.
• Consumers will be allowed to choose dealers as per their choice through digital platform.

5. INR-USD (Rupee-Dollar) F and O contracts launched on India INX and NSE-IFSC

• INR-USD (Rupee-Dollar) Futures and Options contracts have been launched on India INX and NSE-IFSC.
• The newly launched contracts will help India by benefitting its economy and employment.
• INR-USD contracts on India INX and NSE-IFSC will be accessible for 22 hours across all 24 time zones of the world. They will be accessible for participants from all over the globe.
• NSE IFSC is a subsidiary of National Stock Exchange (NSE). This global trading platform was launched in June, 2017. India INX was started in January 2017.
• NSE IFSC’s location: International Financial Service Centre (IFSC), Gujarat International Finance Tech (GIFT) city, Gujarat.

Read Banking Awareness PDF - 08 and 09 May 2020