Banking, Financial and Economic Awareness of 09 and 10 April 2020

1. State power distribution companies (discoms) get power at lesser rates

• State power distribution companies (discoms) are getting power at lesser rates due to a decrease in power purchase rates.
• Power purchase rates in spot market have declined due to decrease in demand caused by COVID-19 lockdown.
• Average power purchase prices reached to Rs 2.40 per kWh between March 15-April 10, 2020.  In 2019, they were Rs 3.18 per kWh.
• Due to lower demand and uninterrupted power supply, discoms can purchase power through the trading platform of Power Exchange of India Limited (PXIL) and fulfill their requirements.
• In January 2020, PXIL has introduced PRATYAY. It is a 24x7 web-enabled trading platform that uses web-based transaction model.
• PXIL is one of India's two operational power exchanges. Indian Energy Exchange (IEX) is second such power exchange.
• National Stock Exchange of India Limited (NSE) and National Commodity and Derivative Exchange (NCDEX) are joint promoters of PXIL.

2. ICRA estimates decline in collections from highway tolls

• ICRA Limited (ICRA) has estimated collections from highway tolls for 2019-20 will decline by 2-3%.
• 2-3% decline for 2019-20 will be in comparison to tolls collected during last financial year.
• One reason for the decline in toll collection is new axle load norms as they allow vehicles to carry more cargo. 
• COVID-19 lockdown and economic slowdown are other reasons for the expected decline in toll collection.
• Toll collection for next financial year may decline by 6.5 %.
• ICRA has also estimated GDP growth at 2 % for fiscal 2020-21.

3.  Digital transactions increase by more than 31%

• As per data available on Digidhan Dashboard, digital transactions for fiscal year 2019-20 have increased by more than 31% from fiscal year 2018-19.
• During fiscal year 2019-20, digital transactions increased to Rs 4,116.74 crore from Rs 3,134 crore in fiscal year 2018-19.
• Government's target for digital transactions in fiscal year 2019-20 is 4,000 crore. This has been achieved.
• 30.19 % of total digital transactions or Rs 1,242.98 crore worth digital transactions was done through BHIM UPI.
• BHIM UPI was most used mode for digital transactions in fiscal year 2019-20. BHIM UPI was followed by prepaid payment instruments and debit cards.
• 12.7 % of total digital transactions or Rs 522.78 crore worth digital transactions was done through prepaid payment instruments.
• Debit cards were used for 12.1% of total digital transactions or Rs 497.73 crore worth digital transactions.
• The target of Rs 4,000 crore included sub-targets for different banks. In February, 27 banks crossed their sub-targets.
• Digidhan Dashboard was developed by the Ministry of Electronics and Information Technology (MeitY). It monitors 16 different modes of digital payments.

4. Types of Custom duties- Basic Custom Duty, Safeguard Duty, Anti-dumping duty, Countervailing duty

• Basic Custom Duty (BCD):
  • It is a type of import duty.
  • It is based on the value of imported goods.
  • A product's Harmonised System of Nomenclature (HSN) code and country of import determine basic custom duty.
  • It differs from 0% to 100%.
  • In Budget 2020-21, the government has proposed to lower BCD on import of paper used for news printing from 10% to 5%.
  • On 9 April 2020, the government has exempted medical equipment (ventilators, masks and test kits) required for fight against COVID-19 from BCD till September 30.
• Safeguard Duty:
  • Safeguard duty is applied if imports of any item suddenly increase and cause harm to domestic industry.
  • Director General (Safeguards) is the authority for administering safeguard duty. It comes under the jurisdiction of the Department of Revenue in the Ministry of Finance.
  • Safeguard duty is not country specific. Unlike anti-dumping duty, safeguard duty does not differently treat different countries of import.  
• Anti-dumping duty: 
  • It is imposed by custom authorities over normal customs duty in order to prevent cheaper export of goods from a country to another country.
  • Dumping or cheaper export of goods from a country may distort trade in another country.
  • Anti-dumping duty is recommended by the Directorate General of Trade Remedies (DGTR) and imposed by the Ministry of Finance.
  • In May 2015, anti-dumping duty was imposed by the department of revenue on import of Chinese calculators till May, 2020.
  • Recently, DGTR has recommended continuation of anti-dumping duty on Chinese calculators.
• Countervailing duty:
  • Countervailing duty is imposed by importing countries to counter subsidies provided by exporting countries to its exporters.
  • Export subsidies provided by exporting countries make exports cheaper and affect domestic producers of importing countries.

Multiple Choice Questions (MCQs)

1. Which of the following is/are promoters of Power Exchange of India Limited (PXIL)?

1. Indian Energy Exchange (IEX)
2. National Stock Exchange of India Limited (NSE)
3. National Commodity and Derivative Exchange (NCDEX)
4. B and C
5. A, B and C

2. How much GDP growth has been estimated by ICRA recently?

1. 1%
2. 1.5%
3. 2%
4. 2.5%
5. 3%

3. Which of the following is the most used mode of digital transactions for fiscal year 2019-20 as per data available on Digidhan Dashboard?

1. BHIM UPI
2. Prepaid payment instruments
3. Debit cards
4. IMPS
5. Internet banking

4. Recently, the government has exempted medical equipment (ventilators, masks and test kits) required for fight against COVID-19 from Basic Customs Duty till

1. July 30
2. August 30
3. September 30
4. October 30
5. November 30

Solution

1. D

2. C

3. A

4. C

Read Banking Awareness PDF - 09 and 10 April 2020