ECONOMY CURRENT AFFAIRS MONTHLY 'FEBRUARY' 2012

General Awareness Updates – February 2012 Economy & Business Yahoo! appointed a new chief executive, poaching Scott Thompson from PayPal to fill the position. Last September Yahoo! sacked Carol Bartz from the job after she failed to revive the internet firm’s sagging fortunes. Moody’s, a leading global credit rating agency, has upgraded India’s short-term foreign currency rating from speculative to investment grade, a development which will help domestic companies to raise funds from overseas markets at better rates. Moody’s has upgraded the short-term country ceiling on foreign currency bank deposit increasing from NP (not prime) to Prime (P-3), suggesting acceptable ability to repay short-term obligations. The ‘P-3’ ratings suggest acceptable ability to repay short-term obligations. The latest upgrade comes just a few weeks after Moody’s had upgraded the credit rating of Indian government’s bonds from speculative to investment grade, a move that was expected to encourage FIIs to increase their exposure in gilts and help companies raise funds from abroad at competitive rates. On December 20 last year, Moody’s had upgraded short term government bonds denominated in domestic currency from NP not prime to P-3. Moody’s had upgraded rating on long-term government bond denominated in domestic currency from Ba1 to Baa3 or from speculative to investment grade. Besides, the long-term country ceiling on the foreign currency bank deposit was also upgraded from Ba1 to Baa3. Giving rationale for the upgrade in December, Moody’s had at that side said, "Diverse sources of Indian growth have enhanced its resilience to global shocks". It had added the present slowdown "could reverse sometime in 2012-13, as inflation cools from current 9 per cent levels".  SAAB has filed for bankruptcy, bringing to an end a two-year effort to rescue the Swedish brand. The final desperate efforts to organise help in China were obstructed by General Motors (GM). Saab CEO Victor Muller has struggled to put together a deal to save Saab, negotiating in recent months with two Chinese groups, carmaker Youngman and car distribution company Pang Da. But Saab’s former owner GM has repeatedly refused technology licence transfers to the Chinese firms, which spelled the death knell for Saab. The attempts to sell Saab to Chinese partners have been seen as the last chance of saving the Swedish carmaker, which was already on the brink of bankruptcy when GM sold it to Swedish Automobile – at the time called Spyker – in early 2010 for U.S. $400 million. It has been a rocky road since then. The carmaker was forced to halt production in April as suppliers stopped deliveries over mountains of unpaid bills. Fulfilling a long-standing demand, Prime Minister Dr Manmohan Singh announced a new pension and life insurance scheme for overseas Indian workers that would allow over five million workers, especially those working in the Gulf, to save money for the future. Announcing the government’s decision to introduce and sponsor the Pension and Life Insurance Fund (PLIF) at the 10th Pravasi Bharatiya Divas, Dr Singh said the scheme will encourage the overseas workers to voluntarily save money for their resettlement and old age. The scheme will also provide a low-cost life insurance cover against natural death. Under the scheme, the government will co-contribute '1,000 per annum for all subscribers who contribute between `1,000 and `12,000 per year. Women overseas workers will enjoy a special additional co- contribution of `1000 a year. The draft Cabinet proposal to give 26 percent stake to Japan in the U.S.$90 billion Delhi—Mumbai Industrial Corridor (DMIC) project has received an approval from the Ministry of External Affairs. The ambitious DMIC project being piloted by the Industry Ministry envisages establishment of several industrial cities across seven northern and western states. Japan has evinced interest in picking up the equity stake which will be offloaded by the Infrastructure Development Finance Company (IDFC) and Infrastructure Leasing and Financial Services Ltd (IL&FS) at the instance of the government. The two private players together hold 51 per cent stake in the DMIC Development Corporation (DMICDC), a special purpose vehicle for implementing the project. It involves building of industrial enclaves along the Delhi-Mumbai rail corridor, spanning Uttar Pradesh, Haryana, Rajasthan, Gujarat, Maharashtra and Madhya Pradesh. In September, the Union Cabinet had approved equity restructuring of DMICDC and an expenditure of `18,500 crore on development of infrastructure. The project is considered vital for the recently cleared National Manufacturing Policy. Spain ’s new conservative government, led by Prime Minister Mariano Rajoy, vowed to rescue the country from an economic crisis and strengthen its standing in Europe, as it took office. The 13 ministers swore loyalty to King Juan Carlos and then dispersed immediately to their new posts to get Prime Minister Mariano Rajoy’s austerity programme under way in the eurozone’s fourth largest economy. Among them, a former executive of the ruined U.S. bank Lehman Brothers, Luis de Guindos, took up the key job of economy minister, tasked with helping get five million unemployed back to work and reassuring Spain’s investors.  Analysts noted that Mr De Guindos and several other ministers have backgrounds in economic and European affairs, important for their mission to convince markets that Spain is not a weak link in the eurozone.  With unemployment at 21.5 per cent and warnings of a fresh recession looming, Mr Rajoy has vowed to deepen the spending cuts that have already hit hospitals and schools and have brought thousands on to the streets in protest. The new leader also wants Spain to take a strong role alongside other countries in efforts to stabilise the eurozone, shaken in recent months by market fears over the debts of members such as Italy and Greece.