December 7, 2017 @ 10:00 am


7th DECEMBER 2017

  1. Monetary Policy Committee(MPC)
  • It is a committee of the Reserve Bank of India, headed by its Governor, formed in 2016, which is entrusted with the task of fixing the benchmark policy interest rate (repo rate) to contain inflation within the specified target level.
  • Monetary Policy Committee is defined in Section 2(iii)(cci) of the Reserve Bank of India Act, 1934 and is constituted under Sub-section (1) of Section 45ZB of the same Act.
  • The MPC replaced the system where the RBI governor, with the aid and advice of his internal team and a technical advisory committee, had complete control over monetary policy decisions.
  1. Inflation
  • Inflation is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling.
  • Central banks attempt to limit inflation, and avoid deflation, in order to keep the economy running smoothly.
  • Excessive inflation and hyperinflation also have negative economic consequences
  1. Headline inflation
  • a measure of the total inflation within an economy, including commodities such as food and energy prices (e.g., oil and gas), which tend to be much more volatile and prone to inflationary spikes.
  1. Core inflation
  • represents the long run trend in the price level.
  • In measuring long run inflation, transitory price changes should be excluded.
  • One way of accomplishing this is by excluding items frequently subject to volatile prices, like food and energy.
  • a measure of the total inflation within an economy, excluding commodities such as food and energy prices (e.g., oil and gas), which tend to be much more volatile and prone to inflationary spikes.
  1. Accommodative monetary policy
  • Central Bank policy that seeks to stimulate economic growth by loosening money supply.
  • An accommodative monetary policy is typically characterized by a succession of decreases in the key policy rate which makes money easier (cheaper) for business to borrow.
  1. Repo rate
  • Repo (Repurchase option) rate also known as the benchmark interest rate is the rate at which the RBI lends money to the banks for a short-term.
  • Banks sell approved government securities to RBI and get funds in exchange.
  • In other words, in a repo transaction, RBI repurchases government securities from banks, depending on the level of money supply it decides to maintain in the country’s monetary system.
  • If RBI wants to make it more expensive for the banks to borrow money, it increases the repo rate similarly, if it wants to make it cheaper for banks to borrow money it reduces the repo rate.
  • Generally, repo rates are cut down whenever the country needs to progress in banking and economy.
  • In the event of inflation, central banks increase repo rate as this acts as a disincentive for banks to borrow from the central bank. This ultimately reduces the money supply in the economy and thus helps in arresting inflation.
  • As of 7 Dec 2017, repo rate is 6 %
  1. Reverse Repo rate
  • Reverse repo rate is the rate at which RBI borrows money from banks for a short-term.
  • Reverse repo is the exact opposite of repo. In a reverse repo transaction, banks purchase government securities form RBI and lend money to the banking regulator, thus earning interest.
  • An increase in the reverse repo rate means that the banks will get a higher rate of interest from RBI. As a result, banks prefer to lend their money to RBI which is always safe instead of lending it others (people, companies etc.) which is always risky.
  • Repo Rate signifies the rate at which liquidity is injected into the banking system by RBI, whereas Reverse Repo rate signifies the rate at which the central bank absorbs liquidity from the banks.
  • As of 7 Dec 2017, reverse repo rate is 5.75%
  1.  International Solar Alliance (ISA)
  • India launched an International Solar Alliance (ISA) at the CoP21 Climate Conference in November 2015
  • It is an alliance of more than 121 countries, most of them being sunshine countries, which come either completely or partly between the Tropic of Cancer and the Tropic of Capricorn.
  • Countries that do not fall within the Tropics can join the ISA and enjoy all benefits as other members, with the exception of voting rights.
  • to function from the National Institute of Solar Energy (NISE), Gurgaon.
  • to share collective ambitions to reduce the cost of finance and technology that is needed to deploy solar power widely; generation and storage technologies would be adapted to the individual countries’ needs.
  • The alliance’s primary objective is work for efficient exploitation of solar energy to reduce dependence on fossil fuels.
  • Among the tasks that the Alliance would pursue are, cooperation in training, building institutions, regulatory issues, common standards, and investment including joint ventures.
  • The alliance entered into an understanding with the World Bank for accelerating mobilization of finance for solar energy.
  • The Alliance, consisting of 121 countries, is led by India.
  • As part of the agreement, India will contribute $27 million (Rs. 175.5 crore approx) to the ISA for creating corpus, building infrastructure and recurring expenditure over five years from 2016-17 to 2020-21.
  • With ratifications by 15 countries, the ISA became a treaty based inter-governmental international organisation and recognized by UN legally becoming fully functionable.
  1. Merchant Discount Rate (MDR)
  • The rate charged to a merchant by a bank for providing debit and credit card services.
  • The MDR is divided up between the bankers involved in the transaction, the company that installed the PoS and the card network company.
  • In short, the merchants and in turn the consumers, have to pay a fee to use the payment infrastructure developed by the financial institutions.
  1. Point of Sale (PoS) device
  • A point-of-sale (POS) terminal is a computerised replacement for a cash register which can process credit and debit cards.
  • A customer needs to enter a card PIN to complete the transaction using the PoS terminal.
  1. Servicification of manufacturing
  • There are signs that manufacturing is becoming increasingly focused on services; this process is known as servicification.
  • Manufacturing has been accounting for an increasing share of services in total sales and exports.
  • The trend of servicification in manufacturing describes the increase of the purchasing, production and sales aspects of the production chain.
  • In pre-production, for instance, it is increasingly common for manufacturers to use KIBS (Knowledge Intensive Business Services) for product design, research & development and packaging.
  • Other outsourced services could be accounting, legal and IT consulting firms that have professional knowledge to support business processes for companies.
  • The practice of treating services and manufacturing separately – e.g., in trade policymaking – may be out-of-date.
  1. Internet of things (IoT)
  • It is the inter-networking of physical devices, vehicles (also referred to as “connected devices” and “smart devices”), buildings, and other items embedded with electronics, software, sensors, actuators, and network connectivity which enable these objects to collect and exchange data.
  • In 2013, the Global Standards Initiative on Internet of Things (IoT-GSI) defined the IoT as “a global infrastructure for the information society, enabling advanced services by interconnecting (physical and virtual) things based on existing and evolving interoperable information and communication technologies,” and for these purposes a “thing” is “an object of the physical world (physical things) or the information world (virtual things), which is capable of being identified and integrated into communication networks”.
  • The IoT allows objects to be sensed or controlled remotely across existing network infrastructure, creating opportunities for more direct integration of the physical world into computer-based systems, and resulting in improved efficiency, accuracy and economic benefit in addition to reduced human intervention.
  • IoT is one of the platforms of today’s Smart City, and Smart Energy Management Systems.
  1. Industrial Revolution 4.0
  • It is the current trend of automation and data exchange in manufacturing technologies.
  • It includes cyber-physical systems, the Internet of things and cloud computing.
  • Industry 4.0 creates what has been called a “smart factory“.
  • Within the modular structured smart factories, cyber-physical systems monitor physical processes, create a virtual copy of the physical world and make decentralized decisions.
  • Over the Internet of Things, cyber-physical systems communicate and cooperate with each other and with humans in real time, and via the Internet of Services, both internal and cross-organizational services are offered and used by participants of the value chain.

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