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The term economics comes from the ancient Greek word oikonomia mean management of a household. The term economic process refers to those activities, through which goods and services aimed at satisfying human needs, are produced, distributed and used. Economics includes the study of labour, land and investments of capital, income and production and taxes and government expenditures. Adam Smith, regarded as the Father of Economics, defines Economics as, ''The science relating to the laws of production, distribution and exchange.''
The two chief branches are as follow: Micro Economics It examine the behaviour of basic elements in the economy, including individual agents (such as households and firms or as buyers and sellers) and market and their interaction. Macro Economics It studies the economy as a whole and its features like national income, unemployment, poverty, balance of payments and inflation. It deals with formulation of models explaining relationship between factors such as consumption, inflation, savings, investment, national income and finance.
It represents production, distribution or trade and consumption of goods and services in a given geographical area by different agents, which can be individuals, businesses, organisation or governments. The study of economy of any country helps us to find out the financial condition of the population as well as the different working sectors of the economy. The modern economy is a complex machine. Its job is to allocate limited resources and distribute output among a large number of agents mainly individuals, firms and governments allowing for the possibility that each agent's action can directly (or indirectly) affect other agent's actions. There are two major type of economies.
It refers to a market-economy, which is generally free fromtrade barriers and where exports and imports forma large percentage of the GDP. No economy is totally open or closed in terms of trade restriction and all governments have varying degrees of control over movements of capital and labour. Degree of openness of an economy determines a government's freedom to pursue economic policies of its choice and the susceptibility of the country to the international economic cycles.
An economy in which no activity is conducted with outside economies. A closed economy is self-sufficient, meaning that no imports are brought in and no exports are sent out. The goal of such economy is to provide consumers with everything that they need from within the economy's borders. The degree of openness of an economy is decided by their respective governments by using policy controls like tariffs, import and export quotas, and exchange rate limits. In India, since independence, the government has played a major role in planning economic activities. Present Status of Indian Economy ▸ Indian economy is world's 6th largest economy or nominal GDP basis and the 3rd largest by Purchasing Power Party (PPP) in 2017. ▸ According to CSO-The growth in GDP during 2017-18 is estimated at 6.5% as compared to the growth rate of 7.1% in 2016-17. ▸ During each of the previous two year, 2014-15 and 2015-16, India's Gross Domestic Product (GDP) (Base year 2011-12) grew by 7.2% and 7.6% respectively per annum. ▸ From 1951 until 2013, India GDP Annual Growth rate averaged 5.8% reaching an all time high of 10.2%in December of 1988 and a record low of 5.2% in December of 1979. ▸ On a per capita income basis, India ranked 141th by nominal GDP and 126th by GDP (PPP) in 2017, according to the IMF. ▸ Purchasing Power Parity (PPP) is a theory, which states that exchanges rates between currencies are balanced, when their purchasing power is the same in each of the two countries.
Primary Sector The primary sector include production of raw material and includes agriculture, forestry and fishing. Secondary Sector Mining manufacturing, electricity, gas and water supply, construction. (also called manufacturing sector) Tertiary Sector Business, transport, telecommunication, banking, insurance, real estate, community and personnel services. (also called service sector)
▸ Mixed Economy It is an economy, where both public and private sector co-exist. The nature of Indian economy is a mixed economy. The term Mixed economy was coined by JM Keynes. ▸ Developing Economy Following features shows that Indian economy is a developing economy (a) Low per capita income. (b) Occupational pattern is primary sector dominated. (c) Heavy population pressure. (d) Prevalence of chronic unemployment and underemployment. (e) Steadily improving rate of capital formation. (f) Low capital per head. (g) Unequal distribution of wealth/ assets. ▸ Agrarian Economy An agrarian economy is a type of economy that relies primarily on agricultural industry including livestock farming or corp production. It is form of economy whose major factor of production in the agricultural land.
▸ National Income (NI) is the net value of all the final goods and services produced by its nationals during a financial year. It is a flow concept. In India, the financial year is from 1st April to 31st March. The national income is calculated annually. ▸ According to National Income Committee (1949). 'A national income estimate measures the volume of commodities and service turned out during a given period counted without duplication'. ▸ NI = C + G + I + (X –M) + (R – P) – Depreciation – Indirect tax + Subsidies. C = Total Consumption Expenditure I = Total Investment Expenditure G = Total Government Expenditure X = Export M = Import (R-P) = Net Faction Income from abroad. ▸ When the National Income is measured at the base year price, it is called national income at constant price. ▸ When the national income is measured at the current year price, it is called national income at current year price. ▸ When NNP is calculated at Factor Cost (FC) it is called National Income. This measure is calculated by deducting indirect taxes and adding subsidies in NNP at Market Price (MP). ▸ NNPFC = NNPMP – Indirect Taxes + Subsidies + Government surplus = National Income. ▸ NI = NNP + Subsidies – Indirect taxes ▸ GNP – Depreciation – Indirect taxes + Subsidies. ▸ The CSO released the 'New series' of national accounts with base year 2011-12 instead of the base year 2004-05. The revisions happen every 5 years. ▸ National Income is the measurement of the production power of an economic system in a given time period. ▸ National Wealth is the measurement of the present assets available at a given time.
ProductMethod In this method, net value of final goods and services produced in a country during a year is obtained, which is called total final product. This represents Gross Domestic Product (GDP). Net income earned in foreign boundaries by nationals is added and depreciation is subtracted from GDP. IncomeMethod In this method, a total of net income earned by working people in different sectors and commercial enterprises is obtained. Incomes of both categories of people — paying taxes and not paying taxes are added to obtain national income. By income method, national income is obtained by adding receipts as total rent, total wages, total interest and total profit. ConsumptionMethod It is also called expendituremethod. Income is either spent on consumption or saved. Hence, national income is the addition of total consumption and total savings. In India, a combination of production method and income method is used for estimating national income.
▸ In 1868, the first attempt was made by Dadabhai Naoroji in his book 'Poverty and Un-British Rule in India'. He estimated the per capita annual income to be ` 20. ▸ The first scientific attempt to measure national income in India was made by professor VKRV Rao in 1931-32. He divided the Indian economy into 13 sectors. ▸ In 1949, National Income Committee under the Chairmanship of professor PC Mahalanobis was constituted. The other members were professor VKRV Rao and professor DR Gadgil. ▸ The Government of India appointed a National Income Committee under the Chairmanship of Dr PC Mahalanobis. This committee gave its first report in 1951 and final report New Series in 1954.
It is the total money value of all final goods and services produced within the geographical boundaries of the country during a given period of time. GDP = C + G + I Where, C = Consumption expenditure G = Government expenditure I = Investment expenditure But in closed economy, (R – P) = 0, then GDP = GNP where, (R – P) = Net factor income from abroad.
▸ It refers to the total value of all the goods and services at market price produced during a year within the geographical boundaries of the country. ▸ Market price refers to the actual transacted price and it includes indirect taxes such as Excise Duty, VAT, Service Tax, Customs Duty etc but it excludes government subsidies.
▸ GDP can be calculated at factor cost. This measure more accurately reveals the income paid to factors of production. ▸ The factor cost means the total cost of all factors of production consumed or used in producing a good or service. It includes government grants and subsidies, but it excludes Indirect Taxes. ▸ The difference between Market Price (MP) and Cost Price (CP) is because of the Indirect Taxes and Subsidies. ▸ GDP FC = GDPMP – Indirect Taxes + Subsidies ▸ In terms of value addition, the Gross Domestic Product of the economy is the sum total of the net value added and depreciation of all the firms of the economy.
▸ GDP in a country is usually calculated by the National Statistical Agency, which compiles the information from a large number of sources. ▸ In case of India, it is Central Statistics Office (CSO), which estimates GDP. However, most countries follow established international standards for calculating GDP of their country. ▸ The international standards for measuring GDP are contained in the System of National Accounts (SNA), 1993, compiled by the International Monetary Fund (IMF), the European Commission (EC), the Organisation for Economic Cooperation and Development (OECD), the United Nations (UN) and the World Bank. Source Central Statistics Office PE = Provisional Estimates (CSO) Nominal GDP and Real GDP Nominal GDP is evaluated at current market prices. Therefore, nominal GDP will include all of the changes in market prices that have occurred during the current year due to inflation or deflation. Real GDP is a better measurement of GDP, since it reflects the increase in quantity of goods and services by adjusting for any increase in prices. Real GDP is generally measured by using base year prices of goods and services. Gross Value Added (GVA) It is a measure of the value of goods and services produced in an area, industry or sector of an economy. It national accounts, GVA is outputminus intermediate consumption, it is a balancing item of the national accounts' production account. Gross National Product (GNP) GNP refers to the money value of total output of production of final goods and services produced by the national residents of a country during a given period of time, generally a year. Symbolically GNP = GDP + (X –M) + (R – P) GNP = C + G + I + (X –M) + (R – P) X = Exports M = Imports (R–P) = Net factor income from abroad Net National Product (NNP) It is obtained by subtracting depreciation value (i.e. capital stock consumption) from GNP. Symbolically, NNP = GNP – Depreciation
It is that income, which is actually obtained by the individual or nationals. Symbolically, Personal Income = National Income – Undistributed profits of corporations –Payment for social security provisions – Corporate taxes + Transfer payments + Net interest paid by the government.
When personal direct taxes are subtracted from personal income, the obtained value is called personal disposable income. Symbolically, PDI = PI – Direct taxes National Statistical Organisation (NSO) was set-up on 1st June, 2005, for promoting statistical network in the country. It was then headed by professor SD Tendulkar. Gross Value Added (GVA) is a measure in economics of the value of goods and services produced in an area, industry or sector of an economy. GVA = GDP + Subsidies – (direct, sales) taxes. CSO and NSSO ▸ CSO (Central Statistical Organisation) was set-up in 1950, constituted to publish national income data. ▸ NSSO (National Sample Survey Organisation) was set-up in 1950, for conducting large scale sample survey to meet the data needs of the country for the estimation of national income and other aggregates.
Human Development Report The Human Development Report (HDR), published by the UNDP since 1990, captures the essence of human development. Human development report rank countries based on their ranking on Human Development Index (HDI). HDI was devised by Pakistani economist Mahbub ul Haq along with Indian economist Amartya Sen. In 2015 HDR, India has been placed at 130th position with 0.609 score in medium human development category. Norway, Australia and Switzerland occupies first three positions. Meaning of HDI Value (2016 Report)
Very high Human development
=
0.800and above
High Human development
0.701 and above
Medium Human development
0.550 and above
Low Human development
0.352 and above
HPI measures the ecological efficiency with which human well-being is delivered. It is calculated by multiplying indices of life satisfaction (estimated by compiling responses to international surveys) and life expectancy and dividing that product by ecological footprint.
The term Gross National Happiness was coined in 1972, by Bhutan's then King Jigme Singye Wangchuck. GNH was designed in on attempt to define an indicator that measures quality of life or social progress in more holistic and psychological terms than the economic indicator of GDP.
After independence in 1947, the Economic Programme Committee (EPC) was formed by All India Congress Committee with Nehru as its chairman. This committee was tomake a plan to balance private and public partnership and urban and rural economies. In 1948, this committee recommended forming of a Planning Commission. InMarch 1950, in pursuance of declared objectives of the government to promote a rapid rise in the standard of living of the people by efficient exploitation of the resources of the country, increasing production and offering opportunities to all for employment in the service of the community, the Planning Commission was set-up by a resolution of the Government of India as an advisory and specialised institution. Jawaharlal Nehru was the first Chairman of the Planning Commission. Planning Commission was an extra constitutional body, charged with the reponsibility of making assessment of all resources of the country, augmenting deficient resources, formulating plans for the most effective and balanced utilisation of resources and determining priorities. Now, it has been replaced by a new institution named NITI Aayog.
NITI Aayog or National Institution for Transforming India Aayog came into existence on 1st January, 2015. It is policy-making think-tank of government that replaces Planning Commission and aims to involve states in economic policy-making. It will provide strategic and technical advice to the Central and the State Governments. Various Index of Human Development
Human Development Index (HDI) 2016
Life expectancy at birth index. Education index comprises mean year of schooling and expected year of schooling. GNI Per Capita (PPPUS $) Index for decent standard of living.
Norway Australia Switzerland
Inequality adjusted HDI (IHDI) 2016
Introduced in HDR-2010.Measures the average level of human development after adjusting for inequality.If perfect equality, HDI = IHDIIf, inequality, HDI< IHDI Greater the inequality in society, greater the divergence between HDI and IHDI.
Norway Iceland Australia
Gender Inequity Index (GII) 2016
Introduced in HDR-2010Gil exposes differences in the distribution. It measures gender inequality based on three dimensions and five indicators. Indicators Maternal Mortality Ratio (MMR); Adolescent Fertility Rate (AFR); Educational attainment (secondary level and above); Parliamentary representation; and Labour force participation,
Switzerland Denmark Netherland
Multidimensional Poverty Index (MPI)
MPI launched by Oxford Poverty and Human Development Initiative (OPHI) and UNDP in July 2010. It is a measure of serious deprivation in the dimesnsion of health, education and living standards that combines the number of deprived and intensity of their deprivation. Indicators Nutrition + Child Mortality (Health); Years of Schooling + Children enrolled (Education); Cooking fuel + Water + Toilet + Floor + Electricity + Assets (Standard of living).
Basic Structure of NITI Aayog
Chairperson
Prime Minister
Governing Council
Its members are Chief Minister and Administrators of the Union Territories
Special Invitees
Experts, Specialists and Practitioners with domain knowledge (nominated by Prime Minister)
Vice-President
Appointed by the Prime Minister
Full time Members
Their number is five.
Part time Members
Two ex-offcio members and university teacher
Ex-officio Members
Four Central Ministers
CEO
Secretary level officer from centre, who will be appointed for a fixed term.
The NDC was constituted on 6th August, 1952, with Prime Minister as the Ex-officio Chairman and the Secretary of the Planning Commission as the Ex-officio Secretary of the NDC. Chief Minister of all the states and themembers of the Planning Commission are the members of the NDC. It is an extra-constitutional and non-statutory body (not formed by Act of Parliament).
▸ First Five Year Plan was based on this strategy. ▸ This strategy emphasised the role of capital accumulation's dual character, which on the one hand increases the national income (demand side role) and on the other hand increases the production capacity (supply side role).
▸ Second Five Year Plan was based on this strategy. ▸ Based on Russian experience, this strategy is a two sector model, i.e. consumer good sector and capital good sector. ▸ The strategy emphasised investment in heavy industry to achieve industrialisation for rapid economic development.
▸ It was enunciated by Acharya SN Agarwal in his 'Gandhian Plan' in 1944. The basic objective of the Gandhian Model is to raise the material as well as cultural level of the masses so as to provide basic standard of life.
▸ Liberalisation, Privatisation and Globalisation (LPG) strategy of planning was introduced by the Finance Minister of that time, Dr Manmohan Singh under Narsimha Rao Government. The strategy ended the 'license permit raj' and opened the hitherto areas reserved for the public sector to private sector.
▸ PURA stands for providing Urban amenities in rural areas and was the brainchild of APJ Abdul Kalam. ▸ This strategy emphasises on three connectivities—physical, electronic, knowledge and thereby leading to economic connectivity to enhance the prosperity of cluster of villages in rural areas. Five Year Plans (At a Glance)
Plan
Objectives
Assessment
First Plan (1951-56) (Harrod Domar Model)
Highest priority accorded to agriculture in view of large import of foodgrains and inflation. 31 % of total plan outlay on agriculture followed by transport and communication, social services, power and industry. Economist KN Raj was the architect.
Agriculture production increased dramatically. National income went up by 18% and per capita income by 11%. Target growth 2.1% and achieved 3.6%.
Second Plan (1956-61)
Rapid industrialisation with particular emphasis on the development of basic and heavy industry, also called Nehru Mahalanobis Plan. To increase national income by 25%, expansion of employment and reduction of inequality. To increase the rate of investment from 7% to 11 % of GDP.
Moderately successful, targeted growth rate was 4.5% but achieved 4.2%. Durgapur (UK), Bhillai (USSR) and Rourkela (W Germany) steel plants set-up with foreign help. Atomic Energy Commission came into being in operation and TIFR was set-up. Inflation and low agricultural production and Suez crisis.
Third Plan (1961-66) (Gadgil Yojana)
Indian economy entered take off stage (WW Rostow). Self-reliant and self-generaling economy was the goal. To increase the national income by 30% and per capita income by 17%.
Indo-China (1962) and Indo-Pakistan (1965) conflict diverted the resources from development to defence. Targeted growth 5.6% achieved growth 2.72%. The situation created by Indo-Pakistan Conflict (1965), two successive years of severe drought, devaluation of currency by 57%, general rise in prices and erosion of resources for plan delayed.
Annual Plans
Due to the unfortunate failure of the third plan, the production in various sectors of the economy became stagnant.
In 1966, the Government of India declared the devaluation of rupee, with a view to increase the exports of the country. So, the fourth plan was postponed and three annual plan were implemented. Some of the economists called this period i.e. from 1966 to 1969 as Plan Holiday.
Fourth Plan (1969-74)
Laid special emphasis on improving the condition of under privileged and weaker sections.
First two years of the plan were successful with record foodgrain production on account of Green Revolution. Targeted growth 5.7% however, achieved growth 3.3%. The plan was failure on account of run way inflation (due to 1972 oil crisis or supply shock) huge influx of refugees from Bangladesh post 1972 Indo-Pak War.
Fifth Plan (1974-79)
Original approach to plan prepared by C Subramaniam.However, final draft prepared by DP Dhar with objectives of removal of poverty (Garibi Hatao) and attainment of self-reliance. Introduction of minimum needs programme.
Targeted growth 4.4% and achieved growth 4.8%. Fifth Plan terminated one year before the plan period in March 1978. Brought to the core problem associated with coalition government making a mockery of formulation of Five Year Plan.
Annual Plan
Annual Plan (Gunar Myrdal) was brought out by Janata Party Government under Morarji Desai in 1978. The focus of the plan was enlargement of the employment potential in agriculture and allied activities to raise the income of the lowest income classes through minimum needs programme. Annual Plan period was 1979-80.
Sixth Plan (1980-85)
Removal of poverty through strengthening of infrastructure for both agriculture and industry.The emphasis was laid on greater management, efficiency and monitoring of various schemes. Involvement of people in formulating schemes of development at local level.
Indian economy made an all round progress and most of the targets fixed by the plan was achieved. Targeted growth 5.2% and achieved growth 5.4%.
Seventh Plan (1985-90)
To accelerate foodgrains production To increase employment opportunities. To raise productivity.
Foodgrain production grew by 3.23% as compared to a long-term growth rate of 2.68% between 1967-68 and 1988-89.The Indian economy finally crossed the barrier of the Hindu rate of growth (professor Raj Krishna). Average annual growth rate was 6.0% as against the targeted 5.0% and average of 3.5% in the previous plans.
The Eighth Plan could not take off due to fast changing political situations at the centre. Therefore, from 1990-1992, Annual Plans were formulated.
Eighth Plan (1992-97)
Process of fiscal reforms and economic reforms initiated by Narsimhan Rao Government to prevent another major economic crisis. To increase the average industrial growth rate to 7.5%. To provide a new dynamism to the economy and improve the quality of life of the common man. Also called as Rao-Manmohan Singh Model. First indicative plan.
Higher economic growth rate of 6.6% achieved as against the targeted 5.6%. Improvement in current account deficit. Significant reduction in fiscal deficit.Agriculture growth and industrial growth increased. Unshackled private sector and foreign investment control was the prime reason for high growth. Overall socio-economic development indicators low.
Ninth Plan (1997-2002)
Growth with social justice and equality. Emphasis on seven Basic Minimum Services (BMSs), which included safe drinking water, universalisation of primary education, streamlining PDS among others. Pursued the policy of fiscal consolidation. Ensuring food and nutritional security to all. Empowerment of women, SC/STs/OBCs.
Global economic slow down and other factors led to revision of targeted growth rate from 7% to 6.5%, which too was not achieved. The economy grew at 5.4% only. Agriculture grew by 2.1% as against the target of 4.2% per annum.
Tenth Plan (2002-2007)
The Tenth Plan aimed at achieving 8% GDP growth. Assuming that ICOR (Incremental Capital Output Ratio will decline from 4.53% to 3.58%. It aimed at increasing domestic saving rate from 23.52% to 29.4% of GDP and gross capital formation to 32.2% from 24.4% of GDP. To improve the overall framework of governance. Agriculture was the core element.
Increase in GDP growth to 7.5% compared to 5.4% in the Ninth Plan. The lower than targeted growth rate of 8% was due to low growth of 3% in the first year of Tenth Plan Increase in gross domestic saving and investment. Reduction in ICOR to 4.2% though higher than targeted but less than Ninth Plan’s ICOR of 4.53%. Increase in foreign exchange reserves to US S 287 billion.
11th Plan (2007-2012)
Average GDP growth of 8.1% per year. Agricultural GDP growth of 4% per year. Generation of 58 million employment opportunities. Sex ratio for age group 0-6 years to be raised to 935 by 2011-12 and to 950 by 2016-17.
The growth rate during the 11th plan period was about 7.9%, which is higher than the 7.5% growth rate achieved in the 10th plan. As against the target of 4% growth in the agricultural sector, the plan could register a growth of only 3% during 2007-12 period. The services sector continued to register a growth rate of more than 10%. However, the industrial growth rate showed at 7.9%.
12th Plan (2012-2017)
Real GDP growth rate of 8.2%. Agriculture growth rate of 4.0%. Manufacturing growth rate of 10%.
The plan period was extended by six months.
The Ist 15 year vision document come into effect from 2017-18 after the end of the 12th five year plan. It will be formulated with centre objective of eradication of poverty. These will be framed keeping in mind the country's social goals and the sustainable development agenda. According to NITI Aayog, the issue was discussed at length and a decision was taken at the highest level 15 year Vision Documents divided into two parts ▸ 7-years National Development Agenda The first 15-year vision document will start from 2017-18, along with a 7-year National Development Agenda which wll lay down the schemes, programmes and strategies to achieve the long-term vision. ▸ 3-years National Development Agenda The long vision documents will comprise of three year mass economic framework. National Development Agenda will be reviewed after a gap of every three years to ensure that it was aligned with financial needs and requirements. For the first Development Agenda the review would be done in 2019-20, in line with the termination year of the 14th Finance Commission. ▸ 2017-18 to 2032-33 Vision Document ▸ 2017-18 to 2024-25 National Development Agenda ▸ 2017-18 to 2019-20 Review of Development Agenda (to be repeated after every three years). Sectorial Growth Rate in Different Five Year Plans
First Plan
2.1
2.71
5.54
4.17
3.6
Development of agriculture and Allied sectors and Community Development Programme
Second Plan
4.5
3.15
5.59
4.94
4.21
Basic industries, Health sector
Third Plan
5.6
– 0.73
6.28
5.26
2.72
Food and Agriculture
Fourth Plan
5.7
2.57
4.91
3.22
3.3%
Agriculture and Irrigation, Self-reliance
Fifth Plan
4.4
3.28
6.55
5.66
4.83
Public health and Social welfare, Poverty elimination
Sixth Plan
5.2
2.25
5.32
5.41
5.4
Agriculture, Industry, Energy, Poverty Alleviation Programmes
Seventh Plan
5
3.47
6.77
7.19
6
Energy and Food
Eighth Plan
4.68
7.58
7.54
6.68
Human Resources Development
Ninth Plan
6.5
2.06
4.51
7.78
Social Justice, Human Development
Tenth Plan
8
2.34
8.9
9.4
7.5
Employment, Energy and Social reconstruction
Eleventh Plan
8.1
4
10.5
9.9
7.9
Rapid economic growth, Employment generation, Self-reliance and Education
Twelfth Plan
04
10.9
10
–
Faster, Sustainable and More inclusive growth
Demography is the study of the size, territorial distribution and composition of population, change therein and the components of such changes.
▸ 1891-1921 Period of stagnant population ▸ 1921-1951 Period of steady growth ▸ 1951-1981 Period of high growth ▸ 1981-2011 Period of declining rate ▸ The year 1921 is known as the Year of Great Divide.
The Census 2011, was the 15th National Census of the country. The census has covered 35 States and Union Territories, 640 Districts, 5767 Tehsils. 7742 Towns and more than 6 lakh villages. ▸ Top 5 States in Sex Ratio (0-6 age group) – Mizoram > Meghalaya > Andaman and Nicobar Islands > Puducherry > Chhattisgarh. ▸ Top 5 States of Population UP > Maharashtra > Bihar > West Bengal > Andhra Pradesh. ▸ Bottom 3 States of minimum population – Sikkim < Mizoram < Arunachal Pradesh. ▸ Top 5 States of literacy-Kerala > Mizoram > Goa > Tripura > Himachal Pradesh.
Total population
121,08,54,977
Males
623.7 million (51.54%)
Females
586.46 million (48.46%)
Population of 0-6 age group
16,44,78,150 (13.58%)
Population density (per sq km)
382
Literacy
73.0% (Male-80.9% and Female-64.6%)
Decadal Growth Rate
18,14,55,986 (17.7%)
Population Increase (2001-2011)
181 million
Sex Ratio
943 : 1000
▸ Population policy refers to all those legal, administrative programmes and other government efforts, which aim at reducing birth rate and improving the quality of life. ▸ After independence, the Government of India adopted a national policy on population with the objective to check the increase in birth rate and improve the standard of living of people. ▸ This policy has been revised from time to time and its scope has been widened. It has been very effective in initiating measures for population control.
▸ The New National Population Policy (NPP) provides a policy framework to meet the reproductive and child health needs of the people of India for the next 10 years. UIDAI ▸ The Unique Identification Authority of India is a statutory authority under provisions of the Aadhar (Targeted Delivery of Financial and other subsidies, Benefits and Services) Act, 2016 under the Ministry of Electronics and Information Technology. Earlier UIDAI was functioning as an attached office of erstwhile Planning Commission. ▸ It was created with the objective to issue Unique Identification numbers (UID), named as 'Aadhaar' to all residents of India. ▸ The numbers will be linked to the basic biometric information of the person, including photograph, iris and fingerprints.
▸ To achieve zero growth rate of population by 2045. ▸ To reduce Infant Mortality Rate below 30 per thousand live births by 2010. ▸ To reduce Maternal Mortality Rate to below 1 per thousand live births. ▸ To reduce birth rate to 2.1 per thousand by 2010. ▸ To reduce total fertility rate to 2.1 by 2010. It is estimated that the population of India will be 126.4 crores by 2016. Main Features of WPP, 2000 ▸ Appointment of a National Commission on population, presided over by the Prime Minister. The Chief Ministers of the States, Administrators of Union Territories and other related ministers to be its members. ▸ State Commissions on population headed by Chief Ministers. The new policy to be implemented by the Panchayats, municipalities and Non-Government Organisations.
▸ Poverty is a social phenomenon where few section of society is unable to fulfil even basic necessities of life. ▸ Planning Commission (Now, NITI Aayog) is the authority, which publishes the poverty estimates based on various rounds of National Sample Survey Organisation (NSSO) on monthly per capita consumption expenditure. In India, the poverty line is defined on the basis of calorie intake. According to this, 2100 calories a day has been fixed for urban areas and 2400 calories in rural areas. ▸ Alternatively, in monthly per capita consumption expenditure terms, the poverty line is fixed at ` 454.0 for rural areas and ` 540.0 for urban are as in 2004-05. ▸ Since, NSSO 55th Round (1999), Planning Commission gives two poverty estimates based on Mixed Recall Period (MRP) and Universal Recall Period (URP). ▸ Mixed Recall Period, gives consumer expenditure data for five non-food items, namely clothing, footwear, durable goods, education and institutional medical expenses for 365 days and consumption data for remaining items are collected for 30 days period. ▸ Universal Recall Period, consumption data for all items are collected for a 30 days recall period. Causes of Rural Poverty ▸ Rapid Population growth ▸ Lack of capital ▸ Lack of alternate employment opportunities other than agriculture ▸ Excessive population pressure on agriculture ▸ Illiteracy ▸ Regional disparities ▸ Joint family system ▸ Child marriage ▸ Lack of proper implementation of PDS (Public Distribution System) Causes of Urban Poverty ▸ Migration from rural areas ▸ Lack of skilled labour ▸ Lack of housing facilities ▸ Limited job opportunities in cities ▸ Lack of vocational education/ training New Definition of Slums ▸ As per the Pranab Sen Committee's new methodology, there has been increase in the urban slum population in 2011 to 93.06 million from 75.26 million estimated in 2001. This is an increase of 26.31%. ▸ As per the new definition, any compact housing cluster or settlement of atleast 20 households with a collection of poorly built tenements, which are mostly, temporary in nature with inadequate sanitary, drinking water facilities and unhygienic conditions will be termed as slums.
Various economists and organisations have studied the extent of poverty in India. Some of them are as follows: Dandekar and Rath's Study of Poverty in India Dr VM Dandekar and Mr Nilkantha Rath estimated the value of the diet with 2250 calories as the desired minimum level of nutrition. They estimated that in 1968-69 about 40% of the rural population and a little more than 50% of the urban population lived below the poverty line. Montek Singh Ahluwalia's Study of Rural Poverty (1977) MS Ahluwalia studied the trends in incidence of rural poverty in India for the period 1956-57 to 1973-74. He used the concept of poverty line, i.e. an expenditure level of`15 in 1960-61 for rural areas and` 20 per person for urban areas. Estimate of Poverty by the Seventh Finance Commission (1978) The Seventh Finance Commission made an attempt to have a more inclusive concept of poverty line. Since, the NSS data cover only household consumer expenditure, thus, to get a more inclusive measure of welfare or deprivation, an estimate of the benefit of public expenditure was added to private consumer expenditure norm for calculating the augmented poverty line.
This committee moved away from just calorie criterion definition to a broader definition of poverty that also includes expenditure on health, education, clothing in addition to food. According to this report, 41.8% population in rural areas and 25.7% population in urban areas was living below poverty line.
The expert group under the Chairmanship of Dr C Rangarajan to review the Methodology for measurement of poverty in the country constituted by the Planning Commission in June, 2012 has submitted its report on 30th June, 2014. The report retained consumption expenditure estimates of NSSO as the basis for determining poverty. On the basis of this, it pegged the total number of poor in India at 363 million or 29.6% of the population. This is higher than 269.8 million poor people or 21.9% pegged by the Suresh Tendulkar Committee.
The highlights of the report are as follows: (i) The daily per capita expenditure is pegged at ` 32 for the rural poor and at ` 47 for the urban poor. (ii) Poverty line based on the average monthly per capita expenditure is pegged at ` 972 for rural areas and ` 1407 for urban areas. (iii) The percentage of people below the poverty line in 2011-12 was 30.95 in rural areas and 26.4 in urban areas.
▸ Unemployment occurs when a person who is actively searching for employment is unable to find a work. Unemployment is often used as a measure of the health of the economy. The most frequently cited measure of unemployment is unemployment rate. That is the number of unemployed persons divided by the number of people in the labour force. ▸ In India, a person working 8 hours a day for 273 days of the year is regarded as employed on a standard person year basis.
▸ B Bhagwati Committee on unemployment estimates (1973) set-up by the Planning Commission gave three estimates of unemployment. These are as follows: ▸ Usual Principal Status (UPS) Persons who remained unemployed for a major part of the year. This is also called 'open unemployment'. ▸ Current Weekly Status (CWS) Persons who did not find even an hour of work during the survey week. ▸ Current Daily Status (CDS) Persons who did not find work on a day or some days during the survey week. This is the comprehensive measure of unemployment, including chronic as well as underemployment. TYPES OF UNEMPLOYMENT Generally, unemployment can be classified into two types
This type of unemployment is on account of people not interested to take the employment i.e. jobs are available but the persons are not interested in being employed. It is psychological in nature. Therefore, such types of persons are not included in the category of unemployed.
It refers to a situation in which the persons are interested to work but the jobs are not available. Such persons are included in the categories of unemployed persons. Under this there are various categoriess of unemployment. They are as follow: Cyclical Unemployment This type of unemployment is due to the recession in the economy. During recession, there is less requirement of man-power on account of the decrease in the level of economic activities and thus causes cyclical unemployment. This type of unemployment is prevalent in the developed countries. This is also known as Keynesian Unemployment. Frictional Unemployment This type of unemployment is caused by people taking time out of work, being between jobs or looking for a job. The one cause of its evolution is decline of one industry and rise of the other and labour take some time before moving to the other industry. This type of unemployment is short-term in nature. Seasonal Unemployment It is an account of the seasonal nature of the productive activities, i.e., some productive activities are carried out only for certain duration of a year. Therefore, the persons employed in such activities are unemployed during off-season. This, generally, occurs in agro-based industries. Disguised Unemployment A situation in which more people'are available for work then is shown in the unemployment statistics. It is also known as concealed unemployment and the discouraged worker effect. Structural Unemployment It refers to a mismatch of job vacancies with the supply of labour available, caused by shifts in the structure of the economy. Structural joblessness results fromthings like skills mismatches and policy to address such mismatches is inherently longer term in scope, involving education and encouraging innovation. Technological Unemployment Technology has always displaced some work and jobs. Thus, technological unemployment is a term used to describe the lack or loss of jobs due to technological changes or innovations. This type of unemployment typically comes from workers either being replaced bymachines or having their jobs made easier and require fewer workers to accomplish the same task. It is one of the reasons of jobless growth. 12th Plan-Some Employment Related Ideas Currently, India is passing through an unprecedented phase of demographic changes. The ongoing demographic changes are likely to contribute to an ever increasing size of labour force in the country. The census projection report shows that the proportion of population in the working age group (15-59 years) is likely to increase from approximately 58%in 2001 to more than 64%by 2021. But the overall population is not the issue the proportion of population in the working age group of 15-59 years will increase from 57.7% to 64.3%. Employment, Poverty, Rural and Urban Development Programmes
Name of the Programmes
Year of Beginning
Objectives/Descriptions
Swarana Jayanti Shahari Rozgar Yojana (SJSRY), it has been revamped with effect from April 2009.
1997
To provide gainful employment to urban unemployed and under empoloyed poor through self-employment of wage employment.
Swaranajayanti Gram Swarozgar Yojana (SSGSY), it replaced IRPD, DWCRA, Ganga Kalyan Yojana (1997). Million Wells Scheme (1989) and Supply Improved Tolls kits to Rural Artisans (1992)
1st April, 1999
For elimination rural property and unemployment and promoting self-employment through establishing micro enterprises in rural areas. Targets to cover 50% SCs/STs. 40% women, 15% minorities and 3% disabled.
Pradhan Mantri Gramodya Yojana (PMGY)
2000
Focus on village level development in 5 critical areas. i.e. primary health, primary education, housing, rural roads and drinking water and nutrition with the overall objective of improving the quality of life of people in rural areas.
Annapurna Scheme
To ensure food security for all, create a hunger free India in the next five serve the poorest of the poor in rural and urban areas.
Food For Work Programme
2001
To give food through wage employment in the drought affected areas in 8 states. Wages are paid by the State Governments, partly in cash and partly in foodgrains.
Jai Prakash Narayan Rozgar Guarantee Yojana (JPNRGY)
Proposed in 2002-03 Budget
Employment guarantee is must poor districts.
MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme). The scheme was notified throughout the country with effect from 1st April, 2008. Renamed as MGNREGS from 2nd October, 2009. SGRY and Food for Work Programme merged into it.
2nd February, 2006
It aims at enhancing livelihood security of households in rural areas of the country by providing at least 100 days on guaranteed wage employment in a financial year to every household, whose adult members volunteer to do unskilled manual work. It also mandates 33% participation for women. The primary objective of the scheme is to augment wage employment.
Prime Minister's Employment Generation Programme (PMEGP)
2008
To generate employment opportunities in rural as well as urban areas through setting up of self-employment ventures/projects/micro enterprises.
Nirmal Bharat Programme
2012
To eradicate practice of open defacation by 2020.
Direct Benefit Transfer
2013
Anti-Poverty Programme, aimed to transfer subsidies directly to the people living below poverty line.
Deen Dayal Upadhyaya Grameen Kaushalya Yojana
2014
Aimed to transform Rural poor youth into an economically independent and globally relevant work force.
Atal Mission for Rejuvenation and Urban Transformation (AMRUT)
2015
To improve the basic infrastructure in 500 cities/ towns which would be known as mission cities/towns.
Rural Development Programmes Name of the Programmes Year of Beginning Objectives/Descriptions
Bharat Nirman Programme
2005
Development of rural infrastructure including six components : irrigation, water supply, housing, road, telephone and electricity.
Twenty Point Programme
1975
Poverty eradication and raising the standard of living.
To ensure food security for all, create a hunger free India in the next 5 years and to reform and improve the Public Distribution System, so as to serve the poorest of the poor in rural and urban areas.
National Rural Drinking Water Programme (NRDWP) previously called Accelerated Rural Water Supply Programme
1st April, 2009
Aims to move forward from achieving habitation level coverage towards household level drinking water coverage through resorting to multiple sources like ground water, surface water etc.
Nirmal Gram Puruskar (NGP)
October, 2003
It is an incentive scheme to encourage PRIs to take up sanitation promotion.
Valmiki Ambedkar Aawas Yojana (VABAY)
December, 2001
Facilitates construction and upgradation of dwelling units for slum dwellers.
Jawaharlal Nehru Urban Renewal Mission (JNNURM), it has two components. (a) Basic services to urban poor; and (b) Integrated Housing and Slum Development Programme
3rd December 2005
To assist cities and towns in taking up housing and infrastructural facilities for the urban poor in 63 cities (now 65 cities) in the country.
Affordable Housing in Partnership (AHIP)
2009
Aims at constructing one million houses for the EWS/LIG/MIG with at least 25% for EWS category seeks to operationalise National Habitat Policy, 2007.
Kisan Samman Nidhi
2019
To Provide `6000 per year financial assistance to those farmer having Cultivable area upto 2 Hectare
Women Empowerment Programmes Name of the Programmes Year of Beginning Objectives/Descriptions
Women Empowerme Name of the Programmes
nt Programmes Year of Beginning
Support to Training and Employment Programme for Women (STEP)
2003-04
To increase the self-reliance and autonomy of women by enhancing their productivity and enabling them to take up income generation activities.
Rajiv Gandhi Scheme for Empowerment of Adolescent Girls (RGSEAG)- 'Sabla'
19th November, 2010
It aims at empowering adolescent girls of 11 to 18 years by improving their nutritional and health status, upgradation of home skills and vocational skills.
Rashtriya Mahila Kosh(National Credit Fund for Women)
1993
It extends micro-finance services through a client friendly and hassle-free loaning mechanism for livelihood activities, housing micro enterprises, family needs etc for upliftment of poor women.
Indira Gandhi Matritva Sahyog Yojana (IGMSY)
2010
To improve the health and nutrition status of pregnant, lactating women and infants.
Swayam Siddha
At organising women into Self-Help Groups to from a strong institutional base.
Dhan Laxmi
March 2008
Condition cash transfer scheme for the girl child to encourage families to educate girl children and to prevent child marriage.
Ujjwala
4th, December, 2007
A comprehensive scheme for prevention of trafficking with five specific components prevention, rescue, rehabilitation, reintegration and repatriation of victims.
National Mission for Empowerment of Women (NMEW)
To achieve empowerment of women socially, economically and educationally by securing convergence of schemes.
Nai Roshni Scheme
Aimed at developing leadership skills among the minority women.
Child Welfare Programmes
Child Welfare Programmes Name of the Programme Year of Beginning
Rajiv Gandhi National 2006 Creche Scheme for the Children of Working Mothers
Overall development of children, childhood protection, complete immunisation, awareness generation among parents of malnutrition, health and education.
Integrated Child Protection 2009-10 Scheme (ICPS)
Providing a safe and secure environment for comprehensive development of children who are in need of care and protection as well as children in conflict with law.
Education Oriented Programmes
Rashtriya Madyamik Shiksha Abhiyan (RMSA) or March, 2009 Scheme for Universalisation of Access for Secondary Education (SUCCESS)
Aims at raising the enrollment rate at secondary stage from 52.26% in 2005-06 to 75% in next 5 years by providing a secondary school within a reasonable distance of 5 km of any habitation: ensure universal access by 2017 and universal retention by 2020.
Saakshar Bharat 8th September, 2009
National Literacy Mission has been recast as 'Saakshar Bharat'. The aim is to cover all adults, is the age group of 15 and above, with its primary focus on women.
Health Oriented Programmes
National Rural Health Mission (NRHM)
12th April, 2005
To provide effective healthcare to rural population with special focus on 18 States with weak health indices/infrastructure to raise public spending on health form 0.9% of GDP of 2.3% of GDP reduction of IMA and MMR and universal assess to health care with emphasis on women.
Janani Suraksha Yojana (JSY)
April, 2005
Focus on demand promotion for institutional deliveries in states and regions and targets lowering of MMR, it is conditional cash transfer programme to increase births in health facilities.
Pradhan Mantri Swasthya Suraksha Yojana (PMSSY)
To correct regional imbalance in tertiary healthcare and augmenting facilities for quality medical education in the country; and setting up six AIIMS-like institution in phase-1 and in phase-2 two more AIIMS like institutions.
Ayshman Bharat Yojana (ABY)
2018
To Provide `5 laskh health Insurance to 10 crore poor familes.
Some new social development schemes to address the critical issues of the country have been introduced. ▸ Pradhan Mantri Krishi Sinchayee Yojana The FM announced this programme in the budget as a measure to mitigate the risk to monsoon dependent irrigation. The scheme is aimed to give assured irrigation to farmers. ▸ Swatchh Bharat Abhiyan Total sanitation by 2019 is the slogan of programme. realising the importance of sanitation of government has sought the help of every citizen to achieve this goal. The year 2019 also marks the 150th Birth anniversary of Mahatma Gandhi. ▸ Soil Health Card Scheme for Every Farmer The government has initiated this scheme concerning the deterioration the soil health which leads to sub-optimal utilisation of farming resources. The government will initiate to provide every farmer a soil health card a in a mission mode. A sum of ` 100 crore is allotted. ▸ A Dedicated TV Channel for Farmers Kisan TV, dedicated to the interests of the agriculture and allied sector has been launched in the current financial year. This will disseminate real information to the farmers regarding new farming techniques, water conservation and organic farming etc. ▸ Deendayal Upadhyaya Gram Jyoti Yojana ''Deendayal Upadhyaya Gram Jyoti Yojana'' for feeder separation has been launched to augment power supply to the rural areas and for strengthening sub-transmission and distribution systems. Its long-term aim is to provide 24 × 7 uninterrupted power supply to all homes. A sum of ` 500 crores has been set aside for this scheme. ▸ Van Bandbu Kalayan Yojana For the welfare of the tribal people 'Van Bandhu Kalayan Yojana' is being launched with an initial allocation of ` 100 crore. ▸ Beti Bachao, Beti Padhao Yojana It was introduced for generating awareness and improving the efficiency of delivery of welfare services meant for women with an initial corpus of `100 crore. The government would focus on campaigns to sensitise people of this country towards the concerns of the girl child and women. The process of sensitisation must begin early and therefore the school curriculum must have a separate chapter on gender main streaming. ▸ National Heritage City Development Augmentation Yojana The programme called Heritage City Development and Augmentation Yojana (HRIDAY) was launched for conserving and preserving the heritage characters of heritage cities. For the beginning programme is launched in the cities such as Mathura, Amritsar, Gaya Kanchipuram, Vellankani, Varanasi, Badami, Puri and Dwarka. The project will work through a partnership of Government, academic institutions and local community combining affordable technologies. ▸ Shyama Prasad Mukherji Rurban Mission It was launched to deliver integrated project based infrastructure in the rural areas. The scheme will also include development of economic activities and skill development. The preferred mode of delivery would be through PPPs while using various scheme funds. It is based on the example of Gujarat that has demonstrated successfully the urban development model of urbanisation of the rural areas, through which people living in the rural areas can get efficient civic infrastructure and associate services. ▸ Neeranchal To give an added impetus to watershed development in the country, a new programme called Neeranchal with an initial outlay of ` 2142 crores has been launched. ▸ Pradhan Mantri Jan Dhan Yojana Pradhan Mantri Jan Dhan Yojana is a scheme for comprehensive financial inclusion launched. Account holders will be provided zero-bank account with rupay debit card. Aim of scheme to tie every Indian in the rural or urban sector to the mainstream banking system. Scheme offers a life cover of ` 30000 and Accidental insurance of ` 200000. 100% financial inclusion. After six months of opening of the bank account, holders can avail ` 5000 overdraft from the bank. ▸ Housing for All by 2022 Government has set-up a Mission on Low Cost Affordable Housing to be anchored in the National Housing Bank with a view to increase the flow of cheaper credit for affordable housing to the urban poor/EWS/LIG segment. The government has already outlined some other incentives such as easier flow of FDI in this sector and is willing to examine other positive suggestions. The government has included slum development in the list of Corporate Social Responsibility (CSR) activities to encourage the private sector to contribute more towards this activity. ▸ USTAD Scheme Union Minister Najma Heptullah launched a welfare scheme, Upgradation of Skills and Training in Ancestral Arts/Crafts for Development (USTAD) which aims at upgrading and promoting the skills of artisans from the minority community. It is launched from Varanasi in order to improve degrading conditions of world famous Banarasi Saree weavers who belong to minority communities. The programme is linked to the make in India campaign. It seeks to help weavers and artisans connect with buyers all over the world. ▸ Deen Dayal Upadhyay Antyodaya Yojana Union Government on 25th September, 2014 Deen Dayal Upadhyay Antyodaya Yojna will replace National Rural Livelihood Mission (Ajeevika) and National Urban Livelihood Mission. It is an overarching scheme for uplift of urban and rural poor through enhancement of livelihood opportunities through skill development and other means. ▸ Smart Cities Mission The objective of smart cities mission is to promote cities that provide core infrastructure and give a decent quality of life to its citizen, a clean and sustainable environment and application of 'smart' solutions. The mission is meant to set examples that can be replicated both within and outside the smart city, catalysing the creation of similar smart cities in various regions and parts of the country. The mission will cover 100 cities and its duration will be 5 years. ▸ Amrut for 500 Cities The Narendra Modi Government has renewed the 10 years old Jawaharlal Nehru National Urban Renewal Mission (JNURM) and named it after the first BJP Prime Minister. The renewed scheme is known as Atal Mission for Rejuvenation and Urban Transformation (AMRUT). AMRUT for 500 Tier 2 and Tier 3 cities will also be launched alongwith smart city project. For AMRUT as well, states have been asked to recommend cities which can be included under this scheme. Uttar Pradesh leads the pack, as it can nominate 64 cities under this project. ▸ Startup Standup India Startup India is a revolutionary scheme that has been started on August, 2015 to help the people who wish to start their own business. Standup India Scheme facilitates bank loan between ` 10 lakh and ` 1 Crore to at least one scheduled Caste (SC) or Scheduled tribe (ST) borrower and at least one woman borrower per bank branch for setting up a greenfield enterprise. ▸ Pradhan Mantri Krishi Sinchai Yojana The primary objectives of PMKSY are to attract investments in irrigation system at field level, develop and expend cultivable land in the country. The primary objective is to enhance ranch water use in order to minimise wastage of water, enhance crop per drop by implementing water saving technologies and precision irrigation. ▸ Pradhan Mantri Ujjwal Yojana Prime Minister Narendra Modi has launched Pradhan Mantri Ujjwal Yojana on 1st May, 2016 (Labour Day) at Ballia (UP) by providing cooking gas connections to 10 women. The objective of the scheme is to provide cooking gas connections to 5 million beneficiaries below the poverty line in the next 3 years (till the year 2019). ▸ Ujala Yojana It was launched by Union Minister for State (IC) for Power, Coal and Renewable Energy Piyush Goyal in Bhopal, Madhya Pradesh on 30th April, 2016. The main motive of this policy is energy efficiency in the country. Consumers can buy the bulbs from distributor by showing any identification card. ▸ Pradhan Mantri Fasal Bima Yojana It is the new crop damage insurance scheme started on 18 Feb, 2016. It will replace the existing two crop insurance schemes National Agricultural Insurance Scheme (NAIS) and Modified NAIS. ▸ Pradhan Mantri Garib Kalyan Yojana The PMGKY notified along with other provisions of taxation laws (Second Amendment) Act, 2016 came into effect from 17 December, 2016. It provides for 50% tax and surcharge on declaration of unaccounted cash deposit in banks. Declarant must make mandatory deposit of 25% of undisclosed income in zero-interest PMGKY scheme 2016 with lock-in period of four years. ▸ Pradhan Mantri Kaushal Vikas Yojana It is a demand-driven, reward-based skill training scheme. PMKVY is formed to provide skill training to class 10 and 12 dropout youths across the country. Under the scheme, besides assessing and certifying 10 lakh youth for the skills they already possess, around 24 lakh youth will be skilled over the next year. ▸ Atal Pension Yojana The Atal Pension Yojana (APY) will focus on all citizens in the unorganised sector, who join the National Pension System (NPS) administered by the Pension Fund Regulatory and Development Authority (PFRDA) and who are not members of any statutory social security scheme. It is available to people between 18 and 40 year of age with bank accounts. The subscribers are required to opt for a monthly pension from ` 1000 to ` 5000. ▸ Pradhan Mantri Jeevan Jyoti Bima Yojana The PMJJBY is available to people in the age group of 18 to 50 and having a bank account. People who join the scheme before completing 50 years can, however, continue to have the risk of life cover upto the age of 55 years subject to payment of premium. Aadhar would be the primary Know Your Customers (KYC) for the bank account life insurance of ` 2 Lakh with a premium of ` 330 per year. ▸ Pradhan Mantri Suraksha Bima Yojana The scheme will be a one-year cover, renewable from year to year. It is available to people between 18 and 70 yr of age with bank accounts. It has an annual premium of ` 12 for ` 2 lakh accidental and ` 1 lakh full disability. ▸ Varishtha Pension Bima Yojana The Union Finance Minister Arun Jaitley re-launched Varishtha Pension Bima Yojana (VPBY) on 14th August, 2014 that will benefit the vulnerable section of society with limited resources as it will provide monthly pension ranging from ` 500 to ` 5000 per month to senior citizens of the country. ▸ Pradhan Mantri Sahaj Bijli Har Ghar Yojana The scheme aims electrifying all the households in rural and urban areas which are still living without power. ▸ Rashtriya Vayoshri Yojana To offer free-living assertive devices to senior citizens belong to BPL families. ▸ UDAN Scheme Udey Desh Ka Aam Nagrik scheme aims at regional air connectivity. ▸ Rashtriya Vayoshri Yojana It provides physical aids and assisted-living divices for senior citizens belonging to BPL category. It will be implemented through Artificial Limbs Manufacturing corporation. ▸ Divyang Sarathi It is an accessible and comprehensive mobile application for easy dissemination of information to Divyangjans.
▸ Agriculture is the mainstay of the Indian economy despite emphasis on industrialisation in the last six decades. ▸ Its importance to the Indian economy can be gauged from the following facts. Contribution to GDP ▸ According to the new series of national income released by CSO at 2011-12 prices, the share of agriculture in total GDP is 17% (Approx) in 2017-18. Contribution to Employment ▸ Agriculture provides livelihood to more than half of the population. ▸ In 2011, it contributed 58% to the total employment in the country. Contribution to Trade ▸ Although, the share of agricultural products in total trade of India is declining due to export diversification. ▸ Yet in 2009-10, it contributed 11% to the total exports and 13% to the total imports of the country. ▸ In addition to above, agriculture sector plays a crucial role in inclusive growth by directly attacking poverty and containing inflation. It is also an important source of raw material for a vast segment of industry.
▸ Agricultural sector contributes a significantly large share to the national income of India, although it has come down from as high as 56% during the 1950s to 13.9 % in 2011-12 and is projected to go further in immediate future. Agriculture and Five Year Plans ▸ The highest outlay on agriculture was during the First Plan, it was 31%. ▸ The Intensive Agricultural District Programme (IADP) followed by High Yielding Variety Programme (HYVP) was introduced during the Third Plan. First and Fifth Plan were the only plans, which achieved the set targets. ▸ Tenth Plan did not set any targets for crop production. ▸ The growth rate of agriculture during the Ninth and Tenth Plan were 2.4% and 2.3% respectively. Agriculture in Eleventh Five Year Plan ▸ Eleventh Plan, recognising the importance of agriculture in promoting inclusive growth, fixed the agriculture growth rate of 4%. Actual outlay in the Eleventh Plan is estimated to be 18.5% of the total plan outlay. Contract farming was encouraged in fruits, vegetables and other crops. ▸ The average annual growth rate of GDP in agriculture and allied sectors during 11th plan was 3.7 per cent. Agriculture in Twelfth Five Year Plan ▸ The approach paper aims at growth rate of 4% per annum in agriculture sector, with foodgrains growing at about 2% per year and non-foodgrains growing at 5.6%. ▸ The approach paper has emphasised on technology as the main vehicle for improving productivity in agriculture as natural resources are fixed. Severely indicting the public sector research in agriculture the Twelfth Plan encourages Public Private Partnership (PPP) in agriculture so as to bridge the gap in dryland areas and rapidly diversify agriculture. ▸ It emphasises on greater road connectivity, development of horticulture, dairying and other animal husbandry to further improve the market acces to the farmers. Average Achievement in Agriculture in Five Year Plans (in percentage)
Five Year Plan
Growth Rate
First Five Year Plan (1951-52 to 1955-56)
Second Five Year Plan (1956-57 to 1960-61)
3.17
Third Five Year Plan (1961 -62 to 1965-66)
0.73
Annual Plan (1966-67 to 1968-69)
4.16
Fourth Five Year Plan (1969-70 to 1973-74)
Fifth Five Year Plan (1974-75 to 1978-79)
Sixth Five Year Plan (1980-81 to 1984-85)
2.52
Seventh Five Year Plan (1985-86 to 1989-90)
Annual Plan (1990-91 to 1991-92)
1.01
Eighth Five Year Plan(1992-93tol996-97)
Ninth Five Year Plan (1997-98 to 2001-02)
2.02
Tenth Five Year Plan (2002-03 to 2006-07)
2.3
Eleventh Five Year Plan (2007-08 to 2011-12)
▸ It was a part of new agricultural strategy, which included, initially, the Intensive Agriculture District Programme (IADP) and later the High Yielding Varieties Programme (HYVP). ▸ It was launched in the year 1966 and was the brainchild of Norman Borlaug, though in India, it was made successful by Dr MS Swaminathan. The term 'Green Revolution' was coined by Dr William Gaud. ▸ The achievement of Green Revolution were rise in cereal production especially wheat and rice, change in cropping pattern in favour of wheat and increase in employment opportunities. ▸ The weaknesses of Green Revolution were growth of capitalistic farming, side tracked land reforms, widened income and regional disparities and environmental degradation. ▸ The Green Revolution demanded high yielding seed, increasing irrigation, pesticides in fertilizer. Farmer’s Commission ▸ A National Commission on farmers was appointed in 2004, under the Chairmanship of Dr MS Swaminathan, which interalia suggested an Agricultural Renewal Action Plan (ARAP). ▸ The ARAP comprised of soil health enhancement, irrigation water supply augmentation and demand management, credit and insurance, technological reforms and assured and remmunerative marketing.
▸ The call for Second Green Revolution was given by then Prime Minister Manmohan Singh at the 93rd Science Conference in 2006. ▸ The Second Green Revolution seeks to build up on the achievements of first Green Revolution and bridge the regional and crop imbalance, which were not addressed by First Green Revolution. ▸ The Second Green Revolution seeks to cover dryland farming and concentrate on the small and marginal farmers. It seeks to raise the foodgrain production to 400 million tonnes by 2020.
▸ Concept given by renowned agricultural scientist Dr MS Swaminathan. ▸ The concept emphasises on 'organic agriculture' and 'green agriculture' with the help of integrated pest management, integrated nutrient supply and integrated natural resource management. ▸ The core of the evergreen revolution is 'sustainability'.
▸ White revolution is relates to phenomenal growth in milk production. To increase the pace of White Revolution, the operation flood was started. The father of operation flood was Dr Verghese Kurien. Operation flood was started by National Dairy Development Board in 1970. ▸ India ranks first in the world in milk production, which went up from 17 MT in 1950-51 to 146.3 MT in 2014-15. The per capita availability of milk in India has increased from 176 grams per day in 1990-91 to 322 grams per day by 2014-15. It is move than the world average of 294 grams per day during 2013.
India is the third largest producer of fish and second largest producer of inland fish in the world. Fisheries constitute about 1 per cent of the GDP of the country and 5.08 per cent of agriculture GDP. The total fish production during 2014-15 was 10.46 MT.
The reference to a Tricolour Revolution was made by Prime Minister Narendra Modi. This phrase has three components. These are as follows ▸ Saffron Energy Revolution for promotion and better utilisation of solar energy. ▸ White Revolution to ensure cattle welfare and further the goals of White Revolution. ▸ Blue Revolution for fishermen's welfare, cleansing rivers and sea and conserving water.
▸ The need for food self-sufficiency was borne out on account of the experience gained from the PL-480 programme of the USA in the year 1966. ▸ Food security implies access by all people at all times to sufficient quantities of food to lead an active and healthy life. Essentially, it involves ▸ quantitative dimension in term of food self-sufficiency; ▸ qualitative dimension in form of nutritional requirement; and ▸ purchasing power dimension so as to ensure access to all through employment generation programmes.
▸ PDS was envisaged in 1967 to act as a price support programme for the consumer during the periods of food shortage of the 1960's. ▸ The basic aim was to provide essential commodities such as rice, wheat, sugar, edible oil, soft coke and kerosene at subsidised prices. PDS is the largest distribution network of its kind in the world. ▸ Following the criticism of PDS, the government in June, 1997 replaced the PDS with Targeted Public Distribution System (TPDS). The system envisaged issuing special cards to BPL families and selling foodgrains to them at subsidised prices.
This act was notified with the objective to provide food and nutritional security in human life cycle approach, by ensuring access to adequate quantity of quality food at affordable prices to people. The act provide for coverage of upto 75% of the rural population and upto 50% of the urban population for receiving subsidised foodgrains under TPDS. Major Agricultural Revolutions
Black Revolution
Petroleum Production
Blue Revolution
Fish Production
Brown Revolution
Leather/Non-conventional (India)/ Cocoa Production
Golden Fibre Revolution
Jute Production
Golden Revolution
Overall Horticulture Development/Honey Production
Green Revolution
Foodgrain (Cereals, Wheat and Leguminous plant) Production
Grey Revolution
Fertilizer Revolution
Pink Revolution
Onion production/ Pharmaceutical (India)/ Prawn Production
Rainbow Revolution
Holistic Development of Agriculture Sector
Red Revolution
Meat and Tomato Production
Round Revolution
Potato Revolution
Silver Fibre Revolution
Cotton Revolution
Silver Revolution
Egg/Poultry Production
White Revolution
Milk/Dairy Production (In India-Operation Flood)
Yellow Revolution
Oil Seeds Production
Evergreen Revolution
Increase in Productivity and Prosperity without Ecological Harm
The eligible persons will be entitled to receive 5 kgs of foodgrains per person per month at subsidised prices of ` 3/2/1 per kg for rice/wheat/coarse grains. The existing Antyodaya Anna Yojana (AAY) households, which constitute the poorest of the poor, will continue to receive 35 kgs of foodgrains per household per month.
▸ APP of the government seeks to ensure remunerative prices to the producers so as to encourage higher interest and production on the one hand, on the other, it safeguards the consumers interest by making food available at reasonable prices. ▸ To achieve this government announces Minimum Support Prices (MSPs) for 25 agricultural crops taking into accounts the recommendation of the Commission for Agricultural Cost and Prices (CACP). MSP is that price, at which government is ready to purchase the crop from the farmers directly, if crop price falls below the MSP. ▸ Commission for Agricultural Costs and Prices (CACPs) was set-up in 1965 with the name Agricultural Price Commission and was renamed as CACP in 1985. ▸ Market Intervention Scheme (MIS) is implemented for horticultural and agricultural commodities, generally perishable in nature and not covered under the Price Support Scheme (PSS). ▸ Economic cost is composed of three components; viz MSP, procurement incidentals and cost of distributing foodgrains. Agriculture Credit ▸ There are two sources of credit available to farmers, viz institutional and private. ▸ Institutional Credit covers cooperative societies and banks, commercial banks, RRB and NABARD. ▸ Non-Institutional/Private sources of credit are moneylenders, traders and commission agents, relatives and landlords. ▸ Lead Bank Scheme (LBS) based on area approach was launched in 1969 on the recommendation of Dr Gadgil Committee and Narasimham Committee. ▸ Under the LBS, all the 14 nationalised banks and a few private sector banks were alloted specific districts and were asked to play the 'lead role' in coordinating credit deployment. Regional Rural Banks (RRBs) ▸ RRBs formally launched in 2nd October, 1975 at Moradabad and Gorakhpur (Uttar Pradesh), Bhiwani (Haryana), Jaipur (Rajasthan) and Malda (West Bengal). ▸ The objective of the RRB was to provide credit and other facilities particularly to small and marginal farmers, agricultural labourers etc so as to develop agriculture. ▸ RRB's mobilise financial resource from rural/semi urban areas. ▸ It is jointly owned by GoI, the concerned State Government and sponsor banks. Agriculture Insurance Company of India Limited (AIC) ▸ AIC was incorporated under the Companies Act, 1956 on 20th December, 2002 as a specialised insurer with the capital participation from GIC, four public sector General Insurance Companies and NABARD. ▸ The other specialised insurer is Export Credit Guarantee Corporation (ECGC). It was established in 1957. NABARD ▸ National Bank for Agriculture and Rural Development (NABARD) was set-up in July, 1982 as the Apex Bank with a paid-up capital of ` 100 crore contributed equally by RBI and Government of India. Its headquarter is in Mumbai. ▸ The role of NABARD was to act as a refinance institution for all kind of production and investment credit to agricultural and village sector. ▸ The paid-up capital of NABARD was raised to ` 5000 crore on 23rd October, 2011 by the government. The RBI divested all of its stake from the NABARD to the government in October, 2010. Now, 99% shares of NABARD is with the government. ▸ Rural Infrastructure Development Fund (RIDF) was set-up in 1995-96, under NABARD for holistic rural development. NAFED National Agricultural Co-operative Marketing Federation of India Limited is the Apex Co-operative Organisation at the national level. It deals in procurement, distribution, export and import of selected agricultural commodities. NCDC National Co-operative Development Corporation was set-up in 1963, under an Act of Parliament. The object of NCDC is planning and promoting programmes for the production, processing, storage and marketing of agricultural produce and notified commodities through co-operative societies. Quick Digest ▸ Kisan Credit Cards (KCCs) was introduced in 1998-99 by NABARD. The purpose of the KCC scheme is to facilitate short-term credit to farmers, Union-Budget 2012-13 has proposed to make KCC as smart cards and can be used at ATMs. ▸ Rehabilitation Package for Distressed Farmers was introduced in 2006 for 31 suicide prone-districts in the states of Andhra Pradesh, Karnataka, Kerala and Maharashtra.
The commodity future market facilitates the price discovery process and provides a platform for price risk management in commodities. The market comprises 21 commodity futures exchanges, which include 5 national and 16 (commodity- specific) regional commodity exchanges. Commodity Markets in India ▸ Commodity Exchange, Mumbai ▸ National Commodity and Derivatives Exchange, Mumbai ▸ Multi Commodity Exchange, Mumbai ▸ ACE Derivatives and Commodity Exchange Limited, Ahmedabad
▸ India is the third largest producer of food in the world after China and the US. ▸ Food processing industry is the fifth largest industry in India in terms of production, consumption, exports and expected growth.
Mega Food Park Scheme was launched in 2008 that aims at providing a mechanism to link agricultural production to the market by bringing together farmers, processors and retailers so as to ensure maximising value addition, minimising wastage, increasing farmers' income and creating employment opportunities particularly in rural sector. Government provide financial assistance to set up modern infrastructure facilities for food processing. The 12th paln has targeted to set-up 50 mega food parks during the plan period.
The 'Participatory Guarantee System' portal will help small and marginal farmers engaged in organic farming to secure certificaton after checks for compliance to standards are carried out. The 'Soil Health Card' portal has been developed to register soil sample and record tests results along with fertiliser recommendations to create a national database on soil health for future use in research. The Fertiliser Quality Control System portal will collate results of draw samples of imported fertilisers helping both consumers and importers with analysis reports. Mobile app 'AgriMarket Mobile' This app has been developed with an aim to keep them abreast with crop prices around them. AgriMarket Mobile App can be used to get the market price of crops in the markets within 50 km of the device's location. Mobile app 'Crop Insurance' It will help the farmers not only to find out complete details about insurance cover available in thier area, but also to calculate the insurance premium for notified crops, coverage amount and loan amount in case of a loaned farmer. National AgricultureMarket or eNAM It is an online trading platform for agricultural commodities in India. eNAM provides inter-connectivity to e-mandis, in order to enable farmers get better prices of their produce. SoilHealth Card Scheme In February 2015, the Narendra Modi government had launched the Soil Health Card Scheme. Under this programme, the government plans to issue soil card to farmers to help them get a good harvest by studying the quality of soil. The Soil Health Card studies and reviews the health of soil or rather we can say a complete evaluation of the quality of soil right from its functional characteristics, to water and nutrients content and other biological properties. Under this scheme Centre plans to target over 14 crore farmers in the next three years.
▸ Industry sector comprises of mining, manufacturing, electricity and gas and construction. ▸ Industry has a share of 28% in the overall GDP and its share in total employment increased from 16.2% in 1999-2000 to 26.7% in 2012-13. ▸ The long-term average annual growth of industries during the post-reform period between 1991-92 to 2011-12, averaged 6.7%. Industrial Policies ▸ Industrial Policies were launched in 1948, 1956, 1977, 1980 and 1991. ▸ The Industrial Policy Resolution of 1948 marked the beginning of the evolution of the Indian Industrial Policy. ▸ The IPR 1956 called the Economic Constitution of India, gave the public sector a strategic role in the economy. ▸ The objective of the IPR 1956 was establishment of socialistic pattern of the society in the country. New Industrial Policy, 1991 ▸ Formed the basis for the economic reforms in India, which proved to be a watershed in the history of Indian economy. ▸ The main aim of the new industrial policy 1991 was to unshackle the Indian industries from the cobweb of unnecessary bureaucratic control; to introduce liberalisation with a view to integrate Indian economy with the world economy; to remove restrictions on FDI and to abolish MRTP Act, 1969; and ▸ to shed the load of the public enterprises. Compulsory Licensing ▸ Distillation and brewing of alcoholic drinks. ▸ Cigars and cigarettes of tobacco and manufactured tobacco substitutes. ▸ Electronic, aerospace and defence equipment; all types. Industrial explosives including match boxes. ▸ Specific hazardous chemical viz, (a) Hydrocyanic acid; (b) Phosgene; and (c) Isocyanates and diisocyanates of hydrocarbon. Disinvestment Policy ▸ The Industrial Policy Statement of 24th July, 1991 outlined the disinvestment of selected PSEs. Disinvestment is a process, through which privatisation could take place. ▸ The objective of pursuing disinvestment in India were unlocking resources trapped in non-strategic PSEs; reducing public debt and transferring commercial risk to the private sector. ▸ First Disinvestment Commission was set-up in 1996, under the Chairmanship of Mr EV in July, 2001, under Dr RH Patil. Ramkrishna, which was later reconstituted Public Sector Enterprises ▸ As on 31st March, 2015, there were 298 Central Public Sector Enterprises (CPSEs). Out of 298 CPSEs, 235 were in operation and 63 were under construction. ▸ Tomeasure the performance ofmanagement of PSEs at the end of the year in an objective and transparent manner, the concept of Memorandum of Understanding (MoU), on the recommendation of Arjun Sengupta Committee (1988), was started in 1991.
▸ Six Decades Old Company Act, 1956 will be replaced by this act. In this act, it has been made mandatory for the companies to include provisions for social welfare. Till date, in the 54 years Old Company Act, 1956 has been amended 25 times. ▸ For companies having an annual turn over above ` 10 lakh, it has been made mandatory to appoint one third independent directors and at least appointment of one female director.
▸ In 2009, the government established the Maharatna status, which raised the PSEs investment ceiling from ` 1000 crore to ` 5000 crore. ▸ The Maharatnas firm can now decide on investments of upto 15% of their net worth. Criteria forMaharatna The six criteria for eligibility of Maharatna are as follows: ▸ Having Navratna status; ▸ Listed on Indian stock exchange; ▸ An average annual turnover of more than ` 25,000 crore during the last three years; ▸ An average annual net worth of more than ` 15,000 crore during the last three years; an average annual net profit after tax of more than ` 5000 crore during the last 3 years and should have significant global presence. List of Maharatna There are eight Maharatnas in India ▸ Oil and Natural Gas Corporation (ONGC) ▸ Gas Authority of India Limited (GAIL) ▸ Steel Authority India Limited (SAIL) ▸ Indian Oil Corporation (IOC) ▸ Bharat Petroleum Corporation Limited (BPCL) ▸ National Thermal Power Corporation (NTPC) ▸ Coal India Limited (CIL) ▸ Bharat Heavy Electricals Limited (BHEL)
To be qualified as a Navratna Company ▸ The company must obtain a score of 60 (of the total 100). ▸ The score is based on six parameters, which included net profit to net worth, total manpower cost to total cost of production, Profit Before Depreciation, Interest and Taxes (PBDIT) to capital employed, PBDIT to turnover, earning per share and inter-sectoral performance. ▸ The company must first be a Miniratna-I and must have four independent directors on its board. The Navratna status empowers a company to invest utpo ` 1000 crore or 15% of their net worth overseas without government approval. ▸ At present, there are 16 Navratnas. List of Navratna ▸ Bharat Electronics Limited ▸ Hindustan Aeronautics Limited ▸ Hindustan Petroleum Corporation Limited ▸ Mahanagar Telephone Nigam Limited ▸ National AluminiumCompany Limited ▸ National Mineral Development Corporation ▸ Nevyeli Lignite Corporation Limited ▸ Oil India Limited ▸ Power Finance Corporation Limited ▸ Power Grid Corporation of India Limited ▸ Rashtriya Ispat Nigam Limited. ▸ Rural Electrification Corporation Limited ▸ Shipping Corporation of India Limited ▸ Engineers India Limited ▸ National Building Construction Corporation Limited ▸ Container Corporation of India Limited
▸ Miniratna Category I Public Sector Enterprises (PSEs) that have made profit continuously for the last three years or earned a net profit of ` 30 crores or more in one of three years. At present, there are 58 Miniratna I. ▸ Miniratna Category II PSEs that have made profit for the lst three years and should have a positive net worth. At present, there are 15 Miniratna II.
▸ A new thrust in favour of small scale industries was given in the Industrial Policy Resolution of 1977. ▸ With effect from 2nd October, 2006 government enacted the Micro, Small and Medium Enterprises Development Act. ▸ The MSMED Act, 2006, clearly defines, for the first time, not only the medium enterprises but also extends it to the services sector too. ▸ According to the Fourth Census (2009) of the MSME sector, 67% are manufacturing and 33% services enterprises. ▸ MSME sector contributes 8% to the GDP, 45% to the manufactured output, 40% to the exports and provides employment to 42 million people. ▸ SIDBI (Small Industries Development Bank of India) is a independent financial institution to finance the growth of MSME's. ▸ Abid Hussain Committee was set-up to look into the problems of small-scale industries. Micro, Small andMedium Enterprises Policy, 2012 The policy was notified in March, 2012. The policy envisages that every Central Ministry/ PSU shall set an annual goal for procurement from the MSE sector with the objective of achievingminimum 20% of the total annual purchase from MSEs in a period of 3 years.
Large Enterprise
Investment in plant and machinery
Investment in Equipment s
Micro Enterprises
Does not exceed ` 25 lakh
Does not exceed ` 10 lakh
Small Enterprises
More than ` 25 lakh, but does not exceed ` 5 crore
More than ` 10 lakh rupees, but does not exceed ` 2 crore
Medium Enterprises
More than ` 5 crore, but does not exceed ` 10 crore
More than ` 2 crore, but does not exceed ` 5 crore
▸ First steel industry at Kulti, West Bengal Iron Works Company was established in 1870. ▸ First large 'scale steel plant-TISCO at Jamshedpur (1907) was followed by IISCO at Burnpur (1919). ▸ The first public owned steel plant was Rourkela Integrated Steel Plant set-up in 1954 with the help of German Kmpp-Demag. ▸ India is the fourth largest producer of crude steel in the world after China, Japan and the USA in 2010. In 2009, India was ranked third. ▸ India is the largest producer of sponge iron since, 2002. ▸ Steel Authority of India Limited (SAIL) was established in 1974 for the development of the steel industry. Sick Industries ▸ A sick unit is one, which is in existence for atleast 5 years and 15% of its net worth has eroded. To combat industrial sickness particularly with regard to the crucial sectors and timely detection of sick and potentially sick industrial companies, Sick Industrial Companies Act, (1985) was enacted. ▸ SICA provisions were extended to public enterprises in 1993 so as to enable public sector enterprises to be referred to a quasi-judicial body Board of Industrial and Finance Reconstruction (BIFR) to take appropriate measures for revival and rehabilitation. Iron and Steel Plants in India
Rourkela (Odisha)
Germany
Bhilai (Chhattisgarh)
Russia
Durgapur (West Bengal)
Britain
Bokaro (Jharkhand)
Vishakhapatnam (Andhra Pradesh)
▸ It is the largest industry in India accounting for about 20% of industrial output, provides employment to 20 million persons and contributes 33% to total export earnings. The first Indian modernised cotton cloth mill was established in 1818 at fort Gloster near Kolkata, but this was unsuccessful. ▸ The second mill was established in 1854 at Bombay by KGN Daber. ▸ The share of cotton in total cloth production declined from 65% to 50% in 2009-10. Whereas, that of fabrics rose from 27% to 50%. ▸ The organised textile industry comprises of (i) spinning mills; (ii) coarse and medium composite mills and (iii) fine and superfine composite mills.
▸ It was started in 1855 at Rishra and India is the largest producer and second largest exporter of jute in the world. Jute Technology Mission was launched 2nd June, 2006. ▸ Government has enacted Jute Packing Materials (compulsory use in packing commodities) Act, 1997 to broaden the usage of jute.
▸ It is an important emerging sector in the Indian economy. According to the data released by the World Gold Council (WGC), India is the largest consumer of gold. ▸ India (especially, Surat and Mumbai) ranks among the 'big four' diamond cutting centres of the world, the other three being, Belgium (Antwerp), the USA (New York) and Israel (Ramat Gan).
▸ India is the second largest (after China) silk manufacturer contributing to 18% of the total raw silk production. ▸ The majority of silk is produced mainly in Bhoodan Pochampally (also known as silk city), Kanchipuram, Dharamvaram and Mysore.
▸ India is the largest producer of sugar in the world with a 22% share. ▸ It is the second largest agro-based industry in the country. ▸ BB Mahajan Committee was set-up to study the sugar industry. ▸ The Sugar Development Fund was set-up in 1982, under the Sugar Cess Act. ▸ Dual price mechanism with partial control is applied to sugar industry. Under this, the government fixes the ratio of and free sale sugar quota in the ratio 28:72.
▸ The foundation of stable Indian cement industry was laid in 1914, when the Indian Cement Company Limited manufactured cement at Porbandar in Gujarat. ▸ India is the second largest producer of cement in the world. ▸ The per capita consumption of cement in India is just 68 kg.
▸ India is the second largest manufacturer of motorcycle and fifth largest manufacturer of commercial vehicles in the world. In 2009, India was the fourth largest exporter of passenger cars after Japan, South Korea and Thailand. ▸ India is the largest manufacturer of tractors in the world. India is the ninth largest car manufacturer in the world.
▸ Unorganise informal workers refer to workers, who are not covered under any social security benefits irrespective of whether they work in organised or unorganised sector. 86% of the total workforce were in the unorganised sector in 2004-05. ▸ To look into the problems of unorganised sector, National Commission for Enterprises in the Unorganised Sector was set-up under the Chairmanship of Dr Arjun Sengupta. ▸ In accordance with the recommendation of the NCEUS, the Government of India enacted the Unorganised Workers Social Security Act, 2008. ▸ The act came into effect from 16th May, 2009. The act among other things provides for constitution of a National Social Security Board and State Social Security Board to recommend Social Security Schemes; ▸ Constitution of record keeping functions by the district administration. ▸ Constitution of a workers facilitation centre. ▸ A National Social Security Fund (NSSF) with initial allocation of ` 1000 crore for the unorganised sector workers has been set-up. ▸ A National Social Security Board (NSSB) has been constituted in 2009.
▸ The NMP was released by the government on 4th November, 2011 to bring about a qualitative and quantitative change with following objectives ▸ Increase manufacturing growth to 12-14% over the medium term; ▸ Enable manufacturing to contribute atleast 25% of GDP by 2022; ▸ Create 100 million additional jobs in the manufacturing sector by 2022; ▸ Provides for National Investment and Manufacturing Zone (NIMZ) on lands, which are degraded and uncultivable.
▸ NPE was released on 3rd October, 2011 providing for a roadmap for the development of the electronics sector in the country. The main objectives are as follow: ▸ To achieve a turnover of about US $ 400 billion by 2020; ▸ To create employment opportunities of around 28 million; ▸ To increase export from US $ 5.5 billion to US $ 80 billion 2020.
Indian Prime Minister Narendra Modi on 25th September, 2014 launched the 'Make in India' (MIN) campaign with a high-pitch event held at New Delhi's Vigyan Bhawan. The campaign aims at reviving the job-creating manufacturing sector, which is being seen as the key to taking the Indian economy on a sustainable high growth path. 'Make in India' aims to take manufacturing sector, which is being seen as the key to taking the Indian economy on a sustainable high path. 'Make in India' aims to take manufacturing growth to 10% on a sustainable basis.
Digital India is a major flagship programme of the Government of India, launched in August, 2014 aimed at transforming the country into a digitally empowered social and knowledge economy, as well as to revive the state of governance in the country. It is an 'Umbrella Programme' weaving together many existing schemes under multiple ministries and departments to ensure that its services are available to citizens electronically.
Trade between two or more nations is called foreign trade or international trade. With the liberalisation of the economy in 1991 and adoption of 'export promotion' policy measures has led to substantial growth in exports and diversification of our exports. ▸ As per the World Trade Organisation (WTO), India's share in global export and imports increase from 0.8% and 1% respectively in 2004 to 1.7% and 2.5% in 2013. Its ranking in terms of leading exporters and importers is 19 and 12 respectively in 2014.
▸ The balance of payments in a statical statement that systematically summarises, for a specific time period. The economic transactions of an economy with the rest of the world. BoP comprises of current account, capital account and omissions and changes in foreign exchange reserves. Current Account ▸ Current account transactions are classified into merchandise (exports and imports) and invisibles. Invisibles Invisible transactions are classified into three categories namely 1. Services travel 2. Income 3.Transfers Capital Account ▸ Under capital account, capital inflows can be classified by instrument (debt/equity) and maturity (short/long-term). ▸ The main component of capital account include foreign investment, loans and banking capital. Non-Debt Liabilities Includes FDI and portfolio investment comprising of FIIs, ADRs/GDRs. Debt Liabilities Includes External assistance, External Commercial Borrowings (ECBs), trade credit and banking capital (NRIs deposits). Balance of Trade (BoT) 1. Balanced BOT i.e. Exports = Imports 2. Adverse BOT i.e. Exports < Imports 3. Favourable BOT, i.e. Exports > Imports
These are the main Foreign Exchange Reserves in India ▸ Foreign Currency Assets (FCAs); ▸ Gold Stock of RBI; ▸ Special Drawing Rights (SDRs); and ▸ Reserve Tranche Position (RTP) in the IMF. ▸ FERA (Foreign Exchange Regulation Act), was enacted in 1973, to consolidate and regulate dealings in foreign exchange, so as to conserve the foreign exchange and utilise it to promote economic development. ▸ FEMA (Foreign Exchange Management Act) was enacted in 1999 to replace existing FERA. This act seeks to make offences related to foreign exchange civil offences. SEZ Act, 2005 ▸ Duty free import/ domestic procurement of goods for development, operation and maintenance of SEZ units. ▸ 100% Income Tax exemption an export income of SEZ units exemption from Central Sales Tax and Service Tax. Single window clearance mechanism for establishment of units.
▸ A Special Economic Zone (SEZ) is a geographical region that has economic and other laws that are more free-market oriented than a country's typical national laws. Asia's first Export Processing Zone (EPZ) was set-up in Kandla, India in 1965. The first SEZ policy was announced in April, 2000, to make SEZ an engine of growth supported by quality infrastructure backed by attractive fiscal package. ▸ To overcome the short comings experienced on account of the multiplicity of controls and clearances and an unstable fiscal regime and with a view to attract foreign investments in India, SEZ Act, 2005 was enacted with effect from 10th February, 2005. Foreign Trade Policy (FTP), (2015-20) The Foreign Trade Policy, 2015-20 was finally announced by the Hon'ble Minister of Commerce and Industry, Smt Nirmala Sitharaman on 1st April, 2015. The FTP has been announced in the backdrop of several measures initiated by the Government of India such as 'Make in India', 'Digital India' and 'Skills India', among others. The focus of the new policy is to support both the manufacturing and services sectors, with a special emphasis on improving the 'ease of doing business'. Features of FTP (2015-20) Features of the foreign trade Policy are as follows: ▸ India to be made a significant participant in world trade by 2020. ▸ Merchandise Exports from India Scheme (MEIS) to promote specific services for specific markets Foreign Trade Policy. ▸ Service Exports from India Scheme has been replaced with Service Exports from India Scheme (SEIS). ▸ FTP would reduce export obligations by 25% and give boost to domestic manufacturing. FTP benefits from both MEIS and SEIS will be extended to units located in SEZs. ▸ Industrial products to be supported in major markets at rates ranging from 2% to 3%.
▸ FDI is a type of investment that involves the injection of foreign funds into an enterprises that operates in a different country of origin from the invester. FDI play an extraordinary and growing role in global business. It can provide a firm with new markets and marketing channels, cheaper production facilities, access to new technology, products, skill and financing. ▸ FDI occurs when a company invests in a business that is located in another country and it is investing not less than 10% of shares belonging to the foreign company. It is a non-debt capital flow. FII (Foreign Institutional Investment). Foreign portfolio investment occurs, when foreign investment in the form of shares, equities and bonds, is made by a foreign company. ▸ The three main institutions that handle FDI related issues in India are the Foreign Investment Promotion Board (FIPB), the Foreign Investment Implementation Authority (FIIA) and the Secretariat for Industrial Assistance (SIA) activities/ sectors not opened to private sector, viz railways and atomic energy. ▸ Since, 20th May, 2011 FDI in Limited Liability Partnership (LLP) has been allowed. FDI Limits in Various Sectors
Defense Sector
100%
Automatic route
Telecom Services
Automatic up to 49% government route beyond 49% and up to 100%
Tea Plantation, Animal Husbandry
Asset Reconstruction Company
Automatic up to 49% government beyond 49% and up to 100%
Petroleum and Natural Gas
49%
Automatic Route
Commodity Exchanges
Power Exchanges
Stock Exchanges/Clearing Corporations
Credit Information Companies, Pharma
74%
Courier Services, e-commerce
Single Brand Product Retail trading, Multi Brand (food)
Insurance Sector
FIPB route (The CCEA* on 24th December, 2014; 49% FDI in Insurance).
Airlines
100% FDI in scheduled airlines and upto 49% FDI airlines through automatic route.
▸ The present monetary system of India is based on inconvertible paper currency and is managed by the RBI. The present currency system is based on minimum reserve system of note issue. It was adopted in 1957, under the minimum reserve system, minimum of gold and foreign securities to the extent of ` 200 crore of which gold should be of value ` 115 crore and the balance in rupee securities is maintained. ▸ RBI Working Group on Money Supply headed by YV Reddy recommended for dropping of post office saving deposits. Accordingly, there are now only three monetary aggregates, viz M1, M2 and M3. The revised monetary measure are as follow: M1 = Coins and Notes + Demand Deposits +Other deposits with RBI. M2 = M1 + Time liabilities portion of saving deposits with banks + Certificates of deposits issued by banks + Term deposit maturing within a year. M3 = M2 + terms deposit with banks with maturity over 1 year + call/term borrowing of the banking system. ▸ Coins are minted at four places, viz Mumbai, Kolkata, Hyderabad and Noida. Quick Digest ▸ The symbol of Indian rupee came into vague on 15th July, 2010. ▸ The new symbol is an amalgamation of Devanagri 'Ra' and the Roman 'R' without the stem. ▸ The new symbol designed by D Udaya Kumar, a post-graduate of IIT Bombay was finally selected by the Union Cabinet on 15th July, 2010. ▸ Though the symbol '`' will not be printed or embossed on currency notes or coins, it would be included in the 'Unicode Standard' and major scripts of the world to ensure that it is easily displaced and printed in the electronic and print media. Devaluation of Currency ▸ It means reducing the value of a currency by the fiscal authorities, so as to make exports cheaper and imports costlier and overcome balance of payments deficit. In India, devaluation has been resorted to four times. 1. First Devaluation In June, 1949 (by 30.5%) (Finance Minister Dr John Mathai). 2. Second Devaluation In June, 1966 (by 57%) (Finance Minister Sachindra Chaudhry). 3. Third Devaluation On 1st July, 1991 (by 9%) (Finance Minister Dr Manmohan Singh). 4. Fourth Devaluation On 3rd July, 1991 (by 11%) (Finance Minister Dr Manmohan Singh). Printing of Securities and Minting in India
Security Press
Station
Related to
India Security Press (1922)
Nashik
Postal material, Postal stamps etc
Security Printing Press (Estd 1982)
Hyderabad
Union excise duty stamps
Currency Notes Press (1928)
Bank notes from ` 1 to ` 100
Bank Notes Press (1974)
Dewas
Bank note of ` 20, ` 50, ` 100, ` 200, `500, ` 2000
Modernised Currency Notes Press (1995)
Mysore (Kar) Salbani (West Bengal)
Security Paper (Estd 1967-68)
Hoshangabad
Banks and currency notes paper
Demonetisation Currency demonetisation is a radical financial step in which a particular currency's status as a legal tender is declared invalid. On 9th December, 2016, Reserve Bank of India withdrew the old ` 500 and ` 1000 notes as official mode of payment. The reason for this move given was that it will help to tackle blackmoney, help to eliminate fake currency and to lower cash circulation in the country.
It means a persistent rise in the general price level of goods and services leading to a fall in the currency's purchasing power. Causes of Inflation ▸ Printing too much money. Increase in money supply in the economy. ▸ Increase in production cost. ▸ Tax rises. Decline in exchange rates. ▸ War or other events causing instability. Effects of Inflation It is economically disastrous for lenders. Balance of trade can become unfavourable. Severely impacts the commonman by reducing their real income. Persistent high level of inflation leads to economic stagnation. Measures to Control Inflation ▸ Increasing the bank interest rates. ▸ Regulating fixed exchange rates of the domestic currency. ▸ Controlling prices and wages. ▸ Providing cost of living allowances to citizens. Regulating black and speculative market. Supply side inflation can be controlled by increasing production of economy, specially foodgrains and by improving infrastructure. Wholesale Price Index (WPI) It measures the change in wholesale prices on weekly basis. On the basis of weekly indices, average annual WPI is worked out. Average annual wholesale prices of the current year are related to average annual wholesale prices of the base year (assumed as 100). The base year for WPI is 2004-05. Consumer Price Index (CPI) It measures the change in retail prices on monthly basis. On the basis of monthly indices, average annual CPI is worked out. Average annual retail prices for the current year are related to the average annual retail prices of the base year (assumed as 100). Deflation A general decline in prices, often caused by a reduction in the supply of money or credit. Deflation can be also caused by a decrease in government, pesonal or investment spending. The unemployment since there is a lower level of demand in the economy, which can lead to an economic depression. Stagflation When you have a slow economy with high inflation rates and unemployment, stagflation is usually resultant. When the economy does not grow and prices continue to rise have a stagflation cycle in the economy.
▸ The first bank of limited liability managed by an Indian was Oudh Commercial Bank established in 1881. Subsequently, PNB was established in 1894. ▸ The largest bank Imperial Bank of India was nationalised in 1955 and renamed as State Bank of India followed by formation of its 7 associates in 1959. ▸ The step toward 'Social Banking' was taken with the nationalisation of 14 Commercial Banks on 19th July, 1969. Six more Commercial Banks were nationalised on 15th August, 1980. ▸ As on March 2011, there were 4 non- Scheduled Commercial Banks in India. Reserve Bank of India (RBI) ▸ RBI is the Central Bank of the country. ▸ RBI was set-up on the basis of Hilton Young Commission recommendation in April, 1935 with the enactment of RBI Act, 1934. Its first Governor was Sir Osborne Smith. ▸ The main purpose of creating RBI was to separate currency and credit from GoI. ▸ RBI was nationalised in 1949 and its first Indian Governor was CD Deshmukh. Administration ▸ The headquarter of the RBI is in Mumbai. ▸ There are 14 Directors in Central Board of Directors besides the Governor, four Deputy Governors and one Government Official. ▸ Governor of RBI – Mr Urjit Patel. Functions The main functions of the RBI includes ▸ Monetary authority. ▸ Issue of currency. Banker and debt manager to government. ▸ Banker of Banks. ▸ Regulator of banking system. ▸ Manager of foreign exchange. ▸ Maintaining financial stability. ▸ Regulator and supervisor of the payment and settlement system. ▸ Since 1952, Monetary Policy of the RBI emphasise on twin goals. These are as follows: 1. Economic growth 2. Inflation control Credit Control Instruments Instrument of credit control can be divided into two namely Qualitative/ Selective credit control and Quantitative credit control. Quantitative/General Credit Control Quantitative credit control are used to control the volume of credit and indirectly to control the inflationary and deflationary pressures caused by expansion and contraction of credit. The quantitative credit control consists of ▸ Bank Rate It is also called the rediscount rate. It is the rate, at which the RBI gives finance to Commercial Banks. ▸ Cash Reserve Ratio (CRR) It specifies the fraction of the total deposits of banks that they are obliged to keep with the RBI. Since 1962, the RBI has been empowered to vary the CRR requirement between 3% and 15% of the total demand and time deposits. ▸ Statutory Liquidity Ratio (SLR) It is the ratio of liquid asset, which all Commercial Banks have to keep in the form of cash, gold and unencumbered approved securities equal to not more than 40% of their total demand and time deposits liabilities. (ranges is 25-40%) ▸ Repo Rate It is the rate, at which RBI lends short-term money to the banks against securities. Repo rate injects liquidity in the market. ▸ Reverse Repo Rate It is the rate, at which banks park short-term excess liquidity with the RBI. Reverse Repo Rate withdraws liquidity from the market. This is always 100 base point 1% less than Repo rate. ▸ Open Market Operations Under OMOs, when the RBI sells G-secs in the market, it withdraws money liquidity from the market and thus, reduces volume of credit leading to control of inflation. Qualitative/Selective/ Direct Credit Control Qualitative measures are used to make sure that purpose, for which loan is given is not misused. It is done through ▸ credit rationing ▸ regulating loan to consumption etc. ▸ moral suation
▸ The scheduled banks are those, which are entered in the Second Schedule of the RBI Act, 1934. These banks have a paid-up capital and reserves of an aggregate value of not less than ` 5 lakh and satisfy the RBI that their affairs are carried out in the interest of their depositors. ▸ All Commercial Banks (Indian and foreign), Regional Rural Banks and State Cooperative Banks are Scheduled Banks. Non-Scheduled Banks are those, which are not included in the Second Scheduled of the RBI Act, 1934.
▸ State Bank of India (SBI) was previously called Imperial Bank of India in 1921, which was created by amalgamation of 3 presidency banks viz Bank of Bengal, Bank of Bombay and Bank of Madras. ▸ It was nationalised in 1955. ▸ In 2017, the five associates of SBI and Bhartiya Mahila Bank were merged in State Bank of India. With this merger, SBI becomes one of the top 50 global banks.
▸ All those banks, where greater parts of stake or equity are held by the private shareholders and not by the government are called private sector banks. ▸ There are two categories of private sector bank old and new. ▸ Banking Regulation Act, 1949 was amended in 1993 and once again in 2001 to permit the entry of new private sector banks in the Indian banking sector; the objective was to instill greater competition in the banking system to increase productivity and efficiency. Top Five Private Sector Banks 1. ICICI Bank, 1994 Vadodara 2. HDFC Bank, 1994 Mumbai 3. Axis Bank, 1994 Ahmedabad 4. Kotak Mahindra Bank, 1985 Mumbai 5. Yes Bank, 2004 Mumbai Structure of Banking in India
Bank Board Bureau The Bank Board Bureau (BBB) is constituted on 28th February, 2016. The Bureau is mandated to play a critical role in reforming the troubled public sector banks by recommending appointments to leadership positions and boards in those banks, and advise them on ways to raise funds and how to go ahead with mergers and acquisitions. Vinod Rai, former comptroller and Auditor General of India, was named the first Chairman of the Banks Board Bureau. Indradhanush Scheme, 2015 The Public Sector Banks (PSBs) plays a vital role in Indian financial system. The assets quality of PSBs have deteriorated because of rising Non-Performing. Assets (NPA) Indradhanush Scheme is for the banking reforms in India. The seven Key reforms of Indradhanush mission include appointments, destressing, BBB, capitalisation, empowerment, frame work of accountablity and governance reforms. RBI Grants New Bank Licence The decade-long wait for new bank licences finally ended on 3rd April, 2014, with the Reserve Bank of India (RBI) deciding to issue permits to two of the 25 applicants. The ones to make the cut were IDFC, a diversified financial services firm with a special focus on infrastructure financing and Bandhan, the country's largest micro lender based in Kolkata.
While preparing guidelines, RBI recognises the need for an explicit policy on banking structure in India keeping in view the recommendations of the Narsimham Committee, Raghuram Rajan Committee and others view points.
These new banks will be provided license under the Banking Regulation Act, 1949 (Section 22(1)), only after the fulfilment of these two conditions. Bandhan Finance It is a microfinance company, based in West Bengal. It is headed by Shri Chandra Shekhar Ghosh and has a net worth of ` 1100 crore. About 45 % of its branches in the rural areas. Bandhan Bank received the inprinciple approval of the RBI in April 2014, the banking regulator gave its final nod in June, 2015. IDFC The Infrastructure Development and Finance Corporation is based in Mumbai. It is originally an investment finance company, headed by Shri Rajiv Lal. IDFC has the net worth of ` 21000 crore, but with a lower rural presence. IDFC started operating banking services on 1st October, 2015 under RBI Banking licence.
India's first all women bank, Bharatiya Mahila Bank was inaugurated in Mumbai on 19th November, 2013, The main objective of the bank was to focus on the banking needs of women and to promote their economic empowerment. Usha Anantha Subramanian was appointed as the first Chairperson and Managing Director of public sector Bharatiya Mahila Bank (BMB). The BMB was based on the principle of : 'Women empowerment in India'. It has been the merged with State Bank of India in 2017.
▸ These are set by Bank of International Settlement (BIS) headquartered in Basel, Switzerland. It prescribes for a set of minimum capital requirement for banks. 55 countries Central Banks are members of the BIS. ▸ In India Basel norms were introduced in 1988 by the RBI. ▸ So far two Basel norms viz, Basel-I and Basel-II have been implemented in India and third i.e., Basel-III norms became operational from 1st January, 2013.RBI issued guidelines in 1992 to maintain a capital adequacy ratio of 9% as mandatory for every Scheduled Commercial Banks (SCBs). Capital adequacy ratio is that ratio of the total capital of a bank to its risk weighted assets, which ensure's strength and stability of a bank to withstand reasonable degree of losses.
Micro Units Development and Refinance Agency Bank (or MUDRA Bank) was launched on 8th April, 2015 with a corpus of ` 20000 crore and a credit guarantee corpus of ` 3000 crore. It is a public sector financial institution in India. It provides loans at low rates to small entrepreneurs. MUDRA Bank will be set-up through a statutory enactment. It is a 100% subsidiary of SIDBI.
MUDRA Bank has rightly classified the borrowers into three segments: the starters, the mid-stage finance seekers and the next level growth seekers. To address the three segments, MUDRA Bank has launched three loan instruments ▸ Shishu-covers loans upto ` 50,000 /- ▸ Kishor-covers loans above ` 50,000/- and upto ` 5 lakh ▸ Tarun-covers loans above ` 5 lakh and upto ` 10 lakh All India Financial Institutions At a Glance
Industrial Finance Corporation of India (IFCI) 1948, New Delhi
To grant loans advances to industrial concerns and subscribe to debentures floated by them.
State Finance Corporations (SFCs) 1951
To finance the needs of the small-scale and medium sized industries in respective states. 28 SFCs are in operations alongwith 28 State Industrial Development Corp (SIDC).
Industrial Credit and Investment Corporation of India (ICICI) 1955, Mumbai
To stimulate the promotion of new industries and assist in modernisation of existing industries. In 2002, ICICI merged with ICICI Bank no more a DFI.
Industrial Development Bank of India (IDBI) 1964 Mumbai
To meet the financial needs of industrialisation and co-ordinate with all other agencies concerned with industrial development finance.
Wholly owned subsidiary of RBI till 1976. Merged with IDBI Bank in 2004.
Industrial Investment Bank of India (IIBI)1985
To assist the industrial units in Eastern region.
Small Industries Development Bank of India (SIDBI), Lucknow
To promote, finance and development industry in small scale sector.
Unit Trust of India (1964) (UTI)
Set-up as an investment institution to stimulate and pool the savings of the middle and low income groups.
UTI bifurcated into two parts (i) UTI Mutual Fund (ii) Specified Undertaking of UTI (SUUTI)
National Housing Bank (NHB) 1988, New Delhi
It is the apex institution of housing finance in India and is a wholly owned subsidiary of the RBI.
Launched RESIDEX for tracking prices of residential properties in India in 2007. At present, RESIDEX covers 15 cities in India. It is a refinance institution.
EXIM Bank (1982), Mumbai
To finance, facilitate and promote foreign trade in India.
It is a specialised financial institution.
Tourism Finance Corporation of India Limited (TFCI)—1989, New Delhi
Set-up on the recommendation of Yunhs Committee on Tourism. It is a specialised finance institution providing assistance to tourism related activities/projects.
Mutual Funds
Mutual Funds are the most important among the newer capital market institutions. MFs functions is to mobilise the savings of the general public and invest them in stock market securities.
▸ Insurance industry includes two sectors- Life Insurance and General Insurance. ▸ Life insurance in India was introduced by Britishers. A British firm in 1818 established the Oriental Life Insurance Company at Calcutta now Kolkata. ▸ Since the opening up, the number of participants in the Insurance Industry has gone up from 7 insurers (including LIC, four public sector general insurers, one specialised insurer and the GIC as the national re-insurer) in 2000 to 49 insurers as on 30th September, 2011. Life Insurance Corporation (LIC) ▸ LIC was established on 1st September, 1956, which set the pace for nationalisation of life insurance under the Stewardship of CD Deshmukh. It has head office at Mumbai and eight zonal offices the most recent being at Patna. ▸ LIC is also operating internationally through branch offices in Fiji, Mauritius and UK and through joint venture companies in Bahrain, Nepal, Sri Lanka, Kenya and Saudi Arabia. In 2008, its wholly and subsidiary was opened in Singapore. General Insurance Corporation (GIC) ▸ GIC was established on 1st January, 1973, with its four subsidiaries, viz, 1. National Insurance Company Limited, Kolkata; 2. The New India Insurance Company Limited, Mumbai; 3. The Oriental Fire and General Insurance Company Limited New Delhi; and 4. United India General Insurance Company Limited, Chennai. ▸ On 3rd November, 2000 GIC was renamed as GIC Re and approved as Indian Reinsurer and the four subsidiaries of GIC were separated from GIC and are functioning independently under Public Sector General Insurance Companies (GIPSA). ▸ GIC Reinsurer (Re) has branch offices in Dubai and London and a representative office in Moscow. Insurance Regulatory and Development Authority of India (IRDAI) ▸ The Insurance Regulatory and Development Authority (IRDA) has changed its name to Insurance Regulatory and Development Athority of India (IRDAI). The change of name was effected in the Insurance Laws (Amendment) Ordinance, 2014 was promulgated by the President of India on 26th December, 2014. ▸ The ordinance contains certain amendments to the Insurance Regulation and Development Act, 1999 and inserted the words 'of India' after development authority.Insurance Regulatory and Development Authority of India(IRDA) is an autonomous apex statutory body which regulates and develops the insurance industry in India. ▸ It was constituted by a Parliament of India act called Insurance Regulatory and Development Authority Act , 1999 and duly passed by the Government of India. The agency operates from its headquarters at Hyderabad, Telangana where it shifted from Delhi in 2001. The FDI limit in insurance sector was raised to 49% in july, 2014.
▸ New Pension System launched on 1st January, 2004. ▸ The NPS covers all employees of the Central Government and Central autonomous bodies, except armed forces 27 States have notified and joined the NPS. ▸ With effect from 1st November, 2009 the NPS was opened to all citizens. ▸ NPS-Lite is the lower cost version of NPS. ▸ Swavalamban Scheme was announced in the budget 2010. It is an incentive scheme for the NPS. ▸ Under this, any citizen in the unorganised sector, who fairs NPS in 2010-11 with a minimal annual contribution of annual ` 1000 and maximum of ` 12000 will receive a government contribution of ` 1000 in his NPS account. ▸ The National Securities Depositories Limited (NSDL) has been appointed as the Central Record Keeping Agency, for the NPS. ▸ The revised guidelines for NPS has raised the age from55 years to 60 years. The Pension Fund Regulatory Development Authority was established on 23rd August, 2003. Insurance Sector Schemes
Programme/Schemes
Main Provisions
JanashreeBima Yojana(JBY)
Launched on 10th August, 2000 by LIC. JBY replaced Social Security Group Insurance Scheme (SSGIS) and Rural Group Life Insurance Scheme (RGLIC). Provides for an insurance cover of ` 30000 on natural death, ` 75000 on permanent disability to accident and ` 37500 on partial disability. The premium is ` 200 per member per annum. 45 occupational groups having 25 members. For both rural and urban people For BPL and marginally above BPL people. 50% of finance is met out of social security fund.
Universal Health Insurance Scheme (UHIS)
Launched from the year 2003-04 for improving the healthcare access to the poor families. Launched by four public sector general insurance company. Export Credit Guarantee Corporation (ECGC) and the Agriculture Insurance Company (AIC) are the specialised insurers.
Rashtriya Swasthya Bima Yojana (RSBY)
Launched on 1st October, 2007. Provides smart-card based health insurance cover ` 30000 per family per annum to BPL families (a unit of five) in the unorganised sector. The premium is shared in 75 : 25 between the centre and the states. For BPL families (a unit of five). For unorganised sector. Its a smart card based cashless health insurance, cover ` 30000 per annum, of insurance or a family floats basis. It also cover migrant workers. It was for 5 years from 2008 to 2013. It cover all pre-existing diseases, maternity benefit, transport cost. It use IT application both private and public service providers for delivering the insurance package. No age limit has been prescribed.
Aam AadmiBima Yojana (AABY)
Launched on 2nd October, 2007 by LIC for rural landless households at Shimla. Premium fixed at ` 200 per person per annum to be shared equally by centre and the states. The age covered is 18 years to 59 years. Death/permanent disability ` 75000, partial disability ` 37500 For rural landless household. Head of the family or one carring member in the family of rural landless. Free add-on benefit for the children of the members of Aam Aadmi Bima Yojana. For BPL families Between 9th to 12th standard.
UniversalHealth Insurance Scheme
For BPL families. It gives reimbursement of medical expenses upto ` 30000 towards hospitalisation. Include pre-existing diseases, maternal benefit. Upto the age 70 years.
▸ Financial system refers to the borrowing and lending of funds for the demand and supply of funds of all individuals institutions, companies and of the government. ▸ The Indian Financial System consists of two parts, viz, Indian money market and the Indian capital market.
▸ This is a market for 'near money' or it is the market for borrowing and lending of short-term funds. Instruments of MoneyMarket T-Bills or treasury bills are the government bonds, which are used to raise funds from the money market. ▸ 91 Days Treasury Bills (T-bills) used by the government to raise funds from the market for short periods nothing but short-term government bond. ▸ 182 Days T-bills introduced on the recommendation of Vaghul working groups, are variable interest bills sold through fortnightly auctions. ▸ 364 Days T-bills introduced on the recommendation of Vaghul working group are long-dated bills, whose yields reflects the market conditions. ▸ 14 Days T-bills introduced in April, 1997 by the RBI at a discount rate equivalent to the rate of interest on Ways and Means Advance (WMA) to the Government of India. ▸ Dated Government Securities are also type of treasury bills recommended by Chakravarty Committee on Monetary System (1988). These are 5 years and 10 years maturity government securities sold on an auction basis. ▸ Certificate of Deposits It is the certificate issued by bank/financial institute to other banks or financial institute, who give funds on short-term basis. Commercial Banks are a saving certificate entitling the bearer to receive interest. The maturity of a CoD varies from 3 months to 1 year. ▸ Commercial Papers It is an instrument to raise short-term funds by the corporate sector. ▸ It can be issued by a listed company with a working capital of almost 5 crore. The CP is issued in multiples of ` 25 lakh subject to a minimum issue of ` 1 crore. The maturity of CP is between 3 to 6 months. ▸ Money Market Index is an index, which helps investors to decide how much and where to invest in money market through providing information about prevailing market ratio. ▸ Bankers Acceptance Rate is the rate, at which the banker's acceptance is traded in secondary market. ▸ LIBOR / MIBOR London Inter-Bank Offered Rate/Mumbai Inter-Bank Offered Rate is the interest rate, at which bank borrows fund from other banks.
▸ Capital market is concerned with provision of raising long-term funds of maturity 1 year or more. ▸ Capital market can be classified into debt market and equity market. ▸ In debt market, a company can acquire funds only by incurring debt and lender is guaranted of a fixed repayment e.g. bond. ▸ Equity Market Here, funds can be raised without incurring debt those, who finance the enterprise by purchasing equity instrument like shares.
SEBI (Securities and Exchange Board of India) was set-up in 1988 and made a statutory body in 1992. Main Functions ▸ To protect the interests of investor in securities. To promote the development of securities market and to regulate the securities market. ▸ For matters connected there with or incidental there to. To prohibit unfair trade practices in the market. ▸ Clause 49 of the Listing Agreement to the Indian stocks exchange relates to the improvement of corporate governance of all listed companies. It came into effect from 31st December, 2005.
▸ In August 2014, the Securities Laws (Amendment) Act, 2014, gave SEBI additional powers, including to order the arrest of violators and seek call data records of individuals under investigation. ▸ The new law gave SEBI the powers to search and obtain information, including call records, about any suspected entity from within or outside the firm. Stock Exchange in India ▸ Stock exchange or share market deals in shares, debentures and financial securities. ▸ There are 23 stock exchanges in India. Among them two are national level stock exchange namely Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The rest 21 are Regional Stock Exchanges (RSE). Bombay Stock Exchange (BSE) ▸ It is a stock exchange located on Dalal Street, Mumbai, Maharashtra. It is the 11th largest stock exchange in the world by market capitalisation as on 31st December, 2012. ▸ Established in 1875, BSE Ltd (formerly known as Bombay Stock Exchange Ltd.), is the India's oldest Stock Exchange , one of Asia’s oldest stock exchange and one of India's leading exchange groups. ▸ Over the past 137 years, BSE has facilitated the growth of the Indian corporate sector by providing it an efficient capital-raising platform. Popularly known as BSE, the bourse was established as 'The Native Share and Stock Brokers' Association' in 1875. National Stock Exchange (NSE) ▸ It is the country's leading stock exchange located in the financial capital of Mumbai, India. National Stock Exchange (NSE) was established in the mid 1990s as a demutualised electronic exchange. ▸ NSE provides a modern, fully automated screen-based trading system, with over 2 lakh trading terminals, through which investors in every nook and corner of India can trade. ▸ NSE has played a critical role in reforming the Indian securities market and in bringing unparalleled transparency, efficiency and market integrity. NSE has a market capitalisation of more than US$989 billion and 1635 companies listed as on July 2013. MCX SX Stock Exchange ▸ It is a private stock exchange headquartered in Mumbai, which was founded in 2008. Now it is a MCX-SX Full Fledged Stock Exchange. ▸ Securities and Exchange Board of India (SEBI) on 10th July, 2012 granted permission to MCX Stock Exchange (MCX-SX) to operate as full-fledged stock exchange. ▸ MCX-SX would be able to offer additional asset classes, such as equity and equity F and O (Futures and Options) interest rate futures and wholesale debt segments. Important Share Price Indexes of India ▸ BSE SENSEX This is the most sensitive share index of the Mumbai Stock Exchange. This is the representative index of 30 main shares. Its base year is 1978-79. BSE is the oldest stock exchange of India, founded in 1875. ▸ The barometer of Indian capital market. BSE sensitive index also referred to as BSE-30 is a free-float market capitali-sations-weighted stock market index of 30 well established and financially sound companies listed on Bombay Stock Exchange. ▸ The free-float market capitalisation of a company is determined by multiplying the price of its stocks by the number of shares issued by a company which is readily available for trading on the stock exchange. The base year/ period of SENSEX is 1978-79. ▸ NSE-50 From 28th July, 1998, its name is S and P CNX Nifty. National Stock Exchange launched a new share Price Index, NSE-50 in place of NSE-100 in April, 1996. NSE-50 includes 50 companies shares. This stock exchanges was founded on Ferwani Committees's recommendation in 1994. ▸ The CNX Nifty covers 22 sectors of the Indian economy and offers investment managers exposure to the Indian market in one portfolio. The CNX Nifty index is a free float market capitalisation weighted index. ▸ The CNX Nifty Index was developed by Ajay Shah and Susan Thomas. Global Indices
Hang Seng
Hong Kong
JCI
Indonesia
Nikkei 225
Japan
Kospi
South Korea
Kualalumpur Composite
Malaysia
TSEC Weighted Index
Taiwan
SSE Composite Index
China
SET
Thailand
FTSE 100
UK
NASDAQ Composite Index
US
STOXX
Europe
Dow Jones
Credit Rating Agencies ▸ It is a company that assigns credit ratings for issuers of certain type of debt obligation as well as the debt instrument, example of issuers are companies, State and Central Government etc. ▸ The credit rating represents the credit rating agency's evaluation of qualitative and quantitative information for a company or government; including non-public information obtained by the credit rating agencies analysts. The credit rating is used by individuals and entities that purchase the bonds issued by companies and governments to determine the likelihood that the government or company will pay its bond obligations. ▸ CRISIL set-up in 1988, is a credit rating agency. It undertakes the rating fixed deposit programmes, convertible and non-convertible debentures and also credit assessment of companies. ▸ CRISIL 500 is the net share Price Index introduced by Credit Rating Agency. The 'Credit Rating Information Services of India Limited' (CRISIL) on 18th January, 1996. ▸ In some cases, the services of the underlying debt are also given ratings.
FITCH Group
1913
Paris
S and P Group
1860
New York
Moody's Investor Services
1909
It refers to themanagement of revenue and capital expenditure finances of the state.
It is the means by which a govrnment adjusts its spending levels and tax rates to monitor and influence a nations economy. It is the sister strategy to Monetary Policy through which a Central Bank influences a nations money supply. These uses can affect the following macro economic variables in an economy ▸ Aggregate demand and the level of economic activity; ▸ The distribution of income; ▸ The pattern of resource allocation within the government sector and relative to the private sector.
Main sources of revenue are customs duties, excise duties, service tax, taxes on property, corporate tax, income taxes.
Plan Expenditure includes agriculture, rural development, irrigation and flood control, energy, industry, minerals, transport and communications etc. Non-Plan Expenditure It consists of interest payments, defence, subsidies and general services.
▸ Internal Debt It comprises loans raised from the open market treasury bills issued to the RBI, Commercial Banks etc. ▸ External Debt It consists of loans taken from World Bank, IMF, ADB and individual countries.
In a budget statement, four types of deficits are mentioned (a) Revenue (b) Capital (c) Fiscal (d) Primary
There are various ways to represent and interpret a government's deficit. The simplest is the revenue deficit which is just the difference between revenue receipts and revenue expenditures. Revenue deficit = Revenue expenditure – Revenue receipts
An imbalance in a nation's balance of payments capital account in which payments made by the country for purchasing foreign assets exceed payments received by the country for selling domestic assets. In other words, investment by the domestic economy in foreign assets is less than foreign investment in domestic assets. This is generally not a desirable situation for a domestic economy. Capital deficit = Capital receipts – Disbursement on capital account
This is the sum of revenue and capital expenditure less all revenue and capital receipts other than loans taken. This gives a more holistic view of the government's funding situation since it gives the difference between all receipts and expenditures other than loans taken to meet such expenditures. Fiscal Deficit = Difference between country's expenditure and earnings Fiscal deficit = Revenue receipts (Net tax revenue + Non-tax revenue) + Capital receipts (only recoveries of loans and other receipts) – Total expenditure (Plan and non-plan).
Amount by which a government's total expenditure exceeds its total revenue, excluding interest payments on its debt. Primary deficit = Fiscal deficit – Interest payments.
▸ The budget is an extensive account of the government's finances, in which revenues from all sources and expenses of all activities undertaken are aggregated. ▸ The Finance Minister presents the Union Budget every year in the Parliament that contains the Government of India's revenue and expenditure for one fiscal year, which runs from 1st April to 31st March.
▸ The term 'Budget' is acutally derived from a French word 'Bougette', which means a sack or pouch. It was first used in France in 1803. ▸ In the Constitution of India the term Budget is nowhere used. It is rather mentioned as Annual Financial Statement under Article 112 comprising the revenue budget, capital budget and also the estimates for the next fiscal year called budgeted estimates.
The budget is prepared by the budget division in the Ministery of Finance (MoF), after consulting with other ministries and the Planning Commission. The process majorly includes following steps which may be sequential or overlapping too. Stages in Budget Enactment The budget goes through the following six stages in the Parliament ▸ Presentation of the budget on the floor of the house before the Lok Sabha. ▸ General discussion on the budget. ▸ Scrutiny by departmentally related standing committees. ▸ Voting on demands for grants. ▸ Passing of Appropriation Bill (Article 114 of the Constitution of India). ▸ Passing of Finance Bill (under Rule 219 of the Lok Sabha).
▸ Usually, the Appropriation Bill (expenditure part of budget) is passed by end of April, but government needs money from beginning of financial year, so government use vote-on-account to remove money from consolidated fund of India.
Line ItemBudgeting If emphasises on the items (objects) of expenditure without highlighting its purpose. It gives object-wise (Line-item) classification in budget. Under this system, the amount granted by the legislature on a specific item should be spent on that item only. Quick Digest ▸ John Mathai proposed the first budget of Republic of India in 1950 and also the creation of Planning Commission. ▸ Finance Minister Morarji Desai has given budget for the maximum number of times (10) followed by P Chidambaram, who has given 8 budgets. ▸ CD Deshmukh was the first Indian Governor of RBI to have presented the Interim Budget for the year 1951-52. ▸ Mrs Indira Gandhi is the only woman to hold the post of the Finance Minister and to have presented the budget in her capacity as the Prime Minister of India in 1978. ▸ The first such mini-budget was presented by TT Krishnamachari on 30th November, 1956, in form of fresh taxation proposals through Finance Bills, demanded by the prevailing domestic and international economic situation. ▸ Since 2017, the Union Budget is presented on 1 February annually. ▸ From 2017, the Railway Budget has been merged with the Central Budget on the recommendation of Bibek Debroy Committee. Output Budgeting It concentrate only on the quantitative aspect of expenditure. Performance Based Budgeting Its attempt to solve decision making problems based on a programmes ability to convert inputs to outputs and use inputs to affect certain outcomes. Performance may be judged by a certain programmes ability to meet certain objective that contribute to more abstract goal as calculated by that programmes ability to use resources efficiently by linking input to outputs. Outcome Budgeting This type of budgeting tries to ensure that budget outlays translate into concrete outcomes. Zero-Based Budgeting It is amethod of budgeting, in which all budgetary allocations are set to nil at the beginning of a financial year. Zero-based budgeting requires the budget request be re-evaluated thoroughly, starting from the zero-base. This process is independent of whether the total budget or specific line items are increasing or decreasing. Zero based budgeting also refers to the identification of a task or tasks and then funding resources to complete the task independent of current renouncing. Gender Budgeting It came into being in 2004-05. To contribute towards the women empowerment and removal of inequality based on gender, role of budgeting has been accepted through this step. Programme Budgeting It emphasis the planning aspect of budgeting for selecting the best out of a number of available programmes and for optimising the choice. The Government has decided on 18 November, 2016 to merge Rail Budget with the Union Budegt from Budget year 2017-18.
Tax is a compulsory payment by the citizens to the government to meet the public expenditure. It is legally imposed by the government on the taxpayer and in no case taxpayer can deny to pay taxes to the government. Direct Tax A direct tax is that tax, which is born by the person on whom it is levied. A direct tax cannot be shifted to other person. Composition of Direct Taxes Out of 56.3% of contribution of direct taxes to gross tax revenue in 2011-12, personal income tax contributed 19. 5% and corporation tax contributed 39.0%. Structure of Taxes
Personal Income Tax
Excise Duty
Corporation Tax
Custom Duty
Wealth Tax
Sales Tax
Gift Tax
Service Tax
Land Revenue
Value Added Tax
Profession Tax
Passenger Tax
Stamp Duty and Registration Charges
Entertainment Tax
Securities Transaction Tax
Electricity Duty
Banking Cash Transaction Tax
Motor Vehicles Tax
Indirect Tax ▸ These are those taxes, which have their primary burden or impact on one person. But that person succeeds in shifting his burden on to others. Indirect taxation is policy often used to generate tax revenue. Indirect tax is so called as it is paid indirectly by the final consumer of goods and services while paying for purchase of goods or for enjoying services. ▸ Composition of Indirect Taxes Out of 42.6% contribution of indirect tax to the total tax revenue in 2011-12, excise contribution was 16.7%, customs contribution was 13.4% and services tax contributed 9.3%.
The Goods and Service Tax (GST) has been implemented from July 1, 2017. It incorporates many of the indirect taxes levied by states and the Central Government. Some of the taxes GST replaced include Sales Tax, Central Excise, Duty, Octroi, Service Tax etc. GST has three components ▸ CGST (Central Goods and Services act) ▸ SGST (State Goods and Services act) ▸ IGST (Integrated Goods and Services act)
▸ India possesses a federal structure, in which a clear distinction is made between the union and the state functions and sources of revenue. ▸ Our Constitution provides residual powers to the centre. Article 264 and Article 293 explain the financial relations between the Union and State Government. It makes a clear division of fiscal powers between the Centre and the State Government. ▸ Although, the states have been assigned certain taxes, which are levied and collected by them, they also have a share in the revenue of certain union taxes and there are certain other taxes, which are levied and collected by the Central Government, but whole proceeds are transferred to the states. (A) List I of Seventh Schedule of the Constitution Enlists the Union Taxes 1. Taxes on income other than agriculture income. 2. Corporation tax. 3. Custom duties. 4. Excise duties except on alcoholic liquors and narcotics not contained in medical or toilet preparation. 5. Estate and succession duties other than on agricultural land. 6. Taxes on the capital value of assets agricultural land of individuals and companies. 7. Rates of stamp duties on financial documents. 8. Taxes other than stamp duties on transactions in stock exchanges and future markets. 9. Taxes on sales or purchases of newspapers and on advertisements there in. 10. Taxes on railway freight and fares. 11. Terminal taxes on goods or passengers carried by railways, sea or air. 12. Taxes on the sale or purchase of goods in the course of interstate trade. (B) List II of Seventh Schedule enlists the Taxes which are within the Jurisdiction of the States ▸ Land revenue. ▸ Taxes on the sale and purchase of goods, except newspapers. ▸ Taxes on agricultural income. ▸ Taxes on land and buildings. ▸ Succession and estate duties on agricultural land. Excise on alcoholic liquors and narcotics. ▸ Taxes on the entry of goods into a local area. ▸ Taxes on the consumption and sale of electricity. ▸ Taxes on mineral rights (subject to any limitations imposed by the Parliament). ▸ Taxes on vehicles, animals and boats. ▸ Stamp duties except those on financial documents. ▸ Taxes on goods and passengers carried by board or inland water-ways. ▸ Taxes on luxuries including entertainments, betting and gambling. ▸ Tolls. ▸ Taxes on professions, trades, callings and employment. ▸ Capitation taxation. ▸ Taxes on advertisements other than those contained in newspapers. (C) Apart from taxes levied and collected by the state, the Constitution has provided for the revenues for certain taxes on the Union List to be allotted, partly or wholly to the states. These provision fall into-various categories 1. Duties, which are levied by the Union Government, but are collected and appropriated by the state. These include stamp duties, excise duties on medical preparations containing alcohol or narcotics. 2. Taxes, which are levied and collected by the Union, but the entire proceeds of which are assigned to the states, in proportion determined by the Parliament. These taxes include (i) Succession and estate duty. (ii) Terminal taxes on goods and passengers. (iii) Taxes on railway freight and fares. (iv) Taxes on transactions in stock exchange and future markets. (v) Taxes on sale and purchase of newspapers and advertisements therein. 3. Central taxes on income and union excise duties are levied and collected by the union, but are shared by it with the state in a prescribed manner. 4. Proceeds of additional excise duty on mill-made textiles, sugar and tobacco, which are levied by the union, since 1957 in replacement of state relates taxes on these commodities, are wholly distributed among the state in amanner as to guarantee their former incomes from the displaced sales taxes.
Finance Commission is constituted to define financial relations between the centre and the state. Under the provision of Article 280 of the Constitution, the President appoint a Finance Commission for the specific purpose of devolution of non-plan revenue resources. The functions of the commission are to make recommendations to the President in respect of the distribution of net proceeds of taxes to be shared between the union and the states and the allocation of share of such proceeds among the states. the principles, which should govern the payment of grants-in-aid by the centre to the states. any other matter concerning financial relations between the centre and the states. Finance Commission in India
Finance Commission
Established in
Chairman
Operational Duration
Year of Submitting Report
I
1951
KC Niyogi
1952-57
1952
II
1956
K Santhanam
1957-62
III
1960
AK Chanda
1962-66
1961
IV
1964
PV Rajamanar
1966-69
1965
V
1968
Mahaveer Tyagi
1969-74
VI
1972
Brahma Nand Reddy
1974-79
1973
VII
1977
JM Shellet
1979-84
1978
VIII
1983
YB Chawan
1984-89
IX
1987
NKP Salve
1989-95
1989
X
1992
KC Pant
1995-2000
1994
XI
1998
AM Khusro
2000-2005
XII
2003
C Rangarajan
2005-2010
2004
XIII
2007
Vijay L Kelkar
2010-2015
XIV
Y Venugopal Reddy
2015-2020
XV
2017
NK Singh
2020-2025
Fourteenth Finance Commission The 14th Finance Commission appointed under the chairmanship of Dr. YV Reddy gave its recommendation on principles which would govern the quantum and distribution of grant-in-aid along with other primary areas it deals with.
Major recommendations of the 14th Finance Commission are as follows: ▸ The Commission recommended increase in the share of states in the centre's tax revenue from the current 32% to 42%, the single largest increase ever recommended. ▸ In understanding the states' needs, it has ignored the plan and non-plan distinctions. ▸ According to the commission, the increased devolution of the divisible pool of taxes is a 'compositional shift in transfers' from grants to tax devolution. ▸ In recommending an horizontal distribution, it has used broad parameters—population (1971), changes in population since, then income distance, forest cover and area, among others. ▸ The 14th Finance Commission, headed by former RBI Governor YV Reddy, has endorsed the compensation road map for the goods and services tax finalised by the centre, but has called for an autonomous and independent GST compensation fund. ▸ It has recommended distribution of grants to states for local bodies using 2011 population data with weight of 90% and area with weight of 10%. Grants to states are divided into two. One, grant to duly constituted Gram Panchayats. Two, grant to duly constituted municipal bodies. and it has divided grants into two parts. ▸ The ratio of basic to performance grant is 90:10 for Panchayats; and 80:20 for municipalities.
▸ IMF was conceived on 22nd July, 1944 and came into existence on 27th December, 1945, when 29 countries signed the agreement. It originally had 45 members. India is the founding member. ▸ IMF at present has 189 members and headquartered at Washington DC. The capital resources of the IMF comprise Special Drawing Rights (SDRs) and currencies that member pay under quotas calculated for themwhen they join the IMF. ▸ The quotas determine the amount of foreign exchange, a member may borrow from the IMF and its voting power on IMF policy matters. Quotas are denominated in SDRs. ▸ The member with largest quotas is USA followed by Japan and China. Tuvalu is the member with smallest quota. India with a quota share of 2.76% is now placed eighth largest quota holding country at the IMF. ▸ Based on noting share, India (together with Bangladesh) Bhutan and Sri Lanka are ranked 22nd in the list of 24 constituencies. ▸ For India, Finance Minister is the Ex-officio Governor of the Board of Governors of the IMF. Governor of the RBI, is India's alternate Governor.
▸ World Bank is the institution created at the Bretton Woods Conference in 1944. Along with the IMF, it constitutes 'twin-sister' of Bretton Woods. ▸ World Bank has 189 members and is headquartered in Washington DC. ▸ The World Bank provides loans to developing countries for capital programme and its official goal is reduction of poverty. ▸ International Finance Corporation (IFC) was established in 1956, to provide loans to private industries of developing nations. ▸ International Development Association (IDA), known as the soft loan window of the World Bank was established on 24th September, 1960. ▸ International Centre for Settlement of Investment Disputes (ICSID) was established in 1966, to provide facilities for the conciliation and arbitration of investment disputes between member countries. It has 157 members. ▸ Multilateral Investment Guarantee Agency (MIGA) was founded in 1988 to promote foreign direct investment into developing countries. It has 175 members.
▸ It was constituted on 1st January, 1995, under the Marrakesh Agreement and took the place of GATT (General Agreement on Trade and Tariff) as an effective formal organisation. GATT was an informal organisation, which regulated world trade since, 1948. ▸ It is headquartered at Geneva. At present, it has 164 members. (Afghanistan has become the 164th WTO member). Special Drawing Rights The SDRs were created in 1969 are supplementary foreign exchange reserves assets maintained by the IMF. SDRs are not a currency. Instead it represents a claim to currency held by IMF member countries. SDR, value is determined by weighted currency basket of five major currencies : the Euro, the US dollar, the British pound and Japanese Yen and Chinese Yuan. SDRs are also called 'paper gold'.
▸ To oversee, implementation and administration of WTO agreements. To provide a forum for negotiations. ▸ To provide a dispute settlement mechanism. To provide facilities for implementation, administration and operation of multilateral and bilateral agreements of the world trade. ▸ The WTO is currently endeavouring to persist with a trade negotiation called Doha Development Agenda (DDA), which was launched in 2001, to enhance equitable participation of poor countries, which represent a majority of the world's population. ▸ Singapore Issues refer to transparency in government procurement, trade facilitation, trade and investment and trade and competition. ▸ Swiss Formula relates to NAMA (Non-Agricultural Market Access).
▸ It was established in December, 1966 with the aim to accelerate economic and social development in Asia and Pacific region. It is headquartered at Manila, Phillipines. ▸ The ADB offers hard loans from ordinary capital resources on commercial terms and the Asian Development Fund affiliated with the ADB extends soft loans from special fund resources with concessional conditions. ▸ At the end of 2014, Japan holds the largest proportion of shares at 15.7%. The United States hols 15.6%, China holds 6.5%, India holds 6.4% and Australia holds 5.8%. It has 67 member countries.
It is a Multilateral Development Bank (MDB) conceived for the 21st century. Chinese President Xi Jinping and Premier Li Keqiang announced the AIIB initiative during their respective visits to South-East Asian countries in October 2013. By the deadline of March 31st for submission of membership applications, the Prospective Founding Members had increased to 57, and the 4th CNM was organised in Beijing in April 2015, after ratifications were received from 10 member states holding a total number of 50% of the initial subscriptions of the Authorised Capital Stock. Committees on Various Sectors of Indian Economy
AC Shah Committee
Non-Banking Financial Company
Bimal Jalan Committee
Market Infrastructure Instruments
Malegam Committee
Functioning of Micro-Finance Institutions
Birla Committee
Corporate Governance
Kirith Parikh Committee
Rationalisation of Petroleum Product Prices
Chaturvedi Committee
Improving National Highways
SR Hashim Committee
Urban Poverty
Abhijit Sen Committee
Wholesale Price Index
C Rangarajan Committee
Services Prices Index and Financial Inclusion
Abid Hussian Committee
Development of Capital Markets
Damodaran Committee
Customer Service in Banks
Khandelwal Committee
Human Resource in Commercial Banks
Patil Committee
Corporate Debt
VK Sharma Committee
Credit to Marginal Farmers
Sarangi Committee
Non-Performing Assets
Khanna Committee
Regional Rural Banks
Dantawala Committee
Lead Bank Scheme
Gadgil Committee
Financial Inclusion
Thorat Committee
Deregulation of Small Saving Deposit Rates
Deepak Mohanty Committee
Monetary System in India
Raghuram Rajan Committee
Financial Sector Reform
Naresh Chandra Committee
Civil Aviation
Rakesh Mohan Committee
Railways
Kakodkar Committee
Rail Safety
Pitroda Committee
Rail Modernisation
JJ Irani Committee
Company Law Reforms
CB Bhave Committee
Disclosure Standards
Karve Committee
Small Scale Industry
Raja Mannar Committee
Banking Laws
LC Gupta Committee
Derivatives Trading
KR Chandratre Committee
Delisting of Shares
Absolute Advantage: The ability to produce more units of a good or service than some other producer, using the same quantity of resources. Aggregate Demand (AD): A schedule (or graph) that shows the value of output (real GDP) that would be demanded at different price levels. Aggregate Supply (AS): A schedule (or graph) that shows the value of output (real GDP) that would be produced at different price levels. In the long run, the schedule shows a constant level of real GDP at all price levels, determined by the economy's productive capacity at full employment. In the short run, the aggregate supply schedule may show different levels of real GDP as the price level changes. Automated Teller Machine (ATM): A machine that provides cash and performs banking services (for deposits and transfers of funds between accounts,) automatically, when accessed by customers using plastic cards coded with Personal Indentification Numbers (PINs). Balance of Payments: Deficit An imbalance in a nation's balance of payments, where more currency is flowing out of the country than is flowing in. This unequal flow of currency is considered unfavourable and can lead to a loss of foreign currency reserves. Balance of Payments: Surplus An imbalance in a nation's balance of payments, in which more currency is flowing into the country than is flowing out. This unequal flow of currency is considered favourable and can lead to an increase in foreign currency reserves. Balance of Trade: The part of a nation's balance of payments accounts that deals only with its imports and exports of goods and services. The balance of trade is divided into the balance on goods (merchandise) and the balance on services. If the value of a country's exports of goods and services is greater than its imports, it has a balance of trade surplus. If the value of a country's imports of goods and services is greater than its exports, it has a balance of trade deficit. Balanced Budget: A financial plan, in which income is equal to expenses. Blue Chip Stocks: Stocks in large, nationally known companies that have been profitable for a long time and are well-known and trusted. Command Economy: An economy, in which most economic issues of production and distribution are resolved through central planning and controlling. Consumer Price Index (CPI): A price index that measures the cost of a fixed basket of consumer goods and services and compares the cost of this basket in one time period with its cost in some base period. Changes in the CPI are used to measure inflation. Cost-Push Inflation: Inflation caused by rising costs of production. Crowding-Out: Increased interest rates and decreased private investment caused by government borrowing. Currency Devaluation: A government adjusts the value of the nation's currency so that it buys less of foreign currencies than before. Current Account: Part of a nation's balance of payments accounts; records exports and imports of goods and services, net investment income and transfer payments with other countries. Current Account Balance: The inflow of the goods, services, investment income and transfer accounts into the domestic country from foreign countries netted against the outflow of goods, services, investment income and transfer accounts from the domestic country to foreign countries. Demand-Pull Inflation: Inflation caused by increasing demand for output or 'too much money chasing too few goods.' Depreciation: A reduction in the value of capital goods over time due to their use in production. Depreciation of Currency: A decline in the price of one currency relative to another. Depression: A severe, prolonged economic contraction. Fixed Exchange Rate: An exchange rate that is set and therefore, prevented from rising or falling with changes in supply and demand for a nation's currency. Flexible Exchange Rate: An exchange rate that is determined by the international demand for and supply of a nation's money; a rate free to rise or fall (to float). Hyperinflation: A very rapid rise in the overall price level. Imperfect Competition: Any market structure, in which firms are not price takers, but instead must seek the price and output levels that maximise their profits. Initial Public Offering (IPO): A company's first sale of stock to the public. When a company 'goes public', it sells blocks of stock shares to an investment firm that specialises in initial offerings of stock and resells them to the public. Market Failures: The systematic over production or underproduction of some goods and services that occurs, when producers or consumers do not have to bear the full costs of transactions they undertake. Usually related to externalities or the need for public goods. Monopolistic Competition: A market structure, in which slightly differentiated products are sold by a large number of relatively small producers and in which the barriers to new firms entering the market are low. Monopoly: A market structure in which there is a single supplier of a good or service. Also, a firm that is the single supplier of a good or service, for which there are no close substitutes; also known as a monopolist. Monopsony: A market situation, in which there is only one buyer of a resource. Also, a firm that is the only buyer of a resource; also known as a monopsonist. Natural Monopoly An industry, in which the advantages of large-scale production make it possible for a single firm to produce the entire output of the market at a lower average cost than a number of firms each producing a smaller quantity. Non-Price Competition: Competition by firms trying to attract customers by methods other than reducing prices; examples include advertising and promotional gifts. Oligopoly: A market structure, in which a few, relatively large firms account for all or most of the production or sales of a good or service in a particular market and where barriers to new firms entering the market are very high. Some oligopolies produce homogeneous products; others produce heterogeneous products. Open Market Operations: The buying and selling of government bonds and securities by the federal Reserves to central bank reserve and the money supply. Pegged Exchange: Rate An exchange rate that is fixed within a certain range or against a major currency or basket of currencies. Perfect Competition: A market structure, in which a large number of relatively small firms produce and sell identical products and in which there are no significant barriers to entry into or exit from the industry. Progressive Tax : A tax that take a larger percentage of income from people in higher-income groups than from people in lower-income ones; the US federal income tax is an example. Recession: A decline in the rate of national economic activity, usually measured by a decline in real GDP for atleast two consecutive quarters (i.e. 6 months). Regressive Tax: A tax that takes a larger percentage of income from people in lower-income groups than from higher-income ones. Sales taxes and excise taxes are examples. Velocity of Money: Member The average number of times each dollar is spent on final goods and services in a year.
The Indian economy should be developed on the socialistic pattern of society was enunciated, at which summit of the Indian National Congress? 2. In which plan did the Indian economy managed to cross the barrier of Hindu rate of growth of 3-3.5%? 3. How many Miniratnas Category-I companies are there at present? 4. What is the punch line of the Twelfth Five Year Plan? 5. Who headed the Committee on Rail Safety? 6. The CSO released the New Series of National Accounts with base year—instead of the base year 2004-05. 7. Which was the first insurance company in India? 8. Which were the two Five Year Plans when the set target for the foodgrain production was achieved during the overall plan period? 9. Which sector of the Indian economy is the second largest provider of the employment after agriculture? 10. What is the unemployment rate on Current Daily Status (CDS) basis as per theNSSO66thRound (2009-10)? 11. Which state accounts for 9/10th of the natural rubber production in the country? 12. What is the rank of India in the recently released Human Development Report-2015? 13. Who gave the first scientific estimates of National Income in India? 14. When was the National Statistical Commission formed and who was the Chairman? 15. Which country is the largest foreign direct investor in India after in 2015? 16. Which country is the smallest holder of the quotas in the International Monetary Fund at present? 17. What is the present rank of India in terms of voting share in the IMF? 18. What is the present number ofmember nations of the World Trade Organisation? 19. What is the alternate name of the Bombay Plan prepared by some industrialists in 1944? 20. When was the dual exchange rate system adopted in India? 21. What is reverse repo rate and what is the present rate of repo? 22. Which are the four connectivities enunciated under the PURA model of growth in India? 23. Who is the present head of the Asian Development Bank and from where does he belong? 24. TheDurgapur Steel Plantwas set-up in collaboration with which country? 25. What was the rate of devaluation of rupee in June, 1966? 26. Which plan did not set any target for crop production? 27. The 'cafeteria approach' is associated with what? 28. Which state registered the maximum growth rate in population according to the Census 2011? 29. In India, for how many days in a year a worker should work to be called as a major worker or an employed person? 30. In which crop, India has the highest productivity in the world? 31. What is the core element of 'evergreen revolution' which has been envisaged for the rejuvenation of agriculture in India? 32. Who coined the term 'Green Revolution'? 33. Which year of the Five Year Plans in India is referred to as 'Second Green Revolution'? 34. With which is the Colin Clark thesis associated? 35. Rolling Plan was adopted in India, in which year? 36. What is the percentage of tax proceeds which need to be sharedwith the States by the centre as per the recommendation of the 13th Finance Commission? 37. Is Good and Services Tax (GST) a sales tax or Value Added Tax? (VAT) 38. What is the main goal of the World Bank? 39. In order to arrive at GrossNational Product at factor cost from Gross National Product at market prices, what needs to be deducted? 40. Which concept among the various concepts of National Income is referred as Real National Income? 41. Which Indian Bank has the maximum number of branches outside India? 42. How many Zonal offices does Life Insurance Corporation (LIC) have at present? 43. Who spearheaded the nationalisation of insurance industry in India and in which year? 44. How many associate banks does SBI have at present? 45. Who headed the committee on micro finance institutions reforms? 46. Which industrial policy for the first time recognised the role of small-scale industry? 47. As per the MSME Act, 2006, what is the investment limit of the medium enterprises in the manufacturing sector? 48. What are the essential components of inclusive growth? 49. How money multiplier is arrived at? 50. Which measure of money supply in India is also called the narrow money? 51. Who was the first Governor of RBI? 52. Agriculture in India is associated, with which type of unemployment? 53. What is the present rate of saving and investment in India? 54. When was Banking Ombudsman Scheme implemented in India? 55. Who gave the concept of Physical Quality of Life Index (PQLI)? 56. What is the rank of India in terms of Green House Gases (GHGs) emissions in absolute terms in the world? 57. TheNationalSolarMission has set the target of generating 20000MWelectricity through solar power, by which year? 58. The National Manufacturing Policy, 2011 seeks to generate, how much additional employment by 2022? 59. What does NIMZ stands for? 60. What is the decadal growth rate of population from 2001 to 2011? 61. What is the present system,which is adopted by theRBI in themanagement of currency in India? 62. Who is the Vice-Chairman of newly form NITI Aayog?
1. Avadi Summit 2. Seventh Plan 3. 54 4. Faster, sustainable and inclusive growth 5. Dr Anil Kakodkar 6. 2011-12. 7. Oriental Life Insurance Company, in 1818 8. First and Fifth Plan 9. Services sector provides 29% employment followed by Industry sector 10. 6.6% 11. Kerala 12. 130 13. Professor V K R V Rao 14. 2005, Professor SD Tendulkar 15. Mauritius 16. Tuvalu 17. 8th 18. 157 19. Plan of Economic Development for India 20. 1992 21. Reverse Repo Rate is the rate, at which RBI allows Commercial Banks to park surplus fund with the RBI. It withdraws liquidity form the market. The present Repo Rate is 7.75%. 22. Physical, electronic, knowledge and economic 23. Takehiko Nakao, Japan 24. The UK 25. 57.5% 26. Tenth Plan 27. Family Planning 28. Bihar 29. 273 30. Pulses 31. Sustainability 32. Dr William Gaced 33. 1983-84 34. Structural change in the economy 35. 1978 36. 32.5% 37. Both 38. Reducing poverty 39. Net indirect tax 40. Net National Product at factor cost 41. State Bank of India 42. 8 43. C D Deshmukh, 1956 44. 5 45. Y H Malegam 46. Industrial Policy, 1977 47. ` 5 crore to ` 10 crore 48. Poverty reduction, agriculture, social sector development, reduction in regional disparities and protecting environment 49. Broad Money (M3)/Reserve Money (M 0) 50. M1 51. Sir Osborne Smith 52. Disguised unemployment 53. 36.8% and 38.1% 54. 2006 55. Morris D Morris 56. 3rd 57. 2020 58. 100 million 59. National Investment and Manufacturing Zone 60. 17.64% 61. Minimum Reserve System, 1957 62. Arvind Panagriya.
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