Status Paper on government debt

  • Released by the Ministry of Finance (DEA).
  • Debt vs Fiscal deficit
  • Debt to GDP ratio
    • Central Government à 45.7 % in 2018-19 from 47.5% in 2011-12.
    • States à 24.8 % in 2019 from 25.0 % in 2018.
    • N.K. Singh Committee recommendations on public debt
      • The debt to GDP ratio should be targeted with a 40% limit for the center and a 20% limit for the states.
  • Gross Fiscal Deficit (GFD) as a percentage of GDP – declining trend since 2012-13.
  • Short-term debt (mature in the next 12 months) within the safe limit so it reduces rollover risk.
  • Increase in Rollover risk: risk associated with the refinancing of debt (usually at higher interest)
  • Currency or foreign exchange risk increase due to high debt–
    • depreciation of the domestic currency
    • Hence, an increase in the Government’s debt servicing cost.
    • Currently, India has a low share of external debt.
  • Increase in Interest payment to revenue receipts (IP-RR)
    • 37.5 % in 2018-19 as compared 35.6 % in 2012-13.

 

Q1 – In India, deficit financing is used for raising resources for (2013)

(a) economic development

(b) redemption of public debt

(c) adjusting the balance of payments

(d) reducing the foreign debt

 

Q2 – Consider the following statements (2018)

  1. The Fiscal Responsibility and Budget Management (FRBM) Review Committee Report has recommended a debt to GDP ratio of 60% for the general (combined) government by 2023, comprising 40% for the Central Government and 20% for the State Governments.
  2. The Central Government has domestic liabilities of 21% of GDP as compared to that of 49% of GDP of the State Governments.
  3. As per the Constitution of India, it is mandatory for a State to take the Central Government’s consent for raising any loan if the former owes any outstanding liabilities to the latter.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

 

LLP settlement Scheme, 2020

  • Launched by Ministry of Corporate Affairs.
  • Allowing a One-time condonation of delay in filing of documents by limited liability partnership firms.

About limited liability partnership firms

  • LLPs are a flexible legal and tax entity that allows partners to benefit from economies of scale by working together while also reducing their liability for the actions of other partners.
  • LLP can continue its existence irrespective of changes in partners and no partner is liable on account of the independent or un-authorized actions of other partners.
  • LLP contains elements of both hence called hybrid between company and partnership.

 

WTO PEACE CLAUSE

Why in news?

  • India has invoked the peace clause of WTO regarding rice support price.
    • Not for commercial exports but to meet domestic food security needs of India’s poor and vulnerable
  • This is first time any county that has used this clause.

More details

  • India informed WTO that the value of its rice production was $43.67 billion in 2018-19 and it gave subsidies worth $5 billion which is 11.46% of the value of production.

Agreement on Agriculture under WTO 1994

  • This Agreement limit trade-distorting support measures.
  • Members agreed to curb all domestic support measures through the Aggregate Measurement of Support (AMS) or Amber box.
    • This subsidy should not exceed 10% de minimis level for developing countries and 5% for developed countries.

Types of subsidies under WTO

  • Green Box – doesn’t cause trade distortion or at most, causes minimal distortion.
  • Blue box – aim to limit production by imposing production quotas or requiring farmers to set aside part of their land.

Any support that would normally be in the amber box is placed in the blue box if the support also requires farmers to limit production.

  • Aggregate Measurement of Support (AMS) or Amber boxtrade distorting domestic support measures. These supports are subject to limits: “de minimis” minimal supports are allowed. Ex- MSP, subsidies on fertilizer, electricity, etc.

Peace Clause

  • Under this, developing countries can provide WTO-prohibited subsidies to farmers without inviting any dispute under the Agreement on Agriculture.

 

RoDTEP

Scheme for “Remission of Duties and Taxes on Exported Products (RoDTEP)” approved by cabinet

  • RoDTEP will replace the Merchandize Export from India Scheme (MEIS)
  • As MEIS was found to violate the WTO rules as it was export focused.
  • This scheme is in nature of prohibited subsidies under the Agreement on Subsidies and Countervailing Measures (SCM).
  • RoDTEP is a WTO-consistent scheme under which indirect taxes on inputs are consumed in the production process.

– Under WTO rules, certain duties like state taxes on power, oil, water, and education cess, are allowed to be refunded.

  • Remission, under the RoDTEP scheme, along with other refunds, would be a step towards zero-rating of exports.

– Zero rating refers to zero taxes on inputs of final products.

  • GK Pillai committee to finalize the rates under RoDTEP.

 

Merchandise Exports from India Scheme (MEIS)

  • It provides rewards to exporters in sectors that generate employment and increase India’s competitiveness.
  • It is used by exporters to offset infrastructure and export-related costs.
  • Priority areas under the MEIS scheme – Agriculture, agro-processing, mining, manufacturing, textiles, consumer goods, infra development, construction, medical and scientific instruments.
  • Rewards under the MEIS scheme – range from 2-5 percent. Textile and agriculture products get the highest incentives.

 

TRIPS FLEXIBILITIES

  • These are ‘policy spaces’ for countries to mitigate the impact of patents.
  • Some major flexibilities under TRIPs are:

– Compulsory Licensing

            >It enables a competent government authority to license the use of a patented invention to a third party without the consent of the patent-holder.

– Parallel importation

         > It enables access to affordable medicines through cheap import without the consent of the patent-holder.

– Exemptions from patentability

> permits countries to deny protection to evergreening of the patent which lacks any novelty

– Limits on Data Protection

           > some limits are allowed to use the data for the generation of generic drugs for public health.

– Extension of transition period for Least-Developed Countries (LDCs)

 

About TRIPS Agreement, 1995

  • Multilateral agreement on intellectual property.
  • It sets out the minimum standards of protection to be provided by each Member.
  • Disputes with respect of TRIPS obligation subject to WTO’s dispute settlement procedures.
  • The areas of intellectual property that it covers are –

– copyright and related rights

– trademarks

– geographical indicators

– industrial designs

– new varieties of plants

– layout-designs of integrated circuit

– trade secrets and test data. 

  • WTO Membership includes an obligation to comply with the TRIPS Agreement.

 

BASEL III NORMS

Its implementation was deferred by a year to January 2023, due to COVID-19 pandemic.

  • Set of financial reforms by the Basel Committee on Banking Supervision.
  • Aim of strengthening regulation, supervision, and risk management.
  • Focus on four banking parameters – capital, leverage, funding, and liquidity.
  • Basel-III norms –

Total capital to risk weighted asset ratio must always be at least 8%

Leverage Ratio: It is the ratio of Tier 1 capital by the average total consolidated assets of a bank it should be at least 3%.

Basel III introduced two liquidity ratios

  • The Liquidity Coverage Ratio requires banks to hold sufficient highly liquid assets that can withstand a 30-day stressed funding scenario as specified by the supervisors.
  • Net Stable Funding Ratio requires banks to maintain stable funding for a period of one year of extended stress.

 

SARFAESI ACT

Context: – Supreme Court recently held that cooperative banks can use the SARFAESI Act for the recovery of debts from its defaulters.

About SARFAESI Act, 2002

  • Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act.
  • It allows banks to seize, take control, manage, and sell assets of defaulting borrowers without intervention of any court/tribunal.
  • It allows only secured creditors to take possession.
  • The act provides procedure for registration and regulation of asset reconstruction company (ARC).
    • Asset reconstruction: converting a NPAs or bad assets into performing assets.
    • Securitization: conversion of existing loans into marketable securities.
  • Enforcement of Security interests by lenders without the intervention of the Court – After giving a notice period of 60 days to the defaulting borrower.
  • Creation of a Central Registry
  • Procedure to appeal in Debts Recovery Appellate Tribunal.

Note: – SARFAESI Act, 2002 covers only secured financial creditors while IBC protects the rights & interests of both secured and unsecured creditors.

 

Q3. Consider the following statement regarding Cooperative banks

  1. They are customer owned financial entities.
  2. They are registered under the State Cooperative Societies Act.
  3. They also come under the regulatory ambit of Banking Regulations Act, 1949.

Select the correct answer using the code given below:

a) 1 and 2 only

b) 1 and 3 only

c) 2 and 3 only

d) All of the above

Ans – D

 

REVISED FDI POLICY

  • The present policy states that a non-resident entity can invest in India, subject to the FDI Policy except in those sectors/activities which are prohibited.
    • Additional Provision: A citizen of Bangladesh and Pakistan or an entity registered in both countries can only invest under the government route.
    • Additionally, for Pakistan sectors/activities such as defense, space, and atomic energy are prohibited for investment in addition to the sectors/activities already prohibited.

Changes in FDI Policy

  • The amended policy states that an entity of a country, which shares a land border with India or where the beneficial owner of investment into India is situated in or is a citizen of any such country, can invest only under the Government route.
  • It also implies to transfer of ownership of an existing or future FDI in an entity in India, which also requires government approval.

Sectors in which FDI is prohibited

  • Lottery businesses
  • Gambling and betting
  • Chit funds
  • Nidhi Company
  • Trading in Transferable Development Rights.
  • Housing and Real Estate (except townships, commercial projects, etc.)
  • Manufacturing of cigars, cheroots, cigarillos, and cigarettes.
  • Sectors are not open to private sector investments such as atomic energy, railway operations, etc.

 

Q5 Consider the following statement

  1. Proposals involving FDI exceeding Rs. 50 billion are placed before the Cabinet Committee on Political Affairs.
  2. All FDI investment in India is regulated under RBI.

Select the correct answer using the code given below:

a) 1 only

b) 2 only

c) Both

d) None

Hint: – D

Proposals involving FDI exceeding Rs. 50 billion are placed before the Cabinet Committee on Economic Affairs.

 

NEGATIVE OIL PRICES

India’s Crude Oil Profile

  • India is the world’s third-largest consumer of oil.
  • India’s import dependence for crude oil is greater than 80% & for natural gas/LNG is 45.3%
  • The top 5 crude oil exporters to India are Iraq, Saudi Arabia, Iran, Nigeria, and UAE in decreasing magnitude of exports.

Crude pricing mechanism in India

  • Petrol & Diesel prices were deregulated by Indian Government.
  • The international price does not directly reflect in the local prices because
    • Additional costs – central government excise and taxes, State government taxes, and operating costs, margin of the retailer, and subsidies given by the government.

Organization of the Petroleum Exporting Countries (OPEC)

  • OPEC is a permanent, intergovernmental Organization, created at the Baghdad Conference in 1960.
  • OPEC has 13 members including Iran, Iraq, Saudi Arabia, and Venezuela.
  • OPEC members control about 82% of the total world proved oil reserves.

 

Pradhan Mantri Street Vendor’s AtmaNirbhar Nidhi scheme

  • A Special Micro-Credit Facility for Street Vendors.
  • To enable street vendors to resume their livelihoods, hit hard due to the lockdown.
  • working capital loan of up to ₹10,000, which is repayable in monthly installments within one year.
  • an interest subsidy of 7% per annum
  • The Ministry of Housing and Urban Affairs has launched PM Svanidhi.
  • Small Industries Development Bank of India (SIDBI) as the Implementation Agency.

 

Fully accessible route for G-SECS

  • To enable non-residents to invest in specified Government dated securities (notified by the Reserve Bank under FAR).
  • It includes all-new issuances of Government securities (G-secs) of 5-year, 10-year, and 30-year tenors.
  • No foreign portfolio investor (FPI) limits under FAR. (in normal G-Sec FPI limit is 6%).

Special liquidity facility for mutual funds (SLF-MF)

  • Under this, the RBI will conduct repo operations of 90 days at the fixed repo rate.
  • The SLF-MF is on-tap (available whenever needed) and open-ended (no restriction on the amounts).
  • It will be available to all LAF (Liquidity Adjustment Facility) eligible banks.
  • Funds availed under the SLF-MF must be used by banks exclusively for meeting the liquidity requirements of MFs.

 

Q4. Priority Sector includes which of the following categories

  1. Micro, Small, and Medium Enterprises
  2. Export Credit
  3. Education
  4. Housing
  5. Social Infrastructure
  6. Renewable Energy

 Select the correct answer using the code given below:

a) 1, 3, 4 and 5 only

b) 1, 4 and 5 only

c) 3, 4 and 5 only

d) All of the above

 

Some Important Initiatives

AT-1 Bonds (Additional Tier-1)
  • AT-1 bonds are a type of unsecured, perpetual bonds and carry no maturity date.
  • Issued by banks to shore up their core capital base to meet the Basel-iii norms.
  • Banks issuing AT-1 bonds can skip interest payouts for a particular year.
  • AT1 bonds are also referred to as quasi-equity.
Government notifies International Financial Services Centers Authority – IFSCA
  • IFSCs is intended to provide Indian corporates with easier access to global financial markets.
  • It will consist of nine members, appointed by the central government. 
    • All members of the IFSC Authority will have a term of three years, subject to reappointment.
    • Main function of IFSCA will be to regulate financial products that have been previously approved by multiple regulators in an IFSC.  
Certificate of Origin (CO)

– under the Commerce ministry

– document tells about the country a commodity or good was manufactured.

Bill of Lading (BOL)

 – BOL is a legal document issued by a carrier to a shipper that details the type, quantity, and destination of the goods being carried.

-aimed at removing hurdles in the trade documentation process.  

Mutual Agreement Procedure (MAP)

– Alternative dispute resolution process.

– two countries enter into discussions to resolve tax-related disputes.

– Central Board of Direct Taxes

– disputes resolved within 24 months.  

India remains on the US Priority Watch List

Special 301 Report

– intellectual property (IP) rights.

Priority Watch List Trading partners present the most significant concerns regarding IP rights. – India continues to be on the ‘Priority Watch List’ for a lack of adequate IP rights protection.  

“Interest subvention on Working Capital Loans for Dairy sector” Scheme

– Ministry of Fisheries, Animal Husbandry, and Dairy

– new scheme for supporting Dairy Cooperatives and Farmer Producer Organizations.

– It provides interest subvention of 2% per annum.  

Kisan Rath Mobile App

– It will facilitate farmers and traders in identifying the right mode of transportation for the movement of farm produce during the lockdown.

– It has been developed by National Informatics Centre (NIC).

Kisan Rail Scheme

– Under Union Budget 2020-21.

Refrigerated coaches in Express and Freight trains.

– through PPP arrangements.

– under the Kisan Vision Project of the Container Corporation of India various temperature-controlled centers will be set up.

Open Market Sale Scheme (OMSS)

– It is the selling of food grains by Government/Government agencies at predetermined prices in the open market to enhance the supply of grains.

Only state governments and registered bulk users were allowed to buy stock from FCI under OMSS rates. 

National Investment and Infrastructure Fund

– NIIF is a collaborative investment platform for international and Indian investors.

– These funds are registered as an Alternative Investment Fund with SEBI.

– The three different funds managed by NIIF are:        

        > Master Fund        

        > Fund of funds        

        > Strategic Fund

India Investment Grid (IIG)

– Department for Promotion of Industry & Internal Trade, Ministry of Commerce, and Invest India.

– It showcases a menu of investment options across India on a single interactive platform.

– The National Infrastructure Pipeline (NIP) project database would be hosted on IIG. 

Bank of Schemes, Ideas, Innovation, and Research Portal on MSMEs

– Portal has the provision for uploading Ideas, Innovations, and Researches in the sector.

evaluation and rating the ideas by crowdsourcing.

– It can facilitate the inflow of venture capital, foreign collaboration, etc.

CHAMPIONS Portal (Creation and Harmonious Application of Modern Processes for Increasing the Output and National Strength Portal)

– Launched by MSMEs.

– It is aimed at assisting Indian MSMEs march into the big league as National and Global CHAMPIONS.

– It is fully integrated with the Central Public Grievance Redress and Monitoring System (CPGRAMS) portal.

‘Tinker from Home’ campaign

– under the Atal Tinkering Labs program.

– To ensure that the children across the county have access to useful easy-to-learn online resources.

CollabCAD

– It is a collaborative network and computer-aided design (CAD) software system.

– A platform for students to create and modify 3D designs.

– Jointly launched by AIM and National Informatics Centre (NIC).  

Facebook Pragati

– Facebook India recently launched its CSR initiative, Facebook Pragati.

– The initiative will incubate and accelerate early-stage women entrepreneurs.

One Nation One Ration Card Initiative

– For enabling Migrants to access the Public Distribution System (Ration) from any Fair Price Shop in India using the same ration card.

– all States/UTs will complete full Fair Price Shop automation by March, 2021.

Defense Production– Enhancing Self Reliance in Defense Production          > Foreign Direct Investment (FDI) limit in the defense manufacturing sub-sectors under automatic route has been raised from 49% to 74%.
Space Activities

– Boosting private sector participation in Space Activities by:       

  • Provide level playing field for private companies.        
  • Allow Private sector players to use ISRO facilities & relevant assets to improve their capacities.      
  •  Open Future projects for planetary exploration, outer space travel, etc. to the private sector.  
Atomic Energy

Link India’s robust start-up ecosystem to the nuclear sector.

-“Technology Development cum Incubation Centers” will set up for fostering synergy between research facilities and tech entrepreneurs emerging from a new start-up ecosystem.

Rs 1 lakh crore Agri-Infrastructure Fund for farm- gate infrastructure

– For the development of farm-gate and aggregation point infrastructure & also affordable and financially viable Post Harvest Management Infrastructure

– for SHGs, Farmers, Joint Liability Groups (JLG), Multipurpose Cooperative Societies, Startups etc.

– All loans under this financing facility will have an interest subvention of 3% per annum up to a limit of Rs. 2 crores.

Scheme for Formalization of Micro Food Enterprises (MFE)

– MFEs refer to food-based organizations that lie in the micro category of MSME definition.

– Centrally Sponsored Scheme.

– Scheme will be implemented over a 5-year period from 2020-21 to 2024-25.

– Cluster approach. – Focus on perishables.

From ‘TOP’ to TOTAL

Operation Greens limited to Tomatoes, Onion, and Potatoes (TOP) will be expanded to All fruits and vegetables (TOTAL).

– It aims to stabilize the supply in India.

– It also focusses on preventing distress sale and reduction of the price of perishable fruits and vegetables at the farm level.  

Pradhan Mantri Matsya Sampada Yojana (PMMSY)

– Aim to bring Blue Revolution.

– Marine, Inland fisheries, and Aquaculture

– Enhancing fish production, export earnings, productivity, and reduction of post-harvest losses.

– ‘Cluster or area-based approach’

Collectivization of fishers and fish farmers to increase bargaining power

Insurance coverage for fishing vessels

Agriculture Produce Price and Quality Assurance

– Generally, farmers don’t have an enforceable standard mechanism.

– Result in unassured returns and various uncertainties.

A facilitative legal framework is to be created to enable farmers for envisaging with exporters, processors, etc.

– Risk mitigation for farmers, assured returns, and quality standardization are envisaged to be an integral part of the framework. 

Share swap ratios

– The boards of 10 public sector banks approved mergers & issued share-swap ratios to create four large banks in the economy.

– Share swap ratio is the ratio in which the acquiring company offers its own shares in exchange for the target company’s shares.

‘Positive Pay’ mechanism

– Introduced by the Reserve Bank of India (RBI) to make cheque payments safer and reduce instances of fraud.

– Account holder electronically uploads the details to his bank.

– Beneficiary’s bank forwarded this to the drawee bank which compares the details mentioned on the cheque with the details provided online by the customer through the Positive Pay system.  

Transparent Taxation – Honoring the Honest’ 

– platform to honor the honest taxpayers of the country

– The government introduced a faceless income tax assessment

– reduce corruption by officials.

– The taxpayer base had expanded by 2.5 crores in the past six-seven years

Student Entrepreneurship Programme 2.0 (SEP 2.0)

– Niti Aayog’s Atal Innovation Mission (AIM) in collaboration with Dell Technologies.

– They will receive mentor support, prototyping and testing support, end-user feedback, intellectual property registration, and patenting of ideas, processes, and products.

Project Chunauti  • It is a start-up challenge under the Next Generation Incubation Scheme (NGIS) initiative. • Selected startups will be provided human resources, legal, intellectual property rights (IPR), and other incubation and mentorship facilities. • Provide seed funds of up to Rs 25 lakh. • Ministry of Electronics and IT


About Next Generation Incubation Scheme (NGIS)

  • By the Software Technology Parks of India (STPI) to create a robust ecosystem for software product development in the country.
  • Empowering the youth of smaller towns to showcase their potential in building indigenous software products.

 

SPECIAL DRAWING RIGHTS   

  • It is a weighted basket of 5 major currencies – the U.S. dollar, the Euro, Japanese yen, Chinese Renminbi, and British pound.
  • SDR is an international reserve asset, created by IMF in 1969.
  • Use to supplement official reserves of member countries.
  • SDR basket is reviewed every five years.
  • SDR is neither a currency nor a claim on the IMF itself.
  • SDR augments international liquidity.
  • SDR serves as the unit of account of the IMF.
  • SDRs can only be held by IMF member countries.
  • An SDR allocation is a low-cost method of adding to member nations’ international reserves.
  • IMF members can also use SDRs in operations and transactions involving the IMF.

International Monetary Fund (IMF) – 189 countries

  • Focus on fostering global monetary cooperation, secure financial stability, facilitate international trade, and reduce poverty around the world.
  • IMF was created in the Bretton Woods Conference of 1944.
  • Headquarters – Washington, D.C.
  • It acts as a specialized agency of the united nations.

 

MINOR FOREST PRODUCE

  • MFP is defined under the Forests Rights Act (FRA) Act, 2006.
  • It includes all non-timber forest produce of plant origin and includes bamboo, canes, fodder, leaves, gums, waxes, dyes, wild fruits, Honey, Lac, etc.
  • Ministry of Tribal Affairs.
  • Nodal agency – Tribal Cooperative Marketing Development Federation of India (TRIFED).
  • MSP for MFPs is revised once every 3 years.
  • Government fixes MSP on recommendations of the Commission for Agricultural Costs and Prices.

Tribal Cooperative Marketing Development Federation of India (TRIFED), 1987

  • Ministry of Tribal Affairs.
  • Its objective is the socio-economic development of tribal people by the marketing of their products.

 

RICE EXPORT PROMOTION FORUM

  • Recently, set up under the Agricultural and Processed Foods Export Promotion Development Authority (APEDA).
  • It will monitor, identify, and anticipate developments pertaining to rice production and exports, and recommend necessary policy measures.
  • It will comprise representatives from the rice industry, exporters, officials from APEDA, Commerce Ministry, Agriculture Ministry, and Directors of Agriculture from major rice-producing states like West Bengal, Uttar Pradesh, Punjab, Haryana, etc.

 

APEDA

  • Agricultural and Processed Food Products Export Development Authority Act, 1985.
  • It is under the Ministry of Commerce and Industry.
  • APEDA provides financial assistance to the registered exporters’ work for Market Development, Infrastructure Development, Quality Development, and Transport Assistance.
  • APEDA has also been entrusted with the responsibility to monitor the import of sugar as well.

Note: –

  • India is the second-largest producer and largest exporter of rice in the world.

 

Direct seeding of rice (DSR)

  • In DSR, the pre-germinated seeds are directly drilled into the field by a tractor-powered machine.
  • Rather than by transplanting seedlings from the nursery.
  • In DSR, water is replaced by real chemical herbicides.
  • Advantages: Saving irrigation water, labor, energy, time and reduces the emission of greenhouse gases.
  • Disadvantages: High weed infestation, Evolution of weedy rice, increase in soil-borne pathogens, Nutrient disorders, Exposure to birds and rats incidence, Rice blast, Brown leaf spot, etc.

 

ENERGY TRANSITION INDEX REPORT

  • Released by World Economic Forum.
  • It enables policymakers and businesses to plot the course for a successful energy transition.
  • It is a part Fostering Effective Energy Transition Initiative of WEF.
  • Top – Sweden
  • India – 76.

 

IMPACT OF ENERGY EFFICIENCY MEASURES FOR THE YEAR 2018-19 REPORT

  • Released by Bureau of Energy Efficiency.
  • India stood the 3rd largest consumer after the USA and China.
  • In terms of the growth rate of energy consumption, India ranks highest in the world.
  • Various schemes have led to reduced energy intensity (energy required to produce one unit of GDP) of the economy by 20% from 2005 levels. 

Bureau of Energy Efficiency (BEE), 2001

  • The statutory body under the Ministry of Power.
  • Assist in developing policies and strategies with a thrust on self-regulation and market principles.

 

NATIONAL INFRASTRUCTURE PIPELINE (NIP)

  • India needs to spend $4.5 trillion on infrastructure by 2030 to sustain its growth rate.
  • It will enable a forward outlook on infrastructure projects.
  • It provides equitable access to infrastructure for all.
  • Includes both economic and social infrastructure projects
  • It plans to invest more than ₹102 lakh crore on infrastructure projects by 2024-25, with the Centre, States, and the private sector.

 

Eastern Waterways Connectivity Transport Grid (EWaCTG) project

  • Provide seamless connectivity between

 * NW1 start from Allahabad to Haldia.

 * NW2 stretch on Brahmaputra river from Sadiya to Dhubri in Assam.

  • Develop an economic corridor of 4,200 km of waterways.
  • Its objective is to pave the way for the regional integration of countries in the South Asian Region.
  • $70 Million From World Bank.

 

ATAL INNOVATION MISSION

  • Initiative to promote a culture of innovation and entrepreneurship in the country.
  • Develop new programmes and policies for fostering innovation.
  • Provide a collaborative platform for different stakeholders.
  • Major initiatives under AIM

– Atal Tinkering Labs

– Atal Incubation Centers

– Atal New India Challenges

– Mentor of India Campaign

– Atal Community Innovation Center

– Atal Research and Innovation for Small Enterprises (ARISE)

Atal Tinkering Labs (ATL)

  • ATLs are set up in schools across India.
  • ATL is a workspace, where young minds can give shape to their ideas.
  • Aim – to foster curiosity, creativity, and imagination in young minds; and inculcate skills.
  • It also offers Financial support.

 

ATMANIRBHAR BHARAT

  • Rs. 20 lakh crores stimulus package and large-scale structural reforms.
  • India’s self-reliance does not advocate self-centric arrangements.
  • This is not about a return to the era of import substitution or isolationism.
  • Atmanirbhar Bharat is active participation in global supply chains, socio-economic resilience, decentralized localism through local brands
  • Atmanirbhar Bharat focuses on reforms and improving the ease of doing business.
  • Freeing Indian entrepreneurship and innovation from bureaucratic hurdles.

 

Affordable Rental Housing Complexes for Urban Migrants

  • A scheme for providing affordable rental housing to about 3 lakh urban migrants.
  • A sub-scheme of the Pradhan Mantri Awas Yojana- Urban.
  • This complex is as a part of the government’s economic package.
  • In line with the vision of AtmaNirbhar Bharat.

Pradhan Mantri Awas Yojana (Urban)

  • PMAY (U) was launched in 2015 to provide housing for all in urban areas by the year 2022.
  • It is implemented by the Ministry of Housing and Urban Affairs (MoHUA).
  • To addresses urban housing shortage among the Economically Weaker Section (EWS), Low Income Group (LIG), and Middle-income groups (MIG) categories including the slum dwellers.
  • The Mission also promotes women empowerment by providing the ownership of houses in name of the female members or in joint names.

 

SATYABHAMA portal

  • Science and Technology Yojana for Aatmanirbhar Bharat in Mining.
  • It allows online submission of project proposals along with monitoring of the projects and utilization of funds/grants.
  • Launched by the Ministry of Mines.

 

ASEEM portal

  • ‘Aatmanirbhar Skilled Employee Employer Mapping’ (ASEEM)
  • To help skilled people find sustainable livelihood opportunities.
  • The AI-based hiring platform for employers.
  • Launched by the Ministry of Skill Development and Entrepreneurship (MSDE).

 

Special Liquidity Scheme for NBFCs and HFCs

  • RBI announces a special liquidity scheme of Rs. 30,000 cr.
  • RBI will provide funds for the Scheme by subscribing to government-guaranteed special securities issued by the Trust.
  • The government of India will provide an unconditional and irrevocable guarantee to the special securities issued by the Trust.
  • Unexpected default by a major shadow lender IL&FS in 2018, it became tough for other NBFCs to refinance their debt – as investors like Mutual funds and other banks turned risk-averse.
  • The asset-liability mismatch is a major issue in all Shadow banking system.
  • Eligibility of  NBFCs – 
    • including Microfinance Institutions that are registered with the RBI Act, 1934, excluding those registered as Core Investment Companies.
    • Housing Finance Companies that are registered under the National Housing Bank Act, 1987.

Difference from Banks

  • NBFC cannot accept demand deposits (but some can accept Time deposits and such NBFCs are called Deposit taking NBFCs)
  • NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn.
  • Deposit insurance facility is not available to depositors of NBFCs
  • Unlike banks, CRR does not apply on any NBFCs while a lower SLR of 15% applies only to Deposit-taking NBFC.

 

MULTIDIMENSIONAL POVERTY INDEX (MPI) 2020

  • Released by the United Nations Development Programme (UNDP).
  • MPI is the product of the proportion of poor people and the average deprivation score of poor people.
  • The MPI ranges from 0 to 1 (higher values imply higher poverty).
  • It examines each person’s deprivations across 10 indicators in three equally weighted dimensions— health, education and standard of living.
  • Across 107 developing countries, 1.3 billion people (22%) live in multidimensional poverty.
  • Half of multidimensionally poor people (644 million) are children under age 18.
  • The largest reduction in multidimensional poverty was in India, where approximately 273 million people moved out of multidimensional poverty between 2005-2016.
  • However, 37.7 crore people lived under multidimensional poverty as of 2018.

 

PRIVATE PARTICIPATION IN RAILWAYS

  • Ministry of Railways has invited private participation for the operation of passenger train services.
  • Bibek Debroy Committee in 2015 recommended that private entry into running both freight and passenger trains should be allowed.
  • Idea was to bring in competition with Indian railways via “liberalization and not privatization”

 

ROUND-THE-CLOCK (RTC) POWER SUPPLY

  • Ministry of power issued guidelines for supply of RTC power to distributors through a Bundling Scheme.
  •  It is a plan to sell renewable energy (RE) and thermal power in a bundle so that end users can get an uninterrupted supply of power.
  • Power generators have to ensure at least 85% availability both annually and during peak hours.
  • Bidders will have to supply at least 51% of the power from a renewable sources.
  • Renewable Purchase Obligation is applicable to it.

 

GIS-enabled Land Bank System

  • Launched by the Union Minister of Commerce and Industry.
  • The system is being developed by the integration of the Industrial Information System with state GIS systems.
  • More than 3,300 industrial parks across 31 states and UTs have been mapped on the system.
  • Investors will get access to details of logistics, land, rail & air connectivity, tax incentives, drainage system, power supply and raw material availability from the portal on various industrial belts.
  • This would eliminate the need for investors to visit multiple platforms/offices to gather information and obtain clearances from different stakeholders.

 

Grand finale to Textile Grand Challenge 2019

  • It was organized by the Ministry of Textiles with the active support of the National Jute Board and the Startup India Team of the Department for Promotion of Industry & Industrial Trade (DPI).
  • Focus – to upgrade textiles machine technology, especially in the Jute sector.
  • Innovative solutions for
    • Alternative to single-use Plastic bags
    • Alternative to Multi-use Plastic bags using domestically grown natural fibers viz; Jute and Cotton.
    • It is also an initiative towards ‘Atmanirbhar Bharat’ and ‘Make in India’.

 

Six Years Completion: Pradhan Mantri Jan-Dhan Yojana

  • PMJDY Accounts- 19th Aug’20 Total PMJDY Accounts: 40.35 Crore; Rural: 63.6%, Women: 55.2%
  • Operative PMJDY Accounts- 34.81 crore (86.3%) are operative
  • Deposits under PMJDY accounts-  increased about 5.7 times Aug 2015.
  • An increase in the average deposit is another indication of increased usage of accounts and inculcation of saving habits among account holders.
  • Total RuPay cards issued to PMJDY account holders: 29.75 Crore.

 

Pradhan Mantri Jan-Dhan Yojana (PMJDY) Scheme

  • For Financial Inclusion to ensure access to financial services, namely, Banking/ Savings & Deposit Accounts, Remittance, Credit, Insurance, Pension in an affordable manner.
  • Basic savings bank accounts with an overdraft facility of Rs. 10,000/- to every household.
  • Financial Literacy Program – savings, use of ATMs, availing insurance and pensions, using basic mobile phones for banking.
  • Creation of Credit Guarantee Fund to provide banks with some guarantee against defaults.
  • Accident cover up to Rs. 1,00,000 and life cover of   Rs. 30,000 on the account opened between 15 Aug 2014 to 31 January 2015.
  • Pension scheme for the Unorganized sector.

 

Pradhan Mantri Garib Kalyan Package  (PMGKP)

  • For PMJDY women beneficiaries: Under this scheme an amount of Rs. 500/- per month for three months (April’20 to June’20).
  • Pradhan Mantri Garib Kalyan Anna Yojana – it also benefits those people who are not secured under the NFSA Act or Public Distribution System of States.
    • disabled people without proportions cards are qualified to get benefits.
    • Segment 10 of NFSA gives the inclusion of people under Antyodaya Anna Yojana.

 

 

National Food Security Act (NFSA), 2013

  • Under it, all state governments have to identify households that are eligible for purchasing subsidized food grain from the Public Distribution System and provide them with ration cards.
  • Each beneficiary is entitled to 5 kg foodgrains at a rate of Rs 1-3 per kg.
  • Provision of maternity benefit of not less than Rs 6,000.
  • Nutritious meals to the children up to 14 years of age.

 

Antyodaya Anna Yojana

  • It is a part of NFSA and the households under AAY are entitled to 35 Kg of foodgrains per month.
  • It covers the poorest of the poor families from amongst the BPL families.

 

Garib Kalyan Rojgar Abhiyan

  • Aims to empower and provide livelihood opportunities to the returnee migrant workers and rural citizens affected by COVID 19 induced lockdown.
  • Also focus on creating infrastructure in rural areas.
  • Ministry of Rural Development is the nodal Ministry.

 

Export Preparedness Index

  • Released by NITI Aayog and Institute of Competitiveness
  • Gujarat has topped the followed by Maharashtra and Tamil Nadu.
  • The EPI is a data-driven effort to identify the core areas crucial for export promotion at the sub-national level i.e. on states and union territories.
  • It ranked states on four key parameters that are
    • Policy
    • Business Ecosystem – create an enabling infrastructure for individuals to initiate start-ups.
    • Export Ecosystem
    • Export Performance: output-based pillar and examines the reach of export footprints of States and Union Territories.

 

National Strategy for Financial Education (NSFE): 2020-2025

RBI has Released this document and recommended a ‘5 C’ approach –

  • Content: Financial Literacy content for various sections of the population.
  • Capacity: Develop the capacity and ‘Code of Conduct’ for financial education providers.
  • Community: for disseminating financial literacy in a sustainable manner.
  • Communication: Use technology, media to disseminate financial education messages.
  • Collaboration: Streamline efforts of other stakeholders for financial literacy.

 

Bhadbhut project

  • It is planned to be a 1.7-km barrage with 90 gates, across the river Narmada, 25 km from the mouth of the river, where it flows into the Gulf of Khambha.
  • The project is part of the larger Kalpasar Project, a 30-km dam across the Gulf of Khambhat between Bharuch and Bhavnagar districts.

 

 

  • The barrage is expected to interfere with the migration and breeding cycle of Hilsa.
  • Hilsa is a marine fish that migrates upstream and arrives in the brackish water of the Narmada estuary near Bharuch for spawning usually during the monsoon months.

 

Innovation and Agri-entrepreneurship Development programme

  • Under Rashtriya, Krishi Vikas Yojana to promote innovation and Agri-preneurship.
  •  Financial and incubation ecosystem.
  • These start-ups are in various categories such as agro-processing, artificial intelligence, digital agriculture, farm mechanization, waste to wealth, dairy, fisheries etc.

Components of the scheme:

  • Agripreneurship Orientation – 2 months duration with a monthly stipend of Rs.  10,000/- per month.  Mentorship is provided on financial, technical, IP issues etc.
  • Idea/Pre-Seed Stage Funding of Agripreneurs – Funding up to Rs. 5 lakhs
  • Seed Stage Funding of R-ABI Incubatees – Funding upto Rs. 25 lakhs.

 

Rashtriya Krishi Vikas Yojana

  • Umbrella scheme – initiated in 2007.
  • For ensuring holistic development of agriculture and allied sectors.
  • Objectives of the programme-
    • Promote states to increase their investment, flexibility in planning and executing programmes for agriculture
    • Reduction of yield gaps in important crops
    • To maximize returns to the farmers
    • To address the agriculture and allied sectors in an integrated manner.

 

Krishi Megh

  • National Agricultural Research & Education System -Cloud Infrastructure and Services.
  • Minister of Agriculture & Farmers’ Welfare
  • Krishi Megh is the data recovery centre of ICAR (Indian Council of Agricultural Research).
  • Set up at National Academy of Agricultural Research Management (NAARM), Hyderabad.
  • It has been set up under the National Agricultural Higher Education Project (NAHEP), funded by both the government and the World Bank.
  • It is equipped with the latest technologies like artificial intelligence and deep learning software for building and deploying deep learning-based applications through image analysis, disease identification in livestock, etc.

 

Tariff Rate Quota Scheme

  • It is an arrangement that allows a set quantity of specific products to be imported at a low or zero rate of duty.
  • They are established under trade agreements between countries.
  • Indian government allows import of four products—maize (corn), “milk and cream in powder, granules”, crude sunflower seed or safflower oil and fractions thereof; and refined rape, colza, or mustard oil and fractions thereof—at concessional rates of customs duty.

Maize farmers in Bihar, who account for over 80 % of India’s 6-7 million tonnes (mt) of the annual production of rabi maize, are facing difficulties in selling their produce as prices have gone down to Rs 1,100-1,250 per quintal.

 

‘Sahakar Cooptube NCDC India’

  • It aims to encourage farmers and the youth to take the benefit of cooperatives.
  • Youtube Videos on the formation and registration of cooperatives for 18 states in Hindi and regional languages were released.

NCDC- The National Cooperative Development Corporation (NCDC)

  • Established in 1963 as a statutory Corporation under the Ministry of Agriculture & Farmers Welfare.
  • Planning, promoting, and financing programmes for production, processing, marketing, storage, export and import of agricultural produce, the supply of consumer goods and collection, processing, etc.

 

Directorate General of Foreign Trade (DGFT)

  • DGFT is undergoing a revamp to address issues related to trade barriers and export.
  • It is responsible for administering laws regarding foreign trade and foreign investment in India and for the execution of India’s import and export Policy.
  • Under the Ministry of Commerce and Industry
  • The Appointments Committee of Cabinet (ACC) appoints the DGFT.

 

Purchasing Managers’ Index

  • It predicts the level of Industrial production in advance.
  • Both in the manufacturing and service sectors.
  • By tracking the following parameters- new order flows, stocks of items purchased backlogs of work, employment levels, etc.
  • In PMI, a print above 50 means expansion, while a score below that denotes contraction.
  • PMI is more dynamic compared to a standard IIP (PESCO-GCF).

 

Announced due to COVID-19

  • RBI deferred the implementation of the Capital Conservation Buffer (CCB) by a year.
  • Promoting preventive care healthcare infrastructure & disaster management for COVID-19 would be treated as eligible CSR activity.
  • Recapitalization of Regional Rural Banks.
  • RBI announced Open Market Operations to the tune of Rs. 10000 crores.
  • Easy money policy repo rate, reverse repo rate, MSF and CRR.
  • Ways and Means Advances (WMA) limit has been raised by 30% for states/UTs – an Advisory Committee under Sudhir Shrivastava to review the Ways and Means Limits.
  • e-Sanjeevani Tele Consultation Services.
  • iGOT platform – ‘Integrated Govt. Online training’ (iGOT) portal on Ministry of HRD’s DIKSHA platform.
    • For the capacity building of frontline workers to handle the pandemic efficiently.
    • Courses launched for Doctors, Nurses, Auxiliary Nursing Midwives (ANMs), State Government Officers, Civil Defence Officers, etc.
    • This course is also available for other volunteers.
  • Amendment to Epidemic Diseases Acts to protect Health Workers from public harassment.
    • violence against health personnel is a cognizable and non-bailable offense and compensation for injury to healthcare service personnel or for causing damage or loss to the property.
  • Manodarpan – For psychosocial support of teachers, students, and their families with regards to their mental health and emotional wellbeing in these times.
  • PAiSA
    • Portal for Affordable Credit and Interest Subvention Access.
    • Centralized electronic platform for processing interest subvention
    • For bank loans under Deendayal Antyodaya Yojana.
  • Introduction of Commercial Mining in the Coal Sector to reduce the import of substitutable coal and increase self-reliance in the production of coal.
  •  Introduction of a new mechanism for joint auction of Bauxite and Coal mineral blocks to enhance the competitiveness of the Aluminium Industry.
  • Extension of Registration and Completion Date of Real Estate Projects under RERA
    • To de-stress real estate developers and ensure timely completion of projects.        
    • Treating COVID-19 as an event of Force Majeure by RERA.
    • Force majeure is a common clause in contracts that essentially frees both parties, from liability or obligation. 
  • Accounting the distress created by COVID-19, fresh initiation of insolvency proceedings up to one year has been suspended.
  • As part of the decriminalization of Company Law defaults in 2018, 16 compoundable offenses such as inadequacies in board report, filing defaults, shortcomings in CSR reporting, delay in holding Annual General Meeting (AGM) have been decriminalized.
  • Changes announced in the definition of MSMEs
    • Introduction of additional criteria for turnover.
    • The distinction between manufacturing and service sector to be eliminated

 

 

New jargon

PAi

– PAi is artificial intelligence (AI) based chatbot, to create awareness around the National Payment Corporation of India’s products on a real-time basis.     

     > It was developed by Bengaluru based startup CoRover Private Limited.

Bancassurance agreements

 – Bancassurance is an arrangement between a bank and an insurance company allowing the insurance company to sell its products to the bank’s client base.

– This allows banks to earn additional revenue by selling insurance products, and insurance companies to expand their customer bases.

Super apps  

– Is a platform developed by a company offering various services under one umbrella.

For Example- China’s WeChat, which started out as a messaging app, expanded into payments, cabs, shopping, food ordering, cab services to become a super app. An analogy to supermalls.

Old But Important

Public Financial Management System (PFMS)

– Financial Management of government schemes as well as a payment cum accounting network.

– implemented by the Office of Controller General of Accounts (CGA), Ministry of Finance.

– integrated with the core banking system and RBI

Post Devaluation Revenue Deficit (PDRD)

– PDRD Grants is for compensation of any loss incurred by states from the Centre.

– is a mechanism provided by the Finance Commission. – 2nd largest chunk of FC transfers (largest to local rural bodies).

Public Debt Management cell (PDMC)

 – Manages and advises the Central Government on internal and external liabilities.

– not a statutory body (currently working under RBI)

– Headed by the Joint Secretary (Budget) of the Department of Economic Affairs. 

Serious Fraud Investigation Office (SFIO)

– SFIO is a statutory, multi-disciplinary organization under the Ministry of Corporate Affairs.

White-collar crime refers to financially motivated, nonviolent crime committed by businesses and government professionals.

Standing Deposit Facility
  • It allows RBI to absorb liquidity (deposits) from commercial banks without giving government securities in return to banks as collateral.
  • lower interest rate than reverse repo
  • Proposed by Urjit Patel Monetary Policy Committee.
  • This was envisaged as collateral may become a constraining factor if RBI runs out of securities to absorb liquidity under Reverse Repo operations.
SDF is being considered because banks are unlikely to lend in a risk-averse environment, providing an alternate liquidity absorption mechanism.
Ind-AS

– RBI came out with regulatory guidelines for the implementation of Indian Accounting Standards (Ind-AS) by NBFCs and asset reconstruction companies.

– Ind-AS are accounting standards that have been harmonized with the globally accepted International Financing

Reporting Standards (IFRS).

– National Advisory Committee on Accounting Standards (NACAS) recommended these standards to the Ministry of Corporate Affairs. 

Long-Term Repo Operations (LTROs)

– LTRO is a tool under which RBI provides one year to three years of money to banks at the prevailing repo rate.

– Accepting government securities as collateral.

– Repo: A repurchase agreement is a form of short-term borrowing for dealers in government securities.

Consolidated Sinking Fund (CSF)

– Recently, RBI decided to relax rules governing withdrawal from CSF.

– It was set up in 1999-2000 by RBI to meet redemption of market loans to the States.

– This fund is maintained outside the consolidated fund of the States and public account.

State governments contribute 1-3% of their outstanding market loans to CSF each year.

Stock market circuit breakers (CB)

– Band of upper and lower limits within which a benchmark market index can fluctuate on a particular day.

– Market-wide CB system of BSE and NSE applies at three stages of index movement, i.e., stock trading is halted if the index zooms or falls 10%, 15%, and 20%.

Future Contract  
  • A futures contract is a standard contract to buy or sell a specific commodity of standardized quality at a certain date in the future.
  • For example, if oil producers want to sell oil in the future, they can lock in their desired price by selling a futures contract today.  
District Mineral Foundation (DMF) funds

– DMFs are a non-profit trust set up in the country’s mining districts.

– under Mines and Minerals (Development & Regulation) Amendment Act, 2015. 

Non-lapsable funds

– Fund is collected at the district level but comes under the jurisdiction of the relevant State Government.

PRAAPTI

– PRAAPTI App and web portal.

– To bring transparency in power purchase transactions between Generators and Distribution companies.

– under the Ministry of Power.

Renewable Energy Certificates (RECs)

– It provides an economic incentive for electricity generation from renewable energy sources.

– Generators can sell electricity from renewable sources just like conventional electricity and offer RECs separately to obligated entities to fulfill their renewable purchase obligation.

– RECs are traded on the Indian Energy Exchange and Power Exchange of India.

Prime Minister’s Employment Generation Program (PMEGP)

 – PMEGP is a credit-linked subsidy programme

– Aimed at generating self-employment opportunities through the establishment of micro-enterprises in rural and urban areas.      

     > Loans are being provided by banks.      

     > Benefit can be availed under PMEGP for setting up of new units only.      

     > It is being implemented by KVIC, State Khadi, and Village Industries Board, and District Industries centers.

State Disaster Response Fund
  • Under the Disaster Management Act, 2005.
  • The Central government contributes 75/90 percent towards the SDRF allocation.
  • For SDRF, the Centre releases funds as per the recommendation of the Finance Commission.
  • National Disaster Response Fund of Centre supplements the SDRF of a state, in case of a disaster of severe nature.
  • The disasters covered under the SDRF include cyclones, droughts, tsunamis, hailstorms, landslides, avalanches, and pest attacks among others.
  • India declared COVID19 as “notified disaster” for purpose of providing assistance under the State Disaster Response Fund.  
Subordinated debt
  • In the case of liquidation of the entity, subordinated debt is the loan that’s paid after all other corporate debts and loans are repaid

 

Facts and stats

  • India is the 3rd largest producer of electricity in the world.
    • India presently exports electricity to Nepal, Bangladesh, and Myanmar, while India imports power from Bhutan.
    • Indian Energy Exchange (IEX) is the first and largest energy exchange in India.
  • As per the Agriculture Census, the average size of operational holdings has decreased from 1970-71 in 2015-16 (1.08 hectares).
    • Department of Agriculture, Co-operation, and Farmers Welfare conducts an agriculture census, every five years.
  • Mizoram became the first state to grant industry status to sports.
  • Reserve Bank of India (RBI) brought startups under the purview of Priority Sector Lending (PSL).
    • Sectors that are already under PSL – agriculture, MSMEs, education, housing, social infrastructure among others.