misc essay topic

7/23/2019 Misc Essay Topic

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Government Budget Meaning, Objective

Components of Government Budget

Classification of receipts Capital and revenue

Classification of expenditure - Capital and revenue

Balanced budget surplus budget, deficit budget- meaning and implication

Revenue deficit, iscal deficit, primar! deficit- Meaning and implication"

Meaning of Government Budget:-A government budget is an annual statement of the

estimated receipts and estimated expenditure of the government during a fiscal year.

Objective of the Government Budget

he objective that are pursued by the government through the budget are-

!. "eallocation of resources -:!t means managed and proper distribution of resources.

As private sector can not provide all the goods and services the government has to

provide these goods.

!!. o reduce ine#ualities in income and $ealth-: hrough budget government tries to

reduce the gap bet$een "ich and poor. his is achieved through taxing the rich and

subsidi%ing the needs of poor people. axing the income of rich people reduces their

purchasing po$er and subsidies to poor people increases real income of poor

people.

!!!. o achieve economic stability -: here may be inflation or depression in theeconomy. !nflation is the situation of rise in price level $hereas depression is lac& of

demand. Both the situations are undesirable. 'uring depression government

reduces rate of tax and borro$ing and increases public expenditure. 'uring inflation

government increases the rate of tax and borro$ing and decreases public

expenditure.

!(. Management of )ublic *nterprises

(. o achieve economic gro$th

+omponents of Government Budget:-

,. Budget "eceipts

. Budget *xpenditure

+lassification of Budget "eceipts:-

,. +apital "eceipts: - +apital "eceipts refer to those receipts of the government

$hich

i tend to create a liability or

ii +auses reduction in its assets. All the +apital receipts are broadly classified into

three categories.


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, "ecovery of loans :- hese are +apital receipts because they reduce financial

assets of the government

Borro$ings: - /unds raised by the government form the borro$ing are treated as

capital receipts such receipts creates liability.

0 Other "eceipts: - /unds raised through disinvestment are included in this

category. By this government assets are reduced.

. "evenue "eceipts:-Any receipts $hich do not either create a liability or lead to

reduction in assets is called revenue receipts.

"evenue receipts consist of

, ax "evenue and 1on-ax "evenue.

, ax "evenue: -

A tax is a legal compulsory payment imposed by the government on the people. All

taxes are broadly classified into

i 'irect ax and ii !ndirect ax.

2hen the liability to pay a tax and the burden of that tax falls on the same person3

the tax is called direct tax. e.g. !ncome tax3 corporation tax3 Gift tax etc.2hen the

liability to pay a tax falls on one person and burden of that tax falls on some other

person3 the tax is called an !ndirect tax. e.g. 4ales tax3 +ustom duties3 4ervice tax

etc.

1on-ax "evenue: - 1on tax revenue consists of all revenue receipts other than

taxes. /or eg.:-i !nterestii )rofit and dividendiii /ees and finesiv *xternal grant-in-

aidMeaning of Budget *xpenditure:-Budget expenditure refers to the estimatedexpenditure to be incurred by the government under different heads in a year.

"evenue *xpenditure:-An expenditure $hich do not creates assets or reducesliability is called "evenue *xpenditure.*xamples are 5 4alaries of governmentemployees3 interest payment on loan ta&en by the government3 pension3 subsidies3grants etc.

+apital *xpenditure:-!t refers to the expenditure $hich leads to creation of assets

and reduction in liabilities eg. *xpenditure incurred on construction of building3 roads3bridges etc.

Balanced Budget:- A Government budget is said to be a balanced in $hichgovernment receipts are sho$n e#ual to government expenditure

4urplus Budget:-2hen government receipts are more than government expenditurein the budget3 the budget is called a surplus budget.

Budget 'eficit


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'eficit Budget:-2hen government expenditure exceeds government receipts in the

budget is said to be a deficit budget.

ypes:-

"evenue 'eficit:-"evenue deficit refers to the excess of revenue expenditure of the

government over its revenue receipts.

"evenue deficit 6 otal revenue expenditure 5 otal revenue receipts.

!mportance: - 4ince it is largely related $ith the recurring expenditure. herefore3high revenue deficit gives a $arning to the government either to cut expenditure or toincrease revenue receipts. !t also implies re#uirement burden in future.

/iscal 'eficit:-

/iscal deficit is defined as excess of total expenditure over total receipts excluding

borro$ings.

/iscal 'eficit 6 otal budget expenditure - otal budget receipts net of borro$ings.

!mportance: - /iscal deficit is a measure of total borro$ings re#uired by thegovernment. Greater fiscal deficit implies3 greater borro$ings by the government.his creates a large burden of interst payments in the future that leads to increase inrevenue expenditure3 causing an increase in revenue deficit. hus a vicious circle

sets in. !n the present3 a large fiscal deficit may also lead to inflationary pressures.

)rimary 'eficit:-

)rimary deficit is defined as fiscal deficit minus interest payment. !t is e#ual to fiscal

deficit reduced by interest payment.

)rimary deficit 6 /iscal deficit 5 interest payment.

!mportance: - )rimary deficit signifies borro$ing re#uirements of the government. A

lo$ or %ero primary deficit means that $hile government7s interest re#uirement onearlier loans have compelled the government to borro$ but it is a$are of the need to

tighter its belt.


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Balance of pa!ment # Meaning andcomponenetsBy +liffton "odrigueson4aturday3 8 9une ,; at ,;:;ence3 the balance of payments represents a better

picture of a country7s economic transactions $ith the rest of the $orld than the

Balance of rade.

4tructure of Balance of )ayments Accounts :-

A Balance of payments statements is a summary of a nation7s total economictransactions underta&en on international account. !t is usually composed of t$o

sections :-

, +urrent Account

+apital Account

, +urrent Account :- !t records the follo$ing 0 items :-

i (isible items of trade :- he balance of export and import of goods is called the

balance of visible trade eg. ea3 +offee etc.

ii !nvisible trade :- he balance of exports and imports of services is called the

balance invisible trade eg. 4hipping3 insurance etc.iii ?nilateral transfers :- ?nilateral transfer are receipts $hich residents of a country

ma&e $ithout getting anything in return eg. Gifts etc.

he net balance of visible trade3 invisible trade and of unilateral transfers is the

balance on current account.

+apital Account :- !t records are international transactions that involve a resident

of the domestic country changing his assets $ith a foreign resident or his liabilities to

a foreign resident.

(arious forms of capital account transactions :-

, )rivate ransactions :- here are transactions that effect the liabilities and assets of individuals.

Official ransactions :- ransactions affecting assets and liabilities by

the govt. and its agencies.

0 )ortfolio !nvestment :- !t is the ac#uisition of an asset that does not

give the purchaser control over the asset.

@ 'irect !nvestment :- !t is the act of purchasing an asset and at the same

time ac#uiring control of it.

he net value of the balance of direct and portfolio investment is called

the balanced on +apital Account.

Other items in the balance of payments:-
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hese are included since the full balance of payments account must balance. hese

are as follo$s 5

i *rrors and omissions :- hese may arise due to the presence of sampling error or

dishonesty.

ii Official reserve transactions :- All transactions excepts those in the category of

autonomous transactions.

Autonomous !tems :-

Autonomous items in BO) refer to international economic transactions that ta&e

place due to some economic motive. 4uch as profit maximi%ation. hese items are

often called above the line items in BO).

he BO) is in deficit if autonomous receipts are less than autonomous

payments. he monetary authorities may finance a deficit by depleting their reserves

of foreign currencies or by borro$ing from the !M/.

Accommodating !tems :- Accommodating items in the BO) refer to transactions that

occur because of other activities in the BO)3 such as government financing.

Accommodating items are also referred to as belo$ the line items.

'ise#uilibrium in BO) :-

here are number of factors that cause dise#uilibrium in the BO). 4ho$ing either a

surplus or deficit. hese are categori%ed in three factors:- i *conomic factors

i )olitical factors

ii 4ocial factors


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$ocial %nfrastructure, &mplo!ment, and 'uman (evelopmentBy +liffton "odrigueson4aturday3 8 9une ,; at ,;:;

Gro$th $ith e#uity has been the focus of !ndian economic policy since the ,8s. By

3 !ndia is projected to be the youngest nation in the $orld in terms of si%e. 2hile

this youth bulge7 provides !ndia great opportunities3 it also poses challenges. heseyoung people need to be healthy3 suitably educated3 and appropriately s&illed to

contribute optimally to the economy. 'espite global shoc&s3 !ndia has not

compromised on expenditures on $elfare activities3 especially for the vulnerable

population. he success of programmes and policies of the government lies in the

strength of institutional structures $ith strong public delivery systems as $ell as in

the attitudes and mindset of the people. o ensure conversion of outlays into

outcomes the role of )anchayati "aj institutions is crucial. hough significant

outcomes have been achieved in the areas of poverty reduction3 health3 and

education3 more remains to be done. Government3 along $ith civil society3 media3

and other sta&eholders3 must $or& to$ards changing the patriarchal mindset ofsociety and empo$ering $omen to reali%e their untapped potential and fulfill their

aspirations.

. As per provisional results of +ensus ,,3 ,-,, is the first decade in

independent !ndia $here in the population momentum coupled $ith declining fertility

has dampened the pace of net additions to population. hus3 the net addition

=bet$een ,-,, is less than that of the pervious decade by .C8 million. At

present a little more than one out of every six persons in the $orld is an !ndian. As

per 4ample "egistration 4ystem =4"4 =,0 data3 there has been a gradual

decline in the share of population in the age group -,@ from @,. to 0C., per cent

during ,


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poor #uality of education is accentuated by the fact that fe$er students opt for higher

education.

*'?+A!O1AE +>AEE*1G*4

.; 2hile only o$ever3 for it to be fruitful3 it is critical that the local administration is fully involved


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and sensiti%ed. . 2hile the "* Act and the 9uvenile 9ustice Act $ere

promulgated to bring children into education rather than employment3 they have

allo$ed youth in the ,;-,C age-group to slip through the crac&s. !ndia has about ,

million young people $ho fall in this category. 4ince there are educational and age

re#uirements for entry into most vocational s&illing programmes3 and job placements

are not possible before age ,C3 the vast majority of this population could land up in

the unorgani%ed sector. here is need for research into the type of &no$ledge or

s&ills re#uired to address the opportunity gaps and to improve productive capacity in

the unorgani%ed sector.

., +oncurrently3 to build capacity in secondary schools on par $ith expanded

primary enrolments3 several schemes li&e the Mid-'ay Meal =M'M scheme3

"ashtriya Madhyami& 4hi&sha Abhiyan ="M4A3 Model 4chool 4cheme =M443 and

4aa&shar Bharat =4BK Adult *ducation have also been implemented. he focus of

4B is female literacy. !nter alia3 the lac& of trained teachers compounds the problem.

o strengthen the cadre of teacher educators by providing early career choice to

prospective teachers and to fill the vacancies in teacher education institutions3 a ne$

four-year integrated programme3 i.e. BAKB*d. and B4c.KB*d. has been introduced.

.,, he !ndian higher education system is one of the largest in the $orld in terms of

the number of colleges and universities. /rom 0; universities and ,83C colleges

in ;-83 the numbers have gone up to


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s&illing3 and lac& of industryready7 s&ills even in professional courses =Eabour

Bureau "eport ,@. 4ome recent initiatives that aim to enhance access3 e#uality3

#uality3 innovation3 etc. in the area of higher and vocational education are the

"ashtriya ?chchatar 4hi&sha Abhiyan ="?4A3 echnical *ducation uality

!mprovement )rogramme =*!)3 and 1ational 4&ill ualification /rame$or&

=14/.

.,@ A dedicated 'epartment of 4&ill 'evelopment and *ntrepreneurship has been

created under the Ministry of 4&ill 'evelopment3 *ntrepreneurship3 Louth Affairs and

4ports to accord focused attention in this area. !n addition3 the s&illing programme for

rural youth has been refocused and reprioriti%ed to build the capacity of poor rural

youth to address domestic and global s&ill re#uirements. he 'een 'ayal

?padhyaya Grameen oushalya Lojana =''?-GL is a placement-lin&ed s&ill

development scheme for poor rural youth. A total of ;,3;8 candidates have been

s&illed under the ''?-GL3 of $hich C3; have been placed till 1ovember during

,@-,;.

.,; Other ne$ programmes that aim at bringing minorities into mainstream

development include 1ai Man%il for education and s&ill development of dropoutsN

?4A' =?pgrading 4&ills and raining in raditional ArtsK+rafts for 'evelopment to

conserve traditional artsKcrafts and build capacity of traditional artisans and

craftsmen belonging to minority communitiesN 1ai "oshni3 a leadership training

programme for $omenN and MA1A4 for upgrading entrepreneurial s&ills of minority

youths.

4luggish employment gro$th

.,8 A cause for concern is the deceleration in the compound annual gro$th rate

=+AG" of employment during @-; to ,,-, to .; per cent from .C per centduring ,- to @-; as against +AG"s of . per cent and .@ per cent

respectively in the labour force for the same periods. As per the 1ational 4ample

4urvey Office =144O data during ,- to @-;3 employment on usual

status =?4 basis increased by ;. million persons from 0C. million to @;


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that of females3 long-term trends indicate a lo$ and stagnant gro$th. 4uch trends

call for diversification of livelihood in rural areas from agriculture to non-agriculture

activities. !n order to improve generation of productive employment under the

Mahatma Gandhi 1ational "ural *mployment Guarantee Act =MG1"*GA3 the

!ntensive and )articipatory )lanning *xercise =!))* has been initiated to prepare

the labour budget for financial year ,;-,8 in selected ; bac&$ard bloc&s using

participatory rural appraisal techni#ue. *mphasis has been laid on agriculture and

allied activities to ensure that at least 8 per cent of the $or&s in a district in terms of

cost is for creation of productive assets lin&ed to agriculture and allied activities

through development of land3 $ater3 and trees.

., A major impediment to the pace of #uality employment generation in !ndia is the

small share of manufacturing in total employment. >o$ever data from the sixty-

eighth 144O round =,,- , indicates a revival in employment gro$th in

manufacturing from ,, per cent in -, to ,.8 per cent in ,,-,. his is

significant given that the 1ational Manufacturing )olicy ,, has set a target of

creating , million jobs by . )romoting gro$th of micro3 small3 and medium

enterprises =M4M* is critical from the perspective of job creation $hich has been

recogni%ed as a prime mover of the development agenda in !ndia. Although total

informal employment increased by .; million to @0;.< million bet$een @-; and

,,-,3 it is significant that informal unorgani%edsector employment declined by ;.C

million to 0. million3 leading to an increase in informal organi%edsector

employment by ,;. million. +onse#uently the share of unorgani%ed labour has

declined from C< per cent to C.< per cent =able ..

. 144O rounds are #uin#uennial and therefore information on the employmentK

unemployment situation in the country is available only after a gap of five years. oma&e available data in the interregnum3 the Eabour Bureau conducts household

employment-unemployment surveys on annual basis and has also been bringing out

#uarterly survey reports on the effects of the economic slo$do$n on employment in

select sectors in !ndia since . he results of the latest #uarterly summary on

employment3 9uly ,@ =Box .3 indicate an increase in employment by 0.; million

since the first survey.

., he ?4 unemployment rate is generally regarded as the measure of chronic

open unemployment during the reference yearN $hile the +'4 is considered a

comprehensive measure of unemployment3 including both chronic and invisible

unemployment. hus3 $hile chronic open unemployment rate in !ndia hovers arounda lo$ of per cent3 it is significant in absolute terms. he number of unemployed

people =under ?4 declined from ,,.0 million during @-; to .C million in -

, but again increased to ,.C million in ,,-,. >o$ever3 based on the +'4 the

number of unemployed person days declined from [email protected] million in @-; to C.

million in -, and further to @.< million in ,,-,. hus there has been a

significant reduction in chronic and invisible unemployment from C. per cent in

@-; to ;.8 per cent in ,,-, =able .,. 'espite only a marginal gro$th in

employment bet$een -, and ,,-,3 the reason for the decline in

unemployment levels could be that an increasing proportion of the young population

opts for education rather than participating in the labour mar&et. his is reflected in


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the rise in enrolment gro$th in higher education from @. million in ,-, to .8

million in ,-,0 =)rovisional.

Eabour "eforms

. 4ignificant improvement in industrial harmony in !ndia is evident from the fact

that mandays lost on account of stri&es and loc&out have been steadily declining:

from ,ealth3 2omen +hild 'evelopment3 and )anchayati "aj3


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provision has been made for incentivi%ing accredited social health activists =A4>As

and angan$adi $or&ers to promote sanitation. Guidelines are also in place to involve

corporates in the sanitation sector through corporate social responsibility.

.8 !n order to improve the availability of drin&ing $ater in rural areas3 3 solar

po$er based $ater supply schemes have been approved under the 1ational "ural

'rin&ing 2ater )rogramme =1"'2) across all the states for their habitations

located in far-flung K hilly areas or $here availability of electricity is a constraint.

.< Mission !ndradhanush $as launched on ; 'ecember ,@ $ith the aim of

covering all those children $ho are either unvaccinated or are partially vaccinated

against seven vaccine-preventable diseases $hich include diphtheria3 $hooping

cough3 tetanus3 polio3 tuberculosis3 measles3 and hepatitis B by . he

intensification of immuni%ation activities $ill be carried out in , high focus districts

in the first phase and < districts $ill be targeted for the second phase in ,;.

.C 2ith the goal of providing holistic health solutions3 the erst$hile 'epartment of

AL?4> =Ayurveda3 Loga and 1aturopathy3 ?nani3 4iddha and >omeopathy has

been elevated to a fullfledged ministry from 1ovember ,@. he basic objective of

the 1ational AL?4> Mission =1AM is to promote AL?4> medical systems through

cost-effective AL?4> services and strengthening of educational systems. 4teps are

also under$ay for including yoga in the regular education curriculum. )aying heed to

the )rime Minister7s exhortation during his address to the ?1 General Assembly in

4eptember ,@3 the ?1 has declared , 9une !nternational Loga 'ay.

. Given the multiple determinants of health3 it is clear that a prevention agenda

that addresses the social and economic environment re#uires cross-sectoral3 multi-

level interventions that involve sectors such as food and nutrition3 education3 drin&ing

$ater and sanitation3 housing3 employment3 industrial and occupational safety3$elfare including social protection3 family and community services3 tribal affairs3 and

communications.

)O(*"L

.0 he latest estimates of poverty are available for the year ,,-,. hese

estimates have been made follo$ing endul&ar +ommittee methodology using

household consumption expenditure survey data collected by the 144O in its sixty-

eighth round =,,-,. Over a span of seven years the incidence of poverty

declined from 0?MA1 '*(*EO)M*1: !1*"1A!O1AE +OM)A"!4O1.0, he ,@ >uman 'evelopment "eport =>'" presents the >uman

'evelopment !ndex =>'! values and ran&s for ,C< countries in terms of three basic

parameters: to live a long and healthy life3 to be educated and &no$ledgeable3 and

to enjoy a decent standard of living. !ndia7s >'! value for ,0 is .;C83 positioning

the country at ,0; out of ,C< countries and territoriesFthe lo$est among the B"!+4

countries3 $ith "ussia at ;


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to $hich gender ine#uality erodes national achievements in reproductive health3

empo$erment and labour mar&et participation . A comparison $ith !ndia7s developing

country peers in the G grouping also sho$s !ndia in poor light on gender e#uality

issues. ?nli&e the >'!3 a higher G!! value indicates poor performance =able .8.

.0@ he Gender 'evelopment !ndex =G'!3 defined as a ratio of the female to male

>'! measures gender ine#uality according to three basic parameters of human

development: health =E*B3 .0 !ndia7s >'! is also belo$ the average of countries in

both the medium human development group =.8,@ and in 4outh Asia =.;CC.

Bet$een ,C and ,03 !ndia7s life expectancy at birth =E*B increased by ,,.

years3 mean years of schooling increased by .; years3 and expected years of

schooling increased by ;.0 years $hile gross national income =G1! per capita

increased by about 08. per cent. As compared to B"!+4 nations and some

neighbouring countries3 !ndia reports the least mean years of schooling and an E*B

that is just above that of 4outh Africa. Bangladesh3 $ith less G1! per capita than

!ndia3 has a much higher E*B and mean years of schooling. +hina3 $hich recorded a

slightly higher >'! than !ndia in ,C3 has $idened the margin in ,0 =able .;.

he existing gap in health and education indicators bet$een !ndia and developed

countries and also many developing countries education =expected years of

schooling for children and mean years for adults aged ; years and olderN and

command over economic resources =estimated G1! per capita. +ountry ran&ings

are based on absolute deviation from gender parity in >'!. he G'! is calculated for

,@C countries. he female >'! value for !ndia is .; as compared to .80 for males3

resulting in a G'! value of .CC. !n comparison3 Bangladesh and +hina are ran&ed

higher $ith values of .C and .0 respectively =able .'!3 itran&s in the bottom per cent on the G!!. hese statistics reflect the high levels of

gender ine#uality in !ndia and the poor status of $omen and girls in !ndian society.

!ndia is a signatory to the +onvention on the *limination of All /orms of

'iscrimination against 2omen =+*'A23 $hich is often described as an

international bill of rights for $omen. !t defines discrimination against $omen and

sets the agenda for national action to end violations of $omen7s rights. An important

element of +*'A2 is its affirmation of $omen7s reproductive rights3 including the

right to determine the number and spacing of children and e#ual access to family

planning. ?nfortunately in !ndia there is an increasingly disproportionate emphasis

on $omen7s sterili%ationN thus tubectomies account for a $hooping


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, to ,,, over the same period. /igure .@ gives the trends in +4" in select

countries in Asia bet$een , and ,.

.0< he ?1 General Assembly in ,0 defined violence against $omen as Hany act

of genderbased violence that results in3 or is li&ely to result in3 physical3 sexual or

psychological harm or suffering to $omen.J +onse#uently3 apart from violence

against marriedKadult $omen3 excess female child mortality3 female infanticide3 and

child marriage are also considered violence against the female gender. he

implementation of the )rotection of 2omen from 'omestic (iolence Act ;

=)2'(A is $ea&3 as nineteen states have no planned schemes.

.0C Appropriately a ne$ scheme3 Beti Bachao Beti )adhao =BBB) )rogramme3 for

promoting survival3 protection3 and education of the girl child $as launched on

9anuary ,; at )anipat3 >aryana3 a state that is noted for the lo$est +4" 5 C0;

=4"4 ,0. !t aims to address declining +4" through a mass campaign targeted at

changing social mind set and creating a$areness about the criticality of the issue.

he overall goal of the BBB) programme is to celebrate the girl child and facilitate

her education $ith the objectives of preventing gender-biased sex-selective

elimination3 ensuring survival and protection3 and education of the girl child. .0

+omparison of select socio-economic development indicators of states is given in

Appendix able .C.

/O4*"!1G !1+E?4!(* G"O2>

.@ !ndian development planning has focused on formulation of programmes and

policies aimed at bringing the marginali%ed and poor sections of society into the main

stream. he government has been implementing many such programmes for social

and financial inclusion. he disbursement of benefits needs a systematic channel

$hich $ill provide for financial empo$erment and ma&e monitoring easier and thelocal bodies more accountable. he )radhan Mantri 9an 'han Lojna =)M9'L

launched on C August ,@ and the "u)ay +ard3 $hich is a payment solution3 are

important schemes in this regard. hese t$o schemes are complementary and $ill

enable achievement of multiple objectives such as financial inclusion3 insurance

penetration3 and digitali%ation.

.@, Government has restructured and finetuned a number of ongoing programmes

based on the field experience to ma&e them need based. hese are listed in

Appendix )age A,@,-A,@;. o facilitate coordinated functioning of various social

infrastructure and human development programmes3 the government has launched

the 4ansad Adarsh Gram Lojna =4AGL $hich $ill be implemented through theconvergence and implementation of existing government programmes. !n addition3

the (anbandhu alyan Lojna $ill be implemented in one bloc& each of ten states that

have /ifth 4chedule areas.

.@ Given the multiple schemes implemented to foster inclusive gro$th3 the role of

)anchayati

'*MOG"A)>!+ '!(!'*1' A1' "*EA*' )OE!+L !1*"(*1!O14

.@0 A declining -,@ population $ill impact both elementary =;-,@ age group and

higher education =,;- age group. *lementary education can be further subdivided

into primary =;- age group and middleKupper primary =,- ,@ age group. he first

stage of impact $ill be felt in declining enrolment in primary schools. As statedearlier3 total enrolment in primary schools has fallen in ,0-,@ $hile upper primary


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enrolment has gro$n. he dependency ratio for !ndia is expected to fall from ;@ per

cent in , to @ per cent in . !n this scenario3 given interstate disparities3

states that are already facing this situation need to adopt specific policy measures in

the field of education3 $herein3 instead of expanding the number of primary schools3

focus should be on =i improving access to education considering the high dropout

rates among senior studentsN =ii removing gender disparity especially in the higher

age group and in rural areasN and =iii improving #uality of education3 including pupil-

teacher ratios and provision of amenities in schools3 especially in vie$ of the

declining learning levels.

.@@ he lag in demographic transition bet$een different states that necessitates

state-specific policies to optimally garner the benefits of the demographic dividend.

O$ing to substantial fertility decline in the south during the last t$o decades3 the

south is ahead in the demographic transition compared to the north3 thereby the

$indo$ is already $ide open in the south compared to the north. /or instance3 the

projected average age of years in has already been surpassed in some

states li&e erala =00 years3 Goa =0.03 amil 1adu =0,.03 >imachal )radesh

=0.@3 )unjab =.3 Andhra )radesh =.03 and 2est Bengal =.,. +omparative

picture of five states each $ith lo$est and highest average age is sho$n in /igure

.;.

.@; his lag in demographic transition among states in !ndia could turn out to be a

great blessing from the point of vie$ of coping $ith the problem of declining

population. !ndia is better placed in this respect than most other countries. hus

states already $ell into the demographic $indo$ should actively pursue policies for

employment generation to the already bulging labour force3 $hile states just entering

the $indo$ period have some time to plan and must pursue policies simultaneouslyin several areas li&e education3 health =including reproductive health3 gender issues3

and employment generation from no$ on so that they can fully utili%e the opportunity.

"*1'4 !1 !1'!A74 4O+!AE-4*+O" *P)*1'!?"*

.@8 "eserve Ban& of !ndia ="B! data on expenditure on social services by the

general government =centre and states as a proportion of total expenditure has also

been sho$ing a mixed trend. !t had declined to . per cent in ,-,0 from @.o$ever3 delay in agreementamongst different lending institutions often comes in the $ay of suchendeavors. Based on the experience in countries li&e the ?3 hailand3 orea3Malaysia3 etc. of putting in place an institutional mechanism for restructuring ofcorporate debt and need for a similar mechanism in !ndia3 a +orporate 'ebt"estructuring 4ystem $as evolved and detailed guidelines $ere issued by"eserve ban& of !ndia on August 03 , for implementation by financialinstitutions and ban&s.

he +orporate 'ebt "estructuring =+'" Mechanism is a voluntary non-

statutory system based on 'ebtor-+reditor Agreement ='+A and !nter-+reditor Agreement =!+A and the principle of approvals by super-majority ofo$ever3 +ore Group3 after revie$ing thereasons for classification of the borro$er as $ilful defaulter3 may consideradmission of exceptional cases for restructuring after satisfying itself that theborro$er $ould be in a position to rectify the $ilful default provided he isgranted an opportunity under +'" mechanism.

$tructure of C(R $!stem#he edifice of the +'" Mechanism in !ndia standson the strength of a three-tier structure:


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+'" 4tanding /orum

+'" *mpo$ered Group

+'" +ell

egal Basis of C(R

he legal basis to the +'" 4ystem is provided by the 'ebtor-+reditorAgreement ='+A and the !nter-+reditor Agreement =!+A. All ban&s Kfinancialinstitutions in the +'" 4ystem are re#uired to enter into the legally binding!+A $ith necessary enforcement and penal provisions. he most importantpart of the +'" Mechanism $hich is the critical element of !+A is the provisionthat if o$ever3 the stand still7 is applicable only to any civil action3either by the borro$er or any lender against the other party3 and does not

cover any criminal action.

Besides3 the borro$er needs to underta&e that during the stand still7 period thedocuments $ill stand extended for the purpose of limitation and that he $ouldnot approach any other authority for any relief and the directors of thecompany $ill not resign from the Board of 'irectors during the stand still7period.
http://www.cdrindia.org/standingforum.htmhttp://www.cdrindia.org/empgroup.htmhttp://www.cdrindia.org/cdrcell.htmhttp://www.cdrindia.org/standingforum.htmhttp://www.cdrindia.org/empgroup.htmhttp://www.cdrindia.org/cdrcell.htm


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!ndia7s public sector ban&s are heading to$ards bad times. 2e don7t need a soothsayer to say

thisFa close loo& at the earnings of ban&s in the #uarter ending March ma&es it #uite clear.

Among 0 listed ban&s in !ndiaFboth private and publicFfour recorded net losses in the March

#uarter3 and three of them are public sector ban&s. hey are Ban* of %ndia3Oriental Ban* of

Commerceand .unjab and $ind Ban*. At least nine other public ban&s recorded a drop in net

profit compared $ith the year-ago #uarterN and for a fe$ of them3 the drop has been pretty sharp.

/or instance3.unjab /ational Ban*=./B posted a 8U drop in net profitN for (ena

Ban*3 0nited Ban* of %ndia=0B% and%ndian Overseas Ban*=%OB3 the drop in net profit $as

even sharperFbet$een


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close to 8U in ,@ and rose about CU in ,;. After setting aside money for bad loans3 private

ban&s7 net profit rose ,


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. Issuer of Bank otes# The RBI has the sole right to issue currency notes. &t !resent, notes of

Rs "*+ Rs "**+ Rs **+ and Rs ",*** are only !rinted. The !rinting of Re ", Rs and Rs has

been sto!!ed. -owever, the RBI has !owers to !rint currency notes of u! to Rs "*,***

denomination. But, an amendment to the Reserve Bank of India &ct, "/0 will be needed if any

note of higher denomination has to be !rinted.

/. Banker to 1overnment# &s banker to the government the RBI manages the banking needs of

the government. It has to maintain and o!erate the government2s de!osit accounts. It collects

recei!ts of funds and makes !ayments on behalf of the government. It re!resents the

1overnment of India as the member of the I34 and the %orld Bank.

0. 5ayment system# The RBI takes !art in the !ayment system as a user of the system, a service

!rovider and is also the regulator of the systems. &s a user it deals with the che'ue based clearing

o!erations. It also !artici!ates as a user in the Electronic learing 6ervice (E6) and (Electronic

4unds Transfer) E4T systems for making its own internal !ayments to its em!loyees, vendor

!ayments etc. 6imilarly, RBI transactions in Re!o 7 Reverse Re!o under 8&4, 9!en 3arket9!erations, would also be settled through the res!ective com!onents of !ayment systems. &s a

!rovider it manages the entralised 4unds 3anagement 6ystems (436), egotiated :ealing

6ystem (:6) and Real Time 1ross 6ettlement (RT16) systems have been fully develo!ed,

o!erationalised and maintained by RBI. Besides the above, RBI (through I:RBT) has also

!rovided the communication backbone to the financial system in the country in the form of

Indian 4inancial etwork (I4IET).

. Regulates banks# RBI regulates banks in the country. &ll those as!iring to start a bank or

ac'uire an e$isting one, have to seek RBI a!!roval. RBI also monitors financial stability of banks

and kee!s a check on lending in the system. Banks have to maintain a !ortion of their de!osits

for cash reserve ratio or RR and at all times maintain minimum ca!ital ade'uacy. RBI monitorsrisks to the financial system by kee!ing a check on banks.

;. E$change rate stability# RBI may intervene in the market to influence the e$change rate or to

reduce volatility. The basic intention in such actions is to maintain the demand


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of control of credit becomes obvious. redit is controlled by the Reserve Bank in accordance with

the economic !riorities of the government.

Short notes on Accounts for NRI/PIO in India

What are the different types of accounts which can be maintained by an NRI/PIO in India?

Types of accounts which can be maintained by an NRI / PIO in India:

A. Non-Resident Ordinary Rupee Account (NRO Account)

NRO accounts may be opened / maintained in the form of current, savings, recurring or fixed

deposit accounts. Interest rates offered by banks on NRO deposits cannot be higher than those

offered by them on comparable domestic rupee deposits.

Account should be denominated in Indian Rupees.W

Permissible credits to NRO account are transfers from rupee accounts of non-resident banks,W

remittances received in permitted currency from outside India through normal banking channels,

permitted currency tendered by account holder during his temporary visit to India, legitimate dues

in India of the account holder like current income like rent, dividend, pension, interest, etc., sale

proceeds of assets including immovable property acquired out of rupee/foreign currency funds or

by way of legacy/ inheritance.

NRI/PIO may remit from the balances held in NRO account an amount not exceeding USD oneW

million per financial year, subject to payment of applicable taxes.

The limit of USD 1 million per financial year includes sale proceeds of immovable propertiesW

held by NRIs/PIOs.

B. Non-Resident (External) Rupee Account (NRE Account)

1) NRE account may be in the form of savings, current, recurring or fixed deposit accounts.

2) Such accounts can be opened only by the non-resident himself and not through the holder of

the power of attorney.

3) Account will be maintained in Indian Rupees.

4) Accrued interest income and balances held in NRE accounts are exempt from Income tax.


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5) Authorised dealers/authorised banks may at their discretion allow for a period of not more than

two weeks, overdrawings in NRE savings bank accounts, up to a limit of Rs.50,000.

6) Loans up to Rs.100 lakh can be extended against security of funds held in NRE Account either

to the depositors or third parties.

C. Foreign Currency Non Resident (Bank) Account FCNR (B) Account

FCNR (B) accounts are only in the form of term deposits of 1 to 5 yearsW

Account can be in any freely convertible currency.W

Loans up to Rs.100 lakh can be extended against security of funds held in FCNR (B) depositW

either to the depositors or third parties.

The interest rates are stipulated by the Department of Banking Operations and Development,W

Reserve Bank of India.

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