upsc economy prelims 2016

UPSC PRELIMS 2016 ECONOMY

TOPICS IN INDIAN ECONOMY

TERMS IN INDIAN ECONOMYPLANNING POVERTY & UNEMPLOYMENT DEMOGRAPHICSINFRASTRUCTURE & INVESTMENT MODELS AGRICULTURE SECTORINDUSTRIAL SECTOR & SERVICES FISCAL POLICY MONETARY POLICY EXTERNAL SECTORMISCELLANEOUS

TERMS IN INDIAN ECONOMY

ECONOMICS (How to produce,distribute & consume goods/services using finite & scarce resources)

ECONOMY (Economics of a particular unit)TYPES- SOCIALIST,CAPITALISTIC, MIXED

ECONOMYMICROECOMY (Decision making at indl entity)MACROECONOMY (Behaviour of aggregates)GDP (Monetary value of all goods & services

produced in a country in a yr)NDP (GDP-Depreciation)GNP (incl intl trade in GDP)NNP (GNP- Depreciation)GREEN GNP (GNP-nat resources & degradation

of envt)

TERMS IN INDIAN ECONOMY

CAPITAL (Factor of production which is not entirely consumed in production process)

FISCAL POLICY (Govt spending & taxation)SUSTAINABLE DEVELOPMENT (Devlt without

compromising needs of future generation)INCLUSIVE GROWTH CRONY CAPITALISMINDICATIVE PLANNING (Flexible plg system in

which Govt decides about targets, but no compulsion & achievement through inducement to pvt sector)

BoP(Overall statement of country’s economic transaction with rest of the world)

TERMS FROM MONETARY POLICY,FISCAL POLICY DEMOGRAPHY, INTL TRADE, INFLATION, BUDGET, ETC

PLANNINGMeaning of planningTypes- Imperative/ Centrally Planned Economy &

Indicative PlgIndian Plg Background- Various Plg models in 1930s &

1940s(M Visweswarayya, Bombay plan, MN Roy’s People’s Plan,Gandhian Plan,FICCI Plan

-Nehruvian Socialistic background - Drained wealth of Indian Economy & rising aspirations Objectives- Eco growth,poverty reduction, empl

generation, self reliance, modernization. Const provisions- Social & Eco plg,Centre- State

relations,Welfare State. Agencies- PC, NDC, NITI AAYOG Central Plans- 5 Yr Plans, 20 Point Pgme & MPLADS . Multilevel plans- Central, State, Dist, Block, Village Plan

PLANNING1st Five yr plan (1951-56)- Background of agri

distress,poverty,unemployment; focus on agri,irrgn.2nd Five yr plan (1956-61)- Focus on heavy & basic

industries.3rd Five yr plan (1961-66)- Characterised by

diversion of funds due to two wars in 1962,1965 & famine;couldn’t achieve targets

Annual Plans (1966-1969)4th Five yr plan (1969-1974)- Focus on Self reliance

and modernization5th Five yr plan (1974-1979)- Focus on Poverty

alleviation; Started Politicization of planning as Planning Commission as a central tool; change of Congress rule

6th Five yr plan (1980-1985)- Focus on poverty alleviation

PLANNING7th Five yr plan (1985-90)- Focus on growth,

modernisation,equality and social justice;BOP crisis, inflation &fiscal deficit

- Focus on energy sector- Perspective plan for 1985-2000• Two Annual plans• 8th Five yr plan (1992-97)- Focus HRD,- LPG;Rethinking on role of State;Thrust on social

sector- 9th Five yr plan (1997-2002)-- Issue of fiscal consolidation became top

priority;reducing subsidies,decentralisation• 10th Five yr plan (2002-07)-- Monitorable targets(27 targets, 6 areas)

PLANNING11th Five yr plan (2007-12)– Towards faster &

Inclusive Growth 10% growth rate, FRBM12th Five yr plan (2012-17)– Towards faster,

Sustainable & more Inclusive Growth ;8% growth rate

ROLE OF PSUs-Temples of modern IndiaProfit,Infrastructure, Empl generation,Welfare

state-Social Responsibility,Modern Tech, Regional balanced Devlt

Disadv- Non profitable, Regional Imbalance of devlt, Lack of autonomy & efficiency

Navratnas, Maharatnas, Miniratnas.

ECONOMIC REFORMS• Meaning- Minimizing role of State & increasing

role of pvt sec• Background- Scepticism amongst Developing

countries against foreign investments as they feared their dominance & rule of colonisers

• Components: 1. Macroeconomic stabilization measures(Boost aggregate demand of economy either domestic or external, domestic by incresing purchasing power of masses by gainful &quality empl opportunities)

2.Structural Reform measures (Boost aggregate supply of goods & services , mostly by capitalists)

• LPG : Liberalization shows Direction of Reforms; Privatization shows path of Reforms & Globalization shows the Ultimate goal of Reforms.

ECONOMIC REFORMS• Liberalization- Pro-capitalistic or Pro- market

inclination of an economy; decreasing traits of a state economy; liberalising from shackles of restrictions/regulations of a state economy

• Privatization- - Denatiolization- Tfr of State ownership of assets to

pvt sector to the tune of 100% -Disinvestment- Denatiolization of state owned

enterprises of less than 100% ownership to pvt sector - All the economic policies of State which directly or

indirectly promote expansion of role of pvt sector or mkt(deregulation, reducing subsidies,permission to FDI)

• Globalization- Increase in economic integration among nations

-Unrestricted cross border movement of goods,services, capital or labour force is Globalization(WTO)

ECONOMIC REFORMS• FIRST GENERATION REFORMS(1991-2000)- Promotion to pvt sector; Ext sector Reforms like

FDI,abolishing QR on imports; Public Sector Reforms to make PSU efficient,profitable,disinvestment; Financial Secor Reforms like Insurance, Banking; Tax Reforms to avoid tax evasion,simplify, broadbase tax.

• SECOND GENERATION REFORMS(2001 Onwards)- Factor Mkt Reforms where dismantling

Administered Price MechanismPromotion (Remaining Urea, K oil, LPG), Public Sector Reforms for greater autonomy to PSU,disinvestment; Adm Reforms where State from Controller to Fascillitator; Legal Sector Reforms like Labour laws, Company laws; Critical Areas Reforms in Health care,education, agri like R & D in agri,corporate farming.

ECONOMIC REFORMS• THIRD GENERATION REFORMS- PRI(Panchayat Raj Instn)so that

development reaches grass root level; Factor of Inclusiveness

• FOURTH GENERATION REFORMS- IT- enabled reforms- Reforms is a simultaneous and continuos

process and is a mean to an end.

POVERTYTypes- Absolute poverty & Relative PovertyMeasures- Gini Coefficient & Lorenz Curve1.Lakdawala Committee (1984-89)2400 C (Rural)& 2100C

(U)2.Tendulkar Committee (2005-09)-Per Capita Exp per

mnth(Only counts Expenditure on food, health, education, clothing); 816(R) & 1000 (U) i.e. 27&33 resp per day- PCE per month; 27 cr poor

3.Rangarajan Committee(2012-14)- per mth exp for fam of five (food + nonfood items such as education, healthcare, clothing, transport (conveyance), rent. + non-food items that meet nutritional requirements)

4860 (R) & 7035 (U)i.e. 32 & 47 resp per day; 37 cr poor ICMR recommendation for calories, proteins & fat- 2155

C,48gm & 28gm Rural and 2090C,50 gm & 26 gmUrban+-10%

POVERTY4. Saxena Committee for BPL Census in Rural

area(2009)- Automatic exclusion like double the avg agri land of dist,four

or three wheelers , mechanised farm eqpt like tractorthresher,salary 10000, ITR

Automatic inclusion like primitive tribal group,mahadalit, family head as minor or destitute or disabled or single woman.

5. Hashim Committee for BPL fam in Urban Areas Schemes-MNREGA, Urban and Rural livelihood

missions Scheme#1: MNREGA Act 2005 under Rural Development ministry Promises minimum 100 days of unskilled manual

work To each rural household. (not to each person) In a financial year (1st April to 31st March)

1/3rd women participationUnemployment allowance, if you can’t get work within 15 daysState governments have to appoint district level ombudsman to hear complaintsWages: Material ratio = 60:40MNREGA Wages are linked with CPI inflation for Agricultural laborersMGNREGA performancefor the year 2013, Average work days 46; women participation 52.9%MNREGA Reforms already takenIndividual bank/PO accounts for All womenWidowed, deserted, and destitute women identified and covered under MNREGA scheme.Designed “schedule of rates (SoR)” for physically handicapped laborers, so they get fair wages

despite providing less output.Provided convergence with other schemes such as Nirmal Bharat Abhiyan, Panchayat Yuva khel

Kendra, ICDS Anganwadi centres etc.MNREGA: Economic Survey observationsMNREGA was supposed to a “panchayat-centric and demand driven” program. But ground reality

is different.Gram Sabha is unaware of its powers. Social audits not done regularly.Hardly any Gram Sabha using MNREGA for public works such as Playground, Anganwadi etc.Shortage of Technical staff => Delay in work measurement => delay in payment.At many places, males find higher wage-work in nearby towns. Therefore only a few women

come at MNREGA site. Big projects cannot be taken up due to worker shortage.Suggested reform: Use MNREGA for tourism related infrastructure.Budget 2014: promised to use MNREGA for creating Agriculture related “more productive”

assets.

Scheme #2: NRLM / AajeevikaWho? Rural Development Ministry1999: Swarnjayanti Gram Swarozgar Yojana (SGSY).

Later renamed to National Rural Livelihood Mission (NRLM). Finally renamed to Aajeevika.

Wants to lift rural families from abject povertyHow?

By 2024, get one person (preferably woman) from each household, into an income generating Self-help groups (SHG).

By Giving (Bank loans + subsidy + training) to those SHG.Economic Survey observation:

Scheme worked fine for agarbatti, pottery, tailoring and other small business activities.

But at some places, Government made too much infrastructure investment compared to scope of the given business activity.

Aajiveeka: Budget 2014Under Aajiveeka, Women-SHG in backward districts get loans at

cheaper interest rate.Budget 2014 increased the number of backward districts under this

scheme.More districts to get Cheaper SHG-loansLoan interest rateBefore 2014after4%In 150 most backward district+100 more added = 2507%Remaining districtsinterest rate unchanged (7%)Additionally, Budget 2014 also announced “Start Up Village

Entrepreneurship Programme” for rural youth. but exact details yet to be worked out.

Scheme #3: National Urban Livelihood mission

Who? Ministry of Housing & Urban poverty alleviation.

Earlier called Swarnajayanti Sahari Swarojgar Yojana. Then renamed into National urban livelihoods mission, with following features

self-help groups: bank credit + subsidies + skill training

street vendors also get easy loans and skill training

Shelters for the homeless.

UNEMPLOYMENTTYPES- 1. INVOLUNTARY (No Demand) 2. STRUCTURAL (Tech Change) 3. CYCLICAL (Unempl during

downtrend) 4. FRICTIONAL (Change of job)RURAL UNEMPLOYMENT- 1. SEASONAL 2.

DISGUISED 3.

UNDEREMPLOYMENT

INFLATIONDef- General rise in price of goods & services over a period of time in an economy

Terms: Stagflation:Increased Unemplmt & Incr Inflation(contrary to

Philips curve on longer term) Deflation & Disinflation:Reverse of Infl is Deflation &

slowdown in rate of inflation is Disflation. Slowdown, Recession (for 2 consecutive qtrs –ve growth

rate )& Depression( 2 successive yrs –ve growth rate) Inflation spiral-Wages press prices up & prices pull wages up Reflation- Deliberately brought by Govt to decrease unempl &

increase demand by increasing public exp & decreasing tax rates Philips Curve- Inverse reln betn inflation & unemployment; In

shorter term, inflationary policies of Govt lead to employment;longer -unempl

INFLATIONTypes- Based on rate, CTG RH Creeping (1-5%), Trotting (6-10%),Galloping(11-

20%), Runaway (21-40%), Hyperinflation (>100%) Based On cause, Demand Pull (Dem-pul) Supply Push / Structural 1. Dem- Pul: Rt ward shift of Demand curve; Increased purchasing power of masses Increased public exp;Increased pvt exp by new pvt

projects;Decreased taxation;Increased poulation;Deficit financing; Black money;Increased exports making less domestic goods; changed consumption patterns

2. Supply Push: Increased indirect taxation;Decreased factors of

prod;Natural calamities;Industrial unrest;Hoarding of goods;Infrastructural bottlenecks; Adm price mech like MSP

INFLATIONEffects- Inefficiencies in mkt & difficult to budget on long term;

Decreased investment & savings;Negative BoT;Decresed currency exchanges value; Increased IT rates.

• Measures – Monetary: By RBI in terms of Credit Control thru BR, CRR, SLR, RR,RRR. Demonetisation of currency (stripping)

Issue of new Currency Fiscal : (Decreased money in mkt) thru Redcn in unnecessary Exp;Increased

taxes;Increased savings thru bonds; Surplus budget,public debt• Urjit Patel Committee (Jan 2014): RBI should adopt new

CPI;Infln should be 4+-2%;0/12/24-10/8/6% CPI;Monetary Policy Committee.

INFLATION INDEX WPI – Index to measure the change in avg price level of

goods traded in wholesale mkt.- Headline inflation based on WPI.- Measured by DIPP (Dept of Ind Promotion & Policy )Min of

commrc- Policies like infl mgt,prices of essential commodities based on

it- 676 items mainly mfg products followed by primary products- Limitations- No consideration of services sector& no mfg

products of unorganised sector.• CPI – Index to measure the change in avg price level of

goods & services at consumer level; Larger weightage to primary art, so food inflation reflected more in CPI

- 7 CPI indices1.CPI (IW):Labour Bureau; Govt Employees; DA & Pay commsn2. CPI (Urban Non manual employees):DA of empl of foreign

companies ,etc

INFLATION INDEX3.CPI (AL):Revising min wages of Agri labours4. CPI (Rural worker):Other than agri workers5. CPI (Urban ), 6. CPI (Rural ) & 7.CPI (Urban-Rural)• Core Inflation- CPI excluding FOOD & FUEL vs

Headline inflation• SPI(Service Price Index)- Currently in exp stage for selected services like

tpt,airlines,rail,port,trade,etc- NHB RESIDEX for Housing

MONETARY POLICY MONETARY POLICY-1.EXPANSIONIST MONETARY POLICY i.e. EMP(Increases supply of

money in mkt;measure during recession;risk of inflation)2.CONTRACTIONIST MONETARY POLICY i.e. CMP (Decreases

supply of money in mkt;measure during inflation;risk of deflation)

• Objectives of monetary policy- 1. Economic growth, 2. Price stability, 3.Exchange rate

stability, 4. Genetares employment, 5. Equitable distribution of income.

QUANTITATIVE MEASURES –1.BANK RATE:By RBI to commercial banks for long term credit

needs;7.75% as on 29 Sept.2. CRR:Proportion of total deposits which commercial banks

have to keep with RBI in liquid form;4% as of 29 Sept;3-20%; No interest paid on thi

3. SLR:Proportion of deposits which commercial banks have to keep in liquid form as cash or gold;21.5%-40%; No interests.

MONETARY POLICY 4.REPO RATE:Rate at which banks borrow from RBI;

6.75%5. REVERSE REPO: Rate at which RBI borrows from

commercial banks; Reason- profit; 5.75%; RR +RRR-Policy rates;Diff of 1% bet RR & RRR.

6. OPEN MARKET OPERATIONS (OMO): Buying & selling of Govt securities in open mkt.

* Marginal Standing Facility (MSF)- Special window for banks to borrow from RBI against approved G- secs in an emergency situations like acute cash shortage; Higher than Repo Rate; 7.75%

PPP MODEL.Pros: Attracts private investment; Best of Private sector in terms of efficiency, innovation & risk sharing; Risk tfr; Long term soln for infra in terms of quality provsn, maintainance for long term.

. Cons: Project cost overrun; Social & public sensitivities; lack of transparency; Crony capitalism; Corruption;Increased NPAs of PSU;Ltd flexibility; Pvt sector capacity (selecting wrong players for big projects),No one stop solution ( not useful for rapid or changing sectors).Lack of role of CSO, People; Lokpal & Audit; RTI.

INDIAN AGRICULTURE - 48.9% Agri popln & 17.4% of GDP from agri.- Role of Agri in Indian Economy- Half the popln & 17.4%

GDP; Industrial devlt as raw material; Role in food security; International trade – net earner.

- Salient features of Indian agri- Marginal & Small land holders> 80%; Surplus agri labour; Gamble on monsoon; Lack of modern inputs; Irrigation; lack of credit facilities & dependence on moneylenders.

- Concepts- Economic Land holing ( min essential area for profitable agri); Family Land holding ( Plough Unit for a family with one plough); Optimum Land Holding (max size owned by a fam)

- Land Reforms- Objectives- Increase production & Equality.- Steps- 1. Abolition of intermediaries (rayatwari, mahalwari

&Zamindari) 2. Tenancy Reforms- Regulation of rent;Security of

tenure;Ownership rights.

INDIAN AGRICULTURE 3. Reorganisation of Agri- Ceiling of landholdings ( 54 &

18 hectr) Consolidation of Land Holdings.- Failure of LR- Land as a social prestige; lack of political

will power; poor land records; defect in land ceiling laws.Green Revolution- > 250 % increase in wheat & rice

production.- Components- HYV seeds ( dwarf variety); Irrigation;

Chemical Fertilizers; Chemical Pesticides & Herbicides; Agri credit, storage & mktg/ distrbn.

- Impact- 1. Foodgrain( wheat, jowar, bajra, maize,rice) vs Non foodgrain disparity2. Socioeconomic Impact- Interregional disparity wheat & rice; Interpersonal disparity( change in wages area wise) 3. Ecological impact- Soil fertility degradation,water table, envtl degrdn.

4. MSP, Procurement Price & issue Price( FCI selling) .

INDIAN AGRICULTURE Agri Price policy & Food security-Useful for both producers as well as consumers against

price fluctuations- CACP in 1965- 1985 for recommending MSP, Procurement

price & Issue price(FCI selling price). - Problems with MSP- Wheat & Rice price increase yr by yr

creating distorted prodn pattern; From Surplus state procurement of wheat & rice creating regional disparities & bias;huge stocks with FCI; uncontrolled inflation;uncompetitive ariculture vis a vis mkt competition.

- Food security- Measures like GR, LR, Agri price policy.Distribution- FCI- procurement,storage,disrtibution of

wheat,maize & coarse foodgrains while NAFED related to oilseeds and pulses.

- Operational stock for TPDS & welfare schemes;buffer stock for exigencies.

INDIAN AGRICULTURE PDS & TPDS - Failure : Ltd to wheat & rice only; All states equal

formula;More in urban than rural; faulty inclusion & exclusion cards & ghost cards; leakages & corruption.

- Food security ActAgricultural Finance-Credit needs as Short term (<15 mnths), Medium Term

(15- 5 yrs) & Long term (>5 yrs).Sources- Non institutional as

moneylenders,traders,relatives & Institutional sources as cooperative banks, RRB s & Commercial banks- supervised by NABARD ( apex inst to promote, develope & supervise agri & rural credit delivery mech)

- Kisan Credit Card- Agricultural Insurance Schemes- SUBSIDIES &MISCELLANEOUS like schemes.

ECONOMIC SURVEY 2016:INDIAN AGRICULTURE

(Chapt- 5(ii),4(i),9(i)• Share for agri in employment 48.9% of workfoce(NSSO

2011-12) & GDP was 17.4% in 2014-15 , at 2011-12 constant prices.

• Twelfth FY plan envisages 4% growth rate in agri & allied sectors to achieve 8% growth rate.

• From 2010-11, the percentage changes in avg yields of rice, wheat, pulses, oilseeds and cotton are also showing declining trends, which is a cause for concern.

• % distr of net irrigated area to total cropped area 33.9% in 2012-13;Need of increased acreage under irrigation & efficient microirrigation technologies- ‘more crop per drop’.

• Productivity increase- Irrigation; mechanization of farm eqpt; quality seeds; fertilizers; pesticides; credit facilities; agricultural research & extension services


(Chapt- 5(ii),4(i),9(i)• The Pardarshi Kisan Sewa Yojana (PKSY) was launched in

September, 2014 and rolled out in April 2015 in Uttar Pradesh for distribution of hybrid seeds through DBT.

• Government of India has allocated R15,000 crore to the Long Term Rural Credit Fund (LTRCF) set up in the National Bank for Agriculture and Rural Development (NABARD) for 2015- 16 as compared to R5000 crore in 2014-15. With the help of this fund, the Cooperative Banks/ Regional Rural Banks (RRBs) can draw much higher refinance support from NABARD for financing medium- and long- term agricultural loans during 2015-16.

• % share of horticulture output in agri is more than 33 per cent. Out of the six categories e.g. Fruits, Vegetables, Flowers, Aromatic plants, Spices and Plantation Crops, the highest annual growth of 9.5 per cent is seen in fruit production during 2013-14.


(Chapt- 5(ii),4(i),9(i)• Mission for Integrated Development of Horticulture

(MIDH), was launched during the Twelfth Plan with effect from 2014-15, for the holistic development of the horticulture sector covering fruits, vegetables, mushrooms, spices, flowers, aromatic plants, coconut, cashew, cocoa and bamboo. The MIDH subsumes the National Horticulture Mission (NHM), the Horticulture Mission for North East & Himalayan States (HMNEH), the National Bamboo Mission (NBM), the National Horticulture Board (NHB), the Coconut Development Board (CDB) and the Central Institute for Horticulture (CIH), Nagaland.

• There is wastage at every post harvest stage, from the farm to the table, which needs to be minimized.

• India ranks first in milk production, accounting for 18.5% of world prod


(Chapt- 5(ii),4(i),9(i)• Per capita availability of milk in India has

increased from 176 grams per day in 1990-91 to 322 grams per day by 2014-15. It is more than the world average of 294 grams per day during 2013.


• NEED OF MORE FROM LESS- Indian Agriculture has become cereal centric; input intensive (land,water,fertilisers); scarcity value of land water (due to industrialisation & climate change);evolving dietary patterns of more protein consumption. To adapt to these changes need paradigm shift of incresing productivity by ‘getting more from less’ from water in terms of microirrigation methods,; cultivation of less water intensive crops (pulses, oilseeds), supported by favourable MSP regime & strengthened procurement system; agri research & extension services & solution for segmentation in Indian agriculture.

• India , a major producer & consumer of pulses in the world; key pulses producing state M.P. has yield barely 3/5 th of China.


• Consolidation of ongoing irrigation schemes – the Accelerated Irrigation Beneft Programme (AIBP), Integrated Watershed Management Programme (IWMP) and On Farm Water Management (OFWM) – into the Prime Minister’s Krishi Sinchayi Yojana (PMKSY) offers the possibility of convergence of investments in irrigation, from water source to distribution and end-use.

• Subsidies on power for agriculture that, apart from its benefts towards farmers, incentivises wasteful use of water and hasten the decline of water tables.

• India, a net exporter of water- China imports water-intensive soybeans, cotton, meat and cereal grains , while exporting vegetables, fruits and processed food. India, on the other hand, exports water-intensive rice, cotton, sugar and soybean.


• Govt announces MSP for 23 crops,but effective MSP-linked procurement occurs only in wheat, rice & cotton.

• One way of rationalizing MSP policy is to make these price signals reflect social rather than just private returns of production. Wheat, sugarcane or paddy, taking account of the negative externalities from using chemical fertiliser (soil depletion and health), water (falling water tables), and from burning crops (adverse health consequences). Conversely, the social returns to pulse production is higher than the private returns, because it not only uses less water and fertiliser but fxes atmospheric nitrogen naturally and helps keep the soil porous and well aerated because of its deep and extensive root systems.


• Market segmentation lead to large differences in producer and consumer prices. Dispersion for prices received by farmers is measured as the ratio between the highest (P95) and the lowest (P5) price of the crop in a country, i.e. if this ratio were to be equal to one, it would imply that there is no price dispersion, and that there is one common market

• Causes – Differences in connectivity (rural roads), power of intermediaries, degree of private sector competition, propensity of regional exposure to shocks, local storage capacity, mandi infrastructure, storage life of the crop and processing cost.

• Greater market integration is essential for farmers to get higher farm gate prices. GST bill is a step in the right direction, a lot more needs to be done, including, creating better physical infrastructure, improved price dissemination campaigns, and removing laws that force farmers to sell to local monopolies, etc. Nearly seventy years after Independence, India is still far from being one nation in agriculture.


• 0.5% of GDP on fertilizer subsidies (FOOD>FERTILIZERS>FUEL), 70% of which is on Urea.

Distortions in urea are the result of multiple regulations. First, there are large subsidies based on end use—only agricultural urea is subsidised—which creates incentives to divert subsidised urea to industry and across the border. Subsidised urea suffers from 3 types of leakages-inefficient urea production;diversion to non agri use & consumption largely by rich farmers, leading to only 35% of urea subsidy reaching to beneficiaries like marginal & small farmers.

Second, under-pricing urea vis a vis other fertilizers, leading to overuse and adverse effects on environment.

Third, Exit problem( multiple distortions—price and movement controls, manufacturer subsidies, import restrictions—feed upon each other, making it diffcult to reallocate resources within the sector to more effcient uses)


• Of all the fertilisers, Urea is the most produced (86 per cent), the most consumed (74 per cent share), and the most imported (52 per cent) fertilizer. It also faces the most government intervention.

• NBS- DAP and MOP producers and importers receive a Nutrient Based Subsidy (NBS) based on a formula that determines the amount of N, P and K in a given amount of fertiliser. Per kg subsidies on DAP and MOP fertiliser are hence fxed—they do not vary with market prices. Imports of DAP and MOP are also not controlled. The prices farmers face are thus deregulated market prices adjusted by fxed nutrient subsidy. Government involvement in DAP and MOP is limited to paying producers and importers a fxed nutrient based subsidy which works out to be roughly 35 per cent of the cost of production.


Concept of NBS : What is Nutrient Based subsidy (NBS)?Launched in 2010 replacing “product based subsidy”.Under NBS, govt. gives subsidy based on weight of the different

Macro/micro nutrient in the fertilizer.In this way, fertilizers companies can make new product mixes with micro-nutrients, according to soil requirement in each region.And farmers can afford to buy these tailor-made fertilizers bcoz Govt gives subsidy to keep them cheap.

Disadvantages-Urea not covered in this scheme; Delay in NBS subsidy payments, so Fertilizer companies focus more on Urea than other fertilz.

Result: shortage of (Cheap) non-urea fertilizers.So, farmers also overuse Urea. Ideal ratio of NPK disruptedFarmer doesn’t move to specialized fruits, vegetable, horticulture cropping- because they require special non-Urea fertilizers, which are not easily available at cheap rates.

So, one hand, tax payers pay for subsidies (and MSP), yet consumers still suffer from food inflation due to low production.


Shortage of coal and natural gas has decreased Urea production. Government has to import from abroad.

Urea smuggling-UP, Bihar-urea smuggled to Bangladesh and Nepal.

Maharashtra, Gujarat and Haryana-Urea smuggled to chemical industries- especially in dyeing, inks, coatings, plastics and paints.

Result: nearly 3 million tonnes of Urea, doesn’t reach farmers.

Thus fertilizer subsidy hurts everyone: farmers, firms, taxpayers, and consumers.


• GOVT INTERVENTION IN UREA-Sets MRP at which urea must be sold to farmers.Subsidy to 30 domestic producers that is frm-specifc

on a cost-plus basis, meaning that more ineffIcient producers get larger subsidies.

Subsidy to importers (only 3) Imports are canalisedMovement of fertiliser is directed—that is, the

government tells manufacturers and importers how much to import and where to sell their urea.

• RESULT- LEAKAGESBlack marketing & smuggling as urea subsidy for agri

use only. Small Farmer Inability to derive full benefits


Inefficient fertilizer mfg (subsidy a frm receives is based on its cost of production.As a consequence, inefficient firms with high production costs survive and the incentive to lower costs is blunted.)

• REFORMS- Decanalising urea imports Urea under Nutrient based subsidy pgme. Turning fertilizer into JAM- - Neem- coating urea ( Neem-coating makes it more diffcult

for black marketers to divert urea to industrial consumers. It also benefts farmers by reducing nitrogen losses from the soil by providing greater nutrient to the crop. As a result, farmers need less urea to achieve the same effect)

- -Targeting small & marginal land-holders (problem related to sharecroppers and small tenants)


- Universal subsidy with cap on no of urea bags (A preferred option would be to set a cap on the number of subsidised bags each household can purchase and require biometric authentication at the point of sale (POS). This is the approach adopted for kerosene and food in Andhra Pradesh)

- DBT in fertilizer subsidy• Conclusion-The current subsidy design—

uncapped, varying by end use, and larger for more inefficient producers—incentivises diversion, creates a black market that hurts farmers most and does not encourage producers to operate efficiently. Reforms will indicate readiness for resolving exit problem of Indian agriculture.

PRADHAN MANTRI FASAL BIMA YOJANA Launched in Jan 2016, replacing existing NAIS & Modified NAIS. Commence functioning from Kharif season of 2016. Features- Uniform premium rate of 2%, 1.5% & 5% of

sum assured for Kharif, Rabi & horticulture, commercial crops respectively

The premium rates to be paid by farmers are very low and balance premium will be paid by Govt to provide full insured amount to the farmers against crop loss on account of natural calamities.There is no upper limit on Government subsidy. Even if balance premium is 90%, it will be borne by the Government.

Earlier, there was a provision of capping the premium rate which resulted in low claims being paid to farmers. This capping was done to limit Government outgo on the premium subsidy. This capping has now been removed and farmers will get claim against full sum insured without any reduction

PRADHAN MANTRI FASAL BIMA YOJANA

This Scheme also covers Loss / damage resulting from occurrence of identified localized risks i.e. hailstorm, landslide.

Coverage is available up to a maximum period of 14 days from harvesting for those crops which are kept in “cut & spread” condition to dry in the field after harvesting, against specific perils of cyclone / cyclonic rains, unseasonal rains throughout the country.

Use of technology will be encouraged to a great extent. Smart phones will be used to capture and upload data of crop cutting to reduce the delays in claim payment to farmers.

Government liability on premium subsidy would be shared by the Central and State governments on a 50:50 basis.

Private insurance companies, along with the Agriculture Insurance Company of India Ltd, will implement the scheme

Applicable for 3 yrs.

PRADHAN MANTRI FASAL BIMA YOJANA

Differences between old & new scheme- 11 states vs All states & UTs; High premium rates

vs less premium rates; slow claim procedure vs fast claim; no post- harvest losses vs post-harvest losses upto 14 days; no use of tech vs use of tech.

NATIONAL FOOD SECURITY ACT, 2013

• Aim- To provide food & nutritional security in human life cycle approach, by ensuring access to adequate qty of quality food at affordable prices to people to live a life with dignity.

‘Welfare based approach’ to ‘ Rights based approach’. Jurisdiction- All states & UTs in India; Covering 2/3 rd of

popln of India i.e. Upto 75% poln in rural & 50% poln in India. 3/2/1 Rs per kg- 5 kg per person of rice/wheat/coarse

foodgrains from priority households and 35 kg per household of AAY scheme

plus free meal to pregnant & lactating mothers 6 mnths post-child birth and 6000/- maternity benefits

plus free meal/mid-day meals to children betn age gr 6 mnths-14 yrs

Failure to prvide this by State Govt- Food security allce.


• Reforms in TPDS scheme- Door step delivery of food grains to TPDS outlets. Appl of ICT tools incl icl end to end computerisation to

ensure transparency & prevent diversion. Use of AADHAR. FPS selection- public inst ,SHG, Cooperative inst,etc Diversification of commodities through TPDS. Innovative schemes like food coupons, cash

tfr,DBT,etc.• Grievance Redressal Mech- Dist Grievance

Redressal Offr; State Food Commission.• Obligations of Central Govt- Regular supply of

foodgrains to eligible households by proper allocation of foodgrains to state govt through central pool.


• Obligations of State- Implementation & Monitoring of scheme; local storage; food security allce.

• Obligations of LSG/PRI- Implementation as per notification.

• Provisions for advancing Food security- Revitalisation of agriculture; procurement, storage & movement related interventions & others like adolescent girls health , nutrition, drinking water, sanitation,etc.

SUBSIDIES Subsidies- an essential attribute of ‘welfare state’. Despite spending as high as 3.77 lakh crore rupees

annually on subsidies, there is no ‘transformational impact’ on standard of living of masses. While subsidies have helped some poor people to do firefighting in life, main allegation on a subsidy economy is that, through subsidies, money meant for poorest is appropriated by richer sections of the society due to mistargeting and leakages.

Subsidies- a Hand- Holding mechanism; Politicization of subsidies.

Subsidies should be aimed at specific development objectives. On achievement of these objectives subsidies should be phased out. It is only then that subsidies can go well with an undistorted market economy.

SUBSIDIES• Subsidies led distortions in India- Energy-groundwater nexus of subsidies- Need of

rationalization of power & water subsidies to farmers; government has plans to separate agriculture feeder network from rest, under Deen Dayal Upadhayay Gram Jyoti Yojna. This separate agriculture feeder will supply electricity only for a few hours a day. This was first tried by Gujrat and results were encouraging as it had role in making Gujrat a power surplus state, along with arresting continuous decline in groundwater levels.

Subsidized fertilizers – Nutrient Based Subsidy - to fix subsidy as per nutrients in the fertilizer and leave the determination of price to suppliers. Presently Urea is not covered under the scheme & consequently subsidized price of Urea remained stagnant even when real costs of production have risen significantly.; Negative externalities on environment-soil degradation, envt damage.

SUBSIDIES Cultivation of wheat, Rice and sugarcane at cost of

pulses, horticulture crops and coarse but nutritious grains-

Evolving dietary pattern towards pulses consumption; Pulses are most suitable to be grown in areas of Maharashtra

and Madhya Pradesh, yet large parts of these areas are under cultivation of sugarcane. Sugarcane due to high ‘fair and remunerative price’ is being sown in these areas. This create two problems – one, it deprives Indians of their source of protein; two, these areas are water deficit and sugarcane is water guzzling crop. This crop is sucking scarce water rapidly and when monsoon failed again this time, mainly in Marathwada; farmer had no way to escape.

Pulses are water efficient crops with capacity to rejuvenate soil by process of nitrogen fixing .Secondly, issue of Rice & wheat surplus production due to MSP policies focussing on them.

SUBSIDIES Railways subsidies- Freight & passenger fares subsidized Agricultural finance- Farmers are entitled to pre- harvest

loan at lesser interest rate & further 3% subvention in case of timely payment. Farmers can also take loan for post-harvest time against negotiable warehouse receipt.

3 discrepancies- 1.Trend for a single loan amount is increasing for most of these subsidized loans. This means that more subsidies is going in favour of rich farmers. 2. Extension of subsidized credit is concentrated in last three months of financial year, which indicates that reluctant banks otherwise unable to meet priority sector lending targets, desperately disburse loans to reach target at the end only. It is unlikely that this way credit will reach to desirable party.3.Agriculture credit is getting concentrated on peripheries of urban areas, so money is being diverted to nonagricultural use.

SUBSIDIESFood inflation: Mainly due to increasing input

costs to farmer coupled with persistent increase in MSP. This forces government’s agency FCI to procure foodgrains in open ended manner. As a result, government ends up procuring 25-33% of total foodgrains production in the country.

Few experts believe that entitlements under Food Security Act are sufficient only to fulfill 50% of requirement of foodgrains for a household. For this 50%, there is massive but inefficient storage and PDS system. This in many ways significantly increases price of remaining 50% food grain need of households. So, a well-intended system may be actually working counter to its stated goals.

SUBSIDIES• DBT as a solution- Fiscal savings – Assuming explicit subsidies being

extended by state in current form to remain between 3 to 4 lakh crores, DBT will curb this expenditure by around 15%.

Hits at roots of corruption – It is common knowledge that subsidized fertilizer is diverted to industrial use from agricultural sector, kerosene is mixed in diesel and PDS food is leaked in black markets. In short, subsidy regime has nurtured a mammoth corrupt ecosystem and black economy in India. When DBT is implemented everything will be sold on market prices by the government. For E.g. Fair Price Shop owner will get PDS food in full CIP plus margin kept by state government. Then question of giving away PDS commodities illegitimately doesn’t arise.

SUBSIDIES Controling inflation – Distortions created by

subsidy regimes discourage investment in relevant sectors. This creates supply side constraints in economy. It is expected that recent deregulation of diesel will increase production and private firms will reopen their retail outlets. This will create competition which often results in cheaper prices.

Further, trading and purchase at market prices keeps demand in check. For e.g. subsidy on urea encourages farmers to use it more even when there is no due benefit. This created huge demand of urea and in turn high prices of unsubsidized urea. This scenario has increased government’s subsidy on urea manifold, which is not only waste but a disaster in itself. Similar case is with the food grains. DBT will leave more food grain in market and hence lower prices.

SUBSIDIES Better nutrition – When there is cash transfer,

poor will be able to diversify their diet by including more items like pulses, eggs etc. This will increase their protein intake.

However, there is risk that some households will misuse this cash in social evils like alcohol, tobacco or gambling. For this government has made eldest women in a household target beneficiary for cash transfers. This step is likely to empower women.

PAHAL scheme – annual saving of Rs. 15000 crore.Direct Cash Transfer is also being implemented for

transfer of wages in MGNREGS scheme. It has resulted in reduction in delayed and fake payments in relevant areas.

WTO & AGRICULTURE• WTO’s agreement on agriculture was concluded in 1994 &

aimed to remove trade barriers and to promote transparent market access and global mkt integration. Agreement on agriculture stands on 3 pillars viz. Domestic

Support, Market Access, and Export Subsidies.Domestic Support- It refers to subsidies like MSP

or Input subsidies which are direct and product specific. Subsidies are categorized into 3 boxes –

1. Green Box .Subsidies which are no or least market distorting includes measures decoupled from output such as income support payments, payments under environmental programs, and agricultural research & development subsidies.

USA has exploited it to fullest by decoupling subsidies from outputs & as of now green box subsidies are about 90% of its total.

WTO & AGRICULTURE2. Blue Box- Only ‘Production limiting Subsidies’ under this

are allowed. They cover payments based on acreage, yield, or number of livestock in a base year.

‘Targets price’ are allowed to be fixed by government and if ‘market prices’ are lower, then farmer will be compensated with difference between target prices and market prices in cash. This cash shall not be invested by farmer in expansion of production.

Loophole- No limit on target prices that can be set and those are often set far above market prices deliberately. EU is active on this front.

3. Amber Box- Trade distorting subsidies and need to be curbed.It contains category of domestic support,scheduled for reduction based on a formula called the “Aggregate Measure of Support” (AMS). AMS is money spent by govt on agri prodn, except for those contained in theBlue Box, Green Box and ‘de minimis’.

WTO & AGRICULTURE It required member countries to report their total AMS for the

period between 1986 and 1988, bind it, and reduce it according to an agreed upon schedule. Developed countries agreed to reduce these figures by 20% over six years starting in 1995. Developing countries agreed to make 13% cuts over 10 years. Least – developed countries do not need to make any cuts.

As we can note that Subsidies were bind to levels of 1986-1988, there was inequality at very beginning of the agreement. At that time subsidies which latter came under ‘Amber Box’ were historically high in western countries. In developing countries, including India these subsidies were very limited. It is only now under pressure of Inflation in prices of agricultural Inputs, and wide differences between market prices and Minimum support Price, subsidies have grown to this level. In effect developed countries are allowed to maintain substantially higher amount of trade distorting subsidies.

Blue Box- This is the amber box with conditions.The conditions are designed to reduce distortion subsidy that would normally be in the amber box & is placed in the blue box if it requires farmer or ascertain production level.These subsidies are nothing but certain direct payments Made to farmers by the government in the form of assistance program to encourage agriculture, rural development,etc.At present there are no limits on spending on the blue box subsidies.In the current negotiation, countries want to keep blue box as it is because they see it as a crucial means of moving away distorting the amber box subsidies without causing too much hardship.

WTO & AGRICULTURE• De-Minimis provision Developed countries are allowed to maintain trade distorting

subsidies or ‘Amber box’ subsidies to level of 5% of total value of agricultural output & for developing countries upto 10%.

So far India’s subsidies are below this limit, but it is growing consistently. This is because MSP are always revised upward whereas Market Prices have fluctuating trends.

Market Access: The market access requires that tariffs fixed (like custom duties) by individual countries be cut progressively to allow free trade. It also required countries to remove non-tariff barriers and convert them to Tariff duties.

India has agreed to this agreement and substantially reduced tariffs. Only goods which are exempted by the agreement are kept under control.

WTO & AGRICULTURE Export Subsidy: These can be in form of subsidy on

inputs of agriculture, making export cheaper or can be other incentives for exports such as import duty remission etc. These can result in dumping of highly subsidized (and cheap) products in other country. This can damage domestic agriculture sector of other country.

These subsidies are also aligned to 1986-1990 levels.But USA is dodging this provision by its Export credit guarantee program. In this, USA Govt gives subsidized credit to purchaser of US agricultural products, which are to be paid back in long periods. e.g. Food Aid programs, such as (Public Law-480) under which food aid is send massively to under developed countries.It results in perpetual dependence on foreign grain in recipient countries and destroys their domestic agriculture. So this is equally trade distorting subsidy, which is not currently under ambit of WTO’s AOA.

WTO & AGRICULTURE Special Safeguard MechanismA Special Safeguard Mechanism (SSM) would allow

developing countries to impose additional (temporary) safeguard duties in the event of an abnormal surge in imports or the entry of unusually cheap imports.

Debates have arisen around this question, some negotiating parties claiming that SSM could be repeatedly and excessively invoked, distorting trade. In turn, the G33 bloc of developing countries, a major SSM proponent, has argued that breaches of bound tariffs should not be ruled out if the SSM is to be an effective. remedy. SSM is quite important in a scenario in which West has significant powers to subsidize their production and in turn, exports.

WTO & AGRICULTURE Sanitary and Phyto- Sanitary Measures It sets out the basic rules for food safety and animal

and plant health standards. It allows countries to set their own standards. But it also says regulations must be based on science. They should be applied only to the extent necessary to protect human, animal or plant life or health & they should not arbitrarily/ unjustifiably discriminate between countries where identical or similar conditions prevail.

Bali Summit 2013- LDC- DFQF mkt access Peace clause (upto 2017, later on permanent without

time limit) Trade facilitation

WTO & AGRICULTURENairobi Summit 2015- Abolish export subsidies Public stock holding for food security (on hold) Spl Safeguard mech (SSM) for developing

countries (on hold) DDA- (no firm commitment)Bargaining tool by India- Trade facilitation.

INDUSTRIESIndustrial Policy Resolution, 1948-(a) Exclusive Govt Monopoly mfg of arms& ammunition,

production and control of atomic energy and railways.(b) Government Monopoly for New Units

This category included coal, iron and steel, aircraft manufacture, ship building, telephone, telegraphs and wireless apparatus (excluding radio receiving sets) and mineral oils. New undertakings in this category could henceforth be undertaken only by the State.

(c) Regulation Industries of such basic importance like machine tools, chemicals, fertilizers, non ferrous metals,rubber industry, cement, paper, newsprint, automobiles, electric engineering- Central Government would feel necessary to plan and regulate.

(d) Unregulated private enterprise Industries in this category left open to the private sector, individual as well as cooperative.

The main thrust of the 1948 Industrial Policy was to lay the foundat

ion of a mixed economy where both the private and public enterprises were to be given importance and work together to develop economy to accelerate the pace of industrial development.

•

INDUSTRIESIndustrial Policy Resolution, 1956-Schedule A: Future development, exclusive res

ponsibility of State. 17 industries;heavy& strategic industries such as defense eqpt; Atomic energy; Iron and Steel.

Schedule B: Progressively State owned & pvt enterprises,expected only to supplement the efforts of the State. 12 industries were included.

Schedule C: Industries left open to pvt sector. -

Monopolistic and Restrictive Trade Practices Act, 1969

This act was hallmark of infamous ‘license quota permit’ system. Companies having more than specified value of assets needed to take permission/license,before any expansion and commencement of operations.

Industrial Policy Resolution 1977- It was result of change in government at centre. More focus on small scale industry,

cottage,vilage industry. Itwas move away from Nehruvian Mahalanobis ideology to Gandhian ideology of economic development.

Small sector into three categories: a) Cottage and household industries which provide self employment on a wide scale.b) Tiny sector incorporating investment in industrial unit in machinery and eqpt upto Rs.

1 lac & situated in towns with a population of less than 50000.c) Small scale industries comprising industrial units with an investment of Rs. 10 lakh

and in case of ancillaries with an investment in fixed capital upto Rs. 15 lakh. This resolution categorized large industries on the lines of Basic/

core industry, Capital Goods industries& High Technology industry and other Industries.

Further, foreign investment would be encouraged only for some industries in the national interest as decided by the Government. This clearly meant that in areas where the foreign collaboration was not required, such case would not be reviewed. For this there was draconian Foreign Exchange Regulation Act in place.

.

Industrial Policy resolution, 1980--Congress made come back and soon restored its own industrial policy. .Regulations, Licensing, restrictions were eased a bit signaling inclination towards private

sector. New Industrial Policy, 1991 - Shift from ‘imperative’ to ‘indicative’ planning under new system. New industrial policy abolished all industrial licensing, irrespective of the level of investment,

except for a short list of18 industries related to the security and strategic concerns, hazardous chemicals and over riding environmental reasons and items of elitist consumption . However, of these 18 industries, 13 categories have been removed from the list gradually and currently only 5 category ;health, strategic and security considerations industries needs license viz. Alcohol, cigarettes, hazardous chemicals, electronic, aerospace and all types of defence eqpt Policy on Public Sector – The 1956 Resolution had reserved 17 industries for the public sector; 1991 policy to8&as of now only 2 industries reserved for govt Atomic Energy , Rail

For Chronically Sick industries- BIFR. Privatization/disinvestment . Removal of threshold limit under MRTP Act; Indigenization of technology. Removal of Mandatory Convertible Clause into equity NEW MANUFACTURING POLICY, 2011 -

The Government of India has announced a national manufacturing policy with the objective of enhancing the share of manufacturing in GDP to 25%within a decade and creating 100 million jobs

Micro Small and Medium Enterprise Small scale industry sector output contributes almost 40% of the gross Industrial value

added 45% of the total exports from India,and is the second largest employer of human resources after agriculture. The development of Small Scale Sector has therefore been assigned an important role in India’s national plans.

There is separate ministry for MSMEs which helps in following way. 1. Reservation – Reservation of products for exclusive manufacture in the small scale sector was intro

duced for the first time in 1967 with the,reservation of 47 items. As of July 2010, 20 item are reserved for exclusive manufacture in the small scale sector.

2. Government has ‘procurement policy’ which prefers SSI – 358 items exclusive procurement policy for SSI.

3. Interest Subvention schemes are started from time to time.4. Technology Upgradation Fund Scheme -

Subsidy is available to small and medium scale industry to adopt new technology. Subsidy is available either on Capital Expenditure, or as interest Subvention.

5. Export Assistance & Facilities – In certain cases duty free or with concessional rate of Custom Duty, so as to ensure higher production for exports. There were less restriction for exports by this sector and overall various supporting facilities such as remission of duties paid on input materials were available.

Exporters are recognized as Export House, Trading Houses, Star Trading Houses and Super Star Trading Houses on the basis of certain criteria as,laid down in the Export Import Policy 1997 2002. Criteria are quantitative targets, such as turnover or FOREX earned.

• Special Economic Zone-It is one or more areas of a country where the tariffs and quotas are eliminated and bureaucratic requirements are lowered sothat more companies are attracted to the area.

In India, the policy for setting up SEZ was introduced on April 1, 2000 with a view to provide an internationally competitive and hassle free environment for exports. The policy offered setting up of SEZ in the public, private, joint sector or by State Govt

Prior to Special economic zones, Expert processing Zones (EPZ) were in vogue. With a view to overcome the shortcomings experienced on account of the,multiplicity of controls and clearance(SEZ provides ‘single window clearance’), absence of world class infrastructure, an unstable fiscal regime and with a,view to attract larger foreign investments in India, SEZ Policy was announced in April 2000. For all specified procedural,purposes Special Economic Zones are considered foreign territory within the country. Domestic trade with SEZ is generally eligible for export concessions.

Disinvestment Timeline in IndiaDisinvestment: When Government sells its shares of a PSU, to private sector company / individual.

Privatization: when Government sells so many shares, that it no longer remains the majority shareholder of the given PSU.

1991-Interim budget, Government announced 20% disinvestment in selected PSUs.

Their shares were sold to Mutual funds and financial institutions (UTI, EPFO, LIC etc.)-1992

1993-Rangarajan Committee suggests:-49% disinvestment in PSUs reserved for public sector;74% disinvestment in all other PSUs

Government did not implement.

1996-Disinvestment commission under GV Ramakrishna. It was a non-statutory, advisory body (similar to UPA’s NAC).

1998-2000--Vajpayee Government classifies PSUs into two parts

Strategic: arms-ammunition, railway, nuke energy – NO disinvestmentNon-strategic: Dsinvestment in a phased manner. Hindustan Zinc, BALCO, Maruti

To implement above policy, Department of disinvestment setup under Finance ministry.

2004-UPA comes into power, Common Minimum program (CMP) updates disinvestment policy

Sick PSUs will be revived;No disinvestment in profit making PSUs;PSUs will get commercial autonomy

2005-Whatever Money Government earns from selling its PSU shares- it’ll got o National investment fund (NIF). 2005-09-Disinvestment remains stagnant because Left allies of the UPA Government stonewall everything.

2009 onwards-UPA-2 without left parties. Government resumes disinvestment process.

All PSUs can be disinvested, but upper limit: 49%2013-14--Plan for 40,000 crores via disinvestment of Indian Oil, BHEL, NHPC, Neyveli lignite etc. but hardly managed to

get ~16,000 because--Oil ministry, mining ministry, trade unions opposed the move, files were delayed; Lukewarm response from investors because sharemarket was down due to internal & external factors.

2014-Modi cabinet approves disinvestment in NHPC, Coal India, ONGC.

Disinvestment: arguments in favour and against1.Socialist / leftist ideology- Limitation of pvt sector in fulfilling social commitmentsPrivate enterprises only focus on profit maximization. They won’t cater for poor people.Therefore Government needs to control all or some industrial sectors. vsSuch Govt controlled units can’t compete in free market economy due to political interference and

pricecontrol mechanisms.Ultimately more public money is wasted in running these loss making entities.2. Dividend Income-Government’s dividend income will decline. (Because they’ll have less shares).Consequently, Fiscal deficit will increase. Vs“dividend” Government earned so far vis a vis Government has spent more for their revival.3. Financial Inclusion- It’ll not help in “financial inclusion” as only 0.5% retail participation in equity

market i.e. only Large corporates and financial institutions benefit from this drive vsAbsurd logic, that just because corporates will benefit, we shouldn’t begin disinvestment.Government already taken plenty of initiatives on financial inclusion front.4. Jobs loss- After disinvestment employees of PSUs will loss their jobs. vsprivate sector experts in Board of Directors, plans to reduce staff strength, to increase profitability.Overstaffing = One of the main reasons why PSUs don’t make optimum profit. Firm action needed.Besides, such employees are given attractive VRS offers.5. Monopoly of pvt- Disinvestment would lead to private monopolies vsUnlikely to happen in today’s world. CCI is always watching and punishing the firms that try to create

monopoly or oligopoly.

6. Less valuation- Allegations that PSEs are sold cheap to preferred parties e.g. BALCO vs

Used to happen in 90s, when Govt sold shares to specific pvt companies at an arbitrary price.

But, Unlikely to happen if shares directly sold via stock exchange. + CAG, Media very active now

7. Changing ownership amongst Govt org-To complete the disinvestment targets, Government asks one PSU to buy shares of another PSU.

e.g. ordering LIC to buy ONGC’s shares……. In such cases, disinvestment doesn’t decrease Govt control over those companies.

Need for a clear policy on disinvestment to stop this practice.Speed of Disinvestment- International experiences-Rapid speed1993: Czech Republic disinvested ~1000 state owned enterprises.; Russia did same.Results were disappointing in both the cases.Hence rapid approach= not recommended for IndiaSlow speedChina- after more “Open Door Policy” in 1978.But speed too slow- thousands of enterprises still under Government ownership.Middle speed- Most suitable for India

Modi PSU-reform1: Disinvesting NHPC, Coal India, ONGCIssues-NHPC-Has 20 hydroelectric power stations.;Unable to recover dues from electricity utility

companies= company making huge losses.Hence it share price won’t fetch truckload of cash to Government.Coal India Ltd-Labour union strike may bring down share price. ONGC-Maharatna PSU-If Government clears the gas price policy, ONGC’s share prices will go up

(And after that Government should sell it-Modi PSU-reform2: Revive 5 and shut down 6Hindustan Photo FilmsHMT BearingsHMT WatchesHMT Chinar WatchesHindustan Cables.Tungabhadra Steel Products LtdHMT Machine ToolsHeavy Engineering CorporationNEPANagaland Paper & Pulp CoTriveni Structurals

ECONOMIC SURVEY 2016- Industrial, Corporate & infrastructural performance

• As per latest data released in January 2016 on revised estimates of national income the growth of Industrial sector broadly comprising mining, manufacturing, electricity and construction is 5.9 per cent during 2014-15, as against a growth of 5.0 per cent during 2013-14. The advance estimates of national income 2015-16 shows that the growth of industrial sector is estimated to be 7.3 per cent with manufacturing sector growing at 9.5 per cent.

• Recent Reforms- Reducing the list of industries that can be considered defence industries requiring industrial licence; and amendments in FDI policy which include allowing FDI in defence up to 49 per cent, in railway infrastructure up to 100 per cent and in the insurance and pension sector up to 49 per cent. The investment limit requiring prior permission from the Foreign Investment Promotion Board (FIPB)/Cabinet Committee on Economic Affairs has been increased from R1200 crore to R3000 crore. The definition of investment by Non Resident Indians (NRI), Persons of Indian Origin (PIO) &Overseas Citizens of India (OCI) in FDI policy has been revised.

• The government has launched several programmes/initiatives such as ease of doing business, Make in India, Invest India, and e-biz Mission Mode Project under the National e-Governance Plan. Further, the Government of India is also building a pentagon of corridors across the country to boost manufacturing and to project India as a global manufacturing destination. The National Investment and Infrastructure Fund (NIIF) has been approved to extend equity support to infrastructure Non-Bank Financial Companies (NBFC). Issue of tax- free infrastructure bonds has been allowed for rail, roads and irrigation programmes.

• The eight core infrastructure supportive industries, coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity that have a total weight of nearly 38 per cent in the IIP, registered a cumulative growth of 1.9 per cent during April-December 2015-16 as compared to 5.7 per cent during 2014-15. Month-wise performance of the eight core sectors shows that the production of coal and fertilizers have increased substantially, while that of crude oil, natural gas and steel have mostly been negative. Refnery products, cement and electricity have attained moderate growth. Crude oil and natural gas production declined because of a fall in production by Oil and Natural Gas Corporation (ONGC), Oil India Limited (OIL).

• Steel Industry- India produces 86.5 million tonnes (MT) of steel, which is over 5 per cent of world production, making it the fourth largest producer of crude steel in the world. The cost of production of domestic steel companies like Jindal Steel and Power Limited, Bhushan Steel and Essar Steel is more than the import parity price at 10 per cent import duty and hence are not globally competitive.

Due to near-stagnant demand for steel globally, and in particular in China, major global steel producers are pushing steel products into the Indian market, leading to a surge in steel imports. The Indian steel industry with higher borrowing and raw material costs and lower productivity is at a comparative disadvantage. The government has taken the following measures to curb the surging steel imports and make domestic production sustainable:

Raised basic customs duties on certain primary iron and steel products; Imposed anti-dumping duties ; Imposed provisional safeguard duty effective from September 14, 2015 ; Minimum import price has been imposed; Reduced export duty on iron ore .

• Aluminium Industry- India is the second largest aluminium- producing country & third largest aluminium- consuming country in the world.

The capacity utilization of the Indian aluminium industry has fallen drastically in the last one and a half years as international prices have slid. The cost of production is higher than international prices.

• Petroleum products and iron and steel are two major industries within the manufacturing sector that recorded contraction in the last three quarters.

• Capacity utilization, as measured by Round of the Order Books, Inventories and Capacity Utilisation Survey (OBICUS) of the Reserve Bank of India (RBI).

• The rate of growth of GCF in industry has registered a sharp rise from (-)3.7 per cent in 2013-14 to 3.6 per cent in 2014-15, showing upward momentum of investment in industry.

• MSME- CRUCIAL ROLE- (i)With 3.6 crore units spread across the country, that employ 8.05 crore people, MSME have a contribution of 37.5 per cent to the country’s GDP.(ii) Huge potential for helping address structural problems like unemployment, regional imbalances, unequal distribution of national income and wealth across the country. Due to comparatively low capital costs and their forward-backward linkages with other sectors, MSMEs will play a crucial role in the success of the Make in India initiative. (iii) Number of schemes/programmes like the Prime Minister’s Employment Generation Programme (PMEGP), Credit Guarantee Trust Fund for Micro and Small Enterprises (CGTMSE), Credit Linked Capital Subsidy Scheme (CLCSS) for and promote start-ups for innovation and entrepreneurship in rural and agriculture- based industry.

NEW INITIATIVES- Udyog Aadhar Memorandum (UAM):- The UAM scheme, which was notified in September 2015 under section 8 of

the MSME Development Act 2006, is a pathbreaking step to promote ease of doing business for MSMEs.

- On self-certification basis and no supporting documents - instantly get a unique Udyog Aadhaar Number (UAN)

Employment Exchange for Industries: To facilitate match making between prospective job seekers and employers

an employment exchange for industries was launched on June 15, 2015 in line with Digital India.

• Framework for Revival and Rehabilitation of MSMEs: Under this framework, which was notified in May 2015, banks have to constitute a Committee for Distressed MSME enterprises at zonal or district level to prepare a Corrective Action Plan (CAP) for these units.

• A scheme for Promoting Innovation and Rural Entrepreneurs (ASPIRE): ASPIRE was launched on March 16, 2015 with the objective of setting up a network of technology centres and incubation centres to accelerate entrepreneurship and promote start-ups for innovation and entrepreneurship in rural and agriculture based industry.

• CPSE- ONGC Ltd, Coal India Ltd, NTPC Ltd, the National Mineral Development Corporation

(NMDC) Ltd and Power Finance Corporation Ltd were top 5 profIt-making CPSEs during 2014-15, whereas Bharat Sanchar Nigam Ltd, Air India Ltd, Mahanagar Telephone Nigam Ltd, Hindustan Photo Films Manufacturing Company Ltd &Mangalore Refinery and Petrochemicals Ltd were top 5 loss-making CPSEs.

CPSEs contribute to the central exchequer by way of dividend payment, interest on government loans and payment of taxes and duties. Their contribution to the central exchequer decreased.

• FDI- With a view to liberalizing and simplifying the FDI policy to provide ease of doing

business climate in the country that will also lead to larger FDI inflows, the government has undertaken various reforms. A number of sectors have been liberalized, including defence, construction, broadcasting, civil aviation, plantation, trading, private sector banking, satellite establishment and operation and credit information companies.

During 2015-16, FDI policy in the pension sector has been revised to permit foreign investment up to 49 per cent, with 26 percent under automatic route. Manufacturing of medical devices and white label ATM operations have been opened up to 100 percent FDI under automatic route.

The various reforms in the FDI sector have led to a significant increase in FDI inflows into India, showing a 26 per cent surge in 2015.

FDI inflows of last fifteen years –( Pneumonic- SC IT A/atics) Services sector (17.6%) > Construction development (8.8 per cent)> Computer

hardware and software (7.2 per cent)> Telecommunications (6.6 percent) > Automobile industry (5.2 percent).

Country-wise FDI Inflow (2015-16): Singapore ,Mauritius, Netherlands and USA account for the major share . During

2015-16 (April- November), more than 60 per cent have come from two geographically small countries named Singapore and Mauritius. (These inflows need perhaps to be examined more closely to determine whether they constitute actual investment or are diversions from other sources to avail of tax benefits under the Double Tax Avoidance Agreement that these countries have with India)

State-wise analysis of FDI inflows in last 15 yrs : Delhi, Haryana, Maharashtra, Karnataka, Tamil Nadu, Gujarat and Andhra Pradesh have together attracted more than 70 per cent of total FDI inflows to India during last 15 years.

MAKE IN INDIA With the objective of making India a global hub of manufacturing, design and

innovation, the Make in India initiative, which is based on four pillars --new processes, new infrastructure, new sectors and new mindset-- has been taken by the government.

DIPP in consultation with various central ministries, state governments, industry leaders, and other stakeholders, has formulated a strategy for increasing the contribution of the manufacturing sector to 25 per cent of the GDP by 2020.

The Government of India has set up Invest India as the national investment promotion and facilitation agency.

As per National Manufacturing Policy 2011, Make in India seeks to create 100 million additional jobs in manufacturing by 2022. The government is taking a number of steps to enhance the skills of workers/ the unemployed in India in order to improve their employability. In order to tap the creative potential and boost entrepreneurship in India, the Start-up India, Stand-up India campaign has been announced. An innovation promotion platform called Atal Innovation Mission (AIM) and a techno-financial, incubation and facilitation programme called Self-Employment and Talent Utilization (SETU) are being implemented to encourage innovation and start-ups in India.

FUNDING- India Aspiration Fund has also been set up under SIDBI for venture capital financing of newly set-up or expanding units in the MSME sector. SIDBI Make in India Loan for Small Enterprises (SMILE) has been launched to offer quasi-equity and term-based short-term loans to Indian SMEs with less stringent rules and regulations and a special focus on 25 thrust sectors of Make in India. Further, a Micro Units Development Refinance Agency (MUDRA) Bank has been set up to provide development and refinance to commercial banks/ NBFCs/cooperative banks for loans given to micro-units.

Measures Taken under ‘Ease of Doing Business’Single window clearance system.Notifcation has been issued by Directorate General of Foreign Trade

(DGFT) to limit number of documents required for export and import to three.

The Companies (Amendment) Act 2015 has been passed to remove requirements of minimum paid-up capital

Simplification of clearances from MHA , MoD, MoEF wherever needed; Defence products’ list for industrial licensing has been issued,

wherein a large number of parts/components, castings/forgings, etc. have been excluded from the purview of industrial licensing.

Registration with the Employees Provident Fund Organization (EPFO) and Employees State Insurance Corporation (ESIC) has been automated and ESIC registration number is being provided on a real-time basis.

A unifIed portal for registration of units for Labour Identifcation Number (LIN), reporting of inspection, submission of returns and grievance redressal has been launched by the Ministry of Labour and Employment.

Union Budget 2016-17: Governance and Ease of Doing Business

The following are the new initiatives proposed in the Budget 2016-17 to achieve the goal of Minimum Government and Maximum Governance and to enable people to realize their full potential.

• A bill to amend the Companies Act, 2013 will be introduced in the 2016-17 budget session. The proposed bill would also improve the enabling environment for start-ups by mandating the registration of companies in one day.

• The Director General of Supplies and Disposal (DGS&D) will establish a technology driven platform to facilitate transparency and efficiency in procurement of goods and services by various Ministries and agencies of the Government.

• The Price Stabilisation Fund will be provided with a corpus of 900 crore rupees to support market interventions in procurement of pulses.

• Ek Bharat Shreshtha Bharat programme will be launched to link States and Districts in an annual programme that connects people through exchanges in areas of language, trade, culture, travel and tourism. The programme marks the celebration of 70th Anniversary of independence.

• Following three initiatives were announced to avoid leakage in disbursement of government subsidies.

1) A bill for targeted delivery of Financial and Other Subsidies, Benefits and Services by using the Aadhaar framework will be introduced in the budget session of 2016-17. A social security platform will be developed using Aadhaar to accurately target beneficiaries. This will be a transformative piece of legislation which will benefit the poor and the vulnerable.

2) Direct Benefit Transfer for delivering fertilizer subsidies will be used on pilot basis in a few districts across the country. It seeks to improve the quality of service delivery to farmers.

3) Out of the 5.35 lakh Fair Price Shops in the country, automation facilities will be provided in 3 lakh Fair Price Shops by March 2017.

SERVICES SECTOR: ECONOMIC SURVEY 2016-17 CSO’s classification of services-India’s services sector covers a wide variety of activities.

(a) Trade, Hotel & restaurants; (b) transport, storage & communication; (c)financing, insurance, real estate & business services, (d) community,social & personal services .

The services sector has emerged as the most dynamic sector of the world economy, contributing almost one-third of world gross value added, half of world employment, one-fifth of global trade and more than half of the world FDI flows. It remains the key driver of India’s economic growth, contributing almost 66.1 per cent of its gross value added growth in 2015-16, important net foreign exchange earner and the most attractive sector for FDI inflows.

Among the world’s top 15 countries in terms of gross domestic product (GDP), the US ranks first in both services GVA and overall GDP, followed by China in second and Japan in third position. India ranked ninth in terms of overall GDP and tenth in terms of services GVA in 2014, climbing one rung in both rankings.

Despite the slowdown in the post crisis period, India showed the fastest service sector growth with a CAGR of 8.6 per cent, followed by China at 8.4 percent. In 2014 India’s service sector growth at 10.3 %was noticeably higher than that of China at 8.0 %.

In 2014-15, while total FDI equity inflows grew by 27.3 per cent to US$ 30.9 billion, FDI equity inflows to the services sector (top 10 services including construction) grew by a whopping 70.4 per cent .

The high growth in services FDI inflows is mainly due to higher growth of three major categories, namely computer software and hardware; services sector category which itself consists of a basket of items like financial, banking, insurance, non-financial, outsourcing and R&D; and trading. This was in spite of the high negative growth at - 61.6 per cent in FDI equity inflows in telecommunications.

WTO Services Negotiations and Bilateral Negotiations including Services Trade in Nairobi Service trade- Implementation of preferential treatment in favour of services and service

suppliers of LDC and increasing LDC participation in services trade; and moratorium on payment of customs duties on electronic transmissions until 2017.

Preferential treatment for LDCs: So far, 21 members, including India, have notifed preferential treatment to LDCs in services trade. India has offered this in respect of: (i) article XVI of the General Agreement on Trade

in Services (GATS) (Market Access); (ii) technical assistance and capacity building; and (iii) waiver of visa fees for LDC applicants applying for Indian business and employment visas. The fee waiver will be valid until 31 December 2030. India is the only member which has offered waiver of visa fees. This is a unique and almost path-breaking offer by India. So far, visa issues have remained untouched in the WTO/free trade agreements (FTA). India’s offer should give signifIcant advantage to service suppliers from LDCs vis-à-vis service suppliers from any other country.

E-commerce: The WTO Members agreed to maintain the current practice of not imposing customs duties on electronic transmissions until the next Ministerial Conference which will be held in 2017.

Bilateral agreements: India has signed comprehensive bilateral trade agreements, including trade in services, with the

governments of Singapore, South Korea, Japan and Malaysia. And also FTA with ASEAN. India has joined the Regional Comprehensive Economic Partnership (RCEP) plurilateral

negotiations. The RCEP is a proposed FTA which includes the 10 ASEAN countries and its six FTA partners, viz. Australia, China, India, Japan, South Korea and New Zealand. The RCEP is the only mega-regional FTA of which India is a part.

India is also engaged in bilateral FTA negotiations including trade in services with Canada, Israel, Thailand, the EU, the European Free Trade Association (EFTA), Australia and New Zealand. Dialogue is under way with the US under the India-US Trade Policy Forum (TPF), with Australia under the India-Australia Joint Ministerial Commission (JMC), with China under the India-China Working-Group on Services, and with Brazil under the India-Brazil Trade Monitoring Mechanism (TMM).

SERVICES SECTOR: ECONOMIC SURVEY 2016-17 India continues to be a leading shipbreaking destination. It was in third on the list of ship

recycling countries in 2015 (January to June) with a world share of 18.3 per cent. The shipbreaking sector is in turmoil .Import of cheap Chinese steel billets into the major

shipbreaking locations is one of the reasons for this, owing to falling demand for scrap ships. Further, the IMO has come up with the Hong Kong Convention on Recycling in 2009 to regulate the entire practice of ship recycling, compliance of which would mean continued business from European owners. The convention will require Indian shipbreaking yards to create facilities in compliance with the upcoming Hong Kong Convention.

Consultancy services are emerging as one of the fastest growing service segments in India Real estate and ownership of dwelling is an important contributor to the Indian economy. It

constituted 8.0 per cent of India’s GVA in 2014-15 and grew by 9.1 per cent. It also generates significant income and employment owing to large forward and backward linkages through creation of demand in the input sectors and real estate services. The sector has grown at a CAGR of 8.1 per cent since 2011-12. However, the construction sector has witnessed a significant slowdown in last few years, with growth rates of 0.6 per cent in 2012-13, 4.6 per cent in 2013-14, 4.4 per cent in 2014-15 and 3.7 per cent in 2015-16 led by weakening of both domestic and global growth.

Despite weak sales and rising inventory, the housing prices in many cities and towns have increased in 2015, as per the National Housing Bank’s RESIDEX (index of residential prices).

GLOSSARY- AUTOMATIC ROUTE : Under this route no Central Government permission is required. GOVERNMENT ROUTE :Under this route applications are considered by the Foreign

Investment Promotion Board (FIPB). Approval from Cabinet Committee on Security is required for more than 49% FDI in defence. The proposals involving investments of more than INR 30 billion are considered by Cabinet committee on economic affairs.

The Indian company receiving FDI either under the automatic route or the government route is required to comply with provisions of the FDI policy including reporting the FDI and issue of shares to the Reserve Bank of India.

SECTORS REQUIRING CENTRAL GOVERNMENT APPROVAL Tea sector, including plantations – 100%. Mining and mineral separation of titanium-bearing minerals and ores, its value addition and

integrated activities -100%. FDI in enterprise manufacturing items reserved for small scale sector – 100%. Defence – up to 49% under FIPB/CCEA approval, beyond – 49% under CCS approval (on a

case-to-case basis, wherever it is likely to result in access to modern and state-of-the-art technology in the country).

Teleports (setting up of up-linking HUBs/Teleports), Direct to Home (DTH), Cable Networks (Multi-system operators operating at National or State or District level and undertaking upgradation of networks towards digitalisation and addressability), Mobile TV and Headend-in-the Sky Broadcasting Service(HITS) – beyond 49% and up to 74%.

Broadcasting Content Services: uplinking of news and current affairs channels – 26%, uplinking of non-news and current affairs TV channels – 100%.

Publishing/printing of scientific and technical magazines/specialty journals/periodicals – 100%. Print media: publishing of newspaper and periodicals dealing with news and current affairs- 26%,

Publication of Indian editions of foreign magazines dealing with news and current affairs- 26%. Terrestrial Broadcasting FM (FM Radio) – 26%. Publication of facsimile edition of foreign newspaper – 100%. Airports – brownfield – beyond 74%. Non-scheduled air transport service – beyond 49% and up to 74%. Ground-handling services – beyond 49% and up to 74%. Satellites – establishment and operation - 74%. Private securities agencies – 49%. Telecom-beyond 49%. Single brand retail – beyond 49%. Asset reconstruction company – beyond 49% and up to 100%. Banking private sector (other than WOS/Branches) – beyond 49% and up to 74%, public sector

– 20%. Insurance - beyond 26% and up to 49%. Pension Sector - beyond 26% and up to 49%. Pharmaceuticals – brownfield – 100%. SECTORS UNDER AUTOMATIC ROUTE All the items other than above are under the automatic route.

FDI-MAKE IN INDIA India has already marked its presence as one of the fastest growing economies of the world. It

has been ranked among the top 3 attractive destinations for inbound investments. Since 1991, the regulatory environment in terms of foreign investment has been consistently eased to make it investor-friendly.

RECENT POLICY MEASURES Government eases FDI norms in 15 major sectors. Townships, shopping complexes & business centres – up to 100% FDI under the auto

route. Conditions on minimum capitalisation & floor area restrictions have now been removed for the construction development sector.

India's defence sector now allows consolidated FDI up to 49% under the automatic route. FDI beyond 49% will now be considered by the Foreign Investment Promotion Board. Govt approval route will be required only when FDI results in a change of ownership pattern.

Private sector banks now allow consolidated FDI up to 74%. Up to 100% FDI is now allowed in coffee/rubber/cardamom/palm oil & olive oil plantations via

the automatic route. 100% FDI is now allowed via the auto route in duty free shops located and operated in the

customs bonded areas. Manufacturers can now sell their products through wholesale and/or retail, including through e-

commerce without Government Approval. Foreign Equity caps have now been increased for establishment & operation of satellites,

credit information companies, non-scheduled air transport & ground handling services from 74% to 100%.

100% FDI allowed in medical devices

FDI cap increased in insurance & sub-activities from 26% to 49% FDI up to 49% has been permitted in the Pension Sector. Construction, operation and maintenance of specified activities of Railway sector

opened to 100% foreign direct investment under automatic route. FDI policy on Construction Development sector has been liberalised by relaxing

the norms pertaining to minimum area, minimum capitalisation and repatriation of funds or exit from the project. To encourage investment in affordable housing, projects committing 30 percent of the total project cost for low cost affordable housing have been exempted from minimum area and capitalisation norms.

Investment by NRIs under Schedule 4 of FEMA (Transfer or Issue of Security by Persons Resident Outside India) Regulations will be deemed to be domestic investment at par with the investment made by residents.

100% FDI allowed in White Label ATM Operations. Note : Citizen or entity from Bangladesh & Pakistan can invest only under the

government route also investor from Pakistan cannot invest in defence, space, atomic energy and sectors prohibited for foreign investment.

SECTORS WHERE FOREIGN DIRECT INVESTMENT IS PROHIBITED : Lottery Business including Government /private lottery, online lotteries, etc. Gambling and Betting including casinos etc. Chit funds Nidhi company-(borrowing from members and lending to members only). Trading in Transferable Development Rights (TDRs) Real Estate Business (other than construction development) or Construction of Farm Houses Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes Activities / sectors not open to private sector investment e.g. Atomic Energy and Railway

Transport (other than construction, operation and maintenance of(i) Suburban corridor projects through PPP,(ii) High speed train projects,(iii) Dedicated freight lines,(iv) Rolling stock including train sets, and locomotives/coaches manufacturing and maintenance facilities,(v) Railway Electrification,(vi) Signaling systems,(vii) Freight terminals,(viii) Passenger terminals,(ix) Infrastructure in industrial park pertaining to railway line/sidings including electrified railway lines and connectivities to main railway line and(x) Mass Rapid Transport Systems.)

Services like legal, book keeping, accounting & auditing.

SECTORS WITH CAPS Petroleum Refining by PSU (49%). Teleports (setting up of up-linking HUBs/Teleports),Direct to Home (DTH), Cable Networks (Multi-

system operators (MSOs) operating at national, state or district level and undertaking upgradation of networks towards digitalisation and addressability), Mobile TV and Headend-in-the-Sky Broadcasting Service (HITS) – (74%).

Cable Networks (49%). Broadcasting content services- FM Radio (26%), uplinking of news and current affairs TV channels

(26%). Print Media dealing with news and current affairs (26%). Air transport services- scheduled air transport (49%), non-scheduled air transport (74%). Ground handling services – Civil Aviation (74%). Satellites- establishment and operation (74%). Private security agencies (49%). Private Sector Banking- Except branches or wholly owned subsidiaries (74%). Public Sector Banking (20%). Commodity exchanges (49%). Credit information companies (74%). Infrastructure companies in securities market (49%). Insurance and sub-activities (49%). Power exchanges (49%). Defence (49% above 49% to CCS); Pension Sector (49%)

TERMS- Free Trade Agreement (FTA): A free trade agreement is a preferential arrangement in

which members reduce tariffs on trade among themselves, while maintaining their own tariff rates for trade with nonmembers.

Customs Union (CU): A customs union (CU) is a free-trade agreement in which members apply a common external tariff (CET) schedule to imports from non-members.

Common Market (CM): A common market is a customs union where movement of factors of production is relatively free amongst member countries

Economic Union (EU): An economic union is a common market where member countries coordinate macro-economic and exchange rate policies.

Trade liberalization, give rise not only to beneficial trade creation but also to trade diversion. Trade diversion occurs when tariff preferences offered under an FTA causes a shift of imports from firms in non- FTA member countries to less efficient firms within the trade bloc, which now become competitive due to tariff reliefs.

5 Stages / evolution

Salient features of EXIM Policy 2015-2020- • Merchandise Export from India Scheme: The 6 different schemes of the earlier FTP (Focus

Product Scheme, Market Linked Focus Product Scheme, Focus Market Scheme, Agriculture Infrastructure

Incentive Scrip, Vishesh Krishi and Gram Udyog Yojana and Incremental Export Incentive Scheme) which had varying sector-specific or actual user only conditions attached to their use have been merged into a single scheme, namely the Merchandise Export from India Scheme (MEIS).

• Service Export from India Scheme: The Served from India Scheme (SFIS) has been replaced with the

Service Export from India Scheme (SEIS). The SEIS applies to 'service providers located in India' instead of 'Indian service providers'. Thus, it provides for incentives to all service providers of notified services who are providing services from India.

• Incentives (MEIS & SEIS) to be available for SEZs: EXIM Policy 2015-20 extends the benefits of the MEIS and SEIS to special economic zones (SEZ) as well, which will give a new impetus to the development and growth of SEZs.

•Other Measures: (a) Under the Export Promotion Capital Goods (EPCG) scheme, in case capital goods are procured

from indigenous manufacturers, specific export obligation has been reduced to 75%. This is designed to help the indigenous capital goods manufacturing industry.

(b) Under the MEIS, export items with high domestic content and value addition have generally been provided higher levels of incentives.

(c) EASE OF BUSINESS- Hard copies of applications and specified documents which were required to be submitted earlier for incentive schemes and duty exemption schemes have now been dispensed with. - Landing documents of export consignments as proof for notified market can now be digitally

uploaded as specified. -There will be no need to submit copies of permanent records/documents repeatedly with each

application, once the same are uploaded in the exporter/importer profile. - Dedicated e-mail addresses have been provided for faster and paperless communication with

various committees of the Directorate General of Foreign Trade (DGFT), e.g. Norms Committee and Exim Facilitation Committee.

Boost Export HOW?

= Foreign Trade Policy 2015-20

Export Targets

FTP-2015

1. WTO SPS/TBT: EU/US block entry of our goods. (e.g. Mangoes)

2. WTO food subsidies related issues.

3. WTO trade rounds dragged for decades without consensus.

4. Therefore, non-WTO Bilateral, multilateral and regional trade agreements to counter 1+2+3

Trade Agreem

ent: WHY?

FTP-2015

CECA, CEPA, BTIAComprehensive

Economic Cooperation Agreements (CECAs)

Comprehensive Economic Partnership Agreements (CEPAs)

Broadbased Trade and Investment Agreements (BTIA)

Free trade agreement

FTAWhat’s the difference?

CECA, CEPA, BTIAGoodsServicesInvestmentIPRMovement of

people.= more trade, jobs

than FTA

Traditionally concerned with Goods only.

FTAWhat’s the difference? As per FTP-2015?

Multilateral trade agreements

1+2 = Erode Indian grip over US-EU markets

50% of world trade captured.

33% of World Trade50% of

population

Trans-Atlantic Trade and Investment Partnership

Between US and EU~0% import duty for their products= India hurt.

Stringent quality norms, environment norms = Indian hurt.

E.g. pesticide residues in oranges (Nagpur vs Florida); Lead / heavy metals in mfg. goods/toy etc.

TATIP

Agreement

~0% import duty for their products= Tariff barrier for India, China

Stringent quality norms, environment norms, faster clearance to US/EU = Non-Tariff barrier for India China.

E.g. pesticide residues in oranges (Nagpur vs Florida); Lead / heavy metals in mfg. goods/toy etc.

TATIP

Agreement

TPP: 12 members :USA + Canada + 10 Asia-Pacific

1. Trans pacific partnership2. Export of “Made in

USA” goods and services.

3. Tariff barriers: 0% 4. Non tariff barriers:

Minimal.5. Sync. All partners with

American environment, labour, IPR laws

Salient Feature

s

TPP

5. TPP and its Implications for India Positives • India could experience huge export gains of more than US$500 billion per year-a 60% increase--from joining an expanded TPP or participating in a comprehensive Free Trade Area of the Asia Pacific (FTAAP). • It would increase both India's exports and imports. Negatives • Possibility of trade diversion and raised concerns about erosion of India's share in exports to US &

Europe. • Loss of competitiveness of Indian exports in European markets • Lower India's export share to the US and the EU, • Some of the export sectors such as textiles and clothing industry are likely to face stiff competition from Vietnam, and it may lead to trade diversion. • Concern of investment diversion, particularly as countries like Vietnam would offer more robust investor protection. Concerns India has to give due consideration to the costs if it is desirous of joining the TPP, as it will be required to comply with provisions relating to tariffs, agriculture and Intellectual Property Right (IPR) protection. Some of the major concerns are as follows: • Openness of market: India needs to work significantly in terms of openness of market as its

tariff rates are significantly higher than those in the Trans-Pacific-Partnership Agreement (TPP) countries. • Import competition: Domestic industries will face severe import competition d/t tariff

elimination of some of the products.

• • IPRs: The prices of pharmaceutical products can be expected to rise due to implementation of IPR

agreements which will give more protection to patented medicine and may lead substantially to elimination of generic drugs from the market. • Government procurement: Apart from stressing non-discriminatory, fair and transparent

procurement procedures, the TPP specifies timely publication of complete information on the procuring entity, the

specific procurement, the time frame for submission of bids, and a description of conditions for participation of suppliers. As the agreement curtails the flexibility available to signatory countries to impose export restrictions on food, it will jeopardize India's endeavour to ensure food security. • Labour standards: TPP bind the members to adopt and maintain laws and practices governing

acceptable conditions of work relating to minimum wages, hours of work, and occupational health and safety. These

labour standards may increase the labour cost. • Environment standard in TPP agreement: The TPP agreement goes beyond the provisions in

other FTAs to include wildlife trafficking, illegal logging and illegal fishing practices. The TPP members acknowledge that inadequate fisheries management, fisheries subsidies that contribute to overfishing and overcapacity, and Illegal, Unreported and Unregulated (IUU) fishing can have significant negative impacts on trade, development and the environment and 'thus recognize the need for individual and collective action

to address the problems of overfishing and unsustainable utilization of fisheries resources'. This is

in contradiction to India's current policy of subsidizing the fishery industry. It may severely affect

special governmental assistance programmes for around 15 million poor fishermen in India. Hence these TPP rules are likely to affect the multilateral process and impact India

RCEP: China, India, ASEAN, Jap, Korea, Aus., NZ

1. 7 countries- Australia, Brunei, Japan, Malaysia, New Zealand, Singapore and Vietnam in both TPP and RCEP2. EU QE+Slowdown = Indian Exports 3. TPP+TATPI= tariff & non tariff barriers, in the name of environment, labour rights, IPR4. RCEP weaker on above fronts (bcoz China itself gross violator).

If we don’t join TPP?

TPP/RCEP?

1. TPP: timing and terms yet unclear2. If we want to join, then must reform environment, labour, IPR front in advance, to align with developed nations. 3. India cannot be a part of it bcoz our social-economic development goals. Compliance Cost high Agro, Mfg. & service industries.

India should

join TPP?

RCEP/TPP

RCEP

Members

1. India: a member. 2. Obligations to reform environment / Labour laws: not much.3. Generous Exemptions to protect local industry: yes4. lenient time-tables for implementation: yes5. Ideal to join such global value added chain. Produce in nearest low cost destination. (CMLV)

RCEP

Trade grouping

~400 trade agreement in action among countries

India should Make agreements with countries where

1.India has potential market

2.India can source raw material / components.

Way ahead?

FTP-2015

Strategies to boost EXPORT

FTP-2015: Region wise Strategies (8)

FTP-2015: Region wise Strategies

Agro/ICT challenges

Explore non-EU

1. South Asian Association for Regional Cooperation

2. Mere 20 billion$ trade.3. Largest trading partner:

Bangladesh > Sri Lanka > Nepal > Pak.

4. 0% duty market access given to L.D.C – Bhutan, Maldives et al.

5. problem: Pakistan

SAARCPresent

FTP-2015

1. WTO: GATT, GATS =MFN concept.

2. If trade barrier lowered for most favored nation (MFN) then all trading partners be treated in same manner.

3. 97: India gave MFN status to Pak

MFN from Pak

Policies

1. But pak still keeps ~1200 items India can't export- textile, agro, automobile parts = SMUGGLING

2. Diplomatic stalling3. 40% Pak-workforce

in textile, vote bank-lobbying

MFN from Pak

Policies

1. Prepare a 5-year action plan2. Value added chains for

textiles, leather, tourism, automobile, healthcare

3. Conclude SAFTA- in services.

4. Border Infrastructure 5. Multimodal connectivity.6. SAARC Energy Grid

SAARC

Solution

FTP-2015

FTP-2015: Region wise Strategies

Env/ICT challenges

Explore non-EU

SAFTA service, Grid, Value added

chain

FTAs: pro, anti

transport

Market access difficult

Language barrier

Russia = problem

CIS = market + RAW + EU entry

FTAs with Israel, GCC, SAU Contract FarmingProject Loans

REER

6 currenciesGeometric

meanREER-6REER-36

CPI: base 2004, CSO RBI calculates REER,

NEEREarlier used WPI

Rupee March 2014 (NEER-6)

NEER66

REER112

• REER > 100 means overvalued

• <100 means undervalued

• ES: CPI’04 series overvalued, CPI’12 series undervalued

FISCAL POLICYMeaning Capital & Revenue Expenditure- Capital exp as

for capital generation like land,eqpt,machine;loans given to states/PSU. Revenue exp as normal functioning of Govt; interest payments; Grants to states.

Capital & Revenue receipts- Capital receipts as LOANS from public – mkt borrowings; LOANS from RBI/Comm banks; LOANS from Int org like WB,IMF; Coal block auctions. Revenue receipts as TAXES & NON TAXES(Interests received, dividend received, service fees recvd, grants in aid from foreign countries.)

Plan vs Non plan exp. Taxes- We Pro.Co.In (Direct) & ExCuSe Ve( Indirect)Terms- MAT (IT vs Companies Act); Fringe benefit

tax

GST Sales tax- VAT- GST Need- Multiple taxes,rates- reduced

compliance Art 246 A const amendment GST Council- FM,MOS,State FM (Voting

strength 1/3 CG+2/3 SG- 75% REQD); Incl,Excl, rates

Dispute Settlement Auth Integrated GST- 1% Addl Interstate trade Excl- CUSTOMS Duty; Crude oil, HSD, ATF,

Petrol; Alcohol for consumption

GSTFeatures and impact of current system with an ideal GST regime & Current regime of indirect taxes

- Goods and services taxed separately* No differentiation between a good and a service; both

subject to one tax.- VAT applies at manufacturing stage (CENVAT i.e. excise

duty) as well as at sales stage (state VAT i.e. sales tax). VAT applies at point of consumption. Set-off on the inputs

gets credit through the production and distribution stages.

-Input credit set-off not available across different taxes. For example, set off not available for CENVAT against state VAT.

Input tax credit available across state and central tax jurisdictions.

- Some taxes (CENVAT, service tax) levied at the stage of production, while some (state VAT) levied on sale.

. Follows a destination based principle where tax is collected on final consumption.

-Many indirect taxes not included in central and state VAT.** Subsumes all indirect taxes under one tax. -Different tax rates levied across products and across states. Single tax rate to apply on all goods and services. -Certain sectors exempt from VAT.*** No goods or services are exempt from GST. -Intra-state transactions get input credit set off but not interstate transactions. Input credit set off to be available across intra-state and inter-state transactions. Impact---- Cascading of taxes across manufacturing and distribution chain increases cost of

products making them uncompetitive. Eliminates cascading by providing for input credit set off at all stages of production. -Limited incentive for tax compliance.

Encourages voluntary compliance. A person in the supply chain gets credit only when tax is paid by previous person.

-Distinguishing between goods and services complicates the taxation of certain products e.g. computer software.

Single tax to apply to both goods and services, hence distinguishing between the two not necessary.

-VAT does not apply uniformly across sectors and goods. Sectors such as oil and gas production, real estate exempt.

No exemptions. All sectors, goods and services subject to GST that broadens tax base. -States’ levy of entry tax/octroi when goods pass through states result in bottlenecks at

borders, raising inventory costs. Facilitates inter-state trade as transactions across state and municipal jurisdictions are free

from tax. -Different tax rates across states leads to economic distortions. Single national tax rate reduces distortions. Complex tax structure leads to higher administrative costs. Single tax reporting structure as all indirect taxes subsumed

Concepts-1. Revenue Deficit2. Effective Revenue Deficit3. Fiscal Deficit4. Primary Deficit FRBM Act 2003- No borrowing from RBI, except under emergency

situations Docus Targets

FRBM DOCUS

Revenue deficit

0% by 31/3/2008

Fiscal deficit

3% of GDP by 31/3/2009

FRBM Act 2003

2012 amendmentERD 0% => 2015, 31st March (14th Finance Commission wants Revenue Deficit)FD 3% => 2017,31st March (Latest-- by 2018, 31st March)

Need of PDMAPublic Debt Management authorityPDMA will sell G-Sec on voluntary basisSame recommendationsVijay Kelkar (13th FC) Justice BN Srikrishna Sweden, NZ, Germany, Denmark etc have

similar.Jaitley Announced PDM-AgencyManage Both internal and external borrowing of

GovernmentHave to amend G-Sec Act, RBI Act.

HOW TO ACHIEVE 3% TARGET1. Kelkar report on fiscal consolidation

(2012)2. GST: 1/4/20163. GAAR: 1/4/2017 (Shome Panel)4. PDMA5. Spectrum auction: hoping 1 lakh crores 6. Coal block auction: hoping 100 billion$

for states

EvasionIncome / transaction hidden

Black moneyJailtime

Reported, everything on file

But Legal loopholes used to avoid tax

Black money….?Vodafone Capital Gains Tax issue

Avoidance

VODAFONE ISSUE

CGP investment

Holding, Cayman

Hutchinson

HongKong

Hutch Essar, India

Vodafone PLC,

London

Vodafone,

Netherland

Rs. 55kcr

Vodafone India Feb.

2007

CGP investment Holding, Cayman

(67%)

Hutchinson HongKong

Hutch Essar, India

Vodafone PLC, London

Vodafone,

Netherland

55-12=43

12k Crore

Vodafone Essar India

Mar. 2007

CGP investment Holding, Cayman

Hutchinson HongKong

Hutch Essar, India

Vodafone PLC, London

Vodafone,

Netherland

$ 11 bn

Rs. 55k cr

Vodafone India

Entire Deal outside IndiaNo sale/purchase of Indian

company / its shares

CGP not in any other businessEntire Deal to acquire Hutch-

Essar

SC: IT has no jurisdiction on CGT over indirect transfer overseas.

2012: Pranab amends IT act- if significant value derived from Indian assets. (Cayman company valued @55k Crore for 67% Indian shares held)

Jaitley clarifies in budget-2015

Prevent Vodafon

e like cases

Budget-2015

But not application in following scenarios

Indian asset worth Rs.10 crore or less

Foreign owner has no more than 5% voting power in Indian company

Merger-demergersBut Indian entity must report foreign ownerships

Only if 50% value

derived

1. Shome Panel2. Only in rare cases3. >3 Cr. + tax benefit4. Not to fill Revenue

shortfalls5. Defer till 2016 (P.C.

accepted)6. (2015) Jaitley=> 2

years7. Not retrospective. Only

from 1/4/2017 onwards

Budget 2012: GAAR

Avoidance

FINANCIAL INTERMEDIARIES & FINANCIAL MKTBanks & NBFIs classification (chart) Differences betwn Banks & NBFCs Types

Type #1 Regulated by RBI Types of NBFCs

Asset Finance Company (AFC)

• loan to buy economically productive assets e.g. truck, tractor, pumpset, bulldozer, earthmover, etc.

• SREI Equipment Finance (WHITE LABEL ATM)

Infrastructure Finance Company

• Gives loan for infra. Projects. (IDFC got separate bank license)

• Rural Electrification Company (REC)• Rajiv Gandhi Gramin Vidhyutikaran

(Power Ministry)• Rs.3,500 crore through tax-free

bonds.

Infrastructure Debt Fund (IDF-NBFC)

Just like above, but they give very long term loans. Can even raise money from abroad.

Investment Cos.Invest in securitiesMuthoot financeL&T finance.

Same. They too invest in securities

Investment long term (speculative, not for public investment)

Cannot enter in insurance

E.g. Tata Capital, Birla Capital

Core Investment Cos

Type II- RBI Controlled

Type II- NBFC- RBI controlledLoan Company

• Muthoot gold loan, Mannapuram Gold

• LTV.Factor Company

• Factoring business• HSBC

Misc. Chit Fund

• RBI + Registrar of Chit fund.

Residuary

• --

RBI regulatedAFCInfra. FinanceIDFInvestment Co.Core investmentLoan CompanyFactor CompanyChit Fund, Misc.

Other than RBINBFI→NBFC→Classification

Insurance companies

Take "premium" from you, invest It in shares/bonds.

LIC, Bajaj Allianz

IRDA

Housing Finance Companies

They arrange money from variety of sources, lend it to home-loan seekers

DHFL, Muthoot Housing finance etc. NHB

Stock Broker, MF

They help buying-selling of shares (of their clients).Earn commission/brokerage) in between.

1.Indiabulls2.Sherkhan3.Reliance

MoneySEBI

NBFI→NBFC→Classification (not regulated)

Investment Banks(US term)

Merger, acquisition, Wealth Management; Merchant Banker: Underwriting

Kotak Mahindra, Citigroup,Bank of America

SEBI

Merchant Banking Companies(UK term)

Underwriting, Corporate advising, They lend money to company via buying its "shares"

DSP Merrill Lynch, Morgan Stanley, Canara Bank, SBI capital (separate license)

SEBI

Venture Capital Fund

They finance start-up companies via equity.

IFCI, IDGSEBI

NBFI→NBFC→Classification (not regulated RBI)

Nidhi

One type of 'club'. Borrow money from members, lend it among the members.mutual benefit funds

SOUTH MADRAS BENEFIT FUND ltd.

Department of Company affairs

Microfinance

companies

Non-Banking Financial Company - Micro Finance Institution (NBFC-MFI)

1. SKS (Andhra),

2. Cashpor (UP),

3. Ujjivan (Karnataka)

Department of Company affairs

NBFI→NBFC→Classification (not regulated RBI)

BANDHAN

Department of company affairs.Entry capital 5 cr.Individual person not given loan above

Rs.50000 Focus on poor people, women clients, SHG.Loan without collateral.Borrower given flexibility to decide EMI and

repaymentActual interest rate: 26%SKS (Andhra), Cashpor (UP), Ujjivan

(Karnataka), Bandhan (Bengal)

NBFI→NBFC→MFI

FINANCIAL MKTMoney mkt & Capital mkt Diff betn T bills & G –secs Money mkt instruments- T- bills; Commercial

papers; Certificate of Deposits; Commercial bills; Call money; Notice money; WMA.

BONDS- Bond yield, bond interest and bond price relationship

Zero coupon bonds; Bearer bonds; IIBs; Masala Bonds

Debentures- Types- OFCDs, NCDs, Partially Convertible debentures, Fully convertible debentures.

NEW GDP METHODOLOGYConcepts- GDP,GNP,NNP,NDP; Real & Nominal GDP,

GDP Deflator CSO Changes- Base yr change; GDP at Mkt price; GVA

at mkt price; pros n consGDP Calculation methods- 1. Income method-

WIPRo(wages,interset,profit,rent)+ indirect taxes-subsidies=GDP at mkt price

2. Expenditure method- CIGF(Pvt consumption,Investment, Govt exp,Foreign net)

3. Production method- GVA at factor cost= Final goods- intermediate goods _-- GVA at basic price_ GVA at factor cost + Production taxes- Production subsidies; GVA at mkt price= GVA at basic price + Product taxes- Product subsidies

Urban ministry schemes

Census 2011: town types

Census definition of city: Depends on population size

According to the Census 2011, 31.16% Of India lives in urban units, accounting for approximately one-third of the country’s population. 31.80% Growth rate of population in urban areas; population in rural areas in the same period was 12.2% 468 Class I Towns population > 1,00,000; 264.9 million 53 million plus cities in India and 160.7 million people live in these cities (43% of total urban population) 63% Urban sector now constitutes 63% of the GDP; India’s share of GDP coming from urban areas is still very low compared to China (78%) 600 Million people will be living in cities by 2031; urban India could house 35% of the country’s population by 2020 87 Cities will have million plus populations, up from 53 today; today, Europe has 41 million plus cities 5 States Tamil Nadu, Gujarat, Maharashtra, Karnataka and Punjab - will have more of their population living in cities than villages 70% GDP will be generated from Urban India by 2030 and the same percent of net new employment opportunities will be created in cities 39.2 Lakh crore worth of investments required in urban infrastructure over the next 20 years for asset creation, redevelopment and capacity

building Under the Smart City Mission The Central GovernmentAssistance to Urban Local Bodies Technology backed urban centres Promotion of a ‘bottom-up model’ of city development Convergence of AMRUT, Swachh Bharat Mission (SBM), National Heritage City Development and Augmentation Yojana (HRIDAY), Digital India, Skill Development, Housing for All for holistic development of cities Centrally Sponsored Scheme (CSS) + matching amount by the State or ULB. The central allocation will be INR 48,000 crore over the next five years (FY 2015-16 to FY 2019-2020)

SMART CITIES MISSION What is a Smart City? A Smart City has- basic infrastructure, uses ‘smart’ solutions to make infrastructure and services better, and relies on Area based development.

Definition: What is Smart city?

What is smart city?

Smart city infrastructure

SMART CITIES MISSIONSmart Cities Mission Strategy Pan-city initiative in which at least one Smart Solution is applied city-

wide. Develop Areas step-by-step – three models of area-based developments

– Retrofitting, Redevelopment, Greenfield

Area based Development Models Retrofitting Development of an existing built area greater than 500 acres so as to

achieve the objective of smart cities mission to make it more efficient and livable e.g. Local Area Development (Ahmedabad)

Redevelopment Replace existing built environment in an area of more than 50 acres and

enable co-creation of a new layout, especially enhanced infrastructure, mixed land use and increased density e.g. Bhendi Bazar, Mumbai

Greenfield Develop a previously vacant area of more than 250 acres using

innovative planning, plan financing and plan implementation tools with provision for affordable housing, especially for the poor e.g. Net Town, Kolkotta.

SMART CITIES MISSION Stage-I Competition (within State) Number of potential Smart Cities will be intimated to each State, based on an equitable & objective

based formula.

An intra-state competition to select proposed Smart Cities, based on the Stage – I criteria

The selected cities will be called the short listed Smart Cities.

City Selection Criteria : Stage-II The 100 short listed potential Smart Cities are selected through an inter-state competition The 100 selected cities prepare their Proposals for All India competition with capacity assistance

Based on pre-defined Stage 2 criteria , the evaluation is done by national and international organisations

Winners declared for Round – 1

Winners set-up SPV and start implementation. Preparation of DPRs, tenders etc.

Non-Winners prepare to improve their proposal for Round - 2

Jawaharlal Nehru National Urban Renewal Mission (JNNURM)

Ministry of Urban DevelopmentSub missions: water supply,

sanitation, transport, waste Management

2015: AMRUT to replace JNNURM. But If JNNURM project 50% finished then AMRUT will finance it as well

JNNRM

2005

Urban Infra

Atal Mission for Rejuvenation and Urban Transformation (AMRUT)

Under urban Development ministry

500 cities w/ 1 lakh+population10 years plan x Rs.2 lakh croresWater supply, waste collection, recycled water for organic farming, wifi-zones, mass transport etc.

Union will not appraise each project. It’s left States=> Cooperative Federalism

AMRUT

Urban Infra

Government schemes in IndiaSchemes Atal Pension Yojana . Beti Bachao, Beti Padhao Yojana DAY .DBT DDUGJY .DDU-GKY DELP HRIDAY Housing for All scheme in India KVPY Midday Meal Scheme NSAP NSS PMGSY PMJDY PMKSY PMMY Pradhan Mantri Jeevan Jyoti Bima Yojana Pradhan Mantri Suraksha Bima Yojana SAGY Soil Health Card Scheme SGSY

https://en.wikipedia.org/wiki/Atal_Pension_Yojana

https://en.wikipedia.org/wiki/Beti_Bachao,_Beti_Padhao_Yojana

https://en.wikipedia.org/wiki/Deen_Dayal_Upadhyaya_Antyodaya_Yojana

https://en.wikipedia.org/wiki/Direct_Benefit_Transfer

https://en.wikipedia.org/wiki/Deen_Dayal_Upadhyaya_Gram_Jyoti_Yojana

https://en.wikipedia.org/wiki/Deen_Dayal_Upadhyaya_Grameen_Kaushalya_Yojana

https://en.wikipedia.org/wiki/Domestic_Efficient_Lighting_Programme

https://en.wikipedia.org/wiki/Heritage_City_Development_and_Augmentation_Yojana

https://en.wikipedia.org/wiki/Housing_for_All_scheme_in_India

https://en.wikipedia.org/wiki/Kishore_Vaigyanik_Protsahan_Yojana

https://en.wikipedia.org/wiki/Midday_Meal_Scheme

https://en.wikipedia.org/wiki/National_Social_Assistance_Scheme

https://en.wikipedia.org/wiki/National_Service_Scheme

https://en.wikipedia.org/wiki/Pradhan_Mantri_Gram_Sadak_Yojana

https://en.wikipedia.org/wiki/Pradhan_Mantri_Jan_Dhan_Yojana

https://en.wikipedia.org/wiki/Pradhan_Mantri_Krishi_Sinchai_Yojana

https://en.wikipedia.org/wiki/Pradhan_Mantri_Mudra_Yojana

https://en.wikipedia.org/wiki/Pradhan_Mantri_Jeevan_Jyoti_Bima_Yojana

MISSION AMRUT Sarva Shiksha Abhiyan Smart Cities Mission TB-Mission 2020 NRHM Projects Bharatmala Indian Rivers Inter-link Sagar Mala project Setu Bharatam Campaigns Digital India Make in India Skill India Startup India Swachh Bharat Abhiyan

Schemes

State

Bhamashah Yojana

Jyotigram Yojana

Make in Maharashtra

Vibrant Gujarat

Closed

Bharat Nirman

CGHS

IAY

ICDS

IGMSY

IRDP

JSY

JnNURM

Kasturba Gandhi Balika Vidyalaya

MPLADS

NLM

NPS

NRLM

Nirmal Bharat Abhiyan

Pooled Finance Development Fund Scheme

Closed

PMAGY Rashtriya Krishi Vikas Yojana RNTCP RSBY Sampoorna Grameen Rozgar Yojana Swavalamban Voluntary Disclosure of Income Scheme

upsc economy prelims 2016

Education