Indian Economy - JULY 2019

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Source : www.thehindu.com Date : 2019-07-01

NEW FRAMEWORK: ON SEBI'S NORMS FOR MUTUALFUND INVESTMENTS

Relevant for: Indian Economy | Topic: Issues relating to Growth & Development - Capital Market & SEBI

After introducing a new standard framework for credit rating agencies last month, the Securitiesand Exchange Board of India came up with more stringent regulations to govern themanagement of mutual funds. The mutual fund industry came under its scrutiny after somemutual funds in the last few months had to postpone redemption of their fixed maturity plans(FMPs). HDFC Mutual Fund and Kotak Mutual Fund came to grief and had to roll over orproportionately reduce redemption of their FMPs in April after some Essel group companiesfailed to redeem their non-convertible debentures where the funds had invested. According tothe new SEBI regulations, liquid mutual fund schemes will have to invest at least 20% of theirfunds in liquid assets like government securities. They will be barred from investing more than20% of their total assets in any one sector; the current cap is 25%. When it comes to sectors likehousing finance, the limit is down to 10%. These measures are aimed to prevent situations suchas the one being witnessed now. While the mandated investment in government securities willensure a modicum of liquidity, the reduction in sectoral concentration will discipline funds andforce them to diversify their risks. Some mutual funds entered into standstill agreements withcompanies in whose debt instruments the funds had invested. This is not a welcome practiceand goes against the interests of investors in the mutual fund. SEBI has done the right thing bybanning funds from entering into such standstill agreements. Further, SEBI has required thatassets of mutual funds be valued on a mark-to-market basis in order to better reflect the value oftheir investments.

While SEBI’s intent to deal with the risks within the financial system is commendable, therecould be unintended consequences to the regulator’s actions — which need watching. One ofthe new regulations introduced by SEBI is to increase the exit load on short-term investments inliquid mutual funds to discourage sudden demands for redemption. This could possibly hinderfund flow into the bond market, which in India is already quite undeveloped when compared tothe rest of the world. While SEBI is doing a commendable job in disciplining the markets andintermediaries, the larger question is whether the regulator can really protect investors beyond acertain point. Market investments involve risk, and investors seeking high returns may in fact bewilling to assume the increased risk that comes with such investment. That said, what theregulator is probably more concerned about is the ripple effect of defaults and roll-overs on thesystem. Investor confidence can be shaken by defaults and that will have consequences for theeconomy. Viewed from this perspective, the regulator’s latest rules should be welcomed.

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FROM BABY STEPS TO GIANT STRIDES, GST GAINSMOMENTUM

Relevant for: Indian Economy | Topic: Issues relating to Growth & Development - Public Finance, Taxation &Black Money incl. Government Budgeting

As more service providers walk into GST, the economy gets more formalised.Reuters

The historical goods and services tax (GST) which was implemented across the country fromJuly 1, 2017 is now two years old. India was not new to indirect tax levies, but consolidatingCentral and State levies and achieving uniformity was no joke. Credit is due to the CentralGovernment as well as each and every State Government and officials who participated in thisexercise.

What industry got

The industry loves GST for harmonising taxes, elimination of cascading effect of tax, wideningthe scope of input tax credit and for achieving a uniform tax rate for a product or service acrossthe country. Tangible benefits include faster refunds, less interaction with tax authorities,abolition of checkposts, etc. There are other intangible benefits on account of GST. In the past,a manufacturer in State A would lose a customer in State B if he made a CST supply.

To prevent the loss, the manufacturer would open a depot in order to effect a local supply inState B. The depot was not a business requirement, but one of tax.

Under GST, a supplier can supply goods from any part of India and tax or input tax credit is nolonger an arbitrage in competition.

The customer is now in a position to source from any supplier and the latter is in a position toaccess markets across India.

Industry gains include elimination or dismantling of structures created under the pre-GST era fortax purposes, supply-chain efficiencies, direct customer access, and a robust transparent trail forthe movement of goods. On the flip side, the industry is extremely unhappy with the massiveincrease in compliance requirements, frequent battles with the GST portal, wastage of manhoursin dealing with technical glitches, and facing potential loss of ITC on account of supplier facingsimilar problems.

The industry is also not happy with frequent changes in law, including scenarios where the portaldoes not permit what the law permits.

What government got

Monthly revenue from GST has crossed Rs. 1,00,000 crore, even though the GDP growth is lowand the economy is witnessing a slump. GST has resulted in the widening of the tax base.Excellent data mining has resulted in identification of tax evasion at an early stage. E-way billsystem has brought in an effective, transparent movement trail.

Higher tax collections even without intervention indicates compliance. As more and morevendors and service providers walk into GST, the formalisation of economy takes place.

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The walk-in is voluntary and sometimes compelled by the bigger player, who prefers onlyregistered compliant suppliers since ITC is linked with vendor compliance.

The natural corollary would be the increase in direct tax collections from these new assessees.Many manufacturing states had anticipated huge losses on account of GST compared to theirpre-GST collections.

This has not happened probably due to significant consumption of services in suchmanufacturing States.

The government, however, is extremely unhappy with the fake invoice racket and rightly so.These players provide a disservice to the economy and also to honest tax payers. While actionis welcome, the government should pursue the route of adjudication, prosecution and earlyconviction instead of the threat of non-bailable arrest provisions which have a potential formisuse.

Unlike many other countries which faced massive inflation on account of introduction of GST,India did not face any inflation. This was probably due to an effective rate of tax policy, as wellas timely course correction.

The National Anti-Profiteering Authority had also played a role, but has outlived its objective.There was no necessity for a two-year extension. The consumer has gained the most in GST.From an era of cascading taxes, which had nearly 30% of taxes on goods; dual and multiplelevies on services, the consumer is now seeing massive reduction in the rate of tax for goodsand services.

In a typical restaurant, where there used to be VAT of 2% or 12.5% and a service tax of 6%, thecustomer is enjoying a flat 5% which is lower than the VAT rates applicable in many countries inthe European Union. Awareness of GST among consumers is at an all-time high, thanks tosocial media.

However, the downside to this is tax evasion, which is now driven by consumers. In the past,when a customer procured goods or services, he was least bothered about the tax rate sinceexcise duty was invisible. The VAT rate was low and was not a significant deterrent. When theoverall indirect tax levy was 30%, it was not reflected in the invoice, but when the rate hasdeclined to 12% and 18%, awareness about GST makes the customer assume it is a new levywhich affects his pocket, and the consumer opens the cash channel.

The law

GST law has turned out to be the most complex one on account of design faults and frequenttinkering. The distinction between goods and services manifests itself in GST in multiplesegments.

The Advance Ruling mechanism has failed since most rulings are in favour of the revenue andin some cases, against the provisions of the statute. The constitution of the AAR is the issue,since it is not presided by a judicial member and comprises sitting officers of the tax department.The GST Council has played a stellar role in cooperative federalism since 35 meetings havetaken place, where resolutions have been passed unanimously despite political differences.

This kind of unanimity is unseen even in flat association meetings. In only two years ofexistence, 32 amendments to the CGST Act; 31 amendments to the CGST Rules; 87 CGST rateNotifications; 179 CGST non-rate Notifications; 90 IGST rate Notifications; 19 IGST non-rate

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Notifications; 101 Board Circulars; 10 Removal of Difficulty Orders; matching Notifications from29 States, do not indicate a simple law.

(The writer is an advocate and tax consultant)

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KEY INVESTMENT METRICRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Capital Market & SEBI

What is Net Asset Value?

The Net Asset Value (NAV) is typically used in the context of mutual funds and exchange tradedfunds.

NAVs offer a transparent way to arrive at a value for a fund. The value to the investor is arrivedat on a per-unit basis.

Why is it necessary?

When you invest in a mutual fund, you are given a certain number of units at a certain value.

Depending on how the mutual fund performs, the value of its assets and liabilities change,reflecting in the price per unit, hence determining the value of your investment.

An investor in the mutual fund can buy more units or can redeem her units for cash. The netasset value per unit determines the value of the transaction.

How is NAV calculated?

Net Asset Value per unit = (total assets — total liabilities) / total number of outstanding units

How often does the NAV change?

Unlike share values that change real-time depending on the price they command in the markets,NAVs for mutual funds are determined by the end-of-day value of the shares in which the mutualfund has invested.

Is the NAV the best indicator of a fund’s performance?

While the NAV is a reasonably good indicator of a fund’s performance, it is not wholly accurate.

Coupled with the NAV reading, one has to look at the dividend or interest that the fund has paidout to investors over a period.

Mutual funds typically pay out dividends, or interest accrued, to investors.

Since these are ‘assets’ that go out of the fund’s books (unless reinvested), the NAV comesdown proportionately.

That does not by itself mean that there has been a dip in the fund’s performance. The annualtotal return is a better indicator of a fund’s wholesome performance.




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MONEY IN SWISS BANKS: INDIA RANKED 74Relevant for: Indian Economy | Topic: Issues relating to Growth & Development - Public Finance, Taxation &

Black Money incl. Government Budgeting

India has moved down one place to 74th rank in terms of money parked by its citizens andenterprises with Swiss banks, while the U.K. has retained its top position, as per data releasedby the central banking authority of the Alpine nation.

India was ranked 73rd last year, after jumping from its 88th rank a year ago.

An analysis of the latest annual banking statistics of the Swiss National Bank (SNB) shows thatIndia remains ranked very low when it comes to money parked by Indian individuals andenterprises in Swiss banks, including through their India-based branches, while accounting for0.07% of the aggregate funds parked by all foreign clients of the Switzerland-based banks.
















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NOT BY WISHFUL THINKINGRelevant for: Indian Economy | Topic: Issues relating to Mobilization of resources incl. Savings, Borrowings &

External Resources

In early June, at a NITI Aayog meeting, Prime Minister Narendra Modi set a clear and boldeconomic target — to grow India into a $5 trillion economy by 2024. It is now for ‘Team India’, asthe meeting was bannered, to translate this target into a plan and policies and programmes.Historically, such goals by popularly elected leaders have voiced the aspiration of voters andenergised nations to realise their potential.

What does the targeted $5 trillion economy mean in familiar economic terms? It is 350,00,000crore of gross domestic product (GDP) at current prices, at 70 to a U.S. dollar exchange rate.India’s (provisional) GDP in 2018-19 at current prices is 190,10,164 crore (or $2.7 trillion), whichmeans the annual per capita income is 1,42,719, or about 11,900 per month.

The target implies an output expansion by 84% in five years, or at 13% compound annualgrowth rate. Assuming an annual price rise of 4%, in line with the Reserve Bank of India’sinflation target, the required growth rate in real, or inflation-adjusted, terms is 9% per year. Toget a perspective, India officially grew at 7.1% per year over the last five years, but the annualgrowth rate never touched 9%. Hence, the target seems ambitious. Is it doable?

How does the target compare with the Asian experience? China, with a historicallyunprecedented growth record in its best five years, during 2003-07, grew at 11.7%; SouthKorea, between 1983 and 1987, grew at 11%. So, Mr. Modi’s target is smaller than the besthistorical records and may seem realistic.

What would it take to grow at 9%? No country grew at such a pace without mobilising domesticsaving and raising fixed investment rates.

In the last five years, on average, the domestic saving rate was 30.8% of gross nationaldomestic income (GNDI), and the investment rate (gross capital formation to GDP ratio) was32.5%. Assuming the underlying technical coefficients remain constant, a 9% annual growth ratecalls for 39% of domestic saving rate and 41.2% of investment rate. Correspondingly, shares ofprivate consumption need to shrink to about 50% of GDP from the current level of 59% of GDPat current prices, assuming foreign capital inflow remains at 1.7% of GDP.

In other words, India will have to turn into an investment-led economy as it happened during theboom last decade (2003-08) before the financial crisis, or like China since the 1980s. Grantingthat rapid technical progress or changes in output composition could reduce the requiredincremental capital-output ratio (ICOR), it nevertheless will call for a nearly 8-9 percentage pointboost to saving and investment rates.

If, however, the economy has grown at a much slower pace than the officially claimed rate — asthe on-going GDP debate suggests and at 4.5% as the former Chief Economic Adviser ArvindSubramanian has pegged it — then Mr. Modi’s growth target would become even moredaunting.

These stark facts call for a re-thinking in the ruling dispensation that seems to hail India as aconsumption-led growth story. There is a belief that greater foreign capital (FDI) inflow would fillin the investment gap, as evident from the NITI Aayog Vice-Chairman’s variouspronouncements. History shows that no country has succeeded in accelerating its growth rate

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without raising the domestic saving rate to close to 40% of GDP. Foreign capital can fill in somevital gaps but is not a substitute for domestic resources. Even in China, FDI inflows as aproportion of GDP never exceeded 5-6%, most of which was in fact round-tripped capitalthrough Hong Kong for securing better property rights at home.

Gross FDI inflow into India peaked in 2008-09 at 2.7% of GDP, decelerating thereafter. As itincreasingly consists of private equity (PE) with a three- to five-year tenure, mostly acquiringcapital assets (contrary to the textbook FDI definition as fixed capital formation for the long term)net FDI rate is lower than the gross inflows, standing at 1.5% of GDP in 2017-18. Hence, thereis a need for caution against the exuberance (or opportunistic bias) that FDI will help to get tothe $5 trillion GDP target.

What is serious is that the economy has slowed down for a while now. The domestic saving ratehas declined from 31.4% in 2013-14 to 29.6% in 2016-17; and gross capital formation rate from33.8% to 30.6% during the same period. The banking sector’s ability to boost credit growth islimited by non-performing assets (NPAs) and the governance crisis in the financial sector.Export to GDP ratio has declined rapidly, with a looming global trade war on the horizon, as hasbeen indicated by the Baltic Dry Index. The highly regarded leading indicator of global trade,currently trading at 1354 is forecasted to decline to less than 1,000 index points by the year-end(a decline from its historic high of 11,793 points in May 2008, just before the financial crisis setin).

Given the foregoing, the $5 trillion target appears daunting. It may yet be doable, providedpolicymakers begin with a realistic assessment, by willing to step up domestic saving andinvestment, and not by the wishful thinking of FDI-led growth accelerations in uncertaineconomic times.

R. Nagaraj is with the Indira Gandhi Institute of Development Research, Mumbai


The incentive of an enviable income for teachers could mitigate many ills that affect India’seducation system








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Source : www.pib.nic.in Date : 2019-07-03

HIGH POWERED COMMITTEE OF CHIEF MINISTERSCONSTITUTED FOR ‘TRANSFORMATION FOR INDIANAGRICULTURE’

Relevant for: Indian Economy | Topic: Agriculture Issues and related constraints

NITI Aayog

High Powered Committee of Chief Ministers constituted for‘Transformation for Indian Agriculture’

Maharashtra CM Devendra Fadnavis to be the Convenor

CMs of Karnataka, Haryana, Arunachal Pradesh, Gujarat,UP, MP & Union Minister of Agriculture, RD & PanchayatiRaj to be the Members

Member , NITI Aayog Ramesh Chand to be the MemberSecretary

Committee to discuss measures for transformation ofagriculture and raising farmers’ income

Modalities for adoption and time bound implementation ofagriculture sector reforms to be suggested by theCommittee

Committee to submit its report in Two Months

Posted On: 01 JUL 2019 8:25PM by PIB Delhi

Agriculture, rural development , water conservation and its proper use have been among themajor planks of NDA Government led by Prime Minister Shri Narendra Modi. In keeping with hispromises and subsequent to the deliberations of Governing Council meeting of NITI Aayog, thePrime Minister has set up a High Powered Committee of Chief Ministers for ‘Transformation ofIndian Agriculture’. The composition of the committee is follows:

Sh. Devendra Fadnavis, Chief Minister, Maharashtra : Convenori.Sh H.D. Kumaraswamy, Chief Minister, Karnataka : Memberii.Sh. Manohar Lal Khattar, Chief Minister, Haryana : Memberiii.Sh. Pema Khandu, Chief Minster, Arunachal Pradesh : Memberiv.

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Sh. Vijay Rupani, Chief Minster, Gujarat : Memberv.Sh. Yogi Adityanath, Chief Minister, Uttar Pradesh : Membervi.Sh. Kamal Nath, Chief Minister, Madhya Pradesh : Membervii.Sh.Narendra Singh Tomar, Minister, AgricultureRural Development and Panchyati Raj, GoI : Member

viii.

Sh. Ramesh Chand, Member NITI Aayog : Member-Secyix.

The terms of Reference (ToR) of the Committee would be

i) to discuss measures for transformation of agriculture and raising farmers’ incomeand suggest modalities for adoption and time bound implementation of followingreforms by States/UTs:

a) The….State/Union Territory ‘Agriculture Produce and Livestock Marketing(Promotion & Facilitation) Act, 2017’ (APLM Act, 2017) circulated by Ministry ofAgriculture and Farmers’ Welfare, GoI to States/UTs.

b) The …..States/Union Territory ‘Agriculture Produce and Livestock, ContractFarming and Services (Promotion & Facilitation) Act, 2018’ circulated by Ministry ofAgriculture and Farmers Welfare, GoI to States/UTs.

ii) to examine various provisions of Essential Commodity Act (ECA), 1955 and situations thatrequire ECA. To suggest changes in the ECA to attract private investments in agriculturalmarketing and infrastructure.

iii) to suggest mechanism for linking of market reforms with e-NAM, GRAM and otherrelevant Centrally Sponsored Schemes.

iv) to suggest policy measures to (a) boost agricultural export (b) raise growth in foodprocessing (c) attract investments in modern market infrastructure, value chains and logistics.

v) to suggest measures to upgrade agri-technology to global standards and improve access offarmers to quality seed, plant propagation material and farm machinery in agriculturally advancecountries.

vi) to propose any other relevant reforms for transformation of agriculture sector and raisingfarmers’ income.

The committee will submit its report within two months of the date of notification of theCommittee.

The High Powered Committee of Chief Ministers for ‘Transformation of Indian Agriculture’ willbe serviced by NITI Aayog.

*****

AKT/SH/SKS

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(Release ID: 1576575) Visitor Counter : 1342

Read this release in: Urdu , Bengali , Hindi , Marathi



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A SCHEME FOR FARMERS THAT HAS NOT REACHEDMOST FARMERS


The PM-KISAN scheme was operationalised on February 24.

The Pradhan Mantri Kisan Samman Nidhi (PM-Kisan), a cash transfer programme that draws onmajor initiatives by two State governments, has a long way to go in terms of both itsimplementation and scope of coverage. Even as the cropping season is under way, thescheme’s support has not reached farmers in most of the country’s regions.

Launched by the Centre at the end of its previous tenure and made effective retrospectively fromDecember 1, 2018, the measure is a necessary state response to assuage agrarian unrest. Thescheme’s original objective, to “supplement financial needs” of the country’s Small and MarginalFarmers (SMFs) and to “augment” farm incomes, has now been broadened to include allcategories of agricultural landowners. This expansion would benefit an additional 10% of rurallanded households.

PM-Kisan offers 6,000 a year per household in three instalments. Broadly speaking, thisamounts to only about a tenth of the production cost per hectare or consumption expenditure fora poor household. Hence, though what the programme offers is meagre, it promises some reliefto poor farmers by partially supplementing their input costs or consumption needs.

The cash transfer is not linked to the size of the farmer’s land, unlike Telangana’s Rythu Bandhuscheme, under which farmers receive 8,000 per annum for every acre owned. While landlesstenants have been left out in both the schemes, the link with land size makes the supportprovided by the Telangana scheme more substantial. PM-Kisan also falls short of Odisha’sKrushak Assistance for Livelihood and Income Augmentation (KALIA) scheme, which includeseven poor rural households that do not own land.

Though the first quarterly instalment, for the December 2018-March 2019 period, was to beprovided in the last financial year, the benefits of PM-Kisan have not reached farmers in mostparts of the country. With kharif cultivation activity under way already, the scheme’s potential todeliver is contingent on its immediate implementation.

There are 125 million farming households owning small and marginal holdings of land in thecountry, who constitute the scheme’s original intended beneficiaries. However, at present, thelist of beneficiaries includes only 32% (40.27 million) of these households.

Further, a majority of the intended beneficiary households are yet to receive even their firstinstalment of 2,000. Only 27% (33.99 million) received the first instalment, and only 24% (29.76million) received the second. In budgetary terms, only 17% of the estimated 75,000 croreexpenditure has been spent. Moreover, implementation in certain States has been prioritised.U.P., for instance, accounts for one-third of total beneficiary households — 33% (11.16 million)in the first instalment and 36% (10.84 million) in the second. About half of the State’s SMFhouseholds have been covered. Only two other States — Gujarat and Andhra Pradesh — have

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gained a prominent share. A total of 17 States have received a negligible share of the firstinstalment, accounting for less than 9%.

For the scheme to be effective, PM-Kisan needs to be uniformly implemented across regions.However, one needs to be mindful that it is not a fix for larger structural issues. Cash transferswill cease to be effective if the state withdraws from its other long-term budgetary commitmentsin agricultural markets and areas of infrastructure such as irrigation. Subsidies for inputs,extension services, and procurement assurances provide a semblance of stability to agriculturalproduction. Food security through the National Food Security Act is also closely linked togovernment interventions in grain markets. If the budgetary allocations shift decisively in favourof cash transfers, they will be a cause for great concern. Further, the scheme recognises onlylandowners as farmers. Tenants, who constitute 13.7% of farm households and incur theadditional input cost of land rent, don’t stand to gain anything if no part of the cultivated land isowned. Hence, there is a strong case to include landless tenants and other poor families.

Moreover, though the scheme is conceptualised to supplement agricultural inputs, it ceases tobe so without the necessary link with scale of production (farm size) built into it. It becomes, ineffect, an income supplement to landowning households. If income support is indeed theobjective, the most deserving need to be given precedence.

Bhim Reddy is a Fellow at the Institute for Human Development, Delhi; Abhishek Shaw is adoctoral student in Economics


Long hours of work, no holidays and large vacancies in the force cause stress and depression








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JOB OPPORTUNITIES BY FDIRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Foreign Capital, Foreign Trade

& BOP

Ministry of Commerce & Industry

Job Opportunities by FDI


The details of FDI inflow & FDI equity inflow reported during the last five years are asunder:

S.No.

FinancialYear

FDI EquityInflow

Total FDIInflow

Amount inUS$ million

Amount inUS$ million

1. 2014-15 29,737 45,148

2. 2015-16 40,001 55,559

3. 2016-17 (P) 43,478 60,220

4. 2017-18 (P) 44,857 60,974

5. 2018-19 (P) 44,366 64,375

(P): Figures are provisional subject to reconciliation with RBI

Foreign Direct Investment is largely a matter of private business decisions. FDIinflows depend on a host of factors such as the availability of natural resources,market size, infrastructure, general investment climate as well as macro-economicstability and investment decision of foreign investors.

Sector wise details of FDI reported through equity inflow during the last five years aregiven below:

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S.No

Sector2014-15Apr-Mar

2015-16Apr-Mar

2016-17Apr-Mar

2017-18Apr-Mar

2018-19Apr-Mar

Total

FDIin US$million

FDIin US$million

FDIin US$million

FDIin US$million

FDIin US$million

FDIin US$ million

1METALLURGICALINDUSTRIES

359.34 456.31 1,440.18 371.76 598.84 3,226.43

2 MINING 683.52 518.95 26.19 34.36 222.31 1,485.33

3 POWER 707.04 868.80 1,112.98 1,621.00 1,105.64 5,415.47

4NON-CONVENTIONALENERGY

615.95 776.51 783.57 1,204.46 1,446.16 4,826.66

5PETROLEUM &NATURAL GAS

1,077.72 48.81 123.20 9.32 65.33 1,324.38

6BOILERS ANDSTEAM GENERATINGPLANTS

1.33 77.91 53.91 68.13 0.01 201.29

7

PRIME MOVER(OTHER THANELECTRICALGENERATORS)

230.70 159.13 286.88 159.06 244.92 1,080.68

8ELECTRICALEQUIPMENTS

574.83 444.88 2,230.69 488.72 976.50 4,715.63

9COMPUTERSOFTWARE &HARDWARE

46.82 167.17 70.19 84.86 11.50 380.54

10 ELECTRONICS 96.84 208.39 83.97 196.87 451.88 1,037.95

11AUTOMOBILEINDUSTRY

2,725.64 2,526.82 1,609.32 2,089.53 2,623.22 11,574.52

12 SEA TRANSPORT 37.69 0.33 22.34 0.01 0.05 60.43

13RAILWAY RELATEDCOMPONENTS

129.73 73.99 87.57 98.54 72.19 462.02

14INDUSTRIALMACHINERY

716.79 568.26 329.30 462.82 338.18 2,415.35

15 MACHINE TOOLS 24.06 126.38 23.89 45.16 44.93 264.42

16AGRICULTURALMACHINERY

72.35 16.44 15.19 17.20 5.78 126.96

17EARTH-MOVINGMACHINERY

30.11 97.66 52.23 29.18 34.16 243.33

18

MISCELLANEOUSMECHANICAL &ENGINEERINGINDUSTRIES

186.69 274.57 245.24 106.42 162.67 975.59

19

COMMERCIAL,OFFICE &HOUSEHOLDEQUIPMENTS

33.39 36.68 7.44 20.97 11.78 110.27

20MEDICAL ANDSURGICAL 145.93 173.26 479.71 87.23 156.72 1,042.85

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APPLIANCES

21INDUSTRIALINSTRUMENTS

0.85 7.42 0.80 2.28 1.62 12.97

22SCIENTIFICINSTRUMENTS

32.34 6.36 76.66 5.53 3.15 124.05

23 FERTILIZERS 225.32 20.93 0.89 26.68 86.73 360.54

24CHEMICALS (OTHERTHAN FERTILIZERS)

762.76 1,469.95 1,392.80 1,307.90 1,980.99 6,914.40

25PHOTOGRAPHICRAW FILM ANDPAPER

0.75 0.00 0.00 0.00 0.00 0.75

26 DYE-STUFFS 54.89 3.32 10.70 0.00 1.52 70.43

27DRUGS &PHARMACEUTICALS

1,497.74 754.26 857.39 1,009.96 265.97 4,385.32

28TEXTILES(INCLUDINGDYED,PRINTED)

177.43 230.13 618.95 454.45 198.14 1,679.10

29PAPER AND PULP(INCLUDING PAPERPRODUCTS)

116.21 85.21 197.61 71.17 38.00 508.21

30 SUGAR 27.77 105.85 15.92 7.90 1.10 158.54

31FERMENTATIONINDUSTRIES

225.38 202.36 110.86 38.48 149.49 726.57

32FOOD PROCESSINGINDUSTRIES

515.86 505.88 727.22 904.90 628.24 3,282.10

33VEGETABLE OILSAND VANASPATI

148.34 34.22 108.45 85.12 116.22 492.35

34SOAPS, COSMETICS& TOILETPREPARATIONS

177.22 193.26 92.60 137.03 154.09 754.20

35 RUBBER GOODS 284.51 296.15 262.76 392.21 197.64 1,433.27

36LEATHER,LEATHERGOODS ANDPICKERS

34.21 17.13 2.30 22.00 4.52 80.16

37 GLUE AND GELATIN 21.44 0.82 90.60 3.76 13.29 129.91

38 GLASS 41.82 25.78 51.69 70.92 35.59 225.80

39 CERAMICS 35.29 51.21 15.40 50.12 58.09 210.11

40CEMENT ANDGYPSUM PRODUCTS

208.99 19.69 2,130.10 19.44 17.61 2,395.83

41 TIMBER PRODUCTS 8.97 53.17 10.23 9.91 7.75 90.03

42DEFENCEINDUSTRIES

0.08 0.10 0.00 0.01 2.18 2.37

43DIAMOND,GOLDORNAMENTS

280.18 58.54 123.92 233.03 29.15 724.82

44

TEA AND COFFEE(PROCESSING &WAREHOUSINGCOFFEE & RUBBER)

1.43 1.12 1.60 20.02 13.64 37.81

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45

PRINTING OF BOOKS(INCLUDING LITHOPRINTINGINDUSTRY)

72.58 122.81 53.17 228.40 549.80 1,026.75

46 COIR 1.36 0.00 0.00 0.00 0.00 1.36

47MISCELLANEOUSINDUSTRIES

765.88 668.77 296.40 398.76 441.16 2,570.96

Grand Total 14,216.10 12,555.69 16,333.01 12,695.58 13,568.42 69,368.79

This information was given by the Minister of Commerce and Industry, PiyushGoyal,in a written reply in the Lok Sabha today.

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INVEST INDIA PROGRAMMERelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Foreign Capital, Foreign Trade

& BOP


Invest India Programme


Invest India was formed in 2009 under Section 25 of the Companies Act 1956 forpromotion of foreign investment with 49% equity of the then Department of IndustrialPolicy and Promotion, Ministry of Commerce and Industry and 51% shareholding byFICCI. The current shareholding pattern of Invest India is 51 % of IndustryAssociations (i.e. 17% each of FICCI, CII & NASSCOM) and the remaining 49% ofCentral and 19 State Governments.

As reported by Invest India, it is currently working with 1003 companies, with anindicated investment worth USD 137 Billion and indicated employment of 1,981,147extending end-to-end facilitation support. Out of these, investments worth USD 23Billion and 138,083 employment have been realized during September 2014 till date.Invest India has responded to 190,431 business requests during the period fromSeptember 2014 till date and is actively working with several Indian States to buildcapacity and strengthen existing Investment Promotion Agencies as well as bring inglobal best practices in investment targeting, promotion and facilitation areas.

The projects which are being handled by Invest India, inter-alia, include the following:

Proactive Investor Targeting: Invest India identifies target companiesacross focus sectors from target markets looking to initiate investmentinto India or further expansion in India.

1.

Handholding support: The provision of high quality services to supportinvestors throughout the investment life cycle is extremely important andInvest India creates vital differentiation and an invaluable service offeringof guidance, handholding, problem solving and facilitation for investors.

1.

Bilateral CEO Forums: Government of India has institutionalized bilateral1.

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CEOs forums with various countries to identify new avenues forcooperation and take initiatives to facilitate business links betweencountries. Invest India takes up the responsibility of acting as the nodalpoint for investment related issues/ recommendations and help actioninvestment specific resolutions raised at the CEOs Forums.

Country – Sector Outreach: Invest India proactively contributes to nationaland regional policy development by planning Country/Sector interactions.

1.

Strategic Investment Research Unit: It shapes India’s investmentlandscape and drives a step change in the quality and quantity of FDI. TheStrategic Investment Research unit not only act as a strong pillar for thecore functions of the IPA, like investor targeting and facilitation, but alsoassist in preparing investment related briefings.

1.

Harnessing Information & Communication Technology for FDI:Invest Indiascales up use of technology for investment targeting and facilitation. UsingInformation and Communication Technology, IPAs are putting in placeincreasingly sophisticated investor inquiry tracking tools to handle andprocess such inquiries

1.

Working with State Investment Promotion Agencies: Invest India plays acentral role in ensuring that FDI is on the agenda of all State agencies,State Governments and stakeholders, highlighting the substantialeconomic and social benefits which can be accrued locally from FDI.

1.

Startups: Startup India is a flagship initiative of the Government of India,intended to build a strong eco-system for nurturing innovation andStartups in the country that will drive sustainable economic growth andgenerate large scale employment opportunities. The Department forPromotion of Industry and Internal Trade with the help of Invest India aimsto empower Startups to grow through innovation and design through thisintiative.

1.

Accelerating Growth of New India’s Innovations (AGNIi): It aims to supportthe ongoing efforts to boost the innovation ecosystem in the country byconnecting innovators across industry, individuals and the grassroots tothe market and helping commercialise their innovative solutions. Invest

1.

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India provide a platform for innovators to bring their market ready productsand solutions to industry thereby helping propel India into a new era ofinclusive economic growth.

India Investment Grid: India Investment Grid (IIG) is an online platform toshowcase investment opportunities in India to global investors. Theplatform is looked after by Invest India.

1.

The efforts of Invest India and measures taken by the Government on FDI policyliberalization along with improvement in ease of doing business climate have resultedin unprecedented growth of total FDI inflows. India has recorded USD 64.38 billionFDI inflow in the year 2018-19 which is an increase of 78.6% over financial year2013-14 when total FDI inflow was USD 36.05 billion.

Department for Promotion of Industry and Internal Trade conducts regular review ofthe performance of Invest India. Further, the Board of Directors, under chairmanshipof Secretary, Department for Promotion of Industry and Internal Trade, includingnominees from Government of India, FICCI, CII and NASSCOM manages andoversee the overall operations, direction and strategy of the company. Regularmeetings of the Board of Directors are held to monitor the operational and overallperformance of Invest India.

The Books of Accounts of the company are examined and audited by StatutoryAuditors appointed in each Annual General meeting by the Board of Directors andShareholders as per the Company Act. In addition, audits are also conducted by theGovernment. No financial irregularity has been detected.

The sector-wise and financial year wise details of FDI equity inflow reported sinceApril, 2014 to March 2019 are given below:

STATEMENT ON FINANCIAL YEAR WISE FDI EQUITY INFLOWSFROM APRIL 2014 TO MARCH 2019

S .No.

Sector2014-15Apr-Mar

2015-16Apr-Mar

2016-17Apr-Mar

2017-18Apr-Mar

2018-19Apr-Mar

Total

FDIi n U S $million

FDIi n U S $million

FDIi n U S $million

FDIi n U S $million

FDIi n U S $million

1M E T A L L U R G I C A LINDUSTRIES

359.34 456.31 1,440.18 371.76 598.84 3,226.43

2 MINING 684.39 520.67 55.75 36.41 223.58 1,520.81

3 POWER 707.04 868.80 1,112.98 1,621.00 1,105.64 5,415.47

4 N O N - C O N V E N T I O N A L 615.95 776.51 783.57 1,204.46 1,446.16 4,826.66

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ENERGY

5PETROLEUM & NATURALGAS

1,079.02 103.02 180.40 24.18 138.43 1,525.06

6B O I L E R S A N D S T E A MGENERATING PLANTS

1.33 77.91 53.91 68.13 0.01 201.29

7PRIME MOVER (OTHERT H A N E L E C T R I C A LGENERATORS)

230.70 159.13 286.88 159.06 244.92 1,080.68

8 ELECTRICAL EQUIPMENTS 574.83 444.88 2,230.69 488.72 976.50 4,715.63

9COMPUTER SOFTWARE &HARDWARE

2,296.04 5,904.36 3,651.71 6,153.20 6,415.21 24,420.52

10 ELECTRONICS 96.84 208.39 83.97 196.87 451.88 1,037.95

11 TELECOMMUNICATIONS 2,894.94 1,324.40 5,563.69 6,211.84 2,667.91 18,662.78

12I N F O R M A T I O N &B R O A D C A S T I N G(INCLUDING PRINT MEDIA)

254.96 1,009.34 1,516.68 638.67 1,252.36 4,672.01

13 AUTOMOBILE INDUSTRY 2,725.64 2,526.82 1,609.32 2,089.53 2,623.22 11,574.52

14A I R T R A N S P O R T(INCLUDING AIR FREIGHT)

74.56 361.25 83.40 628.53 190.64 1,338.37

15 SEA TRANSPORT 333.22 429.30 735.06 1,051.49 279.25 2,828.31

16 PORTS 1.90 0.00 0.00 0.00 0.00 1.90

17R A I L W A Y R E L A T E DCOMPONENTS

129.73 73.99 87.57 98.54 72.19 462.02

18 INDUSTRIAL MACHINERY 716.79 568.26 329.30 462.82 338.18 2,415.35

19 MACHINE TOOLS 24.06 126.38 23.89 45.16 44.93 264.42

20A G R I C U L T U R A LMACHINERY

72.35 16.44 15.19 17.20 5.78 126.96

21E A R T H - M O V I N GMACHINERY

30.11 97.66 52.23 29.18 34.16 243.33

22M I S C E L L A N E O U SM E C H A N I C A L &ENGINEERING INDUSTRIES

186.69 274.57 245.24 106.42 162.67 975.59

23COMMERCIAL, OFFICE &HOUSEHOLD EQUIPMENTS

33.39 36.68 7.44 20.97 11.78 110.27

24MEDICAL AND SURGICALAPPLIANCES

145.93 173.26 479.71 87.23 156.72 1,042.85

25 INDUSTRIAL INSTRUMENTS 0.85 7.42 0.80 2.28 1.62 12.97

26 SCIENTIFIC INSTRUMENTS 32.34 6.36 76.66 5.53 3.15 124.05

27 FERTILIZERS 225.32 20.93 0.89 26.68 86.73 360.54

28CHEMICALS (OTHER THANFERTILIZERS)

762.76 1,469.95 1,392.80 1,307.90 1,980.99 6,914.40

29PHOTOGRAPHIC RAW FILMAND PAPER

0.75 0.00 0.00 0.00 0.00 0.75

30 DYE-STUFFS 54.89 3.32 10.70 0.00 1.52 70.43

31D R U G S &PHARMACEUTICALS

1,497.74 754.26 857.39 1,009.96 265.97 4,385.32

32 T E X T I L E S ( I N C L U D I N G 197.42 230.13 618.95 454.45 198.14 1,699.09

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DYED,PRINTED)

33P A P E R A N D P U L P( I N C L U D I N G P A P E RPRODUCTS)

116.21 85.21 197.61 71.17 38.00 508.21

34 SUGAR 27.77 105.85 15.92 7.90 1.10 158.54

35F E R M E N T A T I O NINDUSTRIES

225.38 202.36 110.86 38.48 149.49 726.57

36F O O D P R O C E S S I N GINDUSTRIES

515.86 505.88 727.22 904.90 628.24 3,282.10

37VEGETABLE OILS ANDVANASPATI

148.34 34.22 108.45 85.12 116.22 492.35

38SOAPS, COSMETICS &TOILET PREPARATIONS

177.22 193.26 92.60 137.03 154.09 754.20

39 RUBBER GOODS 284.51 296.15 262.76 392.21 197.64 1,433.27

40LEATHER,LEATHER GOODSAND PICKERS

34.21 17.13 2.30 22.00 4.52 80.16

41 GLUE AND GELATIN 21.44 0.82 90.60 3.76 13.29 129.91

42 GLASS 41.82 25.78 51.69 70.92 35.59 225.80

43 CERAMICS 35.29 51.21 15.40 50.12 58.09 210.11

44CEMENT AND GYPSUMPRODUCTS

208.99 19.69 2,130.10 19.44 17.61 2,395.83

45 TIMBER PRODUCTS 8.97 53.17 10.23 9.91 7.75 90.03

46 DEFENCE INDUSTRIES 0.08 0.10 0.00 0.01 2.18 2.37

47 CONSULTANCY SERVICES 458.13 517.47 261.14 759.67 410.61 2,407.02

48

S E R V I C E S S E C T O R(Fin.,Banking,Insurance,NonFin/Business,Outsourcing,R&D,Courier,Tech. Testing andAnalysis, Other)

3,250.03 6,889.46 8,684.07 6,708.58 9,157.54 34,689.68

49HOSPITAL & DIAGNOSTICCENTRES

567.85 742.35 747.38 708.09 1,044.61 3,810.29

50 EDUCATION 78.86 230.78 160.12 285.75 776.73 1,532.23

51 HOTEL & TOURISM 777.01 1,332.69 916.13 1,131.97 1,075.75 5,233.55

52 TRADING 2,727.96 3,845.32 2,338.40 4,348.13 4,462.13 17,721.93

53 RETAIL TRADING 168.72 262.24 450.94 223.78 442.83 1,548.51

54 AGRICULTURE SERVICES 59.95 84.65 76.43 110.19 88.07 419.29

55D I A M O N D , G O L DORNAMENTS

280.18 58.54 123.92 233.03 29.15 724.82

56

T E A A N D C O F F E E( P R O C E S S I N G &WAREHOUSING COFFEE &RUBBER)

1.43 1.12 1.60 20.02 13.64 37.81

57P R I N T I N G O F B O O K S( I N C L U D I N G L I T H OPRINTING INDUSTRY)

72.58 122.81 53.17 228.40 549.80 1,026.75

58 COIR 1.36 0.00 0.00 0.00 0.00 1.36

59 C O N S T R U C T I O N 870.25 4,510.71 1,860.73 2,729.69 2,258.00 12,229.38

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( I N F R A S T R U C T U R E )ACTIVITIES

60

C O N S T R U C T I O NDEVELOPMENT: Townships,housing, built-up infrastructureand construction-developmentprojects

769.14 112.55 105.14 539.57 213.15 1,739.55

61M I S C E L L A N E O U SINDUSTRIES

765.88 668.77 296.40 398.76 441.16 2,570.96

Grand Total 29,737.27 40,000.98 43,478.27 44,856.75 44,366.03 202,439.31

This information was given by the Minister of Commerce and Industry, Piyush Goyal,in a written reply in the Lok Sabha today.

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PROMOTION OF INNOVATIONRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Industry & Services Sector

incl. MSMEs and PSUs


Promotion of Innovation


Various Government Ministries/Departments viz. Ministry of Human Resource Development(MHRD), Department of Science and Technology (DST), Department of Bio-technology (DBT),NITI Aayog and Ministry of Electronics and Information Technology (MeitY) have launchedschemes for promotion of innovation. The details of such schemes are:

Department of Science & Technology has launched a NIDHI program (National Initiative forDeveloping and Harnessing Innovations) under which programmes for setting up ofincubators, seed fund, accelerators and 'Proof of concept' grant for innovators andentrepreneurs have been launched. Under NIDHI, PRAYAS (Promoting and AcceleratingYoung and Aspiring innovators & Startups) programme has been initiated in whichestablished Technology Business Incubators (TBI) are supported with PRAYAS grant tosupport innovators and entrepreneurs with grants for ‘Proof of Concept’ and developingprototypes. A maximum grant of Rs. 220 lakh is given to a TBI for establishing a PRAYASCentre which includes Rs.100 lakh for PRAYAS SHALA, Rs. 20 lakh for operational cost ofPRAYAS Centre and maximum of Rs. 10 lakh to one innovator for developing prototype.Funding for ten innovators is given to the TBI in a year.

1.

To boost entrepreneurial spirit in India, the Atal Innovation Mission (AIM), a flagshipinitiative of NITI Aayog, is supporting two programs for setting up and scaling up ofincubation centres. The Atal Incubation Centres (AICs) scheme supports setting up ofgreen field incubation centres that nurture innovative start-up businesses in their pursuit tobecome scalable and sustainable enterprises. The Established Incubation Centres schemeprovides scale-up support to well performing existing incubation centres, referred to asEstablished Incubation Centers (EICs), where AIM intends to further augment theirperformance by providing them scale-up support. In both of these schemes, AIM isproviding grants of upto INR 10 Crores over a period of 3-5 years.

1.

Ministry of Electronics & Information Technology (MeitY), Government of India has takenvarious initiatives and measures to encourage entrepreneurs to develop indigenousproducts in Information and Communications Technology (ICT) domain and also improveinnovation-led ecosystem with scheme and programmes to support researchers, start-upsand MSMEs. Technology Incubation and Development of Entrepreneurs (TIDE) Schemewas put in place by MeitY in 2008 to promote innovation by nurturing startups in InformationTechnology, Communications & Electronics (ICTE) domain. Under the TIDE Scheme,

●

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financial assistance is provided to Institutions of Higher Learning to strengthen theirTechnology Incubation Centres for enabling young entrepreneurs to create technologystartup companies for commercial exploitation of technologies developed by them.Enhanced version Technology Incubation and Development of Entrepreneurs (TIDE 2.0)Scheme is to promote tech entrepreneurship through financial and technical support toincubators engaged in supporting ICT startups using emerging technologies such asInternet of Things (IoT), Artificial Intelligence (AI), Block-chain, Robotics etc.

Biotechnology Industry Research Assistance Council (BIRAC), A Public SectorUndertaking of Department of Biotechnology (DBT) has been promoting incubators inbiotechnology sector for innovative idea through the following programmes:

1.

i) BIRAC BioNEST (BIRAC Bio-incubation: Nurturing Entrepreneurs for Scalingup Technology): BIRAC’s Flagship programme which creates / supports world-class bio-incubators for startups/ entrepreneurs to provide incubation space, mentor networks,instrumentation facilities, IP and technology management support.

1.

ii) SEED(Sustaining Enterprise and Entrepreneurship Development) Fund: Equitybasedfunding support of up to Rs. 30 Lakh to startups and enterprises through bio-incubators for scaling up.

1.

iii) LEAP (Launching Entrepreneurial Driven Affordable Products Fund for Start-ups)Fund: Equity based funding support of up to Rs 1 Cr to startups andenterprises implemented through Incubators for scaling enterprises.

●

Ministry of Human Resource Development is setting up Incubation centers/Research Parksin the institutions of higher learning independently or in conjunction with DBT and DST.Further, DST and MHRD have jointly taken up initiative for establishment of ResearchParks, Technology Business Incubators and Startup Centres. The objective of setting upResearch Parks is to propel successful innovation through incubation and joint Researchand Development (R&D) efforts between academia and industry. Further, throughUcchatar Avishkar Yojana(UAY) Government aims to make students more accustomedwith the outer world and give them market-oriented mind set.

1.

No specific proposal to invite foreign investments to promote innovation in the country is underconsideration of Department of Industrial Policy and Promotion. However, Government has putin place an investorfriendly policy, wherein except for a small negative list, most sectors areopen for 100% FDI under the Automatic route including innovation / R&D, subject to applicablelaws/ regulations; security and other conditionalities.

Further, to attract foreign investments in the country, and showcase its diverse market andtransformative technology innovations to the Investors across the world, DPIIT organized theStartup India Global Venture Capital Summit on 6th and 7th December 2018, bringing togetherover 250 participants from over 20 countries across the globe. The dialogue focused on thehuge return-generating potential of India’s vast and diverse market monetized through cutting-edge technologies supported by investor-friendly regulations. Multiple sessions and Roundtableswere organized for foreign investors with the concerned government stakeholders to understand

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and solve for the regulatory and policy challenges faced for investments in India.

This information was given by the Minister of Commerce and Industry, Piyush Goyal, in a writtenreply in the Lok Sabha today.

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IMPACT OF START UP INDIARelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Industry & Services Sector



Impact of Start up India


A formal mechanism has been put in place in form of Monitoring Committee to reviewprogress of Startup India programme on regular basis. The Monitoring Committeecomprises representative from Department for Promotion of Industry and InternalTrade (DPIIT), NITI Aayog, Department of Revenue (Ministry of Finance), Ministry ofMicro, Small and Medium Enterprises, Department of Science and Technology(Ministry of Science and Technology), Department of Bio-Technology (Ministry ofScience and Technology), Ministry of Electronics and Information Technology,Department of Higher Education (Ministry of Human Resources Development) andSmall Industries Development Board of India (SIDBI). The Monitoring Committeecontinuously reviews progress & implementation of various measures for growth ofstartup ecosystem.

In order to meet the objectives of the Startup India initiative commenced on 16th

January 2016, Government of India announced Action Plan containing 19 ActionPoints. The progress made with respect to each Action Point is given below:

S.No. Item

S i m p l i f i c a t i o n a n dHandholding

Progress

1.1.Compliance Regimeb a s e d o n S e l f -certification

Startups recognised under Startup Indiainitiative can self-certify their complianceagainst 6 labour and 3 environment laws

2. Startup India Hub

Dedicated team setup under Invest India(not for profit facilitation arm of theMinistry of Commerce and Industry)

●

1,38,170 queries addressed by theStartup India team

●

One-on-One Facilitation: The StartupIndia Team has been able to facilitate 682cases till 31st May, 2019

●

Engaged with 100+ Venture Capitalist andangel networks hav ing dea l f low

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arrangement with most of themMapped out 177 incubators, 360 mentorsand 71 accelerators

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Deal f low arrangement with banksincluding Union Bank, Yes Bank, AxisBank, etc.

●

3. Rolling out of MobileApp and Portal

3,18,506 users registered on the StartupIndia Portal

●

1 9 , 2 4 7 S t a r t u p s r e c o g n i z e d b yDepartment for Promotion of Industry andInternal Trade (DPIIT)

●

9 International bridges established toestablished market opportunities forStartups in the respective countries

●

2 , 3 9 , 1 3 6 a s p i r i n g a n d e x i s t i n gentrepreneurs registered for the course

●

3,157 mentor, investor and incubatorconnections established through the portalfor Startups

●

123,000+ monthly visits on the portal●

112 Innovation Hunts and programshosted on the Startup India portal byvarious government departments andcorporates. Total of 8,159 applicationsreceived through these programs.

●

4.

Legal Suppor t andFast-tracking PatentExamination at LowerCosts

Startups are eligible for 80% rebate inpatent filing fees and 50% rebate intrademark f i l ing fees. Addit ionally,Startups will also be considered forexpedi ted examinat ion o f patentapplications to reduce time taken ingranting patents.

■

425 Paten t fac i l i ta to rs and 606Trademark faci l i tators have beenempanelled under this scheme to providefree-of-charge services to Startups.

■

1496 patent applications have beengranted 80% rebate on filing fee.

●

2761 trademark applications have beengranted 50% rebate on fill fee.

●

389 applications were granted expedited●

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examination and 103 patents weregranted.

5.Relaxed Norms o fPublic Procurement forStartups

Public procurement norms relaxed fors ta r tups th rough exempt ions on(November 2016) Prior turnover criteria;andPrior experience criteria

●

Applicable on all tenders issued byCentral Ministries and Central PublicService Undertakings (CPSUs)

Startups exempt from submitting EarnestMoney Deposit requirements (July 2017)

●

GeM Star tup Runway launched –dedicated corner for startups to sellproducts & services to Government(Feb rua ry 2019 ) 1 ,862 S ta r tupsregistered7,697 procurement orders worthRs. 275 Crore received

●

6. Faster Exit for Startups

MCA has notified Startups as “Fast trackfirms”

●

Enabling them to wind up operationswithin 90 days vis-a-vis 180 days for othercompanies

●

F u n d i n g S u p p o r t a n dIncentives

7.

Prov id ing Fund ingSuppor t th rough aFund of Funds with aCorpus of Rs. 10,000crore

Twice of Govt. contribution received byventure funds is invested into DPIITrecognised startups

●

Small Industries Development Bank ofIndia (SIDBI) has committed Rs. 3123.20crore to 49 SEBI registered AlternativeInvestment Funds (AIFs). These fundshave raised a corpus fund of Rs. 27,478crore.

●

Rs. 483.46 core have been drawn fromthe SIDBI Fund of Funds

●

Rs. 1625.73 crore have been invested into247 startups.

●

Credi t GuaranteeFund for Startups

The earlier Cabinet Note on Credit GuaranteeScheme for Startups has been withdrawn andthe Department is under process of re-draftingthe cabinet note keeping in view thesuggestions of SIDBI.

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Tax Exempt ion onCapital Gains

Section 54EE and 54 GB have been insertedin the Income-tax Act, 1961 to provideexemption from capital gains tax.

10.Tax Exemp t i on t oStartups for 3 years

149 start-ups have been benefited under thisincentive

11Tax Exempt ion onInvestments above FairMarket Value

689 startups have been benefitted underthis incentive

I n d u s t r y - A c a d e m i aPartnership and Incubation

12.

Organiz ing Star tupFests for ShowcasingI n n o v a t i o n a n dP r o v i d i n g aCollaboration Platform

The Department is planning to organizeGlobal Startup Conclave 2020 in February,2020 which will be a 4 days mega globalevent like SLUSH, CES, Web Summit with anaim to position India as the next startupdestination.

13.

L a u n c h o f A t a lInnovat ion Miss ion( A I M ) w i t h S e l f -E m p l o y m e n t a n dT a l e n t U t i l i z a t i o n(SETU) Program

8,878 Schools selected for setting up AtalTinkering Labs Rs. 20 Lakhs will be givento each school over 5 years.Rs. 12 Lakhs/ school disbursed to 3,020 schools

●

102 Incubation Centres selected Rs. 10crore to be given to each centre over 5years.Rs. 57.68 crore disbursed to 31New Incubation CentresRs. 38.91 crore disbursed to 8 Established IncubationCentres

●

24 Atal New India Challenges conducted951 applications received; 54 shortlisted

●

14.Harnessing Pr ivateSector Expertise forIncubator Setup

Atal Innovation Mission102 Incubation Centres selected

Rs. 10 crore to be given to each centreover 5 years.

●

Rs. 57.68 crore disbursed to 31 NewIncubation Centres

●

Rs. 38 .91 c rore d isbursed to 8Established Incubation Centres

●

24 Atal New India Challenges conducted951 applications received; 54 shortlisted●

15.Bui ld ing Innovat ionCentres at National

DSTRs. 18.69 Crore d isbursed to 11●

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Incubators15 Startup Centres have been approved;10 centres received a grant of Rs. 3.75Lakh

●

DBTRs. 195.90 Crore disbursed as a grant-in-aid to 4 bio-clusters

●

Rs. 174.26 Crore disbursed to 41 Bio-incubators through BioNEST

●

Rs. 6.23 Crore has been disbursed to 4BIRAC Regional Centres

●

Rs. 150 Crore fund setup as a Fund ofFunds to Bio-incubators

●

Rs. 8.5 Crore disbursed to 13 Bio-incubators (BIRAC SEED FUND)

●

16.

Setting up of 7 NewR e s e a r c h P a r k sM o d e l e d o n t h eResearch Park Setupat IIT Madras

8 Universities have been selected for settingup Research Parks identified with totalsanction amount of Rs. 680 CroreRs. 233 Crore has been disbursed tofollowing Research Parks

IIT Delhi●

IIT Kanpur●

IIT Gandhinagar●

IIT Mumbai●

IIT Guwahati●

IIT Kharagpur●

IIT Hyderabad●

IISc Bangalore●

17.

Promoting Startupsi n t h eB i o t e c h n o l o g ySector

DBTRs. 195.90 Crore disbursed as a grant-in-aid to 4 bio-clusters

●

Rs. 174.26 Crore disbursed to 41 Bio-incubators through BioNEST

●

Rs. 6.23 Crore has been disbursed to 4BIRAC Regional Centres

●

Rs. 150 Crore fund setup as a Fund ofFunds to Bio-incubators

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Rs. 8.5 Crore disbursed to 13 Bio-incubators(BIRAC SEED FUND)

18.

L a u n c h i n g o fInnovation FocusedP r o g r a m s f o r

NIDHI (National Initiative for Developing andHarnessing Innovations)

Grand challenge conducted to promote●

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entrepreneurship amongst studentcommunity224 Applications received; out of 30finalists selected, 12 student run teamsawarded Rs. 10 Lakh each

●

Uchchatar Avishkar Yojana

148 projects sanctioned in UchchatarAvishkar Yojna

●

Rs. 220.75 Crore released under the UAYscheme

●

MANAK (Million Minds Augmenting NationalAspiration and knowledge)

Rs. 10,000 granted to 1,03,497 studentsin the last 3 years under the MANAKScheme

●

19.Annua l IncubatorGrand Challenge

This activity is being coordinated by NITIAayog

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This information was given by the Minister of Commerce and Industry, Piyush Goyal,in a written reply in the Lok Sabha today.

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SAFEGUARDING THE INTELLECTUAL PROPERTYRIGHTS

Relevant for: Indian Economy | Topic: Issues relating to Intellectual Property Rights (IPRs)


Safeguarding the Intellectual Property Rights


The Government has taken several steps that have led to an improvement in patent filing, asalso for safeguarding the Intellectual Property Rights (IPR). Some of these steps, inter alia, are:

National IPR Policy for India was adopted by the Government of India on 12th May, 2016,as a vision document that lays the future roadmap of IPRs in India. The Cell for IPRPromotion and Management (CIPAM) has been set up to coordinate the implementation ofthe National IPR Policy.

●

IP awareness programmes have been undertaken in academic institutions, at both schooland college level, as also for industry.

●

To streamline the processing of IP applications, IP procedures have been simplified andmade user friendly by amendment to the Patents Rules in 2016 and Trademarks Rules in2017.

●

Since 2014-15, the manpower has been augmented both in the Patent office andTrademarks registry which has resulted in major impact on pendency of IP applications.

●

In the year 2018-19, 15284 patents were granted, as against 5978 in the year 2014-15. In thesame period, the number of trademarks registered in a year has also gone up from 41583 to316798. Domestic filing of patent applications has increased from 12,071 in 2014-15 to 17,163 in2018-19, showing a 42% increase.

The Government has taken following steps, inter alia, to enable and assist startups for filing ofpatents:

Under the amended Patents Rules, 80% patent fee reduction has been provided forStartups as compared to large companies.

●

Under the Scheme for Facilitating Startups Intellectual Property Protection (SIPP), 208Patent Agents have been empanelled as facilitators by the Controller General of Patents,Trademarks and Designs, to provide assistance to Startups in the preparation and filing oftheir patent applications and, subsequently, during the stage of prosecution of applicationsbefore the Patent Office. Fees of the facilitators are paid by the Government as per thenorms of the scheme.

●

Startups are also eligible for getting the processing of their patent applications expedited.●

As on 31st May 2019, 1719 Startups have availed the benefit of 80% fee rebate. Further, 512Startups filed for expedited examination of their patent application, of which 453 have beenexamined, and 151 patents already granted.


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STATUS OF TECHNOLOGY HUBSRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Industry & Services Sector



Status of Technology Hubs


Currently, 59 Software Technology Parks of India (STPI) Centres are operational across thecountry out of which 51 Centres are in Tier-II/ III locations. Further, 24 new STPI Centres havebeen approved by the Governing Council of STPI which are at various stages of implementation.(Annexure 1)

Technology Development Programmes (TDP): Department of Science and Technologyhas been implementing Technology Development Programmes (TDP) to facilitateconversion of proof-of-concepts for technologies/ techniques/ processes/products intoadvance prototypes for validation and demonstration in field settings. The mainobjectives of the program include:

• Support R&D for development of innovative technologies in identified areas.

• Promote application of advanced technology for improving the performance andvalue addition to existing technology.

• Capacity building in the area of technology development in terms of humanresource and infra-structure.

The sub schemes of TDP are:

• Advanced Manufacturing Technologies (AMT) aligning to Make in India

• Biomedical Device and Technology Development Program (BDTD) aligning toSwasth Bharat

• Device Development Program (DDP) aligning to Make in India

• Science and Heritage Research Initiative (SHRI)

• Technology Development Program (TDP) aligning to Make in India

• Technology Mission for Indian Railways (TMIR) aligning to Make in India

• Waste Management Technologies (WMT) aligning to Swachh Bharat and SmartCity

The US firm KPMG has released a report based on 750 industry representatives including start-up entrepreneurs and FORTUNE 500 executives titled ‘The Changing Landscape of Disruptive

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Technologies’. The Report ranks India in third place, as 13 percent of the respondents indicatedIndia’s potential for technology breakthroughs.

No such assessment is made by the Government and no data of FDI is maintained based onIndustrial Estates or on geographical location other than States.

During the period 2014-2019 FDI Inflow of USD 286.28 billion (provisional) have been reportedin the country.

ANNEXURE 1

List of existing STPI Centres

S.N State Centre Name City type1

Andhra Pradesh

Kakinada Tier II/III2 Tirupati Tier II/III3 Vijayawada Tier II/III4 Vizag Tier II/III5 Assam Guwahati Tier II/III6 Bihar Patna Tier II/III7 Chhattisgarh Bhilai Tier II/III8 Goa Goa Tier II/III9

GujaratGandhinagar Tier II/III

10 Surat Tier II/III11 Haryana Gurgaon Tier I12 Himachal Pradesh Shimla Tier II/III13

Jammu and KashmirJammu Tier II/III

14 Srinagar Tier II/III15

JharkhandRanchi Tier II/III

16 Deoghar Tier II/III17 Karnataka Bengaluru Tier I18

Hubli Tier II/III19 Mangalore Tier II/III20 Manipal Tier II/III21 Mysore Tier II/III22 Kerala Thiruvananthapuram Tier II/III23

Madhya PradeshGwalior Tier II/III

24 Indore Tier II/III25

Maharashtra

Aurangabad Tier II/III26 Kolhapur Tier II/III27 Nagpur Tier II/III28 Nasik Tier II/III29 Mumbai Tier I30 Pune Tier I31 Manipur Imphal Tier II/III32 Meghalaya Shillong Tier II/III33 Mizoram Aizawl Tier II/III34

OdishaBerhampur Tier II/III

35 Bhubaneswar Tier II/III36 Rourkela Tier II/III37 Pondicherry Pondicherry Tier II/III38 Punjab Mohali Tier II/III

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39Rajasthan

Jaipur Tier II/III40 Jodhour Tier II/III41 Sikkim Gangtok Tier II/III42 Tamil Nadu

Chennai Tier I43 Coimbatore Tier II/III44 Madurai Tier II/III45 Tirunelveli Tier II/III46 Trichy Tier II/III47

TelanganaHyderabad Tier I

48 Warangal Tier II/III49

Uttar Pradesh

Allahabad Tier II/III50 Kanpur Tier II/III51 Lucknow Tier II/III52 Noida Tier I53 Uttarakhand Dehradun Tier II/III54

West Bengal

Durgapur Tier II/III55 Haldia Tier II/III56 Kharagpur Tier II/III57 Kolkata Tier I58 Siliguri Tier II/III59 Tripura Agartala Tier II/III

List of upcoming STPI Centres

S.N State Centre Name City Type1 Arunachal Pradesh Itanagar Tier II/III2

BiharBhagalpur Tier II/III

3 Darbhanga Tier II/III4

JharkhandBokaro Tier II/III

5 Dhanbad Tier II/III6 Jamshedpur Tier II/III7

Madhya PradeshBhopal Tier II/III

8 Chhindwada Tier II/III9 Jabalpur Tier II/III10 Nagaland Kohima-Dimapur Tier II/III11

Odisha

Angul Tier II/III12 Balasore Tier II/III13 Jajpur Tier II/III14 Koraput (Jeypore) Tier II/III15 Sambalpur Tier II/III16 Punjab Amritsar Tier II/III17 Karnataka Davangere Tier II/III18

Uttar Pradesh

Agra Tier II/III19 Gorakhpur Tier II/III20 Meerut Tier II/III21 Varanasi Tier II/III22 Haryana Panchkula Tier II/III23 Gujarat Bhavnagar Tier II/III24 Himachal Pradesh Kangra Tier II/III

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This information was given by the Minister of Commerce and Industry, PiyushGoyal, in a writtenreply in the Lok Sabha today.

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Source : www.hindustantimes.com Date : 2019-07-05

BECOMING A $5-TRILLION ECONOMYRelevant for: Indian Economy | Topic: Issues relating to Planning & Economic Reforms

The Economic Survey for 2018-19 will probably be remembered for its insights on how India canbecome a $5-trillion economy, an articulated objective of the prime minister. Analysing theprogress of several East and South East Asian nations, it makes a case for a growth model builtaround investment and exports with private investment being catalysed by conducive foreigninvestment rules, political stability, and an efficient judiciary. There is little to quibble about here,although reviving the investment cycle through public investment seems easier (and also morepragmatic). While foreign investors will no doubt be drawn to India’s large market (as long aspolicies are conducive), large Indian companies, their balance sheets loaded with debt, havebeen in no position to invest over the past few years (and the situation will likely continue for afew more).

ALSO WATCH | Mint Budget Round-Table: How Modi govt can achieve $5 trillioneconomy aim

Within this larger formula prescribed by the Economic Survey, three subsidiary strands stand out– simply for their acuity in understanding some uniquely Indian problems. The first is theSurvey’s understanding that part of India’s problem is a huge number of sub-scale enterprises(or dwarfs as it calls them). Sub-scale companies typically have low productivity and quality; nordo they create jobs. The second is the Survey’s recommendation for a national floor for theminimum wage, something that would immediately improve the lot of almost a third of India’sworking population which, according to the survey, does not earn this now. The new wage codecleared by the Union Cabinet will do this – but it has to be cleared by Parliament. The third is theSurvey’s focus on behavioural economics when it comes to public policy – India has been azealous adopter of technology in governance, but it is the understanding of the underlyingbehavioural aspects of change – getting people to use toilets as opposed to just building them,for instance – that can have a greater impact.

Yet another Economic Survey has put forth some interesting and radical ideas. It is time theUnion Budget and other policies started reflecting some of these.

First Published: Jul 04, 2019 19:49 IST



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ELECTRICITY GENERATION THROUGH ATOMICENERGY

Relevant for: Indian Economy | Topic: Infrastructure: Energy incl. Renewable & Non-renewable

Department of Atomic Energy

Electricity generation through atomic energy


The share of atomic energy in the overall electricity generation in the country wasabout 2.93% in the year 2017-18.

Nuclear share has remained around 3% of the total electricity generation in thecountry. The main reason for low share has been the low installed capacity base. Thereasons for low capacity base are:

Technology development and international embargo regime that persisted from1974 to 2008. As a result, all the technologies for nuclear power including thefuel cycle technologies had to be developed within the country, thus tooktime.Another constraint faced during the first two decades was availability offinancial resources, as it had to solely depend on budgetary support.However, the earlier constraints have now been overcome and nuclear powerprogramme is poised for rapid expansion.

1.

To increase the share of nuclear power generation, the Government has takenseveral steps to increase the nuclear power capacity and to provide adequatequantity of fuel. These include:

Resolution of issues related to Civil Liability for Nuclear Damage (CLND) Act &Creation of Indian Nuclear Insurance Pool (INIP).

i.

Accord of administrative approval and financial sanction of - ten (10) indigenous700 MW Pressurized Heavy Water Reactors (PHWRs) to be set up in fleet mode& two (02) units of Light Water Reactors (LWRs) to be set up in cooperation withRussian Federation.

ii.

Amendment of the Atomic Energy Act to enable Joint Ventures of Public Sectoriii.

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Companies to set up nuclear power projects.

Entering into enabling agreements with foreign countries for nuclear powercooperation including supply of fuel.

iv.

This information was provided by the Union Minister of State (Independent Charge)Development of North-Eastern Region (DoNER), MoS PMO, Personnel, PublicGrievances & Pensions, Atomic Energy and Space, Dr Jitendra Singh in written replyto a question in Rajya Sabha today.

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NUCLEAR PLANT EXPANSION PROGRAMMERelevant for: Indian Economy | Topic: Infrastructure: Energy incl. Renewable & Non-renewable


Nuclear Plant Expansion Programme


Finance Minister’s budget speech in Lok Sabha on 29.02.2016 for 2016-17 budgetincluded the following reference to nuclear energy:

“In the power sector, we need to diversify the sources of power generation for longterm stability. Government is drawing up a comprehensive plan, spanning next 15 to20 years, to augment the investment in nuclear power generation. Budgetaryallocation up to Rs 3,000 crore per annum, together with public sector investments,will be leveraged to facilitate the required investment for this purpose.”

To meet the large equity requirements involved in implementation of the plannednuclear power expansion programme, formation of Joint Ventures (JV) of NuclearPower Corporation of India Limited (NPCIL) with other PSUs was contemplated. Inthis context, NPCIL entered into Joint Ventures (JV) with Public Sector UndertakingsNTPC Limited, Indian Oil Corporation Limited and National Aluminium CompanyLimited (NALCO). The Government also brought an Amendment of the AtomicEnergy Act to enable Joint Ventures of Public Sector Companies to set up nuclearpower projects.

The equity funding of the projects presently under construction and projects whoseadministrative approval and financial sanction is available, have been tied up.

This information was provided by the Union Minister of State (Independent Charge)Development of North-Eastern Region (DoNER), MoS PMO, Personnel, PublicGrievances & Pensions, Atomic Energy and Space, Dr Jitendra Singh in written replyto a question in Rajya Sabha today.

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Source : www.indianexpress.com Date : 2019-07-05

THE GROWTH DRIVERRelevant for: Indian Economy | Topic: Issues relating to Planning & Economic Reforms

© 2019 The Indian Express Ltd.All Rights Reserved

For an economy in slowdown mode, the key to reviving the growth momentum is privateinvestment, which is a function of the “animal spirits” of entrepreneurs. One must give credit tothe Finance Ministry’s Economic Survey, unveiled a day before the presentation of the NarendraModi government’s first Union Budget in its second innings, for recognising this basic truth.Although it does not explicitly admit it, the Indian economy is, indeed, today caught in a viciouscycle of investments not happening on the ground, jobs drying up and, in turn, impacting incomeand consumption. This is the opposite of what happens in a virtuous cycle, where “investment,productivity growth, job creation, demand and exports feed into each other and enable animalspirits in the economy to thrive”. The Survey is right that the macroeconomic stability indicators— whether pertaining to inflation, external current account or even fiscal balances — are muchbetter than they were five years ago and it is time to “shift gears” to enable an average annualreal GDP growth of 8 per cent for India to become a $5 trillion economy by 2024-25. But the keydriver for it is investment — more specifically, private investment.

But how does one get firms to invest, which is ultimately a forward-looking activity? It basicallyrequires the upfront costs of a project to be less than the present value of the expected rewardsfrom the investment. The Survey has pointed out — which may not be in sync with the ReserveBank of India’s views, at least till recently — that real rates of interest in India have increasedsignificantly over the years and are high even on cross-country comparison. There is, therefore,need to lower the cost of capital. Further, it has argued that the country only needs a “mildlypositive real rate”, which will not necessarily lead to lower savings. Savings are driven primarilyby demographics and income growth: Both of these are favourable for India, given a risingproportion of its working population that will both earn more and save more.

There are other useful suggestions by the Survey that may be worth considering. The first is aredesign of tax policy, including for start-ups. High tax rates on corporate profits and noticesreceived by new economy companies on angel funding from venture capital investors arecertainly not a good idea. They need a complete review, especially in the current context whereanimal spirits are low. Reviving those spirits will present the biggest and most immediatechallenge for the Modi government as it begins its second term.

Download the Indian Express apps for iPhone, iPad or Android

© 2019 The Indian Express Ltd. All Rights Reserved



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‘FDI NEEDED TO SPUR THE VIRTUOUS CYCLE ININDIA’Relevant for: Indian Economy | Topic: Issues relating to Growth & Development - Foreign Capital, Foreign Trade

& BOP

Foreign investment in India is needed to spur the domestic private investment cycle, says ChiefEconomic Adviser (CEA) Krishnamurthy Subramanian. Excerpts from a Q&A session:

Could you elaborate on what you mean about treating data as a public good?

Let me start with an example. Imagine a woman in a village accessing on her smart phone allthe hospitals that are there in her vicinity. Not only can she access the hospitals but she canclick on a particular hospital and get the quality of emergency care, let’s say, of that hospital.And suppose, she can get this in the local language. Now, if someone falls ill in her village, sheknows very well where to go. This is an example of ease of living that can be generated bybringing in data.

That is possible today and it can’t happen without viewing data as a public good. While you havecompanies like Amazon, Google, etc. which utilise data, they do it in a particular area. They willonly do it where there is profit, they are private entities.

Much like the government invests in public goods such as roads, ports, etc., these [data forpublic use] are areas where the private sector will not make investments. It can reduce inclusionand exclusion errors as well via Aadhaar.

That’s the basic idea. And it can be created within the framework of the privacy laws in thecountry because we have the necessary technologies to do that.

The main plank of your Survey is that investment will drive all the other factors of theeconomy such as growth and job creation. Where will this investment come from?

When we were writing this chapter, we had the choice of going into each of these details orfocussing on the big picture message, which is what we need to do to get on that 8% growthpath.

These are questions to which we have the answers, but we wanted to keep the Surveyfocussed.

I think some of the overhang from the previous period has unwound completely. Second, bankshave cleaned up their balance sheets and credit to large firms has started going up.

Third, which I think is a very important opportunity that we have not tapped enough, is that if youlook at the global environment in terms of liquidity and the surplus and the interest rateenvironment that has been prevailing, it is as benign as it ever was. There is a lot of flushliquidity that is looking for avenues for investment.

If you have an economy that is going to grow at 8% growth rates, this money finds it profitable tobe invested there.

In order to trigger this virtuous cycle, we have to rely on some of these foreign savings. They

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can come in and start investment, and once this happens, that will enhance productivity, whichcreates jobs, fosters exports and thereby, demand.

In the Survey, you have missed out on focussing on the banking sector or the problemsaffecting the NBFC sector. Why is that?

As I articulated, we wanted to focus on the big picture. We will be writing another Survey in sixmonths, that will be presented on January 30. So, we had to make a choice. One thing we knewvery well when we started working on the Survey is that this will be the Survey of a newgovernment and therefore, a government that potentially has five years to implement policies.

Banks have cleaned up their balance sheets and credit to large firms has started goingup
















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‘AADHAAR AIDED MGNREGS BENEFICIARIES’Relevant for: Indian Economy | Topic: Issues Related to Poverty, Inclusion, Employment & Sustainable

Development

Refuting criticism of Aadhaar-linked payments and the direct benefit transfer system, theEconomic Survey 2018-19 has used the Mahatma Gandhi National Rural EmploymentGuarantee Scheme (MGNREGS) as a case study to show the benefits of the use of technologyin improving targeting and efficiency in welfare schemes, especially for the most vulnerablegroups.

Going forward, the Survey recommends that digital technology and the JAM troika — Jan Dhan,Aadhaar and Mobile — be expanded to other welfare schemes. The Survey cites data on thetimeliness of wage payments, worker turnout, demand and supply of work under the schemebefore and after Aadhaar-linked payments (ALP) were implemented as a proof for its benefits.

Data show that in 2014-15, less than 27% of wage payments were generated within 15 days.Direct benefit transfers were introduced two years later. By 2018-19, more than 90% of wagepayments were generated within 15 days. “Payment delays drive away farmers in genuinedistress, while others not in distress take the benefits. A person undergoing economic distressneeds immediate and certain liquidity. Working for uncertain promised wages, which are likely tobe realised with a substantial lag, presents an unattractive proposition for a person in distress asdelayed payments effectively imply zero wages in adverse times,” says the Survey. The Surveyalso compared the MGNREGS performance in blocks affected by drought versus other blocks,using drought as a proxy for distress. In drought-affected blocks, the number of personsdemanding work increased more than 20% after the implementation of ALP, while there was noeffect in other blocks. A similar trend is seen in the supply of work. Muster rolls, which are worksite attendance registers, show a 19% increase after ALP implementation in most blocks. Indrought-affected blocks, muster rolls increased by 44%.

“It appears that before the implementation of ALP, the rural poor treated MGNREGS as anoption to earn additional income during good times rather than a shock absorber during badtimes. This actually defeated the purpose of the programme. Post implementation of ALP, thereis a reversal of trend, wherein an increase in demand for work under MGNREGS is observed indrought-affected areas,” says the Survey, arguing that effective targeting has been possiblebecause of ALP.

The Survey suggests that going forward, “demand for work under MGNREGS may be used todevelop a real-time indicator of distress at the granular district or panchayat level.” The Surveyalso recommends that other welfare schemes implement the lessons learnt from Aadhaarlinkages in MGNREGS.

Scholarships, pensions, and subsidies for food, kerosene, and gas cylinders should be next inline to implement Aadhaar-based payments, it said.





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‘RECOVERY UNDER IBC HIGHER AT 43%’Relevant for: Indian Economy | Topic: Issues relating to Growth & Development - Banking, NPAs and RBI

Recovery by financial creditors has seen a significant rise after the Insolvency and BankruptcyCode (IBC) kicked in compared with the previous recovery regimes like Debt Recovery Tribunal,Lok Adalat and SARFAESI Act, the Economic Survey for 2018-19 pointed out.

Between 2007 and 2017, recovery from all those other sources was 23% while the same was43% under the IBC between 2017-19. “These earlier mechanisms have resulted in an averagerecovery of 23% to lenders as against nearly 43% under the IBC,” the Survey said. The overallrecovery in resolved cases is nearly Rs. 74,497 crore for the financial creditors, the Survey said.
















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NEEDED: A WELL-DESIGNED MINIMUM WAGE SYSTEMRelevant for: Indian Economy | Topic: Issues Related to Poverty, Inclusion, Employment & Sustainable

Development

A well-designed and streamlined minimum wage system is required to reduce wage inequality inthe country, the Economic Survey says.

Currently, the minimum wage system, under the Minimum Wages Act, 1948, in India is complex,with 1,915 different minimum wages defined for different job categories across States, thesurvey said. Despite the complex system, workers were still falling through the gaps, it said.

“One in every three wage workers in India is not protected by the minimum wage law,” it said,citing the International Labour Organisation.

For instance, the survey stated, domestic workers were covered under minimum wage laws inonly 18 States and Union Territories. It also pointed out that while the law did not discriminatebetween men and women, analysis of different wages showed a bias.

“For instance, women dominate in the category of domestic workers while men dominate in thecategory of security guards. While both these occupations fall within the category of unskilledworkers, the minimum wage rate for domestic workers within a State is consistently lower thanthat for the minimum wage rates for security guards,” the survey said.

Apart from increasing the ambit of the minimum wage system, it recommended decidingminimum wages on the basis of skills and split across geographical regions. With thegovernment in the process of bringing the Code on Wages Bill in Parliament, the survey said therationalisation of minimum wages proposed by the Bill should be supported.

The survey suggested the government should notify a “national floor minimum wage” across fiveregions, after which the States can fix their own minimum wages, but not lower than the floorwage.

This, it said, would bring uniformity and make States “almost equally attractive from the point ofview of labour cost for investment as well as reduce distress migration.”

The floor wage is currently non-statutory.








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UNION BUDGET PROPOSES PERMITTING 100%FOREIGN DIRECT INVESTMENT (FDI) FOR INSURANCEINTERMEDIARIESRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Foreign Capital, Foreign Trade

& BOP

Ministry of Finance

Union Budget proposes permitting 100% Foreign DirectInvestment (FDI) for insurance intermediaries

Easing of Local Sourcing Norms also proposed for FDI inSingle Brand Retail sector

Rationalization of existing Know Your Customer (KYC)norms for FPIs contemplated to make it more investorfriendly

NRI-Portfolio Investment Scheme Route proposed to bemerged with Foreign Portfolio

Investment Route with a view to provide NRIs withseamless access to Indian equities


It is being contemplated to permit 100% Foreign Direct Investment (FDI) for insuranceintermediaries. This was announced by the Union Minister of Finance and Corporate Affairs,Smt. Nirmala Sitharaman while presenting the Union Budget 2019-20 in the Parliament today.She further proposed that Local sourcing norms will be eased for FDI in Single Brand Retailsector.

The Finance Minister also added that FDI inflows into India have remained robust despite globalheadwinds. Global Foreign Direct Investment (FDI) flows slid by 13% in 2018, to US$ 1.3 trillionfrom US$ 1.5 trillion the previous year – the third consecutive annual decline.

The Finance Minister further stated that according to UNCTAD’s World Investment Report2019. India’s FDI inflows in 2018-19 remained strong at US$ 64.375 billion marking a 6%growth over the previous year.

The Finance Minister proposed to further consolidate the gains in order to make India a moreattractive FDI destination:

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The Government will examine suggestions of further opening up of FDI in aviation, media(animation, AVGC) and insurance sectors in consultation with all stakeholders.100%Foreign Direct Investment (FDI) will be permitted for insurance intermediaries.Localsourcing norms will be eased for FDI in Single Brand Retail sector. FPIs will be permittedto subscribe to listed debt securities issued by ReITs and InvITs.

1.

The Finance Minister further added that time has come that India not only gets integrated intoglobal value chain of production of goods and services, but also become part of the globalfinancial system to mobilise global savings, mostly institutionalized in pension, insurance andsovereign wealth funds. Towards this end, the Government is contemplating organizing anAnnual Global Investors Meet in India, using National Infrastructure Investment Fund (NIIF) asthe anchor, to get all three sets of global players- top industrialists/corporate honchos, toppension/insurance/sovereign wealth funds and top digital technology/venture funds.

The Finance Minister stated that an important determinant of attracting cross-border investmentsis availability of investible stock to the FPIs. This issue assumes greater significance in view ofthe gradual shift, from stock targeted investments, towards passive investment whereby fundstrack global indices composition of which depends upon available floating stock.

Union Budget 2019-20 propose to increase the statutory limit for FPI investment in a companyfrom 24% to sectoral foreign investment limit with option given to the concerned corporates tolimit it to a lower threshold, the Minister added.

The Finance Minister also stated that as a key source of capital to the Indian economy, it isimportant to ensure a harmonized and hassle free investment experience for Foreign PortfolioInvestors. Hence, it is proposed to rationalize and streamline the existing Know Your Customer(KYC) norms for FPIs to make it more investor friendly without compromising the integrity ofcross-border capital flows.

The Finance Minister further proposed to merge the NRI-Portfolio Investment Scheme Routewith Foreign Portfolio Investment Route with a view to provide NRIs with seamless access toIndian equities.

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DSM/RM/SVS/MKV/YK


Read this release in: Malayalam , Marathi , Bengali , Tamil



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STRATEGIC DISINVESTMENT OF SELECT CPSES APRIORITY FOR THE GOVERNMENT

Relevant for: Indian Economy | Topic: Issues relating to Growth & Development - Industry & Services Sectorincl. MSMEs and PSUs

Ministry of Heavy Industries & Public Enterprises

Strategic disinvestment of select CPSEs a priority for theGovernment


Strategic disinvestment of select CPSEs will continue to remain a priority of the Governmentsaid Union Finance and Corporate Affairs Minister while presenting Union Budget 2019-20 inParliament today. In view of current macro-economic parameters, the Government will not onlyreinitiate the process of strategic disinvestment of Air India, but will offer more CPSEs forstrategic participation by the private sector.

The Government will undertake strategic sale of PSUs and will also continue to doconsolidation of PSUs in the non-financial space as well.

The Finance Minister said that Government is considering, to go below 51% to an appropriatelevel, on case to case basis, in case where the Undertaking is still to be retained in Governmentcontrol. The Government has also decided to modify present policy of retaining 51% stakeinclusive of the stake of Government controlled institutions.

She said that Government intends to further encourage retail participation in CPSEswhich, of late, has shown very encouraging upward trend. In order to provide additionalinvestment space, the Government will realign its holding in CPSEs, including Banks to permitgreater availability of its shares and to improve depth of its market.

ETFs have proved to be an important investment opportunity for retail investors and hasturned out to be a good instrument for Government of India’s divestment programme. Toexpand this further, Government will offer an investment option in ETFs on the lines of EquityLinked Savings Scheme (ELSS). This will also encourage long term investment in CPSEs.

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Read this release in: Bengali



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KEY HIGHLIGHTS OF UNION BUDGET 2019-20Relevant for: Indian Economy | Topic: Issues relating to Growth & Development - Public Finance, Taxation &


Ministry of Finance

Key Highlights of Union Budget 2019-20


The Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman made hermaiden Budget Speech today and presented the Union Budget 2019-20 before the Parliament.The key highlights of Union Budget 2019 are as follows:

10-point Vision for the decade

Building Team India with Jan Bhagidari: Minimum Government Maximum Governance.●

Achieving green Mother Earth and Blue Skies through a pollution-free India.●

Making Digital India reach every sector of the economy.●

Launching Gaganyan, Chandrayan, other Space and Satellite programmes.●

Building physical and social infrastructure.●

Water, water management, clean rivers.●

Blue Economy.●

Self-sufficiency and export of food-grains, pulses, oilseeds, fruits and vegetables.●

Achieving a healthy society via Ayushman Bharat, well-nourished women & children,safety of citizens.

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Emphasis on MSMEs, Start-ups, defence manufacturing, automobiles, electronics, fabs andbatteries, and medical devices under Make in India.

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Towards a 5 Trillion Dollar Economy

“People’s hearts filled with Aasha (Hope), Vishwas (Trust), Aakansha (Aspirations)”, saysFM.

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Indian economy to become a 3 trillion dollar economy in the current year.●

Government aspires to make India a 5 trillion dollar economy.●

“India Inc. are India’s job-creators and nation’s wealth-creators”, says FM.●

Need for investment in: Infrastructure.Digital economy.Job creation in small and mediumfirms.

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Initiatives to be proposed for kick-starting the virtuous cycle of investments.●

Common man’s life changed through MUDRA loans for ease of doing business.●

Measures related to MSMEs: Pradhan Mantri Karam Yogi Maandhan Scheme●

Pension benefits to about three crore retail traders & small shopkeepers with annualturnover less than Rs. 1.5 crore.

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Enrolment to be kept simple, requiring only Aadhaar, bank account and a self-declaration.■

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Rs. 350 crore allocated for FY 2019-20 for 2% interest subvention (on fresh or incrementalloans) to all GST-registered MSMEs, under the Interest Subvention Scheme forMSMEs.Payment platform for MSMEs to be created to enable filing of bills and paymentthereof, to eliminate delays in government payments.

India’s first indigenously developed payment ecosystem for transport, based on NationalCommon Mobility Card (NCMC) standards, launched in March 2019.

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Inter-operable transport card runs on RuPay card and would allow the holders to pay for bustravel, toll taxes, parking charges, retail shopping.

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Massive push given to all forms of physical connectivity through: Pradhan Mantri GramSadak Yojana.Industrial Corridors, Dedicated Freight Corridors.Bhartamala and Sagarmalaprojects, Jal Marg Vikas and UDAN Schemes.

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State road networks to be developed in second phase of Bharatmala project.●

Navigational capacity of Ganga to be enhanced via multi modal terminals at Sahibganj andHaldia and a navigational lock at Farakka by 2019-20, under Jal Marg Vikas Project.

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Four times increase in next four years estimated in the cargo volume on Ganga, leading tocheaper freight and passenger movement and reducing the import bill.

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Rs. 50 lakh crore investment needed in Railway Infrastructure during 2018-2030.●

Public-Private-Partnership proposed for development and completion of tracks, rolling stockmanufacturing and delivery of passenger freight services.

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657 kilometers of Metro Rail network has become operational across the country.●

Policy interventions to be made for the development of Maintenance, Repair and Overhaul(MRO), to achieve self- reliance in aviation segment.

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Regulatory roadmap for making India a hub for aircraft financing and leasing activities fromIndian shores, to be laid by the Government.

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Outlay of Rs. 10,000 crore for 3 years approved for Phase-II of FAME Scheme.●

Upfront incentive proposed on purchase and charging infrastructure, to encourage fasteradoption of Electric Vehicles.

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Only advanced-battery-operated and registered e-vehicles to be incentivized under FAMEScheme.

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National Highway Programme to be restructured to ensure a National Highway Grid, usinga financeable model.

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Power at affordable rates to states ensured under ‘One Nation, One Grid’.●

Blueprints to be made available for gas grids, water grids, i-ways, and regional airports.●

High Level Empowered Committee (HLEC) recommendations to be implemented:Retirement of old & inefficient plants.Addressing low utilization of gas plant capacity due topaucity of Natural Gas.

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Cross subsidy surcharges, undesirable duties on open access sales or captive generationfor industrial and other bulk power consumers to be removed under Ujjwal DISCOMAssurance Yojana (UDAY).

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Package of power sector tariff and structural reforms to be announced soon.●

Reform measures to be taken up to promote rental housing.●

Model Tenancy Law to be finalized and circulated to the states.●

Joint development and concession mechanisms to be used for public infrastructure andaffordable housing on land parcels held by the Central Government and CPSEs.

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Measures to enhance the sources of capital for infrastructure financing: Credit●

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Guarantee Enhancement Corporation to be set up in 2019-2020.Action plan to be put inplace to deepen the market for long term bonds with focus on infrastructure.Proposedtransfer/sale of investments by FIIs/FPIs (in debt securities issued by IDF-NBFCs) to anydomestic investor within the specified lock-in period.Measures to deepen bond markets: Stock exchanges to be enabled to allow AA ratedbonds as collaterals.User-friendliness of trading platforms for corporate bonds to bereviewed.

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Social stock exchange: Electronic fund raising platform under the regulatory ambit ofSEBI.Listing social enterprises and voluntary organizations.To raise capital as equity, debtor as units like a mutual fund.

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SEBI to consider raising the threshold for minimum public shareholding in the listedcompanies from 25% to 35%.

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Know Your Customer (KYC) norms for Foreign Portfolio Investors to be made more investorfriendly.

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Government to supplement efforts by RBI to get retail investors to invest in governmenttreasury bills and securities, with further institutional development using stock exchanges.

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Measures to make India a more attractive FDI destination: FDI in sectors like aviation,media (animation, AVGC) and insurance sectors can be opened further after multi-stakeholder examination.Insurance Intermediaries to get 100% FDI.Local sourcing norms tobe eased for FDI in Single Brand Retail sector.

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Government to organize an annual Global Investors Meet in India, using NationalInfrastructure Investment Fund (NIIF) as an anchor to get all three sets of global players(pension, insurance and sovereign wealth funds).

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Statutory limit for FPI investment in a company is proposed to be increased from 24% tosectoral foreign investment limit. Option to be given to the concerned corporate to limit it toa lower threshold.

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FPIs to be permitted to subscribe to listed debt securities issued by ReITs and InvITs.●

NRI-Portfolio Investment Scheme Route is proposed to be merged with the Foreign PortfolioInvestment Route.

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Cumulative resources garnered through new financial instruments like InfrastructureInvestment Trusts (InvITs), Real Estate Investment Trusts (REITs) as well as models likeToll-Operate-Transfer (ToT) exceed Rs. 24,000 crore.

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New Space India Limited (NSIL), a PSE, incorporated as a new commercial arm ofDepartment of Space.

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To tap the benefits of the Research & Development carried out by ISRO likecommercialization of products like launch vehicles, transfer to technologies and marketing ofspace products.

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Direct Taxes

Tax rate reduced to 25% for companies with annual turnover up to Rs. 400 crore●

Surcharge increased on individuals having taxable income from Rs. 2 crore to Rs. 5 croreand Rs. 5 crore and above.

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India’s Ease of Doing Business ranking under the category of ‘paying taxes’ jumped from172 in 2017 to 121 in the 2019.

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Direct tax revenue increased by over 78% in past 5 years to Rs. 11.37 lakh crore●

Tax Simplification and Ease of living - making compliance easier by leveraging technology:

Interchangeability of PAN and Aadhaar Those who don’t have PAN can file tax returnsusing Aadhaar.Aadhaar can be used wherever PAN is required.

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Pre-filling of Income-tax Returns for faster, more accurate tax returns Pre-filled taxreturns with details of several incomes and deductions to be made available.Information tobe collected from Banks, Stock exchanges, mutual funds etc.

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Faceless e-assessment Faceless e-assessment with no human interface to belaunched.To be carried out initially in cases requiring verification of certain specifiedtransactions or discrepancies.

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Affordable housing

Additional deduction up to Rs. 1.5 lakhs for interest paid on loans borrowed up to 31st

March, 2020 for purchase of house valued up to Rs. 45 lakh. Overall benefit of around Rs. 7lakh over loan period of 15 years.

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Boost to Electric Vehicles

Additional income tax deduction of Rs. 1.5 lakh on interest paid on electric vehicle loans.●

Customs duty exempted on certain parts of electric vehicles.●

Other Direct Tax measures

Simplification of tax laws to reduce genuine hardships of taxpayers: Higher tax threshold forlaunching prosecution for non-filing of returnsAppropriate class of persons exempted fromthe anti-abuse provisions of Section 50CA and Section 56 of the Income Tax Act.

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Relief for Start-ups

Capital gains exemptions from sale of residential house for investment in start-ups extendedtill FY21.

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‘Angel tax’ issue resolved- start-ups and investors filing requisite declarations and providinginformation in their returns not to be subjected to any kind of scrutiny in respect ofvaluations of share premiums.

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Funds raised by start-ups to not require scrutiny from Income Tax Department E-verificationmechanism for establishing identity of the investor and source of funds.

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Special administrative arrangements for pending assessments and grievance redressal Noinquiry in such cases by the Assessing Officer without obtaining approval of the supervisoryofficer.

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No scrutiny of valuation of shares issued to Category-II Alternative Investment Funds.●

Relaxation of conditions for carry forward and set off of losses.●

NBFCs

Interest on certain bad or doubtful debts by deposit taking as well as systemically importantnon-deposit taking NBFCs to be taxed in the year in which interest is actually received.

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International Financial Services Centre (IFSC)

Direct tax incentives proposed for an IFSC: 100 % profit-linked deduction in any ten-year●

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block within a fifteen-year period.Exemption from dividend distribution tax from current andaccumulated income to companies and mutual funds.Exemptions on capital gain toCategory-III Alternative Investment Funds (AIFs).Exemption to interest payment on loantaken from non-residents.

Securities Transaction Tax (STT)

STT restricted only to the difference between settlement and strike price in case of exerciseof options.

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Indirect Taxes

Make In India

Basic Customs Duty increased on cashew kernels, PVC, tiles, auto parts, marble slabs,optical fibre cable, CCTV camera etc.

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Exemptions from Custom Duty on certain electronic items now manufactured in Indiawithdrawn.

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End use based exemptions on palm stearin, fatty oils withdrawn.●

Exemptions to various kinds of papers withdrawn.●

5% Basic Custom Duty imposed on imported books.●

Customs duty reduced on certain raw materials such as: Inputs for artificial kidney anddisposable sterilised dialyser and fuels for nuclear power plants etc.Capital goods requiredfor manufacture of specified electronic goods.

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Defence

Defence equipment not manufactured in India exempted from basic customs duty●

Other Indirect Tax provisions

Export duty rationalised on raw and semi-finished leather●

Increase in Special Additional Excise Duty and Road and Infrastructure Cess each by Rs. 1per litre on petrol and diesel

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Custom duty on gold and other precious metals increased●

Legacy Dispute Resolution Scheme for quick closure of pending litigations in Central Exciseand Service tax from pre-GST regime

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Grameen Bharat / Rural India

Ujjwala Yojana and Saubhagya Yojana have transformed the lives of every rural family,dramatically improving ease of their living.

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Electricity and clean cooking facility to all willing rural families by 2022.●

Pradhan Mantri Awas Yojana – Gramin (PMAY-G) aims to achieve "Housing for All" by2022: Eligible beneficiaries to be provided 1.95 crore houses with amenities like toilets,electricity and LPG connections during its second phase (2019-20 to 2021-22).

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Pradhan Mantri Matsya Sampada Yojana (PMMSY) A robust fisheries managementframework through PMMSY to be established by the Department of Fisheries.To addresscritical gaps in the value chain including infrastructure, modernization, traceability,

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production, productivity, post-harvest management, and quality control.Pradhan Mantri Gram Sadak Yojana (PMGSY) Target of connecting the eligible andfeasible habitations advanced from 2022 to 2019 with 97% of such habitations alreadybeing provided with all weather connectivity.30,000 kilometers of PMGSY roads have beenbuilt using Green Technology, Waste Plastic and Cold Mix Technology, thereby reducingcarbon footprint.1,25,000 kilometers of road length to be upgraded over the next five yearsunder PMGSY III with an estimated cost of Rs. 80,250 crore.

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Scheme of Fund for Upgradation and Regeneration of Traditional Industries’ (SFURTI)Common Facility Centres (CFCs) to be setup to facilitate cluster based development formaking traditional industries more productive, profitable and capable for generatingsustained employment opportunities.100 new clusters to be setup during 2019-20 withspecial focus on Bamboo, Honey and Khadi, enabling 50,000 artisans to join the economicvalue chain.

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Scheme for Promotion of Innovation, Rural Industry and Entrepreneurship’ (ASPIRE)consolidated. 80 Livelihood Business Incubators (LBIs) and 20 Technology BusinessIncubators (TBIs) to be setup in 2019-20.75,000 entrepreneurs to be skilled in agro-ruralindustry sectors.

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Private entrepreneurships to be supported in driving value-addition to farmers’ produce fromthe field and for those from allied activities.

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Dairying through cooperatives to be encouraged by creating infrastructure for cattle feedmanufacturing, milk procurement, processing & marketing.

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10,000 new Farmer Producer Organizations to be formed, to ensure economies of scalefor farmers.

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Government to work with State Governments to allow farmers to benefit from e-NAM.●

Zero Budget Farming in which few states’ farmers are already being trained to bereplicated in other states.

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India’s water security New Jal Shakti Mantralaya to look at the management of our waterresources and water supply in an integrated and holistic mannerJal Jeevan Mission toachieve Har Ghar Jal (piped water supply) to all rural households by 2024To focus onintegrated demand and supply side management of water at the local level.Convergencewith other Central and State Government Schemes to achieve its objectives.1592 criticaland over exploited Blocks spread across 256 District being identified for the Jal ShaktiAbhiyan.Compensatory Afforestation Fund Management and Planning Authority (CAMPA)fund can be used for this purpose.

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Swachh Bharat Abhiyan 9.6 crore toilets constructed since Oct 2, 2014.More than 5.6 lakhvillages have become Open Defecation Free (ODF).Swachh Bharat Mission to be expandedto undertake sustainable solid waste management in every village.

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Pradhan Mantri Gramin Digital Saksharta Abhiyan, Over two crore rural Indians madedigitally literate.Internet connectivity in local bodies in every Panchayat under Bharat-Net tobridge rural-urban divide.Universal Obligation Fund under a PPP arrangement to be utilizedfor speeding up Bharat-Net.

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Shahree Bharat/Urban India

Pradhan Mantri Awas Yojana – Urban (PMAY-Urban)- Over 81 lakh houses with aninvestment of about Rs. 4.83 lakh crore sanctioned of which construction started in about 47lakh houses.Over 26 lakh houses completed of which nearly 24 lakh houses delivered to the

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beneficiaries.Over 13 lakh houses so far constructed using new technologies.More than 95% of cities also declared Open Defecation Free (ODF).●

Almost 1 crore citizens have downloaded Swachhata App.●

Target of achieving Gandhiji’s resolve of Swachh Bharat to make India ODF by 2ndOctober 2019. To mark this occasion, the Rashtriya Swachhta Kendra to be inauguratedat Gandhi Darshan, Rajghat on 2nd October, 2019.Gandhipedia being developed byNational Council for Science Museums to sensitize youth and society about positiveGandhian values.

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Railways to be encouraged to invest more in suburban railways through SPV structures likeRapid Regional Transport System (RRTS) proposed on the Delhi-Meerut route.

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Proposal to enhance the metro-railway initiatives by: Encouraging more PPPinitiatives.Ensuring completion of sanctioned works.Supporting transit oriented development(TOD) to ensure commercial activity around transit hubs.

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Youth

New National Education Policy to be brought which proposes Major changes in bothschool and higher educationBetter Governance systemsGreater focus on research andinnovation.

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National Research Foundation (NRF) proposed To fund, coordinate and promoteresearch in the country.To assimilate independent research grants given by variousMinistries.To strengthen overall research eco-system in the country This would beadequately supplemented with additional funds.

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Rs. 400 crore provided for “World Class Institutions”, for FY 2019-20, more than threetimes the revised estimates for the previous year.

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‘Study in India’ proposed to bring foreign students to study in Indian higher educationalinstitutions.

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Regulatory systems of higher education to be reformed comprehensively: To promotegreater autonomy.To focus on better academic outcomes.

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Draft legislation to set up Higher Education Commission of India (HECI), to be presented.●

Khelo India Scheme to be expanded with all necessary financial support.●

National Sports Education Board for development of sportspersons to be set up underKhelo India, to popularize sports at all levels

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To prepare youth for overseas jobs, focus to be increased on globally valued skill-setsincluding language training, AI, IoT, Big Data, 3D Printing, Virtual Reality and Robotics.

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Set of four labour codes proposed, to streamline multiple labour laws to standardize andstreamline registration and filing of returns.

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A television program proposed exclusively for and by start-ups, within the DD bouquet ofchannels.

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Stand-Up India Scheme to be continued for the period of 2020-25. The Banks to providefinancial assistance for demand based businesses.

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Ease of Living

About 30 lakh workers joined the Pradhan Mantri Shram Yogi Maandhan Scheme thatprovides Rs. 3,000 per month as pension on attaining the age of 60 to workers in

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unorganized and informal sectors.Approximately 35 crore LED bulbs distributed under UJALA Yojana leading to cost savingof Rs. 18,341 crore annually.

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Solar stoves and battery chargers to be promoted using the approach of LED bulbs mission.●

A massive program of railway station modernization to be launched.●

Naari Tu Narayani/Women

Approach shift from women-centric-policy making to women-led initiatives and movements.●

A Committee proposed with Government and private stakeholders for moving forward onGender budgeting.

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SHG: Women SHG interest subvention program proposed to be expanded to alldistricts.Overdraft of Rs. 5,000 to be allowed for every verified women SHG member havinga Jan Dhan Bank Account.One woman per SHG to be eligible for a loan up to Rs. 1 lakhunder MUDRA Scheme.

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India’s Soft Power

Proposal to consider issuing Aadhaar Card for NRIs with Indian Passports on their arrivalwithout waiting for 180 days.

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Mission to integrate traditional artisans with global markets proposed, with necessarypatents and geographical indicators.

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18 new Indian diplomatic Missions in Africa approved in March, 2018, out of which 5 alreadyopened. Another 4 new Embassies intended in 2019-20.

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Revamp of Indian Development Assistance Scheme (IDEAS) proposed.●

17 iconic Tourism Sites being developed into model world class tourist destinations.●

Present digital repository aimed at preserving rich tribal cultural heritage, to bestrengthened.

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Banking and Financial Sector

NPAs of commercial banks reduced by over Rs. 1 lakh crore over the last year.●

Record recovery of over Rs. 4 lakh crore effected over the last four years.●

Provision coverage ratio at its highest in seven years.●

Domestic credit growth increased to 13.8%.●

Measures related to PSBs: Rs. 70,000 crore proposed to be provided to PSBs to boostcredit.PSBs to leverage technology, offering online personal loans and doorstep banking,and enabling customers of one PSBs to access services across all PSBs.Steps to beinitiated to empower accountholders to have control over deposit of cash by others in theiraccounts.Reforms to be undertaken to strengthen governance in PSBs.

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Measures related to NBFCs: Proposals for strengthening the regulatory authority of RBIover NBFCs to be placed in the Finance Bill.Requirement of creating a DebentureRedemption Reserve will be done away with to allow NBFCs to raise funds in publicissues.Steps to allow all NBFCs to directly participate on the TReDS platform.

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Return of regulatory authority from NHB to RBI proposed, over the housing finance sector.●

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Rs. 100 lakh crore investment in infrastructure intended over the next five years. Committeeproposed to recommend the structure and required flow of funds through developmentfinance institutions.

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Steps to be taken to separate the NPS Trust from PFRDA.●

Reduction in Net Owned Fund requirement from Rs. 5,000 crore to Rs. 1,000 crore proposed: To facilitate on-shoring of international insurance transactions.To enable openingof branches by foreign reinsurers in the International Financial Services Centre.

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Measures related to CPSEs: Target of Rs. 1, 05,000 crore of disinvestment receipts set forthe FY 2019-20.Government to reinitiate the process of strategic disinvestment of Air India,and to offer more CPSEs for strategic participation by the private sector.Government toundertake strategic sale of PSUs and continue to consolidate PSUs in the non-financialspace.Government to consider going to an appropriate level below 51% in PSUs where thegovernment control is still to be retained, on case to case basis.Present policy of retaining51% Government stake to be modified to retaining 51% stake inclusive of the stake ofGovernment controlled institutions.Retail participation in CPSEs to be encouraged.Toprovide additional investment space:

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Government to realign its holding in CPSEs■

Banks to permit greater availability of its shares and to improve depth of its market.Government to offer an investment option in ETFs on the lines of Equity Linked SavingsScheme (ELSS).Government to meet public shareholding norms of 25% for all listed PSUsand raise the foreign shareholding limits to maximum permissible sector limits for all PSUcompanies which are part of Emerging Market Index.

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Government to raise a part of its gross borrowing program in external markets in externalcurrencies. This will also have beneficial impact on demand situation for the governmentsecurities in domestic market.

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New series of coins of One Rupee, Two Rupees, Five Rupees, Ten Rupees and TwentyRupees, easily identifiable to the visually impaired to be made available for public useshortly.

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Digital Payments

TDS of 2% on cash withdrawal exceeding Rs. 1 crore in a year from a bank account●

Business establishments with annual turnover more than Rs. 50 crore shall offer low costdigital modes of payment to their customers and no charges or Merchant Discount Rateshall be imposed on customers as well as merchants.

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Mega Investment in Sunrise and Advanced Technology Areas

Scheme to invite global companies to set up mega-manufacturing plants in areas such asSemi-conductor Fabrication (FAB), Solar Photo Voltaic cells, Lithium storage batteries,Computer Servers, Laptops, etc Investment linked income tax exemptions to be providedalong with indirect tax benefits.

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Achievements during 2014-19

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1 trillion dollar added to Indian economy over last 5 years (compared to over 55 years takento reach the first trillion dollar).

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India is now the 6th largest economy in the world, compared to 11th largest five years ago.●

Indian economy is globally the 3rd largest in Purchasing Power Parity (PPP) terms.●

Strident commitment to fiscal discipline and a rejuvenated Centre-State dynamic providedduring 2014-19.

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Structural reforms in indirect taxation, bankruptcy and real estate carried out.●

Average amount spent on food security per year almost doubled during 2014-19 comparedto 2009-14.

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Patents issued more than trebled in 2017-18 as against the number in 2014.●

Ball set rolling for a New India, planned and assisted by the NITI Aayog.●

Roadmap for future

Simplification of procedures.●

Incentivizing performance.●

Red-tape reduction.●

Making the best use of technology.●

Accelerating mega programmes and services initiated and delivered so far.●

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Read this release in: Tamil , Malayalam , Kannada , Bengali , Urdu , Marathi , Gujarati , Telugu



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BUDGET SPEECH SUMMARY – PART ARelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Public Finance, Taxation &


Ministry of Finance

Budget Speech Summary – Part A


Indian economy becoming a 3 trillion dollar economy this year with World’s 3rd largest economyin terms of Purchasing Power Parity, government’s intention to invest Rs. 100 lakh crore ininfrastructure in next 5 years, enhaced target of over one lakh 5,000 crore of disinvestment in2019-20, proposal to provide Rs.70,000 crore to PSBs to boost credit, doubling of food securitybudget in last 5 years, faster adoption of Electric vehicles with an outlay of Rs.10,000 crore,opening of 18 new Indian diplomatic missions in Africa, development of 17 iconic Tourism Sitesinto world class tourist destinations and issuance of new series of coins of 1,2,5,10 & 20 rupeesare some of the key highlights of the Union Budget 2019-20 presented to Parliament by UnionMinister of Finance and Corporate Affairs Smt. Nirmala Sitharaman today.

In her maiden Budget speech, the Finance Minister said that Har Ghar Jal to all rural householdsby 2024 under Jal Jeevan Mission, “Housing for All” by 2022 under Pradhan Mantri AwasYojana-(Gramin), upgradation of 1,25,000 kms of rural road under PMGSY-III in 5 years with anoutlay of more than 80,000 crore with all weather connectivity provided to over 97% of suchhabitations, common facility centres under SFURTI for Bamboo, Honey and Khadi clusters,setting up of 80 Livelihood Business Incubators and 20 Technology Business incubators in2019-20 to develop 75,000 skilled entrepreneurs in agro-rural industry sectors are some of theimportant New Deals for the Rural and Agricultural sectors of the Economy.

Smt. Sitharaman said that the first term of PM Modi-led-NDA-Government stood out as aperforming Government, a Government whose signature was in the last mile delivery. Between2014-19, government provided a rejuvenated Centre-State dynamic, cooperative federalism,GST Council, and a strident commitment to fiscal discipline. It set the ball rolling for a New India,planned and assisted by the NITI Aayog, a broad based think tank and has shown its deeds thatthe principle of “Reform, Perform, Transform” can succeed.

On many programmes and initiatives government had worked on unprecedented scales.

Pre- 2014 Post-2014Food Security Rs.1.2 Lakh Crores Rs. 1.8 Lakh Crores

Number of Patents 4000 13,000(2017-18)MSP Rs. 89,740 crores Rs. 1,71,127.48 crores(2018-19)

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The Finance Minister said that mega programmes and services initiated and delivered during thelast 5 years will now be further accelerated and sincere efforts will be made to further simplifyprocedures, incentivize performance, reduce red-tape and make the best use of technology toachieve the desired goals.

The Finance Minister elaborated that the Indian economy will grow to become a 3 trillion dollareconomy in the current year and will reach the vision of Prime Minister to become 5 trillion dollareconomy in the next five years. It is now the sixth largest in the world, while it was at 11th

position in 2014. In Purchasing Power Parity terms, India is in fact, the 3rd largest economyalready, only next to China and the USA. She said that to attain this and more the country needsto continue undertaking many structural reforms like the many big reforms in particular in the last5 years in indirect taxation, bankruptcy and real estate. Even the common man’s life was beingchanged through MUDRA loans to help him do his business, and through several programmes itwas being ensured that his/her kitchen had become smokeless, his/her house got electricityconnection and women’s dignity was respected with the provision of toilets in homes.

Smt. Sitharaman said that gone are the days of policy paralysis and license-quota-controlregimes. India Inc. are India’s job-creators and they are the nation’s wealth-creators. She said,“Together, with mutual trust, we can gain, catalyze fast and attain sustained national growth. Iwish to propose a number of initiatives as part of a framework for kick-starting the virtuous cycleof domestic and foreign investments”.

Referring to connectivity as the lifeblood of an economy, the Finance Minister said that theGovernment has given a massive push to all forms of physical connectivity through PradhanMantri Gram SadakYojana, industrial corridors, dedicated freight corridors, Bhartamala andSagarmala projects, Jal Marg Vikas and UDAN Schemes. While the industrial corridors wouldimprove infrastructure availability for greater industrial investment in the catchment regions, thededicated freight corridors would mitigate the congestion of our railway network benefitting thecommon man. The ambitious programme of Bharatmala would help develop national roadcorridors and highways, while Sagarmala would enhance port connectivity, modernization andport-linked industrialization. If Sagarmala is aimed at improving the infrastructure for externaltrade, equally it is the poor man’s transport too. Waterways are proven as a cheap mode oftransport. The Jal Marg Vikas project for capacity augmentation of navigation on NationalWaterways is aimed at smoothening internal trade carried through inland water transport. Theseinitiatives will improve logistics tremendously, reducing the cost of transportation and increasingthe competitiveness of domestically produced goods.

The Finance Minister said that as the world’s third largest domestic aviation market, the time isripe for India to enter into aircraft financing and leasing activities from Indian shores. She said,for providing an enabling ecosystem for growth in India of Maintenance, Repair and Overhaul(MRO) industry, it is proposed to leverage India’s engineering advantage and potential toachieve self-reliance in this vital aviation segment. She added that the government will adoptsuitable policy interventions to create a congenial atmosphere for the development of MRO in

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the country.

The Finance Minister informed that Phase-II of FAME Scheme 2019, following approval of theCabinet with an outlay of Rs.10,000 crore for a period of 3 years, has commenced from 1st April,2019. The main objective of the Scheme is to encourage faster adoption of Electric vehicles byway of offering upfront incentive on purchase of Electric vehicles and also by establishing thenecessary charging infrastructure for electric vehicles.

Dwelling on the Railways, Smt. Sithraman said that it is estimated that Railway Infrastructurewould need an investment of Rs. 50 lakh crores between 2018-2030. Given that the capitalexpenditure outlays of Railways are around 1.5 to 1.6 lakh crores per annum, completing evenall sanctioned projects would take decades. It is therefore proposed to use Public-PrivatePartnership to unleash faster development and completion of tracks, rolling stock manufacturerand delivery of passenger freight services. She said that to take connectivity infrastructure to thenext level, government will build on the successful model in ensuring power connectivity – OneNation, One Grid – that has ensured power availability to states at affordable rates and sheproposed to make available a blueprint this year for developing gas grids, water grids, i-ways,and regional airports.

Referring to welfare measures, the Fianance Minister said that the Government of India hasdecided to extend the pension benefit to about three crore retail traders & small shopkeeperswhose annual turnover is less than Rs.1.5 crore under a new Scheme namely PradhanMantriLaghuVyapari Mann-DhanYojana (PMLVMY). Enrolment into the Scheme will be keptsimple requiring only Aadhaar and a bank account and rest will be on self-declaration.

Recognizing that investment-driven growth requires access to low cost capital, the FinanceMinister said, India requires investments averaging Rs. 20 lakh crores every year (USD 300billion a year) and therefore a number of measures are proposed to enhance the sources ofcapital for infrastructure financing:

A Credit Guarantee Enhancement Corporation for which regulations have been notified bythe RBI, will be set up in 2019-20.

●

An action plan to deepen the market for long term bonds including for deepening marketsfor corporate bond repos, credit default swaps etc., with specific focus on infrastructuresector, will be put in place.

●

It is proposed to permit investments made by FIIs/FPIs in debt securities issued by IDF-NBFCs to be transferred/sold to any domestic investor within the specified lock-in period.

●

On the subject of Foreign Direct Investment, Smt. Sitharaman said that FDI inflows into Indiahave remained robust despite global headwinds. India’s FDI inflows in 2018-19 remained strongat US$ 64.375 billion marking a 6% growth over the previous year. She added that theGovernment will examine suggestions of further opening up of FDI in aviation, media (animation,AVGC) and insurance sectors in consultation with all stakeholders and suggested followingmeasures:

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100% Foreign Direct Investment (FDI) will be permitted for insurance intermediaries.Localsourcing norms will be eased for FDI in Single Brand Retail sector. FPIs will be permittedto subscribe to listed debt securities issued by ReITs and InvITs.

1.

On a similar issue, the Finance Minister informed that even though India is the world's topremittance recipient, NRI investment in Indian capital markets is comparatively less. With a viewto provide NRIs with seamless access to Indian equities, she proposed to merge the NRI-Portfolio Investment Scheme Route with the Foreign Portfolio Investment Route.

Dwelling on the rural issues and Rural India, the Finance Minister said that Prime Minister ShriNarendra Modi’s two mega initiatives of Ujjwala Yojana and Saubhagya Yojana- havetransformed the lives of every rural family, dramatically improving ease of their living. Householdaccess to clean cooking gas has seen an unprecedented expansion, through provision of morethan 7 crore LPG connections. All villages, and almost 100% households across the countryhavebeen provided with electricity. She informed that by 2022, the 75th year of India’sindependence, every single rural family, except those who are unwilling to take the connectionwill have an electricity and a clean cooking facility. Similarly, under Pradhan MantriAwasYojana– Gramin (PMAY-G) a total of 1.54 crore rural homes have been completed in the last five years.In the second phase of PMAY-G, during 2019-20 to 2021-22, 1.95 crore houses are proposed tobe provided to the eligible beneficiaries. These houses are also being provided with amenitieslike toilets, electricity and LPG connections. With the use of technology, theDBT platform andtechnology inputs, average number of days for completion of houses has reduced from 314 daysin 2015-16 to 114 days in 2017-18.

The Finance Minister said that Pradhan MantriGram SadakYojana (PMGSY) has brought manysocio economic gains in the rural areas and its target for completion was advanced from 2022 to2019, as all weather connectivity has now been provided to over 97% of such habitations. Thishas been possible by maintaining a high pace of road construction of 130 to 135 km per day inthe last 1,000 days. She underlined that the PMGSY-III is envisaged to upgrade 1,25,000 kms ofroad length over the next five years, with an estimated cost of Rs. 80,250 crore.

Smt. Sitharaman said that the ‘Scheme of Fund for Upgradation and Regeneration of TraditionalIndustries’ (SFURTI) aims to set up more Common Facility Centres (CFCs) to facilitate clusterbased development to make the traditional industries more productive, profitable and capable forgenerating sustained employment opportunities. The focused sectors are Bamboo, Honey andKhadi clusters. The SFURTI envisions setting up 100 new clusters during 2019-20 which shouldenable 50,000 artisans to join the economic value chain. Further, to improve the technology ofsuch industries, the Scheme for Promotion of Innovation, Rural Industry and Entrepreneurship(ASPIRE) has been consolidated for setting up of Livelihood Business Incubators (LBIs) andTechnology Business Incubators (TBIs). The Scheme contemplates to set up 80 LivelihoodBusiness Incubators (LBIs) and 20 Technology Business Incubators (TBIs) in 2019-20 todevelop 75,000 skilled entrepreneurs in agro-rural industry sectors. Government also hopes toform 10,000 new Farmer Producer Organizations, to ensure economies of scale for farmers.

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To provide benefits to fishermen communities through a focused Scheme – the Pradhan MantriMatsya Sampada Yojana (PMMSY) – the Department of Fisheries will establish a robustfisheries management framework. They will address critical gaps in strengthening the valuechain, including infrastructure, modernization, traceability, production, productivity, post-harvestmanagement, and quality control.

Finance Minister said that ensuring India’s water security and providing access to safe andadequate drinking water to all Indians is a priority of the Government. A major step in thisdirection has been the constitution of the Jal Shakti Mantralaya, integrating the Ministry of WaterResources, River Development and Ganga Rejuvenation and Ministry of Drinking Water andSanitation. This new Mantralaya will look at the management of our water resources and watersupply in an integrated and holistic manner, and will work with States to ensure HarGharJal –(piped water supply) to all rural households by 2024 under the Jal Jeevan Mission. TheGovernment has identified 1592 Blocks which are critical and over exploited, spread across 256District for the Jal Shakti Abhiyan. Besides using funds available under various Schemes, theGovernment will also explore possibility of using additional funds available under theCompensatory Afforestation Fund Management and Planning Authority (CAMPA) for thispurpose.

Under the Pradhan Mantri Gramin Digital SakshartaAbhiyan, over two crore rural Indians haveso far been made digitally literate. To bridge rural-urban digital divide, Bharat-Net is targetinginternet connectivity in local bodies in every Panchayat in the country. This will be speeded upwith assistance from Universal Obligation Fund and under a Public Private Partnershiparrangement.

Under Pradhan Mantri Awas Yojana – Urban (PMAY-Urban), over 81 lakh houses with aninvestment of about Rs.4.83 lakh crores have been sanctioned of which construction has startedin about 47 lakh houses. Over 26 lakh houses have been completed of which nearly 24 lakhhouses have been delivered to the beneficiaries. There is large scale adoption of newtechnologies for construction of these houses. Over 13 lakh houses have so far beenconstructed using these new technologies.

The 150th birth anniversary of Mahatma Gandhi is an apt occasion for us to re-dedicateourselves to the ideals of Mahatma Gandhi. Prime Minister Modi took the Sankalp of achievingGandhiji’s resolve of Swachh Bharat to make India Open Defecation Free by 2nd October 2019.I am very satisfied and happy to report that this would be achieved by the 2nd October.

The Finance Minister said that the Government will bring in a New National Education Policy totransform India’s higher education system to one of the global best education systems. The newPolicy proposes major changes in both school and higher education among others, betterGovernance systems and brings greater focus on research and innovation. It also proposed toestablish a National Research Foundation (NRF) to fund, coordinate and promote research inthe country. She said that these initiatives have up-graded the quality of education. There wasnot a single Indian institution in the top 200 in the world university rankings five years back. Dueto concerted efforts by our institutions to boost their standards and also project their credentials

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better, we have three institutions now – two IITs and IISc Bangalore – in the top 200 bracket.

Smt Sitharaman said that through the implementation of ‘KayakaveKailasa’, the Government willenable about 10 million youth to take up industry-relevant skill training through the PradhanMantri Kaushal Vikas Yojana (PMKVY). This is helping to create a large pool of skilledmanpower with speed and high standards. She also added that the government will also layfocus on new-age skills like Artificial Intelligence (AI), Internet of Things, Big Data, 3D Printing,Virtual Reality and Robotics, which are valued highly both within and outside the country, andoffer much higher remuneration.

She said that the Government has decided to increase contribution to 12% for both EmployeesProvident Fund and Employee’s Pension Scheme for all sectors w.e.f. 01.04.2018. As a result ofthis measure, number of beneficiaries increased by almost 88 lakhs during FY 2018-19. As on31.03.2019, total beneficiaries under the Scheme are 1,18,05,000 and the establishmentsbenefitting are 1,45,512. The Government is proposing to streamline multiple labour laws into aset of four labour codes. This will ensure that process of registration and filing of returns will getstandardized and streamlined.

Smt Sitharaman dsaid that this Government has supported and encouraged womenentrepreneurship through various schemes such as MUDRA, Stand UP India and the Self HelpGroup (SHG) movement. In order to further encourage women enterprise, she proposed toexpand the Women SHG interest subvention programme to all districts. Furthermore, for everyverified women SHG member having a Jan Dhan Bank Account, an overdraft of Rs.5,000 shallbe allowed. One woman in every SHG will also be made eligible for a loan up to Rs. 1 lakhunder the MUDRA Scheme.

On tourism front, the Finance Minister said that the Government is developing 17 iconic TourismSites into world class tourist destinations and to serve as a model for other tourism sites. TheIconic Tourism Sites would enhance visitor experience which would lead to increase visits ofboth domestic and international tourists at these destinations. She also informed that with theobjective of preserving rich tribal cultural heritage, a digital repository is developed wheredocuments, folk songs, photos & videos regarding their evolution, place of origin, lifestyle,architecture, education level, traditional art, folk dances and other anthropological details of thetribes in India are stored. The repository will further be enriched and strengthened.

The Finance Minister flagged the ten points of Government’s Vision:

Building physical and social infrastructure;Digital India reaching every sector of theeconomy;Pollution free India with green Mother Earth and Blue Skies;Make in India withparticular emphasis on MSMEs, Start-ups, defence manufacturing, automobiles,

1.

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electronics, fabs and batteries, and medical devices;Water, water management, cleanRivers;Blue Economy;Space programmes. Gaganyan, Chandrayan and Satelliteprogrammes;Self-sufficiency and export of food-grains, pulses, oilseeds, fruits andvegetables;Healthy society – Ayushman Bharat, well-nourished women & children. Safetyof citizensTeam India with Jan Bhagidari. Minimum Government Maximum Governance.

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DSM/RM/BB/SNC


Read this release in: Urdu , Marathi , Malayalam



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SEVERAL TAX PROPOSALS AIM TO PROMOTEINVESTMENTS IN START-UPS AND SUNRISEINDUSTRIES IN THE COUNTRY


Ministry of Finance

Several tax proposals aim to promote investments in start-ups and sunrise industries in the country

Lower 25% corporate tax rate is to be applicable to thosewith annual turnover upto Rs.400 crore instead of thecurrent limit of Rs.250 crore

Increase in surcharge by 3% for those with taxable incomebetween 2-5 crore rupees and by 5% to those with incomeof over rupees 5 crore

Digital economy to be promoted. A tds of 2% on cashwithdrawal exceeding Rs.1 crore in a year from a bankaccount is proposed

Both direct and indirect tax incentives for promotion ofelectric vehicles in a big way announced

Several customs duty proposals announced for promotingmake in India, reducing import dependence, protection toMSME sector and promoting clean energy

Special additional excise duty and road & infrastructurecess of one Rupee each on petrol and diesel proposed

Customs duty on gold and other precious metals increasedfrom 10% to 12.5%


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PROMOTING INVESTMENTS

Several of the tax proposals announced by the Union Minister of Finance and Corporate AffairsSmt. Nirmala Sitharaman, while presenting the Union Budget 2019-20 in Parliament today, areaimed at promoting investments in Sunrise Advanced Technology industries and in Start-ups. To boost economic growth and Make in India, a Scheme is to be launched to invite globalcompanies through a transparent competitive bidding to set up mega-manufacturing plants insunrise and advanced technology areas such as Semi-conductor Fabrication (FAB), SolarPhoto Voltaic cells, Lithium storage batteries, Solar electric charging infrastructure, ComputerServers, Laptops, etc. Such global companies are to be give investment linked income taxexemptions under Section 35 AD of the Income Tax Act, and other indirect tax benefits.

The Finance Minister, Smt. Nirmala Sitharaman presenting her maiden budget, said “to resolvethe so-called ‘angel tax’ issue, the start-ups and their investors who file requisite declarationsand provide information in their returns

will not be subjected to any kind of scrutiny in respect of valuations of share premiums. Theissue of establishing identity of the investor and source of his funds will be resolved by putting inplace a mechanism of e-verification. With this, the funds raised by start-ups will not require anykind of scrutiny from the Income Tax Department. Special administrative arrangements shall bemade by CBDT for pending assessments of start-ups and redressal of their grievances. Noinquiry or verification in such cases can be carried out by the Assessing Officer without obtainingapproval of his supervisory officer. ” Start-ups will not be required to justify fair market value oftheir shares issued to Category-II Alternative Investment Funds also. Valuation of shares issuedto these funds shall be beyond the scope of income tax scrutiny. She said it is also proposed torelax some of the conditions for carry forward and set off of losses in the case of start-ups. It isalso proposed to extend the period of exemption of capital gains arising from sale of residentialhouse for investment in start-ups up to 31.3.2021.

AFFORDABLE HOUSING

Affordable housing gets further encouragement in the form of additional tax deduction of Rs.1.5lakh beyond Rs. 2 lakh of interest paid on loans borrowed upto 31st March, 2020 for purchase ofan affordable house valued up to Rs. 45 lakh. The Finance Minister said “thus a personpurchasing an affordable house will now get an enhanced interest deduction up to Rs. 3.5 lakh.This will translate into a benefit of around Rs 7 lakh to the middle class home-buyers over theirloan period of 15 years.”

MODERNISATION OF TAX ADMINISTRATION

Expressing thanks to the taxpayer, including self-employed, small traders, salary earners andsenior citizens, Smt. Sitharaman said that “the direct tax revenue has significantly increasedover the past couple of years. It has increased by over 78% from Rs. 6.38 lakh crore in FinancialYear 2013-14 to around Rs. 11.37 lakh crore in Financial Year 2018-19. It is now growing atdouble digit rate every year.”

Saying that those in the highest income brackets need to contribute more to the nation’s

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development and for revenue mobilization, the Finance Minister announced enhancement ofsurcharge of 3 % on individuals having taxable income from Rs. 2 crore to Rs. 5 crore and 7 %for those with taxable income of Rs. 5 crore and above.

At the same time, several measures are announced to leverage technology to make taxadministration and tax payment easier. Those without Pan Card are now allowed to file incometax returns by quoting their Aadhar number.

Pre-filled tax returns would be made available to taxpayers with details of salary income, capitalgains from securities, bank interests, and dividends and tax deductions etc,. Informationregarding these incomes will be collected from the concerned sources such as Banks, Stockexchanges, mutual funds, EPFO, State Registration Departments etc.

A Scheme of Faceless Assessment in electronic mode involving no human interface is beinglaunched this year in a phased manner. To start with, such e-assessments shall be carried-outin cases requiring verification of certain specified transactions or discrepancies. Cases selectedfor scrutiny shall be allocated to assessment units in a random manner and notices shall beissued electronically by a Central Cell, without disclosing the name, designation or location ofthe Assessing Officer. The Central Cell shall be the single point of contact between the taxpayerand the Department.

CORPORATE TAX

On corporate tax, the Minister said, “we continue with phased reduction in rates. Currently, thelower rate of 25 % is only applicable to companies having annual turnover up to Rs 250 Crore.This is proposed to be widened to include all companies having annual turnover up to Rs 400crore. This would cover 99.3% of the companies. With this only, 0.7 % of companies will remainoutside this rate”.

DIGITAL PAYMENTS

To further encourage digital payments practices in the country or discourage cash payments, theFinance Minister announced several measures which include discouraging the practice ofmaking business payments in cash, proposal to levy TDS of 2% on cash withdrawal exceedingRs.1 crore in a year from a bank account. Business establishments with annual turnover morethan Rs. 50 crore shall offer low cost digital modes of payment to their customers and nocharges or Merchant Discount Rate is to be imposed on customers as well as merchants. RBIand Banks will absorb these costs from the savings that will accrue to them on account ofhandling less cash as people move to these digital modes of payment. Necessary amendmentsare being made in the Income Tax Act and the Payments and Settlement Systems Act, 2007 togive effect to these provisions.

ELECTRIC VEHICLES

For promotion of electric vehicles in a big way in the country, both direct and indirect taxincentives are announced. The Finance Minister said –“considering India’s large consumerbase, we aim to envision India as a global hub of manufacturing of Electric Vehicles”. Inclusion of Solar storage batteries and charging infrastructure in the above Scheme will boostour efforts, she said. The Finance Minister announced that the “Government has already movedGST Council to lower the GST rate on electric vehicles from 12% to 5%. Also to make electricvehicle affordable to consumers, our Government will provide additional income tax deduction of

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Rs 1.5 lakh on the interest paid on loans taken to purchase electric vehicles. This amounts to abenefit of around Rs 2.5 lakh over the loan period to the taxpayers who take loans to purchaseelectric vehicle”. The Minister while proposing increase in customs duties on automobile andautomobile parts, had provided for exemption of customs duties on certain parts of electricvehicles.

CUSTOM DUTY PROPOSALS

In general, other Customs Duty proposals are aimed at promoting Make in India, reducing importdependence, protection to MSME sector, promoting clean energy, curbing non-essential importsand correcting inversions.

To provide level playing field to domestic industry, custom duties are enhanced on 36 itemsincluding :

Cashew kernels●

Fatty acids. Acid oils from refining used in manufacture of oleochemicals and soaps●

Poly Vinyl Chloride●

Floor cover of plastics, Wall or ceiling coverings of plastics●

Articles of plastic●

Butyl Rubber●

Chlorobutyl rubber or bromobutyl rubber●

Paper for newsprint and magazines●

Printed books (including covers for printed books) and printed manuals●

Water blocking tapes for manufacture of optical fiber cables●

Ceramic roofing tiles and ceramic flags and pavings, hearth or wall tiles etc.●

Stainless steel products●

Wire of other alloy steel (other than INVAR)●

Base metal fittings, mountings and similar articles suitable for furniture, doors, staircases,windows, blinds, hinge for auto mobiles

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Indoor and outdoor unit of split –system air conditioner●

Stone crushing (cone type) plants for the construction of roads●

Charger/ power adapter of CCTV camera/ IP camera and DVR / NVR●

Loudspeaker●

Digital Video Recorder (DVR) and Network Video Recorder (NVR)●

CCTV camera and IP camera●

Optical Fibres, optical fibre bundles and cables●

Friction material and articles thereof (for example, sheets, rolls, strips, segments, discs,washers, pads), not mounted, for brakes, for clutches or the like, with a basis of asbestos, ofother mineral substances or of cellulose, whether or not combined with textile or othermaterials.

●

Glass mirrors, whether or not framed, including rear-view mirrors●

Locks of a kind used in motor vehicles●

Catalytic Converter●

Oil or petrol filters for internal combustion engines●

Intake air filters for internal combustion engines●

Lighting or visual signaling equipment of a kind used in bicycles or motor vehicles●

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Horns for vehicle●

Other visual or sound signalling equipment for bicycle and motor vehicle●

Parts of visual or sound signaling equipment, windscreen wipers, defrosters and demistersof a kind used in cycles or motor vehicles

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Windscreen wipers, defrosters and demisters, Sealed beam lamp units, Other lamps forautomobiles.

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Completely Built Unit (CBU)of vehiclesfalling under heading 8702, 8704●

Chassis fitted with engines, for the motor vehicles of headings 8701 to 8705●

Bodies (including cabs), for the motor vehicles of headings 8701 to 8705●

Similarly, to support domestic industry, Customs Duty has been proposed to be reduced oncertain raw materials and capital goods as follows:

Naphtha●

Methyloxirane (Propylene Oxide)●

Ethylene dichloride (EDC)●

Raw materials used in manufacture of Preform of Silica: -●

Silicon Tetra Chloridea.Germanium Tetra Chlorideb.Refrigerated Helium Liquidc.Silica Rodsd.Silica Tubese.

Wool fibre, Wool Tops●

Inputs for the manufacture of CRGO steel: -●

MgO coated cold rolled steel coilsa.Hot rolled coilsb.Cold-rolled MgO coated and annealed steelc.Hot rolled annealed and pickled coilsd.Cold rolled full harde.

Amorphous alloy ribbon●

Cobalt mattes and other intermediate products of cobalt metallurgy●

Capital goods used for manufacturing of following electronic items, namely-●

Populated PCBAa.Camera module of cellular mobile phonesb.Charger/Adapter of cellular mobile phonec.Lithium Ion Celld.Display Modulee.Set Top Boxf.Compact Camera Moduleg.

While Customs duty is imposed on certain electronic goods, now being manufactured in India topromote domestic industry, custom duty on the other hand is removed on certain other capitalgoods required for manufacture of specified electronic goods.

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To encourage export of sports goods, certain items to a certain limit, like foam and pinewoodare included in the list of items allowed for duty free import. Similarly, “Export duty is beingrationalised on raw and semi-finished leather to provide relief to this sector’ the Minister said.

The Minister said “Defence has an immediate requirement of modernisation and upgradation.This is national priority. For this purpose, import of defence equipment that are not beingmanufactured in India are being exempted from the basic customs duty.”

GST AND WAY FORWARD

While stating that with introduction of GST, 17 taxes and 13 cesses have become one tax, it alsoled to transformation of operations wherein a transport truck has started doing two trips in thesame time that it was doing one with simplification of operations. She said reduction of GSTrates have led to relief of about 92,000 crore rupees per annum.

The Finance Minister stated that free accounting software for preparation of tax returns isbeing made available to small businesses and a fully automated GST refund module is expectedto be implemented soon. She said taxpayer with an annual turnover of less than 5 crores is tofile quarterly returns. Electronic invoice details are to be captured in a central system to enablepre-filled taxpayer returns and a simultaneous e-way bill to be generated. These are expectedto begin from January, 2020 reducing the compliance burden significantly.

LEGACY DISPUTE RESOLUTION

The Minister proposed a “Legacy Dispute Resolution Scheme that will allow quick closure oflitigations.” She said “more than 3.75 lakh crore rupees is blocked in litigations in service taxand excise duties from pre-GST regime.” She urged the trade and business to avail thisopportunity of dispute resolution scheme to be called as Sabka Vishwas Legacy DisputeResolution Scheme, 2019. This scheme is to be notified in due course allows personsdischarged under it not liable for prosecution.

CUSTOMS VIOLATIONS

The Minister also proposed certain amendments to the Customs Act to prevent certainbogus entities from resorting to unfair practices to benefit from export incentives. Provisions tomake violations involving duty free scripts and drawback facility of over 50 lakh rupeescognizable and non-bailable offence are being made in the Customs Act. The amendment to theCustoms Act, 1962 proposes to introduce provision for verification of Aadhar or any otheridentity to prevent smuggling. It also empowers customs authorities to arrest a person who hascommitted an offence outside India.

NBFCs

A provision for allowing all Non-Banking Financial Companies to avail the facility ofoffering the interest to be taxed in the year in which it is actually received like in the case ofScheduled Banks is to be made. This was announced by the Finance Minister in her BudgetSpeech today.

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INTERNATIONAL FINANCIAL SERVICES CENTRE(IFSC)

Several direct tax incentives including 100% profit-linked deduction under Section 80-LAin any ten-year block within a fifteen-year period has been announced for the InternationalFinancial Services Centre (IFSC) in GIFT City. “Exemption from dividend distribution tax fromcurrent and accumulated income to companies and mutual funds, exemptions on capital gain toCategory-III Alternative Investment Funds (AIF) and interest payment on loan taken from non-residents”, have also been announced for IFSC.

EXCISE ON CIGARETTES

The Finance Minister said as National Calamity and Contingent duty is contested with regard totobacco products and crude as there is no basic excise duty on these items, a nominal basicexcise duty is now proposed to be imposed. Rates for such basic excise duties have beenannounced as set forth in the Fourth Schedule to the Central Excise Act, 1944.

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DSM/RM/KSP/nb


Read this release in: Marathi , Bengali , Tamil



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INDIA’S 10- POINT ‘VISION FOR THE DECADE’FLAGGED IN BUDGET 2019-20


Ministry of Finance

India’s 10- point ‘Vision for the Decade’ flagged in Budget2019-20

India to become a 3 trillion Dollar Economy this year and a5 trillion Dollar Economy by 2024-25

India requires Investments averaging Rs. 20 lakh croresevery year

Gone are the days of policy paralysis and license-quota-control regimes: Finance Minister


“Indian economy will become a 3 trillion dollar economy in the current year and is on the path ofachieving the Prime Minister’s vision of a 5 trillion dollar economy by 2024-25”, said UnionMinister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman, while presenting the UnionBudget 2019-20 in Parliament today. It took over 55 years for the Indian economy to reach 1trillion dollar and in the last 5 years, the government has added 1 trillion dollar to reach about 2.7trillion dollar. India is now the sixth largest economy in the world, up from 11th position five yearsago, she added.

Beginning her speech on a high note, the Finance Minister termed the recently concludedGeneral Election as an election charged with brimming hope and desire among the citizens ofthe country for a bright and stable New India. These elections were a stamp of their approvalof a performing Government, a Government whose signature was in the last mile delivery, sheadded.

Finance Minister stated that between 2014-19, the Government provided a rejuvenated Centre-State dynamic, cooperative federalism, GST Council, a strident commitment to fiscal disciplineand set the ball rolling for a New India, planned and assisted by the NITI Aayog. In the last fiveyears, the Government initiated many big reforms in particular, in indirect taxation, bankruptcy,real estate and those in the social sector improving common man’s life. She added that the lastmile delivery stood out and the unknown citizen in the nooks of our country stood out with

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evidence. The Government has shown by its deeds that the principle of “Reform, Perform,Transform” can succeed.

Setting pace for the vision for India in the next decade, the Finance Minister stated that megaprogrammes and services which were initiated and delivered during the last 5 years will now befurther accelerated. The Government plans to simplify procedures, incentivize performance,reduce red-tape and make the best use of technology to achieve the desired goals. “Goneare the days of policy paralysis and license-quota-control regimes. India Inc. are India’s job-creators. They are the nation’s wealth-creators”, she said while emphasizing the substantial roleof India’s private industry in growing our economy.

Citing its genesis in the Interim Budget 2019-20 presented in February 2019, the FinanceMinister flagged ten points of the Government’s ‘Vision for the Decade’:

Building physical and social infrastructure;Digital India reaching every sector of theeconomy;Pollution free India with green Mother Earth and Blue Skies;Make in India withparticular emphasis on MSMEs, Start-ups, Defence manufacturing, automobiles,electronics, fabs and batteries, and medical devices;Water, water management, cleanRivers;Blue Economy;Space programmes. Gaganyan, Chandrayan and Satelliteprogrammes;Self-sufficiency and export of food-grains, pulses, oilseeds, fruits andvegetables;Healthy society – Ayushman Bharat, well-nourished women & children. Safety ofcitizens;Team India with Jan Bhagidari. Minimum Government Maximum Governance.

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Elaborating on the above points, Finance Minister emphasized on an investment-drivengrowth model to achieve the goal of 5 Trillion dollar economy. She stated that the Governmentrecognizes that investment-driven growth requires access to low cost capital. It is estimated thatIndia requires investments averaging Rs. 20 lakh crores every year (USD 300 billion a year).

Further, the Finance Minister stated that it is estimated that Railway Infrastructure would needan investment of Rs. 50 lakh crores between 2018-2030. She proposed to use Public-PrivatePartnership to unleash faster development and completion of projects and to make available ablueprint this year for developing National Highway Grid, gas grids, water grids, i-ways, andregional airports.

Focusing on unlocking the true potential of Public Sector Undertakings, Finance Minister saidthat strategic disinvestment of select CPSEs would continue to remain a priority of thisGovernment, along with consolidation of PSUs in the non-financial space. Government isconsidering, in case where the Undertaking is still to be retained in Government control, to gobelow 51% to an appropriate level on case to case basis. Government is setting an enhancedtarget of Rs. 1,05,000 crore of disinvestment revenue for the financial year 2019-20, she added.

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To prepare India’s youth to also take up jobs overseas, Finance Minister said that theGovernment will increase focus on skillsets needed abroad including language training. Focuswould be laid on new-age skills like Artificial Intelligence (AI), Internet of Things, Big Data, 3DPrinting, Virtual Reality and Robotics, which are valued highly both within and outside thecountry, and offer much higher remuneration.

Further in her Budget Speech, Finance Minister also proposed to start a television programmewithin the DD bouquet of channels exclusively for start-ups, discussing issues affecting theirgrowth, matchmaking with venture capitalists and for funding and tax planning.

Regarding Industry sector, Finance Minister stated that under the Interest Subvention Schemefor MSMEs, Rs. 350 crore has been allocated for FY 2019-20 for 2% interest subvention for allGST registered MSMEs, on fresh or incremental loans. Government will create a paymentplatform for MSMEs to enable filing of bills and payment thereof on the platform itself. Further,the Government is proposing to streamline multiple labour laws into a set of four labourcodes, which is expected to reduce disputes, she added.

Summing up the vision of the Government, Smt. Sitharaman stated, “Marking 75 years of ourIndependence, We should place emphasis on our ‘Duty’ towards India, withoutundermining ‘Rights’.”

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POLICY MEASURES TO PROMOTE GROWTH ANDEMPLOYMENT GENERATION IN INDIAN ECONOMY


Ministry of Finance

Policy Measures to promote Growth and EmploymentGeneration in Indian Economy


The Union Budget 2019-20 presented today by Union Minister of Finance and Corporate Affairs,Smt. Nirmala Sitharaman, lays down a vision for India becoming a 5 trillion dollar economy by2024-25. Investment-driven growth and employment generation form the cornerstone of thisvision.

The Tax Policy Measures in this direction are as under:

Profit-linked deduction was introduced for start-ups.●

The scope of investment-linked deduction was broadened by including certain new sectors,including infrastructure, which are critical to growth.

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Investment allowance and higher additional depreciation was provided for undertakings setup in backward regions of states of Andhra Pradesh, Bihar, Telangana and West Bengal.

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Incentive for employment generation was broadened and the conditions for eligibility toclaim the incentive were relaxed.

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Benefit was provided for computation of MAT liability and carry forward of loss forcompanies under Insolvency and Bankruptcy code (IBC).

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Safe Harbour provisions were further liberalised to align with industry standards.●

Scope of domestic transfer pricing provisions was restricted only for transactions betweenenterprises having profit-linked deductions.

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Pass through status was provided to Category I & II Alternative Investment Funds (AIFs).●

The time period for carry forward of MAT credit was increased from 10 to 15 years.●

Above initiatives were proposed as part of a framework for kick-starting the virtuous cycle ofdomestic and foreign investments. “We need to invest heavily in infrastructure, in digitaleconomy and on job creation in small and medium firms”, the Finance Minister stated. Thecommon man’s life changed through MUDRA loans to help him do his business.

Government has announced its intention to invest Rs.100 lakh crores in infrastructure overthe next five years, the Finance Minister stated. The massive push given to all forms of physicalconnectivity through Pradhan Mantri Gram Sadak Yojana, industrial corridors, dedicated freightcorridors, Bhartamala and Sagarmala projects, Jal Marg Vikas and UDAN Schemes would givethe required boost to the economy.

Measures to enhance the Sources of Capital for Infrastructure Financing:

A Credit Guarantee Enhancement Corporation to be set up in 2019-2020.●

An action plan to deepen the market for long term bonds with specific focus oninfrastructure sector, to be put in place.

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Proposal to permit investments made by FIIs/FPIs in debt securities issued by IDF-NBFCsto be transferred/sold to any domestic investor within the specified lock-in period.

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“We shall further simplify procedures, incentivize performance, reduce red-tape and make thebest use of technology. Big structural reforms in particular, in indirect taxation, bankruptcy andreal estate carried out”, the Finance Minister stated. The number of patents issued more thantrebled in 2017-18 as against the number in 2014.

The ‘Vision for the Next Decade’ laid down in the Budget document focuses upon buildingphysical and social infrastructure; Make in India with particular emphasis on MSMEs, Start-ups,

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defence manufacturing, automobiles, electronics, fabs and batteries, and medical devices,among others, emphasize on employment generation and growth.

Under the Interest Subvention Scheme for MSMEs, Rs. 350 crore has been allocated for FY2019-20 for 2% interest subvention for all GST registered MSMEs, on fresh or incrementalloans. Government would create a payment platform for MSMEs to enable filing of bills andpayment thereof on the platform itself to eliminate delays in government payments. Further,Government would extend the pension benefit to about three crore retail traders & smallshopkeepers whose annual turnover is less than Rs.1.5 crore under a new Scheme namelyPradhan Mantri Karam Yogi Maandhan Scheme.

The Budget proposes setting up 100 new clusters during 2019-20 envisioned which shouldenable 50,000 artisans to join the economic value chain under the Scheme of Fund forUpgradation and Regeneration of Traditional Industries’ (SFURTI). Further, 10,000 newFarmer Producer Organizations are proposed to be formed, to ensure economies of scale forfarmers, under the Scheme for Promotion of Innovation, Rural Industry andEntrepreneurship’ (ASPIRE).

To address Human Resource creation, the Budget proposes a New National Education Policywhich would bring major changes in both school and higher education, better governancesystems and greater focus on research and innovation. Further, there is a proposal to establisha National Research Foundation (NRF) to fund, coordinate and promote research in thecountry.

Finance Minister stated that an amount of Rs. 400 crore is proposed to be provided under thehead, “World Class Institutions”, for FY 2019-20, more than three times the revised estimatesfor the previous year.

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Other measures that would give a boost to the economy and employment generation wouldinclude a proposal to streamline multiple labour laws into a set of four labour codes to ensurestandardization and streamlining of registration and filing of returns. Further, there is also aproposal to start a television programme within the DD bouquet of channels exclusively for start-ups, Smt. Sitharaman added.

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DD CHANNEL FOR START-UPSRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Public Finance, Taxation &



DD channel for start-ups


The Union Minster of Finance and Corporate Affairs, Nirmala Sitharaman said that theGovernment proposes to start a channel within the DD bouquet of channels exclusively for start-ups.

Presenting the Union Budget 2019-20 in Parliament today, she said that the channel will serveas a platform for promoting start-ups, discussing issues affecting their growth, matchmaking withventure capitalists and funding and tax planning. She said that this channel will be designedand executed by start-ups themselves.

The condition for carry forward and set off of losses in cases of eligible start-ups is proposed tobe relaxed enabling them to carry forward their losses on satisfaction of any one of the twoconditions - continuity of 51% shareholding/voting power of continuity of 100% of originalshareholders. Further, the provision which allows exemption of capital gains from sale ofresidential property on investment of net consideration in equity shares of eligible start-up shallbe extended by 2 years. The benefit will be available for sale of residential property on or before31st March, 2021. The condition of minimum holding of 50% of share capital or voting rights inthe start-up is proposed to be relaxed to 25%. The condition restricting transfer of new assetbeing computer or computer software is also proposed to be relaxed from the current 5 years to3 years.

Start-ups in India are taking firm roots and their continued growth needs to be encouraged. Toresolve the so-called ‘angel tax’ issue, the start-ups and their investors who file requisitedeclarations and provide information in their returns will not be subjected to any kind of scrutinyin respect of valuations of share premiums. The issue of establishing identity of the investor andsource of his funds will be resolved by putting in place a mechanism of e-verification. With this,funds raised by start-ups will not require any kind of scrutiny from the Income Tax Department,she informed.

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Read this release in: Hindi



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UNION BUDGET PROPOSES NUMBER OF MEASURESTO ENHANCE THE SOURCES OF CAPITAL FORINFRASTRUCTURE FINANCING


Ministry of Finance

Union Budget proposes number of measures to enhancethe sources of capital for infrastructure financing

Credit Guarantee Enhancement Corporation to be set up in2019-20

An action plan to deepen the market for long term bonds tobe put in place


A Credit Guarantee Enhancement Corporation is to be set up in 2019-20. This wasannounced by the Union Minister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman,while presenting the Union Budget 2019-20 in Parliament today.

The Finance Minister further said that we recognize that investment-driven growth requiresaccess to low cost capital. It is estimated that India requires investments averaging Rs. 20 lakhcrore every year (USD 300 billion a year).

The Finance Minister further added that a number of measures are proposed to enhance thesources of capital for infrastructure financing, which are as follows;

A Credit Guarantee Enhancement Corporation for which regulations have been notified bythe RBI, will be set up in 2019-20.

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An action plan to deepen the market for long term bonds including for deepening marketsfor corporate bond repos, credit default swaps etc., with specific focus on infrastructuresector, will be put in place.

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To permit investments made by FIIs/FPIs in debt securities issued by IDF-NBFCs to betransferred/sold to any domestic investor within the specified lock-in period.

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DSM/RM/SVS/MKV/YK


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TAX RATES FOR INDIVIDUALS HAVING TAXABLEINCOME FROM RS. 2 CR - 5 CR AND RS. 5 CR & ABOVETO BE INCREASED BY AROUND 3 % AND 7 %RESPECTIVELY


Ministry of Finance

Tax rates for individuals having taxable income from Rs. 2cr - 5 cr and Rs. 5 cr & above to be increased by around 3 %and 7 % respectively

Direct Tax revenue increases by over 78 % in FY2018-19from FY 2013-14; rose to Rs. 11.37 lakh crore from Rs. 6.38lakh crore

Relief proposed in Levy of Securities Transaction Tax (STT)

Additional deduction of up to Rs.1.5 lakh for interest paidon loans for purchase of affordable house

Additional Income Tax deduction of Rs. 1.5 lakh on interestpaid on loans taken to purchase Electric Vehicles


The effective tax rates for the higher income group individuals having taxable income from Rs. 2crore to Rs. 5 crore and Rs. 5 crore and above is proposed to be increased by around 3 percentand 7 percent respectively. Presenting the General Budget 2019-20 in the Parliament today,Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman said, “In view of risingincome levels, those in the highest income bracket need to contribute more to the Nation’sdevelopment”. Thanking the taxpayers, she said that they are playing a major role in Nationbuilding.

Referring to several measures taken in the past to alleviate the tax burden on small and mediumincome earners, the Minister said, “Those having annual income upto Rs. 5 lakh are not requiredto pay any income tax”. This includes self-employed as well as small traders, salary earners,and senior citizens, she added.

Tax Revenue Up

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Due to slew of efforts taken by the Government, the direct tax revenue has significantlyincreased by over 78 percent from Rs. 6.38 lakh crore in Financial Year 2013-14 to around Rs.11.37 lakh crore in Financial Year 2018-19. The Minister stated that the increase has beensignificant in last couple of years. The Direct Tax revenue grew by 19.13 percent to Rs. 10, 02,741 crore in 2017-18 (Rs. 8, 41, 713 crore in 2016-17) and by 13.46 percent in 2018-19. Thenumber of taxpayers also increased by approximately 48 percent over the period 2013-14 to2017-18, from 5.71 crore taxpayers to 8.4 crore taxpayers, due to various initiatives andtaxpayer outreach programmes undertaken by the Government.

Relief in Levy of Securities Transaction Tax (STT)

In her speech, the Finance Minister proposed to give relief in levy of Securities Transaction Taxby restricting it only to the difference between settlement and strike price in case of exercise ofoptions.

Additional Deduction of Interest for Affordable Housing

In order to provide a further impetus to affordable housing, the Minister proposed to allow anadditional deduction of up to Rs.1,50,000/- for interest paid on loans borrowed up to 31st March,2020 for purchase of an affordable house valued up to Rs. 45 lakh. Therefore, a personpurchasing an affordable house will now get an enhanced interest deduction up to Rs. 3.5 lakh.This will translate into a benefit of around Rs.7 lakh to the middle class home-buyers over theirloan period of 15 years.

For realisation of the goal of ‘Housing for All’ and affordable housing, a tax holiday has alreadybeen provided on the profits earned by developers of affordable housing. Also, interest paid onhousing loans is allowed as a deduction to the extent of Rs. 2 lakh in respect of self-occupiedproperty.

Promoting Electric Vehicles

To make Electric Vehicles affordable to consumers, the Minister said that the Government willprovide additional income tax deduction of Rs. 1.5 lakh on the interest paid on loans taken topurchase electric vehicles. This amounts to a benefit of around Rs. 2.5 lakh over the loan periodto the taxpayers who take loans to purchase electric vehicle. Considering India’s large consumerbase, the she stated, “We aim to leapfrog and envision India as a global hub of manufacturingof Electric Vehicles. Inclusion of Solar storage batteries and charging infrastructure in the abovescheme will boost our efforts”. The Government has already moved GST council to lower theGST rate on electric vehicles from 12% to 5%, she added.

Level Playing Field for Non Banking Financial Companies (NBFCs)

Recognising the increasingly important role of NBFCs in India’s financial system and to providelevel playing field, the Finance Minister has proposed to tax the interest on bad or doubtful debtsin the year in which it is actually received. Presently this is allowed for scheduled banks, publicfinancial institutions, state financial corporations, state industrial investment corporations,cooperative banks and certain public companies like housing finance companies.

Measures to promote the International Financial Services Centre (IFSC)

To promote IFSC in GIFT City, the Finance Minister proposed to further provide several directtax incentives to an IFSC including 100 percent profit-linked deduction under section 80-LA inany ten-year block within a fifteen-year period, exemption from dividend distribution tax from

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current and accumulated income to companies and mutual funds, exemptions on capital gain toCategory-III AIF and interest payment on loan taken from non-residents.

Compulsory Filing of Return

The General Budget 2019-20 proposes to make return filing compulsory for persons, who havedeposited more than Rs. 1 crore in a current account in a year, or who have expended morethan Rs. 2 lakh on foreign travel or more than Rs. 1 lakh on electricity consumption in a year orwho fulfils the prescribed conditions, in order to ensure that persons who enter into high valuetransactions also furnish return of income. It is also proposes to provide that a person whoseincome becomes lower than maximum amount not chargeable to tax due to claim of rolloverbenefit of capital gains shall also be required to furnish the return.

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NEW SPACE INDIA LTD. INCORPORATED AS A NEWCOMMERCIAL ARM OF D/O SPACE: FINANCEMINISTER


Department of Space

New Space India Ltd. incorporated as a new commercialarm of D/o Space: Finance Minister

Company to spearhead commercialization of various spaceproducts


Presenting the General Budget 2019-20 in the Parliament today, Union Minister of Finance andCorporate Affairs Smt. Nirmala Sitharaman said that a Public Sector Enterprise viz. New SpaceIndia Limited (NSIL) has been incorporated as a new commercial arm of Department of Space totap the benefits of the Research & Development carried out by ISRO.

The Company will spearhead commercialization of various space products including productionof launch vehicles, transfer to technologies and marketing of space products. The Minister saidthat, “India has emerged as a major space power with the technology and ability to launchsatellites and other space products at globally low cost. Time has come to harness this abilitycommercially”.

The Budget Estimates for Department of Space for FY 2019-20 is Rs 12,473.26 crore ascompared to the RE of Rs 11,200 crore in FY 2018-19.

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Outlay of major schemes:

(in Rs crore)

Schemes 2018-19 (RE) 2019-20(BE)

Space Technology (including Gaganyan) 6993 8408

Space Applications 1595 1885

INSAT Satellite Systems 1330 884

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UNION BUDGET PROPOSES MEASURES TO DEEPENCORPORATE DEBT MARKETS


Ministry of Finance

Union Budget proposes measures to deepen CorporateDebt markets

Government will work with regulators RBI/SEBI to enablestock exchanges to allow AA rated bonds as collaterals


A number of measures to further deepen bond markets have been proposed by the UnionMinister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman, while presenting the UnionBudget 2019-20 in Parliament today.

The Finance Minister said, “Corporate Debt markets are crucial for the infrastructure sector. Though the number and value of bond issuances had gone up, there has been a dip in the lasttwo years. The market is skewed in favour of private placement”.

The Finance Minister added that given the need to further deepen bond markets, a number ofmeasures are proposed to be taken up, which are as follows;

To deepen the Corporate tri-party repo market in Corporate Debt securities, Governmentwill work with regulators RBI/SEBI to enable stock exchanges to allow AA rated bonds ascollaterals.

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User-friendliness of trading platforms for corporate bonds will be reviewed, including issuesarising-out of capping of ISINs.

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UNION BUDGET ENVISIONS INDIA AS A GLOBAL HUBFOR MANUFACTURING ELECTRIC VEHICLES


Ministry of Finance

Union Budget envisions India as a global hub for manufacturing electric vehicles

Says inclusion of solar storage batteries and charginginfrastructure in the fame scheme will Boost production

Government has sought lowering of GST on electricvehicles from 12% to 5%

Union Budget says government will provide additionalincome tax deduction of Rs 1.5 Lakh on Interest paid onloans taken to purchase electric vehicles


The Union Budget has outlined various proposals for giving a boost to manufacturing of electricvehicles and developing India as a global hub for the same.

In her maiden budget speech in Parliament today, the Union Minister of Finance and CorporateAffairs, Smt. Nirmala Sitharaman said that Under Phase-II of the FAME Scheme, only advancedbattery and registered e-vehicles will be incentivized, with greater emphasis on providingaffordable and environment friendly public transportation options for the common man. Themain objective of the Scheme is to encourage faster adoption of electric vehicles through upfrontincentive on purchase of such vehicles and also by establishing the necessary charginginfrastructure for the same. Phase II of FAME has an outlay of Rs10,000 crore for a period of 3years, and has commenced from 1st April, 2019.

The Finance Minister has further said that the inclusion of solar storage batteries and charginginfrastructure in the FAME scheme will give a boost to manufacturing, which is needed for India to leapfrog and become a global hub for manufacturing of these vehicles.

The Finance Minister also said that the Government has already moved GST council to lowerthe GST rate on electric vehicles from 12% to 5%. Also to make electric vehicles affordable toconsumers, the Union Budget says the government will provide additional income tax deductionof Rs 1.5 lakh on the interest paid on loans taken to purchase electric vehicles. This amountsto a benefit of around Rs 2.5 lakh over the loan period to the taxpayers who take loans topurchase electric vehicle.

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To further incentivise e-mobility, customs duty is being exempted on certain parts of electricvehicles.

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UNION BUDGET PROPOSES CREATION OF A SOCIALSTOCK EXCHANGE- UNDER THE REGULATORY AMBITOF SECURITIES AND EXCHANGE BOARD OF INDIA(SEBI) FOR LISTING SOCIAL ENTERPRISES ANDVOLUNTARY ORGANIZATIONS


Ministry of Finance

Union Budget proposes creation of a social stockexchange- under the regulatory ambit of Securities andExchange Board of India (SEBI) for listing socialenterprises and voluntary organizations

Government to take up necessary measures for inter-operability of RBI depositories and SEBI depositories


Creation of a social stock exchange has been proposed by the Union Minister of Finance andCorporate Affairs, Smt. Nirmala Sitharaman, while presenting the Union Budget 2019-20 inParliament today.

The Finance Minister said that it is time to take our capital markets closer to the masses andmeet various social welfare objectives related to inclusive growth and financial inclusion. TheMinister further stated that “I propose to initiate steps towards creating an electronic fund raisingplatform – a social stock exchange - under the regulatory ambit of Securities and ExchangeBoard of India (SEBI) for listing social enterprises and voluntary organizations working for therealization of a social welfare objective so that they can raise capital as equity, debt or as unitslike a mutual fund”.

The Finance Minister added that it is important to get retail investors to invest in treasury billsand securities issued by the Government. Efforts made by the Reserve Bank will need to besupplemented with further institutional development using stock exchanges. For this purpose,inter-operability of RBI depositories and SEBI depositories would be necessary to bring aboutseamless transfer of treasury bills and government securities between RBI and Depositoryledgers and for enabling this. The Government will take up necessary measures in this regard inconsultation with RBI and SEBI.

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DSM/RM/BB/SVS/MKV/YK


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PUBLIC SECTOR BANKS PROPOSED TO BEPROVIDED RS 70,000 CRORE CAPITAL TO BOOSTCREDIT


Ministry of Finance

Public Sector Banks proposed to be provided Rs 70,000crore capital to boost credit

Government will provide one time six months' partial creditguarantee to Public Sector Banks for first loss of up to 10%

Appropriate proposals for strengthening regulatoryauthority of RBI over NBFCs being placed in Finance Bill


Public Sector Banks are to be further provided Rs 70,000 crore capital to boost credit for astrong impetus to the economy. To further improve ease of living, they will leverage technology,offering online personal loans and doorstep banking, and enabling customers of one PublicSector Bank to access services across all Public Sector Banks. While presenting Union Budget2019-20 in Parliament today, the Union Minister of Finance and Corporate Affairs, Smt. NirmalaSitharaman informed that in addition, Government will initiate steps to empower accountholdersto remedy the current situation in which they do not have control over deposit of cash by othersin their accounts. Reforms will also be undertaken to strengthen governance in Public SectorBanks.

Financial gains from cleaning of the banking system are now amply visible. The NPAs ofcommercial banks have reduced by over Rs 1 lakh crore over the last year, record recovery ofover Rs 4 lakh crore due to IBC and other measures has been effected over the last four years,provision coverage ratio is now at its highest in seven years, and domestic credit growth hasrisen to 13.8%.

She further informed that, the Government has smoothly carried, out consolidation, reducing thenumber of Public Sector Banks by eight. At the same time, as many as six Public Sector Bankshave been enabled to come out of Prompt Corrective Action framework.

Non-Banking Financial Companies (NBFCs)

The Finance Minister informed that Non-Banking Financial Companies (NBFCs) are playing an

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extremely important role in sustaining consumption demand as well as capital formation in smalland medium industrial segment. NBFCs that are fundamentally sound should continue to getfunding from banks and mutual funds without being unduly risk averse. For purchase of high-rated pooled assets of financially sound NBFCs, amounting to a total of Rupees one lakh croreduring the current financial year, Government will provide one time six months' partial creditguarantee to Public Sector Banks for first loss of up to 10%. Further, Reserve Bank of India(RBI) is the regulator for NBFCs. However, RBI has limited regulatory authority over NBFCs. Appropriate proposals for strengthening the regulatory authority of RBI over NBFCs are beingplaced in the Finance Bill.

She said that NBFCs which do public placement of debt have to maintain a DebentureRedemption Reserve (DRR) and in addition, a special reserve as required by RBI, has also tobe maintained. To allow NBFCs to raise funds in public issues, the requirement of creating aDRR, which is currently applicable for only public issues as private placements are exempt, willbe done away with. To bring more participants, especially NBFCs, not registered as NBFCs-Factor, on the TReDS platform, amendment in the Factoring Regulation Act, 2011 is necessaryand steps will be taken to allow all NBFCs to directly participate on the TReDS platform.

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PROVIDING ACCESS TO SAFE AND ADEQUATEDRINKING WATER TO ALL INDIANS IS A PRIORITY OFTHE GOVERNMENT


Ministry of Finance

Providing access to safe and adequate drinking water to allIndians is a priority of the Government

Jal Jeevan Mission to ensure HarGharJal (piped watersupply) to all rural households by 2024

New Ministry-“Jal Shakti Mantralaya” to manage waterresources and water supply in an integrated and holisticmanner with the State Governments


The Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman said thatensuring India’s water security and providing access to safe and adequate drinking water to allIndians is a priority of the Government. While, presenting the Union Budget 2019-20 in theParliament today, Smt. Sitharaman said that a major step in this direction has been theconstitution of the Jal Shakti Mantralaya, integrating the Ministry of Water Resources, RiverDevelopment and Ganga Rejuvenation and Ministry of Drinking Water and Sanitation. This newMantralaya will look at the management of our water resources and water supply in anintegrated and holistic manner, and will work with States to ensure HarGharJal – (piped watersupply) to all rural households by 2024 under the Jal Jeevan Mission.

This Mission, under the Department of Drinking Water and Sanitation, will focus on integrateddemand and supply side management of water at the local level, including creation of localinfrastructure for source sustainability like rainwater harvesting, groundwater recharge andmanagement of household wastewater for reuse in agriculture. The Jal Jeevan Mission willconverge with other Central and State Government Schemes to achieve its objectives ofsustainable water supply management across the country.

The Finance Minister informed that government has identified 1592 Blocks which are critical andover exploited, spread across 256 Districts for the Jal Shakti Abhiyan. Besides using fundsavailable under various Schemes, the Government will also explore possibility of usingadditional funds available under the Compensatory Afforestation Fund Management andPlanning Authority (CAMPA) for this purpose.

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ESTIMATED SAVINGS/BENEFITS OF RS. 59,599 CROREUPTO MARCH, 2019 UNDER ‘PAHAL’ SCHEME


Ministry of Petroleum & Natural Gas

Estimated savings/benefits of Rs. 59,599 crore upto March,2019 under ‘PAHAL’ scheme


There have been estimated savings/benefits of Rs. 59,599 crore for the Government uptoMarch, 2019 under the ‘PAHAL’ scheme of the Ministry of Petroleum and Natural Gas. Thestatement of fiscal policy, as required under the Fiscal Responsibility and Budget ManagementAct, 2003, laid in Parliament along with other budget documents by the Union Finance andCorporate Affairs Minister Smt. Nirmala Sitharaman today, states that 4.23 crore duplicate,fake/non-existent, inactive LPG connections have been eliminated under this DBT scheme.Under the ‘PAHAL’ scheme, beneficiaries buy LPG cylinders at market rate and subsequentlyreceived subsidy directly in their bank accounts. Direct Benefit Transfer is a landmark initiative ofthe Government to ensure that benefits under various welfare and subsidy programmes of thecountry reach eligible and rightful beneficiaries. The document states that in addition, there are1.86 crore non-subsidised LPG consumers, including 1.03 crore ‘Give it up’ consumers.

On the issue of Direct Benefit Transfer in PDS kerosene, the statements of Fiscal Policyindicate that till date, 12 State Governments/UTs have voluntarily surrendered their PDSkerosene allocations under DBTK Scheme. Eight State Governments/UTs have already cutdown their PDS kerosene allocation to Nil. There has been an overall reduction of 12% for theyear 2018-19 in comparison to the allocation of 2017-18.

The Budget Estimates provide an amount of Rs. 37478 crore as Petroleum subsidy forthe 2019-20, compared to Rs. 24833 crore in revised estimates of 2018-19. Out of the above,Rs. 32989 crore are earmarked for LPG subsidy while Rs. 4489 crore have been allocated forkerosene subsidy.

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GOVERNMENT SETS ENHANCED TARGET OF RS1,05,000 CRORE OF DISINVESTMENT DURING 2019-20


Ministry of Finance

Government sets enhanced target of Rs 1,05,000 crore ofdisinvestment during 2019-20

Strategic disinvestment of Air India proposed to bereinitiated

More CPSEs proposed for strategic participation by privatesector


Government is setting an enhanced target of Rs 1,05,000 crore of disinvestment receipts for thefinancial year 2019-20 said the Union Minister of Finance & Corporate Affairs Smt. NirmalaSitharaman while presenting the Union Budget 2019-20 in Parliament today. She furtherinformed that Government will undertake strategic sale of PSUs and continue to doconsolidation of PSUs in the non-financial space as well.

She informed that the Government has been following the policy of disinvestment in non-financial public sector undertakings maintaining Government stake not to go below 51%.Government is considering, in case where the Undertaking is still to be retained in Governmentcontrol, to go below 51% to an appropriate level on case to case basis. Government has alsodecided to modify present policy of retaining 51% Government stake to retaining 51% stakeinclusive of the stake of Government controlled institutions.

The Finance Minister said that “strategic disinvestment of select CPSEs would continue toremain a priority of this Government. In view of current macro-economic parameters,Government would not only reinitiate the process of strategic disinvestment of Air India, butwould offer more CPSEs for strategic participation by the private sector.”

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DSM/RM/BB/RJ/SK/SKS


Read this release in: Marathi , Tamil , Bengali , Gujarati , Malayalam

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Source : www.economictimes.indiatimes.com Date : 2019-07-06

VIEW: OPENING THE GATES FOR A FOREIGN-FUNDEDINDIA GROWTHRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Foreign Capital, Foreign Trade

& BOP

By Abheek Barua, Chief Economist, HDFC Bank

Modi government 2.0’s first budget recognises a critical fact — domestic savings are inadequateto fund the 8%-plus real annual growth in GDP needed to take the economy to the $5 trilliontarget over the next five years. A lot more foreign savings need to be brought in moreaggressively. The most important step in this direction is the decision to finally break the tabooagainst the sovereign government seeking funds abroad. This could be the clichédgamechanger for Indian borrowers abroad. While GoI may actually borrow a small amount inline with its conservative external debt management practices there could be significant‘externalities’.

A sovereign bond issue would help set a clear benchmark for other external bond issuances andis likely to bring borrowing costs down across the board for Indian companies as well asincrease the appetite for Indian debt paper. Efforts like the possibility of upping the investmentlimits in media and aviation, easing local sourcing norms for single-brand retailers, and themerger of the NRI-portfolio investment and the foreign portfolio investment route, all seem to bea part of a cohesive strategy to get foreigners to fund India’s growth. There is also a clear effortto improve capital market mechanisms to ensure that the sluices are unclogged.

There is some effort to address some of the immediate growth bottlenecks. The Rs 70,000 crorebank recapitalisation for PSBs is certainly more than what most analysts expected. This,coupled with the credit guarantee scheme, could ease some of the credit constraints that bothconsumers and businesses are facing and revive demand.

What are the problems with the budget? For one, there is need for clarity on a number of things.Dividends and profits from PSUs and GoI undertakings are forecasted to be a whopping Rs1,63,000 crore. The bulk of this comes from RBI that is expected to pay Rs 90,000 crore thisfiscal year against the Rs 68,000 crore paid last year. One wonders if this contains the transferof RBI’s surplus reserves on its balance sheet.

The funding of the large banking recapitalisation programme needs to be explained better. WhileGoI is issuing recapitalisation bonds, the question is whether these bonds will make their wayinto the markets at all and potentially impact interest rates. Or will it merely be a balance sheetexercise in which bonds are swapped for equity on bank’s balance sheet without seeping intothe financial markets at all?

Very broadly, the numbers do add up to yield a fiscal deficit target of 3.3% of GDP. Thedisinvestment estimates are a tad higher than in February’s interim budget. But a renewedemphasis on strategic sales, a tax-break on retail investments in exchange traded funds ofPSUs and, perhaps, a little help at the last minute from the business of cross-holdings, thetargets should be met. Solid growth in ‘non-tax’ receipts like disinvestments and dividendscompensate for the rather sedate growth in tax collections of around 11% the budget assumesfor 2019-20.

Gross market borrowing target for GoI is Rs 7,10,000 crore that will go into the funding the fiscal

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gap. While it is high in absolute terms, it hasn’t exceeded the amount projected in the interimbudget. Besides, that GoI seems to remain committed to fiscal consolidation, and is also seekingnew (external) avenues to fund its deficit has triggered a rally in the bond markets. If externalfund flows do jump on the bank of some of the new initiatives to invite foreign capital, domesticborrowing costs should remain low.By Abheek Barua, Chief Economist, HDFC Bank

Modi government 2.0’s first budget recognises a critical fact — domestic savings are inadequateto fund the 8%-plus real annual growth in GDP needed to take the economy to the $5 trilliontarget over the next five years. A lot more foreign savings need to be brought in moreaggressively. The most important step in this direction is the decision to finally break the tabooagainst the sovereign government seeking funds abroad. This could be the clichédgamechanger for Indian borrowers abroad. While GoI may actually borrow a small amount inline with its conservative external debt management practices there could be significant‘externalities’.

A sovereign bond issue would help set a clear benchmark for other external bond issuances andis likely to bring borrowing costs down across the board for Indian companies as well asincrease the appetite for Indian debt paper. Efforts like the possibility of upping the investmentlimits in media and aviation, easing local sourcing norms for single-brand retailers, and themerger of the NRI-portfolio investment and the foreign portfolio investment route, all seem to bea part of a cohesive strategy to get foreigners to fund India’s growth. There is also a clear effortto improve capital market mechanisms to ensure that the sluices are unclogged.

There is some effort to address some of the immediate growth bottlenecks. The Rs 70,000 crorebank recapitalisation for PSBs is certainly more than what most analysts expected. This,coupled with the credit guarantee scheme, could ease some of the credit constraints that bothconsumers and businesses are facing and revive demand.

What are the problems with the budget? For one, there is need for clarity on a number of things.Dividends and profits from PSUs and GoI undertakings are forecasted to be a whopping Rs1,63,000 crore. The bulk of this comes from RBI that is expected to pay Rs 90,000 crore thisfiscal year against the Rs 68,000 crore paid last year. One wonders if this contains the transferof RBI’s surplus reserves on its balance sheet.

The funding of the large banking recapitalisation programme needs to be explained better. WhileGoI is issuing recapitalisation bonds, the question is whether these bonds will make their wayinto the markets at all and potentially impact interest rates. Or will it merely be a balance sheetexercise in which bonds are swapped for equity on bank’s balance sheet without seeping intothe financial markets at all?

Very broadly, the numbers do add up to yield a fiscal deficit target of 3.3% of GDP. Thedisinvestment estimates are a tad higher than in February’s interim budget. But a renewedemphasis on strategic sales, a tax-break on retail investments in exchange traded funds ofPSUs and, perhaps, a little help at the last minute from the business of cross-holdings, thetargets should be met. Solid growth in ‘non-tax’ receipts like disinvestments and dividendscompensate for the rather sedate growth in tax collections of around 11% the budget assumesfor 2019-20.

Gross market borrowing target for GoI is Rs 7,10,000 crore that will go into the funding the fiscalgap. While it is high in absolute terms, it hasn’t exceeded the amount projected in the interimbudget. Besides, that GoI seems to remain committed to fiscal consolidation, and is also seekingnew (external) avenues to fund its deficit has triggered a rally in the bond markets. If external

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fund flows do jump on the bank of some of the new initiatives to invite foreign capital, domesticborrowing costs should remain low.



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AADHAAR CAN BE USED FOR CASH TRANSACTIONSBEYOND RS 50,000 IN PLACE OF PAN: REVENUE SECY

Relevant for: Indian Economy | Topic: Issues relating to Growth & Development - Banking, NPAs and RBI

The Aadhaar number can now be quoted for cash transactions of more than Rs. 50,000 and forall other purposes where traditionally the income tax PAN number was mandatory, RevenueSecretary Ajay Bhushan Pandey said on Saturday. Banks will make upgrades to allowacceptance of Aadhaar, Mr. Pandey said. This follows the Budget allowing interchange of PANand Aadhaar for filing taxes.PTI
















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NO EASY ANSWER TO ECONOMIC SLOWDOWNRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Public Finance, Taxation &


The most keenly watched number in the Union Budget is, perhaps, the ratio of fiscal deficit toGDP. A decline in the ratio is cheered by commentators and the markets. An increase is a seenas a setback to reforms.

This year, the number was of greater interest than before thanks to the vision outlined by theEconomic Survey for 2018-19 a day earlier. Earlier editions of the Survey had suggested thatsince private investment was not taking off, there was scope for public investment to pick up theslack.

The latest Survey leaves no room for such ambiguities. It makes clear that private investment isthe key driver of growth and jobs. It follows that the government must make fewer demands onpublic savings so that more of it is available for private investment. In other words, going by theSurvey’s analysis, there is no escape from an even sharper focus on fiscal consolidation.

It is astonishing, therefore, that Finance Minister Nirmala Sitharaman’s Budget speech did noteven mention the fiscal deficit figure, perhaps a first of sorts! Nor did it make any reference to apath towards the fiscal deficit target of 3.3% of GDP. The omission reflects the limitationsimposed on the Finance Minister by trends in revenue and expenditure.

In 2011-12, the fiscal deficit to GDP ratio was 5.9%. By 2015-16, it had declined to 3.9%.Thereafter, it has got stuck at around 3.5%. The Budget for 2018-19 missed the targets setearlier, for 2017-18 and 2018-19. It outlined a revised ‘glide path’ with fiscal deficit targets of3.3% for 2018-19, 3.1% for 2019-20 and 3% for 2020-21. The Budget for 2019-20 shows thatthe revised targets too have been missed thus far. The fiscal deficit for 2018-19 has ended up3.4% of GDP; for 2019-20, it is estimated at 3.3%. It would be a brave soul who believes that thetarget of 3% for 2020-21 will be met.

Nirmala’s maiden Budget is all about incremental measures

The government has had some success in reining in traditional items of revenue expenditure.Major subsidies (food, fertiliser, petroleum), which used to claim 2% or more of GDP, havestabilised at 1.4% of GDP. But new items of expenditure have emerged. The PM-Kisan scheme,which provides 6,000 for each farming household per year, will cost the government 75,000crore in 2019-20. The outlays on the National Rural Employment Guarantee Scheme have creptup with each passing year.

The big disappointment has been in respect of tax revenues. The expectation followingdemonetisation and the introduction of the Goods and Services Tax (GST) was that both directand indirect taxes would rise. As a result, the tax to GDP ratio would move to a differenttrajectory. The Budget for 2018-19 projected the tax to GDP ratio to rise from 11.6% in 2017-19to 12.1% in 2018-19 and further to 12.4% in 2019-20. The Budget for 2019-20 dashes thesehopes. It estimates the tax to GDP ratio at 11.9% in 2018-19 and 11.7% in 2019-20. Theshortfall in GST collections in 2018-19 seems to have set the clock back for fiscal consolidation.

How do we balance the fiscal numbers when the tax to GDP ratio is not coming up toexpectations? The Chief Economic Adviser has indicated that the government pins its hopes oncapital receipts from disinvestment and the sale of land belonging to the government including

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public sector enterprises (PSEs). Disinvestment in the sense of strategic sale of PSEs has notreally taken off. Much of disinvestment has involved the buying of equity in PSEs by other PSEs.The sale of government land is bound to be a long-drawn-out process and one with fraught withcontroversy over valuation. Moreover, the sale of government assets to balance the Budgetmerely defers fiscal problems to the future. It is not the answer to the problem of fiscalsustainability.

In the short term, the government’s hopes must rest on the Bimal Jalan committee on theeconomic capital framework for the Reserve Bank of India (RBI). The government’s intention insetting up the committee was to see whether some of the RBI’s reserves could be used tomitigate the fiscal position. The report has been submitted, but is yet to be made public. Thereare reports that the majority does not favour a one-shot transfer to the government, somethingthe government would have liked.

Private investment is constrained not just by the crowding out effect of a high fiscal deficit.Earlier editions of the Economic Survey had identified the twin balance sheet problem, that is,high levels of debt in companies and high non-performing assets of banks, as an importantconstraint on private investment. The Economic Survey of 2018-19 contends that reducingpolicy uncertainty can somehow overwhelm the drag caused by the twin balance sheet problem.This is questionable. The broad direction of policy has never been in doubt since the onset ofeconomic reforms, even if the pace has varied in response to the situation on the ground. Hadpolicy uncertainty been a serious issue, it would have surely been reflected in inflows of foreigncapital, whether foreign institutional investment or foreign direct investment.

Resolving the twin balance sheet remains the key to reviving private investment. This requiresthe government to provide adequate capital to public sector banks (PSBs). The Budget’s biggestpositive is the allocation of 70,000 crore towards capital for PSBs. However, the allocation ismeaningful only if it is spent at one go in the current financial year, not staggered over severalyears. Only then will banks have enough capital to cover provisions for non-performing assetsas well as provide loans to firms.

The Budget also makes an attempt to address the liquidity problem at NBFCs. It provides coverfor loss of up to 10% on purchase of pooled assets of NBFCs of a total value of 100,000 croreduring the current financial year. Many see it as a government bailout of private NBFCs. Theapprehensions may be misplaced. The loss cover is only for six months and is intended only forwell-rated portfolios and NBFCs. Banks may be incentivised to buy more of the portfolios of thebetter NBFCs, not those of the weaker ones.

The government expects that by boosting the flow of credit, the recapitalisation of PSBs will helprevive private investment. What if it doesn’t? Should the government continue to focus on asingle number for the fiscal deficit target? Or would it be more realistic to accept a broad range,keeping in mind the fall in the inflation rate and the decline in the combined fiscal deficit of theCentre and the States? The answer to the economic slowdown may not be as simple as theSurvey makes out.

T.T. Ram Mohan is a professor at IIM Ahmedabad. [email protected]


The Trump administration’s successive punitive actions against Iran can only be interpreted as adesire for direct conflict

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OPINIONRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Public Finance, Taxation &


India’s GDP grew at 5.8% in the quarter ending March, 2019, the lowest figure since the 5.3%recorded in the quarter ending March 2014. The GDP growth rate has been coming downcontinuously since June 2018. A section of academics and commentators, including a formerchief economic advisor to the Narendra Modi government, think that the economy is doing worsethan what the official statistics tell us. In a paper published last month, Arvind Subramanianargued that official GDP statistics could be overestimating India’s GDP by around 2.5percentage points. The Prime Minister’s Economic Advisory Council has rejected Subramanian’sarguments in a rejoinder. A final resolution of this debate is not possible unless the governmentconstitutes an independent committee to ascertain the veracity of GDP statistics. The debate onmagnitude of the GDP growth rate notwithstanding, both the government and its critiques are inagreement over the fact that the Indian economy is showing unmistakable signs of a slowdown.The question is how does one reverse it? The government, as evident from both Thursday’sEconomic Survey and Friday’s Union Budget, believes private investment holds the key. Thatmay well be the case. Still, any credible answer to this has to look at the GDP as a sum of partsand the relative weight of these at a given point in time. Here’s why.

Elementary economics tells us that there are two ways to look at what constitutes the GDP of acountry. The first is a sector-wise approach, with agriculture, industry and services being itsthree major components. The overall GDP growth is a weighted average of share of each sectorin the economy and their respective growth rates. The second is an expenditure/ demandclassification, with consumption (private and government), investment and net exports as thethree major components. While each of these sub-categories matter for present growth,investment is a crucial determinant for future growth as well.

As an economy gets modernised -- economic transformation in economics jargon -- the share ofagriculture in GDP comes down and that of industry and services increases. A change in sector-wise distribution of GDP, however, is no guarantee of the same for income distribution in aneconomy. This depends on the share of employment in different sectors of the economy. Anexample can make it clear. Let us assume that the total GDP of a country in a given year is~100 with the share of agriculture, industry and services being ~20, ~35 and ~45 respectively.Now, let us assume two different scenarios for the employment share of these sectors. If theemployment share of each of these sectors were the same as their GDP share, then the GDPwould be equally distributed in the economy. If there were 100 workers in the economy, and allworkers in a sector made the same amount of money, then everyone would earn one rupee inthis case. Things would be radically different if the employment-income shares of sectors aredifferent. Let us assume that agriculture had half of the workers, while industry and services had

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a 40% and 10% share in employment. In this case, 50 workers in agriculture would earn 40paisa each, 40 workers in industry

would earn 87 paisa each and the 10 workers employed in services would make Rs 4.5 each.To be sure, a real economy can never have same levels of earnings for all workers in a sectortoo. For example a CEO, a freshly hired engineer and a porter in a car manufacturing companywould have very different earnings.

The Indian economy, for a long time, has been closer to the second example discussed here.Even as the share of agriculture in GDP has come down from 27.3% in 1991 to 14.5% in 2018,its share in employment has been relatively stagnant, having come down from 63% to 44%during this period..

This has basically meant that a large number of workers engaged in agriculture in the Indianeconomy have much less incomes, and hence purchasing power, than their peers engaged innonagricultural activities. Why should distribution of purchasing power concern a discussion oneconomic growth?

It matters because purchasing power is an important determinant of how much of what is sold,and, to a large extent, produced in an economy. For instance, India’s benchmark inflationmeasure, Consumer Price Index (CPI) assigns a much higher weightage to food items than thatof a developed country such as the US. Inflation indices are representative of the averagedemand from a household in an economy. This means that nonfood items have a more broad-based demand, and hence market, in the US than in India.

The higher share of food items in average demand is also a reflection of lower overall incomesin an economy. As is to be expected, the potential for value addition (income generation) in fooditems is much less than non-food items. This means that an economy where food items have agreater share in average spending will be making more of low value addition goods than aneconomy with a higher share of average non-food demand. For an economy like India, a bigboost in demand for non-food items, especially of the high value kind, can generate big tailwindsfor overall GDP growth by increasing their production. It is for this reason that developmentssuch as deceleration in automobile sales, which has what has been happening in India in therecent period, are seen with concern -- they hit production in high income generating sectors.

The discussion so far allows us to bring our focus to the demand side break-up of GDP. Ifconsumption demand, especially for automobiles rather than food, is slowing then it is a doublewhammy for GDP growth. This is because it affects consumption demand in the current periodand investment demand in the future. Investment demand is adversely affected because anentrepreneur, who is not being able to sell even current output, is unlikely to have, and thereforeput more money for increasing or improving production.

To be sure, domestic demand is not the only avenue for GDP growth. A country can alwaysmake products and sell them in foreign markets, even if there are no buyers at home. Thepositive impact of exports on a country’s income is offset by imports, which add to anothercountry’s demand. However, there are two important limitations to exploiting this as a driver forgrowth. A country can be import dependent for critical resources such as oil, which can lead toan ever increasing import bill, and hence declining net exports, as incomes increase. India is agood example of this due to its dependence on oil-imports. The other important challenge comesfrom the nature of the domestic market. Normally, producers first start their businesses in thedomestic market and then enter the export markets. Therefore a country which does not have abroad based market for high value products, and hence lack of domestic expertise formanufacturing such products, is unlikely to reap success in exporting such products as well.

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This constraint can be navigated when a foreign entrepreneur brings such technical knowhowvia the foreign direct investment (FDI) route. This explains why developing economies such asIndia are always keen on promoting FDI. It also explains why finance minister NiramalaSitharaman said in her budget speech that India would seek to attract technology majors tocome in and set up factories to make new-age products such as Electric vehicles, solarequipment and batteries.

The FDI route has its own limitations, though. A big-ticket FDI will only materialise if the investorhopes to capture a big share of the domestic or foreign market. With global growth slowing,demand in foreign markets is likely to lose pace. Global exports have in any case been growingat a slower pace than before the 2008 financial crisis. The slowdown in global export growthpost-2008 has affected India disproportionately, which can be seen from the fact that India’sexport growth has come down significantly after this period. If the slowdown in global exportswere to continue, India would continue to face a squeeze on an important driver of economicgrowth in the near future.

For a country like India, where the domestic market is constrained due to many workers havinglow incomes, domestic market growth is limited to selected goods. Mobile phones in the recentperiod are one such example in India. However, not all FDI is an unambiguous blessing. Forexample, if a Chinese phone manufacturer were to set up its final assembly plant in India, andimport most components for making these phones, the net export impact would be limited for theIndian economy. Such an FDI will also kill the possibility of developing indigenous entrepreneursin these sectors.

The problems listed here are much easier to discuss than solve. Most of these are also similar towhat can be termed a vicious cycle. If mass incomes are lower, there won’t be enough demandfor high value food items, which would restrict domestic production and knowledge creationabout producing these and hence prevent the country from becoming a successful exporter ofthese. It is naive to think that all these issues can all be solved immediately. Politics also plays itpart. For example, farmers’ incomes would improve if food prices in India were to becomehigher. But this would mean an extra burden on most other Indians, who spend a large share oftheir earnings on food.

The key to successful economic transformation lies in having a holistic picture about thechallenges facing the economy and then synchronising specific policy responses with the rightopportunities for making these interventions.

Back-to-back decisive victories for Narendra Modi have brought an element of continuity for thepresent regime in the country. This merits that the evaluation of its economic performanceshould also be done on these long-term parameters rather than just quarterly or even annualeconomic statistics.




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BUDGET 2019: VISA, MASTERCARD BRACE FORSERIOUS BLOW AFTER SITHARAMAN'S E-PAYMENTPUSH


MUMBAI: The government's move to do away with bank charges on electronic payments forbusinesses with an annual turnover of Rs 50 crore could hit Mastercard and Visa hard asmerchants will now find it more profitable to accept UPI and other local e-payments.

Large retailers (with a turnover of over Rs 50 crore) are the mainstay of retail credit cardtransactions. These retailers have been paying fees by way of merchant discount rate (MDR) ofclose to 2%.

The finance minister Nirmala Sitharaman in her budget said that it would be mandatory for suchlarge companies to provide their customers with low-cost electronic payment options. Theseinclude Bhim UPI (unified payments interface), UPI-QR Code, Aadhaar Pay, certain debit cards,NEFT (national electronic funds transfer), and RTGS (real time gross settlement).

The budget also ensures that the customer does not pay a fee for using any of these channelsand the charges are borne by banks and the RBI.

This means that the business now has an electronic payment channel that will improve itsmargin by 2%.

The new section, 269SU, of the Income-tax Act requiring large businesses to provide a facilityfor acceptance of payment through electronic modes will come into effect later this year fromNovember 1, 2019.

"The move will lead to an increase in the UPI-based to onboard them by the likes of PhonePe,Paytm and Google Pay. RBI wants these companies to deploy BharatQR, which can beaccessed by any bank customer.

According to Anand Ramachandran, CFO, Ingenico ePayments India, the two moves - no MDRfor businesses above Rs 50 crore turnover and 2% tax deduction on cash withdrawals over Rs 1crore per annum are a further nudge to industry to lower the entry barrier to digital payments.

"The proposal to set up a payment platform for MSMEs for online presentation and payment ofinvoices will not only help cash flow but also give a huge boost to digital payments, as the entiresupply chain will now be incentivised to go digital. Also, the platform opens up possibilities foraccessing lower cost funding," Ramachandran added.

Change on the cards?payments from customers to merchants and this might probably lead to some migration fromcards to merchants, which could in the long term impact card volumes and influence behaviouralchange of merchants towards UPI," said Rajeev Agarwal, founder of Innovity Payments, a firmthat sets up payment infrastructure for retail.

The choice of words 'certain debit cards' in the speech has led many to believe that thegovernment might be seeking to differentiate between Rupay and other payment cards like Visaand Mastercard.

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Payment operators are upset that there is no incentive for payment companies providingacceptance infrastructure. Some players feel that the government may have chosen to ignorethe small businesses given that there is a lot of competition.MUMBAI: The government's move to do away with bank charges on electronic payments forbusinesses with an annual turnover of Rs 50 crore could hit Mastercard and Visa hard asmerchants will now find it more profitable to accept UPI and other local e-payments.

Large retailers (with a turnover of over Rs 50 crore) are the mainstay of retail credit cardtransactions. These retailers have been paying fees by way of merchant discount rate (MDR) ofclose to 2%.

The finance minister Nirmala Sitharaman in her budget said that it would be mandatory for suchlarge companies to provide their customers with low-cost electronic payment options. Theseinclude Bhim UPI (unified payments interface), UPI-QR Code, Aadhaar Pay, certain debit cards,NEFT (national electronic funds transfer), and RTGS (real time gross settlement).

The budget also ensures that the customer does not pay a fee for using any of these channelsand the charges are borne by banks and the RBI.

This means that the business now has an electronic payment channel that will improve itsmargin by 2%.

The new section, 269SU, of the Income-tax Act requiring large businesses to provide a facilityfor acceptance of payment through electronic modes will come into effect later this year fromNovember 1, 2019.

"The move will lead to an increase in the UPI-based to onboard them by the likes of PhonePe,Paytm and Google Pay. RBI wants these companies to deploy BharatQR, which can beaccessed by any bank customer.

According to Anand Ramachandran, CFO, Ingenico ePayments India, the two moves - no MDRfor businesses above Rs 50 crore turnover and 2% tax deduction on cash withdrawals over Rs 1crore per annum are a further nudge to industry to lower the entry barrier to digital payments.

"The proposal to set up a payment platform for MSMEs for online presentation and payment ofinvoices will not only help cash flow but also give a huge boost to digital payments, as the entiresupply chain will now be incentivised to go digital. Also, the platform opens up possibilities foraccessing lower cost funding," Ramachandran added.

Change on the cards?payments from customers to merchants and this might probably lead to some migration fromcards to merchants, which could in the long term impact card volumes and influence behaviouralchange of merchants towards UPI," said Rajeev Agarwal, founder of Innovity Payments, a firmthat sets up payment infrastructure for retail.

The choice of words 'certain debit cards' in the speech has led many to believe that thegovernment might be seeking to differentiate between Rupay and other payment cards like Visaand Mastercard.

Payment operators are upset that there is no incentive for payment companies providingacceptance infrastructure. Some players feel that the government may have chosen to ignorethe small businesses given that there is a lot of competition.

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RBI BOARD FINALISES ‘UTKARSH 2022’Relevant for: Indian Economy | Topic: Issues relating to Growth & Development - Banking, NPAs and RBI

The Reserve Bank of India (RBI) board, which met in New Delhi, finalised a three- year roadmapto improve regulation and supervision, among other functions of the central bank.

This medium term strategy — named Utkarsh 2022 — is in line with the global central banks’plan to strengthen the regulatory and supervisory mechanism, sources aware of the boardmeeting told The Hindu.

“It is a three-year road map for medium term objective to be achieved for improving regulation,supervision of the central bank,” said a source.

“Worldwide, all central banks strengthen the regulatory and supervisory mechanism, everybodyis formulating a long-term plan and a medium-term plan. So, the RBI has also decided it willformulate a pragramme to outline what is to be achieved in the next three years,” the sourceadded.

An internal committee was formed, which was anchored by outgoing Deputy Governor ViralAcharya, to identify issues that needed to be addressed over the next three years. While arounda dozen areas were identified by the committee, some board members felt that areas could befiltered and lesser number of areas can be identified for implementation in the next three years.

“The idea is that the central bank plays a proactive role and takes preemptive action to avoidany crisis,” said another source, highlighting the IL&FS debt default issue and the crisis ofconfidence the non-banking financial sector faced in the aftermath.

In a statement after the board meeting, the RBI said the board finalised the three -year medium-term strategy document of the Reserve Bank, ‘which covered, inter-alia, its mission and visionstatement.’

The board also approved the RBI’s budget for the July 2019—June 2020 period. Other mattersdiscussed by the board included issues relating to currency management and payment systems,the statement added.









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MAINTENANCE OF CAR BY BANKSRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Banking, NPAs and RBI

Ministry of Finance

Maintenance of CAR by Banks


As per RBI guidelines, banks are required to maintain a minimum Capital to Risk-weightedAssets (CRAR) of 9% on an ongoing basis. As on 31.3.2019, all Public Sector Banks (PSBs)and Private Sector Banks meet this minimum CRAR requirement. As per RBI’s FinancialStability Report (FSR) of June 2019, as on 31.3.2019, the CRAR, for Scheduled CommercialBanks (which include both PSBs and Private Sector Banks) and PSBs was 14.3% and 12.2%respectively.

As per FSR of June 2019, growth of gross non-performing assets (NPAs) has deceleratedacross all bank groups, including PSBs, and further, due to the increased pace of recognitionof NPAs, NPAs in the banking system peaked in March 2018 and have since declined to9.3% in March 2019, signalling a turnaround in the NPA cycle. In addition, under the baselinescenario of macro-stress tests for credit, FSR has projected further decrease in the grossNPA ratio of all Scheduled Commercial Banks to 9.0% by March 2020, driven by a decline inthe gross NPA ratios of PSBs'' from 12.6% to 12.0% over the same period.

As per the Securities and Exchange Board of India (Credit Rating Agencies) Regulations,1999, credit rating agencies rate securities offered by way of public or rights issue.Accordingly, credit rating agencies rate securities and not industry. However, recent creditrating agency reports have highlighted several positive aspects regarding the Indian Bankingsector including inter-alia, the following:

CRISIL, a subsidiary of the leading international credit rating agency S&P Global, in itsarticle titled ‘Bank NPAs to shrink 350 bps to ~8% by March 2020’, has stated: “Assetquality of banks should witness a decisive turnaround this fiscal with gross non-performingassets (NPAs) reducing by 350 basis points (bps) over two years to ~8% by March 2020compared with a peak of ~11.5% in March 2018 and 9.3% in March 2019... PSBs shouldsee their gross NPAs climb down over 400 bps to ~10.6% by March 2020.”

i.

ICRA, an associate of the leading international credit rating agency Moody’s InvestorService, in its report titled ‘ICRA Looks at Sectoral Development Prospects for NDA 2.0’,has stated: “The GNPAs and NNPAs of PSBs is expected to decline to 8.1-8.4% and 3.5-3.6% by March 2020.”

ii.

This was stated by Shri Anurag Singh Thakur, Minister of State for Finance & Corporate Affairsin a written reply to a question in Lok Sabha today.

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BANK CUSTOMER CARE CENTRESRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Banking, NPAs and RBI

Ministry of Finance

Bank Customer Care Centres


Pradhan Mantri Jan Dhan Yojana (PMJDY) was launched with the objective to inter-alia provideuniversal access to banking facilities. Under the scheme all rural and semi-urban areas weremapped into 1.59 lakh Sub-Service Areas (SSAs) where one SSA catering to 1,000 to 1,500households. While 0.33 lakh SSAs have been covered with bank branches, 1.26 lakh SSAs,have been covered by deployment of interoperable Bank Mitras. Bank Mitras provide bankingservices to customers including financial transactions.

As apprised by banks 10,472 SSAs are covered through Business Correspondents for providingbanking services in the state of Bihar.

As far as Customer Care Centres are concerned, banks are permitted to set up such centres, aspart of their grievance redressal mechanism.

As per the Reserve Bank of India’s circular dated 1.7.2014 the banks are to adopt technology-based solutions for managing the risk as engagement of intermediaries such as BusinessFacilitators/ Correspondents involves significant reputational, legal and operational risks.

Further, banks have been directed to constitute Grievance Redressal Machinery for redressingcomplaints about services rendered by the BCs. The name and contact number of designatedgrievance redressal officer are also made known and widely publicized. If a complainant doesnot get satisfactory response from the bank within 60 days from the date of his/her lodging thecompliant, he/she will have the option to approach the Office of the Banking Ombudsmanconcerned for redressal of his/her grievance/s.

Accordingly, all BCs related complaints are handled by respective banks or through BankingOmbudsman, in terms of the extant RBI guidelines.


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REGULATORY COMPLIANCE BY PRIVATE BANKSRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Banking, NPAs and RBI

Ministry of Finance

Regulatory Compliance by Private Banks


Regulatory mechanism are in place to deal with non-compliance with directions on“Know Your Customer/Anti-Money Laundering Norms” (KYC/AML norms) and onreporting of frauds by lenders and banks, and deficiencies in regulatory complianceby lenders.

In this regard, Reserve Bank of India (RBI) has informed that with a view todeveloping a sound framework and process for enforcement action, a separateEnforcement Department (EFD) has been established within RBI with effect from3.4.2017 as a centralised department to speed up regulatory compliance. RBI hasfurther informed that instances of regulatory deficiencies, including non-compliancewith KYC/AML norms by private sector lenders and banks, are flagged in RBI’sinspection reports and pursued for compliance by RBI’s supervisory department.Some of the deficiencies and instances of non-compliance are taken up forenforcement action (in the nature of imposing a monetary penalty) by EFD inaccordance with policy framed in this regard based on, inter alia, materiality of theviolation. Since the creation of EFD, monetary penalty amounting to Rs. 148.91 crorehas been imposed on 43 private lenders and banks for regulatory deficiencies, out ofwhich penalty of Rs. 8.30 crore has been imposed on nine private lenders and banksfor non-compliance with directions on KYC/AML norms.

Further, as per inputs received from the Department of Revenue, the Director,Financial Intelligence Unit - India (FIU-IND), based on inquiry initiated under thePrevention of Money Laundering Act, 2002 (PMLA), is empowered to take suitableactions against erring entities for non-compliance of legal obligations under PMLA.Director, FIU-IND has imposed penalty against 10 private sector banks where non-compliance of the provision of Chapter IV of PMLA and the Prevention of MoneyLaundering Rules, 2005 had been reported or detected.

RBI has also issued Master Directions on Frauds ? Classification and Reporting,which require banks to report frauds beyond a threshold amount to law enforcementagencies, monitoring and follow-up of cases by a special committee, quarterlyplacement of information before the Audit Committee of bank Board concerned, andannual review of frauds by the bank concerned. These cover, inter alia, preventivemeasures, fraud detection systems, systemic lacunae, remedial action, monitoring ofprogress of investigation and recovery, and staff accountability.

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This was stated by Shri Anurag Singh Thakur, Minister of State for Finance &Corporate Affairs in a written reply to a question in Lok Sabha today.

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BANK SERVICE CHARGESRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Banking, NPAs and RBI

Ministry of Finance

Bank Service Charges


As per extant guidelines of Reserve Bank of India (RBI), following basic minimum facilities tothe Basic Savings Bank Deposit Account (BSBDA) are provided free of charge and without anyrequirement for maintaining minimum balance in the account:

Deposit of cash at bank branch as well as ATMs/Cash Deposit Machines (CDMs).Receipt/credit of money through any electronic channel or by means of deposit /collection ofcheques drawn by Central/State Government agencies and departments.No limit onnumber and value of deposits that can be made in a month.Minimum of four withdrawals ina month, including ATM withdrawals.ATM Card or ATM-cum-Debit Card.

1.

Accordingly, as on March, 2019 the above facilities are provided to 57.3 crore BSBD accounts(including 35.27 crore PMJDY accounts) free of charge.

In addition to the above, banks may provide additional value-added services, including issue ofcheque book, beyond the above minimum facilities, which may/may not be priced (in non-discriminatory manner) subject to disclosure. The availment of such additional services are tomade at the option of the customers. However, while offering such additional services, banksshall not require the customer to maintain a minimum balance and offering such additionalservices would also not make BSBD account a non-BSBD Account, so long as the prescribedminimum services are provided free of charge by the banks.

For accounts other than BSBD accounts, as per Reserve Bank of India (RBI)’s Master Circularon “Customer Service in Banks” dated July 1, 2015, banks are permitted to fix service chargeson various services rendered by them, as per their Board approved policy, while ensuring thatthe charges are reasonable and not out of line with the average cost of providing theseservices. Banks have been advised to identify basic services and the principles to be adopted/followed by them for ensuring reasonableness in fixing such charges. They are also advised totake steps to ensure that customers are made aware of the service charges upfront andchanges in the service charges are implemented only with the prior notice to the customers.

The Reserve Bank of India (RBI) vide its circular on ‘National Electronic Funds Transfer (NEFT)and Real Time Gross Settlement (RTGS) systems – Waiver of charges’ dated 11.06.2019, has

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decided that with effect from July 1, 2019, processing charges and time varying charges leviedon banks by RBI for outward transactions undertaken using the RTGS system, as also theprocessing charges levied by RBI for transactions processed in NEFT system would be waivedby the Reserve Bank. The banks are also advised by RBI to pass on the benefits to theircustomers for undertaking transactions using RTGS and NEFT systems.

The quantum of charges (Rs in crore) collected by RBI since 2016-17 is as follows:

Year (April toMarch)

RTGS

NEFT

Total

MembershipCharges

Processing + TimeVaryingCharges

NEFT Clearinghouse Charges

FY 2016-17

0.89 45.94 38.71 85.54

FY 2017-18

0.94 52.30 46.28 99.52

FY 2018-19

0.99 56.37 52.92 110.29

FY 2019-20(April-June)

0.25

14.69

13.62

28.56

Source: RBI

This waiver of processing and time varying charges by RBI on banks will accordingly reducethe cost of RTGS and NEFT transactions for the customers and will give fillip to digital fundmovement.

Following RBI guidelines, rural branches and Financial Literacy Centres (FLCs) of banksconduct camps for financial literacy across the country. Rural branches and FLCs of bankshave been advised by RBI to use the audio visuals on basic financial awareness messagesinter-alia including electronic payment systems NEFT/RTGS prepared by National Centre forFinancial Education.


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Read this release in: Urdu , Marathi



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INFRASTRUCTURE INVESTMENTRelevant for: Indian Economy | Topic: Infrastructure: Roads

Ministry of Finance

Infrastructure Investment


India has been spending much more than Rs 1 trillion per annum on infrastructure.For example, the Budget Estimate of Government expenditure on Infrastructure in2018-19 was Rs. 5.97 trillion. As per Interim Budget 2019-2020, India has a vision tobecome a five trillion dollar economy in the next five years and a ten trillion dollareconomy in the next eight years thereafter. Infrastructure investment needs toincrease commensurately to attain these targets.

Government has taken a number of initiatives to boost infrastructure investment in theeconomy:

Government has launched sectoral initiatives such as Bharatmala Pariyojana fordevelopment of the road sector, Sagarmala Programme which aims to promoteport-led development with a view to reducing logistics cost for international anddomestic trade, Ude Desh Ka Aam Nagrik (UDAN) - Regional ConnectivityScheme (RCS) which aims at facilitating regional air connectivity by making itaffordable, Ujjawal Discom Assurance Yojana (UDAY) for effecting financial andoperational turnaround of Power Distribution Companies, etc.

i.

Government has also launched innovative financing vehicles such asInfrastructure Debt Funds (IDFs), Infrastructure Investment Trusts (InvITs), RealEstate Investment Trusts (REITs); mainstreaming of Public Private Partnerships(PPPs) across infrastructure sectors through viability gap funding; periodicreview of Harmonized Master List of Infrastructure Sub-sectors; andestablishment of the National Investment and Infrastructure Fund (NIIF).

ii.

This was stated by Shri Anurag Singh Thakur, Minister of State for Finance &Corporate Affairs in a written reply to a question in Lok Sabha today.

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CAPITAL SHORTAGE IN PSBSRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Banking, NPAs and RBI

Ministry of Finance

Capital Shortage in PSBs


As per RBI guidelines, banks in India are required to maintain a minimum Capital to Risk-weighted Assets Ratio (CRAR) of 9%. As on 31.3.2019, all 18 Public Sector Banks (PSBs) meetthis minimum CRAR requirement.

In the Union budget for the financial year 2019-20, Government has proposed to makeprovision for infusion of Rs. 70,000 crore capital to PSBs to boost credit for a strong impetus tothe economy.

As per inputs received from State Bank of India, bank has obtained approval for raising equitycapital of up to Rs. 20,000 crore from the market by way of Qualified Institutional Placement(QIP) or other modes till 31.3.2020.

The bank has further informed that at present it is well capitalised, with CRAR of 12.72% as on31.3.2019 against regulatory requirement of 11.325% and, depending upon the requirement, itwould decide on raising capital at an appropriate time during the financial year.

PSBs source capital through internal capital generation, mobilisation of capital from markets,and infusion by the Government. Thus, capital infusion by the Government complements PSB’sinternal capital generation and mobilisation of capital from markets. During the period fromfinancial year (FY) 2008-09 to FY2018-19, PSBs have mobilised Rs. 2,81,616 crore of capitalthrough sources other than Government, and have posted net profit of Rs. 98,373 crore, ofwhich a sizeable proportion has contributed to internal capital generation. During the sameperiod, Government has infused capital of Rs. 3,15,721 crore in PSBs.


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RS. 15 LAKH BEING PROVIDED TO MICRO AND SMALLENTERPRISES FOR TECHNOLOGY UPGRADATION


Ministry of Micro,Small & Medium Enterprises

Rs. 15 lakh being provided to Micro and Small Enterprisesfor Technology Upgradation


Lack of access to latest technologies affects the capability of Small and Medium Enterprises tocompete in the global market. In order to support SMEs in accessing latest technologies, theMinistry of Micro, Small and Medium Enterprises (MSME) implements a scheme named CreditLinked Capital Subsidy and Technology Up-gradation Scheme (CLCS-TUS). One of thecomponents under the schemes is Credit Linked Capital Subsidy (CLCS) under which capitalsubsidy up to Rs. 15 Lakh is provided to Micro and Small Enterprises (MSEs) for accessingmodern technology.

Other measures aimed at enhancing competitiveness are as follows:

Building awareness of Intellectual Property Rights (IPR).●

Undertaking digital empowerment initiatives.●

Supporting entrepreneurial and managerial development through Incubators.●

Providing design expertise to manufacturing enterprises.●

Adopting lean manufacturing practices.●

Enabling ZED Certification.●

This information was given by Shri Nitin Gadkari, Union Minister for Micro, Small and MediumEnterprises in a written reply to a question in Rajya Sabha today.

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MEASURES TAKEN FOR PROMOTION OF INDIANCOASTAL SHIPPING INDUSTRIES

Relevant for: Indian Economy | Topic: Infrastructure: Ports & Waterways

Ministry of Shipping

Measures taken for Promotion of Indian Coastal ShippingIndustries


The Minister of State Shipping (I/C) and Chemical & Fertilizers Shri Mansukh Mandaviya in awritten reply to a question in Rajya Sabha today informed that the Government has relaxedCabotage under section 406 & 407 of the Merchant Shipping Act, 1958, for the coastalmovement of Agriculture, horticulture, fisheries and animal husbandry commodities. The saidrelaxation has given wider geographical spread for distribution of fertilizers for the benefit offarming community.

He informed thatin order to promote coastal shipping, the Ministry of Shipping, in exercise ofpower vested in the Central Government vide Section 407(3) of the Merchant Shipping Act, hadrelaxed cabotage and allowed foreign flag ships to engage in the coastal trade of India withoutobtaining licence from Directorate General of Shipping for coastal movement of the following:

For specialized vessels such as RO-RO, RO-PAX, Hybrid Ro-Ro, Pure car carriers, purecar and truck carriers, LNG vessels and over-dimensional cargo or project cargo vide orderdated 2nd September, 2015.

●

EXIM/EMPTY containers vide order dated 21st May, 2018;●

Agriculture, horticulture, fisheries and animal husbandry commodities vide order dated 22nd

May, 2018, and

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Fertilizers vide order dated 22nd June, 2018.●

He further informed that in addition, the Ministry of Shipping in exercise of power vested videSection 406 (1) of the said Act, had allowed foreign flag ships chartered by a citizen of India or acompany or a cooperative society to engage in coastal trade of India for movement of abovementioned cargoes without obtaining a licence from Directorate General of Shipping.

The licensing condition has been relaxed for certain type of specialized foreign ships due to non-availability of adequate number of such Indian flagged vessels. Similar relaxation for specificcargoes/commodities has been made to make available additional vessels for carriage ofcargoes on the coast at competitive freight rates. This would encourage modal shift from roadand rail transport to coastal shipping and eventually benefit the end-users. Both, the coastaltrade and the transshipment of containers from Indian Ports, have shown an increasesubsequent to the relaxation of licensing conditions for plying of foreign ships for specified typesof cargoes.

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TECHNOLOGICAL GAP OF CPSESRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Industry & Services Sector


Ministry of Heavy Industries & Public Enterprises

Technological Gap of CPSEs


The Government has implemented Maharatna, Navratna and Miniratna scheme for CentralPublic Sector Enterprises (CPSEs) under which the Boards of these CPSEs have beendelegated powers, inter-alia, to enter technology joint ventures or strategic alliances and toobtain by purchase or other arrangement technology and know-how as per Governmentguidelines. Further, ‘R&D, Innovation, Technology up-gradation’ has been included as anon-financial parameter under the system of Memorandum of Understanding for CPSEs(except for CPSEs in the financial sector) with a weight of up to 10% in order to providefocus on efforts of management of CPSEs in this regard.

A l l CPSEs funct ion under the admin is t ra t ive jur isd ic t ion o f concernedMinistry/Departments. The Board of Directors of a CPSE is responsible for regular reviewof performance of the concerned CPSE and to decide on steps to be taken for enhancingoutput/productivity of the company as per its operational needs and business plans withthe approval of the competent authority. The concerned administrative Ministry/Departmentalso undertakes periodic review of performance of CPSEs under their respectivejurisdiction to facilitate policy interventions required for enhancing output/productivity ofconcerned CPSE(s).

This information was given by the Minister of Heavy Industries & Public Enterprises, ArvindGanpat Sawant, in a written reply in the Lok Sabha today.

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CABINET APPROVES THE BANNING OFUNREGULATED DEPOSIT SCHEMES BILL, 2019


Cabinet

Cabinet approves the Banning of Unregulated DepositSchemes Bill, 2019

Bill to be introduced in ensuing session of Parliament


The Union Cabinet, chaired by the Prime Minister Narendra Modi has approved the banning ofUnregulated Deposit Schemes Bill, 2019. It will replace the banning of Unregulated DepositSchemes Ordinance, 2019.

The banning of Unregulated Deposit Schemes Bill, 2019 will replace the Ordinancepromulgated on 21st February, 2019, which will otherwise cease to operate after six weeksafter reassembly of Parliament.

Impact

The Bill will help tackle the menace of illicit deposit taking activities in the country, which atpresent are exploiting regulatory gaps and lack of strict administrative measures to dupe poorand gullible people of their hard-earned savings.

Background

The banning of Unregulated Deposit Scheme Bill, 2018 was considered by the Lok Sabha inits sitting held on 13th February, 2019 and after discussion, the same was passed, asamended through the proposed official amendments, as the banning of Unregulated DepositScheme Bill, 2019. However, before the same could be considered and passed in the RajyaSabha, the Rajya Sabha was adjourned sine die on the same day.

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AKT/PK/SH


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Read this release in: Assamese , Urdu , Marathi , Bengali , Punjabi , Gujarati , Tamil



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CABINET APPROVES CODE ON OCCUPATIONALSAFETY, HEALTH AND WORKING CONDITIONS BILL,2019


Cabinet

Cabinet approves Code on Occupational Safety, Health andWorking Conditions Bill, 2019

13 Central Labour Laws brought in ambit of New Code


In the spirit of ‘Sabka Saath, Sabka Vikaas’ and ‘Sabka Vishwas’, the NDA Government led byPrime Minister Narendra Modi has been continuously working for the benefit of people fromvarious walks of life. With this objective, the Union Cabinet chaired by Prime Minister NarendraModi has approved for introduction of the Code on Occupational Safety, Health and WorkingConditions Bill, 2019 in the Parliament. This proposal would enhance the coverage of the safety,health and working conditions provisions manifold as compared to the present scenario. Thedecision will enhance the coverage of the safety, health and working conditions provisionsmanifold as compared to the present scenario.

The New Code has been drafted after amalgamation, simplification and rationalisation of therelevant provisions of the 13 Central Labour Acts:

The Factories Act, 1948;●

The Mines Act, 1952; The Dock Workers (Safety, Health and Welfare) Act, 1986;●

The Building and Other Construction Workers (Regulation of Employment and Conditions ofService) Act, 1996;

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The Plantations Labour Act, 1951;●

The Contract Labour (Regulation and Abolition) Act, 1970;●

The Inter-State Migrant workmen (Regulation of Employment and Conditions of Service)Act, 1979;

●

The Working Journalist and other Newspaper Employees (Conditions of Service and Misc.Provision) Act, 1955;

●

The Working Journalist (Fixation of rates of wages) Act, 1958;●

The Motor Transport Workers Act, 1961;●

Sales Promotion Employees (Condition of Service) Act, 1976;●

The Beedi and Cigar Workers (Conditions of Employment) Act, 1966; and●

The Cine Workers and Cinema Theatre Workers Act, 1981. After the enactment of theCode, all these Acts being subsumed in the Code will be repealed.

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Benefits

Safety, Health, welfare and improved Working Conditions are pre-requisite for well-being ofthe worker and also for economic growth of the country as healthy workforce of the countrywould be more productive and occurrence of less accidents and unforeseen incidents wouldbe economically beneficial to the employers also. With the ultimate aim of extending thesafety and healthy working conditions to all workforce of the country, the Code enhancesthe ambit of provisions of safety, health, welfare and working conditions from existing about9 major sectors to all establishments having 10 or more employees.

●

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AKT/PK/SH


Read this release in: Assamese , Urdu , Marathi , Bengali , Gujarati , Tamil



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BOOST TO RURAL ROAD CONNECTIVITYRelevant for: Indian Economy | Topic: Infrastructure: Roads

Cabinet Committee on Economic Affairs (CCEA)

Boost to Rural Road Connectivity

1,25,000 Km Road Length to be Consolidated

Estimated Cost Rs 80,250 Crore

Cabinet approves Launch of Pradhan Mantri Gram SadakYojana-lll (PMGSY-III)


In a major boost to rural road connectivity across the country, the Cabinet Committee onEconomic Affairs, chaired by the Prime Minister Shri Narendra Modi, has given its approval forthe launch of Pradhan Mantri Gram Sadak Yojana-lll (PMGSY-III). It involves consolidation ofThrough Routes and Major Rural Links connecting habitations to Gramin Agricultural Markets(GrAMs), Higher Secondary Schools and Hospitals.

Under the PMGSY-III Scheme, it is proposed to consolidate 1,25,000 Km road length in theStates.The Scheme will also include Through Routes and Major Rural Links that connecthabitations to Gramin Agricultural Markets (GrAMs), Higher Secondary Schools and Hospitals.

Impact

This would facilitate easy and faster movement to and from Gramin Agricultural Markets(GrAMs), Higher Secondary Schools and Hospitals.

●

Roads constructed under PMGSY would also be maintained properly.●

Financial Implications

It will entail an estimated cost of Rs 80,250 crore (Central Share-Rs. 53,800 crore, StateShare- Rs 26,450 crore).

●

The funds would be shared in the ratio of 60:40 between the Centre and State for all Statesexcept for 8 North Eastern and 3 Himalayan States (Jammu & Kashmir, Himachal Pradesh& Uttarakhand) for which it is 90:10.

●

Implementation

Project period: 2019-20 to 2024-25.●

Selection of candidate roads based on the sum total of the marks obtained by particularroad on the basis of parameters of population served, market, educational and medicalfacilities, etc.

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Construction of bridges upto 150 m in plain areas and 200 m in Himalayan and NE Statesproposed, as against the existing provisions of 75 m and 100 m in plain areas andHimalayan and NE States respectively.

●

The States shall be asked to enter into a Memorandum of Understanding (MoU) beforelaunching of PMGSY-III in the concerned State for providing adequate funds formaintenance of roads constructed under PMGSY post 5-year construction maintenanceperiod.

●

Progress under PMGSY

A total of 5,99,090 Km road length has been constructed under the scheme since inception tillApril, 2019 (inclusive of PMGSY-I, PMGSY-II and RCPLWEA Scheme.

Background

PMGSY-III scheme was announced by the Finance Minister in Budget Speech for the year2018-19.

The CCEA in its meeting held on 9th August, 2018 approved continuation of PMGSY-I & IIbeyond 12th Five Year Plan and covering of balance eligible habitations under PMGSY-I byMarch 2019, PMGSY-II, and habitations under identified LWE blocks (100-249 population) byMarch 2020.

PMGSY-I

PMGSY was launched in December, 2000 with an objective to provide single all-weather roadconnectivity to eligible unconnected habitation of designated population size (500+ in plain areasand 250+ in North-East, hill, tribal and desert areas as per Census, 2001) for overall socio-economic development of the areas. 97% of the eligible and feasible habitations have alreadybeen connected by all-weather road.

Road Connectivity Project for Left Wing Extremism Area (RCPLWEA)

Government launched Road Connectivity Project for Left Wing Extremism affected Areas in theyear 2016 as a separate vertical under PMGSY to provide all-weather road connectivity withnecessary culverts and cross-drainage structures in 44 districts (35 are worst LWE affecteddistricts and 09 are adjoining districts), which are critical from security and communication pointof view. Under the Scheme, 5,066 Km road length has been sanctioned.

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AKT/PK/SH


Read this release in: Urdu , Marathi , Bengali , Tamil

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NUCLEAR INSURANCE POOLRelevant for: Indian Economy | Topic: Infrastructure: Energy incl. Renewable & Non-renewable


Nuclear Insurance Pool


The Government has created an Indian Nuclear Insurance Pool (INIP) on 12th June, 2015. M/s.General Insurance Corporation of India (GIC-Re), along with several other Indian InsuranceCompanies, have launched the Indian Nuclear Insurance Pool (INIP) with a capacity of 1500crore to provide insurance to cover the liability as prescribed under Civil Liability for NuclearDamage (CLND) Act, 2010. This has addressed issues related to Civil Liability for NuclearDamage (CLND) Act and had facilitated commencement of work in setting up new nuclearpower projects.

The present nuclear power capacity is 6780 MW comprising of 22 reactors. There are 9 reactorswith a capacity of 6700 MW (including 500 MW PFBR being implemented by BHAVINI) underconstruction. The Government in 2017 has also accorded administrative approval and financialsanction of 12 nuclear power plants totaling to a capacity of 9000 MW. On their progressivecompletion, the installed nuclear capacity is expected to reach 8180 MW by 2020 and 22480MW by 2031.

This information was provided by the Union Minister of State (Independent Charge)Development of North-Eastern Region (DoNER), MoS PMO, Personnel, Public Grievances &Pensions, Atomic Energy and Space, DrJitendra Singh in written reply to a question in LokSabha today.

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Read this release in: Punjabi



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PRICE STABILISATION FUNDRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Foreign Capital, Foreign Trade

& BOP


Price Stabilisation Fund


In view of the fluctuating nature of international prices in plantation crops and the dependence ofgrowers on the export markets, Government launched and implemented the Price StabilizationFund (PSF) Scheme from 1st April, 2003 to 30th September, 2013 to provide financial relief tosmall growers of coffee, tea, rubber and tobacco having land holdings up to four hectares. Thisfinancial relief was provided when prices of these commodities fell below the price spectrumband. Every year, a uniform price spectrum band for all four commodities was announced by theHigh Powered Committee (HPC) constituted by the Department of Commerce with a range of +20 % to - 20 % of moving average of the previous seven years international prices of the crops.

The scheme was based on the principle of contributions from the growers and the Governmentdepending on normal/boom/distress periods, with a provision for withdrawal by the growersduring the distress period. The Price Stabilization Fund Trust (PSFT) was set up by theDepartment of Commerce and NABARD to implement the PSF Scheme. The grower memberswere required to deposit Rs. 500 (non-refundable) towards entry fee, which would form part ofthe PSF Corpus. If the price falls within the band, the year would be declared as normal yearand growers as well as PSFT would deposit Rs. 500 each in the PSF saving account of groweropened for the purpose of the scheme in the Nationalized banks. If the price goes above theupper band, the year would be declared as boom yearand only the grower would deposit Rs.1000 in the account and if the price falls below lower band, the year would be declared asdistress year and only PSFT would deposit Rs. 1000 in the growers’ accounts. In distress year,each eligible grower was allowed to withdraw Rs.1000 from the respective account. The schemewas closed on 30/9/2013. Therefore,no fund was allocated and utilized under the scheme duringthe last three years.

A corpus fund was set up in the year 2003 with the Government of India’s contribution of Rs.432.88 crore and growers’ contribution of Rs. 2.67 crore (Total Rs. 435.55 crore) to implementthe PSF scheme. The PSFT, set up in September, 2003 for a period of ten years wasimplementing the PSF scheme and operating the PSF Corpus Fund. As per the provisions ofthe scheme, interest earned on the Corpus was utilized for implementing the scheme, keepingthe corpus fund vested in the Public Account of Government of India intact. The PSF Trust hasbeen re-registered for a period of 10 years commencing from 11/9/2013. As per the guidelines ofthe PSF, interest is calculated at the end of each financial year and transferred to the ReserveFund –PSFT.

The PSF scheme was not successful. The scheme was reviewed in October, 2012 with a viewto rectify the deficiencies in the scheme. As a result, a draft modified PSF Scheme wasprepared and discussed in the meeting held on 4/6/2014 under the chairmanship of ExpenditureSecretary. In the meeting, it was decided that the available corpus with the Price StabilizationFund Trust may be utilized by the Department of Commerce to implement a modified insurancepremium subvention scheme for insuring the growers.

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Accordingly, the Department of Commerce approved a pilot scheme in the name of RevenueInsurance Scheme for Plantation Crops (RISPC) to protect small growers of tea, coffee, rubber& cardamom from the twin risks of weather and prices for implementing in nine districts of sevenStates by the commodity boards through selected insurance companies. However, the schemedid not elicit desired response from the target groups and insurance companies.

The Indian Institute of Plantation Management Bengaluru evaluated the scheme andrecommended crop specific insurance schemesfor Coffee, Tea, Cardamom and Tobacco sothat the needs of each crop could be met. The commodity boards have been advised toformulate suitable schemes as recommended by the evaluation study. The finalization andapproval of the modified scheme is dependent upon the submission of suitable schemesaddressing the deficiencies of the earlier scheme.


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PROMOTION OF AGRO EXPORTSRelevant for: Indian Economy | Topic: Transport & Marketing of agricultural produce


Promotion of Agro Exports


Promoting agricultural exports is a continuous process. To promote the agricultural exports, theGovernment has introduced a comprehensive Agriculture Export Policy with the following vision:

“Harness export potential of Indian agriculture, through suitable policy instruments, to makeIndia a global power in agriculture, and raise farmers’ income.”

Inter-alia, the objectives of the Agriculture Export policy are as under:

To diversify our export basket, destinations and boost high value and value addedagricultural exports, including focus on perishables.

i.

To promote novel, indigenous, organic, ethnic, traditional and non-traditional Agri productsexports.

ii.

To provide an institutional mechanism for pursuing market access, tackling barriers anddealing with sanitary and phytosanitary issues.

iii.

To strive to double India’s share in world agri exports by integrating with global valuechains.

iv.

Enable farmers to get benefit of export opportunities in overseas market.v.

The Government has also brought out a new Central Sector Scheme – ‘Transport and MarketingAssistance for Specified Agriculture Products’ - for providing assistance for the internationalcomponent of freight, to mitigate the freight disadvantage for the export of agriculture products,and marketing of agricultural products.

The Department of Commerce also has several schemes to promote exports, including exportsof agricultural products, viz. Trade Infrastructure for Export Scheme (TIES), Market AccessInitiatives (MAI) Scheme, Merchandise Exports from India Scheme (MEIS) etc. In addition,assistance to the exporters of agricultural products is also available under the Export PromotionSchemes of Agricultural & Processed Food Products Export Development Authority (APEDA),Marine Products Export Development Authority (MPEDA), Tobacco Board, Tea Board, CoffeeBoard, Rubber Board and Spices Board.


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PRODUCTION OF NATURAL RUBBERRelevant for: Indian Economy | Topic: Major Crops, Cropping Patterns and various Agricultural Revolutions


Production of Natural Rubber


The total production of Natural Rubber (NR) during 2018-19 is provisionally estimated at 648000tonnes. The production of NR during April-May 2019 is provisionally estimated at 74000tonnes.

The Natural Rubber prices have been at relatively low levels during the past few years indomestic and international markets. However, the rubber prices started increasing during therecent weeks and the average price for the RSS4 grade in June, 2019 was 150.29 per kg. TheNatural Rubber prices are determined by market forces and a range of factors which inter-aliainclude trends in economic growth in major consuming countries, oil/synthetic rubber prices,weather conditions and developments in future markets.

The domestic NR market generally follows the trend in world market with occasionaldivergences due to region specific and seasonal factors. No quantitative restrictions can beimposed on the import of NR under WTO commitments. The domestic NR price is sensitive toimport of NR. Therefore, to regulate the import of NR, the Government has increased the dutyon import of dry rubber from “20% or Rs. 30 per kg whichever is lower” to “25% or Rs. 30 per kgwhichever is lower” from 30.4.2015.

The Government has also reduced the period of utilization of imported dry rubber in January2015 under advance licensing scheme from 18 months to 6 months. The Director General ofForeign Trade (DGFT) has imposed port restriction on the import of Natural Rubber byrestricting the port of entry to Chennai and NhavaSheva (Jawaharlal Nehru Port) since 20th

January, 2016.

State-wise production of NR upto 2018-19 is given below:

State-wise production of NR (Tonne)

State 2015-16 2016-17 2017-18 (P) 2018-19 (P)

Kerala 438630 540400 540775 490460

Tamil Nadu 19495 21140 21110 21500

TraditionalTotal

458125 561540 561885 511960

Tripura 44245 50985 50500 53050

Assam 14560 19970 23300 24300

Meghalaya 7360 8950 9050 9100

Nagaland 3020 4320 4820 4930

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Manipur 1660 2090 1790 1850

Mizoram 595 742 742 750

ArunachalPradesh

360 478 428 450

North EastTotal

71800 87535 90630 94430

Karnataka 29400 38800 38300 38200

A&N Islands 240 240 240 275

Goa 640 645 575 625

Maharashtra 925 1185 1185 1250

Odisha 315 400 450 480

West Bengal 325 335 335 380

AndhraPradesh

230 320 400 400

Others Total 32075 41925 41485 41610

Non TraditionalTotal

103875 129460 132115 136040

Grand Total 562000 691000 694000 648000

Source: Rubber Board

P: Provisional


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TEA GARDENSRelevant for: Indian Economy | Topic: Major Crops, Cropping Patterns and various Agricultural Revolutions


Tea Gardens


At present, there are 1585 number of established tea gardens in the country. The names of thecompanies operating the tea gardens as per the Baseline Survey conducted in the year 2015 bythe Tea Board is given in Annexure-1. The details of total number of permanent /temporaryworkers state-wise as per the Baseline Survey conducted by the Tea Board in 2015 for theorganized sector in the country is given in the following Table:

S.No State Permanent Temporary Total1 Assam 400352 284302 6846542 West Bengal 241144 96172 3373163 Tripura 7953 5304 132574 Arunachal Pradesh 141 487 6285 Sikkim 397 0 3976 Meghalaya 19 125 1447 Bihar 20 40 608 Himachal Pradesh 55 508 5639 Mizoram 15 50 6510 Uttarakhand 668 948 161611 Tamil Nadu 39311 10099 4941012 Kerala 33534 7239 4077313 Karnataka 2638 421 3059 All India 726247 405695 1131942

Source: Tea Board

At present, 11 tea gardens are closed in the country. The main reasons for closure of thesegardens are attributed to poor yield of the estates, ageing bush profile and high vacancypercentage in tea area, negligible uprooting / replanting of age old tea bushes for years, poorgarden management practices, falling quality and price realizations, overall lack of developmentperspective, highly debt oriented funding strategy and ownership disputes.

The details indicating state-wise closed tea estates (T.E) and number of workers affected aregiven below:

S l .No.

Name of the T.E State/UTNo. of Workers affectedPermanent Temporary

1Dheklapara T.E

West Bengal 6042 0 0(Approx.)

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2Bundapani T.E

West Bengal 1215 68

3Dharanipur T.E


4Redbank T.E


5 Surendranagar T.E West Bengal 3011 5 0(Approx.)

6 Madhu T.E West Bengal 947 -7. Panighata West Bengal 787 -8 Manabarrie West Bengal 452 101

9.M/s Peermade Tea Co. Ltd.-Peermade&Lonetree T.E.

Kerala

220 -

10.M/s MMJ Plantat ions-Kottamala&Bonami T.E

Kerala 375

-

11 Bonaccord Kerala 220 - Total = 6366 1669

Source: Tea Board

The following steps have been taken by the Government for revival of the closed tea estates inthe country:

(i) The Dheklapara Tea Estate was officially liquidated by the Calcutta High Court.The garden was put up for e-auction by the Calcutta High Court (Official Liquidator) on11th May, 2012, but no prospective buyer was available. The West Bengal Govt. hascancel led land lease in respect of Bundapani, Redbank, Dharanipur,Surendranagarand Madhu tea estates and taken possession of the land to find out newentrepreneur.

(ii) A committee headed by the District Magistrates in North Bengal districts regularlymonitors the welfare measures and different schemes introduced by the Stategovernment in the tea gardens.

(iii) The Government of Kerala has constituted Plantation Workers’ Relief Fund in thedistricts of Thiruvananthapuram, Palakkad, Waynad and Idukki. The fund is utilized forthe relief activities such as nutritious food, study materials, note books, school bags andumbrellas to the children of workersin the closed gardens of the State. Medical campsare being organised and financial assistance extended for the medical treatment ofdeadly diseases to the labourers.

The Tea Board under the Tea Development & Promotion Scheme is extending financialassistance to the small growers for uprooting and replanting, rejuvenation, pruning, irrigation,assistance to Self Help Groups (SHGs), field mechanization, assistance to Farmers’ ProducersOrganizations (FPOs), annual award for SHGs & FPOs, setting up of new factories by FPOs,setting up mini factories, workshop/training, development & promotion of organic farming and

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organic conversion.

Assistance provided by the Tea Board under the Tea Development & Promotion Scheme duringthe last three years and current year for the benefit of small tea growers is given below:

States

Years (Rs. In Lakh)2016-17 2017-18 2018-19 2019-2020

Assam 446.2 328.32 885.54 105.00Tripura 17.33 29.24 133.93 0.23Arunachal Pradesh 0.61 0.95 0.87 0.00Nagaland 0.43 0.10 14.74 0.00Meghalaya 0.5 0.72 6.22 0.00Mizoram 9.67 98.60 19.43 0.00Tamil Nadu 179.94 295.21 104.76 29.71Kerala 74.54 406.44 117.91 2.81Karnataka 0.00 0.13 0.00 0.00West Bengal 48.16 55.61 578.51 30.44Bihar 0.77 0.00 0.16 0.00Himachal Pradesh 24.78 97.64 85.62 6.71Uttarakhand 2.78 87.4 97.51 6.08Total = 805.71 1400.36 2045.20 180.98

Source: Tea Board

District Green Leaf Price Monitoring Committee (DGLPMC) has been notified in all tea growingdistricts of India under the chairmanship of District Collector/Deputy Commissioner to ensureremunerative prices for green leaf to the small teas growers. The committee notifies MinimumBenchmark Price (MBP) every month by taking into consideration the average sale price ofmade tea for the previous month for all the factories located in the district.

The Tea Board was set up under section 4 of the Tea Act, 1953. The Tea Board comprises of aChairman and 31 members appointed by the Government of India, including the representativesof the major tea growing States, representatives of the Parliament and members representingdifferent sections of the tea industry.

The Head office of the Tea Board is located in Kolkata, West Bengal and there are two ZonalOffices, one each at Guwahati and Coonoor. The Tea Board functions as an apex bodyconcerned with overall development of the tea industry in India by providing necessaryassistance for research and developmental activities aimed at increasing production, productivityand quality; facilitation of trade and promotion of exports so as to ensure maximum returns tothe producers including small growers, safeguarding the interests of the workers and theconsumers.

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Welfare needs of plantation workers, including tea, are addressed through the provisions of thePlantation Labour Act which are implemented by the tea estates under the supervision of thestate governments. In addition, the Tea Board also undertakes several welfare activities whichare supplemental in nature. Such activities aimed at Human Resource Development (HRD)consists of measures for improving the health and hygiene of workers, education of wards ofworkers and imparting training for improvement of skills.

Funds provided under the Human Resource Development (HRD) during the last three years andthe current year are given in the following table:

YearTo ta l (Rs . incrores)

2016-17 4.652017-18 5.222018-19 2.452019-20 (Upto30-6-2019)Provisional

0.45

Total 12.77

Source: Tea Board

For the overall development of the tea industry, including tea growers, the Government of India,through Tea Board is implementing the Tea Development & Promotion Scheme. Different nodalofficers of the Tea Board are responsible implementation of the different components of theScheme. The Deputy Chairman, Tea Board periodically reviews the progress of implementationof the Scheme. All the services for implementation of the various components of the schemeare provided through online e-governance mechanism and all payments are made through e-payment mode i.e. RTGS/NEFT.

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Annexure-1

List of Tea Companies

S.NO. COMPANY NAME 34 GONESHBARI TEA CO. PVT.LTD.

1 SIANG TEA & INDUSTRIES PVT LTD 35 JALLAN GOLAGHAT TEA CO PVT LTD

2 IRRINGMARA TEA CO (1951) LTD 36 GOBINDAPORE TEA CO. PVT LTD

3 SUBLIME AGRO LIMITED 37 BARAK VALLEY CEMENT LTD.

4 DOYAPORE TEA INDUSTRIES (P) LTD. 38 GOPAL KRISHNA TEA CO. PVT. LTD.

5 HASHMUKH.R.PATEL SRI HARISH. R. PATEL. 39 BURAGOHAIN AGRO ASSOCIATES

6THE ASSAM TEA & TEASEED PLANTATIONS(P) LTD. 40

M.K.JOKAI AGRI PLANTATIONS PRIVATELIMITED

7 THE GROB TEA CO. LTD. 41 DHUNSERI PETROCHEM & TEA LIMITED

8 GILLANDERS ARBUTHNOT & CO. LTD. 42 HARISHPUR TEA CO. PVT. LTD.

9 KANOI PLANTATIONS PVT. LTD. 43 MARUDHAR TEA CO. PVT. LTD.

10 ETHELWOLD ESTATE PRIVATE LIMITED 44 HANUMAN TEXNIT & INDUSTRIES LTD

11CHOUDHURY TEA & AGRO INDUSTRIES PVTLTD 45 STEWART HOLL(INDIA) LTD

12JALLAN FURKATING TEA COMPANY (PVT)LTD. 46 RUKMINI TEA INDISTRIES (P) LTD

13 B & A LTD. 47APEEJAY TEA SURRENDRA CORPORATESERVICE PVT. LTD.

14 BANSHIDHAR SEWBHAGOVAN & CO 48 KPC PLANTATIONS PVT LTD

15 GANGABARI TEA CO. PVT. LTD 49 ANDREW YULE & COMPANY LIMITED

16 THE BARAK TEA CMPANY LTD 50 HIAJULI TEA COMPANY LIMITED

17 DHUNSERI TEA & INDUSTRIES LIMITED 51 HOOGRAJULI (ASSAM) TEA CO. LTD.

18 THE AHMED TEA CO PVT LTD 52 GOODRICKE GROUP LIMITED

19 MCLEOD RUSSEL INDIA LIMITED 53NANDLALL & SONS TEWA INDUSTRIES(P) LTD.

20 ROSSEL TEA LIMITED 54 JAINCO TEA (P) LTD

21 MOHEEMA LTD 55 JOONKTOLLEE TEA & INDUSTRIES LTD.

22AMALGAMATED PLANTATIONS PRIVATELIMITED 56 JALANNAGAR TEA ESTATE (P) LTD

23 ASSAM COMPANY INDIA LIMITED 57 SPBP TEA PLANTATION LTD.

24 THE BORMAHJAN TEA CO.(1936) LTD. 58 BHUMYA TEA CO. PVT. LTD.

25 AMRAWATI TEA CO. PVT. LTD. 59S O N T O N Z A C O N S T R U C T I O N &CARRIERS PVT. LTD.

26 RYDAK SYNDICATE LIMITED 60 THE ALL INDIA TEA & TRADING CO LTD

27 THE CHAMONG TEA CO LTD 61 SHREE JAGADAMBA CO PVT. LTD

28BIJOY KRISHNA SADHAN ASHRAM TRUSTBOARD 62 KHEMANI TEA COMPANY PVT. LTD.

29 VISHNU TEA & INDUSTRIES PVT LTD 63 KUYKIS LTD.

30 BAGASA PLANTATION PVT LTD 64 ASSAM TEA CORPORATION LIMITED

31 WARREN TEA LIMITED 65 SURMA TEA & AGRO INDUSTRIES

32 RUNGAMATTEE TEA & INDUSTRIES LTD 66 SONAI RIVER TEA CO. LTD.

33 M K SHAH EXPORTS LIMITED 67 DHELAKHAT TEA CO. LTD

68 DHONESWARI WOOD PRODUCTS LTD 102 NIDHI PACKERSPVT LTD

69NORTHERN EVANGELICAL LUTHERANCHURCH 103 RUKONG TEA ESTATE PVT LTD

70 MODINAGAR TEA CO. (P) LTD 104 THE JOREHAUT GROUP LIMITED

71 LUXMI TEA CO.LTD. 105 RUTTONPORE PLANTATIONS PVT.LTD.

72 MUKTABARI TEA ESTATES PVY. LTD. 106 SAROJINI TEA CO. (P) LTD.

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73 BOCHAPATHAR TEA ESTATE PRIVATE LTD. 107 SALONAH TEA ESTATE (P) LTD.

74 NAHORBARI TEA COMPANY PVT. LTD. 108 SAPOI TEA COMPANY LIMITED

75 NAWKA TEA PLANTATIONS 109 SANKAR TEA CO PVT LTD

76 NAHORJAN TEA CO. (PVT) LTD 110 SENGAJAN TEA CO. PVT. LTD.

77 NARSINGPORE TEA CO LTD 111 BASANTIPUR TEA CO LTD

78 NARAYANPUR TEA CO.(P) LTD. 112 SECONEE T.E PVT. LTD

79 NAMBURNADI TEA CO. LTD. 113 MAUD TEA & SEED CO. LTD.

80 MADARKHAT TEA CO PVT LTD 114 KAMAL TEA INDUSTRIES LTD.

81 SADASIVA TEA CO PVT LTD 115 ASSAM DAIRY FARM

82 KYANG TEA SEED CO. LTD. 116 TONGANI TEA CO LTD

83 BORNEWRIA TEA CO. PVT. LTD. 117 TOCKLAI EXPERIMENTAL STATION

84 NEW MANAS TEA ESTATES PVT LTD 118 MONABARI TEA CO. LTD.

85 NOORBARI TEA CO. PVT. LTD. 119 TONGANAGAON TEA CO PVT LTD

86 PORAPKAR DEALERS PVT.LTD 120 TULIP TEA CO. LTD.

87 PADAM PLANTATIONS PVT LTD 121 H.P.BARUA TEA ESTATES (P)LTD.

88 MANTRI TEA COMPANY PRIVATE LTD 122 KATILCHERRA KHANDSARI SUGAR MILLS

89 BENGAL TEA & FABRICS LTD. 123 UMABARI TEA CO. PVT. LTD.

90 PANBARI TEA COMPANY LIMITED 124 CACHAR NATIVE GOINT STOCK CO.LTD

91 PULSAR COMMERCE PRIVATE LTD 125 KHETAN KRISHI FARM

92 HANUMAN PLANTATION LIMITED 126 MOKALBARI KANOI TEA ESTATE (P) LTD

93 JOREHAUT GROUP LIMITED 127 MADHUTING TEA PVT LTD

94 MADHUPUR TEA ESTATE PVT.LTD. 128 AGARWALLA AGRICULTURAL CO (P) LTD

95 THENGALBARI ESTATES PVT LTD 129 BIJULI TEA PVT. LTD.

96 RANGSALI TEA COMPANY PVT. LTD. 130 KAKADONGA T.E.S. PVT LTD

97 RABBANIA TEA CO(P) LTD 131 KAMALPUR (ASSAM) T.E. (P) LTD.

98 RAJARAMPORE TEA& INDUSTRIES (P) LTD. 132 GUPTU & CO (P) LTD

99 BEMOLAPUR TEA COMPANY PVT LTD 133 GROB TEA CO LTD

100 PRITHUNAGAR TEA CO. (P) LTD. 134 KALYANI TEA CO LTD

101 PURANIMATI PLANTATION PRIVATE LTD 135 FARMEX TEA CO. PVT. LTD.

136 KOOMBER TEA CO. PVT LTD 170 A SHAH AND S SHAH

137SHRI RAM TEA COMPANY PRIVATELIMITED 171 SHREE KRISHNA TEA CO PVT LTD

138 BUNI DOOARS TEA CO. LTD 172 AMBICA TEA ESTATE

139 KOLKATA TEA COMPANY 173 BAJRANGPUR TEA CO. (P) LTD

140 KOLONY TEA ESTATE PVT LTD 174 GOUR NITYA TEA CO INDUS. LTD

141 ENVER PLANTATIONS PVT. LTD. 175 BAGRODIA CHAI PVT.LTD.

142DARSHANLAL ANAND PRAKASH & SONSPVT LTD 176 JALAN CHARITY TRUST

143KRISHNAKALI TEA ESTATE UNIT OFRADHARANI T.E. 177 SINGHI INDUSTRIES PVT LTD

144 LALLAMUKH TEA CO. PVT. LTD 178 BANWARIPUR T.E.

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145 HATIGARH ASSOCIATES



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FDI IN MULTI - BRAND RETAILRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Foreign Capital, Foreign Trade

& BOP


FDI in Multi - Brand Retail


India has received FDI in multi-brand retail from one foreign company of United Kingdom.State/UT-wise data of FDI inflow is not centrally maintained.

There is no proposal under consideration of the Government to increase Foreign DirectInvestment (FDI) in multi brand retail sector in the country.

The retail market sector depends on a number of factors, including FDI. However, FDI is largelya matter of private business decisions. FDI inflows depend on a host of factors such asavailability of natural resource, market size, infrastructure, general investment climate as well asmacro-economic stability and investment decision of foreign investors.

Under the Foreign Direct Investment (FDI) Policy, the details of norms for undertaking multi-brand retail trading in the country is given below:

FDI Policy in Multi Brand Retail Trading

Sector/Activity% of Equity/

FDI CapEntry Route

Multi Brand Retail Trading 51% Government

FDI in multi brand retail trading, in all products, will be permitted, subject to the followingconditions:

1.

(i) Fresh agricultural produce, including fruits, vegetables, flowers, grains, pulses,fresh poultry,fishery and meat products, may be unbranded.

(ii) Minimum amount to be brought in, as FDI, by the foreign investor, wouldbe USD 100 million.

(iii) At least 50% of total FDI brought in the first tranche of USD 100 million,shall be invested in 'back-end infrastructure' within three years, where ‘back-endinfrastructure’ will include capital expenditure on all activities, excluding that onfront-end units; for instance, back-end infrastructure will include investment madetowards processing, manufacturing, distribution, design improvement, qualitycontrol, packaging, logistics, storage, ware-house and agriculture market produceinfrastructure. Expenditure on land cost and rentals, if any, will not be counted forpurposes of backend infrastructure. Subsequent investment in backend

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infrastructure would be made by the MBRT retailer as needed, depending upon itsbusiness requirements.

(iv) At least 30% of the value of procurement of manufactured/processedproducts purchased shall be sourced from Indian micro, small and mediumindustries, which have a total investment in plant & machinery not exceeding USD2.00 million. This valuation refers to the value at the time of installation, withoutproviding for depreciation. The ‘small industry’ status would be reckoned only atthe time of first engagement with the retailer, and such industry shall continue toqualify as a ‘small industry’ for this purpose, even if it outgrows the said investmentof USD 2.00 million during the course of its relationship with the said retailer.Sourcing from agricultural co-operatives and farmers’ co-operatives would also beconsidered in this category. The procurement requirement would have to be met,in the first instance, as an average of five years’ total value of themanufactured/processed products purchased, beginning 1st April of the yearduring which the first tranche of FDI is received. Thereafter, it would have to bemet on an annual basis.

(v) Self-certification by the company, to ensure compliance of the conditionsat serial nos. (ii), (iii) and (iv) above, which could be cross-checked, as and whenrequired. Accordingly, the investors shall maintain accounts, duly certified bystatutory auditors.

(vi) Retail sales outlets may be set up only in cities with a population of morethan 10 lakh as per 2011 Census or any other cities as per the decision of therespective State Governments, and may also cover an area of 10 kms around themunicipal/urban agglomeration limits of such cities; retail locations will be restrictedto conforming areas as per the Master/Zonal Plans of the concerned cities andprovision will be made for requisite facilities such as transport connectivity andparking.

(vii) Government will have the first right to procurement of agricultural products.

The above policy is an enabling policy only and the State Governments/Union Territorieswould be free to take their own decisions in regard to implementation of the policy. Therefore, retail sales outlets may be set up in those States/Union Territories which haveagreed, or agree in future, to allow FDI in MBRT under this policy. The list of States/UnionTerritories which have conveyed their agreement is at (2) below. Such agreement, infuture, to permit establishment of retail outlets under this policy, would be conveyed to theGovernment of India through the Department of Industrial Policy & Promotion andadditions would be made to the list at (2) below accordingly. The establishment of theretail sales outlets will be in compliance of applicable State/Union Territory laws/regulations, such as the Shops and Establishments Act etc.

viii.

Retail trading, in any form, by means of e-commerce, would not be permissible, forcompanies with FDI, engaged in the activity of multi-brand retail trading.

ix.


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GROWTH IN MANUFACTURING SECTORRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Industry & Services Sector



Growth in Manufacturing Sector


The growth of India’s Manufacturing Gross Value Added (GVA) and Gross Domestic Product(GDP) from the year 2005-06 at constant (2011-12) prices is given below:

Growth rate (in per cent) of Manufacturing GVA and GDP at constant (2011-12) prices

Year Growth rate of Manufacturing Growth rate of GDP

2005-06 9.3 7.9

2006-07 17.8 8.1

2007-08 7.0 7.7

2008-09 4.7 3.1

2009-10 11.0 7.9

2010-11 7.7 8.5

2011-12 3.1 5.2

2012-13 5.5 5.5

2013-14 5.0 6.4

2014-15 7.9 7.4

2015-16 13.1 8.0

2016-17 7.9 8.2

2017-18 5.9 7.2

2018-19 6.9 6.8

Source: National Statistical Office.

The figures for the years 2016-17, 2017-18 and 2018-19 are provisional

As per the latest available estimates of GDP by National Statistical Office, the share of GVA ofmanufacturing sector in GDP at constant prices at 2011-12 for the last three years is givenbelow:

Share (in per cent) of Manufacturing GVA in GDP at constant prices (2011-12)

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2016-17 2017-18 2018-19

Share ofmanufacturing

16.7 16.5 16.5

Source: National Statistical Office.

The figures for the years 2016-17, 2017-18 and 2018-19 are provisional

The Government has been continuously taking steps to boost manufacturing and spur economicgrowth. It aims at creating a conducive environment by streamlining the existing regulations andprocesses and eliminating unnecessary requirements and procedures. ‘Make in India’programme aims at making India a global hub for manufacturing, research and innovation andan integral part of the global supply chain. Several steps to boost domestic manufacturing arebeing taken as part of schemes such as ‘Startup India’, ‘Ease of Doing Business’, ModifiedIndustrial Infrastructure Upgradation Scheme, Business Reform Action Plan and IntellectualProperty Rights (IPR) Policy. Foreign Direct Investment (FDI) policy and procedures have beensimplified and liberalized progressively.


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LAUNCH OF PHASE-II OF DBT IN FERTILIZER SUBSIDYRelevant for: Indian Economy | Topic: Issues related to direct & indirect Farm Subsidies and MSP

Ministry of Chemicals and Fertilizers

Launch of Phase-II of DBT in Fertilizer Subsidy


Union Minister for Chemicals and Fertilizers, Shri D.V. Sadananda Gowda launched the Phase-II of the Direct Benefit Transfer of Fertilizer Subsidy (DBT 2.0), here today. Minister of State forShipping (IC) and Chemicals & Fertilizers, Shri Mansukh L. Mandaviya also graced theoccasion. The Department of Fertilizers (DoF) has implemented the Phase-I of Direct BenefitTransfer (DBT) system in fertilizer subsidy pan-India in Fertilizers w.e.f. March 2018.

Talking about Prime Minister, Shri Narendra Modi’s vision of ‘Less Government, MoreGovernance, Shri Gowda said that only by bringing transparency in administration can theGovernment bring a positive change in lives of the people. DBT in fertilizer subsidy is such astep in the direction of bringing ease of living in the lives of farmers through use of moderntechnology and plugging leakages, pilferages and black marketing, the Minister added.

The new initiatives of DBT 2.0 are as under:

DBT Dashboards: In order to facilitate accurate information gathering and decision-making w.r.t. the position of requirement/supply/availability of various fertilizers at National,State and District levels, the DoF has developed various dashboards. These dashboardsprovide various reports regarding the Fertilizer Stock position at ports, plants, in States, atDistrict levels; Proportionate requirement for the season and availability of stocks at variouslevels; Top 20 buyers; Frequent buyers; Retailers not selling fertilizers etc. The reportswould facilitate real-time monitoring of the availability and sale of fertilizers within eachState/UT. Public can access the dashboards by clicking the e-urvarak websiteof DoF (www.urvarak.nic.in).

●

PoS 3.0 Software: The Multi-lingual facility would provide Aadhar virtual IDoption for registration, login and sale activity in DBT software. It would also have a provisionfor area-specific, crop-specific recommendations based on Soil Health Card (SHC)data. Further, it would capture sale to farmers, mixture manufacturers, planter associationseparately.

●

Desktop PoS Version: Keeping in view the various operational challenges viz. limited PoSvendors, rush of sales due to peak season etc. the department has developeda multilingual desktop version of PoS software as an alternative or added facility to PoSdevices. Retailers with laptops and computer systems can use high-speed broadbandservice for fertilizer sales. The Desktop software is more robust and secure as theapplication is developed and handled directly from the central HQ team at DoF.

●

Addressing the gathering, Shri Mansukh Mandaviya laid stress on e-governance as a platform toachieve good governance in the country. Talking about the new initiatives under DBT 2.0, theMinister said that these by implementation of second phase of DBT, the system would becomemore transparent and the penetration of fertilizer subsidy would further be increased in thecountry.

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Phase-I DBT system in Fertilizers (DBT 1.0) envisaged the release of 100% subsidy on variousfertilizer grades to the fertilizer companies on the basis of actual sales made by the retailer tothe beneficiaries. The Phase-II of DBT will explore the feasibility of direct cash transfer tofarmer’s accounts. An expert committee under NITI Aayog has been constituted on 28.09.2017as per the request of the DoF, to suggest a model for the implementation of phase-2.

A Project Monitoring Cell was set up at DoF to oversee implementation of DBT exclusively. 24State Coordinators have been appointed across all States to monitor the on-going DBTactivities.

Implementation of the DBT Scheme requires deployment of PoS devices at every retailer shop,training of retailers for operating PoS device. Across the country, Lead Fertilizer Supplier (LFS)have conducted 8943 training sessions till date. 2.24 Lakh PoS devices have been deployedacross all States. 670.99 Lakh Metric tonnes Fertilizers have been sold through PoS devices tillJune 2019.

To address network connectivity issues, DoF has come up with various options as under:

PoS devices were provided with multiple connectivity options such as Wi-Fi, LAN, PSTN,SIM, etc.

●

A network survey/assessment can be conducted at retail shops, to identify the telecomservice providers having good connectivity in that area.

●

Simple measures such as attaching an antenna to the PoS device can give better signalreception.

●

To address peak season sales, a single retailer can install more than one PoS device at theretail point. There is a provision to use maximum up to 5 PoS devices at a single retail pointunder DBT system.

Further, a dedicated 15-member Multi-lingual Help Desk has been set up to provide quickresponse to the queries of wide range of stakeholders across the country as a preparatory toDBT implementation. The helpdesk will operate from 9.30 am to 6.00 pm on all working daysincluding Saturdays. The toll free number of the helpdesk is 1800115501. Further, WhatsApp isbeing used extensively for quick response to grievances of various stakeholders.

To address the issues of malfunctioning PoS devices, separate toll free lines have beenprovided by PoS vendors viz., Visiontek, Analogics and Oasys. Dedicated manpower/vendorsupport system has been provided by the PoS vendors across all States. Further, DBT StateCoordinators have been appointed by DoF in every State/UT to monitor the implementation ofDBT and for quick resolution of hardware/software problems.

Dignitaries on the dais included Secretary, Fertilizers, Shri Chhabilendra Roul, AdditionalSecretary, Fertilizers, Shri Dharam Pal. The gathering comprised of the who’s who of fertilizersector including CMDs of Fertilizer Cos., along with senior officers of DoF.

*****

KSP

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Read this release in: Urdu , Hindi , Marathi , Bengali , Punjabi



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RISE IN NPAS OF PSBSRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Banking, NPAs and RBI

Ministry of Finance

Rise in NPAs of PSBs


As per Reserve Bank of India (RBI) data on domestic operations, aggregate gross advancesof PSBs increased from Rs. 16,96,051 crore as on 31.3.2008 to Rs. 45,90,570 crore as on31.3.2014. As per RBI inputs, the primary reasons for spurt in stressed assets have beenobserved to be, inter-alia, aggressive lending practices, wilful default/loan frauds/corruption insome cases, and economic slowdown. Asset Quality Review (AQR) initiated in 2015 for cleanand fully provisioned bank balance-sheets revealed high incidence of Non-Performing Assets(NPAs). As a result of AQR and subsequent transparent recognition by banks, stressedaccounts were reclassified as NPAs and expected losses on stressed loans, not provided forearlier under flexibility given to restructured loans, were provided for. Primarily as a result oftransparent recognition of stressed assets as NPAs, gross NPAs of PSBs, as per RBI data ondomestic operations, rose from Rs. 2,67,065 crore as on 31.3.2015, to Rs. 8,45,475 crore ason 31.3.2018, and as a result of Government’s 4R’s strategy of recognition, resolution,recapitalisation and reforms, have since declined by Rs. 1,35,366 crore to Rs. 7,10,109 croreas on 31.3.2019 (provisional data as reported by RBI on 2.7.2019).

Government adopted the comprehensive 4R’s strategy consisting of recognition of NPAstransparently, resolution and recovering value from stressed accounts, recapitalising PublicSector Banks (PSBs), and reforms in PSBs and financial ecosystem to ensure a responsibleand clean system. Steps taken under these strategies to expedite and enable resolution ofNPAs of PSBs, and to improve the condition of banks include, inter-alia, the following:

Change in credit culture was effected, with the Insolvency and Bankruptcy Code (IBC)fundamentally changing the creditor-borrower relationship, taking away control of thedefaulting company from promoters/owners and debarring wilful defaulters from theresolution process and debarring them from raising funds from the market.

i.

Over the last four financial years, PSBs were recapitalised to the extent of Rs. 3.12 lakhcrore, with infusion of Rs. 2.46 lakh crore by the Government and mobilisation of over Rs.0.66 lakh crore by PSBs themselves.

ii.

Key reforms were instituted in PSBs as part of PSBs Reforms Agenda, include thefollowing:

iii.

Board-approved Loan Policies of PSBs now mandate tying up necessaryclearances/approvals and linkages before disbursement, scrutiny of group balance-sheetand ring-fencing of cash flows, non-fund and tail risk appraisal in project financing.

iv.

Use of third-party data sources for comprehensive due diligence across data sources hasbeen instituted, thus mitigating risk on account of misrepresentation and fraud.

v.

Monitoring has been strictly segregated from sanctioning roles in high-value loans, andspecialised monitoring agencies combining financial and domain knowledge have beendeployed for effective monitoring of loans above Rs. 250 crore.

vi.

To ensure timely and better realisation in one-time settlements (OTSs), online end-to-endOTS platforms have been set up.

vii.

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Enabled by the above steps, financial gains from cleaning of the banking system are nowamply visible. Gross NPAs of PSBs, as per RBI data on domestic operations, have reducedover the last financial year (provisional data) by Rs. 1,35,366 crore, and as per RBI data onglobal operations, PSBs have recovered an amount of Rs. 3,09,568 crore over the last fourfinancial years, including a record recovery of Rs. 1,21,076 crore in the last financial year(provisional data).

As per RBI data on domestic operations, the gross NPAs of PSBs, as on 30.6.2014,31.3.2017, and 31.3.2019 (provisional data) were Rs. 2,24,542 crore, Rs. 6,41,057 crore andRs. 7,10,109 crore respectively, which amounts to an increase of 10.77% over the last threefinancial years. RBI has apprised that the details of NPAs of PSBs as on 30.6.2019 are notavailable. Bank-wise details are at Annex.

Note: Figures cited above for PSBs for 31.3.2019 exclude those for IDBI Bank Limited, whichwas recategorised as a private sector bank by RBI with effect from 21.1.2019.

This was stated by Shri Anurag Singh Thakur, Minister of State for Finance & CorporateAffairs in a written reply to a question in Lok Sabha today.

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DSM/RM/PD

Annex

Gross NPA of Public Sector Banks

Bank

GNPA % ageincreasebetween31.3.2017

and31.3.2019

Asse t Qua l i t y Rev iew(AQR) initiated in 2015 forclean and fully provisionedb a n k b a l a n c e - s h e e t srevealed high incidence ofNon-Performing Assets(NPAs). As a result of AQRand subsequent transparentrecogn i t i on by PSBs ,stressed accounts werereclassified as NPAs ande x p e c t e d l o s s e s o n

As on30.6.2

014

As on31.3.2

017

As on31.3.2

019

Allahabad Bank 7,59920,52

028,69

839.85%

Andhra Bank 6,82717,67

028,97

463.97%

Bank of Baroda10,64

134,93

540,38

815.61%

Bank of India11,16

042,72

451,16

719.76%

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Bank of Maharashtra 3,76117,18

915,32

4(-)10.85%

s t r e s s e d l o a n s , n o tprovided for earlier underf l e x i b i l i t y g i v e n t orestructured loans, wereprov ided for . A l l suchschemes for restructurings t r e s s e d l o a n s w e r ewithdrawn. Primarily as ar e s u l t o f t r a n s p a r e n trecognit ion of stressedassets as NPAs, the grossNPAs of Publ ic SectorBanks (PSBs) increased.Enabled by Government’s4R’s strategy, as per RBId a t a o n d o m e s t i coperat ions, PSBs haverecovered Rs. 3,09,568crore over the last fourfinancial years, includingrecord recovery of Rs.1,21,076 crore during 2018-19 (provisional data asr e p o r t e d b y R B I o n2.7.2019).

Canara Bank 7,90531,80

136,16

513.72%

Central Bank of India11,44

927,25

132,35

618.73%

Corporation Bank 5,47017,04

520,72

421.58%

Dena Bank 3,16912,61

912,76

81.18%

IDBI Bank Limited10,76

238,22

3- -

Indian Bank 4,415 9,58813,15

637.21%

Indian Overseas Bank 8,78132,52

132,41

6(-)0.33%

Oriental Bank ofCommerce

5,98322,85

921,71

7(-)5.00%

Punjab and Sind Bank 3,010 6,298 8,606 36.65%

Punjab National Bank19,33

553,12

176,72

444.43%

State Bank of India (SBI)56,83

01,05,5

491,70,8

1361.83%

State Bank of Bikaner andJaipur

2,33110,67

7

Merged

withSBI

Mergedwith SBI

State Bank of Hyderabad 6,17418,21

2

State Bank of Mysore 2,490 9,915

State Bank of Patiala 3,37517,84

7

State Bank of Travancore 3,282 8,817

Bharatiya Mahila BankLimited

0 55

Syndicate Bank 4,74215,66

222,34

842.70%

UCO Bank 5,98221,69

929,23

334.72%

Union Bank of India 9,90230,92

847,55

453.76%

United Bank of India 7,09710,95

212,05

310.06%

Vijaya Bank 2,069 6,382 8,923 39.82%

Source: RBI (domestic operations)

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Note: IDBI Bank Limited was recategorised as a private sector bank by RBI with effect from 21.1.2019

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HEALTH OF LIVESTOCK AND ANIMALSRelevant for: Indian Economy | Topic: Economics of Animal-Rearing incl. White, Blue & Pink Revolutions

Ministry of Fisheries, Animal Husbandry & Dairying

Health of Livestock and Animals


For promotion of health of livestock and animals, the Department of Animal Husbandry &Dairying implements a Centrally Sponsored Scheme “Livestock Health & Disease Control”(LH&DC), which envisages control & containment of economically important animal diseases byproviding central financial assistance to the States. Under this scheme, vaccination is carried outfor control of diseases like Foot and Mouth Disease (FMD), Peste des Petits Ruminants (PPR),Brucellosis, Anthrax, Hemorrhagic Septicemia (HS), Black Quarter (BQ), Classical Swine Fever,Ranikhet disease, etc. This scheme also provides for establishment & strengthening ofveterinary hospitals and dispensaries for veterinary services. Training of veterinarians and para-veterinarians is conducted for latest techniques, technology and advancement in treatments.

To prevent the ingress of exotic animal diseases into the country through imported Livestockand Livestock Products, this Department has setup 6 (six) Animal Quarantine and CertificationServices Centers (AQCS) in the country at New Delhi, Mumbai, Kolkata, Chennai, Hyderabadand Bangalore.

This Department provides financial assistance for strengthening of the 5 (five) Regional DiseaseDiagnostic Laboratories (RDDLs) at Jalandhar, Banglore, Kolkata, Pune, Guwahati and a Centrefor Animal Disease Research & Diagnosis (CADRAD) of IVRI Izatnagar to enhance diseasediagnostic facilities in the country.

In view of economic importance of Foot & Mouth Disease (FMD) and Brucellosis, the NationalAnimal Disease Control Programme for Foot and Mouth Disease (FMD) and Brucellosis(NADCP) has been approved by Cabinet on 31.05.2019 as a new Central Sector Scheme with atotal outlay of Rs.13,343.00 crore for five years (2019-24). An amount of Rs.2682.84 crore isproposed for Financial Year 2019-20. It has following components:

I. Foot and Mouth Disease (FMD) Control Programme - It envisages 100% vaccination coverageof cattle, buffaloes, sheep, goats and pigs at six-months interval in the entire country. Further,animals would be identified using unique animal identification ear tags. The programme alsoincludes de-worming of the targeted population of livestock twice a year.

II. Brucellosis Control Programme: It envisages 100% vaccination coverage of female cattle andbuffalo calves (4-8 months of age) once in a life time.

This information was given in a written reply by the Minister of State for Fisheries, AnimalHusbandry and Dairying, Shri Sanjeev Balyan in Lok Sabha today.

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APS/AS

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NPAS WRITTEN OFF BY PSBSRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Banking, NPAs and RBI

Ministry of Finance

NPAs Written Off By PSBs


As per inputs received from Public Sector Banks (PSBs), valuation reports are obtainedfrom banks’ empanelled valuers and banks do not follow a practice of obtaining valuation reportsfrom practising member of the Institute of Chartered Accountants of India (ICAI).

As per inputs received from PSBs, till 31.3.2019, resolution plans have been approved in 68cases by the National Company Law Tribunal (NCLT) under the Insolvency and BankruptcyCode, 2016 (IBC). The total resolution amount approved in these cases was Rs. 65,320 crore.Provision held by PSBs in these cases was Rs. 33,556 crore as on 31.3.2019. PSBs providedfor an additional amount of Rs. 21,727 crore, which amounts to 18.02% of the principaloutstanding in these accounts.

As per inputs received from PSBs, as on 31.3.2019, FIRs have been filed against 3,154 wilfuldefaulters.

To strengthen PSBs, Government has implemented a comprehensive 4R’s strategy consistingof recognition of NPAs transparently, resolution and recovering value from stressed accounts,recapitalising PSBs, and reforms in PSBs and financial ecosystem to ensure a responsible andclean system. Steps taken under these strategies include, inter-alia, the following:

Change in credit culture was effected, with the IBC fundamentally changing the creditor-borrower relationship, taking away control of the default ing company frompromoters/owners and debarring wilful defaulters from the resolution process anddebarring them from raising funds from the market.

1.


2.

Key reforms were instituted in PSBs as part of PSBs Reforms Agenda, whichinclude, inter-alia, the following:

3.

Board-approved Loan Pol icies of PSBs now mandate tying up necessaryclearances/approvals and linkages before disbursement, scrutiny of group balance-sheetand ring-fencing of cash flows, non-fund and tail risk appraisal in project financing.

1.


2.


3.

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4.

Gains to PSBs are amply visible in their growing financial strength. As per RBI data on globaloperations (including provisional data for March 2019, as reported on 2.7.2019), gross NPAs ofPSBs have reduced over the last financial year by Rs. 1,06,032 crore, record recovery of Rs.3,09,568 crore has been effected over the last four financial years (excluding recovery in IDBIBank Limited made during 2018-19), and domestic credit growth has risen to 10.20% duringfinancial year 2018-19.

Growing strength of PSBs is also evident from the fact that all PSBs meet minimum regulatorycapital requirement, 6 PSBs are now out of PCA restrictions, balance-sheets of PSBs have beencleaned up through transparent recognition of NPAs and their provision coverage ratio is at itshighest level in seven years, and asset quality has improved sharply.

Note: NPA Figures cited above for PSBs include those for IDBI Bank Limited, which wasrecategorised as a private sector bank by RBI with effect from 21.1.2019.


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DSM/RM/PD





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WAIVING OFF LOANS OF FARMERS IN DROUGHTPRONE AREAS


Ministry of Finance

Waiving off Loans of Farmers in Drought Prone Areas


State-wise details of agriculture credit disbursement as reported by the National Bank forAgriculture and Rural Development (NABARD) during the year 2018-19 (provisional) is given inAnnexure.

There is no proposal under consideration of the Union Government to waive off loans of farmers.However, to reduce the debt burden of farmers, the following major initiatives have been taken:

· With a view to ensure availability of agriculture credit at a reduced interest rate of 7%p.a. to the farmers, the Government of India in the Department of Agriculture Cooperationand Farmers’ Welfare (DAC&FW) implements an interest subvention scheme for shortterm crop loans up to Rs. 3.00 lakh. The scheme provides interest subvention of 2% perannum to Banks on use of their own resources. Besides, additional 3% incentive is givento the farmers for prompt repayment of the loan, thereby reducing the effective rate ofinterest to 4%.

· Under the aforesaid interest subvention scheme, to provide relief to farmers affected bynatural calamities, the interest subvention (2%) on crop loan continues to be available tobanks for the first year on the restructured amount. Such restructured loans may,however, attract normal rate of interest from the second year onwards as per the policylaid down by the Reserve Bank of India (RBI).

· In order to provide relief to the farmers affected due to severe natural calamities, theGovernment in DAC&FW has decided that interest subvention of 2% per annum will bemade available to banks for first three years/entire period (subject to a maximum of fiveyears) on the restructured loan amount, and in all such cases the benefit of promptrepayment incentive at 3% per annum shall also be provided to the affected farmers. Thegrant of such benefits in cases of severe natural calamities shall, however, be decided bya High Level Committee (HLC) based on the recommendation of Inter-Ministerial CentralTeam (IMCT) and Sub Committee of National Executive Committee (SC-NEC).

· Reserve Bank of India (RBI) has issued directions for Relief Measures to be provided byrespective lending institutions in areas affected by natural calamities which, inter alia,include restructuring/rescheduling of existing crop loans and term loans, extending freshloans, relaxed security and margin norms, moratorium, etc. These directions have beenso designed that the moment calamity is declared by the concerned District Authorities,they are automatically set in motion without any intervention, thus saving precious time.The benchmark for initiating relief measures by banks has been reduced from 50% to33% crop loss in line with the National Disaster Management Framework. Banks havebeen advised not to insist for additional collateral security for restructured loans.

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· Loan to distressed farmers indebted to non-institutional lenders is an eligible category offarm credit under the Priority Sector Lending (PSL) as per directions issued by RBI.

· To enhance coverage of small and marginal farmers in the formal credit system, RBI hasdecided to raise the limit for collateral-free agriculture loans from Rs. 1 lakh to Rs. 1.6lakh.

· The requirement of ‘no due’ certificate has also been dispensed with for small loans uptoRs.50,000/- to small and marginal farmers, share croppers and the like and, instead, onlya self-declaration from the borrower is required.

· To bring small, marginal, tenant farmers, oral lessees, etc. into the fold of institutionalcredit, Joint Liability Groups (JLGs) have been promoted by banks.

· Pradhan Mantri KIsan SAmman Nidhi (PM-KISAN) scheme has been implemented toprovide an assured income support to all farmers, irrespective of the size of their landholdings subject to the exclusion factor. Under this scheme direct income support @ ofRs. 6,000 per year will be transferred directly into the bank accounts of beneficiaryfarmers, in three equal installments of Rs.2,000 each.

· Pradhan Mantri Fasal Bima Yojana (PMFBY) provides a comprehensive insurance coveragainst failure of insured crops due to non-preventable natural risks, thus providingfinancial support to farmers suffering crop loss/ damage arising out of unforeseen events;stabilizing the income of farmers to ensure their continuance in farming; and encouragingthem to adopt innovative and modern agricultural practices.


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DSM/RM/PD

AnnexureAgriculture Credit Disbursemsent ( Number of Accounts in lakh and Amount in

Rs.Crore)

2018-19 (Provisional)

S.No StatesNumber ofAccounts

Amount Disbursed

1 DELHI 0.26 24,422.02

2 HARYANA 31.54 63,126.07

3 HIMACHALPRADESH

10.31 9,017.77

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4JAMMU &KASHMIR

9.53 13,117.12

5 PUNJAB 34.35 76,858.90

6 RAJASTHAN 77.65 83,266.87

7 CHANDIGARH UT 0.37 1,991.19

8ARUNACHALPRADESH

0.05 54.54

9 ASSAM 8.90 6,940.52

10 MANIPUR 0.22 247.94

11 MEGHALAYA 0.30 196.87

12 MIZORAM 0.11 362.69

13 NAGALAND 0.38 209.40

14 SIKKIM 0.12 156.44

15 TRIPURA 3.82 2,643.64

16 A & N ISLAND 0.10 128.87

17 BIHAR 43.19 32,152.73

18 JHARKHAND 8.88 3,960.07

19 ODISHA 58.92 27,346.75

20 WEST BENGAL 60.60 45,941.20

21 CHHATTISGARH 17.75 10,328.50

22 MADHYA PRADESH 82.34 62,112.81

23 UTTARAKHAND 7.04 10,273.97

24 UTTAR PRADESH 102.19 88,647.09

25 GOA 0.62 1,330.58

26 GUJARAT 39.31 66,558.40

27 MAHARASHTRA 63.01 86,809.11

28 D & N HAVELI UT 0.02 62.19

29 DAMAN & DIU UT 0.01 43.86

30 ANDHRA PRADESH 126.04 124,499.76

31 TELANGANA 49.02 57,606.06

32 KARNATAKA 86.29 72,880.18

33 KERALA 84.47 90,632.36

34 PUDUCHERRY 3.68 2,782.38

35 TAMILNADU 221.88 188,050.45

36 LAKSHADWEEP UT 0.00 2.92

TOTAL 1233.30 1,254,762.20

Source: NABARD

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FINANCIAL PROBLEMS IN BANKS DUE TO FRAUDSAND NPAS


Ministry of Finance

Financial Problems in Banks Due to Frauds and NPAs


As per Reserve Bank of India (RBI) data on global operations, aggregate gross advances ofnationalised banks increased from Rs. 11,33,137 crore as on 31.3.2008 to Rs. 34,03,717crore as on 31.3.2014. As per RBI inputs, the primary reasons for spurt in stressed assets havebeen observed to be, inter-alia, aggressive lending practices, wilful default/loanfrauds/corruption in some cases, and economic slowdown. Asset Quality Review (AQR)initiated in 2015 for clean and fully provisioned bank balance-sheets revealed high incidence ofNPAs. As a result of AQR and subsequent transparent recognition by banks, stressed accountswere reclassified as NPAs and expected losses on stressed loans, not provided for earlierunder flexibility given to restructured loans, were provided for. Further, all such schemes forrestructuring stressed loans were withdrawn. Primarily as a result of transparent recognition ofstressed assets as NPAs, gross NPAs of nationalised banks, as per RBI data on globaloperations, rose from Rs. 1,92,809 crore as on 31.3.2015, to Rs. 4,62,114 crore as on31.3.2017, and to Rs. 6,16,586 crore as on 31.3.2018, and as a result of Government’s 4R’sstrategy of recognition, resolution, recapitalisation and reforms, have since declined by Rs.49,795 crore to Rs. 5,66,791 crore as on 31.3.2019 (provisional data). The details of grossNPAs for financial year 2019-20 upto May is not available as data is collated only on a quarterlybasis.

Government has implemented a comprehensive 4R’s strategy consisting of recognition ofNPAs transparently, resolution and recovering value from stressed accounts, recapitalisingPublic Sector Banks (PSBs), and reforms in PSBs and financial ecosystem to reduce NPAs andstrengthen PSBs. Steps taken under this strategy include, inter-alia, the following:


i.


ii.

Key reforms were instituted in PSBs as part of PSBs Reforms Agenda, include thefollowing:

iii.


1.

Use of third-party data sources for comprehensive due diligence across data sources has2.

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been instituted, thus mitigating risk on account of misrepresentation and fraud.Monitoring has been strictly segregated from sanctioning roles in high-value loans, andspecialised monitoring agencies combining financial and domain knowledge have beendeployed for effective monitoring of loans above Rs. 250 crore.

3.


4.

Enabled by the above steps, financial gains from cleaning of the banking system arenow amply visible. Gross NPAs of nationalised banks, as per RBI data on global operations(including provisional data for March 2019, as reported on 2.7.2019), have reduced over thelast financial year by Rs. 49,795 crore, and recovery of Rs. 2,19,407 crore has been effected bythese banks over the last four financial years, including a record recovery of Rs. 86,013 crore inthe last financial year.

Government has taken comprehensive steps to reduce the incidence of frauds in banks. Thesteps taken include, inter-alia, the following:

Government has issued “Framework for timely detection, reporting, investigation etc.relating to large value bank frauds” to Public Sector Banks (PSBs), for systemic andcomprehensive checking of legacy stock of their non-performing assets (NPAs), whichprovides, inter-alia, that—

1.

all accounts exceeding Rs. 50 crore, if classified as NPAs, be examined by banks from theangle of possible fraud, and a report placed before the bank’s Committee for Review ofNPAs on the findings of this investigation;

i.

examination be initiated for wilful default immediately upon reporting fraud to RBI; andii.report on the borrower be sought from the Central Economic Intelligence Bureau in casean account turns NPA.

iii.

Fugitive Economic Offenders Act, 2018 has been enacted to deter economic offendersfrom evading the process of Indian law by remaining outside the jurisdiction of Indiancourts. The act provides for attachment of property of a fugitive economic offender,confiscation of such offender’s property and disentitlement of the offender from defendingany civil claim.

2.

PSBs have been advised to obtain certified copy of the passport of the promoters/directorsand other authorised signatories of companies availing loan facilities of more than Rs. 50crore and, decide on publishing photographs of wilful defaulters, in terms of RBI’sinstructions and as per their Board-approved policy and to strictly ensure rotational transferof officials/employees. The heads of PSBs have also been empowered to issue requestsfor issue of Look Out Circulars (LOCs).

3.

For enforcement of auditing standards and ensuring the quality of audits, Government hasestablished the National Financial Reporting Authority as an independent regulator.

4.

Instructions/advisories have been issued by Government to PSBs to decide on publishingphotographs of wilful defaulters, in terms of RBI’s instructions and as per their Board-approved policy, and to obtain certified copy of the passport of the promoters/directors andother authorised signatories of companies availing loan facilities of more than Rs. 50 crore.

5.

In order to bring transparency and accountability in the larger financial system, bankaccounts of 3.38 lakh inoperative companies were frozen over the last two financial years.

6.

The impact of the above steps is reflected in Reserve Bank of India (RBI)’s Financial StabilityReport (FSR) of June 2019. As per FSR, systemic and comprehensive checking of legacy stock

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of NPAs of PSBs for frauds has helped unearth frauds perpetrated over a number of years,which is getting reflected in increased number of reported incidents of frauds in recent yearscompared to previous years. Further, details of the amount involved in frauds of Rs. 1 lakh andabove that occurred during the last three financial years (FYs), reported by nationalised banksto RBI, as per inputs received from RBI, are as under:

FY ofoccurrence

Amount involved

(in crore Rs.)

Number

2016-17 22,844 1,141

2017-18 6,522 833

2018-19 5,030 404

The details of bank frauds of Rs. 1 lakh and above for financial year 2019-20 up to May are notavailable as data is collated only on a quarterly basis.


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WAIVING OFF CHARGES ON NEFT AND RTGSRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Banking, NPAs and RBI

Ministry of Finance

Waiving off Charges on NEFT and RTGS


The Reserve Bank of India (RBI) vide its circular on ‘National Electronic Funds Transfer(NEFT) and Real Time Gross Settlement (RTGS) systems – Waiver of charges’ dated11.06.2019, has decided that with effect from July 1, 2019, processing charges and timevarying charges levied on banks by RBI for outward transactions undertaken using the RTGSsystem, as also the processing charges levied by RBI for transactions processed in NEFTsystem would be waived by the Reserve Bank.

The banks are also advised by RBI to pass on the benefits to their customers for undertakingtransactions using RTGS and NEFT systems. This waiver of processing and time varyingcharges by RBI on banks will reduce the cost of RTGS and NEFT transactions and will givefillip to digital fund movement.

There is an increase in NEFT and RTGS transactions during the last three years as illustratedin the table given below (in crore) :

Year RTGS (Customer + Interbank) NEFT

2016-17 10.78 162.21

2017-18 12.44 194.64

2018-19 13.66 231.89

Source: RBI

As apprised by RBI, total number of online transactions including Real Time Gross Settlement(RTGS), Electronic Clearing Service (ECS), National Electronic Fund Transfer (NEFT),Immediate Payment Service (IMPS), National Automated Clearing House (NACH), UnifiedPayment Interface (UPI) (including Bharat Interface for Money (BHIM) and UnstructuredSupplementary Service Data (USSD)), Prepaid Payment Instruments (PPIs), Credit Cards atPoint of Sale (PoS) and online, Debit Cards at Point of Sale (PoS) and online (in crore) since2016-17 is as follows:

Year Total Transactions (in crore)

2016-17 977.94

2017-18 1471.19

2018-19 2338.44


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MINIMUM KYC WALLETS FOR LOW VALUETRANSACTIONS


Ministry of Finance

Minimum KYC Wallets for Low Value Transactions


As apprised by the Ministry of Electronics and Information Technology (MeitY),Government of India has initiated incentive schemes such as BHIM cash-back scheme forindividuals, BHIM incentive scheme for merchants, BHIM Aadhaar merchant incentive schemefor promotion and wider adoption of digital payment.

Further, MeitY vide their gazette notification No. 6(19)/2017-DPD-1 dated27th December, 2017 has notified the reimbursement of MDR charges on Debit cards/ BHIM-UPI and BHIM Aadhaar Pay transactions of value upto Rs. 2000 for two years effective from 1stJan, 2018, in order to promote and enable acceptance of UPI based payments at the small andmicro merchants.

Also Reserve Bank of India (RBI), as the regulator of Payment and SettlementSystems in the country, sets the necessary regulatory framework, generally, through aconsultative process, to ensure that different types of payment systems thrive in the country tomeet the payment needs of different segments of society. The regulatory framework has alsoencouraged enhanced participation of non-bank entities in the payments domain. Details of thevarious payment systems catering to the financial needs of society are at Annex - I.

As apprised by Reserve Bank of India (RBI), they have issued ‘Master Direction onIssuance and Operation of Prepaid Payment Instruments (Master Direction on PPIs) datedOctober 11, 2017 (updated as on February 25, 2019). Accordingly para 9.1 (i) of this MasterDirection, the PPIs is allowed for a period of 18 months by accepting minimum details of PPIholder. KYC of such PPIs need to be completed within this period, else no further loading isallowed. However, the balance is allowed to be utilised for purchase of goods and services.


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Annex - I

S.No.Details of the various payment systemscatering to the financial needs of society

1National Financial Switch (NFS) for ATMtransactions

2Cheque Truncation System (CTS) forimage-based cheque clearing

3 Express Cheque Clearing System (ECCS)

4 Immediate Payment Service (IMPS) for 24x 7 payments

5Cards for physical and e-commercetransactions

6

Aadhaar Enabled Payments System(AEPS) fo r Aadhaar authent ica tedpayments predominantly at BusinessCorrespondents.

7National Automated Clearing House(NACH) for bulk and repetitive paymentsand receipts.

8Aadhaar Payment Bridge System (APBS)for DBT payments.

9Unified Payments Interface (UPI) for mobilepayments; National Unified USSD Platform(NUUP) for mobile payments.

10BHIM-Aadhaar Pay – for mobile paymentsfor merchant transactions.

11Bharat Bill Payments System (BBPS) – forpan-India bill payments.

12National Electronic Toll Collection (NETC) –for toll payments.

13

National Electronic Funds Transfer (NEFT)– for funds transfer across all computerisedbranches of banks (member / sub-memberof NEFT) across the country.

14

Real Time Gross Settlement (RTGS)system – for transfer of money from onebank account to another on a "real time"and on "gross" basis.

15

Prepaid Payment Instruments (PPIs) – forfacilitating purchase of goods and services,including funds transfer, against the valuestored on such instruments.

16White Label ATMs (WLAs) – to bridge thegap in ATM infrastructure particularly in

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rural and semi urban areas.

17

Trade Receivables Discounting System(TReDS) – for facilitating the financing oftrade receivables of MSMEs throughmultiple financiers.




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BANK REFORMS TO CHECK FRAUDSRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Banking, NPAs and RBI

Ministry of Finance

Bank Reforms to Check Frauds


Occurrence of frauds was enabled by laxity in the financial system, and the underlying causeshave been systematically dealt with by the Government through comprehensive steps forreduction in occurrence of frauds, and their proactive checking and timely detection. The stepstaken in this regard include, inter-alia, the following:

Government has issued “Framework for timely detection, reporting, investigation etc.relating to large value bank frauds” to Public Sector Banks (PSBs), for systemic andcomprehensive checking of legacy stock of their non-performing assets (NPAs), whichprovides, inter-alia, that—

1.

all accounts exceeding Rs. 50 crore, if classified as NPAs, be examined by banks from theangle of possible fraud, and a report placed before the bank’s Committee for Review ofNPAs on the findings of this investigation;

2.

examination be initiated for wilful default immediately upon reporting fraud to RBI; and3.report on the borrower be sought from the Central Economic Intelligence Bureau in casean account turns NPA.

4.

Fugitive Economic Offenders Act, 2018 has been enacted to deter economic offendersfrom evading the process of Indian law by remaining outside the jurisdiction of Indiancourts. The act provides for attachment of property of a fugitive economic offender,confiscation of such offender’s property and disentitlement of the offender from defendingany civil claim.

5.

PSBs have been advised to obtain certified copy of the passport of the promoters/directorsand other authorised signatories of companies availing loan facilities of more than Rs. 50crore and, decide on publishing photographs of wilful defaulters, in terms of Reserve Bankof India (RBI)’s instructions and as per their Board-approved policy and to strictly ensurerotational transfer of officials/employees. The heads of PSBs have also been empoweredto issue requests for issue of Look Out Circulars.

6.

For enforcement of auditing standards and ensuring the quality of audits, Government hasestablished the National Financial Reporting Authority as an independent regulator.

7.

Instructions/advisories have been issued by Government to PSBs to decide on publishingphotographs of wilful defaulters, in terms of RBI’s instructions and as per their Board-approved policy, and to obtain certified copy of the passport of the promoters/directors andother authorised signatories of companies availing loan facilities of more than Rs. 50 crore.

8.

In order to bring transparency and accountability in the larger financial system, bankaccounts of 3.38 lakh inoperative companies were frozen over the last two financial years.

9.

The impact of the above steps is reflected in RBI’s Financial Stability Report (FSR) of June2019. As per FSR, systemic and comprehensive checking of legacy stock of NPAs of PSBsfor frauds has helped unearth frauds perpetrated over a number of years, which is gettingreflected in increased number of reported incidents of frauds in recent years compared to

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previous years. The details of frauds of Rs. 1 lakh and above that occurred during the lastthree financial years (FYs), reported by PSBs to RBI, as per inputs received from RBI, are asunder:

FY ofoccurrence

Number ofcases

Amount involved

(in crore Rs.)

2016-17 1,745 24,291

2017-18 1,545 6,916

2018-19 739 5,149

Bank-wise details are at Annex.

Note: Figures cited above for PSBs include those for IDBI Bank Limited, which wasrecategorised as a private sector bank by RBI with effect from 21.1.2019.


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Annex

Details of frauds (Based on date of occurrence - Amount Involved Rs. 1 lakh and above) forPublic Sector Banks

Amounts in crore Rs.

Bank NameFY

2016-17FY

2017-18FY

2018-19

Comprehensive measureshave been taken toprevent frauds includingdirections to banks toexamine all NPA accountsabove Rs. 50 crore fromthe angle of possiblefraud, initiation of criminalproceedings, enactmentof Fugi t ive EconomicOf fenders Ac t 2018 ,

Allahabad Bank 63 11 12

Andhra Bank 36 37 11

Bank of Baroda 140 84 32

Bank of India 95 99 52

Bank of Maharashtra 34 32 38

Canara Bank 48 50 24

Central Bank of India 59 56 45

Corporation Bank 52 12 5

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Dena Bank 24 11 3

creation of Central FraudRegistry, empoweringBank Heads to request fori s s u e o f L o o k O u tCircular, establishment ofN a t i o n a l F i n a n c i a lR e p o r t i n g A u t h o r i t y ,S t r a i g h t t h r o u g hprocessing between CoreBank ing Sys tem andSWIFT, advice to banks toobtain certified copy ofpassport of promoters/directors of companiesavailing loan exceedingRs. 50 crore etc.

IDBI Bank Limited 91 94 99

Indian Bank 70 47 20

Indian Overseas Bank 53 34 30

Oriental Bank of Commerce 42 24 8

Punjab and Sind Bank 22 3 0

Punjab National Bank 101 108 33

State Bank of India 469 618 236

State Bank of Bikaner andJaipur

5

MergedwithSBI

MergedwithSBI

State Bank of Hyderabad 6

State Bank of Mysore 12

State Bank of Patiala 6

State Bank of Travancore 15

Syndicate Bank 127 78 27

UCO Bank 31 41 27

Union Bank of India 83 69 15

United Bank of India 29 15 20

Vijaya Bank 32 22 2

Source: RBI

Note: IDBI Bank Limited was recategorised as a private sector bank by RBI with effect from21.1.2019.

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JOBLESS GROWTH BECOMES MORE SYSTEMICRelevant for: Indian Economy | Topic: Issues Related to Poverty, Inclusion, Employment & Sustainable

Development

Concept of business movement, Arrows

The findings of the latest employment survey, called the Periodic Labour Force Survey (2017-18), are a cause for concern as the scenario is still far from anything that would denote decentemployment. The two biggest issues here are: the shrinking share of the labour force; and therising unemployment.

The labour force participation rate (% of people working or seeking work in the above-15 yearsage category) in the earlier survey of 2012 was 55.5%. This has shrunk to 49.7% in 2018. Thereis an absolute decline in the number of workers from 467.7 million in 2012 to 461.5 million in2018.

Recent attempts by some to create an impression that self-employment has not been capturedby the National Sample Survey is absolutely false since the definition of ‘employment’ includesin itself ‘self-’ as well as ‘wage employment’. Within the category of ‘self-employed’, the surveyalso counts those engaged in ‘unpaid family labour’.

Can the government help create jobs?

The figure for the overall unemployment rate at 6.1% is 2.77 times the same figure for 2012. Afew experts have raised doubts about comparability of estimates between the two periodsthough we feel that they are not substantial issues that prevent anyone from a judiciouscomparison.

The rise in overall unemployment has both locational and gender dimensions. The highestunemployment rate of a severe nature was among the urban women at 10.8%; followed byurban men at 7.1%; rural men at 5.8%; and rural women at 3.8%.

When we ignore the location of residence, we find that severe unemployment among men at6.2% was higher than among women at 5.7%. However, given the sharp decline in women’slabour force participation rate, they have been losing out heavily due to the double whammy ofexclusion from the labour force and an inability to access employment when included in thelabour force. The decline in women’s labour force participation from 31% to 24% means thatIndia is among the countries with the lowest participation of women in the labour force.

The issue of educated unemployment, given its link with not just growth but also withtransformative development, has never been as acute as at present. Defined as unemploymentamong those with at least a secondary school certificate, it is at 11.4% compared to the previoussurvey’s figure of 4.9%.

The sum and substance of the jobs data

But what is significant is that the unemployment rates go up as levels of education go up.Among those with secondary school education, it is 5.7% but jumps to 10.3% when those withhigher secondary-level education are considered.

The highest rate is among the diploma and certificate holders (19.8%); followed by graduates

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(17.2); and postgraduates (14.6%).

Of course, educated persons are likely to have aspirations for specific jobs and hence likely togo through a longer waiting period than their less-educated counterparts. They are also likely tobe less economically deprived. But the country’s inability to absorb the educated into gainfulemployment is indeed an economic loss and a demoralising experience both for the unemployedand those enthusiastically enrolling themselves for higher education.

Here again, the burden is the highest among urban women (19.8%) followed by rural women(17.3%), rural men (10.5%) and urban men (9.2%). Among the educated, women face a moreunfavourable situation than men despite a low labour force participation rate. Compared to theearlier 2012 survey, unemployment of educated men has more than doubled in both rural andurban areas and in the case of women, the rate has nearly doubled. However, it is important toremember is that the rate was higher for educated women, when compared to educated men, inboth the periods.

It is almost scandalous that youth unemployment rate (unemployment among those in the 15-29years age category) has reached a high 17.8%. Even here, the women stand moredisadvantaged than the men, especially urban women, whose unemployment rate of 27.2% ismore than double the 2012 figure of 13.1%. The rate for urban men, at 18.7%, is particularlyhigh as well.

The overall conclusion here is that the trend of ‘jobless growth’ that was till recently confinedlargely, if not only, to the organised sector has now spread to other sectors of the economy,making it more generalised. This calls for a thorough re-examination of the missing linkagesbetween growth and employment.

K.P. Kannan is a former Director, Centre for Development Studies. G. Raveendran is a formerAdditional Director General, Central Statistical Organisation










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TREAD WITH CAUTION: ON LABOUR LAWSRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Industry & Services Sector


As part of its commitment to simplify and consolidate labour rules and laws under four codes,the Union Cabinet has cleared the Occupational, Safety, Health and Working ConditionsCode, a week after it approved the Code on Wages Bill. The latter seeks to include moreworkers under the purview of minimum wages and proposes a statutory national minimum wagefor different geographic regions, to ensure that States will not fix minimum wages below thoseset by the Centre. These steps should be welcomed. The Code on labour safety and workingconditions include regular and mandatory medical examinations for workers, issuing ofappointment letters, and framing of rules on women working night shifts. Other codes that awaitCabinet approval include the Code on Industrial Relations and the Code on Social Security.Unlike these pending bills, especially the one related to industrial relations that will bescrutinised by labour unions for any changes to worker rights and rules on hiring and dismissaland contract jobs, the two that have been passed should be easier to build a consensus on, inParliament and in the public sphere. Organised unions have vociferously opposed changesproposed in the Industrial Relations code, especially the proviso to increase the limit for priorgovernment permission for lay-off, retrenchment and closure from 100 workers as it is currently,to 300. The Economic Survey highlighted the effect of labour reforms in Rajasthan, suggestingthat the growth rates of firms employing more than 100 workers increased at a higher rate thanthe rest of the country after labour reforms. But worker organisations claim that theimplementation of such stringent labour laws in most States is generally lax. Clearly, a cross-State analysis of labour movement and increase in employment should give a better picture ofthe impact of these rules.

Simplification and consolidation of labour laws apart, the government must focus on the keyissue of job creation. The Periodic Labour Force Survey that was finally made public in late Mayclearly pointed to the dire situation in job creation in recent years. While the proportion ofworkers in regular employment has increased, unemployment has reached a 45-year high. Theworker participation rate has also declined between surveys held in 2011-12 and 2017-18. Thegovernment’s response to this question has either been denial, as was evident after the draftPLFS report was leaked last year, or silence, after it was finally released. In such a situation, thegovernment should be better off building a broader consensus on any major rule changes toexisting worker rights rather than rushing through them for the sake of simplification. Theconsolidated code bills should be thoroughly discussed in Parliament and also with labourunions before being enacted.


An RBI panel’s suggestions on the MSME sector cut to the heart of crucial issues






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FIRST, LET THERE BE INVESTMENTRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Public Finance, Taxation &



Bijapurkar is the author of We Are Like That Only and A Never-before World: Tracking theevolution of Consumer India.

The 2019 Economic Survey’s focus on investment as a key driver of economic growth is verywelcome. It changes the alarming paradigm that business and media have been working with —since investment is not happening, in order to bolster slowing economic growth the focus ofpolicymaking should shift to boosting consumption, with cash transfers, reduced excise duties,decreased interest rates on retail loans and so on. Why investment has slowed down and how torevive it has not received even a fraction of the public attention that consumption has.

There are few takers for the notion, despite data, that for most of consumer India, unlessincomes grow there is no way consumption can or should grow. Only the richest 20 per cent ofIndian households (R20), which incidentally is the so-called middle class (based on mostpeople’s mental models of the middle class) have surplus money (income minus expenditure) togrow their expenditure faster than their incomes. The rest have virtually no surplus even in goodtimes.

Consumption growth when economic activity is slow can only come from more consumption byR20, of the things that they consume, much of which is discretionary. Consumption growth fromthe rest can’t happen unless their incomes grow. This can’t happen if investment is slowresulting in slow economic activity, and hence lower earning opportunities. This problem is evenmore pronounced given that the majority of Indians, including R20, are self-employed and don’tget a regular income. It is not prudent to say “let them eat cake” by lowering interest rates andencouraging more people to borrow to consume. Most will be hard pressed to pay their EMIs,even at lower interest rates. Economist friends patiently explain why getting a GDP growthnumber on the back of an unreal, propped up consumption is a good thing to do. “Think of it likea glucose booster shot for the economy,” they say. But are booster shots the best way to dealwith a body weakened by ailments?

From this perspective, it is very reassuring that the Economic Survey and Union Budget havestayed away from administering such booster shots as the mainstay of the economic revivalstrategy, and have focused instead on addressing the fundamental problem of increasingeconomic activity. Through the mantra of “investment-led growth”, the Economic Survey puts thehighest priority on strengthening the supply side to rev up economic activity. Through theplanned massive infrastructure push in the Budget and the focus on what the Economic Surveycalls behavioural nudges, the life-foundation of consumer India, the goose that lays the goldenegg of consumption is sought to be strengthened.

It is well known that every unit of improvement in living infrastructure and human capital createsa disproportionate and sustainable jump in consumption over time. The Economic Survey doesmention stimulating consumer demand but more in the context of better administration of theminimum wage system. It mentions, in passing, the link between the minimum wage for thepoorest sections of citizens and strengthening the middle class, but that is a leap as wide as thechasm that exists in income and social distance between them. It, however, stopped well short

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of suggesting additional money for the purpose of directly stimulating consumption.

It is also time for the media and India Inc. to buy in and shift the narrative around corporatefinancial performance from what the government should do to make the macro environment lesshostile and more supportive, to what individual companies can do by way of strategy, ability andefforts to improve their performance when consumer incomes are growing slowly. Thegovernment of India is not India Inc’s marketing director in charge of making top lines grow.

Growing revenue and profits in times of slow consumer income growth can come fromcompeting across categories for a larger share of the enormous household consumptionexpenditure that already exists, even after removing around half of it for essentials. In toughtimes, summer holiday travel and new two-wheelers compete, as do premium toiletries and newclothes. Market share growth is another obvious route available. The last quarter of 2018-19underscored these two points. Even as the media yelled “doomsday, consumption slows down”,there was a wide variation in levels of performance across different product categories andcompanies.

Slowdowns in consumption are perceived when expectations based on past growth rates are notmet. Fundamental changes are afoot in consumer India, which may require an adjustment ofexpectations.

Consider televisions. Recently, a stock market analyst said that the macroeconomic scenario isreally worse than what we thought because of poor television set sales, despite the World Cup.From the consumer point of view, the answer is clear. The 30 per cent of Indians who are yet toown a TV are seriously low income and will buy one as soon as they have a steady income. Thereplacement and upgrade demand that had fuelled the category in the past is now morediscretionary than ever because the quality and features and service levels of existing TVs arepretty good. Many people are choosing to upgrade their mobile phones instead. Home theatres,once a favourite upgrade category for the rich, are not so hot any more because going toEngland to watch the match (as you can see from the crowd shown on TV) is the new cool thing.

Let’s take the case of cars: Creating a more favourable macro environment for car companies todo well isn’t necessary. Car sales are restricted to R20 households (a chunk of whom are inrural areas) and ownership in R20 is still so low that there is plenty of room for growth. There’splenty of surplus money with these people to buy a car and banks love to lend to them.However, if they are choosing not to buy then stimulating consumption by the government is justtapping into their greed and giving money to the poor will not help. It has to be the carcompanies who tempt them to buy, making long term-short term trade-offs.

The two-wheeler story is different. Two-wheeler buyers come from all income groups across theboard, in both rural and urban India, and in the absence of a humming investment-led economyoffering plenty of work, and with rising fuel prices, significant buy, replace or upgrade salesaren’t going to happen even with stimuli. Two-wheeler buyers are the heart of the Indianconsumer and revving up the economy will make them immediately upgrade their foremostproductivity tool.

Indian consumers are dying to consume more. Consumption growth will follow income growth,which will follow more available work. That’s why the push for investment and public goods inthis budget, rather than a push for propping up consumption, is so important.

Bijapurkar is the author of We Are Like That Only and A Never-before World: Tracking theevolution of Consumer India

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WAGE IMBALANCERelevant for: Indian Economy | Topic: Issues Related to Poverty, Inclusion, Employment & Sustainable

Development


Last week, the Union cabinet approved the revised version of the Code on the Wages Bill. Thebill envisages a national minimum wage, linked to factors such as skill level and geographicalregion. This national wage would effectively serve as a floor wage, with states having the optionof setting higher wages. Minimum wage legislation forms a vital component of the architecturefor social protection. A well designed minimum wage system, as articulated in the EconomicSurvey 2018-19, can help “reduce inequalities in income, bridge gender gaps in wages andalleviate poverty”. It could also help address the imbalance of power between workers andemployers.

Having said that, the government must carefully think through the consequences of this move forthe very constituency it seeks to address. There is concern that if wages are pushed up, withoutbeing linked to productivity, companies will respond by hiring fewer workers. In a country wherepreference for capital intensive production is well documented, despite the abundance of labour,a high minimum wage may further skew the capital-labour ratio. It is also likely that companieswill try to circumvent the system by opting to route part of their workforce through informalchannels. By pushing up costs, a high minimum wage could erode competitiveness, makingcertain segments economically unfeasible. Coming at a time when India is struggling to findways to boost exports, especially those of labour intensive sectors such as garments, such amove might have unintended consequences. And while the bill has proposed to take intoaccount regional variations, wage differences across regions could impact labour mobility. Then,there’s also the structure of the labour market in India to consider. The duality of the labourmarket, characterised by the presence of a large informal sector — 93 per cent workers are inthe informal economy according to the latest Economic Survey — suggests that enforcement islikely to be problematic.

It is also true that with little bargaining power, workers are being squeezed, and that thegovernment must intervene to address this. Though the share of workers’ wages in gross valueadded has risen to 12.7 per cent in 2016-17, up from a low of 9.2 per cent in 2007-08, it remainswell below levels seen in the early 1980s. But it must be asked whether, for serving the goals ofequity and justice, a high minimum wage is the best way forward. Lowering the costs associatedwith formalisation, creating more flexible labour laws, might be a more prudent approach.





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STARTUP INDIA PROGRAMME FOR MSME SECTORRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Industry & Services Sector



Startup India Programme for MSME Sector


Government has launched the Startup India Initiative with the objective of building strong eco-system for nurturing innovation and startups in the country. The incentives available to Startupsunder Startup India initiative are given below:

Self-Certification under 6 Labour Laws & 3 Environmental Laws.i.Relaxation in Public Procurement Norms.ii.Faster exit under the Bankruptcy Code.iii.Rebates on Patent & Trademark filing fees, support from facilitators and to expediteexamination of Patent application.

iv.

Income Tax exemption.v.Exemption from Income Tax on investments received above fair market value.vi.Funding support under the Fund of Funds for Startups.vii.Guidance and facilitation support from Startup India Hub.viii.

Government has notified Public Procurement Policy for Micro and Small Enterprises (MSEs)Order, 2012 under MSMED Act, 2006. The policy mandates 25% annual procurement fromMSEs by Central Ministries/Departments/Public Sector Enterprises (CPSEs). Out of 25% targetof annual procurement from MSEs, 4% is earmarked for procurement from MSEs owned bySC/ST entrepreneurs and 3% from MSEs owned by Women Entrepreneurs. In order to monitoreffective implementation of this Policy, Ministry of MSME has launched a Portal, namely, MSME“SAMBANDH”

This information was given by Shri Nitin Gadkari, Union Minister for Micro, Small and MediumEnterprises in written reply to a question in Lok Sabha today.

*****

NP/SKP/IA


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MAXIMISE REVENUE, MINIMISE TAXRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Public Finance, Taxation &



The writer is Contributing Editor at The Indian Express, and Consulting Editor at Network 18

Bhasin is a New Delhi based policy researcher

Budget 2019-20 contained major tax changes to direct taxes, both personal and corporate. Itmay have been the last time that we witnessed such changes. Very likely, when Budget 2020-21is presented, the government would have accepted the direct tax code report, and direct taxeswill go the way of excise taxes — out of the budget.

The budget reduced the corporate tax rate (CTR) from 30 per cent to 25 per cent for all firmswith a turnover of Rs 400 crore. Earlier, the 25 per cent slab was applicable for firms with aturnover of Rs 250 crore. The FM stated that this move would cover 99.3 per cent of all firms inIndia. However, it is unclear as to how much of the total corporate taxes is accounted for bythese 99.3 per cent of firms. Speculation abounds – is it as low as 10 per cent? We do not know.

Tax rates are always an item of discussion and debate, and now more so than ever. PresidentDonald Trump lowered the CTR for the US from 35 per cent to 21 per cent in 2018. As shownbelow, the lower tax rate was well chosen by Trump because that is close to the optimal tax rate.But that is getting ahead of the story.

OECD has recently released a comprehensive set of data on corporate taxes, for close to a 100economies. [https://stats.oecd.org/ Index.aspx?DataSetCode=RS_GBL]. The data reveals whathas been feared (and argued) for a long time — India has one of the highest (actually thehighest) corporate tax rate in the world. And, according to OECD, it also has the highesteffective corporate tax rate (ECTR) — and that to by a huge margin. India’s ECTR is estimatedby OECD at 44 per cent. Their definition includes all taxes paid by corporates in different

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countries — for example, corporate tax, dividend tax, capital gains tax. Incidentally, the second-highest ETR is for Argentina and it is 9 ppt (percentage points) lower than India, and third isFrance, 11 ppt lower. China’s ECTR is 20 ppt lower than India at 23.6 per cent! One reason whyChina has got all the investments, and growth, at least relative to India?

In this age of globalisation, no country is an island. Competitiveness is affected by tax rates,interest rates, exchange rates, and labour costs. However, gone are the days when countriescould devalue their way to prosperity. China accomplished this via massive undervaluation forabout 20 years, from 1990-2010. Their success ensured that such undervaluation (readcurrency manipulation) would never again be allowed by the Western powers. It is likely thatTrump’s trade war would not have occurred if China had been more responsible with the settingof its exchange rate.

What can countries do to improve their competitiveness, given that the mercantilist route is nolonger an option? They can reduce its cost of capital, make labour more competitive, makeindustry more competitive, and rekindle animal spirits. On the first three counts, the budget hasmoved in the right direction. Sovereign bond borrowing is an idea whose time has definitelycome, notwithstanding the perennial naysayers and those not comprehending the fundamentalnature of change in the world. Inflation nowhere (including India) is the bogey it once was. Alsonaysayers should note, and answer the following question — between fiscal years 2004 and2011 (the so-called Golden Age of Indian growth) the real repo rate averaged minus 1 per cent.For the fiscal years 2016-2018 real repo rates averaged 2.3 per cent. Go figure the growthimplications.

Since Shaktikanta Das assumed governorship of the RBI, there has been considerableimprovement in communication and a gradual lowering of policy rates, but this has also beenaccompanied by a more than equal lowering of inflation, that is, the real repo rate has yet tomove below 2.3 per cent. The sovereign bond issue will help, but don’t look for a quickacceleration in GDP growth.

Exchange rate change is no longer operational, labour codes are too slow to change, andmonetary policy is sluggish in its operation, and impact. The only real growth option for Indianpolicymakers — cut tax rates to internationally competitive levels. And what might that be?Around 22 per cent for all firms, and we obtain that result from a comparative study (see below— and chart).

But first, a comment on the personal income tax (PIT) rate increase in the budget. The move toincrease PIT rates to developed country levels is not in the right direction. It seems that therewas more old-fashioned morality (tax the rich) than revenue maximisation at play. At best, thegovernment plans to raise Rs 5,000 crore more by socking it to the rich. (Total personal incometax collection is budgeted at Rs 5,00,000 crore). And even that may not happen as tax arbitragebetween the much lower corporate tax rate and the near highest individual income tax rate (only10 per cent of countries have a higher than 43 per cent top PIT rate) will move animal spiritstowards payment of corporate tax. And if not tax arbitrage, tax evasion may lower gain in PITcollection.

Ostensibly, tax rates are set to maximise tax revenue — and tax revenue depends on bothincome and tax compliance. Tax compliance can either be considered as more firms filing taxesor more firms revealing a closer approximation to true income. Improving compliance alone canensure greater resource mobilisation through taxation — and without increasing the tax rate(and may indeed occur if the tax rate is reduced).

The non-linear relationship between tax rate and tax revenue (as per cent of GDP) is revealed

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by the famous Laffer curve – with zero tax rates, you get zero tax revenue and with 100 per centtax rate, you get zero tax revenue. In-between, logically, the share of tax revenue increases,before peaking and declining toward zero. Several “truths” become evident from even a cursoryglance at the chart. First, that OECD cross-country data for 2017 conforms (fits) the inverted U-shaped curve rather well — and the inverted U is a close approximation to a normal distribution(red line in chart). Second, that the lowest bang for the tax buck is obtained in India, possiblybecause tax rates are set on the basis of morality rather than revenue maximisation. In India, wetax at 44 per cent to get 3.5 per cent of tax revenue (as percentage of GDP). Both Korea andIsrael (and other countries) obtain this same amount of revenue with half of India’s taxationlevels. As the chart shows, the tax rate level at which revenue is maximised is around 23 percent — half India’s tax level.

Why is the effective tax rate in India so high? In India, firms must pay a corporate tax, which isfollowed by a

surcharge and an additional 15 per cent dividend distribution tax (DDT). The revenuemobilisation from DDT is marginal compared to the overall tax revenue from corporate taxes.Estimates suggest that the resource mobilisation from DDT is just around 8 per cent of the totalcorporate tax revenue. A steep 15 per cent DDT only dissuades firms from issuing dividends totheir shareholders. Forget about double taxation as there’s another moral Indian tax icing — ifan individual earns more than Rs 10 lakh of dividend income, she must pay an additional 10 percent tax. So the same income is taxed thrice in India — and only in India.

Both the budget and the Economic Survey focused on revival of private investment to ensuresustained long-term growth. Thus, there is strong case for further and aggressive reduction intax rates on the grounds of revival of investment, and helping India become a $5 trillioneconomy. With another budget just six months down the line, there is hope that the governmentwill realise its mistake and depart from misguided taxation policies.

Bhalla is contributing editor, The Indian Express. Bhasin is a New Delhi-based policy researcher.Views are personal





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CRISIS IN JUTE INDUSTRYRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Industry & Services Sector


Ministry of Textiles

Crisis in Jute Industry


There is no report of crisis in jute industry including closure of jute mills, loss of jobs, intensecompetition and cheap imports from Bangladesh. In-fact, during the last two years 10 jute twinemills have re-opened in Andhra Pradesh benefitting 20,000 workmen directly and indirectly. Witha view to protect domestic jute industry, anti- dumping duty on import of jute goods fromBangladesh and Nepal has been imposed w.e.f. 5th January, 2017. The details of jute/juteproducts produced and imported/exported during the last three years is at Annexure-A.

Government of India is implementing various schemes for welfare of jute workers, improvingproductivity and quality of jute and overall development of jute industry in jute growing states.The details of various schemes implemented for upliftment of jute sector are at Annexure-B.

National Jute Board (NJB) is implementing the Incentive scheme for Acquisition of Plants andMachinery (ISAPM) for modernization in Jute mills & JDP units. During 2014-15 to 2018-19,NJB has released capital subsidy amounting to Rs. 4971.19 lakhs to jute mills and JDP units.

Year 2014-15 2015-16 2016-17 2017-18 2018-19*

Assistance/Subsidy(Rs. In lakhs)

362.18 355.57 1739.21 1427.23 1087.00

No. of Mills / unit 18 22 39 52 27

Details of jute mills those who participated under this scheme and availed assistance are givenat Annexure C.

Annexure-A

Production of Jute Goods

Qty: ‘000 M. Tons

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Hessian SackingCarpet

BackingCloth

Yarn Others Total

2016-17 178.6 871.6 3.0 93.3 45.8 1142.3

2017-18 173.3 902.7 1.9 51.7 48.5 1178.1

2018-19 141.0 846.5 0.5 45.2 47.1 1080.3

Source: Indian Jute Mills Association

Total Exports of Jute goods

Qty: 000’ M. Tons

Value: Rs. / Crore

Year Hessian Sacking Yarn Others JDPs Total Qty. Value Qty. Value Qty. Value Qty. Value Value Qty. Value

2016 - 17 78.6 930.18 46.6 411.80 9.2 72.76 4.1 68.50 590.95 140.7 2074.202017 – 18 86.8 917.24 44.8 407.19 16.9 130.19 4.2 72.43 631.49 155.3 2158.562018 – 19 64.1 802.69 37.0 432.91 13.6 109.42 7.0 112.75 815.50 121.7 2273.27

Source: DGCI&S, Kolkata

Total Imports of Jute goods (from Bangladesh)

Qty: 000’ M. Tons

Value: Rs. / Crore

Year Hessian Sacking Yarn Others JDPs Total Qty. Value Qty. Value Qty. Value Qty. Value Value Qty. Value

2016 - 17 5.9 57.56 43.8 307.43 79.1 502.43 9.7 54.17 10.02 140.2 931.602017 – 18 11.9 122.37 45.4 413.73 50.0 310.94 7.5 23.82 9.43 115.4 880.282018 – 19 18.1 184.40 54.1 432.66 49.2 292.13 5.8 30.39 12.34 108.3 951.92


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Exports of jute goods to Top 20 Countries

Value: Rs. / Crore

2016-17 2017-18 2018-19

Sl. Country Value % Country Value % Country Value %

1 U S A 415.31 20 U S A 454.07 21 U S A 492.73 22

2 GHANA 168.62 8 GHANA 183.87 9 GHANA 258.38 11

3 U K 155.92 8 U K 141.81 7 U K 158.82 7

4GERMANY

99.81 5COTE D’IVOIRE

107.53 5NETHERLAND

114.62 5

5NETHERLAND

98.37 5GERMANY

99.75 5AUSTRALIA

98.70 4

6AUSTRALIA

82.40 4 NEPAL 92.59 4GERMANY

97.19 4

7SAUDIARAB

71.74 3NETHERLAND

82.63 4COTE D'IVOIRE

81.15 4

8COTE D'IVOIRE

68.05 3SAUDIARAB

78.49 4 SPAIN 76.63 3

9 SUDAN 56.18 3AUSTRALIA

48.37 2INDONESIA

52.82 2

10U ARABEMTS

51.10 2U ARABEMTS

47.17 2NEWZEALAND

52.69 2

11 CANADA 42.95 2 TURKEY 42.14 2SAUDIARAB

52.13 2

12 ITALY 42.43 2INDONESIA

39.57 2 FRANCE 47.59 2

13EGYPTA RP

39.23 2 CANADA 38.63 2 ITALY 39.99 2

14 SPAIN 34.72 2BELGIUM

37.46 2U ARABEMTS

39.67 2

15NEWZEALAND

33.38 2 ITALY 37.38 2BELGIUM

36.93 2

16BELGIUM

32.94 2 SPAIN 36.70 2 JAPAN 34.06 1

17TANZANIA REP

32.61 2EGYPT ARP

35.90 2 CANADA 33.15 1

18 TURKEY 32.51 2TANZANIA REP

31.81 1 SUDAN 32.70 1

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19 JAPAN 28.51 1NEWZEALAND

31.46 1TANZANIA REP

32.70 1

20 FRANCE 27.45 1 FRANCE 30.68 1 PERU 19.82 1

Total of20countries

1614.23 79

Total of20countries

1698.01 80

Total of20countries

1852.47 79

Total ofAll jutegoods

2074.20 Total ofAll jutegoods

2158.56 Total ofAll jutegoods

2273.27


Annexure-B

Steps/Schemes for welfare of jute workers, development of jute industry, resolvingproblems of jute producers and increasing productivity and export of jute:

Mandatory Packaging in Jute Materials

Under the Jute Packaging Materials (Compulsory Use in Packing Commodities) Act, 1987,Government specifies the commodities and the extent to which they are mandatorily requiredto be packed in Jute Packaging Materials. At present, a minimum of 100% of food grains and aminimum of 20% of sugar are to be compulsorily packed in jute sacking.

MSP operation in raw jute

Whenever the market price of raw jute falls below a certain level, the Jute Corporation of India(JCI) procures raw jute at Minimum Support Price (MSP), fixed on the basis of recommendationof the commission for Agricultural Cost and Prices (CACP) from jute growers to safeguard theirinterest.

Workers’ Welfare Scheme:

Swachhatta Abhiyan – Sulabh Sauchalaya:

NJB provides assistance to the jute mills for improvement of sanitation, health facilities andworking conditions of jute mill workers. The rate of assistance is @90% of actual expensessubject to maximum of Rs. 60.00 lakh (per mill / annum). Under this scheme, 1365 Toilet unitshave been constructed in 46 Jute Mills from 2014-15 to 2018-19.

Scholarship Scheme for the girl children of the workers of jute mills, JDP-MSMEs

NJB provides Scholarship / Incentive support to the girl children of the workers of Jute Mills /JDP – MSME units on passing out Secondary and Higher Secondary examinations. Scholarship/ Incentive of Rs. 1133.05 lakh have been given to 17,722 girl children of Jute Mills / JDP MSMEworkers for being successful in Secondary and Higher secondary examinations from 2014-15 to2018-19.

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JUTE –ICARE (Jute: Improved Cultivation and Advanced Retting Exercise)

National Jute Board (NJB) in association with Jute Corporation of India Ltd (JCI) and CentralResearch Institute for Jute and Allied Fibres (CRIJAF), Ministry of Agriculture is implementing anscheme for welfare of Jute farmers namely Jute –ICARE (Improved Cultivation and AdvancedRetting Exercise) for the last four years in a phased manner covering 69 blocks under jutegrowing states till 2018-19. Through this scheme, the farmers have been encouraged to growjute by using certified seeds, adopting scientific technique in jute cultivation and retting toproduce quality jute and increase productivity and to reduce the cost of jute production for thejute farmers.

Incentive Scheme for Acquisition of Plant & Machinery

Keeping in mind the need to modernise the jute mills by increasing their productivity and toreplace the old machines by new and technologically advanced machines; National Jute Board(NJB) has been implementing schemes for modernization of jute industry. The scheme has beeninstrumental in bringing new investment to the industry. The ISAPM scheme has been launchedin 2013 with an incentive @20% of the cost of machineries to Jute mills and 30% to the MSME–JDP units. During 2014-15 to 2018-19, capital subsidy amounting to Rs. 4971.19 lakhs to jutemills and JDP units has been released.

Market Promotion Support

Market Promotion support is provided to the jute artisans, entrepreneurs, weavers, NGOs,Women Self Help Groups (WSHGs) for selling, marketing and promotion of their products inIndia and abroad. The fairs organized by NJB are means of livelihood to these groups of people.Some of the prominent events among others were – IITF, Delhi, Surajkund Mela, Tex Trends,Delhi, Taj Mahotsav, Lucknow Mahotsav, Shilpgram Udaipur, Giftex, Mumbai, Indian Handicraftsand gift fair, Greater Noida etc where National Jute Board organise and facilitate participation ofjute units for promotion of jute products. The Market Promotion Support beneficiaries are JDPUnits, Jute Mills, WSHGs etc.. The Market promotion fairs/exhibitions are organised andparticipated in throughout the country. NJB also provides export promotion supports to the juteexporters and facilitate participation in International fairs Business delegation, Buyer Seller Meet(BSM) for boosting exports.

Design Development Scheme - NJB Jute Design Cell at NID

A Jute Design Cell for development of Jute Shopping Bags and Lifestyle Accessories has beenset up at the Innovative Centre for Natural Fibres (ICNF) of National Institute of Design (NID),Ahmedabad.

Jute Integrated Development Scheme (JIDS)

JID Scheme aims at setting up local units and agencies at distant locations around the countrythrough collaboration with bonafide bodies to carry out various activities. JID agencies act as afacilitator for providing Basic, Advance and Design Development training programmes andrendering the backward and forward linkages to the existing and potential entrepreneurs at

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grass-root levels mainly on technology application and design /product development anddisseminations.

Jute Raw Material Bank (JRMB) Scheme

The scheme has been designed to make jute raw material available to the small and tinyartisans / entrepreneurs locally at mill gate price, suiting to the present requirement andsustainability of the decentralized JDP sector in the country.

Export Market Development Assistance Scheme

Export Market Development Assistance (EMDA) Scheme facilitates registered manufacturersand exporters of jute products to participate in international fairs and business delegation abroadfor export promotion of lifestyle and other JDPs and boost exports. During 2014-15 to 2018-19,an amount of Rs. 17.21 crores has been disbursed to registered jute exporters for participationin international fairs under the scheme.

Retail Outlet of Jute Diversified Products and Bulk Supply Scheme

Retail Outlet scheme supports supply chain and bulk supply of JDPs by the jute entrepreneursfor selective and mass consumption. During 2014-15 to 2018-19, an amount of Rs. 347.90 lakhhas been provided to 80 beneficiaries/entrepreneurs under this scheme.

Annexure-C

State/Mill-wise disbursement of Incentive under ISAPM Scheme

Sl. No.Name of the JuteMill

Incentive Amount releasedTotal(Rs.)2016-17

(Rs.)2017-18(Rs.)

2018-19(Rs.)

West Bengal

1

H o o g h l yInfrastructure Pvt.Ltd.( H u k u m c h a n dJute Mill)

6,139,800

2,029,000

153,000

8,321,800

2Dalhousie JuteCompany

880,000

7,628,666

3,258,000

11,766,666

3Kanknarrah Co.Ltd.

826,952

6,477,827

7,304,779

4A l l i a n c e M i l l s(Lessees) Ltd.

6,687,000

944,000

4,567,000

12,198,000

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5

Aditya Translink(P) Ltd.( S a m n u g g u rNorth)

1,444,000

236,000

1,680,000

6Jagatdal Jute &Industries Ltd.

4,974,385

5,107,000

10,081,385

7R D B T e x t i l e sLimited(Victoria Jute Mill)

1,165,200

1,665,000

6,249,400

9,079,600

8Vijai Shree Ltd.( F o r t W i l l i a mJute)

890,000

2,985,000

2,346,000

6,221,000

9 Ashoka Exports

270,520 386,400

697,435

1,354,355

10Ludlow Jute &Specialities Ltd.

2,030,920

2,576,602

4,607,522

11Cheviot CompanyLtd.

13,761,506

211,500

13,973,006

12T h e A n g u sCompany Ltd.

697,000

225,600

922,600

13The Naihati JuteMills Co. Ltd.

2,830,400

14,988,000

17,818,400

14Caledonian Jute& Industries Ltd.

2,771,000

2,928,600

2,359,700

8,059,300

15Bowreah Jute MillPrivate Ltd.

16,704,400

2,104,800

18,809,200

16

J a n k a l y a nVinimay Pvt. Ltd.( M e g n a J u t eMills)

807,000

1,780,000

2,587,000

17Maheswari JuteSpinners Pvt. Ltd.

4,898,000

1,609,600

6,507,600

18The Empire JuteCompany Ltd.

832,000

832,000

19R e l i a n c e J u t eMills (Int.) Ltd.

4,447,400

5,284,993

4,986,000

14,718,393

20 Gloster Limited

14,898,096

4,082,800

18,980,896

21K a m a r h a t t yCompany Ltd.

4,379,000

4,379,000

22Premchand Jute& Industries Pvt.Ltd.

8,184,171

8,184,171

23Kamakshi JuteIndustries Ltd.

3,973,444

3,973,444

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24 Birla Corporoation

25,000,000

25,000,000

25Sree Durga FibreProducts

820,000

820,000

1,640,000

26Uma Sp innersPvt. Ltd.

1,020,000

1,020,000

27Agarpara Ju teMills Ltd.

5,856,187

5,856,187

28Richie Bags &Fashion Pvt. Ltd.

92,824

92,824

29Trand VyapparLtd.

1,115,000

110,000

1,225,000

30G.D.Cement Pvt.Ltd.

360,000

360,000

31OSB OverseasPvt. Ltd.

146,700

146,700

32CMTP Expor tsPvt. Ltd.

400,500

400,500

33K a r i w a l aIndustries Ltd.

1,930,324

1,930,324

34The BaranagoreJute Factory Plc.

4,408,200

4,408,200

35Ganges Jute Pvt.Ltd.

10,022,724

10,022,724

36ECO Jute Pvt .Ltd.

1,545,400

1,545,400

37Tepcon Int . ( I )Ltd.

1,686,000

1,686,000

38G o y e a lMerchants Pvt.Ltd.

1,388,000

1,388,000

39The Hooghly MillsCo. Ltd.

27,000

27,000

40Budge Budge Co.Ltd.

9,887,200

9,887,200

41Ash is Bags &Fashions Pvt. Ltd.

571,200

571,200

42E a r t h B a g sExports Pvt. Ltd.

2,464,422

2,464,422

43 Auckland Int. Ltd.

1,666,800

1,666,800

44Mahadeo Jute &Industries Ltd.

352,000 352,000

45 Patra Jute Mil l

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Pvt. Ltd. 410,000 410,000

Total : (A)

104,492,194

109,105,347

50,863,057

264,460,598

Andhra Pradesh

1Andhra PradeshFibres Limited

178,000

178,000

2Sri SitaramaLakshmi JuteMills (P) Ltd.

1,328,258

1,328,258

3Rajam PolyPacks Ltd.

360,000

360,000

Total : (B)

1,866,258

1,866,258

Assam

1Prakash JuteIndustries Pvt.Ltd.

2,230,000

2,230,000

Total : (C)

2,230,000

2,230,000

Grand Total : (A)+ (B) + ( C)

268,556,856

This information was given by the Union Minister of Textiles, Smriti Zubin Irani, in a written replyin the Lok Sabha today.

***

MM/ SB



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TEXTILE EXPORT CLUSTERSRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Industry & Services Sector



Textile Export Clusters


There is no scheme for establishing textile export clusters at present.

Government is implementing the Scheme for Integrated Textile Park (SITP) underwhich support is provided for creation of infrastructure facilities on cluster basis underPPP mode. Fifty-ninetextile parks have been approved and are under various stagesof implementation as per statement attached.

The details of the textile units approved by Government are as follows:

S.no. Name of the park State

U n i t sProposed

Status

1HindupurVyapar Apparel ParkLimited

Andhra Pradesh 10 Sanctioned

2MAS Fabric Park (India) Pvt.Ltd.


3Brandix India Apparel CityPrivate Limited

Andhra Pradesh 17 Completed

4Tarakeswara Textile Park Pvt.Ltd.


5 Guntur Textile Park, Guntur Andhra Pradesh 61 Sanctioned

6 PragJyoti Textile Park at Assam Assam 42 Sanctioned

7 Gujarat Eco-Textile Park Limited Gujarat 33 Completed

8Mundra SEZ Textile & ApparelPark Limited

Gujarat 11 Completed

9 Fairdeal Textile Park Pvt. Ltd. Gujarat 30 Completed

10Vraj Integrated Textile ParkLimited

Gujarat 15 Completed

11 Sayana Textile Park Limited Gujarat 50 Completed

12 Surat Super Yarn Park Limited Gujarat 27 Completed

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13 RJD Integrated Textile Park Ltd. Gujarat 579 Completed

14 Kejriwal Integrated Textile Park Gujarat 34 Sanctioned

15Shanti Integrated Textile ParkPvt Ltd., Surat

Gujarat 45 Sanctioned

16Palsana ITP Park , Surat ,Gujarat


17Amitara Green High TechTextile Park Pvt Ltd.


18NSP Infrastructure PrivateLimited, Surat


19 Karanj Integrated Textile Park Gujarat 42 Sanctioned

20 Shahlon Textile Park Gujarat 25 Sanctioned

21Aalishan Eco Texti le Park,Panipat

Haryana 12 Sanctioned

22 Himachal Pradesh Textile Park Himachal Pradesh 8 Sanctioned

23 J&K Textile ParkJ a m m u a n dKashmir

27 Sanctioned

24Kashmir Wool & Silk TextilePark, Ghatti, J & k

J a m m u a n dKashmir

50 Sanctioned

25 Gulbarga Textile Park Pvt. Ltd. Karnataka 47 Sanctioned

26Doddabalapur Integrated TextilePark

Karnataka 72 Completed

27Metro Hi-Tech Cooperative ParkLtd

Maharashtra 72 Completed

28Baramati Hi-Tech Textile ParkLimited


29 Deesan Infrastructure Pvt. Ltd Maharashtra 50 Completed

30Islampur Integrated Textile ParkPvt Ltd., Sangli, Maharashtra


31Latur Integrated Textile Park PvtLtd, Latur, Maharashtra


32 AsmeetaInfratech Ltd. Maharashtra 599 Completed

33Pride India Co-operative TextilePark Limited


34Purna global Text i le ParkLimited

Maharashtra 89 Sanctioned

35K a l l a p p a n n a A w a d e C o -Operative Industrial Estate &Integrated Textile Park Ltd.


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36Satyaraj Integrated Textile Park,Shirol, Kolhapur


37Dhule Texti le Park, Dhule,Maharashtra


38Hinganghat Integrated TextilePark Pvt.Ltd.


39S h r i G a n e s h , D h u l e ,Maharashtra


40 Lotus integrated Textile Park Punjab 7 Completed

41Rhythm Textile & Apparel ParkLimited

Punjab 14 Sanctioned

42Ludhiana Integrated TextilePark Limited

Punjab 55 Sanctioned

43NextGen Textile Park PrivateLimited

Rajasthan 26 Sanctioned

44Kishangarh Hi-Tech TextileWeaving Park Limited

Rajasthan 34 Sanctioned

45Jaipur Integrated Texcraft ParkPvt. Ltd.

Rajasthan 20 Completed

46SIMA Textile Processing CentrePvt Ltd

Tamil Nadu 10 Sanctioned

47Palladam Hi-Tech WeavingPark

Tamil Nadu 90 Completed

48K o m a r a p a l a y a m H i - T e c hWeaving Park Limited


49 Karur Integrated Textile Park Tamil Nadu 35 Completed

50Madurai Integrated Textile ParkLimited

Tamil Nadu 17 Completed

51PerarignarAnna Handloom SilkPark Ltd.


52Pallavada Technical TextilePark


53The Great Indian Linen & TextileInfrastructure Company Limited


54Pochampally Handloom ParkLimited

Telangana 2000 Completed

55 Whitegold Textile Park Telangana 10 Sanctioned

56 Ecotex, Uttar Pradesh Uttar Pradesh 36 Sanctioned

57Far rukhabad Text i le parkPvt.Ltd.

Uttar Pradesh 50 Sanctioned

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58 EIGMEF Apparel Park Limited West Bengal 73 Sanctioned

59Hosiery Park at Howrah, WestBengal

West Bengal 176 Sanctioned

This information was given by the Union Minister of Textiles, SmritiZubinIrani, in awritten reply in the Lok Sabha today.

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MODERNISATION OF JUTE MILLSRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Industry & Services Sector



Modernisation of Jute Mills


Keeping in mind the need to modernise the jute mills by increasing their productivity and toreplace the old machines by new and technologically advanced machines, National Jute Board(NJB) has been implementing schemes for modernization of jute industry. The scheme hasbeen instrumental in bringing new investment to the industry.

The ISAPM scheme has been launched in 2013 with an incentive @20% of the cost ofmachineries to jute mills and 30% to the MSME –JDP units. During 2014-15 to 2018-19, capitalsubsidy amounting to Rs. 4971.19 lakhhas been released to jute mills and JDP units.

Ten composite jute manufacturing units have been establishedin the last five years.

The effective installed capacity of the industry is around 16.5 lakh metric tonne and around 11.5lakh metric tonnes of jute goods is produced in the country. The difference in the production andcapacity is due to labour related issues including shortage of labour.

This information was given by the Union Minister of Textiles, Smriti Zubin Irani, in a written replyin the Rajya Sabha today.

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PROMOTION OF TRADITIONAL TEXTILE-MAKINGSKILLS



Promotion of Traditional Textile-Making Skills


In order to encourage Indian traditional textile-making, the government has been implementingvarious policy initiatives. Block Level Clusters is one of the components of the NationalHandloom Development Programme. Comprehensive Handloom Cluster Development Scheme(CHCDS), provides financial assistance upto Rs. 2 crores for setting up of Common FacilityCentres (CFCs) including Common Service Centres (CSCs).

28 Weavers’ Service Centres (WSCs) are functioning across the country that are documentingtraditional handloom textile products using different techniques viz. sale of traditional handloomproducts atvarious craft melas, exhibitions sponsored by the government, display of weavingskills/techniques, linking of handloom weavers with e-commerce, documentation ofsamples/products in digital format and developing new designs in different themes under theproject “Tantavi” and promoting them through exhibitions and releasing catalogues.

National Centre for Textile Designs (NCTD) was set up in 2001 to promote traditional andcontemporary designs so as to make handloom sector more responsive to the rapidly changingmarket demand. Presently, it is working from the premises of Weavers Service Centre (WSC),Delhi.

Indian Handloom Brand (IHB) promote production of niche handloom products with high quality,authentic traditional designs with zero defect and zero effect on environment.

Weaving & Designing Training Centre at Kullu, Himachal Pradesh has been established to keepalive the traditional profession of woollen products and meet out the increasing demand ofskilled weavers/artisans. The training centre imparts training to unemployed youth and also up-grade skill of existing weavers by providing training in handloom weaving.

Silk Samagra is being implemented for the development of sericulture Industry in the country.Under this scheme, support is being provided to establish Common facility centres towards silkprocessing activities like Tub Dyeing, Arm dyeing and Fabric processing/finishing units for thebenefit of traditional Silk making. These Common facility Centres will help in survival oftraditional silk making in different regions of the country.

Jute Integrated Development Scheme(JIDS)aims at setting up local units and agencies atdistant locations around the country through collaboration with bonafide bodies to carry outvarious activities. JID provides basic, advance and design development training programmesand rendering the backward and forward linkages to the existing and potential entrepreneurs atgrass-root levels mainly on technology application and design /product development and

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disseminations

Samarth Scheme for Capacity Building in Textile Sector (SCBTS) was launched in 2017 forthree years with an outlay of Rs. 1300 crore. The scheme will have National Skill QualificationFramework (NSQF) compliant training courses with funding forms as per the Common Normsnotified by Ministry of Skill Development and Entrepreneurship (MSDE). 10 lakh people areexpected to be skilled and certified in various segments of textile sector through the scheme, outof which 1 lakh will be in traditional sectors.

A Workshop on Bridging Japan and India by Bamboo was organised by Cane and BambooTechnology Centre (CBTC) Assam at Bamboo and Cane Development Institute, Agartala, on2ndAugust 2018. On that occasion Japan’s Economic Minister and Forest Minister of TripuraGovernment and other official officers were present. During the workshop,Japanese Artisan andShilp-guru of Tripura, traditional Northeast artisans exchanged their crafts ideas and developedcraft items.


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NEW SCHEMES FOR SILK SECTORRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Industry & Services Sector



New Schemes for Silk Sector


Under the Central Sector Scheme Government of India implementing “Silk Samagra”throughCentral Silk Board with a total outlay of Rs. 2161.68 crore for three years (2017-2020) fordevelopment of sericulture in the country.It focuses on improving quality and productivity ofdomestic silk thereby reducing the country’s dependence on imported silk. Under the scheme,assistance is extended to sericulture stakeholders for the beneficiary oriented components like,raising of Kissan nursery, plantation with improved Mulberry varieties, Irrigation, chawki rearingcentres with incubation facility, construction of rearing houses, rearing equipment, door to doorservice agents for disinfection and input supply, support for Improved reeling units like AutomaticReeling units, multi-end Reeling machines, Improved Twisting machines and support for postyarn facilities for quality silk and fabric production.

Under North East Region Textile Promotion Scheme (NERTPS) implemented to promote TextileIndustry in the North East Region by the Ministry of Textiles, 38 Sericulture projects have beenimplemented in the identified potential districts under three broad categories viz., IntegratedSericulture Development Project (ISDP) and Intensive BivoltineSericulture Development ProjectandAspirational Districts. Total cost of these projects is Rs. 1,106.97 crore, of whichGovernment of India’s share is Rs. 955.07 crore.Objective of these projects is to establishsericulture as viable commercial activity in NER by creating necessary infrastructure andimparting skills to the locals for silkworm rearing and allied activities in the value chain.

The allocation madeand expenditure incurred under the scheme during the last three years isgiven below:

(Rs. in crore)

Year Scheme

Silk Samagra NERTPS

2017-18Allocation 542.50 232.27

Expenditure 542.50 232.27

2018-19Allocation 601.29 90.00

Expenditure 598.70 65.72

2019-20Allocation 730.00 124.98

Expenditure (till date) 182.50 1.70

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This information was given by the Union Minister of Textiles, SmritiZubinIrani, in a written reply inthe Rajya Sabha today.

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POLICY INITIATIVES FOR COTTON PRODUCERSRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Industry & Services Sector



Policy Initiatives for Cotton Producers


To encourage the cotton spinning millers in the country, the Government has been implementingvarious policy initiatives and schemes viz., announcement of key reforms under a SpecialPackage that includes additional incentives under the Amended Technology Upgradation FundScheme (ATUFS), relaxation of Section 80JJAA of Income Tax Actand introduction of fixed termemployment for the apparel sector. Government is providing rebate of State and Central taxes/levies embedded in manufacturing, assistance to exporters under Market Access Initiative (MAI)Scheme.

Under Pradhan MantriRojgarProtsahanYojana (PMRPY), Government is providing entire 12% ofEmployer’s contribution towards Employees’ Provident Fund (EPF) and Employees PensionScheme (EPS). The rates under Merchandise Exports from India Scheme (MEIS) have beenenhanced from 2% to 4% for apparel & made ups and 5% to 7% for handloom & handicrafts.Theinterest equalization rate for pre and post shipment credit for exports done by Micro, Small andMedium Enterprises (MSMEs) of textile sector has been enhanced from 3% to 5%.The benefitsof this scheme have also been extended to merchant exporters which was earlier limited to onlymanufacturer exporters.

There is no report of cotton producers suffering from exorbitant cotton rates. The Association ofCotton Producers have also not submitted any representation to the Ministry for curtailment ofrising prices of raw cotton.

This information was given by the Union Minister of Textiles, SmritiZubinIrani, in a written reply inthe Rajya Sabha today.

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EMPLOYMENT IN TEXTILE INDUSTRYRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Industry & Services Sector



Employment in Textile Industry


As per the latest available Annual Survey of Industries, employment in the Textiles and WearingApparel were 25.27 lakh in 2014-15, 26.48 lakh in 2015-16 and 26.97 lakh in 2016-17.

Government has been implementing various schemes for welfare and development of textileworkers/weavers including handicraft artisans.

Under the group insurance scheme for powerloom workers, insurance cover is provided to allpowerloom weavers/workers in the case of natural death, accidental death as well as partial andpermanent disability due to accident. Additionally, the weavers/workers enrolled under thisscheme are entitled for educational grant of Rs. 600/- per child half-yearly for two childrenstudying in 9th to12th standard for a maximum period of 4 years.Under the scheme, total numberof powerloom weavers/workers enrolled was 1.11 lakh in 2015-16, 1.32 lakh in 2016-17 and 1.62lakh in 2017-18.

Under the Textile Workers Rehabilitations Fund Scheme (TWRFS) which has been merged withthe Rajiv Gandhi Shramik Kalyan Yojana (RGSKY) of the Ministry of Labour& Employment, thetextile workers rendered jobless due to permanent closure of the mills, are provided a relief of75% of the wage employment in the first year, 50% in the second and 25% in the third year.

Under the “Handloom Weavers Comprehensive Welfare Scheme, (HWCWS), life and accidentalinsurance are provided to handloom weavers/workers in the age groups of 18-50 years. It was,then, converged under Mahatma Gandhi BunkarBimaYojana (MGBBY). The HWCWS has beenmerged under Pradhan MantriJeevanJyotiBimaYojana (PMJJBY) and Pradhan Mantri SurakshaBimaYojana (PMSBY).

Total of targeted enrollment of weavers/workers under the PMJJBY and converged MGBBY are5.32 lakh for 2017-18 and 6.65 lakh for 2018-19 which include 3.84 lakh for general states and2.84 lakh for North Eastern States. As add on benefit to the above, scholarship@Rs. 180/- permonth per child isprovided toa maximum of two children of the beneficiaries studying 9th to 12th

standard.

Welfare programmes being implemented for handicraft artisansare Rajiv Gandhi Shilpi SwasthyaBima Yojana (RGSSBY), BimaYojana for Handicrafts Artisans (Aam Admi Bima Yojana (AABY),support to artisans in indigent circumstances, credit guarantee scheme, interest subventionscheme and issue of identify cards and creation of data-base.


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***

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INTERNATIONAL FINANCIAL SERVICES CENTRE:MUCH NEEDED FOR INDIARelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Foreign Capital, Foreign Trade

& BOP

By Taponeel Mukherjee

In a rapidly transforming global economic landscape in the face of Brexit, trade wars, debatesaround central bank policy and India emerging as a major economy in aggregate terms, a focuson creating a financial hub in India is both required and commendable. The Union Budget 2019has provided incentives to ensure a renewed focus on the International Financial ServicesCentre (IFSC) at GIFT City, Gandhinagar. Tax measures to boost investor interest is timely anda good start.

An asset-financing hub can help fund critical sectors in the economy. One such sector that canbenefit from an Indian financial centre is aviation. Through a financial hub not only will Indiabenefit from the asset usage from a consumption point of view but will also help through creatinga financing ecosystem that creates value through a host of interlinked industries in the IFSC.

Currently, most asset financing, such as airline financing, is done outside India in other financialhubs that have long attracted capital. But as India continues to become a more significant userof aviation infrastructure, a renewed focus on utilising IFSC to bring "home" the financing aspectof the asset will be vital. Such a measure will deliver the above-mentioned twin objectives ofconsumer access to assets and capital access for business.

The need to push the IFSC as an asset-financing hub assumes even greater importance, as onefactors in the growth that Asia will see in asset demand. Taking the aviation sector as anexample, one can see why a centralised financial hub in India assumes great importance. Areport by IATA in October 2018 found that more than half of the total number of new passengersglobally over the next twenty years will be from Asia. Additionally, by 2030, China, India andIndonesia will comprise three of the top four aviation markets. The financial hub, such as IFSCtruly needs to capture a significant component of the financing market as consumption trendssuch as aviation market growth gather further momentum in Asia.

Indian policymakers and businesses must view the IFSC as a "centralised infrastructureecosystem" as opposed to a single point of financing availability. Utilising the aviation financingexample from above to illustrate this point would imply that the IFSC must not only look tocapture the asset-financing component of the aviation market growth but eventually become ahub for aviation asset management, aviation insurance and allied industries.

Mainly, as Indian consumers fly more, the aim must be for the IFSC to provide an avenue forcentralised financial infrastructure hub that can truly cater to the needs of a growing economy.An increasing volume of passengers will imply a more significant number of airports and anincrease in the size of airports. Therefore, financing planes, managing the assets, providinginsurance to both air carriers and airport operators will all be business lines that will witnesssignificant growth.

The inter-linkages also create the ecosystem in terms of services, human capital and ancillaryindustries that are so essential for long-run success of a financial centre such as the IFSC. Theneed to cater to a multitude of needs, as mentioned above, will create the demand for high-

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quality human capital and boost the services industry relating to finance, information technology,legal and accounting needs. The creation of a large service industry base will help fund the IFSChub better and create a network effect that will allow top-quality human capital to cater to thediverse industries bound by a common financial centre.

Besides aviation, with the increased financialisation of the economy and the need for higheramounts of capital at optimal funding levels, the IFSC can deliver significant value for a varietyof industries related to financial services, insurance and asset management in India.

While the measures in the Union Budget 2019 are welcome, but to truly establish the IFSC as aglobal financial hub, it will need renewed attention on strengthening the regulatory framework.Most importantly, stability and consistency in policy will be vital. A financial centre andsurrounding businesses are by their very nature long-term decision based and hence must belooked at through a "long-term policy lens". That said, India's push for a global financial hub is anecessity in its ambition to further its position as a global economic superpower.

(The views expressed in this article are personal and that of the author. The author headsDevelopment Tracks, an infrastructure advisory firm. You can contact him [email protected] or @Taponeel on Twitter)By Taponeel Mukherjee

In a rapidly transforming global economic landscape in the face of Brexit, trade wars, debatesaround central bank policy and India emerging as a major economy in aggregate terms, a focuson creating a financial hub in India is both required and commendable. The Union Budget 2019has provided incentives to ensure a renewed focus on the International Financial ServicesCentre (IFSC) at GIFT City, Gandhinagar. Tax measures to boost investor interest is timely anda good start.

An asset-financing hub can help fund critical sectors in the economy. One such sector that canbenefit from an Indian financial centre is aviation. Through a financial hub not only will Indiabenefit from the asset usage from a consumption point of view but will also help through creatinga financing ecosystem that creates value through a host of interlinked industries in the IFSC.

Currently, most asset financing, such as airline financing, is done outside India in other financialhubs that have long attracted capital. But as India continues to become a more significant userof aviation infrastructure, a renewed focus on utilising IFSC to bring "home" the financing aspectof the asset will be vital. Such a measure will deliver the above-mentioned twin objectives ofconsumer access to assets and capital access for business.

The need to push the IFSC as an asset-financing hub assumes even greater importance, as onefactors in the growth that Asia will see in asset demand. Taking the aviation sector as anexample, one can see why a centralised financial hub in India assumes great importance. Areport by IATA in October 2018 found that more than half of the total number of new passengersglobally over the next twenty years will be from Asia. Additionally, by 2030, China, India andIndonesia will comprise three of the top four aviation markets. The financial hub, such as IFSCtruly needs to capture a significant component of the financing market as consumption trendssuch as aviation market growth gather further momentum in Asia.

Indian policymakers and businesses must view the IFSC as a "centralised infrastructureecosystem" as opposed to a single point of financing availability. Utilising the aviation financingexample from above to illustrate this point would imply that the IFSC must not only look tocapture the asset-financing component of the aviation market growth but eventually become ahub for aviation asset management, aviation insurance and allied industries.

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Mainly, as Indian consumers fly more, the aim must be for the IFSC to provide an avenue forcentralised financial infrastructure hub that can truly cater to the needs of a growing economy.An increasing volume of passengers will imply a more significant number of airports and anincrease in the size of airports. Therefore, financing planes, managing the assets, providinginsurance to both air carriers and airport operators will all be business lines that will witnesssignificant growth.

The inter-linkages also create the ecosystem in terms of services, human capital and ancillaryindustries that are so essential for long-run success of a financial centre such as the IFSC. Theneed to cater to a multitude of needs, as mentioned above, will create the demand for high-quality human capital and boost the services industry relating to finance, information technology,legal and accounting needs. The creation of a large service industry base will help fund the IFSChub better and create a network effect that will allow top-quality human capital to cater to thediverse industries bound by a common financial centre.

Besides aviation, with the increased financialisation of the economy and the need for higheramounts of capital at optimal funding levels, the IFSC can deliver significant value for a varietyof industries related to financial services, insurance and asset management in India.

While the measures in the Union Budget 2019 are welcome, but to truly establish the IFSC as aglobal financial hub, it will need renewed attention on strengthening the regulatory framework.Most importantly, stability and consistency in policy will be vital. A financial centre andsurrounding businesses are by their very nature long-term decision based and hence must belooked at through a "long-term policy lens". That said, India's push for a global financial hub is anecessity in its ambition to further its position as a global economic superpower.

(The views expressed in this article are personal and that of the author. The author headsDevelopment Tracks, an infrastructure advisory firm. You can contact him [email protected] or @Taponeel on Twitter)



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THE REAL CURERelevant for: Indian Economy | Topic: Issues Related to Poverty, Inclusion, Employment & Sustainable

Development


The Global Multidimensional Poverty Index (MPI) 2019report, an initiative of the Oxford Poverty and Human Development Initiative and the UnitedNations Development Programme, released last week, says that India has recorded the fastestabsolute reduction in the Index value among 10 countries across every developing region.According to this report, between 2005-06 and 2015-16, India lifted 271 million out of povertyand reduced deprivations in many of its 10 indicators, particularly in assets, cooking fuel,sanitation and nutrition. It also says that Jharkhand, among the poorest regions in the world,reduced the incidence of multi-dimensional poverty — captured in indicators such as nutrition,sanitation, child mortality, housing, cooking fuel, years of schooling and electricity — the fastest.

The greatest period of poverty decline between 2005 to 2015-16 in India’s recorded history waspossible because of high growth averaging over 8 per cent or close to it. That pace of economicgrowth over a sustained period helped create the fiscal space for welfare programmes both bythe Centre and the states, ensuring better access to food, nutrition, health and cooking fuel. Theknock-on impact has been felt by states, too, with poverty levels declining faster in bettermanaged states which had invested hugely in the social sector. Such high growth helped thegovernment launch schemes such as MGNREGA, which threw up work opportunities. The Modigovernment, too, can be credited for schemes or programmes designed to provide puccahousing, toilets, cooking gas, power, roads and healthcare or the public provision of privategoods with a lot of positive externalities.

But all these programmes need resources which can come only from growth with its trickle-downeffect. So the focus has to be on growth to further reduce and eliminate poverty and to ensure

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economic convergence among states. A couple of percentage points’ increase or decrease ingrowth can make a big difference to a nation’s destiny.





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POVERTY INDEX: WELL DONE, BUT STILL A LONGWAY TO GO

Relevant for: Indian Economy | Topic: Issues Related to Poverty, Inclusion, Employment & SustainableDevelopment

The 2019 global Multidimensional Poverty Index (MPI) from the UN Development Programmeand the Oxford Poverty and Human Development Initiative, which was released last week,confirmed that India’s poverty reduction programmes are on the right track.

The report said that incidence of multidimensional poverty almost halved between 2005-06 and2015-16, climbing down to 27.5%, indicating that the number of poor people in the country fell bymore than 271 million within 10 years. Among states, Jharkhand showed the greatestimprovement, with Arunachal Pradesh, Bihar, Chhattisgarh, and Nagaland slightly behind.Multidimensional poverty defines poor not only on the basis of income, but also on otherindicators, including poor health, poor quality of work and the threat of violence. The poorestdistrict is Alirajpur in Madhya Pradesh, where 76.5% of people are poor – the same as SierraLeone in Sub-Saharan Africa.

India’s progress in reducing multidimensional poverty has happened thanks to investments inkey areas. The country reduced deprivation in nutrition from 44.3% in 2005-06 to 21.2% in 2015-16. Child mortality dropped from 4.5% to 2.2%; deprivation in sanitation from 50.4% to 24.6%;people deprived of cooking fuel from 52.9% to 26.2%; and those deprived of drinking water from16.6% to 6.2%.

The positive numbers, however, cannot hide another stark reality.

Despite poverty reduction across religions and caste groups, the report also found that 50% oftribals in the country are poor, as are 33% of Dalits and 33% of Muslims. Keeping in view theambitions of the 2030 Agenda for Sustainable Development, how can India ensure that Dalits,Muslims and tribals are not left behind? The UN’s recently released World Economic Situationand Prospects as of mid-2019 makes a critical point: Economic growth alone is not sufficient forpoverty reduction.

What matters are the types of investment by the State. Countries that have driven povertyreduction trends, the report added, have focused their investments on people, importantlythrough the provision of health, education and social protection. India has been doing that; nowit needs to put the pedal to the metal by not just increasing investments in these areas, but alsoimproving implementation of national programmes and ensuring that they reach the last mile.




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RESOLUTION OF STRESSED ASSETSRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Banking, NPAs and RBI

Ministry of Finance

Resolution of Stressed Assets


On 12.2.2018, Reserve Bank of India (RBI) issued a circular on Resolution of Stressed Assets— Revised Framework. RBI has informed that Supreme Court, vide its order dated 2.4.2019,held the said circular as non-est, necessitating issue of a revised circular for expeditious andeffective resolution of stressed assets. RBI has further informed that against this background,RBI on 7.6.2019 has issued “Prudential Framework for Resolution of Stressed Assets” for earlyresolution of stressed assets in a transparent and time-bound manner, giving completediscretion to lenders with regard to design and implementation of resolution plans, whileproviding for disincentives in the form of additional provisioning for delay in implementation ofresolution plan or initiation of insolvency proceedings, and making mandatory the signing of aninter-creditor agreement, providing for majority decision-making by all lenders. As per inputs received from Indian Banks’ Association (IBA), the Prudential Frameworkissued by RBI vide the circular dated 7.6.2019 has made signing of inter-creditor agreementmandatory before working out the resolution proposal for a particular stressed account and, inthis connection, IBA has drafted an inter-creditor agreement and circulated the same among itsmember banks to facilitate the resolution process. IBA has further apprised that this draftagreement is not with reference to any particular sector, including the power sector.

A number of steps have been taken by the Government to help revive stalled projects. Aproject monitoring group has been set up and is working as an institutional mechanism toresolve a variety of issues, including fast-tracking of approvals. Till 1.1.2019, more than 3,191issues raised in the PMG portal pertaining to 725 projects with anticipated investment of Rs.29.88 lakh crore had been resolved, and 513 inter-ministerial meetings and 247 meetings withChief Secretaries of States had been held for resolution of related issues/clearances. Further,inter-ministerial groups were constituted by the nodal ministries concerned for the shipping,textile, power, telecommunications, renewable energy and MSMEs sectors to examine systemicissues affecting viability and repayment capacity of the sectors.

This was stated by Shri Anurag Thakur, Minister of State for Finance & Corporate Affairs in awritten reply to a question in Lok Sabha today.

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USAGE OF FINANCIAL INSTRUMENTSRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Banking, NPAs and RBI

Ministry of Finance

Usage of Financial Instruments


As per the NABARD All India Rural Financial Inclusions Survey (NAFIS) 2016-17, 50.6% of allhouseholds (including agricultural and non-agricultural households) in Tier-III to Tier-VI centreswith population of less than 50,000 affirmed to have saved any money during one yearpreceding date of survey.

With a view to increasing banking penetration and to promote financial inclusion across thecountry, a National Mission on Financial Inclusion known as Pradhan Mantri Jan Dhan Yojana(PMJDY) was launched on 28thAugust, 2014 at national level by the Hon’ble Prime Minister.Under the Yojana, a Basic Saving Bank Deposit (BSBD) account is opened without requirementof any minimum balance. Till 03.07.2019, a total of 36.06 crore accounts have been openedunder PMJDY across the country with aggregate deposit of `1,00,495 crore. Out of total 36.06crore accounts, 21.37 crore (59.26%) are in rural/semi-urban centres.

Further, to consolidate the gains made through financial inclusion initiatives implemented so farand deepen it further to accelerate the participation of the masses in the economic growth of thecountry, PMJDY has been extended beyond 14.8.2018 with following modification:

Existing Over Draft (OD) limit of ` 5,000 revised to `10,000.●

There will not be any conditions attached for OD upto `2,000.●

Age limit for availing OD facility revised from 18-60 years to 18-65 years.●

The accidental insurance cover for new RuPay card holders raised from existing `1 lakh to`2 lakh to new PMJDY accounts opened after 28.8.2018.

●

For opening of accounts under PMJDY, the focus has now been shifted to from “everyhousehold to every adult”, with added emphasis on usage of accounts by enhancing DBT flowsthrough these accounts, adoption of social security schemes, linking saving product to Jan Dhanaccounts, promoting digital payments through the use of RuPay cards, etc.


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REVIVAL OF COOPERATIVE SOCIETIESRelevant for: Indian Economy | Topic: Transport & Marketing of agricultural produce

Ministry of Finance

Revival of Cooperative Societies


Cooperative Societies is a State Subject under Entry 32 of the State List of Seventh Scheduleof the Constitution of India. National Bank for Agriculture and Rural Development (NABARD)has informed that the functioning of Cooperative Banks is guided by the CooperativeSocieties Act of the respective States. At the State level, the Registrar of CooperativeSocieties (RCS) of respective States exercises control over the Cooperative Banks. However,the banking functions of the Cooperative Banks are regulated by Reserve Bank of India underthe Banking Regulation Act, 1949 (as applicable to Cooperatives).

The Government has taken the following measures to revive the Short TermCooperative Credit Structure (STCCS).

Based on the recommendation of Vaidyanathan Committee, Government implemented arevival package for STCCS encompassing legal and institutional reforms, measures toimprove the quality of management and financial assistance as necessary for theirdemocratic, self-reliant and efficient functioning. Under the revival package, Government ofIndia released `9,245 crore.

a.

Recognizing the need to revamp ailing Cooperative Banks so that they are able to cater tothe needs of farmers at their doorstep, the Union Government in 2014 announcedimplementation of the Scheme for revival of 23 Unlicensed DCCBs in the four States i.eUttar Pradesh, Maharashtra, West Bengal and Jammu & Kashmir. The entire share ofUnion Government of `673.29 crore under the Scheme was released to NABARD foronward transmission to Cooperative Banks as per the scheme provisions.

b.

The scheme guidelines prescribed achievement of certain deliverables by DCCBswhich, inter alia, included attainment of the minimum level of CRAR, reduction of NPA level,enhancement deposits, building up strong Management Information System (MIS) andimplementation of Core Banking Solution (CBS) etc.

To enable Cooperative Banks to meet the crop loan and term loan requirements offarmers, Government has set up two Funds in NABARD, to be met out of the shortfall inpriority sector lending targets by commercial banks, as under:

Short Term Cooperative Rural Credit (Refinance) Fund: Through this Fund NABARDprovides concessional short term refinance to Cooperative Banks for their crop loan

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lending. Such refinance is given to banks at an interest rate of 4.5% per annum, providedthe banks lend to the ultimate borrower at an interest rate of 7% per annum upto an amountof `3 lakh per borrower. An amount of `45,000 crore has been allocated for the said Fundduring 2018-19.

Long Term Rural Credit Fund (LTRCF): This fund has been set up for the purpose ofproviding long term refinance support to Cooperative Banks and Regional Rural Banks at aconcessional rate of interest for their lending towards investment activities in agriculture.Government has allocated additional resources of `15,000 crore to this Fund during 2018-19.

ii.


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PAYMENTS THROUGH DEBIT CARDSRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Banking, NPAs and RBI

Ministry of Finance

Payments through Debit Cards


As per Reserve Bank of India (RBI), the limit for purchase of goods and services through a cardare decided by the card-issuer bank. As apprised by Public Sector Banks (PSBs), the maximumlimit of making payment through debit card for making a purchase has not been reduced bybanks.

As apprised by Central Board of Direct Taxes (CBDT), Department of Revenue, the Governmenthas taken various steps to move towards a less cash economy and reduce generation andcirculation of black money. Finance Act, 2017, section 269ST, inserted in the Income-tax Act,1961, provides that no person is permitted to receive an amount of Rs 2 lakh or more:-

in aggregate from a person in a day;i.in respect of a single transaction; orii.in respect of transactions relating to one event or occasion from a person;iii.

otherwise than by an account payee cheque or account payee bank draft or use of electronicclearing system through a bank account. Further, penalty provision at the rate of 100 per cent ofsuch amount is applicable, if amount is received in violation of the above provisions of section269ST of the Act.


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BANK CHARGES FOR TRANSACTIONSRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Banking, NPAs and RBI

Ministry of Finance

Bank Charges for Transactions


As per extant guidelines of Reserve Bank of India (RBI), following basic minimum facilities tothe Basic Savings Bank Deposit Account (BSBDA) are provided free of charge and without anyrequirement for maintaining minimum balance in the account:

Deposit of cash at bank branch as well as ATMs/Cash Deposit Machines (CDMs).Receipt/credit of money through any electronic channel or by means of deposit /collection ofcheques drawn by Central/State Government agencies and departments.No limit onnumber and value of deposits that can be made in a month.Minimum of four withdrawals ina month, including ATM withdrawals.ATM Card or ATM-cum-Debit Card.

1.

Accordingly, as on March, 2019 the above facilities are provided to 57.3 crore BSBDaccounts (including 35.27 crore PMJDY accounts) free of charge.

In addition to the above, banks may provide additional value-added services, includingissue of cheque book, beyond the above minimum facilities, which may/may not be priced (innon- discriminatory manner) subject to disclosure. The availment of such additional servicesare to made at the option of the customers. However, while offering such additional services,banks shall not require the customer to maintain a minimum balance and offering such additional services would also not make BSBD account a non-BSBD Account, so longas the prescribed minimum services are provided free of charge by the banks.

For accounts other than BSBD accounts, as per Reserve Bank of India (RBI)’s MasterCircular on “Customer Service in Banks” dated July 1, 2015, banks are permitted to fix servicecharges on various services rendered by them, as per their Board approved policy, whileensuring that the charges are reasonable and not out of line with the average cost ofproviding these services. Banks have been advised to identify basic services and theprinciples to be adopted/ followed by them for ensuring reasonableness in fixing suchcharges. They are also advised to take steps to ensure that customers are made aware of theservice charges upfront and changes in the service charges are implemented only with theprior notice to the customers.

As apprised by Reserve Bank of India (RBI), the total number of savings accounts inPublic Sector Banks has increased since 2015. The details are as follows:

Year Total no. of Savings Accounts (in crore)

2015 88.39

2016 101.37

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2017 112.88

2018 119.25

This was stated by Shri Anurag Thakur, Minister of State for Finance & Corporate Affairsin a written reply to a question in Lok Sabha today.

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RECOVERY UNDER SARFAESI ACTRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Banking, NPAs and RBI

Ministry of Finance

Recovery under SARFAESI Act


The Central Government administers the Securitisation and Reconstruction of FinancialAssets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) which allows banksand financial institutions to recover their dues exceeding one lakh rupees by proceedingagainst secured assets of the borrower/guarantor without the intervention of thecourt/tribunals. The Government is not involved in commercial decisions or recoveryproceedings of banks or financial institutions. As such, to address any concerns aboutproperty valuation, there are adequate provisions under Rule 8 (5) of the Security Interest(Enforcement) Rules, 2002 under the SARFAESI Act, that cast a duty on the AuthorisedOfficer of the secured creditor (bank or financial institution) to obtain the valuation of theproperty from an approved valuer (as defined in the Rules) and, in consultation with thesecured creditor, fix the reserve price of the property before putting the property on sale. Anyaggrieved debtor/borrower has recourse to filing appeal in the Debts Recovery Tribunal (DRT)against action under the SARFAESI Act and further recourse to appeal against the DRT’sdecision is available in the Debts Recovery Appellate Tribunal.

The SARFAESI Act does not differentiate between debtors/borrowers on any basis, includingthe financial status or debt value.

Substantive amendments were made in the SARFAESI Act on 14.8.2016 through theEnforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions(Amendment) Act, 2016, in consultation with stakeholders. At present there is no proposal toamend the SARFAESI Act or the Rules framed thereunder.


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DISINVESTMENT OF PUBLIC SECTOR BANKSRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Banking, NPAs and RBI

Ministry of Finance

Disinvestment of Public Sector Banks


As per RBI data on global operations, aggregate gross advances of Public Sector Banks (PSBs)increased from Rs. 18,19,074 crore as on 31.3.2008 to Rs. 52,15,920 crore as on 31.3.2014. Asper RBI inputs, the primary reasons for spurt in stressed assets have been observed to be, inter-alia, aggressive lending practices, wilful default/loan frauds/corruption in some cases, andeconomic slowdown. Asset Quality Review (AQR) initiated in 2015 for clean and fullyprovisioned bank balance-sheets revealed high incidence of Non-Performing Assets (NPAs). Asa result of AQR and subsequent transparent recognition by banks, stressed accounts werereclassified as NPAs and expected losses on stressed loans, not provided for earlier underflexibility given to restructured loans, were provided for. Further, all such schemes forrestructuring stressed loans were withdrawn. With the recognition of stress since 2015, theadverse impact of the hidden stress became manifest as weakness in financial indicators ofPSBs.

To strengthen the financial position of PSBs, over the last four financial years, Government hasinvested Rs. 2,45,997 crore in PSBs as a part of comprehensive 4R’s strategy that comprisesrecognising NPAs transparently, resolution and recovering value from stressed accountsthrough clean and effective laws and processes, recapitalising PSBs and reforming banksthrough the PSB Reforms Agenda. Steps taken under this strategy include, inter-alia, thefollowing:


●

Over the last four financial years, PSBs were recapitalised to the extent of Rs. 3,11,796crore, including mobilisation of over Rs. 65,799 crore by PSBs themselves. (iii) Key reforms were instituted in PSBs as part of PSBs Reforms Agenda, including thefollowing:

●

Board-approved Loan Policies of PSBs now mandate tying up necessaryclearances/approvals and linkages before disbursement, scrutiny of group balance-sheetand ring-fencing of cash flows, non-fund and tail risk appraisal in project financing.

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Positive impact on PSBs of Government’s 4R’s strategy is now visible and includes, inter-alia¸ the following:

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(i) Record recovery of Rs. 3,16,479 crore over the last four financial years, including recordrecovery of Rs 1,27,987 crore in FY 2018-19, has been effected.

●

(ii) Assets quality has improved as reflected in 45% year-on-year reduction in slippage intoNPAs in FY 2018-19, and 63% reduction in 31 to 90 days overdue corporate accounts byMarch 2019 from their peak in June 2017.

●

(iii) With stress recognition largely completed, significant headway in recovery andresolution under IBC, and reduced slippages as a result of improved underwriting andmonitoring, gross NPAs of PSBs have started declining, after peaking in March 2018,registering a decline of Rs. 1,06,032 crore, from Rs. 8,95,601 crore in March 2018 to Rs.7,89,569 crore in March 2019.

●

Thus, by addressing the underlying causes behind the build-up of stress in PSBs throughcomprehensive reform to change credit culture and tighten discipline in the financial system,institutionalising robust underwriting and monitoring, governance reforms, and leveragingtechnology, PSBs have emerged stronger.

Note: Figures cited above for PSBs include those for IDBI Bank Limited, which wasrecategorised as a private sector bank by RBI with effect from 21.1.2019


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CHARGES WAIVER ON DIGITAL TRANSACTIONSRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Banking, NPAs and RBI

Ministry of Finance

Charges Waiver on Digital Transactions


As apprised by the Ministry of Electronics and Information Technology (MeitY), Governmentof India has initiated incentive schemes such as BHIM cash-back scheme for individuals,BHIM incentive scheme for merchants, BHIM Aadhaar merchant incentive scheme forpromotion and wider adoption of digital payment.

In order to promote digital payments, MeitY vide their notification dated 27th December,2017 has allowed reimbursement of MDR charges on Debit cards/ BHIM-UPI and BHIMAadhaar Pay transactions for value upto Rs. 2000, for two years effective from 1st Jan, 2018.

All public transport operators have been requested to enable National Common MobiltyCard (NCMC) for digital payments.

As per the Budget speech 2019-20, Hon’ble Finance Minister has, inter-alia, proposedthat business establishments with annual turnover of more than Rs.50 crore shall offer lowcost digital modes of payment to their customers and no charges or Merchant Discount Rateshall be imposed on customers as well as merchants. RBI and Banks will absorb these costsfrom the savings that will accrue to them on account of handling less cash as people move tothese digital modes of payment.


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INTEREST-FREE LOAN TO FARMERSRelevant for: Indian Economy | Topic: Agricultural Finance & Insurance

Ministry of Finance

Interest-Free Loan to Farmers


Government fixes agriculture credit disbursement targets for the banking sector every year.Details of agriculture credit disbursement by banks during the last three years as reported byNational Bank for Agriculture and Rural Development (NABARD) are as under:

(Amount in `crore)

Year Amount

2016-17 9,15,509.92

2017-18 10,65,755.67

2018-19* 12,54,762.20

*provisional

With a view to ensure availability of agriculture credit at a reduced interest rate of 7%p.a. to the farmers, the Government of India in the Department of Agriculture Cooperation andFarmers Welfare (DAC&FW) implements an interest subvention scheme for short term croploans up to `3.00 lakh. The scheme provides interest subvention of 2% per annum to Banks onuse of their own resources. Besides, additional 3% incentive is given to the farmers for promptrepayment of the loan, thereby reducing the effective rate of interest to 4%.

Under the aforesaid interest subvention scheme, to provide relief to farmers affected by naturalcalamities, the interest subvention (2%) on crop loan continues to be available to banks for thefirst year on the restructured amount. Such restructured loans may, however, attract normalrate of interest from the second year onwards as per the policy laid down by the Reserve Bankof India (RBI).

In order to provide relief to the farmers affected due to severe natural calamities, theGovernment in DAC&FW has decided that interest subvention of 2% per annum will be madeavailable to banks for first three years/entire period (subject to a maximum of five years) on therestructured loan amount, and in all such cases the benefit of prompt repayment incentive at3% per annum shall also be provided to the affected farmers. The grant of such benefits incases of severe natural calamities shall, however, be decided by a High Level Committee(HLC) based on the recommendation of Inter-Ministerial Central Team (IMCT) and SubCommittee of National Executive Committee (SC-NEC).

The Government of India/ Reserve Bank of India (RBI)/ NABARD have, inter alia, taken thefollowing major initiatives for providing hassle free crop loans to farmers of the country.

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The Kisan Credit Card (KCC) Scheme, enables farmers to purchase agricultural inputs such asseeds, fertilisers, pesticides, etc. and draw cash to satisfy their agricultural and consumptionneeds. The KCC Scheme has since been simplified and converted into ATM enabled RuPaydebit card with, inter alia, facilities of one-time documentation, built-in cost escalation in the limit,any number of drawals within the limit, etc.

The credit limit/ loan amount under KCC is fixed by Banks as per guidelines prescribed in theMaster Circular dated July 4, 2018 issued by RBI. The short term credit limit under KCC for thefirst year is determined based on Scale of Finance for the crop (as decided by District LevelTechnical Committee) x Extent of area cultivated + 10% of l imit towards post-harvest/household/ consumption requirements + 20% of limit towards repairs and maintenanceexpenses of farm assets + crop insurance and/or accident insurance including personalaccidental insurance scheme (PAIS), health insurance & asset insurance. The limit for secondand subsequent years (3rd, 4th and 5th year) is arrived based on first year limit for cropcultivation purpose plus 10% of the limit towards cost escalation / increase in scale of financeand estimated term loan component for the tenure of Kisan Credit Card, i.e., five years.

The short term loan limit arrived for the 5th year plus the estimated long term loanrequirement will be the Maximum Permissible Limit (MPL) and is to be treated as the KisanCredit Card limit.

Under the KCC Scheme, a flexible limit of `10,000 to `50,000 has been provided to marginalfarmers (as Flexi KCC) based on the land holding and crops grown including post harvestwarehouse storage related credit needs and other farm expenses, consumption needs, etc., plussmall term loan investments without relating it to the value of land.

As per RBI directions, Domestic Scheduled Commercial Banks are required to lend 18% of theAdjusted Net Bank Credit (ANBC) or Credit Equivalent to Off-Balance Sheet Exposure(CEOBE), whichever is higher, towards agriculture. A sub-target of 8% is also prescribed forlending to small and marginal farmers including landless agricultural labourers, tenant farmers,oral lessees and share croppers. Similarly, in the case of Regional Rural Banks 18% of theirtotal outstanding advances is required to be towards agriculture and a sub-target of 8% hasbeen set for lending to small and marginal farmers.

To enhance coverage of small and marginal farmers in the formal credit system, RBI hasdecided to raise the limit for collateral-free agriculture loans from `1 lakh to `1.6 lakh.

The requirement of 'no due’ certificate has also been dispensed with for small loans up to`50,000 to small and marginal farmers, share-croppers and the like and, instead, only a self-declaration from the borrower is required.

To bring small, marginal, tenant farmers, oral lessees, etc. into the fold of institutional credit,Joint Liability Groups (JLGs) have been promoted by banks.


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BSBD ACCOUNTS SCHEMERelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Banking, NPAs and RBI

Ministry of Finance

BSBD Accounts Scheme


Reserve Bank of India (RBI) vide its circular dated 10.06.2019 has revised their earlierinstructions dated 10.08.2012 on Basic Savings Bank Deposit (BSBD) accounts. As per therevised Instructions, Banks are advised to offer the following basic minimum facilities in theBSBD Account, free of charge, without any requirement of minimum balance.

Deposit of cash at bank branch as well as ATMs/Cash Deposit Machines (CDMs) Receipt/credit of money through any electronic channel or by means of deposit /collection of chequesdrawn by Central/State Government agencies and departments No limit on number and valueof deposits that can be made in a month Minimum of four withdrawals in a month, includingATM withdrawals ATM Card or ATM-cum-Debit Card.

Further, Banks are free to provide additional value-added services, including issue of chequebook, beyond the above minimum facilities, which may/may not be priced (in non-discriminatory manner) subject to disclosure. The availment of such additional servicesshould be at the option of the customers.

However, while offering such additional services, banks shall not require the customer tomaintain a minimum balance. Offering such additional services would not make it a non-BSBD Account, so long as the prescribed minimum services are provided free of charge. TheBSBD Accounts are considered a normal banking service available to all.

As informed by banks, conversion of BSBD account into normal savings bank account isallowed only at the written request of the customer. RBI under Banking Regulation Act, 1949can impose penalty on banks for non-compliance of any instructions issued by it.


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CHINESE CHECK: ON ECONOMIC TROUBLESRelevant for: Indian Economy | Topic: Issues relating to Planning & Economic Reforms

The Chinese economy is seeing the first signs of trouble after long years of sustained growththat rode on cheap labour and high volumes of exports. Data released by the National Bureau ofStatistics on Monday revealed that the economy grew by 6.2% in the second quarter, its slowestpace in 27 years. This is in contrast to the growth rates of 6.4% and 6.6% reported for the firstquarter and the full year of 2018, respectively. The faltering growth rate was due to a slump inexports in June amidst China’s ongoing trade war with the United States and the downturnwitnessed by sectors such as housing construction, where investor sentiments play a major role.Many economists believe that the worst may not yet be over for China and that economic growthcould further worsen in the coming quarters. But just as growth seems to be faltering, the latestgrowth figures also showed that the retail sales and industrial output components of the growthnumbers witnessed steady growth, suggesting that domestic demand may be compensating forthe dropping appetite for Chinese exports weighed down by high tariffs. But with China stillheavily reliant on exports and its trade war with the U.S. showing no signs of coming to an end,the pressure on growth is likely to remain for some more time. So the Chinese government,which has tried to boost the economy through measures such as tax cuts, increased publicspending and a relaxation in bank reserve requirements to encourage banks to increase lending,will hope that domestic demand for its goods will hold up the economy.

China’s quarterly GDP numbers, while useful in many ways, don’t reveal very much about theunderlying challenges facing the country. One is the need to improve the credibility of datareleased by the Chinese government. An even larger challenge is the urgent need to restructurethe Chinese economy from one that is driven heavily by state-led investment and exports to onethat is driven primarily by market forces. The high-growth years of the Chinese economy weremade possible by the huge amount of liquidity provided by the Chinese state and the large andaffordable workforce that helped build China into an export powerhouse. But now, with China’stried and tested growth model facing the threat of getting derailed as the export and investmentboom comes to an end, the Chinese will have to build a more sustainable model, or forfeit hopesof double-digit economic growth in the future. As of now, there are no signs to suggest that theChinese authorities are looking at implementing deep-seated structural reforms reminiscent ofits early decades of liberalisation that can help fundamentally restructure the economy. Theremight not be a need for radical macroeconomic changes, but China’s economic troubles will notgo away unless the government boosts domestic consumption and reduces the reliance onexports.


An RBI panel’s suggestions on the MSME sector cut to the heart of crucial issues






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ORGANIC FARMINGRelevant for: Indian Economy | Topic: Major Crops, Cropping Patterns and various Agricultural Revolutions

Ministry of Agriculture & Farmers Welfare

Organic Farming


Realizing the potential and benefits of organic farming and to improve the economic condition offarmers in the country, Government of India is promoting organic farming through the dedicatedschemes of Paramparagat Krishi Vikas Yojana (PKVY) and Mission Organic Value ChainDevelopment for North Eastern Region (MOVCDNER) under National Mission for SustainableAgriculture (NMSA) since 2015-16. Under PKVY, flexibility is given to states to adopt any modelof Organic Farming including ZBNF depending on farmer’s choice that is free from chemicals,pesticides residues and adopts eco-friendly low cost technologies.

Under PKVY, assistance of Rs. 50,000 per hectare/ 3 years is allowed out of which Rs.31,000 (61%) is provided to farmer directly through DBT for input (biofertilisers, biopesticides,vermicompost, botanical extracts etc) production/ procurement, packing, marketing etc.

Under MOVCDNER , assistance is provided to the farmers in a value chain mode starting fromformation of Farmers Producer Organisations (FPOs), on/off farm input production, supply ofseeds/ planting materials, post harvest infrastructure including collection, sorting, gradingfacilities, establishment of integrated processing unit, refrigerated transportation, pre-cooling/cold stores chamber, branding, labelling and packaging, etc .

These schemes are implemented through State Governments at district and village leveldepending on the interest of the farmers. PKVY scheme is being implemented in 29 States &UTs and MOVCDNER scheme is implemented in the States of Arunachal Pradesh, Assam,Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura since 2015-16.

This information was given in a written reply by the Union Minister of Agriculture and FarmersWelfare Shri Narendra Singh Tomar in Lok Sabha today.

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WITHDRAWAL OF MINIMUM BALANCE PENALTY BYBANKS


Ministry of Finance

Withdrawal of Minimum Balance Penalty by Banks


According to Reserve Bank of India (RBI) guidelines, banks do not have any Minimum Balancerequirement for Basic Savings Bank Deposit accounts (BSBD), including accounts openedunder Pradhan Mantri Jan DhanYojana (PMJDY). As on March 2019, there were 57.3 croreBSBD accounts across the country including 35.27 crore (61.6%) Jan-Dhan accounts. Hence,for these accounts there are no charges for not maintaining minimum balance. BSBD accountsare considered normal banking services available to all and it offers certain basic minimumfacilities free of charge.

For accounts other than BSBD accounts, as per RBI’s Master Circular on “Customer Service inBanks” dated July 1, 2015, banks are permitted to fix service charges on various servicesrendered by them, as per their Board approved policy, while ensuring that the charges arereasonable and not out of line with the average cost of providing these services. Further, bankshave been advised to identify basic services and the principles to be adopted/ followed by themfor ensuring reasonableness in fixing such charges. Banks are also advised to take steps toensure that customers are made aware of the service charges upfront and changes in theservice charges are implemented only with the prior notice to the customers.


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SEEDING OF BANK ACCOUNT AND LINKING WITHAADHAAR


Ministry of Finance

Seeding of Bank Account and Linking with Aadhaar


Ministry of Electronics and Information Technology (MeitY) has apprised that “The Aadhaar andOther Laws (Amendment) Bill, 2019” has been passed by the Parliament. The bill, inter-alia,has the provision for allowing the use of Aadhaar authentication on voluntary basis asacceptable Know Your Customer (KYC) document, by inserting Section 11A under thePrevention of Money Laundering Act, 2002.

Further, as per Reserve Bank of India (RBI’s) Master Direction on KYC dated 25.2.2016(as amended in May 2019), banks are to obtain the Aadhaar number from an individual who isdesirous of receiving any benefit or subsidy under any scheme notified under section 7 of theAadhaar (Targeted Delivery of Financial and Other subsidies, Benefits and Services) Act, 2016(18 of 2016).

As far as the requirement of Aadhaar number for receipt of certain subsidies, benefitsand services etc. are concerned, Section 7 of The Aadhaar (Targeted Delivery of Financial andOther subsidies, Benefits and Services) Act, 2016 (18 of 2016), inter-alia, provides that:

“The Central Government or, as the case may be, the State Government may, forthe purpose of establishing identity of an individual as a condition for receipt of a subsidy, benefitor service for which the expenditure is incurred from, or the receipt therefrom forms part of, theConsolidated Fund of India, require that such individual undergo authentication, or furnish proofof possession of Aadhaar number or in the case of an individual to whom no Aadhaar numberhas been assigned, such individual makes an application for enrolment:

Provided that if an Aadhaar number is not assigned to an individual, the individual shallbe offered alternate and viable means of identification for delivery of the subsidy, benefit orservice.”

The linking of the bank accounts with Aadhaar for receiving subsidy/direct benefittransfers from the Government, including the State Governments is done as per the extantprovisions of the Aadhaar (Targeted Delivery of Financial and Other subsidies, Benefits andServices) Act, 2016 (18 of 2016).


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FORMATION OF NATIONAL RURAL BANKRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Banking, NPAs and RBI

Ministry of Finance

Formation of National Rural Bank


The Parliamentary Standing Committee on Finance (2003) in its 55th Report recommended thatGovernment may consider the setting up of an apex body viz. National Rural Bank of India. Government has been receiving various representations from time to time in this regard.

Government examined the proposal in consultation with the State Governments and SponsorBanks and in the Action Taken Report on the recommendations in the aforesaid Report ofParliamentary Standing Committee on Finance (2003), Government, inter alia, stated that “Theproposal for consolidating the RRBs under a National Rural Bank or NABARD has not beenfavoured so far for various reasons. State Governments and sponsor banks were consulted in ameeting taken by Secretary (FS) on 1.5.2004 on the proposal made by the select Group ofCMDs. Sponsor Banks were supportive of the proposal but most of the States favoured statelevel amalgamation without any additional financial support.”

The steps taken by the Government to strengthen the RRBs are as under:

Government had initiated the process of structural consolidation of RRBs in 2004-05 byamalgamating RRBs of the same Sponsor Bank within a State. The amalgamation processbrought down the number of RRBs from 196 to 82. With a view to enable RRBs tominimize their overhead expenses, optimize the use of technology, enhance the capitalbase and area of operation and increase their exposure, the process of amalgamation ofRRBs was again carried out in the year 2011. During 2011-2014, the number of RRBs wasbrought down to 56 from 82. In the year 2018-19, amalgamation of RRBs has been carriedout based on a roadmap proposed by NABARD and consultation with respective SponsorBanks and State Governments. Accordingly, the number of RRBs has been brought downto 45 from 56, as on 01.04.2019. It is expected that amalgamation will bring about betterefficiency of scale, higher productivity, improved financial health of the RRBs and greatercredit flow to rural areas.

1.

Recapitalization support is provided to RRBs to augment their capital so as to comply withregulatory capital requirements.

2.

Periodic review of financial performance of RRBs, including business diversifications, profitplanning, revenue management and NPA management through conduct of national levelmeetings by NABARD and through Empowered Committee (EC) meetings at state level.

3.

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Regular Capacity building efforts are undertaken by NABARD like training at BankersInstitute of Rural Development (BIRD), conduct of Organizational Development Initiative(ODI), exposure visits, etc.

4.

NABARD provides regular policy support to RRBs in matters relating to human resourcesand an arrangement has been made for redressal of grievances through Joint ConsultativeCommittee (JCC).

5.


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CMS TO FILE ONLINE COMPLAINT AGAINST BANKSAND NBFCS


Ministry of Finance

CMS to File Online Complaint Against Banks and NBFCS


Reserve Bank of India (RBI) has informed that the Complaint Management System (CMS) waslaunched on June 24, 2019. The total number of complaints received against banks and NBFCsas on July 05, 2019 are given below:-

Complaints received against Grand TotalBanks 10,249NBFCs 133Total 10,382

CMS is an application for filing of complaints with RBI against any of the regulated entities. Thecomplaints falling under the grounds of complaints of the Banking Ombudsman (BO) Scheme,2006 and Ombudsman Scheme for NBFCs, 2018 are resolved as per the provisions ofSchemes.

Clause 7(2) of the BO Scheme reads as ‘The Banking Ombudsman shall receive and considercomplaints relating to the deficiencies in banking or other services filed on the groundsmentioned in clause 8 irrespective of the pecuniary value of the deficiency in service complainedand facilitate their satisfaction or settlement by agreement or through conciliation and mediationbetween the bank concerned and the aggrieved parties or by passing an Award as per theprovisions of the Scheme.’

Clause 7(2) of the Ombudsman Scheme for NBFC reads as ‘The Ombudsman shall receive andconsider complaints relating to the deficiencies in services filed on any one or more of thegrounds mentioned in Clause 8 and facilitate their satisfaction or settlement by agreement orthrough conciliation and mediation between the non-banking financial company concerned andthe aggrieved party or by passing an Award in accordance with the provisions of the Scheme.’

At present there is no IVR system to track the status of complaints.


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SCHEME TO PROVIDE LOANS UNDER SHORT TERMAGRICULTURE LOAN

Relevant for: Indian Economy | Topic: Agricultural Finance & Insurance

Ministry of Finance

Scheme to Provide Loans Under Short Term AgricultureLoan


In order to provide short term crop loans upto `3.00 lakh to farmers at a concessional interestrate of 7 per cent per annum, the Government of India in the Department of AgricultureCooperation and Farmers Welfare (DAC&FW) implements an interest subvention scheme whichprovides interest subvention of 2% per annum to lending institutions viz. Public Sector Banks(PSBs), Private Sector Commercial Banks (in respect of loans given by their rural and semiurban branches only), Regional Rural Banks (RRBs) and Cooperative Banks on use of their ownresources. Besides, additional 3% incentive is given to the farmers for prompt repayment of theloan, thereby reducing the effective rate of interest to 4%.

As reported by the National Bank for Agriculture and Rural Development (NABARD) the numberof farmers who have availed crop loans from Cooperative Banks and RRBs and benefited with3% prompt repayment incentive under the scheme in Maharashtra during the last 3 years aregiven in following table:

YearNo. of farmers provided 3% prompt repaymentincentive

2015-16 2636190

2016-17 1825900

2017-18* 790724

*(provisional)

As regards commercial banks, the State wise data in respect of farmers benefitted underInterest Subvention Scheme is not maintained centrally by Reserve Bank of India.

Government releases funds to settle interest subvention claims of banks through Reserve Bankof India and NABARD. The details of amount released under Interest Subvention Scheme duringthe last three years are as under:

(`in crore)

Year 2015-16 2016-17 2017-18

Released 13,000 13,397.13 13045.72

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AMENDING SECRECY CLAUSE TO DISCLOSE THEBORROWERS NAME


Ministry of Finance

Amending Secrecy Clause to Disclose the Borrowers Name


As per Reserve Bank of India (RBI)’s data on global operations, aggregate gross advances ofPublic Sector Banks (PSBs) increased from Rs. 18,19,074 crore as on 31.3.2008 to Rs.52,15,920 crore as on 31.3.2014. As per RBI inputs, the primary reasons for the spurt instressed assets have been observed to be, inter-alia, aggressive lending practices, wilfuldefault/loan frauds/corruption in some cases, and economic slowdown. Asset Quality Review(AQR) initiated in 2015 for clean and fully provisioned bank balance-sheets revealed highincidence of Non-Performing Assets (NPAs). As a result of AQR and subsequent transparentrecognition by banks, stressed accounts were reclassified as NPAs and expected losses onstressed loans, not provided for earlier under flexibility given to restructured loans, wereprovided for. Further, all such schemes for restructuring stressed loans were withdrawn.Primarily as a result of transparent recognition of stressed assets as NPAs, gross NPAs ofPSBs, as per RBI data on global operations, rose from Rs. 2,79,016 crore as on 31.3.2015, toRs. 8,95,601 crore as on 31.3.2018, and as a result of Government’s 4R’s strategy ofrecognition, resolution, recapitalisation and reforms, have since declined by Rs. 1,56,060 croreto Rs. 7,39,541 crore as on 31.3.2019 (provisional data on global operations for 31.3.2019 asreported by RBI on 2.7.2019).

Government has implemented a comprehensive 4R’s strategy, consisting of recognition of NPAstransparently, resolution and recovery of value from stressed accounts, recapitalising of PSBs,and reforms in PSBs and the wider financial ecosystem for a responsible and clean system.Comprehensive steps have been taken under the 4R’s strategy to reduce NPAs of PSBs,including, inter-alia, the following:

Change in credit culture has been effected, with the Insolvency and Bankruptcy Code (IBC)fundamentally changing the creditor-borrower relationship, taking away control of thedefaulting company from promoters/owners and debarring wilful defaulters from theresolution process and debarring them from raising funds from the market.

i.

Over the last four financial years, PSBs have been recapitalised to the extent of Rs. 3.12lakh crore, with infusion of Rs. 2.46 lakh crore by the Government and mobilisation of overRs. 0.66 lakh crore by PSBs themselves enabling PSBs to pursue timely resolution ofNPAs.

ii.

Key reforms have been instituted in PSBs as part of the PSBs Reforms Agenda, includingthe following:

iii.


a.

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b.


c.


d.

Enabled by the above steps, as per RBI data on global operations, the NPAs of PSBs, afterreaching a peak of Rs. 8,95,601 crore as on 31.3.2018, have declined by Rs. 1,56,060 crore toRs. 7,39,541 crore as on 31.3.2019 (provisional data), and PSBs have effected record recoveryof Rs. 3,09,568 crore over the last four financial years, including record recovery of Rs. 1,21,076crore during 2018-19 (provisional data).

As per RBI data on global operations as on 31.3.2019 (provisional data), the total fundedamount outstanding of the top 100 NPA borrowers of PSBs was Rs. 3,22,108 crore, amountingto 43.6% of gross NPAs of PSBs.

As per inputs from RBI, lists of suit-filed wilful defaulters of Rs. 25 lakh and above and of suit-filed defaulters of Rs. 1 crore and above stand disclosed in public domain on the websites ofCredit Information Companies (CICs) while the list of non-suit filed wilful defaulters isconfidential in nature and is exempt from disclosure under section 45E of the Reserve Bank ofIndia Act, 1934. No legislation to amend legal disclosability as above has been introduced by theGovernment. In this connection, RBI has apprised that confidentiality of information related tobank customers is a universally accepted phenomenon.

Note: Figures for PSBs for the financial year 2018-19 exclude those for IDBI Bank Limited,which was recategorised as a private sector bank by RBI with effect from 21.1.2019.


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DUE TO THE CENTRAL GOVERNMENT’S 4R’SSTRATEGY OF RECOGNITION, RESOLUTION,RECAPITALISATION AND REFORMS, NPAS HAVESINCE DECLINED BY RS. 1,06,032 CRORE TO RS.7,89,569 CRORE AS ON 31.3.2019


Ministry of Finance

Due to the Central Government’s 4R’s strategy ofRecognition, Resolution, Recapitalisation and Reforms,NPAs have since declined by Rs. 1,06,032 crore to Rs.7,89,569 crore as on 31.3.2019


As per inputs received from Reserve Bank of India (RBI), as on 31.3.2019, there were 1,938unique borrowers with funded amount outstanding (FAO) of more than Rs. 25 crore who haddefaulted on their loans. Regarding the list of such borrowers, RBI has apprised that under theprovisions of section 45E of the Reserve Bank of India Act, 1934, RBI is prohibited fromdisclosing credit information. Section 45E provides that credit information submitted by a bankshall be treated as confidential and not be published or otherwise disclosed.

As per RBI data on global operations, aggregate gross advances of Public Sector Banks (PSBs)increased from Rs. 18,19,074 crore as on 31.3.2008 to Rs. 52,15,920 crore as on 31.3.2014. Asper RBI inputs, the primary reasons for spurt in stressed assets have been observed to be, inter-alia, aggressive lending practices, wilful default / loan frauds / corruption in some cases, andeconomic slowdown. Asset Quality Review (AQR) initiated in 2015 for clean and fullyprovisioned bank balance-sheets revealed high incidence of NPAs. As a result of AQR andsubsequent transparent recognition by banks, stressed accounts were reclassified as NPAs andexpected losses on stressed loans, not provided for earlier under flexibility given to restructuredloans, were provided for. Further, all such schemes for restructuring stressed loans werewithdrawn. Primarily as a result of transparent recognition of stressed assets as NPAs, grossNPAs of PSBs, as per RBI data on global operations, rose from Rs. 2,79,016 crore as on31.3.2015, to Rs. 8,95,601 crore as on 31.3.2018, and as a result of Government’s 4R’sstrategy of recognition, resolution, recapitalisation and reforms, NPAs have since declined byRs. 1,06,032 crore to Rs. 7,89,569 crore as on 31.3.2019 (provisional data as reported by RBIon 2.7.2019).

A number of initiatives have been taken for stricter check on loan advances of large amounts,including, inter alia, the following:

PSBs have been asked to examine all accounts exceeding Rs. 50 crore, if classified asNPA, from the angle of possible fraud and to immediately initiate examination of the issue

1.

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of wilful default once a fraud is reported.Key reforms were instituted in PSBs as part of PSBs Reforms Agenda, including thefollowing:

2.


a.


b.


c.

All PSBs have created Stressed Asset Management Verticals, which monitor high-valueSpecial Mention Accounts and identified stressed assets.

d.

Through enactment of the Insolvency and Bankruptcy Code, 2016, taking over ofmanagement of the affairs of the corporate debtor at the outset of the corporate insolvencyresolution process and debarment of wilful defaulters and persons associated with NPAaccounts from the process have been provided for, which has instilled greater creditdiscipline among corporate debtors.

3.

PSBs have put in place arrangements for checking credit information reports of CreditInformation Companies for sanction and renewal of corporate loans.

4.

A Central Repository of Information on Large Credits (CRILC) has been created to collect,store and disseminate data on all borrowers’ credit exposures of Rs. 5 crore and above, toenable better monitoring.

5.

To enable banks to inform relevant authorities if need arises, PSBs have been advised toobtain a certified copy of the passport of promoters/Directors and other authorisedsignatories of companies availing of loan facilities of more than Rs. 50 crore. The heads ofPSBs have also been empowered to issue requests for issue of Look Out Circulars.

6.

A Central Fraud Registry has been created for all frauds reported by banks to RBI,involving amount above Rs. 1 lakh.

7.

Enabled by the above steps, financial gains from cleaning of the banking system are nowamply visible. As per RBI data on global operations, the NPAs of PSBs, after reaching a peak ofRs. 8,95,601 crore as on 31.3.2018, have since declined by Rs. 1,06,032 crore to Rs. 7,89,569crore as on 31.3.2019 (provisional data for the financial year ending March 2019). PSBs haverecovered Rs. 3,16,479 crore over the last four financial years, including a record recovery ofRs. 1,27,987 crore during 2018-19 (provisional data for the financial year ending March 2019, asreported by RBI on 9.7.2019).

Note: Figures cited above for PSBs include those for IDBI Bank Limited, which wasrecategorised as a private sector bank by RBI with effect from 21.1.2019.


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PSBS BRANCHES IN RURAL AREAS FOR SUCCESS OFPMJDY


Ministry of Finance

PSBs Branches in Rural Areas for Success of PMJDY


Under Pradhan Mantri Jan Dhan Yojana (PMJDY), account holders are provided bankingservices free of charge and without any requirement of maintaining minimum balance. As perthe information provided by banks, district-wise number of accounts opened under PMJDY inGujarat as on 03.07.2019 is at Annexure I. State-wise details of deposit balance in PMJDY ason 03.07.2019 is at Annexure II.

Reserve Bank of India (RBI) has rationalized its Branch Authorisation Policy and grantedgeneral permission to domestic Scheduled Commercial Banks (excluding Regional RuralBanks), including Public Sector Banks, to open banking outlets (a fixed point service deliveryunit, manned by either bank’s staff or its Business Correspondents) at any place in the country,without seeking prior approval of RBI in each case, subject to at least 25 percent of the totalnumber of banking outlets opened during a financial year being in unbanked rural centres (Tier 5and Tier 6 centres ie. having population less than 10,000). For this purpose, banking outletsopened in any centre having population less than 50,000 in North Eastern states and Sikkim andalso Left Wing Extremism (LWE) affected districts as notified by the Government of India arealso considered as equivalent to opening of banking outlets in unbanked rural centres.

Under PMJDY scheme all villages were mapped into 1.59 lakh Sub-Service Areas (SSAs) whereone SSA catering to 1,000 to 1,500 households. As informed by banks, while 0.33 lakh SSAshave been covered with bank branches, 1.26 lakh SSAs have been covered by deployment ofinteroperable Bank Mitras.

As per RBI, since the launch of PMJDY in August 2014, the number of rural branchesof Scheduled Commercial Banks (SCBs) has increased from 41,823 in March 2014 to 51,653 inMarch, 2019. Further, number of Branch less mode / Business Correspondents (BCs) ofScheduled Commercial Banks (SCBs) in rural areas has also increased from 3.37 lakh in March,2014 to 5.15 lakh in March, 2018.


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Annexure I “PSBs branches in rural areas for success of PMJDY”

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Total Number of accounts opened under PMJDY in Gujarat as on03.07.2019

District PMJDY Accounts

Ahmadabad 1137933

Amreli 227839

Anand 470256

Arvalli 255369

Banas Kantha 1024251

Bharuch 494486

Bhavnagar 586314

Boatad 118779

Chhotaudepur 121133

Devbhoomi Dawarka 87637

Dohad 844455

Gandhinagar 205834

Gir Somnath 165110

Jamnagar 331213

Junagadh 315936

Kachchh 484639

Kheda 535284

Mahesana 401521

Mahisagar 61134

Morbi 97760

Narmada 241106

Navsari 356933

Panch Mahals 607206

Patan 359394

Porbandar 86108

Rajkot 552828

Sabar Kantha 420025

Surat 1450148

Surendranagar 409055

Tapi 199603

The Dangs 102381

Vadodara 788624

Valsad 535919

Total 14076213

Source: Banks

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Annexure II “PSBs branches in rural areas for success of PMJDY”

Deposit in PMJDY accounts as on 03.07.2019

StateDeposit in PMJDY Accounts (in Rs.

crore)

Andaman & Nicobar Islands 23.76

Andhra Pradesh 1981.73

Arunachal Pradesh 118.07

Assam 3519.40

Bihar 9888.03

Chandigarh 105.10

Chhattisgarh 3214.06

Dadra & Nagar Haveli 49.67

Daman & Diu 18.89

Delhi 1783.14

Goa 90.79

Gujarat 4264.10

Haryana 3253.33

Himachal Pradesh 592.18

Jammu & Kashmir 949.45

Jharkhand 3194.51

Karnataka 3639.04

Kerala 1295.84

Lakshadweep 8.38

Madhya Pradesh 5134.27

Maharashtra 6058.64

Manipur 201.56

Meghalaya 244.02

Mizoram 88.03

Nagaland 54.79

Odisha 4494.46

Puducherry 39.52

Punjab 2555.18

Rajasthan 7541.72

Sikkim 39.66

Tamil Nadu 1937.10

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Telangana 1694.20

Tripura 682.05

Uttar Pradesh 18235.10

Uttarakhand 1108.46

West Bengal 12397.70

Total 100495.95

Source: Banks




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MORE SECURITY FEATURES IN ATM/DEBIT CARDSRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Banking, NPAs and RBI

Ministry of Finance

More Security Features in ATM/Debit Cards


Reserve Bank of India (RBI) has issued various instructions to banks in respect of security andrisk mitigation measures related to card transactions, which are as follows:

Provide online alerts for all card transactions.i.Introduce additional security measures, inter-alia, including the following:ii.

All new debit cards and credit cards to be issued only for domestic usage, unlessinternational use is specifically sought by the customers.

a.

To ensure that the terminals installed at the merchants for capturing card payments(including the double swipe terminals used) should be certified for PCI-DSS (PaymentCard Industry-Data Security Standards) and PA-DSS (Payment Applications-Data SecurityStandards).

b.

To ensure that all acquiring infrastructure that is currently operational on IP (InternetProtocol) based solutions are mandatorily made to go through PCI-DSS and PA-DSScertification. This should include acquirers, processors / aggregators and large merchants.

c.

(iii) To convert all existing Magstripe cards issued by them to EMV Chip and PINcards.

●

(iv) To mandatorily put in place Additional Factor of Authentication (AFA) for all CardNot Present (CNP) transactions.

●

As apprised by Reserve Bank of India (RBI), no specific studies have been conductedby RBI pertaining to existing practices in European Countries and other foreign nations.However, global best practices are also considered at the time of preparing any policy.


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GROWTH OF DAIRY SECTORRelevant for: Indian Economy | Topic: Economics of Animal-Rearing incl. White, Blue & Pink Revolutions


Growth of Dairy Sector


The growth rate of dairy sector in terms of total milk production in the country is given in thefollowing table:

2013-14 2018-19*Growth rate during 2013-14 to 2018-19

Estimated Milk Production(million tonnes)

137.7 188.1 36.6%

* Provisional (based on the outcomes of annual Integrated Sample Surveyconducted during the period March 2018 to February 2019)

Further, the demand of milk production across the country has not been assessed.

As per 19th Livestock Census-2012, the total cattle population in the country is 190.90million numbers which covers all rural and urban areas including rain fed areas of the country.

To overcome the shortage of feed and fodder in the country, the Ministry of Fisheries,Animal Husbandry and Dairying is implementing Centrally Sponsored Scheme NationalLivestock Mission with a Sub Mission on Feed and Fodder Development since 2014-15. Underthe Sub-Mission, financial assistance is provided to the Animal Husbandry Departments of theStates/UTs including Milk Co-operatives for feed and fodder development under the followingcomponents:

Fodder Production from Non-forest wasteland/ rangeland / grassland/ non-arable land●

Fodder production from Forest land●

Fodder Seed Procurement/ Production & Distribution●

Introduction of Hand Driven Chaff-Cutter●

Introduction of Power Driven Chaff-Cutter●

Distribution of low capacity, tractor mountable Fodder Block Making units, hay balingmachines/reapers/forage harvesters

●

Establishment of silage making Units●

Establishment of by-pass protein production units●

Establishment of Area Specific Mineral Mixture / Feed Pelleting/ Feed ManufacturingUnit.

●

Establishment/modernization of Feed Testing Laboratories●


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REHABILITATION OF STRAY CATTLERelevant for: Indian Economy | Topic: Economics of Animal-Rearing incl. White, Blue & Pink Revolutions


Rehabilitation of Stray Cattle


As per the Article 246(3) of the Constitution of India in List II of Seventh Schedule thePreservation, protection and improvement of stock and prevention of animal diseases; veterinarytraining and practice is under State list on which the State has exclusive power to make laws forsuch State or any part thereof with respect to any of the matters enumerated in List II in theSeventh Schedule. Further, as per the Article 48 of the Constitution of India State shallendeavour to organise agriculture and animal husbandry on modern and scientific lines and shall,in particular, take steps for preserving and improving the breeds, and prohibiting the slaughter, ofcows and calves and other milch and draught cattle.

Further, as per Section 3 of the Prevention of Cruelty to Animals Act, 1960, it is the duty of everyperson having care or charge of any animal to take all reasonable measures to ensure the wellbeing of such animal and to prevent infliction of unnecessary pain and sufferings. Section 11(1)(h) of Prevention of Cruelty to Animals Act, 1960 provides that it is a cruelty, if any person, beingthe owner of (any animal) fails to provide such animal with sufficient food, drink or shelter and asper the Section 11 (1)(i) it is a Cruelty, if any person, without reasonable cause, abandons anyanimal in circumstances which tender it likely that it will suffer pain by reason or starvation, thirstand it is also a punishable offense under PCA Act, 1960. The Provisions of the Prevention ofCruelty to Animals Act, 1960 and Rules framed there under need to be implemented by the StateGovernments.

However, the Animal Welfare Board has issued advisory on stray animals to all the StateGovernments/ Union Territories vide letter dated 12th July, 2018. The Gaushalas are establishedto take care of stray animals (s). The Animal Welfare Board encourages such organizations byproviding grant-in-aid for taking care of the animals with the budget provided by the Governmentof India. Apart from the aforementioned actions, many state governments is also taking variousactions for rehabilitating stray cattle.


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ADOPTION OF METHODS OF IRRIGATIONRelevant for: Indian Economy | Topic: Different types of Irrigation & Irrigation systems storage

Ministry of Agriculture & Farmers Welfare

Adoption of Methods of Irrigation


The net sown area in the country is 140130 thousand ha and net irrigated area is 68385thousand ha. As per available information, the area covered under drip irrigation is 4374.53thousand ha.

An Impact evaluation study of Micro Irrigation scheme was carried out by Department ofAgriculture Cooperation & Farmers Welfare in 2014 through M/s Global Agri System Ltd. Themajor findings of the study are as under:

Irrigation cost is reduced by 20% to 50% with average of 32.3%.●

Electricity consumption is reduced by about 31%.●

Saving of fertilizers in the range of 7% to 42%.●

Average productivity of fruits and vegetables increased by about 42.3% and 52.8%.●

Overall income enhancement of farmers in the range of 20% to 68% with an averageof 48.5%.

●

Water use efficiency of Micro Irrigation including drip irrigation is as high as 80 to 95% incomparison to only 30-50% in conventional flood irrigation resulting in considerable amount ofsaving irrigation water under drip irrigation as also evident from the research studies conductedon different crops by centres of All India Coordinated Research Project on Irrigation WaterManagement in different agro-ecological regions of India.

Department of Agriculture, Cooperation & Farmers Welfare (DAC&FW) is implementing PerDrop More Crop component of Pradhan Mantri Krishi Sinchayee Yojana (PMKSY-PDMC) whichfocuses on enhancing water use efficiency at farm level through Micro Irrigation technologiesviz. Drip and Sprinkler Irrigation systems.

Besides, the Department creates awareness about Micro Irrigation by wide publicitythrough press & print media, publication of leaflets/booklets, organization of workshops,exhibitions, farmer fairs, information on State/Government of India web portals etc. In addition,Indian Council of Agricultural Research (ICAR) imparts training and organizes fielddemonstrations through Krishi Vigyan Kendras (KVK) to educate farmers for promotion of MicroIrrigation.

This information was given in a written reply by the Union Minister of Agriculture and FarmersWelfare Shri Narendra Singh Tomar in Lok Sabha today.

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LAUNCHING THE BROADBAND READINESS INDEXFOR INDIAN STATES AND UNION TERRITORIES (2019-2022)

Relevant for: Indian Economy | Topic: Issues relating to Growth & Development - Demographic Economics &Various Indexes

Ministry of Communications

Launching the Broadband Readiness Index for IndianStates and Union Territories (2019-2022)


The Department of Telecom (DoT) and the Indian Council for Research onInternational Economic Relations (ICRIER) signed a Memorandum of Understanding(MoU) to develop a Broadband Readiness Index (BRI) for Indian States and UnionTerritories (UT). The first estimate will be made in 2019 and subsequently every yearuntil 2022.Shri. Sanjay Shamrao Dhotre, Union Minister of State for Human ResourceDevelopment, Communications and Electronics & Information Technology, Ms. ArunaSundararajan, Chairman Digital Communications Commission& Secretary, DoT,Shri.Amit Yadav, Joint Secretary, DoT, Dr. Rajat Kathuria, Director and Chief Executive,ICRIER and Ms. Geetha Nair, Secretary, ICRIER were present at the signingceremony.

The National Digital Communication Policy (NDCP) 2018 acknowledged the need forbuilding a robust digital communications infrastructure leveraging existing assets ofthe broadcasting and power sectors including collaborative models involving state,local bodies and the private sector. Accordingly, the policy recommended that a BRIfor States and UTs be developed to attract investments and address Right ofWay(RoW) challenges across India.

This index will appraise the condition of the underlying digital infrastructure andrelated factors at the State/UT level. Such an exercise will provide useful insights intostrategic choices made by States for investment allocations in ICT programmes. Inthe spirit of competitive federalism, the index will encourage states to cross learn andjointly participate in achieving the overall objective of digital inclusion anddevelopment in India. The framework will not only evaluate a state’s relativedevelopment but will also allow for better understanding of a state’s strengths andweaknesses that can feed into evidence-based policy making. The methodologydeveloped as a part of this research will be adapted and used on an annual basis forsystematic evaluation of state-performance on metrics set out as the goals for 2022under the new policy. As a result, ranking and understanding State/UT performanceover time will be an important part of the exercise.

The BRI consists of two parts. Part I will focus on infrastructure development based

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on the measurement of nine parameters. These are provided in the Table below. PartII consists of demand side parameters which will be captured through primarysurveys. It will include indicators such as percentage of households using computers/laptops with internet connection, percentage of households with fixed broadbandconnection, internet users as a percentage of the population, smart phones density,percentage of households with at least one digitally literate member, etc. Theprimarysurvey will be conducted annually until 2022.

S.No Proposed BRI Indicators

1Availability of State Policy on RoW and Towers (based on DoT RoWRules 2016

2Percentage of ROW cases given permission within 60 days of the firstapplication

3Availability of a centralized IT Portal for ROW clearances across allGovernment land and building owning authorities.

4 Adoption of the National Building Code 2016 by the State

(i)State policy to have enabling provisions for access togovernment landsand buildings for installation of telecom towers

(ii) State policy to have enabling provision for 24* 7 telecom operations

(iii)Standardized RFP template for smart city implementation – enabling rulespromoting non exclusivity and infrastructure sharing in a non-discriminatory manner

(iv)Common duct policy based on the Central Government’s “Dig OncePolicy”

5 Percentage of mobile towers connected with fibre

6 Number. of fibre kms per sq. KM/ per capita/ per 100 households

7Percentage of public institutions / offices connected by FTTX (Hospitalsincluding PHCs, Police stations, Schools and CSCs)

8Percentage of towers receiving grid supply (Duration: Urban 20 hours;Rural 12 Hours)

(i) Priority electricity connection available to telecom towers in the state

(ii) Supply of electricity at affordable/ industrial rates to telecom towers

9NagarNet –Number of Public Wi-Fi Hotspots in urban areas

JanWiFi – Number of Public Wi-Fi Hotspots in rural areas

The development of BRIwill be a collaborative exercise with stakeholders including

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State governments and industry associations like the Tower and InfrastructureProviders Association (TAIPA), the Internet Service Providers Association of India(ISPAI) and the Cellular Operators Association of India (COAI). This will be a first ofits kind exercise that will comprehensively measure the development of telecominfrastructure at the sub national level.

<><><><><>

SNC





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Source : www.prsindia.org Date : 2019-07-17

PRSINDIARelevant for: Indian Economy | Topic: Infrastructure: Airports

IntroducedRajya SabhaJul 12, 2019Gray



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CABINET OKAYS AMENDMENTS TO BANKRUPTCYCODE


The Union Cabinet on Wednesday approved amendments to the Insolvency and BankruptcyCode, placing a greater emphasis on more time-bound resolution and laying down voting rulesof the financial creditors.

“The Union Cabinet today approved the proposal to carry out seven amendments to theInsolvency and Bankruptcy Code 2016 through the Insolvency and Bankruptcy Code(Amendment) Bill, 2019,” the government said in a release.

Among the amendments approved is the one that mandates a deadline for the completion of theresolution process within 330 days, including all litigation and judicial processes. “Votes of allfinancial creditors covered under Section 21(6A) shall be cast in accordance with the decisionapproved by the highest voting share [more than 50%] of financial creditors on present andvoting basis,” the release added.

Minimum liquidation

Another amendment allows for creditors who voted against the majority to receive a minimumliquidation value. This decision would have retrospective effect in cases where the resolutionplan has not yet been finalised or has been appealed against. The Amendment Bill also statesthat the resolution plan will be binding on all the stakeholders, including governments, to whom adebt is owed.

“Welcome amendments to the IBC, specifically the clarity around process timelines, and theclarity around the binding nature of the proposed resolution vis-a-vis the central, state and localgovernments,” Sanjeev Krishan, Partner & Leader – PE & Deals, PwC India said.

“Allowing all possible corporate actions as part of the proposed resolution plans can also helpsave time and effort for applicants.”










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COST OF BORROWINGRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Banking, NPAs and RBI


After dropping below 6.3 per cent in the opening hours of trading on Wednesday, the 10-yeargovernment bond yield closed the day at 6.35, falling to levels last seen in the aftermath ofdemonetisation. Since the Union budget was presented on July 5, G-Sec yields have fallen bymore than 30 bps.

This faster than expected decline in yields can be attributed to several factors. First, by stickingto the path of fiscal consolidation, despite doubts over its revenue projections, the governmentseems to have assuaged the concerns of the bond market.

Second, despite the associated risks, the proposal to meet part of the Centre’s borrowingsthrough international markets, which would reduce the supply of government paper in thedomestic market, has had a salutary effect.

Third, with growth faltering, the case for greater monetary stimulus, especially with the monetarypolicy committee shifting its stance to accomodative, strengthens. A rate cut in August lookscertain.

Fourth, there has been a significant easing of liquidity conditions in recent months. Fifth,globally, central banks are increasingly adopting a dovish tone, making Indian G-Secs anattractive investment. But, notwithstanding the decline in government bond yields, thefundamental question of transmission remains. Will the fall in G-Sec yields lead to acommensurate fall in the cost of funds across the broader economy? And will this help stimulateinvestment and consumption?

The trends over the past few months indicate that transmission of lower rates has been faster inthe corporate bond market than in bank lending rates. Corporate bond yields fell by 34 bpsbetween April and June according to CARE ratings. There is scope for further decline.

With the term premium falling, there is likely to be a gradual fall in credit risk in the comingquarters, as the risk perception of some segments, particularly that of NBFCs, reduces once therecent policy initiatives kick in. This would lower the spread between corporate bonds and G-Secs enticing corporates to raise more funds through the bond markets. Corporate bondissuances have in fact risen of late, averaging Rs 41,044 crore in May and June, up 67 per centfrom April.

In the case of banks, the transmission of lower interest rates has been to a lesser extent, asbanks’ cost of funds continues to remain high. It is only when the cost of funds (deposits) comesdown that banks will lower lending rates. To ensure greater transmission, in addition to greaterclarity from the RBI on its liquidity management framework, the government would do well toclosely align interest rates on small savings with G-Sec yields.

Though it has recently cut the interest rate for small savings by 10 bps, a closer alignment in thecoming quarters could lead to a gradual fall in bank deposit rates, translating to lower lendingrates to the broader economy.

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TESTING THE WATERS: MENTION OF BLUE ECONOMYIN BUDGET MUST SERVE AS AN IMPETUS FOR THESECTOR

Relevant for: Indian Economy | Topic: Infrastructure: Ports & Waterways


The writer is chairman, National Shipping Board

Experts dissecting Budget 2019 have been remiss in not discussing the inclusion of an agendato develop the Blue Economy. The development of the Blue Economy can play a critical role innation building by enhancing the GDP, not just by exploitation of under-water resources but bydeveloping it as a platform for infrastructure expansion into the ocean, especially when there is ashortage of space on land.

The idea is to expand port activities on the sea rather than on land.

Inclusion of the Blue Economy in the budget encourages me to talk of the possible re-calibrationof its growth potential, first, by improving the measurement of its contribution to the economyand then through strategic policy interventions to enhance its contribution to manufacturing andservices.

Using the SMART (Specific, Measurable, Achievable, Realistic, Time-tested) formula, we canset a time-bound action plan.

As noted in SMART, any good strategy must have elements which can be monitored. And to dothis, they must be measurable. A strategy to develop blue manufacturing and blue services willhave to focus on several sub-sectors. I suggest that for effective policy intervention, the entirespectrum of the Blue Economy will require a deep analysis of the underlying constituents ofthese sub-sectors. As a beginning, the strategy should spell out a well-accepted and testedmethodology for such a statistical analysis.

A dedicated national-level institution, skilled in such state-of-the-art analytical approaches, willhave to be given this responsibility. Based on this analysis, and a study of the trends of theunderlying constituents of these subsectors in the GDP, a graded policy intervention will be thefirst part of implementation.

The sub-sectors where measurement is possible are: Blue trade in both goods and services,including the development of marine services (such as port services, ship repair, maritimefinance and insurance, marine ICT and digitisation); blue investment (port and transloading inmid-seas, coastal-to-hinterland connectivity); blue SMEs — a sub-category of the SMEs asdefined by the Ministry of Small and Medium Enterprises (MSME) and administered by aseparate division in the MSME and blue manufacturing (development of dedicated industrialparks, as is being envisaged under the Sagarmala, protection risks of coastal natural calamities,etc.)

While the arithmetic of sectoral analysis is important for identifying the areas requiring gradedintervention, an effective strategy to increase the value addition will need policy interventions inthe areas of upscaling the available technology for manufacturing and delivery of blue services.

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These will be further underpinned by training and reskilling of the available manpower, for whicha coordinated plan (across the organs of states and central governments) will be needed.

No strategy can be implemented without efforts to enhance resource availability, both from thepublic and the private sectors. The strategy must make sure that there is no overlap and that thebalance of resources is maintained. A path-breaking relook at the regulations to ease the flow ofprivate investment will be needed. Some time-tested paradigms of PPPs (Public PrivatePartnerships) will be ideal. The strategy must realise the context of the federal structure withinwhich it will have to operate. Therefore, a mechanism to coordinate the efforts of the coastaldistricts/municipalities/panchayats, coastal state governments, and the Union government willneed to be established. Akin to the Tribal Sub-Plan in the budget exercise, a dedicated chapteron the Blue Economy in the state and Union budgets could be a beginning.

A reasonable time-frame and an institutional coordination machinery will make the plan realisticand achievable. A national coordination mechanism for monitoring is absolutely necessary forany strategy in a federal structure, such as ours. Commitment to the development of the BlueEconomy has been expressed by a mention in the budget speech. This has laid the foundationand will provide the initial traction to create the space for implementation of the strategy.

This article first appeared in today’s paper under the headline: “Testing the waters”. Thewriter is former secretary, Ministry of Shipping and Ministry of Mines, former chairman ofthe National Shipping Board and former chairman of Inland Waterways Authority of India.





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AGRI EXPORT ZONESRelevant for: Indian Economy | Topic: Transport & Marketing of agricultural produce


Agri Export Zones


The Government had notified 60 Agri Export Zones in 20 States till 2004-05. All theAgri Export Zones have since completed their intended span of 5 years. As such, asof now, there are no functional Agri Export Zones in the country.

Promotion of agricultural exports is a continuous process. To promote the agriculturalexports, the Government has introduced a comprehensive Agriculture Export Policywith the following vision:

Harness export potential of Indian agriculture, through suitable policy instruments, tomake India a global power in agriculture, and raise farmers’ income.

The Government has also brought out a new Central Sector Scheme – ‘Transportand Marketing Assistance for Specified Agriculture Products’ - for providingassistance for the international component of freight, to mitigate the freightdisadvantage for the export of agriculture products, and marketing of agriculturalproducts.

The Department of Commerce also has several schemes to promote exports,including exports of agricultural products, viz. Trade Infrastructure for Export Scheme(TIES), Market Access Initiatives (MAI) Scheme and Merchandise Exports from IndiaScheme (MEIS). In addition, assistance to the exporters of agricultural products isalso available under the Export Promotion Schemes of Agricultural & Processed FoodProducts Export Development Authority (APEDA), Marine Products ExportDevelopment Authority (MPEDA), Tobacco Board, Tea Board, Coffee Board, RubberBoard and Spices Board.

The product-wise details of agricultural exports from the country, during the last threeyears, are at Annexure-I. State-wise data for exports is not published by theDirectorate General of Commercial Intelligence & Statistics (DGCI&S).

Annexure-I

EXPORT OF AGRICULTURAL PRODUCTS

Quantity: in thousand units; Value: USD Million

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Description 2016-17 2017-18 2018-19

UNIT Quantity Value Quantity Value Quantity Value

Marine Products KGS11,85,27

2.875,903.06

14,32,456.67

7,389.2214,36,680.

636,802.24

Rice -Basmati TON 3,985.21 3,208.60 4,056.85 4,169.56 4,414.61 4,712.44

Buffalo Meat TON 1,323.58 3,903.49 1,350.25 4,037.11 1,233.38 3,587.15

Spices KGS10,14,45

3.312,851.95

10,96,322.85

3,115.3710,91,789.

683,322.56

Rice(Other ThanBasmati)

TON 6,770.83 2,525.19 8,818.53 3,636.60 7,599.75 3,040.22

Cotton Raw Incld.Waste

TON 996.09 1,621.11 1,101.47 1,894.25 1,143.07 2,104.41

Oil Meals TON 2,632.26 805.45 3,570.78 1,093.16 4,486.14 1,511.52

Sugar TON 2,544.01 1,290.71 1,757.93 810.9 3,987.96 1,359.75

Castor Oil KGS5,99,195.

56674.73

6,97,092.50

1,043.996,19,376.5

7883.78

Tea KGS2,43,429.

62731.26

2,72,894.98

837.362,70,300.1

2830.9

Coffee KGS2,88,613.

37842.84

3,17,828.97

968.572,82,889.0

2822.34

Fresh Vegetables TON 3,404.07 863.12 2,448.02 821.76 2,933.37 810.44

Fresh Fruits TON 817.06 743.23 714 761.79 754.75 794.04

Guargam Meal TON 419.95 463.35 494.13 646.94 513.22 674.88

Misc ProcessedItems

- 455.59

-

550.55 - 658.35

Cashew TON 91.79 786.93 90.06 922.41 78.22 654.43

Processed FruitsAnd Juices

KGS5,33,152.

10584.79

5,73,281.42

646.925,92,174.5

8639.65

TobaccoUnmanufactured

KGS2,04,447.

42634.38

1,85,363.88

593.881,89,538.7

0570.28

Cereal Preparations TON 339.95 531.7 353.35 552.61 347.77 551.74

Sesame Seeds KGS3,07,328.

55402.17

3,36,850.37

463.93,11,987.3

4538.94

Dairy Products KGS90,352.3

1253.73

1,02,262.55

303.051,80,698.3

8481.55

Groundnut TON 725.71 809.6 504.04 524.82 489.19 472.74

Tobacco 324.31 340.37 - 410.96

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Manufactured - -

Other Cereals TON 734.77 212.3 864.24 248.59 1,277.00 349.06

Alcoholic Beverages LTR2,32,179.

33298.9

2,41,013.37

326.672,31,601.9

3300.91

ProcessedVegetables

KGS1,92,855.

77263.57

2,12,203.36

282.872,28,872.6

4293.95

Pulses TON 136.72 191.05 179.6 227.75 285.83 259.34

Cocoa Products KGS25,649.5

0162.18

29,579.53

177.47 27,603.73 192.69

Milled Products KGS2,55,803.

65121.37

2,70,396.97

136.013,07,367.5

0151.46

Other Oil Seeds TON 193.27 126 295.1 174.79 213.83 131.57

Fruits / VegetableSeeds

KGS11,288.6

278.16

14,465.77

104.04 17,419.48 124.92

Sheep/Goat Meat TON 22.01 129.69 22.8 130.9 21.67 124.65

Vegetable Oils TON 60.47 116.29 37.06 87.83 49.95 106.79

Poultry Products

- 79.11

-

85.7 - 98.17

Molasses TON 390.67 47.06 123.97 15.06 841.16 83.76

Floricltr Products KGS22,020.3

381.55

20,703.51

78.73 19,726.56 81.78

Animal Casings KGS 173.24 2.0612,424.6

650.68 14,882.83 68.27

Wheat TON 265.61 66.85 322.79 96.72 226.23 60.31

Shellac KGS 6,065.00 33.6 6,530.85 44.22 6,996.04 43.7

Niger Seeds KGS14,070.4

617.46 9,215.04 10.84 13,370.58 13.64

Natural Rubber TON 24.46 37.65 7.7 13.89 6.66 11.02

Cashew Nut ShellLiquid

KGS11,404.7

66.56 8,325.16 5.06 5,300.66 3.87

Processed Meat TON 0.14 0.69 0.27 1.54 0.41 2

Other Meat TON 0.01 0.03 0.45 1.09 0.85 1.96

TOTAL 33,283.4

1

38,425.52

38,739.10

Source: DGCI&S

This information was given by the Minister of State in the Ministry of Commerce and

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Industry,Hardeep Singh Puriin a written reply in the Lok Sabha today.

***

MM




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TIME TAKEN FOR SECURITY CLEARANCE TO FDIPROPOSALS HALVED IN LAST 5 YEARSRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Foreign Capital, Foreign Trade

& BOP

Ministry of Home Affairs

Time taken for Security Clearance to FDI Proposals Halvedin Last 5 Years


Ministry of Home Affairs makes every endeavour to accord security clearance to cases offoreign direct investment (FDI) expeditiously. The average time taken for clearance of suchproposals has reduced significantly from about four months in 2014 to about two months in2019. Only seven cases of FDI are presently under the consideration of Ministry of Home Affairsand no case is pending beyond prescribed time limit.

This was stated by the Minister of State for Home Affairs, Shri G. Kishan Reddy in a written replyto question in the Rajya Sabha today.

****

VG/VM/SK/JB/2746




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SELECTED AREAS FOR SEZSRelevant for: Indian Economy | Topic: Investment Models: PPP, SEZ, EPZ and others


Selected areas for SEZs


There were 7 Central Government Special Economic Zones (SEZs) and 12State/Private Sector SEZs prior to the enactment of the SEZ Act, 2005. In addition,416 proposals for setting up of SEZs in the country have been accorded formalapproval under the SEZ Act, 2005. Presently, 351 SEZs are notified, out of which232 SEZs are operational. States/Union Territories-wise details of SEZs is atAnnexure-I.

SEZs being set up under the SEZ Act, 2005 and SEZ Rule, 2006 are primarily privateinvestment driven. As per the Special Economic Zones Act, 2005, a SpecialEconomic Zone (SEZ) may be established either jointly or severally by the CentralGovernment, State Governments or any person for manufacture of goods orrendering services or for both or as a Free Trade and Warehousing Zone. Proposalsfor setting up of SEZs are considered by the Board of Approval only after writtenconsent of the concerned State Government. No proposal for establishment ofSpecial Economic Zone (SEZ) in Bihar is pending with the Department of Commerceat present.

As per Section 30 of the SEZ Act, 2005, any goods removed from a SEZ to theDomestic Tariff Area shall be chargeable to duties of customs including anti-dumping,countervailing and safeguard duties under the Customs Tariff Act, 1975, whereapplicable, as leviable on such goods when imported. The revenue received by theGovernment from developed SEZ during the last five years, year-wise is as below:

Year-wise revenue from duty for the Domestic Tariff Area SaleTransactions

Year Duty Amount Paid (Rs. Crores)

2014-15 3,035

2015-16 4,183

2016-17 5,528

2017-18 18,095

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2018-19 26,810

Annexure-1

States/Union Territories-wise distribution of approved SEZs

States/UTs

C e n t r a lGovernmentSEZs set upprior to theenac tmentof SEZs Act,2005

S t a t eGovernment/ P r i v a t eSector SEZsset up priort o t h eenac tmentof SEZs Act,2005

F o r m a lA p p r o v a l sg r a n t e d unde r t heSEZs Ac t ,2005

N o t i f i e dSEZs underthe SEZ Act,2005

T o t a lOperationalS E Z s ( I n c l u d i n gp r i o r t oSEZs Act +unde r t heSEZs Act)

A n d h r aPradesh

1 0 32 27 19

Chandigarh 0 0 2 2 2

Chhattisgarh

0 0 2 1 1

Delhi 0 0 2 0 0

Goa 0 0 7 3 0

Gujarat 1 2 28 24 20

Haryana 0 0 24 21 6

Jharkhand 0 0 1 1 0

Karnataka 0 0 62 51 31

Kerala 1 0 29 25 19

M a d h y aPradesh

0 1 10 5 5

Maharashtra 1 0 49 43 30

Manipur 0 0 1 1 0

Nagaland 0 0 2 2 0

Odisha 0 0 7 5 5

Puducherry 0 0 1 0 0

Punjab 0 0 5 3 3

Rajasthan 0 2 5 4 3

Tamil Nadu 1 4 53 50 40

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Telangana 0 0 63 57 29

U t t a rPradesh

1 1 24 21 12

W e s tBengal

1 2 7 5 7

G R A N DTOTAL

7 12 416 351 232

This information was given by the Minister of State in the Ministry of Commerce andIndustry,Hardeep Singh Puriin a written reply in the Lok Sabha today.

***

MM/SB




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EXPORT PROMOTION SCHEMERelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Foreign Capital, Foreign Trade

& BOP


Export Promotion Scheme


The Government of India has launched a scheme namely, Trade Infrastructure forExport Scheme (TIES) from FY 2017-18 with the objective to assist Central and StateGovernment Agencies for creation of appropriate infrastructure for growth of exportsfrom the States. The Scheme provides financial assistance in the form of grant-in-aidto Central/State Government owned agencies for setting up or for up-gradation ofexport infrastructure as per the guidelines of the Scheme. The scheme can be availedby the States through their Implementing Agencies, for infrastructure projects withoverwhelming export linkages like the Border Haats, Land customs stations, qualitytesting and certification labs, cold chains, trade promotion centres, dry ports, exportwarehousing and packaging, SEZs and ports/airports cargo terminuses. The Schemeguidelines are available at http://commerce.gov.in.

Under the TIES Scheme, a total of 28 export infrastructure projects have beenprovided financial assistance during FY 2017-18, 2018-19 and 2019-20 (as on 1st

July, 2019). The state-wise and Year-wise details of projects, located in variousStates/UTs, is given at Annexure-I.

The Government of India strives to ensure a continuous dialogue with the StateGovernments and Union Territories on measures for promoting exports and forproviding an international trade enabling environment in the States, and to create aframework for making the States active partners in boosting exports from India.

Under the Foreign Trade Policy (FTP), DGFT operates various Export promotionschemes such as Advance Authorization, Duty Free Import Authorization, ExportPromotion of Capital Goods, Merchandise Exports from India Scheme (MEIS) andServices Exports from India Scheme (SEIS). To give effect to these schemes, CentralBoard of Indirect Taxes and Customs has issued various exemption notifications. Thedetails of various exemptions provided for these schemes are given in the FTP.

MEIS was introduced in the FTP from 01.04.2015, providing rewards for exporters ofspecified goods. The objective of the MEIS is to offset infrastructural inefficiencies

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and associated costs involved in export ing goods/products which areproduced/manufactured in India. The scheme incentivizes exporters in terms of DutyCredit Scrips at the rate of 2, 3, 4, 5, 7 % of FOB Value of exports realized. Thesescrips are transferable and can be used to pay certain Central Duties/taxes includingCustoms Duties.

As regards promotion of trade in services, Government of India provides fiscalbenefits through Services Exports from India Scheme (SEIS) for some identifiedsectors. Government of India is following a multi-pronged strategy, includingnegotiating meaningful market access through multilateral, regional and bilateraltrade agreements, trade promotion through participation in internationalfairs/exhibitions and focused strategies for specific markets and sectors to promoteTrade in Services. An ‘Action Plan for Champion Sectors in Services’ has also beenapproved in February, 2018 to give focused attention to 12 Champion ServicesSector like Information Technology / Information Technology Enabled Services,Tourism and Hospitality Services and Medical value Travel.

The Agriculture Export Policy was launched in 2018 to harness export potential ofIndian agriculture, through suitable policy instruments, to make India global power inagriculture and raise farmers’ income. This comprehensive “Agriculture Export Policy”aims to increase agricultural exports by integrating Indian farmers and agriculturalproducts with the global value chains.

Section 10AA of the Income-tax Act, 1961 provides for deduction of profits and gainsderived from the export of articles or things or from services in respect of newlyestablished Units in Special Economic Zones. Such deduction is allowed to an entrepreneur as referred to in clause (j) of section 2 of the Special Economic ZonesAct, 2005, from his Unit, who begins to manufacture or produce articles or things orprovide any services during the previous year relevant to any assessment yearcommencing on or after the 1st day of April, 2006, but before the first day of April,2021. The deduction is allowed as under:

hundred per cent of profits and gains derived from the export, of such articles orthings or from services for a period of five consecutive assessment years beginningwith the assessment year relevant to the previous year in which the Unit begins tomanufacture or produce such articles or things or provide services, as the case maybe, and fifty per cent of such profits and gains for further five assessment years andthereafter.

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For the next five consecutive assessment years, so much of the amount notexceeding fifty per cent of the profit as is debited to the profit and loss account of theprevious year in respect of which the deduction is to be allowed and credited to areserve account (to be called the "Special Economic Zone Re-Investment ReserveAccount") to be created and utilized for the purposes of the business of the assessein the manner laid down.

Annexure-I

Details of projects approved under TIES [FY 17-18 to FY 19-20(till 01.07.2019)]

S.No.N a m e o fState/UT

Year

Number ofn e wp r o j e c t sapproved

TIES fundr e l e a s e d(in Rs.Cr.)

1 Karnataka

2017-18 3 5.85

2018-19 0 2.85*

2019-20 0 0

Total 3 8.7

2 Kerala

2017-18 1 6.5

2018-19 0 6.5*

2019-20 0 0

Total 1 13

3 Manipur

2017-18 1 6

2018-19 1 5.83

2019-20 0 0

Total 2 11.83

4A n d h r aPradesh

2017-18 2 8.15

2018-19 0 26.01*

2019-20 0 1.99*

Total 2 36.15

5 Tamil Nadu

2017-18 2 14.78

2018-19 4 15.65

2019-20 3 6.56

Total 9 36.99

6M a d h y aPradesh

2017-18 2 25.71

2018-19 0 0

2019-20 0 0

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Total 2 25.71

7U t t a rPradesh

2017-18 1 1.07

2018-19 0 0

2019-20 0 0

Total 1 1.07

8Maharashtra

2017-18 1 1.52

2018-19 0 0

2019-20 0 0

Total 1 1.52

9 Tripura

2017-18 1 6.15

2018-19 0 0

2019-20 0 0

Total 1 6.15

10W e s tBengal

2017-18 1 4.27

2018-19 0 2.56*

2019-20 0 0

Total 1 6.83

11 Delhi

2017-18 0 0

2018-19 1 8

2019-20 0 0

Total 1 8

12 Rajasthan

2017-18 0 0

2018-19 2 3.06

2019-20 0 0

Total 2 3.06

13 Chandigarh

2017-18 0 0

2018-19 1 2.81

2019-20 0 0

Total 1 2.81

14 Assam

2017-18 0 0

2018-19 0 0

2019-20 1 3.95**

Total 1 3.95**

G R A N DTOTAL

28 165.77

* Includes disbursement of subsequent installments

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for a previously sanctioned project

**Funds yet to be disbursed

This information was given by the Minister of State in the Ministry of Commerce andIndustry, Hardeep Singh Puriin a written reply in the Lok Sabha today.

***

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NUCLEAR PLANTS EXPANSION PROGRAMMERelevant for: Indian Economy | Topic: Infrastructure: Energy incl. Renewable & Non-renewable


Nuclear Plants Expansion Programme


Finance Minister’s budget speech in Lok Sabha on 29.02.2016 for 2016-17 budgetincluded the following reference to nuclear energy:

“In the power sector, we need to diversify the sources of power generation for longterm stability. Government is drawing up a comprehensive plan, spanning next 15 to20 years, to augment the investment in nuclear power generation. Budgetaryallocation up to 3,000 crore per annum, together with public sector investments, willbe leveraged to facilitate the required investment for this purpose.”

The Government has already accorded administrative approval and financial sanctionfor setting up four units of 700 MW each at Gorakhpur in Haryana and the first twounits - GHAVP 1&2 (2X700 MW) are under construction.

The process of identification of suitable sites for locating future nuclear power plantsis an ongoing activity, carried out by the Standing Site Selection Committee (SSSC)of the Department of Atomic Energy.

This information was provided by the Union Minister of State (Independent Charge)Development of North-Eastern Region (DoNER), MoS PMO, Personnel, PublicGrievances & Pensions, Atomic Energy and Space, Dr Jitendra Singh in written replyto a question in Lok Sabha today.

*****

VG/NK/PJ/3960




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ROAD AND RAIL CONNECTIVITY IN NORTH EASTERNREGION

Relevant for: Indian Economy | Topic: Infrastructure: Railways

Ministry of Development of North-East Region

Road and rail connectivity in North Eastern Region


The road and rail connectivity of main land to the States in the North Eastern Region is throughthe Siliguri Corridor.

In the last four years under the schemes of M/o DoNER, road projects worth Rs.821.56 crorewere sanctioned and under schemes of North Eastern Council (NEC) Rs.1293.65 crore wasreleased for development of infrastructure like roads and bridges, ISBT, airports, railway in NorthEastern Region. Under the SARDP-NE including Arunachal Package of Roads and Highways,1262 km of road length worth Rs.17,065 crore has been completed in the last four years in theNorth East Region (NER). Under Bharatmala Pariyojana (BMP) roads stretches aggregating toabout 5301 km in NER have been approved for improvement. Out of this, 3246 km road lengthhas been approved for development of Economic Corridors in the North East. Under PradhanMantri Gram Sadak Yojana, road length of 20,708 km has been constructed at a cost ofRs.9033.76 crore, thereby connecting 3123 habitations in North Eastern Region.

In respect of Rail Connectivity, during the last four years the entire North East Region has beenconverted to the Broad Gauge (BG) network. The State wise details are given below:

State wise details of conversion from MG to BG rail line in the last three years

Name of State Rail Link

Arunachal Pradesh Balipara–Bhalukpong

Assam Rangiya-Murkongselek

Assam Lumding-Silchar

Tripura Kumaraghat-Agartala

Manipur Arunachal-Jiribam

Mizoram Kathakal–Bhairabi

In respect of Air Connectivity, modernization and development of Airports have been taken up.This includes construction of a new integrated terminal building at Guwahati, Imphal and

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Agartala Airports; Extension of Runway at Dibrugarh Airport; Strengthening of Runway, Taxiwayat Dimapur Airport; and upgradation works at Tezu Airport. The Greenfield Airport at Pakyonghas been completed and is now operational. A new Greenfield Airport at Holongi (Itanagar) hasalso been taken up for improving connectivity in the North East region. Moreover, RegionalConnectivity Scheme (RCS-UDAN) has been launched to provide connectivity to unserved andunderserved Airports within the country and to promote regional connectivity by making theairfare affordable through Viability Gap Funding (VGF). The North East has been kept as apriority area under RCS-UDAN.

The Ministry of Tourism has identified several segments like Eco-Tourism, Rural Tourism,Medical Tourism, Wellness Tourism, Adventure Tourism, Cruise Tourism, Sustainable Tourism,Agri-Tourism, Promotion of Cuisines as having huge potential for the North East Region. TheSwadesh Darshan Scheme of Ministry of Tourism is aimed at developing theme based touristcircuits in the Country, including the North East Region. Under this scheme, projects worthRs.1315.06 crore have been sanctioned for the North East Region in the last four years andRs.783.40 crore has been released for the same. The Ministry of Tourism also organizes the‘International Tourism Mart’ in the North East States for promotion of the North East Region.

As per the information available, major projects taken up in the North-East Region inter aliainclude Promotion of MSMEs in North Eastern Region and Sikkim, Comprehensive TelecomDevelopment Project (CTDP) for the North-Eastern Region, Comprehensive Scheme forstrengthening of Transmission and Distribution Systems (CSST&DS), North Eastern RegionPower System Improvement Project (NERPSIP), National Sports University at Imphal, Agartala-Akhaura Rail-Link to connect the existing Agartala station in Tripura to Akhaura Station ofBangladesh Railways, development of Brahmaputra and 19 new waterways including Barak.

In addition to above M/o Housing and Urban Affairs facilitates and assists 8 North EasternStates for schemes like Swachh Bharat Mission – Urban (SBM–U), Atal Mission forRejuvenation and Urban Transformation (AMRUT), Smart Cities Mission (SCM), Pradhan MantriAwas Yojana (Urban) (PMAY-U) and North Eastern Region Urban Development Programme(NERDUP) and 10% Lumpsum Scheme to improve the quality of life in cities and towns coveredunder these Missions/Schemes.

In addition to above, Ministry of Development of North Eastern Region has also taken upprojects for filling gaps in infrastructure through its schemes such as NLCPR-State, North EastRoad Sector Development Scheme (NERSDS), Schemes of North Eastern Council (NEC) andNorth East Special Infrastructure Development Scheme (NESIDS).

This information was provided by the Union Minister of State (Independent Charge)Development of North-Eastern Region (DoNER), MoS PMO, Personnel, Public Grievances &Pensions, Atomic Energy and Space, Dr Jitendra Singh in written reply to a question in LokSabha today.

****

VG/ NK/PJ



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CMS’ PANEL MULLS MOVE TO TIE STATE FARMREFORMS TO FUNDS


With a view to usher in sweeping reforms to boost agricultural growth, a panel of Chief Ministersdiscussed ways to bring State Governments on board including the possibility of linking theadoption of reforms to the Finance Commission’s grants and allocations.

Some of the reforms discussed by the panel, which held its first meeting at the NITI Aayog onThursday, included the potential scrapping of the Essential Commodities Act (ECA) for the foodsector and a review of agricultural subsidies, said Maharashtra Chief Minister DevendraFadnavis who chaired the meeting. The dismantling of market monopolies, and steps toincrease private investment and investment credit in the sector were also mulled, Mr. Fadnavistold reporters on the sidelines of the meeting.

‘State subject’

“Agriculture is a State subject and all the States must be brought on board,” he said,emphasising the importance of simultaneous and time-bound reforms across States to bringeffective transformation countrywide. “Central government grants and the Finance Commissionallocations should be linked with the agriculture reforms implemented by States,” he opined.

The panel has finalised its terms of reference and is preparing a paper to be circulated amongStates. State government feedback is expected by August 7, and the panel is due to meet againin Mumbai on August 16. The meeting was attended by Union Agriculture Minister NarendraSingh Tomar and the Chief Ministers of Gujarat, Haryana and Arunachal Pradesh. The MadhyaPradesh Chief Minister participated via video conferencing, while the Uttar Pradesh ChiefMinister sent his input in writing.

Mr. Fadnavis asserted that farm sector growth had lagged behind other sectors as it had notbeen part of the economic reforms of 1991. Almost three decades later, the Chief Ministers areattempting to build consensus around structural changes in the agriculture sector.

Bipartisan view

The Chief Ministers of both Gujarat and Madhya Pradesh — one from the BJP and the otherfrom the Congress — spoke on the need to do away with the restrictions of the EssentialCommodities Act in the food sector, according to Mr. Fadnavis. The panel also discussed waysto ensure fair prices and end manipulative monopolies in the local agriculture produce mandis,as well as the need to remove obstacles to the implementation of the digital e-NAM system in allStates.

Approaches to spur growth in the food processing sector, which must grow at a faster pace thanthe overall agriculture sector in order to increase farmers’ income, were also discussed.

The panel also considered the need for better coordination between the Agriculture andCommerce Ministries to ensure a dynamic pricing policy based on global market trends for majoragricultural commodities.

With regard to subsidies, the panel discussed ways to ensure that they are targeted better in

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order to maximise benefits for farmers. Holding that private investments were key to the growthof the sector, the panel discussed ways to reduce credit costs and improve linkages withfinancial institutions.

The need for States to adopt the Centre’s Model Contract Farming Act was also stressed at themeeting.










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INAPPROPRIATE TEMPLATE FOR A LEGITIMATETARGET

Relevant for: Indian Economy | Topic: Issues relating to Planning & Economic Reforms

Getty Images/istockphoto | Photo Credit: Creative-Touch

The recently-released Economic Survey either glosses over or ignores many acute challengesfaced by the Indian economy — like the severe agrarian crisis; the troubles of loss-making anddebt-ridden public sector units; and the issues plaguing public sector banks.

Economic Survey 2019 in six charts

While the Survey is not incorrect in highlighting the importance of incorporating insights frompsychology into economics, it is odd that this has been done so late in the day. Many othercountries like the U.K., Australia and Singapore have for long being applying such points topolicy design and implementation areas and the issue has been discussed in India over the lastfew years as well. It is unclear what added value the report truly has to offer here.

One issue that the Survey rightly underlines is the need for India to revive private investment if itis to achieve the magical $5-trillion economy status by 2024-25. However, what is odd here isthat to stress this, the document invokes the age-old comparison between India and East Asiancountries. It is rather strange that the Survey brings up something that has been taught ineconomic development classes over the last two decades.

Here, a question that arises is: Can the East Asian model help revive India’s flounderinginvestment rates? Some crucial reminders are worth underlining.

Read: Full text of Economic Survey 2019

The East Asian model was largely a story driven by the newly industrialised economies (NIEs) ofSingapore, Hong Kong, South Korea and Taiwan, and Japan earlier.

Specifically, the prime goal in various NIEs from 1960s through to the 1990s (prior to the AsianFinancial Crisis) was to raise gross savings rates. While the rise in household savings was partlydue to the positive demographic dividend, a variety of other factors, including macroeconomicstability, low inflation, lack of social safety nets, inability to leverage (due to a highly regulatedbanking system) and forced savings (fully-funded Provident Funds) also played a role. State-owned enterprises had to operate with budget constraints. This, coupled with the fiscal disciplinepractised by the economies, ensured that the public sector did not crowd out private savingsand, in some cases, actually added to national savings.

Union Budget 2019-20: Bucks for the banks

Another goal was to ensure that the private savings were actually intermediated into the formalfinancial system, failing which the cost of capital would remain high and the availability of capitalfor investment would be low. To achieve this, importance was given to the establishment of asafe and secure public sector banking system (usually in the form of postal savings networks)where deposits were guaranteed by the central bank and interest incomes was taxed lightly, if atall. The state-owned banks were tightly regulated as financial stability was the cornerstone ofoverall macroeconomic stability.

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Financial inclusion was encouraged, though the focus was on actual use of the deposit accountsrather than just their opening. While the manufacturing sector was viewed as a growth engineand open to export competition, the banking sector, in all economies apart from Hong Kong,remained tightly regulated and closed to foreign banks. Even Singapore initially adopted a dualbanking structure that sheltered the domestic economy largely from significant short-term bankflows. It resorted to a calibrated policy to allow fully licensed foreign banks only in the late 1990s.

So, while these economies were generally successful in encouraging savings, the cost of capitalwas rather high, not unlike the problem in India today. To tackle this, the East Asian economiesundertook financial repression — conventionally understood as a ceiling price keeping lendingrates lower than market equilibrium.

The macro does not gel with the micro

This, in normal circumstances, would have led to disintermediation from the formal financialsystem, a consequent reduction in the quantity of financing and the creation of a shadowbanking system. However, central banks of these economies maintained tight oversight, andselective capital controls ensured that the low-yielding savings did not leave their countries oforigin, while limited financial development forestalled the possibility of people looking for savingsalternatives.

Along with these, the governments undertook sophisticated industrial policies to promotedomestic investment, much of which was export-led (though not necessarily free-market based).The governments understood that a vertical industrial policy (of ‘picking winners’) would not workwithout a sound horizontal industrial policy (dealing with labour and land reforms, bringing aboutbasic literacy and raising women’s participation in the labour force). Besides, incentives also hadclear guidelines and sunset clauses and mechanisms were in place to phase out support. Thus,winners prospered while losers were allowed to fail.

In addition, the bureaucracies of these East Asian economies had what Berkeley sociologistPeter Evans referred to as “embedded autonomy”. This allowed the state to be autonomous, yetembedded within the private sector and enabled the two to work together to develop policies orchange course if the policies did not work. This made industrial policy operate as a process ofself-discovery, as emphasised by Harvard economist Dani Rodrik. It is the lack of this embeddedautonomy in the next-tier NIEs of Malaysia, Thailand and Indonesia that has been partlyresponsible for them being stuck in the ‘middle income trap’.

Thus, much of the investment and export acceleration in East Asian countries was due toheterodox policies and reforms that were carefully calibrated, well-sequenced and implementedat a time when the external environment was far less hostile than it is today. These measuresallowed the nations to benefit from their demographic dividends and transform themselves intodeveloped economies in record time.

A Budget that goes nowhere

In contrast, due to political and other compulsions, India’s reforms since 1991 have been ratherhaphazard and of a ‘stop-and-go’ nature with perverse consequences, all of which has made itmuch more challenging for the country to take full advantage of its demographic dividend.

Successive governments have neither had the tool-sets and the policy space nor the embeddedautonomy needed to drive the industrial transformation as in the East Asian countries.

Though measures like reducing policy uncertainty; ensuring that the fiscal expenditures do not

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crowd out private savings and investment; enhancing the efficiency of financial intermediation;and dealing with land acquisition and environment clearances are all essential to reigniteinvestment, we do not need to invoke the East Asian example to understand the importance ofthese.

Ramkishen S. Rajan is a Professor at the Lee Kuan Yew School of Public Policy, Singapore.Sasidaran Gopalan is a Senior Research Fellow at the Nanyang Business School, Singapore

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FUNDS FOR WELFARE OF WEAVERSRelevant for: Indian Economy | Topic: Issues Related to Poverty, Inclusion, Employment & Sustainable

Development


Funds for Welfare of Weavers


Budgetary allocation of funds is not made State-wise. However, indicative physical targets areallotted to States and funds are released to various Implementing Agencies based on viableproposals received and utilisation of previously released funds.

The Government of India, Ministry of Textiles is implementing following schemes for promotion &development of handlooms and welfare of handloom weavers across the country:

National Handloom Development Programme (NHDP)1.Comprehensive Handloom Cluster Development Scheme (CHCDS)2.Handloom Weavers’ Comprehensive Welfare Scheme (HWCWS)3.Yarn Supply Scheme (YSS)4.

Under the above schemes, financial assistance is provided for raw materials, purchase of loomsand accessories, design innovation, product diversification, infrastructure development, skillupgradation, lighting units, marketing of handloom products and loan at concessional rates.

1. National Handloom Development Programme (NHDP)

Block Level Cluster: Introduced in 2015-16 as one of the components of NationalHandloom Development Programme (NHDP). Financial assistance upto Rs. 2.00crore per BLC for various interventions such as skill upgradation, HathkarghaSamvardhan Sahayata, product development, construction of workshed, projectmanagement cost, design development, setting up of common facility centre (CFC)etc. is provided. Besides, financial assistance upto Rs. 50.00 lakh is also available forsetting up of one dye house at district level. The proposals are recommended by theState Government.

i.

Handloom Marketing Assistance is one of the components of National HandloomDevelopment Programme. In order to provide marketing platform to the handloomagencies/weavers to sell their products directly to the consumers, financialassistance is provided to the States/eligible handloom agencies for organising

ii.

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marketing events in domestic as well as overseas markets.

Weavers’ MUDRA Scheme: Under the Weavers’ Mudra Scheme, credit atconcessional interest rate of 6% is provided to the handloom weavers. Marginmoney assistance to a maximum of Rs. 10,000 per weaver and credit guarantee for aperiod of 3 years is also provided. MUDRA portal has been developed in associationwith Punjab National Bank to cut down delay in disbursement of funds for marginmoney and interest subvention

iii.

HATHKARGHA SAMVARDHAN SAHAYATA (HSS):iv.Hathkargha Samvardhan Sahayata (HSS) was introduced on 1st December 2016 with anobjective to provide looms/accessories to the weavers to enhance their earnings throughimproved productivity and quality of the handloom products. Under the scheme, 90% of thecost of loom/accessory is borne by the Government of India while remaining 10% is borneby the beneficiary. The Government of India’s share is released directly in the Bankaccount of the beneficiary through designated agency.

EDUCATION OF HANDLOOM WEAVERS AND THEIR CHILDREN:v.Ministry of Textiles has signed Memorandums of Understanding with Indira GandhiNational Open University (IGNOU) and National Institute of Open Schooling (NIOS) tosecure educational facilities for the weavers and their families. NIOS offers Secondaryand Senior Secondary level education with specialized subjects on design, marketing,business development, etc. through distance learning mode for handloom weavers,whereas IGNOU offers continuing education programs through accessible and flexiblelearning opportunities relevant to the aspirations of handloom weavers and their childrenfor career progression.

Ministry of Textiles is providing reimbursement of 75% of the fee towards admission toNIOS/IGNOU courses in case of SC, ST, BPL, and Women learners belonging tohandloom weavers’ families.

“India Handloom” Brand- During the celebration of 7th August 2015 as NationalHandloom Day, ‘India Handloom’ Brand was launched by Hon’ble Prime Minister forbranding of high quality handloom products. It promotes production of niche handloomproducts with high quality, authentic traditional designs with zero defect and zero effect onenvironment. Since its launch, 1232 registrations have been issued under 122 productcategories and sale of Rs. 689.72 crore as reported on 31-03-2019.

VI.

Initiatives with various leading brands has been undertaken to bring out a separate rangeof handloom garments in their brand.

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e-commerce- In order to promote e-marketing of handloom products, a policyframe work was designed and under which any willing e-commerce platform withgood track record can participate in online marketing of handloom products.Accordingly, 23 e-commerce entities have been engaged for on-line marketing ofhandloom products. A total sale of Rs. 34.72 crore has been reported through theonline portal as on 31-03-2019.

VII.

Urban Haats are set up in the big towns/metropolitan cities to provide adequatedirect marketing facilities to the craft persons/weavers and eliminate middleagencies. 38 such Urban Haats have been sanctioned across the country so far.

VIII.

2. Comprehensive Handloom Cluster Development Scheme:

The Comprehensive Handloom Cluster Development Scheme (CHCDS) is implementedfor development of Mega Handloom Clusters covering atleast 15000 to 25,000 handloomsand financial assistance as GoI share from Rs. 40.00 to Rs.70.00 crore is in a period of 5years. 8 mega handloom clusters taken up as announced in the Budgets i.e. Varanasi,Sivasagar (2008-09), Virudhunagar, Murshidabad (2009-10), Prakasam and Gunturdistricts and Godda and neighboring districts (2012-13), Bhagalpur &Trichy (2014-15).

Under the scheme, components like conducting Diagnostic Study, engaging Designer,Product Development, Corpus for raw material, Construction of Worksheds (forBPL/SC/ST/Women weavers), Skill up-gradation etc. are fully funded by Government ofIndia, while the components like Technology up-gradation, lighting units funded 90% andother common infrastructural projects like Design Studio, Marketing Complex, ValueAddition Centres and Publicity are funded by the Government of India to the extent of 80%.

3. Handloom Weavers’ Comprehensive Welfare Scheme

Weavers Comprehensive Welfare Scheme (HWCWS) is providing life, accidental anddisability insurance coverage under the components Pradhan Mantri Jivan Jyoti BimaYojana (PMJJBY), Pradhan Mantri Suraksha Bima Yojana (PMSBY) and ConvergedMahatma Gandhi Bunkar Bima Yojana(MGBBY).

4. Yarn Supply Scheme:

Yarn Supply Scheme is being implemented throughout the country to make available alltypes of yarn at Mill Gate Price. The scheme is being implemented through NationalHandloom Development Corporation. Under the Scheme freight is reimbursed and depotoperating charges at 2% is given to depot operating agencies. A component of 10% pricesubsidy also exists on hank yarn, which is applicable on cotton, domestic silk and woollenyarn with quantity caps.

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The details of funds released for handloom activities to various States under National HandloomDevelopment Programme (NHDP) and Comprehensive Handloom Cluster DevelopmentScheme (CHCDS) during the last three years is Annexed.

Under the Handloom Weavers’ Comprehensive Welfare Scheme and Yarn Supply Scheme, thefunds are released to the implementing agencies i.e. LIC of India and NHDC respectively. Theabove funds released to the implementing agencies as per the proposals initiated by them andutilization of the previously released funds. The details of total funds and released during the lastthree years is as under:

(Rs. in crore)

S. No. Name of the Scheme Total funds Funds released

01H a n d l o o m W e a v e r s ’Comprehensive Welfare Scheme

63.55 53.59

02 Yarn Supply Scheme 616.91 588.03

ANNEXURE

(Rs. in Crore)

S. No. Name of the States Funds released

during2016-17 to 2018-19

1 Andhra Pradesh 23.56

2 Bihar 5.63

3 Chhattisgarh 1.22

4 Delhi 0.22

5 Himachal Pradesh 2.49

6 Haryana 0.04

7 Gujarat 3.56

8 Kerala 1.15

9 Madhya Pradesh 3.00

10 Maharashtra 2.78

11 Jammu & Kashmir 4.82

12 Jharkhand 11.00

13 Karnataka 2.61

14 Orissa 12.96

15 Rajasthan 0.81

16 Tamilnadu 95.08

17 Telangana 2.93

18 Uttar Pradesh 23.99

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19 Uttarakhand 0.90

20 West Bengal 22.03

Total 220.78

NER

21 Arunachal Pradesh 2.480

22 Assam 49.10

23 Manipur 4.32

24 Mizoram 1.77

25 Nagaland 4.16

26 Meghalaya 0.08

27 Sikkim 0.97

28 Tripura 1.46

Total 64.34

Grand Total 285.12

*****

This information was given by the Union Minister of Textiles, Smriti Zubin Irani, in written reply inthe Rajya Sabha today.

***

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IMPACT OF DEMONETISATION AND GST ON TEXTILEINDUSTRY



Impact of Demonetisation and GST on Textile Industry


Ministry of Textiles has not conducted a study on the impact of demonetization and GST ontextile sector as no negative impact of demonetisation was observed by the Ministry during itsimplementation of schemes/field visits.

GST rates for garments and made up articles is 5% of sale value not exceeding Rs. 1000 perpiece and 12% for articles of sale value exceeding Rs. 1000 per piece. The GST rates are lesserthan the pre-GST incidence of taxes on these goods. To reduce the cost of garment industry,GST rate on manmade fibre yarns has been reduced from 18% to 12%. Further, the refund ofaccumulated input tax credit on fabrics has also been allowed to reduce cost of fabrics which isa major input for garments. Further, under the Interest Subvention Scheme, it was announced inthe budget speech that 350 crore allocated for 2 per cent interest subvention for all GST-registered MSMEs on fresh or incremental loans.

Government has taken a number of steps for promotion of investment, production exports andfor creation of new job opportunities in the textile sector which inter-alia include the following:

(i) To increase competitiveness of textile industry, Government announced a SpecialPackage for garments and made-ups sectors of Rs.6000 crore which was launched in2016 to promote investment, boost exports and employment generation of around 1.11crore jobs. The package offers Rebate of State Levies (RoSL), labour law reforms,additional incentives under Amended Technology Upgradation Fund Scheme ATUFS andrelaxation of Section 80JJAA of Income Tax Act. The RoSL scheme has been replaced bythe new RoSCTL (Rebate of State and Central Taxes and Levies) scheme w.e.f 7th March2019 and shall remain in force up to 31.03.2020. The rates under Merchandise Exportsfrom India Scheme (MEIS) have been enhanced from 2% to 4% for garment and made-ups, 5% to 7% for handloom and handicrafts w.e.f. 1st November 2017. Products such asfibre, yarn and fabric in the textile value chain are being strengthened and madecompetitive through various schemes, inter alia, Powertex for fabric segment, ATUFS forall segments except spinning, Scheme for Integrated Textile Parks (SITP) for all segments,etc. Assistance is also provided to exporters under Market Access Initiative (MAI) Scheme.Government has enhanced interest equalization rate for pre and post shipment credit forexports done by MSMEs of textile sector from 3% to 5% w.e.f. 02.11.2018. Benefits ofInterest Equalization Scheme has been extended to merchant exporters from 02.01.2019

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which was earlier limited to only manufacturer exporters.

(ii) Amended Technology Upgradation Fund Scheme is being implemented to upgradetechnology/machinery of textile industry with an outlay of Rs. 17,822 crore during 2016-2022which will attract investment of Rs.1 lakh crore and generate 35.62 lakh employment in thetextile sector by 2022.

(iii) Under the Scheme of Integrated Textile Park (SITP), Government provides 40% subsidywith a ceiling of Rs.40 crore to set up Textile Parks for creation of textile infrastructure andemployment generation.

(iv) A separate scheme for development of knitting and knitwear has been launched recentlyto boost production in knitting and knitwear clusters which provide employment to nearly 24lakh persons.

(v) Government has approved a new scheme viz., ‘Samarth – Scheme for CapacityBuilding’, to train 10 lakh youth for a period of three years from 2017-18 to 2019-20, at anestimated cost of Rs.1300 crore. The scheme aimed at providing demand driven,placement oriented National Skills Qualifications Framework (NSQF) compliant skillingprogrammes to incentivize and supplement the efforts of the industry in creating jobs in theorganised and related sector including skilling and skill-upgradation in the traditionalsector.

(vi) Apart from the above, Government has been implementing various schemes forpromoting investment, production, employment generation and for boosting exports in thetextile sector. These include PowerTex India Scheme - for Powerloom SectorDevelopment; Silk Samagra- the integrated silk development scheme; IntegratedProcessing Development Scheme (IPDS), North Eastern Region Textile PromotionScheme (NERTPS), Incentive Scheme for Acquisition of Plants and Machinery (ISAPM) forJute Industry and Jute Diversified Products Manufacturing Units, innovation and expansionunder Technology Mission on Technical Textiles- for Promoting Usage of Agro textiles,Focus Incubation Centre, etc. Furthermore, Government has been encouraging andsupporting the traditional handloom and handicraft sectors including silk, wool and jutesectors for enhancing production and employment generation in these segments.


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MM/ SB




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EXPANSION OF SERICULTURERelevant for: Indian Economy | Topic: Major Crops, Cropping Patterns and various Agricultural Revolutions


Expansion of Sericulture


A web portal “SILKS” (Sericulture Information Linkage Knowledge System) has been developedin collaboration with North Eastern Space Applications Centre (NESAC), Umiam, Meghalayaand being used by the State Sericulture Departments, Central Silk Board (CSB) & planners tofind out potential areas for development of Sericulture in the States. “SILKS” is a single window,ICT (Information and Communication technology) based information and Advisory ServicesSystem for planners, field staff and farmers practicing sericulture. A total 108 districts in 24States covered in first phase of the project. In second phase of the project, total 70 moredistricts in 25 states have been taken up for study under Silk Samagra - Integrated Scheme forDevelopment of Silk Industry (ISDSI) which is in final stage.

Central Silk Board (CSB), a statutory body under the Ministry of Textiles has developed anIndigenous Automatic Silk Reeling Machine (ARM) involving domestic manufacturers forpromotion under Transfer of Technology (TOT) in the field to support ‘Make in India’ concept.The Indigenous ARM of 200 end capacity has been included and promoted under the GOIFlagship Programme ‘’ Silk Samagra’’ (2017-2020) with a unit cost of Rs.76.65 lakh. CSB isproviding Technical & Financial assistance for weaving and processing sector under itsbeneficiary oriented Central Sector Scheme “Silk Samagra’’ for the year 2019-20.

In respect of silk machinery related to Vanya silk, nine different Vanya silk reeling & Spinningmachines have been promoted/implemented in various Plans. Further, the implementation ofimproved machines is being continued under Silk Samgra (2017-20). In order toreplace/eradicate thigh reeling, which is unhygienic and against dignity of women, the Buniyadreeling machine has been developed and is being popularized. As on March-2019, 4530Buniyad reeling machine has been distributed among the tribal women under “Silk Samagra”.

Under “Silk Samagra” (2017-18 to 2019-20) being implemented by CSB, following steps arebeing taken for further modernization of seed producing centres in different states for enhancingtheir productivity and production capacities.

Revolving capital fund support for seed production centresi.Purchase of seed testing equipment for seed production centresii.Up-gradation of production units and cold storage facilitiesiii.

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To encourage Private participation in seed production, National Silkworm Seed Organization(NSSO) under Central Silk Board has initiated a move to attract small and large scale seedproducers to the sector. Central Silk Board has initiated action to develop private RegisteredSeed Producers (RSP) in Bivoltine hybrid seed production programme, for which differenttechnical and technological supports are being extended to them, which are as follows:

Supply of P1 Bivoltine Seed Cocoons: As a hand holding to promote bivoltine seedproduction, CSB is supplying quality seed cocoons to the RSPs, on cost basis.

i.

Cold Storage Support to the RSPs for preservation of Bivoltine silkworm seed produced bythem.

ii.

Uniform selling price of bivoltine seed by all agencies.iii.Technological hand-holding and Skill development: The RSPs are provided hands-on-training in commercial bivoltine seed production under Central Seed Act and also regularlybeing supported technically time to time.

iv.


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SURVEY ON EMPLOYMENT IN TEXTILE SECTORRelevant for: Indian Economy | Topic: Issues Related to Poverty, Inclusion, Employment & Sustainable

Development


Survey on Employment in Textile Sector


A survey for skill gap analysis in textile and clothing sector of India was conducted by theTextiles Committee in May 2018. The survey estimated additional employment to the tune of62.12 lakh in organised sector by 2020. The study also projected skilling requirement for 30.56lakh persons in which 23.89 Lakh was for Apparel Sector.

With a view to address the skilled manpower requirements of textile sector, the Ministry hadbeen implementing Integrated Skill Development Scheme (ISDS) from 2010-11 to 2017-18. Thescheme was implemented on pan India basis. Under the scheme, 11.14 lakh persons weretrained out of which 8.43 lakh persons were given employment.

In order to continue the endeavour of the Ministry in addressing the skill gap in the textileindustry, the Government has approved a new scheme titled Samarth-Scheme for CapacityBuilding in Textile Sector (SCBTS) for the entire value chain of textile sector, excluding Spinningand Weaving in the organized sector, for a period of three years from 2017-18 to 2019-20 withan outlay of Rs. 1300 crore. The objectives of the scheme inter alia include providing demanddriven, placement oriented National Skills Qualifications Framework (NSQF) compliant skillingprogrammes to incentivize and supplement the efforts of the industry in creating jobs in theorganised textile and related sectors and to provide skilling and skill-upgradation in thetraditional sectors. 10.00 lakh persons will be trained under the scheme.


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GREEN SHOOTS OF ECONOMIC GROWTHRelevant for: Indian Economy | Topic: Issues relating to Planning & Economic Reforms

India’s dream of becoming a $5-trillion economy by 2024 is now in the open with a ‘blue sky’vision envisaged in the Economic Survey this year. The document lays down a clear strategy toaugment the growth of key sectors by shifting gears as the current economic conditions aresmooth in terms of macroeconomic stability to expand growth. However, unless there areadequate investment reforms in primary sectors, steps taken to augment growth in other sectorswould be futile.

According to the Food and Agriculture Organisation (FAO), insufficient investment in theagriculture sector in most developing countries over the past 30 years has resulted in lowproductivity and stagnant production.

In India, with a steadily decreasing share of 14.4% in Gross Value Added since 2015-16, thesector’s contribution to a $5-trillion economy would be around $1 trillion — assuming a positiveannual growth rate hereafter.

What a $5 trillion economy would look like

Investment is the key to unlocking the potential of a developing economy. However, the myopicpolicy regime in the past several decades has resulted in sluggish investment growth in the farmsector. Therefore, strengthening the sector with an enabling investment package (both publicand private) is critical.

First, the wave of investment should touch segments such as agro-processing, and exports,agri-startups and agri-tourism, where the potential for job creation and capacity utilisation is farless. Integrating the existing tourism circuit with a relatively new area of agri-tourism (as a hub-and-spoke model), where glimpses of farm staff and farm operations are displayed to attracttourists, would help in boosting the investment cycle and generate in-situ employment.

$5 trillion target achievable, says Chief Economic Adviser

Second, investment needs to be driven to strengthen both public and private extension advisorysystems and the quality of agri-education and research through collaboration and convergence.It would also serve as a stage to demonstrate resource conservation and sustainable usethrough organic, natural and green methods, and also zero budget natural farming.

Third, given that India has the highest livestock population in the world, investment should bemade to utilise this surplus by employing next-generation livestock technology with a strongemphasis not only on productivity enhancement but also on conservation of indigenousgermplasm, disease surveillance, quality control, waste utilisation and value addition. This wouldlead to a sustained increase in farm income and savings with an export-oriented growth model.

Fourth, investment in renewable energy generation (using small wind mill and solar pumps) onfallow farmland and in hilly terrain would help reduce the burden of debt-ridden electricitydistribution companies and State governments, besides enabling energy security in rural areas.

Fifth, a farm business organisation is another source of routing private investment to agriculture.Linking these organisations with commodity exchanges would provide agriculture commoditiesmore space on international trading platforms and reduce the burden of markets in a glut

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season, with certain policy/procedural modifications.

Finally, data is the key driver of modern agriculture which in turn can power artificial intelligence-led agriculture, e-markets, soil mapping and others. Currently, there are issues of enumeration,maintenance and accessibility to help maintain agri-data on various fronts. There also needs tobe a centralised institutional mechanism to help maintain farm level-data available for real time(virtual) assessment, while also helping plug the loopholes in subsidy distribution, funding andunrealistic assumption in production estimation. This will help in effectively implementing andmonitoring various schemes for a pragmatic food system.

Union Budget 2019-20 first take: Moving strategically to a $5-trillion economy

It is widely accepted that resource conservation comes with behavioural change, which needsdedicated investment in behavioural farm research sets. Perhaps this would help find a way toleverage nudge policies/choice architecture for resource conservation, fertilizer use, irrigationand electricity consumption. Above all, there is a need to converge fragmented investments(public, private and foreign) to address the structural weaknesses in the agriculture sector,enunciated in the Economic Survey 2016-17.

Though economic transition has seen significant growth contribution from services and industry,agriculture remains the most trusted sector in helping alleviate poverty, hunger and malnutritionand ensuring better income distribution.

An earlier experience of BRIC (Brazil, Russia, India and China) nations has shown that a 1%growth in agriculture is at least two to three times more effective in reducing poverty than similargrowth in non-agricultural sectors. Public investment in agriculture research and development interms of percentage share in agri GVA stands at 0.37%, which is fairly low in comparison tobetween 3% and 5% in developed countries.

Also, in real terms, current investment can create an enabling environment to route privateinvestment in R&D. Therefore, public investment in agriculture should see a commensurate risewith a healthy mix of education, research and extension encouraging ‘blue-sky thinking’ in allsegments, while pushing for a targeted pruning of public expenditures on subsidies, kindtransfers, loan waivers and populist measures.

Agriculture and its allied sectors are believed to be one of the most fertile grounds to helpachieve the ambitious Sustainable Developmental Goals (SDGs). However, with the currentpace of agriculture growth, India requires ‘patient capital’, as financial returns to investment areunlikely to materialise in the initial years. An inclusive business model facilitating strong investor-farmer relations should be created, with a legal and institutional framework for governance.Expanding institutions is essential to accommodate the developmental impacts of foreignagricultural investment.

Naveen P. Singh and Ranjith P.C. are with the ICAR-National Institute of Agricultural Economicsand Policy Research, New Delhi. The views expressed are personal




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NOW, MISSION ECONOMYRelevant for: Indian Economy | Topic: Issues relating to Planning & Economic Reforms


The writer is a senior advocate of the Madras High Court

Fifty years ago, Apollo11 landed on the moon and realised the audacious goal set by the USPresident Kennedy in 1961 of sending a man to the moon and bringing him back safely by theend of the decade. Equally audacious is the goal set by Prime Minister Narendra Modi ofincreasing India’s GDP from $2.8 trillion to $5 trillion in just five years.

NASA engineers asked a critical question: What are the most essential things that must be dealtwith to achieve this goal? They came up with three issues: Navigation, propulsion and life-support (for the astronauts). It is equally necessary for India to identity the most critical thingsthat it has to grapple with to achieve the $5 trillion target. These are our tax system, regulatorylaws and the attitude towards the private sector.

The biggest stumbling block to achieving the $5 trillion target is that each of these factors workin their own sphere unmindful of the fact that while their actions may achieve their individualgoals, they may cause serious damage to the national policy objective. Our policy is toencourage foreign direct investment but our tax laws and the tax administration are soaggressively anti-industry that most foreign investors would rather set up manufacturing units inChina, Thailand or Vietnam. The tax authorities have a single-minded focus of achieving theirrevenue targets, and any method justifies the end. This results in the most ridiculous taxdemands that lead to extensive litigation. It is a matter of serious concern that India, with lessthan 2 per cent of global trade, has more transfer-pricing disputes than any other country.

Our regulatory and labour laws, particularly at the state level, still require multiple licences andpermits that make it very difficult to set up an industry. A large number of these laws have to bedismantled if Make in India is to become a reality. The land acquisition laws now require at least48 months to set up a large project. The sugar industry is a classic example of the government’spopulist policy crippling an entire industry. No industry can survive if the state-regulated rawmaterial price is more than the market-driven selling price of the final product.

The third factor is critical to achieving our ambitious target. There has to be a change in theattitude towards the private sector, particularly big business. We must stop treating privateenterprise as a necessary evil rather than as an affirmative good. China, whose GDP equaledIndia’s a few decades ago, is now a $13 trillion economy with almost the same population. It hasbecome the largest manufacturing centre only because of private enterprise. Just one exampleshows the gap: China’s garment exports in 2017 were $110 billion, while India’s exports werejust $17 billion.

The same story is repeated in several sectors. None of this would have been possible withoutthe Chinese government actively and aggressively encouraging the private sector. We will haveto examine what are the tax, labour and regulatory laws that have made China so successful?And how many of these incentives and policies can be replicated?

We have just five years to achieve this target. Jim Collins, the famous management guru,laments that several companies choose to ignore the “brutal facts”; so do nations, at their peril.

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Several industries are in a precarious position and there is an overall slowdown of the economy.The Indian economy is in need of a serious overhaul if we are to generate large-scaleemployment. The failure of several “global investors” conferences is a grim indicator that India isnot an attractive investment destination.

The task of achieving the $5 trillion goal has to be equally shared by states. With the same partyin power in the Centre and several states, it will be easier to implement large-scale reforms thatare now necessary. We have two options: To continue with the status quo of focusing on largegovernment sponsored infrastructure and welfare schemes to drive growth, with the attendantrequirement of massive borrowings or actively encourage private investment to make India thesecond-largest manufacturing nation. Only the second option will enable India to reach thetarget by 2024. The tax and regulatory laws must function in unison and must be designed tobecome growth oriented. If we change course, like NASA, we can achieve our ambitious goal. Ifwe continue on the existing path, the $5 trillion dream will remain a mirage.

The writer is a senior advocate, Supreme Court.





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SCHEME FOR INTEGRATED TEXTILE PARKRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Industry & Services Sector



Scheme for Integrated Textile Park


The Scheme for Integrated Textile Park (SITP) was approved during the 10th FiveYear Plan in 2005.Five (5) Textile Parks have been sanctioned so far, under SITP inthe state of Andhra Pradesh. A sum of Rs.4.75 crores have been released to theseTextile Parks during the last two years and the current year.

There are a total of 59 textile parks approved under SITP by the Ministry. Although,there are no specific apparel parks under SITP, there are36 Textiles Parks which haveapparel units under them. Status of Textile Parks in Andhra Pradesh under the SITP interms of employment generation is at Annexure A.

This Ministry is implementing the Integrated Processing Development Scheme (IPDS)for enabling the textile processing sector to meet environmental standards throughadoption of appropriate technology, specifically in the area of water and waste watermanagement. The Scheme is a demand driven scheme. This Ministry has sanctioned7 Projects under the IPDS for setting up ‘Common Effluent Treatment plants’ (CETPs)with Zero Liquid Discharge (ZLD) systems out of which 3 projects arein the stateRajasthan, 3 projects are in the state of Tamil Nadu and 1 project is in the state ofGujarat. Also, required CETPs may be included in SITP proposal under ‘CommonFacility’ component.

Scheme for Integrated Textile Park is a demand driven scheme in which theprospective entrepreneurs can send their proposals to the Government, aftercompletion of stipulated conditions as per guidelines. The Textile Parks under SITPapproved in the state of Gujarat are given in Annexure-B.

Annexure-A

Status of Textile Park under SITP in Andhra Pradesh

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Sr.No.

Name of the Park LocationProposedEmployment

Actual (tilldate)

Status

1Brandix India ApparelCity Pvt. Ltd.

Vishakhapatnam 60000 19000 Completed

2 MAS Fabric Park Nellore 31000 550 Sanctioned

3HindupurVyapaarApparel Park

Hindupur 10500 0 Sanctioned

4 Guntur Textile Park Guntur 2960 0 Sanctioned

5Tarakeswara TextilePark

Nellore 2199 0 Sanctioned

ANNEXURE-B

Sanctioned SITP Parks in Gujarat

Sl.No. Name of the park Location State Status

1Gujarat Eco-Textile

Park LimitedSurat Gujarat Completed

2Mundra SEZ Textile &Apparel Park Limited

Kutch Gujarat Completed

3Fairdeal Textile Park

Pvt. Ltd.Surat Gujarat Completed

4Vraj Integrated Textile

Park LimitedAhmadabad Gujarat Completed

5Sayana Textile Park

LimitedSurat Gujarat Completed

6Surat Super Yarn Park

LimitedSurat Gujarat Completed

7RJD Integrated Textile

Park Ltd.

Ichhapore,Taluka - Hazira,

Dist- Surat,Gujarat.

Gujarat Completed

8Kejriwal Integrated

Textile ParkSurat Gujarat Under progress

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9Shanti Integrated

Textile Park Pvt Ltd.,Surat

VillageNaviPardi, Ta.

KamrejGujarat Under Progress

10Palsana ITP Park,

Surat, GujaratPalsana Gujarat Under Progress

11Amitara Green High

Tech Textile Park PvtLtd.

MojeNaikaKheda Gujarat

Gujarat Under Progress

12NSP Infrastructure

Private Limited, SuratIchhapore Gujarat Standstill

13Karanj Integrated

Textile Park

Molvan, TalukaMangrol, Surat

DistrictGujarat Under Progress

14 Shahlon Textile Park Mangrol-Taluka Gujarat Under Progress

This information was given by the Union Minister of Textiles, Smriti Zubin Irani, in awritten reply in the Lok Sabha today.

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JUTE MILLSRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Industry & Services Sector



Jute Mills


The Government is ensuring consistent demand for jute mills under the Jute PackagingMaterials (Compulsory Use in Packing Commodities) [JPM Act], 1987. At present, a minimum of100% of food grains and a minimum of 20% of sugar procured by State Procuring Agencies(SPAs) are to be compulsorily packed in jute sacking.

The Government of India has launched Incentive Scheme for Acquisition of Plants andMachinery (ISAPM) for Jute Industry and Jute Diversified Products Manufacturing Units tofacilitate modernization and up-gradation in existing and new jute mills/JDP units by way ofcapital subsidy. The Government has also imposed Anti-Dumping Duty on jute goods originatingfrom Bangladesh and Nepal to protect domestic jute industry.

The different jute mills under National Jute Manufactures Corporation (NJMC) Ltd. formedthrough nationalization of six jute mills including Alexandra, Kinnison and Khardahwere closeddue to financial losses and the closure was approved by Cabinet Committee of Economic Affairs(CCEA) after the revival scheme failed to materialise.


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HEALTH INSURANCE SCHEME FOR WEAVERSRelevant for: Indian Economy | Topic: Issues Related to Poverty, Inclusion, Employment & Sustainable

Development


Health Insurance Scheme for Weavers


Health Insurance Scheme was implemented by Ministry of Textiles till 30.09.2014 to providehealth care facility to handloom weavers. The healthcare facility was provided through a HealthInsurance Company which was selected by open tender procedure. Only the annual premiumwas paid to the Health Insurance Company as per the actual enrolment done. The healthinsurance claims submitted by the weavers were paid directly by Health Insurance Company. No irregularity in utilizing the Government of India funds were noticed in the implementation ofthe scheme.

The Government of India, Office of the Development Commissioner (Handicrafts) isimplementing following Schemes for promotion and development of Handicrafts Sector:

National Handicraft Development Programme (NHDP)

Comprehensive Handicrafts Cluster Development Scheme (CHCDS)

National Handicraft Development Programme (NHDP)

Base Line Survey & Mobilization of Artisans under Ambedkar Hastship Vikas Yojana

Design & Technology upgradation (DTU)

Human Resource Development (HRD)

Direct Benefit to Artisans (DBA)

Infrastructure and Technology Support (ITS)

Research and Development (R&D)

Marketing Support & Services (MSS)

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Comprehensive Handicrafts Cluster Development Scheme(CHCDS)

Mega Cluster (MC)

Special Projects under Integrated Development and Promotion of Handicraft (IDPH)

The State-wise financial assistance provided under these schemes during the last three years isAnnexed.

For strengthening the Yarn Supply Scheme, the guidelines have been revised during 2018-19.Under the Scheme, 10% price subsidy is provided on cotton, domestic Silk, Woolen yarn andLinen yarn in hank form with quantity restrictions, besides the supply of yarn at Mill Gate Pricewithout quantity restrictions.

ANNEXURE

Financial assistance provided for promotion and development of Handicrafts Industries duringthe last three years.

STATE/UTsAmount released

(Rs in Lakhs)

A & N Islands 56.89

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Andhra Pradesh 2227.66

Arunachal Pradesh 132.14

Assam 1127.32

Bihar 1369.83

Chandigarh 46.67

Chhattisgarh 221.53

Delhi 1313.12

Goa 14.25

Gujarat 644.06

Haryana 258.07

Himachal Pradesh 514.54

Jammu & Kashmir 1276.47

Jharkhand 210.18

Karnataka 432.38

Kerala 253.15

Madhya Pradesh 838.05

Maharashtra 494.33

Manipur 794.22

Meghalaya 233.14

Mizoram 83.52

Nagaland 159.49

Odisha 677.78

Puducherry 83.70

Punjab 501.11

Rajasthan 1192.20

Sikkim 155.16

Tamil Nadu 360.22

Telangana 981.71

Tripura 224.53

Uttar Pradesh 4444.11

Uttrakhand 245.65

West Bengal 415.90

TOTAL 21983.08

This information was given by the Union Minister of Textiles, SmritiZubinIrani, in a written replyin the Lok Sabha today.

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HANDLOOM WEAVERSRelevant for: Indian Economy | Topic: Issues Related to Poverty, Inclusion, Employment & Sustainable

Development


Handloom Weavers


As per 3rd handloom census, there are 43.31lakh handloom weavers and allied workers in thecountry, including Rajasthan, Uttar Pradesh and Maharashtra. A Statement showing State-wisenumber of handloom weavers and workers is at Annexure-I.

The weaverscooperative societies come under the purview of State Governments.Howeverbased on the reports received, so far 1477 societies are not active in the States ofRajasthan(736), Uttar Pradesh(324) and Maharashtra(417).

The Government has promulgated the Handlooms (Reservation of Articles for Production) Act,1985 to protect the interest of handlooms weavers in the country. 11 textiles articles areexc lus ive ly reserved wi th some techn ica l spec i f i ca t ions for product ion onhandlooms.Implementing agencies carry out powerloom inspections to check any violation of theAct. Central Assistance is also provided under the Scheme to the eligible State Governments foreffective implementation of the Act. An amount of Rs. 761.67 Lakh has been released during thelast three years to the ten eligible State Governments to implement the Act.

The Government of India, Ministry of Textiles is implementing following schemes for promotion &development of handlooms and welfare of handloom weavers across the country:

National Handloom Development Programme (NHDP)

Comprehensive Handloom Cluster Development Scheme (CHCDS)

Handloom Weavers’ Comprehensive Welfare Scheme (HWCWS)

Yarn Supply Scheme (YSS)

Under the above schemes, financial assistance is provided for raw materials, purchase of loomsand accessories, design innovation, product diversification, infrastructure development, skillupgradation, lighting units, marketing of handloom products and loan at concessional rates.Those cooperative societies which are not functioning well can also improve their performance

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by utilizing the assistance given under these schemes.

National Handloom Development Programme (NHDP)

Block Level Cluster: Introduced in 2015-16 as one of the components of NationalHandloom Development Programme (NHDP). Financial assistance upto Rs. 2.00 croreper BLC for various interventions such as skill upgradation, Hathkargha SamvardhanSahayata, product development, construction of workshed, project management cost,design development, setting up of common facility centre (CFC) etc. Is provided. Besides,financial assistance upto Rs. 50.00 lakh is also available for setting up of one dye houseat district level. The proposals are recommended by the State Government.

Handloom Marketing Assistance is one of the components of National HandloomDevelopment Programme. In order to provide marketing platform to the handloomagencies/weavers to sell their products directly to the consumers, financial assistance isprovided to the States/eligible handloom agencies for organising marketing events indomestic as well as overseas markets.

Weavers’ MUDRA Scheme: Under the Weavers’ Mudra Scheme, credit at concessionalinterest rate of 6% is provided to the handloom weavers. Margin money assistance to amaximum of Rs. 10,000 per weaver and credit guarantee for a period of 3 years is alsoprovided. MUDRA portal has been developed in association with Punjab National Bank tocut down delay in disbursement of funds for margin money and interest subvention

HATHKARGHA SAMVARDHAN SAHAYATA (HSS)

HathkarghaSamvardhanSahayata (HSS) was introduced on 1st December 2016 with anobjective to provide looms/accessories to the weavers to enhance their earnings throughimproved productivity and quality of the handloom products. Under the scheme, 90% of the costof loom/accessory is borne by the Government of India while remaining 10% is borne by thebeneficiary. The Government of India’s share is released directly in the Bank account of thebeneficiary through designated agency.

EDUCATION OF HANDLOOM WEAVERS AND THEIR CHILDREN:

Ministry of Textiles has signed Memorandums of Understanding with Indira Gandhi NationalOpen University (IGNOU) and National Institute of Open Schooling (NIOS) to secure educational

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facilities for the weavers and their families. NIOS offers Secondary and Senior Secondary leveleducation with specialized subjects on design, marketing, business development, etc. throughdistance learning mode for handloom weavers, whereas IGNOU offers continuing educationprograms through accessible and flexible learning opportunities relevant to the aspirations ofhandloom weavers and their children for career progression.

Ministry of Textiles is providing reimbursement of 75% of the fee towards admission toNIOS/IGNOU courses in case of SC, ST, BPL, and Women learners belonging to handloomweavers’ families.

“India Handloom” Brand- During the celebration of 7th August 2015 as National HandloomDay, ‘India Handloom’ Brand was launched by Hon’ble Prime Minister for branding of highquality handloom products. It promotes production of niche handloom products with high quality,authentic traditional designs with zero defect and zero effect on environment. Since its launch,1232 registrations have been issued under 122 product categories and sale of Rs. 689.72 croreas reported on 31-03-2019.

Initiatives with various leading brands has been undertaken to bring out a separate range ofhandloom garments in their brand.

e-commerce- In order to promote e-marketing of handloom products, a policy frame workwas designed and under which any willing e-commerce platform with good track recordcan participate in online marketing of handloom products. Accordingly, 23 e-commerceentities have been engaged for on-line marketing of handloom products. A total sales ofRs.34.72 crore has been reported through the online portal as on 31-03-2019.

Urban Haats are set up in the big towns/metropolitan cities to provide adequate directmarketing facilities to the craft persons/weavers and eliminate middle agencies. 38 suchUrban Haats have been sanctioned across the country so far.

Comprehensive Handloom Cluster Development Scheme:

The Comprehensive Handloom Cluster Development Scheme (CHCDS) is implemented fordevelopment of Mega Handloom Clusters covering atleast 15000 to 25,000 handlooms andfinancial assistance as Government of India share from Rs. 40.00 to Rs.70.00 crore is in aperiod of 5 years. 8 mega handloom clusters taken up as announced in the Budgets i.e.Varanasi, Sivasagar (2008-09), Virudhunagar, Murshidabad (2009-10), Prakasam and Gunturdistricts and Godda& neighboring districts (2012-13), Bhagalpur &Trichy (2014-15).

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Under the scheme, components like conducting Diagnostic Study, engaging Designer, ProductDevelopment, Corpus for raw material, Construction of Worksheds (for BPL/SC/ST/Womenweavers), Skill up-gradation etc. are fully funded by Government of India, while the componentslike Technology up-gradation, lighting units funded 90% andother common infrastructuralprojects like Design Studio, Marketing Complex, Value Addition Centres, Publicity etc., arefunded by the GOI to the extent of 80%.

Handloom Weavers’ Comprehensive Welfare Scheme

Weavers Comprehensive Welfare Scheme (HWCWS) is providing life, accidental and disabilityinsurance coverage under the components Pradhan Mantri Jivan Jyoti Bima Yojana (PMJJBY),Pradhan Mantri Suraksha BimaYojana(PMSBY) and Converged Mahatma Gandhi Bunkar BimaYojana(MGBBY).

Yarn Supply Scheme

Yarn Supply Scheme is being implemented throughout the country to make available all types ofyarn at Mill Gate Price. The scheme is being implemented through National HandloomDevelopment Corporation. Under the Scheme freight is reimbursed and depot operatingcharges @2% is given to depot operating agencies. A component of 10% price subsidy alsoexists on hank yarn, which is applicable on cotton, domestic silk and woolen yarn with quantitycaps.

Annexure-I

Details of Statewise number of handloom weavers and allied workers as per 3rd handloomcensus of 2009-10

SN StateNo. of handloom weavers

& allied workers

1 Andhra Pradesh 2,89,809

2 Arunachal Pradesh 33,041

3 Assam 16,43,453

4 Bihar 43,392

5 Chhattisgarh 8,191

6 Delhi 2,738

7 Gujarat 11,009

8 Haryana 7,967

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9 Himachal Pradesh 13,458

10 Jammu & Kashmir 33,209

11 Jharkhand 21,160

12 Karnataka 89,256

13 Kerala 14,679

14 Madhya Pradesh 14,761

15 Maharashtra 3,418

16 Manipur 2,18,753

17 Mizoram 43,528

18 Meghalaya 13,612

19 Nagaland 66,490

20 Odisha 1,14,106

21 Pondicherry 2,803

22 Punjab 2,636

23 Rajasthan 31,958

24 Sikkim 568

25 Tamil Nadu 3,52,321

26 Telangana 66,029

27 Tripura 1,37,177

28 Uttar Pradesh 2,57,783

29 Uttrakhand 15,468

30 West Bengal 7,79,103

Total 43,31,876


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CONTRIBUTION OF TEXTILE INDUSTRYRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Industry & Services Sector



Contribution of Textile Industry


The percentage of contribution of Textile industry to industrial production and Gross Domesticproduction(GDP) for the year 2014-15 to 2016-17 are given below at table (i) and income fromtextile exports for the years 2016-17 to2018-19 is given below at table (ii):-

Share of Textiles Sector to India’s GDP and GDP of Manufacturing Sector(at Basicprices)(Rs. in crore)

Year% share of Textile Industry to GDP of manufacturingSector

% share of Textile Industry to India’sGDP

2014-15 13.50 2.33

2015-16 12.43 2.22

2016-17 12.65 2.30

Source: National Accounts Statistics, 2018.

India’s textiles exports including handicrafts from 2016-17 to 2018-19:

(Rs in crore)

Year 2016-17 2017-18 2018-19

Textiles exports including handicrafts (Rs. in crore) 265340.00 255159.98 255336.98

There are estimatedto be more than 4.5 crore people engaged/employed directly in the textileindustry and another 6 crore people in allied sectors including a large numberof women andrural population employed in the sector.

Government has taken a number of steps for promotion of investment, production, exports andemployment generation in the textile sector across the country which inter-alia include thefollowing:-

A special package of Rs.6000 crore was launched in 2016 to promote investment, boostexports and employment generation (estimated 1.11 crore jobs) in apparel and made-upssectorwith three main components viz., (i) Remission of State Levies (ROSL) full refund of theState level taxes paid by the exporters; (ii) production linked additional incentive of 10% underthe Amended Technology Up-gradation Fund Scheme (ATUFS) and (iii) full employer’s

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con t r i bu t i on ( 12%) o f t he Emp loyees P rov i den t Fund (EPF) unde r t hePradhanMantriParidhanRozgarProtsahanYojana (PMPRPY)for a period of three years w.e.f1st April,2018 to employees of garment industry who are earning less than Rs. 15,000 permonth for all sectors including Textiles and Apparel (T&A) sector;

Amended Technology Upgradation Fund Scheme - to upgrade technology/machineries of textileindustry with an outlay of Rs.17, 822crore during 2016-2022 which will attract investment of Rs.1lakh crore and generate 35.62 lakh employments in the textile sector by 2022.

Under the Scheme of Integrated Textile Park (SITP), 40% subsidy is provided with a ceiling ofRs.40 crore to set up Textile Parks for creation of textile infrastructure and employmentgeneration.

A separate scheme for development of Knitting and knitwear has been launched inJanuary,2019 with an outlay of Rs.47.72 crore for a period upto 31.3.2020to boost production inknitting and knitwear clusters which provide employment to nearly 24 lakh persons.

Government has approved a new scheme viz., ‘Samarth – Scheme for Capacity Building’, totrain 10 lakh youth for a period of three years from 2017-18 to 2019-20, at an estimated cost ofRs.1300 crore. The scheme is aimed at providing demand driven, placement oriented NationalSkills Qualifications Framework (NSQF) compliant skilling programmes to incentivize andsupplement the efforts of the industry in creating jobs in the organised and related sectorincluding skilling and skill-upgradation in the traditional sector.

National Handloom Development Programme - Comprehensive Handloom Cluster DevelopmentScheme, Handloom Weaver Comprehensive Welfare Scheme and Yarn Supply Schemes–providing basic inputs, looms and accessories, design and development, infrastructuredevelopment, marketing of handloom products, etc.

National Handicrafts Development Programme (NHDP) and Comprehensive Handicraft ClusterDevelopment Schemes - for holistic development of handicrafts clusters through integratedapproach by providing support for design, technology up-gradation, infrastructure development,marketing etc.

“PowerTex India”— launched on 1st April, 2017 with an outlay of Rs. 487 crore for three yearsfor loom upgradation, infrastructure creation and access to concessional credit - push to thefabric segment;

A new scheme ‘Silk Samagra’ was launched for a period of 3 years upto 2019-20, with an outlayof Rs.2161.68 crore for comprehensive development of the silk sector - Integrated SericultureDevelopment Project and Intensive BiovoltineSericulture Development Project-including38sericulture projects are being implemented in 8 North East States at a total cost of Rs. 1107crore from 2014-15 to 2020-21 to cover 63,000 beneficiaries;

Jute ICARE for increasing the income of farmers by at least 50% through promotion of certifiedseeds, better agronomic practices and use of microbial re-using of Jute plant;

Integrated Wool Development Programme for growth of wool sector by way of machine sheepshearing, strengthening of wool market and processing and woollen product manufacturing;

North East Region Textile Promotion Scheme (NERTPS) for promoting textiles industry in theNER by providing infrastructure, capacity building and marketing support to all segments oftextile industry;

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As detail given in table (a),(ii)in reply to part (a) of the question above, export increased from Rs.255159.98 crore in 2017-18 to Rs. 255336.98cr in 2018-19.

Apart from the above, Government has been taking various initiativesfor increasingcompetitiveness and exports of textile products including knitwear and handloom such asSpecial Package for garments and made-ups sectors - Rebate of State Levies (RoSL); labourlaw reforms; additional incentives under Amended Technology Upgradation Fund SchemeATUFS; and relaxation of Section 80JJAA of Income Tax Act. The RoSL scheme has beenreplaced by the new RoSCTL (Rebate of State and Central Taxes and Levies) scheme w.e.f7th March 2019 and shall remain in force up to 31.03.2020.

Further, the rates under Merchandise Exports from India Scheme (MEIS) have been enhancedfrom 2% to 4% for garment and made-ups, 5% to 7% for handloom and handicrafts w.e.f.1st November 2017. Financial assistance is also provided to exporters under Market AccessInitiative (MAI) Scheme. Government has enhanced interest equalization rate for pre and postshipment credit for exports done by MSMEs of textile sector from 3% to 5% w.e.f. 02.11.2018. Benefits of Interest Equalization Scheme have been extended to merchant exporters from02.01.2019 which was earlier limited to only manufacturer exporters.To reduce the cost ofgarment industry, GST rate on manmade fibre yarns has been reduced from 18% to 12%.

The refund of accumulated input tax credit on fabrics has also been allowed to reduce cost offabrics which is a major input for garments. Further, under the Interest Subvention Scheme, itwas announced in the budget speech that 350 crore allocated for 2 per cent interest subventionfor all GST-registered MSMEs on fresh or incremental loans.

Besides the above, Government has been encouraging and supporting the traditional handloomand handicraft sectors including silk, wool and jute sectors for enhancing production andemployment generation in these segments.


***

MM/SB




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FROM PLATE TO PLOUGH: A WIN-WIN DEALRelevant for: Indian Economy | Topic: Issues related to direct & indirect Farm Subsidies and MSP


The writer is chair professor for agriculture at ICRIER. Views are personal

In her budget speech, the Union finance minister (FM) said: “At the centre of everything that wedo, we keep gaon, garib aur kisan in mind.” Here then is a small mantra for her to transform thelives of the kisan and the poor in rural areas. Just streamline the food and fertiliser subsidies byconverting them to direct cash transfers to identified beneficiaries. This can be done through theJAM trinity (Jan Dhan, Aadhaar and Mobile). Such a measure would not only empower the poorand farmers but also usher in a policy shift that can save the exchequer least Rs 50,000 croreevery year. The government can invest this in agri-R&D and better water management, inmeasures to ensure the country’s food security for the next 25 years and to augment farmers’incomes.

Let us first talk about the food subsidy. The food subsidy allocation in the budget is Rs 1,84, 220crore — let us say Rs 1.84 lakh crore. How many are aware that the pending dues of the FoodCorporation of India (FCI) stand at Rs 1.86 lakh crore? Year after year, there is under-provisioning of the food subsidy in the budget and the FCI is being asked to borrow from thebanks so that the fiscal deficit can be shown under control. The FCI’s loans from the banks havenow crossed Rs 2.48 lakh crore (see figure).

Two things stand out. One, the under-provisioning of the food subsidy — including overdues —in the budget. There is more under the carpet (Rs 1.86 lakh crore) than in the budget (Rs 1.84lakh crore). Two, the real deficit in the budget is much more than what is claimed.

But here I am more concerned about the efficiency, equity and sustainability of the food subsidyregime under the National Food Security Act (NFSA) — a legacy of UPA-2. Does the FM reallythink that 67 per cent of the population covered under the NFSA cannot afford basic food? Thereis more than 90 per cent subsidy on rice and wheat under the PDS — the economic cost of ricehovers around Rs 35 per kg and that of wheat is about Rs 25 per kg, while rice is being sold viathe PDS at Rs 3 per kg and wheat at Rs 2 per kg.

Interestingly, in rural areas in a majority of states, rice (paddy) is sold at less than the minimumsupport price (MSP). The landless labourers and small and marginal farmers, most of whom arecovered under PDS, produce these staples. The government first buys paddy and wheat fromrural areas and, after adding almost 50 per cent cost for procurement, stocking and distributionon top of the MSP price, sells the back most of this grain to people in rural areas. Thegovernment can achieve its ends in a much more cost-effective way if it transfers an equivalentamount of food subsidy in the form of cash to the beneficiary’s accounts. The beneficiary willhave the freedom to buy anything — rice, wheat, coarse cereals, pulses or even milk and eggs,which are more nutritious. Diversified diets will signal the need for diversification in farms. Thegovernment can keep some stocks for strategic purposes but gradually reduce procurement andshrink the size and operations of FCI, especially in areas where the water table is depleting fast— the northwest of the country, for example.

Further, the government has to think whether the coverage under PDS should be 67 per cent ofthe population or if it should be brought down to, say, 40 or even 30 per cent. Also, the NFSA

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allows the government to hike issue prices. Why should the price of rice be kept at Rs 3 per kgand that of wheat at Rs 2 per kg? This leads to massive diversion of PDS supplies to the openmarket. The Shanta Kumar Panel had estimated the leakages in PDS at 46 per cent.

The Modi government has introduced PoS machines and weeded out some fake ration cards.But leakages continue — rough estimates put it at 30-40 per cent. Fair price shop (FPS) ownersare much smarter than the government. Leakages can be reduced if the issue price is linked tosay 50 to 75 per cent of the MSP. If the Modi government can do this, not only will it result inmassive efficiency and equity but ensure sustainability as well.

Now, look at the fertiliser subsidy. The FM has allocated Rs 80,000 crore for fertilisers in thebudget. The fertiliser industry says that there is massive under-provisioning. The industry alsoclaims that Rs 38,000 crore of its dues are pending with the government. With this under-provisioning, the subsidy dues will cross Rs 50,000 crore. Which industry can feel upbeat if itsdues from the government pile up, year after year?

The problem is that the government does not have the will to revise the urea price, which atroughly $80 per tonne, is the lowest in the world. The average cost of production of the industryis around $250 per tonne, import parity hovers around $300 per tonne and keeps fluctuating,depending on global prices. The government has revived some almost dead plants (for exampleat Gorakhpur and Ramgundam) that produce urea at more than $400 per tonne.

It seems there is no economic rationale either in the pricing of urea for the farmers at $80 pertonne or producing urea, at the margin, at $400 per tonne. This is leading to large leakages andinefficient use, besides polluting the groundwater table — in fact, the environment at large.Interestingly, crops do not absorb more than 25 per cent of the urea being applied in India. So,basically, we are subsidising the pollution of the environment.

Can the Modi government rationalise these subsidies by converting them into direct cashtransfers on a per hectare basis? Our back-of-the-envelope calculations show that thegovernment can save about Rs 50,000 crore every year through such measures. The moneycan be invested in agri-R&D and water management. That would be the biggest reform in agri-food space

The writer is Infosys Chair Professor for Agriculture at ICRIER





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SUCKING UP SURPLUS: SEBI NEEDS FINANCIALAUTONOMY TO REMAIN EFFECTIVE


The Centre’s decision to clip the wings of the Securities and Exchange Board of India has notgone down too well with its members. Yet, the Centre is refusing to budge. In a letter dated July10, SEBI Chairman Ajay Tyagi said the Centre’s decision to suck out SEBI’s surplus funds willaffect its autonomy. SEBI employees had also written to the government with the same concern.As part of the Finance Bill introduced in Parliament, the Centre had proposed amendments tothe Securities and Exchange Board of India Act, 1992 that were seen as affecting SEBI’sfinancial autonomy. To be specific, the amendments required that after 25% of its surplus cashin any year is transferred to its reserve fund, SEBI will have to transfer the remaining 75% to thegovernment. On Friday, the government rejected the plea from SEBI’s officials asking thegovernment to reconsider its decision, thus paving the way for further conflict. Prima facie, thereseems to be very little rationale in the government’s decision to confiscate funds from the chiefmarkets regulator. For one, it is highly unlikely that the quantum of funds that the government islikely to receive from SEBI will make much of a difference to the government’s overall fiscalsituation. So the amendment to the SEBI Act seems to be clearly motivated by the desire toincrease control over the regulator rather than by financial considerations. This is particularly sogiven that the recent amendments require SEBI to seek approval from the government to goahead with its capital expenditure plans.

A regulatory agency that is at the government’s mercy to run its financial and administrativeoperations cannot be expected to be independent. Further, the lack of financial autonomy canaffect SEBI’s plans to improve the quality of its operations by investing in new technologies andother requirements to upgrade market infrastructure. This can affect the health of India’sfinancial markets in the long run. In the larger picture, this is not the first time that thegovernment at the Centre has gone after independent agencies. The Reserve Bank of India andthe National Sample Survey Office have come under pressure in recent months, and the latestmove on SEBI adds to this worrisome trend of independent agencies being subordinated by thegovernment. The Centre perhaps believes it can do a better job of regulating the economy byconsolidating all existing powers under the Finance Ministry. But such centralisation of powerswill be risky. Regulatory agencies such as SEBI need to be given full powers over their assetsand be made accountable to Parliament. Stripping them of their powers by subsuming themunder the wings of the government will affect their credibility.



By aiding defections, the BJP is shrinking opposition space in an unseemly fashion





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PANEL FOR BAN ON CRYPTOCURRENCIES IN INDIARelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Capital Market & SEBI

“All these cryptocurrencies have been created by non-sovereigns.” The report went on tohighlight the fact that crypto-currencies do not have any intrinsic value of their own and lack anyof the attributes of a currency.

“Therefore, the Committee is of clear view that the private crytocurrencies should not beallowed,” the report said. “These cryptocurrencies cannot serve the purpose of a currency. Theprivate cryptocurrencies are inconsistent with the essential functions of money/currency, henceprivate cryptocurrencies cannot replace fiat currencies.”

The Committee, however, leaves the door open for the central bank issued cryptocurrencies,adding that it endorsed the RBI’s stance of banning any sort of interface of cryptocurrencies withthe banking system in India.

While the committee has taken a strong stance against cryptocurrencies, it has highlighted thebenefits of the underlying technology— the distributed ledger technology (DLT) and blockchain.“The Committee recommends that the RBI examine the utility of using DLT based systems forenabling faster and more secure payment infrastructure,” the report said.










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SIX REASONS WHY THE ECONOMIC SURVEY’SPRESENTATION OF MGNREGA IS MISLEADING

Relevant for: Indian Economy | Topic: Issues Related to Poverty, Inclusion, Employment & SustainableDevelopment

A chapter in the recent Economic Survey on the “transformational” impact of Aadhaar on theMahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) merits scrutiny. Itpresents a skewed and unbalanced view of the programme’s technical interventions instead oftaking a comprehensive view of the implementation. The Survey draws heavily from the IndianSchool of Business’s working paper titled “A Friend Indeed: Does The Use of Digital IdentityMake Welfare Programs Truly Counter-Cyclical?”

A rebuttal of this working paper, published in November 2018, highlighted glaring flaws on threecounts — factual, methodological and conceptual. Yet the paper has been uncritically acceptedand widely cited in the Survey. This raises questions about the credibility of the Chief EconomicAdviser’s (an affiliate of the ISB) office. Here are six reasons why the Economic Survey’spresentation of the MGNREGA is misleading.

Aadhaar has to be understood as merely being a pipeline for funds transfer in the MGNREGA. Alack of adequate financial allocation, pending liabilities and low wages have dogged theprogramme over the past eight years. About 20% of the Budget allocation in each of the last fiveyears is of pending wage liabilities from previous years. It was worst in 2016-17, when pendingliabilities were 35% (13,220 crore) out of a total allocation of 38,500 crore. MGNREGA wages inmany States are about 40% lower than the Ministry of Labour’s national minimum wage. Insteadof sufficiently funding MGNREGA, a legal right, in times of severe drought, there isdisproportionate attention by the government towards creating a complex architecture based ontechnical solutions.

Second, the Economic Survey misrepresents the continuous technological interventions in theMGNREGA since its inception. Electronic funds transfer started as far back as in 2011 throughthe Electronic Fund Management System (eFMS), and became symbolic of the Direct BenefitTransfers (DBT). This served as the basis for the National Electronic Fund Management System(N-eFMS), introduced, in 2016. The Survey uses the term “ALP” for Aadhaar-linked paymentsand conflates it with the DBT by repeatedly referring to the time before 2015 as “pre-DBT” tomake its claims. The conflation of terms prevents one from making an honest assessment onthe effect that different interventions have had.

Third, the Survey makes strong assertions that timely payment of wages have positivelyimpacted worker participation. To support this, the Survey makes dubious causal claims onreduction in payment delays due to the introduction of Aadhaar. However, their understanding ofpayment delays is faulty.

Wage payments to MGNREGA workers happen in two stages. The first is the time taken by theblocks to generate the electronic Funds Transfer Orders (FTO) and send it digitally to theCentral government. The second is the time taken by the Central government to process theseFTOs and transfer wages to workers’ accounts. While it is true that delays in the first stage havereduced, those in the second stage continue to be unacceptably high. Only about 30% of thepayments are credited on time; the Central government takes more than than 50 days (which isthe second stage) to transfer wages to workers.

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The Survey only considers the delays in the first stage. Aadhaar has no role in reducing thedelays in the first stage but comes into play only in the second stage. Therefore the claim in theSurvey that the “ALP has positively impacted the flow of payments under the scheme” is amanipulation of facts.

Fourth, the Survey attributes an increase in demand for and supply of work in drought-affectedareas to Aadhaar ignoring other crucial factors. For instance, it ignores the Supreme Court’sorders on drought (Swaraj Abhiyan vs. Union of India (2015), which coincided with the durationof the working paper’s analysis. Taking cognisance of the Court’s orders and continuingmonitoring, the Ministry of Rural Development issued strict directives (between 2014 and 2017)to ensure allocation of works and on-time payment of wages.

These judicial-administrative directives, which came into effect after Aadhaar was introduced,played an important role in the increase in the MGNREGA work uptake in drought areas. Notaccounting for the Court’s orders as a contributing factor in their “causal” analysis makes theirfindings unreliable. In fact, in Rajasthan, under the new State government, the ‘work demand’campaign initiated in December 2018 has resulted in a 67% increase in employment generatedand a record number of households having completed 100 days of work under the MGNREGA.There is a three-fold increase in employment generation in Karnataka in 2019 compared to2018. This demonstrates how political and administrative priorities can have a strong positiveimpact on the programme.

Fifth, while the Survey rightfully acknowledges the nature of positive targeting of the MGNREGA— with women, Dalits and Adivasis benefitting the most — it wrongfully attributes it wholly to theintroduction of Aadhaar. The argument denies the unambiguous impact of the universal accessof the MGNREGA without having to meet any eligibility criteria. It is disappointing that inindependent India, an official document on the state of the economy compares a constitutionallybacked legal guarantee to the largesse of feudal kings. This should have been expected as theSurvey misses the point that the programme was introduced as a legal right and not as an act ofcharity. Indeed, to this end, the Minister for Rural Development recently made an odd comment:“I am not in favour of continuing with MNREGA because it is for the poor and the governmentwants to eradicate poverty.”

Sixth, the Survey’s claims about the ALP identifying “ghost beneficiaries” is exaggerated as anRTI query showed that they accounted for only about 1.4% of total households in 2016-17.

The technology historian, Melvin Kranzberg, wrote, “Technology is neither good nor bad; nor is itneutral.” It is telling that the Survey completely ignores numerous instances where technologyhas resulted in violation of workers’ rights under the MGNREGA — some examples are notregistering work demand, not paying unemployment allowance and compensation for paymentdelays among others.

In fact, another ISB study, not cited in the Economic Survey shows that 38% of the Aadhaar-based transactions in Jharkhand were diverted to a different account. Overlooking thesefundamental issues, cherry-picking studies and using flawed analyses to justify technocracy isan example of ethical paralysis. While the Economic Survey harps about an ill-designedtechnological pipeline, the fact is that a landmark labour programme is being put on a ventilator.

Rakshita is affiliated with the Social Accountability Resource Unit. Rajendran Narayananteaches at Azim Premji University, Bangalore


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There are major differences but also similarities in the U.S.’ response to Russia’s S-400 dealswith Turkey and India








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PRSINDIARelevant for: Indian Economy | Topic: Infrastructure: Roads

IntroducedLok SabhaJul 15, 2019Gray



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SKILL INDIA MISSION TO FARMERSRelevant for: Indian Economy | Topic: E-technology in the aid of farmers

Ministry of Skill Development and Entrepreneurship

Skill India Mission to Farmers


The National Skill Development Mission (NSDM) was launched by the Hon’ble Prime Minister on15th July, 2015, to provide a strong institutional framework to implement and scale up skilldevelopment efforts across the country. Under this initative, the Government is implementingmore than 40 sk i l l deve lopment schemes/programmes across 20 Cent ra lMinistries/Departments, for providing a variety of skill development training programmes on panIndia basis. As per the information provided by Ministries, 85.98 Lakh persons have beentrained in 2018-19.

The Ministry of Skill Development and Entrepreneurship (MSDE) imparts employable skills tothe youth through long term and short term training. The Ministry is implementing its flagshipscheme Pradhan Mantri Kaushal Vikas Yojana 2.0 (PMKVY 2.0) on pan-India basis with a targetto provide skilling to one crore people across the country in various sectors including Agriculture.Under the Centrally Sponsored Centrally Managed (CSCM) component of scheme, as on12.06.2019, 49.10 Lakh have been trained across the country; out of which 4 lakh candidateshave been trained in Rajasthan which include 5628 from Udaipur district.

Further, under Recognition of Prior Learning (RPL) component of PMKVY 2.0, up skilling offarmers have been made via bridge course training in the job roles namely organic grower, dairyfarmer, pulses cultivator etc. Under this project, 12488 beneficiaries have been enrolled in theState of Rajasthan.

Long term training is imparted through Industrial Training Institutes (ITIs). There are 1808 ITIs inthe State of Rajasthan with a training capacity of 3.59 lakh; out of which 21 ITIs with a seatingcapacity of 5,584 are in Udaipur. In addition some new trades like Internet of Things (SmartAgriculture) and Soil Testing and Crop Technician have been introduced to keep pace withTechnological innovations.

This information was given in a written reply by the Minister of State for Skill Development andEntrepreneurship Shri. R. K. Singh in the Lok Sabha today.

*****

SNC/SS


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PRSINDIARelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Capital Market & SEBI

IntroducedLok SabhaJul 19, 2019Gray



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BRINGING POTENTIAL BORROWERS UNDER CREDITNET


Ministry of Finance

Bringing Potential Borrowers under Credit Net


As per news release dated 21.5.2018 issued by TransUnion CIBIL, a Credit InformationCompany, a study by the company has calculated that approximately 220 million consumersmeet the target age range — from 20 to 69 — and income level of at least Rs. 2,50,000 peryear, to be attractive to lenders foSr retail products. On this basis, it states that the totalpopulation of “credit-eligible” consumers in India is roughly 220 million, and further states that, ofthis eligible population, only about one-third — 72 million — are currently credit active, meaningthat they have a live account with a bank or lending institution, while the remainder — nearly 150million — are not currently credit active, but would meet the age and income requirements thatwould make them potentially attractive to lenders.

Eligibility for credit is a function of a potential borrower’s repayment capacity andcreditworthiness. Repayment capacity is assessed on the basis of both income and expenditurecash flows, as well as assets and liabilities. Further, creditworthiness is reflected in theborrower’s track record in meeting credit and other payment obligations such as taxes and utilitybill, as well as the borrower’s risk profile.

It is not correct to make age and income criteria as the primary basis for arriving at thefigure of the potential eligible consumers for credit as credit is based on demand for it and is alsodependent on the repayment capacity, applicant’s liabilities, including tax liabilities, availability ofrequisite details and documents to enable the bank to arrive at a decision in its commercialjudgement with due regard to the technical feasibility and economic viability of the proposal andthe creditworthiness of the applicant, in accordance with the bank’s Board-approved loan policy.

Government has taken a number of steps to make the credit-seeking experience hassle-free. These steps enabling more and more potential borrowers under credit net so as to boostthe economy include, inter alia, the following:

With the mandate of Pradhan Mantri Jan Dhan Yojana not being limited to opening depositaccounts but to also enable access to credit, banks led by PSBs have been extending creditthrough the overdraft facility, available under the scheme, to accountholders havingsatisfactory conduct of account.

i.

For MSMEs, Pradhan Mantri MUDRA Yojana, for providing loans up to Rs. 10 lakh to non-corporate, non-farm small and micro enterprises, and Stand Up India scheme, forextending institutional credit system for loans between Rs. 10 lakh and Rs. 1 crore toundeserved strata of society like the Scheduled Castes and the Scheduled Tribes, andwomen entrepreneurs, have been successfully launched by the Government. Further,Public Sector Banks (PSBs) have taken the initiative for hassle-free and expeditious in

ii.

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principle approval for loans to MSMEs in contactless digital mode through thepsbloansin59minutes.com platform,which private sector banks have subsequently on-boarded and all PSBs have on-boarded the Trade Receivable electronic DiscountingSystem (TReDS) platform, enabling online discounting of trade receivables by MSMEs forfaster realisation against the receivables.To further improve the system of loan sanctioning and disbursement PSBs, reformsinitiated by Government under PSB Reforms Agenda include, inter alia, the following:

iii.

For time-bound credit decision making for better turnaround time of loan proposals,comprehensive Loan Management Systems (LMS) have been put in place in banks forpersonal segment and MSME loans

a.

Decision-making layers for loan sanctioning have been rationalised and restricted to amaximum of three layers.

b.

Proactive reach-out and faster automated processing for personal loans have beenenabled to greater use of dedicated sales channels, including digital channels, co-origination of loans in tie-up with non-banking financial companies, external partnershipsand dedicated marketing workforce.

c.

For agriculture, RuPay Kisan Credit Card (KCC), a smart card cum debit card has beenintroduced to meet the production credit requirements of farmers in a timely and hassle-free manner.

iv.

Vidya Lakshmi, a common web-based portal (www.vidyalakshmi.co.in), has been launchedto facilitate education loans application to banks on an anytime, anywhere basis.

v.

All these steps taken by the Government have enabled India’s rank on “Ease of getting credit” inWorld Bank’s Ease of Doing Business Index to improve steadily from 44 in 2016 to 22 in 2018.Further, year-on-year domestic credit growth from the banking system has risen to 13.8% as on31.3.2019, as per RBI data.

This was stated by Shri Anurag Singh Thakur, Minister of State for Finance & Corporate Affairsin a written reply to a question in Rajya Sabha today.

****

DSM/RM/PD


END

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NPAS IN SCHEDULED COMMERCIAL BANKSRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Banking, NPAs and RBI

Ministry of Finance

NPAs in Scheduled Commercial Banks


As per Reserve Bank of India (RBI)’s data on global operations, aggregate grossadvances of Scheduled Commercial Banks (SCBs) increased from Rs. 25,03,431 crore as on31.3.2008 to Rs. 68,75,748 crore as on 31.3.2014. As per RBI inputs, the primary reasons forthe spurt in stressed assets have been observed to be, inter-alia, aggressive lending practices,wilful default/loan frauds/corruption in some cases, and economic slowdown. Asset QualityReview (AQR) initiated in 2015 for clean and fully provisioned bank balance-sheets revealedhigh incidence of Non-Performing Assets (NPAs). As a result of AQR and subsequenttransparent recognition by banks, stressed accounts were reclassified as NPAs and expectedlosses on stressed loans, not provided for earlier under flexibility given to restructured loans,were provided for. Further, all such schemes for restructuring stressed loans were withdrawn.Primarily as a result of transparent recognition of stressed assets as NPAs, gross NPAs ofSCBs, as per RBI data on global operations, rose from Rs. 3,23,464 crore as on 31.3.2015, toRs. 10,36,187 crore as on 31.3.2018, and as a result of Government’s 4R’s strategy ofrecognition, resolution, recapitalisation and reforms, have since declined by Rs. 1,02,562 croreto Rs. 9,33,625 crore as on 31.3.2019 (provisional data reported by RBI on 2.7.2019).

With regard to the number of loans transformed into NPA after 2014, RBI has informed that itdoes not collect data on NPAs based on the original date of sanction of loans and as such, itdoes not have information with reference to any particular date of disbursal.

Government has implemented a comprehensive 4R’s strategy, consisting of recognition of NPAstransparently, resolution and recovery of value from stressed accounts, recapitalising of PublicSector Banks (PSBs), and reforms in PSBs and the wider financial ecosystem for a responsibleand clean system. Comprehensive steps have been taken under the 4R’s strategy to reduceNPAs of PSBs, including, inter-alia, the following:

Change in credit culture has been effected, with the Insolvency and Bankruptcy Code (IBC)fundamentally changing the creditor-borrower relationship, taking away control of thedefaulting company from promoters/owners and debarring wilful defaulters from theresolution process and debarring them from raising funds from the market.

i.

SARFAESI Act has been amended to make it more effective, with provision for threemonths’ imprisonment in case the borrower does not provide asset details, and for thelender to get possession of mortgaged property within 30 days.

ii.

Suits for recovery of dues are also filed by banks before DRTs. Six new DRTs have beenestablished to expedite recovery.

iii.

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Over the last four financial years, PSBs have been recapitalised to the extent of Rs. 3.12lakh crore, with infusion of Rs. 2.46 lakh crore by the Government and mobilisation of overRs. 0.66 lakh crore by PSBs themselves enabling PSBs to pursue timely resolution ofNPAs.

iv.

Key reforms have been instituted in PSBs as part of the PSBs Reforms Agenda, includingthe following:

v.


a.


b.


c.


d.

Enabled by the above steps, as per RBI data on global operations, the NPAs of SCBs, afterreaching a peak of Rs. 10,36,187 crore as on 31.3.2018, have declined by Rs. 1,02,562 crore toRs. 9,33,625 crore as on 31.3.2019 (provisional data for the financial year ending March2019), and SCBs have effected record recovery of Rs. 4,01,424 crore over the last four financialyears, including record recovery of Rs. 1,56,746 crore during 2018-19 (provisional data).

This was stated by Shri Anurag Singh Thakur, Minister of State for Finance & Corporate Affairsin a written reply to a question in Rajya Sabha today.

*****

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FRUIT EXPORTSRelevant for: Indian Economy | Topic: Transport & Marketing of agricultural produce


Fruit Exports


India’s share in world exports of fruits like apple, pear, peach, plum, apricot and cherry is verylow. These fruits are grown in temperate climates and in India can be grown only in specificregions. As such, the availability of exportable surplus of these fruits as well as availability ofright quality, colour, size, texture and aroma of fruits, suitable for exports, is low. Details ofIndia’s share in world fruit exports are as under:

World export vis-à-vis India's export (Year: 2018)

Quantity in MT, Value in USD Mill.

Product World India India's Share in %

(Value) Quantity Value Quantity Value

Total (Fresh Fruits - HS Codes0803 to 0810))

- 99,409.73 - 692.15 0.6963

Apples 81,60,765.00 8,230.03 12,894.00 5.61 0.0682

Cherries (Sour Cherries & OtherCherries)

7,98,963.00 3,569.86 14.00 0.04 0.0010

Pears 26,37,662.00 2,831.97 2.00 0.01 0.0002

Peaches, Incl. Nectarines, Fresh 19,67,948.00 2,521.12 -

-

0.0000

Plums & Sloes, Fresh 7,33,294.00 996.69 86.00 0.03 0.0027

Apricots, Fresh 3,81,162.00 482.06 9.00 0.04 0.0081

Source: ITC Trade Map

For overall promotion of agricultural exports, the Government has introduced a comprehensiveAgriculture Export Policy. The Agricultural & Processed Food Products Export DevelopmentAuthority (APEDA), an autonomous organisation under the administrative control of theDepartment of Commerce, has the mandate to promote exports of fruits. APEDA providesassistance to the exporters of fruits under various component of its scheme “Agriculture &Processed Food Export Promotion Scheme of APEDA” viz. Infrastructure Development, QualityDevelopment and Market Development. In addition, incentives are available on export of variousfruits under the Merchandise Exports from India Scheme (MEIS). Assistance is also provided toexporters/state governments under various other schemes of Department of Commerce - TradeInfrastructure for Export Scheme (TIES), Transport & Marketing Assistance (TMA) Scheme andMarket Access Initiative (MAI) Scheme.

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The details of total quantity and value of fruits exported during the last three years and thecurrent year, fruit wise, are given below:

India's Exports of Fresh Fruits

Quantity in MT; Value in USD Million

DESCRIPTION

2016-17 2017-18 2018-192019-20 (Apr-

May)

Quantity Value Quantity Value Quantity ValueQuantit

yValue

GRAPES FRESH198471.

30267.04

205039.41

303.71246133.7

7334.77

32862.96

44.08

POMEGRANATESFRESH

49852.04

73.3152391.8

285.97 67891.80 98.76 5500.73 7.55

MANGOES FRESH52761.0

066.46

49671.32

59.45 46510.22 60.24 8954.21 14.02

BANANAS, FRESH110750.

5757.83

102521.88

54.39134503.4

059.24

24753.44

10.12

ORANGES FRESHOR DRIED

48111.64

17.4837049.0

914.64 43098.28 34.62 915.50 0.24

OTHER FRUITS,FRSH

38113.32

16.4624611.8

010.95 15203.39 12.99 1512.02 1.04

APPLES FRSH22550.0

29.40

14780.68

7.18 16744.61 10.80 7.13 0.00

WATER MELONS26346.3

68.89

26219.30

8.86 33366.47 9.90 2523.94 0.67

LEMONSAND LIMES14116.8

98.59

17480.31

8.50 21121.33 6.41 1093.21 0.69

PAPAWS (PAPAYAS)FRESH

12442.76

7.6310030.3

96.44 9785.61 5.26 1029.21 0.44

OTHERS - 42.82 - 41.47 - 23.80 - 2.30

TOTAL 575.92 601.56 656.79 81.15

Source: DGCI&S

This information was given by the Union Minister of Commerce and Industry, PiyushGoyal, in awritten reply in the Lok Sabha today.

***

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ndin Global Innovation Index-2019


INDIA RANKED 52NDIN GLOBAL INNOVATION INDEX-2019

Relevant for: Indian Economy | Topic: Issues relating to Growth & Development - Demographic Economics &Various Indexes


India Ranked 52ndin Global Innovation Index-2019

Commerce & Industry Minister Releases Global InnovationIndex Rankings


Union Minister of Commerce & Industry and Railways, PiyushGoyal, launchedthe GlobalInnovation Index (GII) 2019 in New Delhi, today. India jumped five places to improve its positionfrom 57th last year to 52nd in 2019.

Speaking on this occasion Commerce and Industry Minister first congratulated all those involvedin the process and said that India has made a significant progress to 52nd rank in the GII-2019and now the culture of innovation is coming to the centre-stage. He said that India will continueits efforts to reach upwards of top 50 ranks in the GII that Prime Minister, Narendra Modi set agoal. He further said that India will not rest on past laurels until it achieves its target ofpositioning itself among the top 25 countries of the Global Innovation Index. To achieve thisranking he urged all stakeholders to work in mission mode.

PiyushGoyal urged the R&D institutions, universities and private sector to transform the countryinto a hub of innovation. The Commerce and Industry Ministry requested the World IntellectualProperty Organization (WIPO) to factor in India’s rural innovation as part of the innovation indexin future.

Commerce and Industry Minister in his address said that the improvement in the rankings shouldinspire Indians to help marginalized and under privileged section of society and R&D mustprovide sustainable solutions to the problems that India is facing at present like rising pollutionlevels in cities, water crises faced in different parts of the country, depleting natural resources,issues of climate change and solving problems of food wastage. All these problems that thecountry is facing should be solve through innovative ideas. The Commerce and Industry Ministerfurther added that India must be a responsive country and work in mission mode by engagingwith academia, private sector and government agencies to improve the quality of citizens’ liveseven in the remotest parts of the country.

Referring to GII theme of this year which is Creating Healthy Lives - The Future of MedicalInnovation, PiyushGoyal said that Government of India is focusing on not just curative butpreventive healthcare where wellness becomes a part of society.

The GII rankings are published every year by Cornell University, INSEAD and the UN WorldIntellectual Property Organization (WIPO) and GII Knowledge Partners. This is the 12th edition

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of the GII rankings of 129 economies based on 80 indicators ranging from intellectual propertyfiling rates to mobile-application creation, education spending and scientific and technicalpublications.

Switzerland remains number one is the GII index followed by Sweden, the United States ofAmerica, the Netherlands, the United Kingdom, Finland, Denmark, Singapore, Germany andIsrael.

***

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USE OF GI LOGORelevant for: Indian Economy | Topic: Issues relating to Intellectual Property Rights (IPRs)


Use of GI LOGO


Agricultural, natural or manufactured goods are registered as GeographicalIndications (GI) by the Geographical Indications Registry as per the provisions of theGeographical Indications of Goods (Registration & Protection) Act, 1999.

The Government is not aware of any index by the name of International IntellectualProperty (IP) Index published by any multilateral organisation. However, a privateentity namely, Global Intellectual Property Centre of the U.S. Chamber of Commerce,prepares an International Intellectual Property Index, which does not provide acomposite view of the IP regime in any country. The intellectual property rightsindicators used in the index are selective and hence not a true reflection of the stateof Intellectual Property Rights (IPR) protection and innovation in India.

India has a well-established legislative, administrative and judicial framework tosafeguard IPRs, which meets its international obligations while utilizing the flexibilitiesprovided in the international regime to address its developmental concerns. India hasa Trade Related Aspects of Intellectual Property Rights (TRIPS) compliant, robust,equitable and dynamic IPR regime.

In addition, the Government of India has taken various steps to further strengthen theIPR regime of the country, some of which are as follows:

The National IPR Policy, 2016 was adopted on 12.05.2016 as a visiondocument to guide future development of IPRs in the country.

●

The administration of Copyright Act, 1957 and Semiconductor IntegratedCircuits Layout-Design Act, 2000, along with their associated Registries, hasbeen transferred to the Department for Promotion of Industry and InternalTrade (DPIIT).

●

Subsequently, under the Finance Act, 2017, the Copyright Board has alsobeen merged in the Intellectual Property Appellate Board.

●

The Patents Rules, 2003 and the Trademarks Rules, 2002 have beenamended whereby the IP processes have been re-engineered to streamlinethem and make them more user-friendly.

●

Manpower in the Intellectual Property offices has been ramped upsignificantly with fresh recruitments. This augmentation of manpower has

●

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already had a salutary effect on the examination and disposal of patent andtrademark applications. The examination time for trademark applications hascome down from the earlier 13 months to just 1 month. The disposal ofpatent applications has increased by more than twofold in 2018-19 vis-à-vis2015-16.IPR awareness and training programmes are held for academic institutions,industry associations and enforcement agencies.

●

Special provisions have been made for startups and MSMEs.●

The Government has entered into an agreement with WIPO forestablishment of Technology and Innovation Support Centers (TISC).

●

The Commercial Courts set up under the Commercial Courts, CommercialDivision and Commercial Appellate Division of High Courts Act, 2015 alsodeal with IP disputes.

●

India has acceded to a number of multilateral treaties and agreements in thepast two years, such as WIPO Copyright Treaty, WIPO Performance andPhonograms Treaty, Nice Agreement concerning the internationalclassification of goods & services for the purposes of registration of marks,the Vienna Agreement establishing an international classification of thefigurative elements for marks and Locarno Agreement establishing aninternational classification for industrial designs.

●

As on 20.07.2019, 301 Indian products have been registered as GIs. The list ofIndian GI products registered State-wise is given below:

List of Indian GI Products eligible for use of GI Logo:

S.NO Registered GI Products Type State1 Guntur Sannam Chilli Agricultural Andhra Pradesh2 Bandar Laddu Food Stuff Andhra Pradesh3 Tirupathi Laddu Food Stuff Andhra Pradesh4 Allagadda Stone Carving Handicraft Andhra Pradesh

5Andhra Pradesh LeatherPuppetry

Handicraft Andhra Pradesh

6 Bobbili Veena Handicraft Andhra Pradesh

7Budithi Bell & Brass MetalCraft


8Dharmavaram HandloomPattu Sarees And Paavadas


9 Durgi Stone Carvings Handicraft Andhra Pradesh10 Etikoppaka Toys Handicraft Andhra Pradesh11 Kondapalli Bommalu Handicraft Andhra Pradesh

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12 Machilipatnam Kalamkari Handicraft Andhra Pradesh

13Mangalagiri Sarees AndFabrics


14 Sri Kalahasthi Kalamkari Handicraft Andhra Pradesh15 Udayagiri Wooden Cutlery Handicraft Andhra Pradesh16 Uppada Jamdani Sarees Handicraft Andhra Pradesh17 Venkatagiri Sarees Handicraft Andhra Pradesh18 Arunachal Orange Agricultural Arunachal Pradesh19 Assam (Orthodox) Tea Agricultural Assam

20Assam Ka rb i Ang longGinger

Agricultural Assam

21 Boka Chaul Agricultural Assam22 Joha Rice of Assam Agricultural Assam23 Tezpur Litchi Agricultural Assam24 Muga Silk of Assam Handicraft Assam25 Bhagalpuri Zardalu Agricultural Bihar26 Katarni Rice Agricultural Bihar27 Magahi Paan Agricultural Bihar28 Shahi Litchi of Bihar Agricultural Bihar29 Silao Khaja Food Stuff Bihar

30Applique (Khatwa) Work ofBihar

Handicraft Bihar

31 Bhagalpur Silk Handicraft Bihar32 Madhubani Painting Handicraft Bihar33 Darjeeling Tea Agricultural West Bengal

34Sikki Grass Products ofBihar

Handicraft Bihar

35Sujini Embroidery Work ofBihar

Handicraft Bihar

36 Pokkali Rice Agricultural Kerala37 Jeeraphool Agricultural Chhattisgarh38 Bastar Dhokra Handicraft Chhattisgarh39 Bastar Iron Craft Handicraft Chhattisgarh40 Bastar Wooden Craft Handicraft Chhattisgarh

41Champa Silk Saree AndFabrics

Handicraft Chhattisgarh

42 Feni Manufactured Goa43 Bhalia Wheat Agricultural Gujarat44 Gir Kesar Mango Agricultural Gujarat45 Agates of Cambay Handicraft Gujarat46 Jamnagari Bandhani Handicraft Gujarat47 Kachchh Shawls Handicraft Gujarat48 Kutch Embroidery Handicraft Gujarat49 Patan Patola Handicraft Gujarat50 Sankheda Furniture Handicraft Gujarat51 Surat Zari Craft Handicraft Gujarat52 Tangaliya Shawl Handicraft Gujarat53 Pethapur Printing Blocks Handicraft Gujarat54 Rajkot Patola Handicraft Gujarat

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55 Himachali Kala Zeera Agricultural Himachal Pradesh56 Kangra Tea Agricultural Himachal Pradesh57 Chamba Rumal Handicraft Himachal Pradesh58 Kangra Paintings Handicraft Himachal Pradesh59 Kinnauri Shawl Handicraft Himachal Pradesh60 Kullu Shawl Handicraft Himachal Pradesh61 Himachali Chulli Oil Manufactured Himachal Pradesh62 Kolhapuri Chappal Handicraft Karnataka & Maharashtra63 Alleppey Green Cardamom Agricultural Kerala & Tamilnadu

64 Malabar Pepper AgriculturalKera la , Karnataka &Tamilnadu

65 Nagpur Orange AgriculturalMaharashtra & MadhyaPradesh

66 Warli Painting HandicraftMaharashtra, Gujarat,Dadara & Nagar Haveli,Daman Diu

67 Basmati Agricultural

Pun jab / Ha ryana /Himachal Pradesh / Delhi/ U t ta rkhand / U t ta rPradesh / Jammu &Kashmir

68 Phulkari HandicraftP u n j a b , H a r y a n a &Rajasthan

69 Araku Valley Arabica Coffee Agricultural Andhra Pradesh & Odisha

70M a n s o o n e d M a l a b a rArabica Coffee

Agricultural Karnataka & Kerala

71M o n s o o n e d M a l a b a rRobusta Coffee

Agricultural Karnataka & Kerala

72 Banaganapalle Mangoes AgriculturalTe langana & AndhraPradesh

73 Kani Shawl Handicraft Jammu & Kashmir74 Kashmir Paper Mache Handicraft Jammu & Kashmir75 Kashmir Pashmina Handicraft Jammu & Kashmir

76 Kashmir Sozani Craft Handicraft Jammu & Kashmir

77Kashmi r Walnu t WoodCarving

Handicraft Jammu & Kashmir

78Kashmir i Hand KnottedCarpet

Handicraft Jammu & Kashmir

79 Khatamband Handicraft Jammu & Kashmir80 Appemidi Mango Agricultural Karnataka

81Bababudangir is ArabicaCoffee

Agricultural Karnataka

82 Bangalore Blue Grapes Agricultural Karnataka83 Bangalore Rose Onion Agricultural Karnataka84 Byadagi Chilli Agricultural Karnataka85 Chikmagalur Arabica Coffee Agricultural Karnataka86 Coorg Arabica Coffee Agricultural Karnataka87 Coorg Green Cardamom Agricultural Karnataka

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88 Coorg Orange Agricultural Karnataka89 Devanahalli Pomello Agricultural Karnataka90 Hadagali Malligae Agricultural Karnataka91 Kamalapur Red Banana Agricultural Karnataka92 Mysore Betel Leaf Agricultural Karnataka93 Mysore Malligae Agricultural Karnataka94 Nanjanagud Banana Agricultural Karnataka95 Sirsi Supari Agricultural Karnataka96 Udupi Malligae Agricultural Karnataka97 Udupi Mattu Gulla Brinjal Agricultural Karnataka98 Dharwad Pedha Food Stuff Karnataka99 Bidriware Handicraft Karnataka

100Channapatna Toys AndDolls

Handicraft Karnataka

101 Ganjifa Cards of Mysore Handicraft Karnataka102 Guledgudd Khana Handicraft Karnataka103 Ilkal Sarees Handicraft Karnataka104 Karnataka Bronzeware Handicraft Karnataka105 Kasuti Embroidery Handicraft Karnataka106 Kinhal Toys Handicraft Karnataka107 Molakalmuru Sarees Handicraft Karnataka108 Mysore Rosewood Inlay Handicraft Karnataka109 Mysore Silk Handicraft Karnataka110 Mysore Traditional Paintings Handicraft Karnataka111 Navalgund Durries Handicraft Karnataka112 Sandur Lambani Embroidery Handicraft Karnataka113 Udupi Sarees Handicraft Karnataka114 Mysore Agarbathi Manufactured Karnataka115 Mysore Sandal Soap Manufactured Karnataka116 Mysore Sandalwood Oil Manufactured Karnataka117 Central Travancore Jaggery Agricultural Kerala

118Chengalikodan NendranBanana

Agricultural Kerala

119M a r a y o o r J a g g e r y(Marayoor Sharkara)

Agricultural Kerala

120 Navara Rice Agricultural Kerala121 Nilambur Teak Agricultural Kerala122 Palakkadan Matta Rice Agricultural Kerala123 Vazhakulam Pineapple Agricultural Kerala124 Wayanaad Robusta Coffee Agricultural Kerala

125Wayanad GandhakasalaRice

Agricultural Kerala

126 Wayanad Jeerakasala Rice Agricultural Kerala127 Alleppey Coir Handicraft Kerala

128A r a n m u l a K a n n a d i(Aranmula Metal Mirror)

Handicraft Kerala

129Balaramapuram Sarees AndFine Cotton Fabrics

Handicraft Kerala

130 Brass Broidered Coconut Handicraft Kerala

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Shell Crafts of Kerala

131C a n n a n o r e H o m eFurnishings

Handicraft Kerala

132Chendamangalam Dhoties& Set Mundu

Handicraft Kerala

133 Kasaragod Sarees Handicraft Kerala

134Kuthampully Dhoties & SetMundu

Handicraft Kerala

135 Kuthampully Sarees Handicraft Kerala136 Maddalam of Palakkad Handicraft Kerala137 Payyannur Pavithra Ring Handicraft Kerala138 Screw Pine Craft of Kerala Handicraft Kerala139 Kaipad Rice Agricultural Kerala140 Ratlami Sev Food Stuff Madhya Pradesh

141Bagh Prints of MadhyaPradesh

Handicraft Madhya Pradesh

142Bell Metal Ware of Datia andTikamgarh


143 Chanderi Sarees Handicraft Madhya Pradesh144 Leather Toys of Indore Handicraft Madhya Pradesh

145M a h e s h w a r S a r e e s &Fabrics


146Jhabua Kadaknath BlackChicken Meat

Manufactured Madhya Pradesh

147 Ajara Ghansal Rice Agricultural Maharashtra148 Alphonso Agricultural Maharashtra149 Ambemohar Rice Agricultural Maharashtra150 Beed Custard Apple Agricultural Maharashtra151 Bhiwapur Chilli Agricultural Maharashtra152 Dahanu Gholvad Chikoo Agricultural Maharashtra153 Jalgaon Banana Agricultural Maharashtra154 Jalgaon Bharit Brinjal Agricultural Maharashtra

155 Jalna Sweet Orange Agricultural Maharashtra

156 Kolhapur Jaggery Agricultural Maharashtra157 Lasalgaon Onion Agricultural Maharashtra158 Mahabaleshwar Strawberry Agricultural Maharashtra159 Mangalwedha Jowar Agricultural Maharashtra160 Marathwada Kesar Mango Agricultural Maharashtra161 Nashik Grapes Agricultural Maharashtra162 Navapur Tur Dal Agricultural Maharashtra163 Purandar Fig Agricultural Maharashtra164 Sangli Raisins Agricultural Maharashtra165 Sangli Turmeric Agricultural Maharashtra

166Sindhudurg & Ratnagir iKokum

Agricultural Maharashtra

167 Solapur Pomegranate Agricultural Maharashtra168 Vengurla Cashew Agricultural Maharashtra169 Waghya Ghevada Agricultural Maharashtra

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170 Waigaon Turmeric Agricultural Maharashtra

171Karvath Kati Sarees AndFabrics

Handicraft Maharashtra

172 Paithani Sarees And Fabrics Handicraft Maharashtra173 Puneri Pagadi Handicraft Maharashtra174 Solapur Chaddar Handicraft Maharashtra175 Solapur Terry Towel Handicraft Maharashtra176 Nashik Valley Wine Manufactured Maharashtra177 Kachai Lemon Agricultural Manipur178 Moirang Phee Handicraft Manipur179 Shaphee Lanphee Handicraft Manipur180 Wangkhei Phee Handicraft Manipur181 Khasi Mandarin Agricultural Meghalaya182 Memong Narang Agricultural Meghalaya183 Mizo Chilli Agricultural Mizoram184 Naga Mircha Agricultural Nagaland185 Chakhesang Shawl Handicraft Nagaland186 Naga Tree Tomato Agricultural Nagaland187 Ganjam Kewda Flower Agricultural Odisha188 Kandhamal Haladi Agricultural Odisha

189Berhampur Patta (PhodaKumbha) Saree & Joda

Handicraft Odisha

190 Bomkai Saree & Fabrics Handicraft Odisha

191D h a l a p a t h a r P a r d a &Fabrics

Handicraft Odisha

192 Gopalpur Tussar Fabrics Handicraft Odisha193 Habaspuri Saree & Fabrics Handicraft Odisha194 Khandua Saree And Fabrics Handicraft Odisha195 Konark Stone Carving Handicraft Odisha196 Kotpad Handloom Fabric Handicraft Odisha197 Orissa Ikat Handicraft Odisha198 Orissa Pattachitra Handicraft Odisha199 Pipli Applique Work Handicraft Odisha

200Sambalpuri Bandha Saree &Fabrics

Handicraft Odisha

201 Ganjam Kewda Rooh Manufactured Odisha

202Tirukanur Papier MacheCraft

Handicraft Pondicherry

203 Villianur Terracotta Works Handicraft Pondicherry204 Bikaneri Bhujia Food Stuff Rajasthan205 Bagru Hand Block Print Handicraft Rajasthan206 Blue Pottery of Jaipur Handicraft Rajasthan207 Kathputlis of Rajasthan Handicraft Rajasthan208 Kota Doria Handicraft Rajasthan209 Molela Clay Work Handicraft Rajasthan210 Pokaran Pottery Handicraft Rajasthan

211Sanganer i Hand B lockPrinting

Handicraft Rajasthan

212 Thewa Art Work Handicraft Rajasthan

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213 Makrana Marble Natural Rajasthan214 Sikkim Large Cardamom Agricultural Sikkim215 Eathomozhy Tall Coconut Agricultural Tamil Nadu

216E r o d e M a n j a l ( E r o d eTurmeric)

Agricultural Tamil Nadu

217 Nilgiri (Orthodox) Agricultural Tamil Nadu218 Sirumalai Hill Banana Agricultural Tamil Nadu219 Virupakshi Hill Banana Agricultural Tamil Nadu220 Arani Silk Handicraft Tamil Nadu221 Bhavani Jamakkalam Handicraft Tamil Nadu222 Chettinad Kottan Handicraft Tamil Nadu223 Kancheepuram Silk Handicraft Tamil Nadu224 Kovai Kora Cotton Sarees Handicraft Tamil Nadu225 Madurai Sungudi Handicraft Tamil Nadu

226M a h a b a l i p u r a m S t o n eSculpture

Handicraft Tamil Nadu

227Nachiarkoil Kuthuvilakku(“Nachiarkoil Lamp”)


228P a t t a m a d a i P a i(“Pattamadai Mat”)


229 Salem Fabric Handicraft Tamil Nadu

230Salem Silk know as SalemVenpattu


231 Swamimalai Bronze Icons Handicraft Tamil Nadu

232T e m p l e J e w e l l e r y o fNagercoil


233 Thanjavur Art Plate Handicraft Tamil Nadu234 Thanjavur Doll Handicraft Tamil Nadu235 Thanjavur Painting Handicraft Tamil Nadu236 Thanjavur Veenai Handicraft Tamil Nadu237 Thirubuvanam Silk Sarees Handicraft Tamil Nadu238 Toda Embroidery Handicraft Tamil Nadu239 Coimbatore Wet Grinder Manufactured Tamil Nadu240 East India Leather Manufactured Tamil Nadu241 Madurai Malli Agricultural Tamil Nadu242 Hyderabad Haleem Food Stuff Telangana243 Adilabad Dokra Handicraft Telangana244 Cheriyal Paintings Handicraft Telangana245 Gadwal Sarees Handicraft Telangana

246Narayanpe t Hand loomSarees

Handicraft Telangana

247 Nirmal Furniture Handicraft Telangana248 Nirmal Paintings Handicraft Telangana249 Nirmal Toys and Craft Handicraft Telangana250 Pembarthi Metal Craft Handicraft Telangana251 Pochampally Ikat Handicraft Telangana252 Siddipet Gollabama Handicraft Telangana253 Silver Filigree of Karimnagar Handicraft Telangana254 Warangal Durries Handicraft Telangana

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255 Tripura Queen Pineapple Agricultural Tripura256 Allahabad Surkha Guava Agricultural Uttar Pradesh257 Kalanamak Rice Agricultural Uttar Pradesh

258M a n g o M a l i h a b a d iDusseheri

Agricultural Uttar Pradesh

259Banaras Metal RepousseCraft

Handicraft Uttar Pradesh

260Varanasi Soft Stone JaliWork


261 Agra Durrie Handicraft Uttar Pradesh

262Banaras Brocades AndSarees


263Banaras Gulabi MeenakariCraft


264 Farrukhabad Prints Handicraft Uttar Pradesh265 Firozabad Glass Handicraft Uttar Pradesh266 Ghazipur Wall Hanging Handicraft Uttar Pradesh

267Hand Made Carpe t o fBhadohi


268 Kanpur Saddlery Handicraft Uttar Pradesh269 Khurja Pottery Handicraft Uttar Pradesh270 Lucknow Chikan Craft Handicraft Uttar Pradesh271 Lucknow Zardozi Handicraft Uttar Pradesh272 Mirzapur Handmade Dari Handicraft Uttar Pradesh273 Moradabad Metal Craft Handicraft Uttar Pradesh274 Nizamabad Black Pottery Handicraft Uttar Pradesh275 Saharanpur Wood Craft Handicraft Uttar Pradesh276 Varanasi Glass Beads Handicraft Uttar Pradesh

277V a r a n a s i W o o d e nLacquerware & Toys


278 Kannauj Perfume Manufactured Uttar Pradesh279 Meerut Scissors Manufactured Uttar Pradesh280 Chunar Balua Patthar Natural Uttar Pradesh281 Uttarakhand Tejpatta Agricultural Uttarakhand282 Gobindobhog Rice Agricultural West Bengal283 Malda Fazli Mango Agricultural West Bengal

284Malda Khirsapati (Himsagar)Mango

Agricultural West Bengal

285 Malda Laxman Bhog Mango Agricultural West Bengal286 Tulaipanji Rice Agricultural West Bengal287 Banglar Rasogolla Food Stuff West Bengal288 Bardhaman Mihidana Food Stuff West Bengal289 Bardhaman Sitabhog Food Stuff West Bengal290 Bengal Dokra Handicraft West Bengal291 Baluchari Saree Handicraft West Bengal

292B a n k u r a P a n c h m u r aTerracotta Craft

Handicraft West Bengal

293 Bengal Patachitra Handicraft West Bengal294 Dhaniakhali Saree Handicraft West Bengal

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295 Joynagar Moa Food Stuff West Bengal296 Madurkathi Handicraft West Bengal297 Nakshi Kantha Handicraft West Bengal298 Purulia Chau Mask Handicraft West Bengal299 Santiniketan Leather Goods Handicraft West Bengal300 Santipore Saree Handicraft West Bengal

301W o o d e n M a s k o fKushmandi

Handicraft West Bengal

This information was given by the Union Minister of Commerce and Industry, PiyushGoyal, in a written reply in the Lok Sabha today.

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REVISION OF LOAN LIMIT IN MSME SECTORRECOMMENDED



Revision of Loan Limit in MSME Sector Recommended


A Committee constituted by Reserve Bank of India (RBI) has submitted its Report to the RBIwherein it has been recommended that the limit for collateral free lending should be increased toRs.20 lakh for MSMEs and Self-Help Groups (SHGs). The Committee has also recommendedrevision of loan limit sanctioned under MUDRA to Rs.20 lakh from Rs.10 lakh.

This information was given by Shri Nitin Gadkari, Union Minister for Micro, Small and MediumEnterprises in written reply to a question in Lok Sabha today.

*****

NP/SKP/IA


Read this release in: Urdu , Marathi



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PRSINDIARelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Banking, NPAs and RBI

IntroducedRajya SabhaJul 24, 2019



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RECONSIDER SOVEREIGN EXTERNAL BORROWINGRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Public Finance, Taxation &


According to a Bloomberg report, the Government of India is planning to raise $10 billion in itsfirst overseas bond sale by October. The decision to resort to this route for raising capital wasannounced in the budget earlier this month. While the initial offerings might be for euro or yen-denominated bonds, dollar offerings have not been ruled out. There are both pros and cons ofusing this route to raise capital.

The biggest benefit of such bonds is that interest rates in international markets are much lowerthan domestic markets. Such borrowing also does not lead to the government crowding out theprivate sector from a finite, and decelerating, pool of domestic savings. The biggest risk is thatsuch borrowings have an in-built unpredictability because of foreign exchange movements.Because the debt has to be repaid in foreign currency out of domestic resources, a depreciationin the Indian rupee vis-à-vis the currency in which the debt is denominated can lead to a spike indomestic debt burden. Given the sovereign guarantee, it will have to be repaid at all costs,unlike a corporate loan, which need not be paid in case of bankruptcy. An unforeseen disruptionin global markets in the future can derail the calculations which form the basis of taking any suchdebt in the present.

It is because of these downside risks that a wide gamut of economists and policy makers,including three former governors of the Reserve Bank of India, have advised against this routeto raise investible resources. The cautionary voices also include economists who are a part ofthe Prime Minister’s Economic Advisory Council. These are people whose service andallegiance to the best interests of the Indian economy are beyond doubt. Even the SwadeshiJagran Manch has spoken against this plan. Therefore, it is necessary that the governmentengages with these voices and tweaks its policy decision to allay their concerns. Any suchdecision will not be seen as a sign of political weakness, but a rational decision to heed to wisecounsel within the country. It is in our best interests to continue avoiding riskier forms ofengagement with the global economy.




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INTEGRATED SCHEME FOR DEVELOPMENT OF SILKINDUSTRY



Integrated Scheme for Development of Silk Industry


Under the Central Sector Scheme Silk Samagra an Integrated Scheme forDevelopment of Silk Industry (ISDSI) implemented by Government of India throughCentral Silk Board (CSB) with a total outlay of Rs. 2161.68 crore for three years(2017-18 to 2019-20) for the overall development of silk industry in the Country withan objective to scale up production by improving the quality and productivity. Thescheme comprises four major components viz. (i) Research & Development,Training, Transfer of Technology and Information Technology Initiatives, (ii) SeedOrganizations, (iii) Coordination and Market Development and (iv) QualityCertification Systems (QCS) / Export Brand Promotion and Technology Up-gradation.

Features of the Scheme

All the four major components of Silk Samagra are interlinked with each other andaimed at a common goal. The main objective of the scheme is to maintain Breedersstock, Breed improvement through R&D Projects, Development of mechanizedpractices, Technology translation through Sericulture Information Linkages andKnowledge System (SILKS) Portal, Mobile Application for Stakeholders and for seedquality monitoring, develop technology packages, impart training on improvedtechnology programmes to Stakeholders, and transfer technology to the field throughfront line demonstration, produce Basic & Commercial Seed of the improvedSilkworm breeds developed by the Research Institutes, encourage PrivatePartnership in Seed sector, and Maintain & Certify the quality standards set by theR&D units for Silkworm Seed, Cocoon, Raw Silk and Silk products covering the entireSilk value chain.

Major Interventions:

1. Research & Development: Race improvement through development of improvedhost plant varieties and improved disease resistant Silkworm breeds through

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collaborative research with reputed National Research organizations like IITs, CSIR,IISc and International research institutes on Sericulture.

2. Seed organisation: Seed production units will be strengthened to bring in qualitystandards in production network, besides increasing the production capacity to caterto the increased silk production target, promote adopted seed rearers to generatequality seed cocoons, Private Graineurs to produce quality seed and Chawki RearingCentres (CRCs) with Incubation facilities to produce and supply chawki worms,

3. Quality Certification /Brand Promotion: Promote Indian silk through qualitycertification by Silk Mark not only in the domestic market but also in the Exportmarket. Besides, emphasis has been given for use of Silkworm by-products (pupa)for Poultry feed, Sericin for Cosmetic Applications and Product Diversification intonon-woven fabrics, Silk Denim, Silk Knit etc. for value addition.

The scheme also comprises of various beneficiary oriented components to supportMulberry, Vanya and Post Cocoon Sectors. These interventions cover the majorareas viz. (a) Development and expansion of host plant, (b) Strengthening andcreation of Silkworm seed Multiplication infrastructure, (c) Development of farm andpost-cocoon infrastructure, (d) Up-gradation of reeling and processing technologies inSilk, and (e) Capacity Building through Skill development / Enterprise DevelopmentProgramme.

The above scheme interventions are expected to increase /improve the productionand productivity of silk. The details of expected outcome of the scheme are as under:

Increase the Silk production from the level of 30,348 MTs (Metric Tonne) during2016- 17 to 38,500 MTs by end of 2019-20,

●

Increase the production of Bivoltine Import Substitute Silk to 8500 MTs from 5266 MTs in 2016-17

●

Increasing Vanya Raw Silk production to 11,500 MTs from 9075 in 2016-17 MTs.●

To produce International Grade Silk of 4A and above to minimize the import to●

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bare minimum.

To generate additional employment to about 15 lakh person by reaching 100lakh persons by end of March,2020 from the level of 85.10 lakh persons in 2016-17.

●

The details of funds sanctioned/ allocated and utilized under “Silk Samagra” schemeduring the years 2017-18, 2018-19 and 2019-20 in the country including Tamil Naduare given below:

(Rs. in crore)

2017-18 2018-19 2019-20Sanctioned/allocated

UtilizedSanctioned/allocated

UtilizedSanctioned/allocated

Utilized(Til l date,2019)

542.50 542.50 601.29 598.70 730.00 182.50

The details of funds released in respect of Tamil Nadu State under “Silk Samagra”towards implementation of various beneficiary oriented components during 2017-18and 2018-19 are given below:

State 2017-18 2018-19

Tamil Nadu (Rs. in lakh) 1110.44 622.42

82562 villages under 455 districts in 26 silk producing states have been coveredunder the scheme “Silk Samagra”.

Sericulture is an agro-based cottage industry having huge employment and incomegenerating potential in rural and semi-urban areas. It is estimated that sericultureindustry provides employment to approximately 91.20 lakh persons (including 3.40lakh persons in the State of Tamil Nadu) in rural and semi-urban areas in the countryas of March-2019. Of these, a sizeable number of workers belong to the economicallyweaker sections of society, including women. This is mainly due to implementation ofGovernment schemes and efforts made by State/ Central Government.

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The main aim of “Silk Samagra” Scheme is to empower downtrodden, poor &backward tribal families through various activities of sericulture in the countryincluding women. Women constitute over 60% of those employed in down-streamactivities of sericulture like mulberry garden management, leaf harvesting andsilkworm rearing etc. Even silk reeling industry including weaving is largely supportedby them. An average of 30% women beneficiaries are being covered under the “SilkSamagra”. Women SHGs are involved in implementation of various beneficiaryoriented components under “Silk Samagra” specially group activities. Throughbeneficiary oriented components of the scheme, support has been extended underTribal Sub Plan (TSP) to take up sericulture activities by tribal for their livelihood. Thescheme as employment provider tool improved the living standards and economicconditions of the downtrodden, poor, backward & tribal families by supporting to takeup various sericulture activities for their livelihood.


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MUGA YARNSRelevant for: Indian Economy | Topic: Major Crops, Cropping Patterns and various Agricultural Revolutions


Muga Yarns


For Conservation of Muga in natural habitat, under Integrated Sericulture Development Project(ISDP) of North East Region Textile Promotion Scheme (NERTPS), the Government of Indiahas approved a project on conservation of Muga in natural habitat in Assam, ArunachalPradesh, Bodoland Territorial Council (BTC) and Meghalaya. Memorandum of Understanding(MoU) has been signed between Forest Department, State Sericulture Department and CentralMuga and Eri Research & Training Institute (CMER&TI), CSB, Lahdoigarh, Jorhat. The schemeis being implemented in the following areas:

Upper Doigrung Wild Life area, KarbiAnglong / Golaghat, Assam1.Kuklung Reserve Forest range for muga ex-situ conservation site in BTC2.Mebo Reserve Forest, Pasighat Forest Division, Pasighat in Arunachal Pradesh3.Bagmara Reserve forest, Balpakram National Park, and Tura Peak in Meghalaya4.

Assistance is also provided to these States to identify and develop pockets in the forest forintensive plantations of different food plants of the Muga silkworm and to build the population inwild habitat for their use in breeding programmes and replenishment of stocks at P4 level ofBasic Seed Multiplication. CSB’s Research & Development Institute, Central Muga and EriResearch & Training Institute at Lahdoigarh, Jorhat, Assam has come out with user friendlytechnologies viz., biological control of uzi fly, Lahdoi- disinfectant andmother moth examination& egg surface sterilization to ensure disease freeness of the progeny.Under North-East RegionTextile Promotion Scheme (NERTPS), the beneficiaries have been supported with critical inputsfor disease management through Departments of Sericulture of NE states. Two P4units, fiveP3units for production of basic silkworm seed and one Muga Silkworm Seed Production Centrehave been established for the production of commercial mega silkworm seed under thereorganized Muga Silkworm Seed Organization (MSSO) of CSB.


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AMBEDKAR HASTSHILP VIKAS YOJANARelevant for: Indian Economy | Topic: Issues Related to Poverty, Inclusion, Employment & Sustainable

Development


Ambedkar Hastshilp Vikas Yojana


The Government launched the Ambedkar Hastshilp Vikas Yojana (AHVY) in the year2001-2002 with a view to mobilize the artisans into Self Help Groups thrift and credit,training of Self Help Groups on various aspects of forming and running thecommunity business enterprises for self sustainability of artisans. The salient featuresof the Yojana are as follows:-

Ambedkar Hastshilp Vikas Yojana (Base Line Survey & Mobilization of Artisans)1.

Design & Technology Upgradation2.

Human Resource Development 3.

Direct Benefit to Artisans4.

Infrastructure and Technology Support5.

Research and Development6.

Marketing Support & Services7.

During this current financial year (2019-20), the Government has taken initiative toorganize campaign to educate cluster artisans about the scope of producer company,its importance for long term sustainable business development for the cluster andmotivate prospective artisans/Self Help Groups members to form producercompanies in various cluster areas across the country.

The Government has identified and adopted 90 clusters across the country which willalso cover aspirational districts, women clusters, weaker section and export potentialclusters. The objective is to transform these clusters in a time period of 3 years byensuring self-sustainment of the Self Help Groups/artisans of these clusters.

In addition to the above, the Government organized Hastkala Sahyog Shivirs at morethan 300 places all over the country for providing Aadhaar linked Pahchan card,marketing facilities, facilitating to artisans through Mudra loan and enrolment ofartisans under Pradhan Mantri Jeeven Jyoti Bima Yojana, Pradhan Mantri SurakshaBima Yojana and Aam Aadmi Bima Yojana for the welfare of artisans during the

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Hastkala Sahyog Shivirs.

The details of funds provided during the last three years, State/UT- wise under thescheme is given in Annexure-I.

Annexure - I

State/UT wise data of fund sanctioned and artisans benefitted under Ambedkar HastshilpV i k a s Y o j a n a(AHVY) (Rs. In Lakhs)

S.No. State

2016-17 2017-18 2018-19

F u n dSanctioned

Ar t isansBenefitted

F u n dSanctioned


F u n dSanctioned


1Andaman&Nicobar

0.00 0 0.00 0 16.40 800

2A n d h r aPradesh

8.92 550 0.00 0 18.05 2050

3Arunachal Pradesh

52.88 1190 34.86 140 4.50 1500

4 Assam 304.88 17235 350.94 6021 119.87 940

5 Bihar 62.06 983 52.43 1880 21.45 1100

6Chhattisgarh

98.79 2840 9.60 60 15.45 120

7 Delhi 0.00 0 4.50 530 3.50 700

8 Goa 13.30 530 0.00 0 0.00 0

9 Gujarat 150.17 12150 613.17 10010 259.15 2020

10 Haryana 44.79 1030 9.45 60 0.00 0

11HimachalPradesh

42.95 1340 4.50 530 16.17 290

12 J & K 187.82 9870 161.14 5090 1.50 500

13Jharkhand

1.78 600 0.00 0 0.00 0

14Karnataka

14.50 850 0.00 0 0.00 0

15 Kerala 32.47 600 18.60 1120 0.00 0

16 M a d h y a 325.58 15592 168.26 8895 101.25 1710

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Pradesh

17Maharashtra

91.81 2880 8.00 600 28.77 1580

18 Manipur 283.67 24884 122.64 4460 42.07 300

19Meghalaya

0.00 0 0.00 0 0.90 300

20 Mizoram 54.61 1630 0.00 0 0.00 0

21 Nagaland 60.74 1250 4.80 30 0.00 0

22 Orissa 21.02 2250 69.81 2740 15.45 120

23Pondicherry

0.00 0 0.00 0 0.00 0

24 Punjab 86.86 1930 64.12 360 26.95 390

25Rajasthan

140.57 3780 17.52 1560 6.73 230

26 Sikkim 0.00 0 0.00 0 0.00 0

27Telangana

0.00 0 11.10 560 2.10 700

28T a m i lNadu

0.60 200 0.00 0 0.00 0

29 Tripura 53.20 2500 4.72 30 0.00 0

30U t t a rPradesh

322.38 18140 262.76 17150 228.50 2870

31Uttarakhand

32.23 1380 76.08 3810 19.45 520

32W e s tBengal

10.19 50 1.50 500 0.00 0

Total 2498.84 126234 2070.53 66136 948.23 18740


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PRSINDIARelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Industry & Services Sector


IntroducedLok SabhaJul 25, 2019



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GOVERNING INDIA THROUGH FISCAL MATHRelevant for: Indian Economy | Topic: Issues relating to Growth & Development - Public Finance, Taxation &


While it is important for a government to pursue a sound economic policy, includingmanagement of the public finances, it is yet another matter to make a fetish of any one aspect ofit. The latter appears to govern this government’s approach to policy when the fiscal deficit isgiven pride of place in its self-assessment. Not only is this unlikely to yield results on its own, it isnot even necessarily prudent.

Soon after the Budget for 2019-20 was presented, one of the Finance Minister’s predecessorsremarked that “fiscal prudence rewards economies”. This was perhaps issued both as praise forthe Budget itself and as a justification of the approach taken during his own tenure. Though aconcern for the size of the fiscal deficit would have been inevitable since the enactment of theFiscal Responsibility and Budget Management Bill in 2003, and has therefore been on the radarof political parties of all persuasions at the Centre, it has been raised to special significancesince 2014. It figured in the most recent Economic Survey, and its anticipated magnitude for2019-20 was the final statement in the Budget speech that had followed. The Finance Ministerhad commenced the speech saying how the government was committed to fiscal discipline.

In the context, “fiscal discipline” is understood as taking the economy towards the 3% of thegross domestic product. The basis for this figure can be queried but that is beside the point.Actually, the point is two fold: whether the fiscal deficit should be the sole index of fiscalmanagement and what a reduction in the deficit would achieve. To suggest that fiscal prudencerewards economies is to suggest both that the fiscal deficit is the right indicator of fiscalsoundness and that reducing it is bountiful.

While a sound fiscal policy is highly desirable, the magnitude of the fiscal deficit is not alwaysand everywhere — think here of the state of the economy — a good measure of soundness.First, the fiscal deficit reflects the overall imbalance in the Budget. Embedded in the accounts ofthe government is the revenue account which is a statement of current receipts and expenditure.A fiscal deficit may or may not contain within it a deficit on the revenue account, termed the“revenue deficit”. The possible embeddedness of a revenue deficit within a fiscal deficit muddiesthe waters somewhat. For movements in the overall, or fiscal, deficit by itself tell us nothingabout what is happening to the revenue deficit. Why should we worry, one might ask. We worrybecause it is the balance on the revenue deficit that indicates whether the government is savingout of its income or spending more than it receives as current revenue. A revenue deficit impliesthat the government is dissaving.

A fiscal deficit co-terminus with a revenue deficit is to be frowned upon as it implies that at leastsome part of the borrowing is to finance current consumption, something a government oughtprudently to avoid, at least for long. Therefore, unless the revenue deficit is kept explicitly in thepicture, we cannot deduce the soundness of economic management from a mere reduction inthe fiscal deficit. In fact, in the Budget for 2019-20, while the fiscal deficit projected is marginallylower than earlier, the revenue deficit is projected to rise. Even though the magnitude of thechanges is minuscule, their direction calls into question the Finance Minister’s claim that thegovernment is committed to fiscal discipline. It is yet another instance when the fiscal deficit canend up being no more than window dressing. While a pathological adherence to a revenueaccount balance is itself avoidable, a steady revenue deficit as the fiscal deficit shrinks makes amockery of fiscal consolidation. Worse still it is open to the interpretation that the exercise isideological in that it aims only to shrink the size of government, fiscal prudence be damned.

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A detour through history would help bring some perspective here. A revenue deficit of theCentral government is relatively recent, having been virtually non-existent till the 1980s. Afterthat a rampant populism has taken over all political parties, reflected in revenue deficitsaccounting for over two thirds of the fiscal deficit such as the case today. Revenue deficits havebecome structural in India by now. This has three implications: that the public debt is only boundto rise; we are permanently borrowing to consume, and leaving it to future generations to inheritthe debt. While the populism referred to is not the monopoly of any one political party, it isparticularly stark in the case of the present one which relentlessly flags its virtue in lowering thefiscal deficit.

We can see the hollowness of the claim that fiscal consolidation or the shrinking of the fiscaldeficit is always and everywhere prudent, for the issue is what is happening to the revenuedeficit. Now onto the former Finance Minister’s claim that “it rewards” economies. Thisgovernment has lowered the fiscal deficit alright, though not as much as the United ProgressiveAlliance government, but the rewards are yet to be seen. Export growth has slowed and theunemployment rate has risen. Even private investment has not soared, an outcome predictedfollowing the claim that government borrowing “crowds out” private investment.

Of late an entirely new dimension has been added to fiscal management, but here again theappropriateness of conducting economic policy by reference to the magnitude of the fiscal deficitremains the issue. In the last Budget the government has signalled its intention to borrow inforeign currency from the international market. This is an innovation alright as the Governmentof India has so far never borrowed in the international markets, leaving it to public sectororganisations and the private corporate sector to do so.

In the Budget speech of the 17th Lok Sabha, the Finance Minister justified the move in terms ofthe very low share of foreign debt to GDP. The proposal has received criticism, some of itfocussing on the consequences of exchange rate volatility. Benefits have been flagged too, suchas that Indian sovereign bonds will attract a lower risk premium because the price of the foreign-currency-denominated sovereign bond will now be discoverable. This though ignores the biggestlesson from the global financial crisis of 2007, that the market cannot be relied upon to price riskcorrectly. And, both arguments overlook the foreign exchange constraint.

Dollar-denominated debt has to be repaid in dollars. Right now our reserves are fairly high butthis could change. Oil prices could go back to where they were, the trade war initiated by U.S.President Donald Trump holds little prospect for faster export growth, and portfolio investmentmay flow out. While these are only possibilities, they point to the need to ultimately base yourborrowing plan on expected dollar earnings. The opportunity offered by low global interest ratesright now is not matched by the likelihood of robust export growth.

In the final analysis though, it is not the risk of exchange rate depreciation or stagnant exports oreven capital flight that is the issue; it is the rationale for borrowing. With revenue deficits theoverwhelming part of the fiscal deficit, we would be borrowing to finance consumption. Dollardenominated sovereign debt is just a matter of shifting this borrowing overseas. That is the realissue.

Pulapre Balakrishnan is Professor of Economics, Ashoka University and Senior Fellow, IIMKozhikode



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WHAT IS ZERO BUDGET NATURAL FARMING?Relevant for: Indian Economy | Topic: Major Crops, Cropping Patterns and various Agricultural Revolutions

A cotton field in Andhra Pradesh. (Below) Subhash Palekar | Photo Credit: Mahesh Kumar A.

The story so far: Finance Minister Nirmala Sitharaman thrust zero budget farming into thespotlight in the first Budget speech of the 17th Lok Sabha earlier this month, calling for a “backto the basics” approach. She said, “We need to replicate this innovative model through which ina few States, farmers are already being trained in this practice. Steps such as this can help indoubling our farmers’ income in time for our 75th year of Independence.” Several States,including Andhra Pradesh and Himachal Pradesh, have been aggressively driving a shifttowards this model.

Zero budget natural farming (ZBNF) is a method of chemical-free agriculture drawing fromtraditional Indian practices.

It was originally promoted by Maharashtrian agriculturist and Padma Shri recipient SubhashPalekar, who developed it in the mid-1990s as an alternative to the Green Revolution’s methodsdriven by chemical fertilizers and pesticides and intensive irrigation. He argued that the risingcost of these external inputs was a leading cause of indebtedness and suicide among farmers,while the impact of chemicals on the environment and on long-term fertility was devastating.Without the need to spend money on these inputs — or take loans to buy them — the cost ofproduction could be reduced and farming made into a “zero budget” exercise, breaking the debtcycle for many small farmers.

Instead of commercially produced chemical inputs, the ZBNF promotes the application ofjeevamrutha — a mixture of fresh desi cow dung and aged desi cow urine, jaggery, pulse flour,water and soil — on farmland. This is a fermented microbial culture that adds nutrients to thesoil, and acts as a catalytic agent to promote the activity of microorganisms and earthworms inthe soil. About 200 litres of jeevamrutha should be sprayed twice a month per acre of land; afterthree years, the system is supposed to become self-sustaining. Only one cow is needed for 30acres of land, according to Mr. Palekar, with the caveat that it must be a local Indian breed —not an imported Jersey or Holstein.

A similar mixture, called bijamrita, is used to treat seeds, while concoctions using neem leavesand pulp, tobacco and green chillis are prepared for insect and pest management.

The ZBNF method also promotes soil aeration, minimal watering, intercropping, bunds andtopsoil mulching and discourages intensive irrigation and deep ploughing. Mr. Palekar is againstvermicomposting, which is the mainstay of typical organic farming, as it introduces the the mostcommon composting worm, the European red wiggler (Eisenia fetida) to Indian soils. He claimsthese worms absorb toxic metals and poison groundwater and soil.

According to National Sample Survey Office (NSSO) data, almost 70% of agriculturalhouseholds spend more than they earn and more than half of all farmers are in debt. In Statessuch as Andhra Pradesh and Telangana, levels of indebtedness are around 90%, where eachhousehold bears an average debt of 1 lakh. In order to achieve the Central government’spromise to double farmers income by 2022, one aspect being considered is natural farmingmethods such as the ZBNF which reduce farmers’ dependence on loans to purchase inputs theycannot afford. Meanwhile, inter-cropping allows for increased returns.

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The Economic Survey has also highlighted the ecological advantages.

A limited 2017 study in Andhra Pradesh claimed a sharp decline in input costs and improvementin yields. However, reports also suggest that many farmers, including in Mr. Palekar’s nativeMaharashtra, have reverted to conventional farming after seeing their ZBNF returns drop after afew years, in turn raising doubts about the method’s efficacy in increasing farmers’ incomes.

ZBNF critics, including some experts within the Central policy and planning think tank NITIAayog, note that India needed the Green Revolution in order to become self-sufficient andensure food security. They warn against a wholesale move away from that model withoutsufficient proof that yields will not be affected. Sikkim, which has seen some decline in yieldsfollowing a conversion to organic farming, is used as a cautionary tale regarding the pitfalls ofabandoning chemical fertilizers.

According to the Economic Survey, more than 1.6 lakh farmers are practising the ZBNF inalmost 1,000 villages using some form of state support, although the method’s advocates claimmore than 30 lakh practitioners overall. The original pioneer was Karnataka, where the ZBNFwas adopted as a movement by a State farmers’ association, the Karnataka Rajya RaithaSangha. Large-scale training camps were organised to educate farmers in the method.According to a survey carried out in those early years, ZBNF farmers all owned small plots ofland, had some access to irrigation and owned at least one cow of their own.

In June 2018, Andhra Pradesh rolled out an ambitious plan to become India’s first State topractise 100% natural farming by 2024. It aims to phase out chemical farming over 80 lakhhectares of land, converting the State’s 60 lakh farmers to ZBNF methods.

Himachal Pradesh, Chhattisgarh, Kerala, Karnataka and Uttarakhand have also invited Mr.Palekar to train their farmers.

Despite the ZBNF buzz caused by the Budget speech, the Finance Minister did not actuallyannounce any new funding to promote it. Last year, the Centre revised the norms for theRashtriya Krishi Vikas Yojana- Remunerative Approaches for Agriculture and Allied sectorRejuvenation (RKVY-RAFTAAR), a flagship Green Revolution scheme with an allocation of3,745 crore this year, and the Paramparagat Krishi Vikas Yojana, which has an allocation of 325crore and is meant to promote organic farming and soil health. Under the revised guidelines,both Centrally-sponsored schemes now allow States to use their funds to promote the ZBNF,vedic farming, natural farming, cow farming and a host of other traditional methods.

Andhra Pradesh says it has utilised 249 crore from these schemes to promote the ZBNF over atwo-and-a-half year period. The State estimates it will need 17,000 crore to convert all of its 60lakh farmers to the ZBNF over the next 10 years.

However, this is only a fraction of the spending on Central government subsidies for fertilizers,pesticides and mass irrigation that has driven the Green Revolution model.

NITI Aayog has been among the foremost promoters of Mr. Palekar and the ZBNF method.However, its experts have also warned that multi-location studies are needed to scientificallyvalidate the long-term impact and viability of the model before it can be scaled up and promotedcountry-wide.

The Indian Council of Agricultural Research is studying the ZBNF methods practised by basmatiand wheat farmers in Modipuram (Uttar Pradesh), Ludhiana (Punjab), Pantnagar (Uttarakhand)and Kurukshetra (Haryana), evaluating the impact on productivity, economics and soil health

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including soil organic carbon and soil fertility.

If found to be successful, an enabling institutional mechanism could be set up to promote thetechnology, NITI Aayog vice-chairman Rajiv Kumar has said. The Andhra Pradesh experience isalso being monitored closely to judge the need for further public funding support.



Farmers in India, despite being a major part of political slogans and a constant topic in mediadebates, are largely unrelieved of their incessant

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REGION-BASED JOBS RESERVATION IS WRONGRelevant for: Indian Economy | Topic: Issues Related to Poverty, Inclusion, Employment & Sustainable

Development

On July 24, the Andhra Pradesh legislative assembly passed the AP Employment of LocalCandidates in Industries and Factories Bill, 2019, that mandates employment of at least 75%state candidates in the respective units. The “local” reservation, a poll promise of chief minister,Jaganmohan Reddy, will extend to industries, factories, joint venture units, and projects taken upunder public-private partnership initiatives. Mr Reddy is not the first CM to take such aretrograde step. Similar promises have been made by Gujarat chief minister, Vijay Rupani, and,more recently, by Madhya Pradesh chief minister, Kamal Nath. While Maharashtra did notpromise or enact such a law, politicians such as Maharashtra Navnirman Sena chief, RajThackeray, has often made scathing attacks on migrants from Uttar Pradesh and Bihar anddemanded that young people from the state should be given priority if there are any jobopportunities in the state.

It is not too difficult to figure out the reason for such demands. India’s agriculture is in crisis, andthere is a serious dearth of jobs in manufacturing. While one appreciates the challengingsituation, reservation is not the answer to the problem. It may, instead, be a counterproductivemove. Moreover, such laws go against the constitutional rights of Indians to live, work, and settlein any part of the country. In fact, there are scores of studies that show migration is goodbecause it brings skills that are otherwise probably unavailable in a particular state, and alsoimproves the economic condition of the people in the home state because, as economist,Chinmay Tumbe, puts it evocatively, “Remittances from all these places flow all through the yearto thousands of villages and small towns, much like the tributaries of the river Ganga”. Besidesthe financial aspect, who can deny the importance of cultural and social interaction in a countryas spectacularly diverse as India?

More importantly, such a law discourages the private sector. A company will think twice to set upits industry in a state that put these kinds of restrictions, instead of investing in the basic buildingblocks of a citizen: health, education, and skill training. An educated, healthy and well-trainedcitizen is always an asset, and any industry will be keen to employ people based on theseparameters rather than where she lives/comes from.




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PRSINDIARelevant for: Indian Economy | Topic: Issues Related to Poverty, Inclusion, Employment & Sustainable

Development

IntroducedLok SabhaJul 23, 2019



Indian Economy - JULY 2019

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Transcript of Indian Economy - JULY 2019