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Insights

PT 2017 Exclusive

Economy

June 2016 – March 2017

W W W . I N S I G H T S O N I N D I A . C O M

Insights PT 2017 Exclusive

www.insightsonindia.com www.Insightsias.com

Table of Contents

A. Schemes / Government Initiatives

1. Tejaswini Project…………………..…………………..…………………..…………………..…………………..…………………..........6 2. Insolvency and Bankruptcy Code (IBC), 2016…………………..…………………..…………………..………………….........6 3. National Investment and Infrastructure Fund (NIIF) …………………..…………………..…………………..................6 4. Hydrocarbon Exploration and Licensing Policy (HELP) …………………..…………………..…………………...............6 5. Electoral Bonds…………………..…………………..…………………..…………………..…………………..…………………...........6 6. Border haats (Border Markets) …………………..…………………..…………………..…………………..…………………........7 7. Sovereign Gold Bond Scheme (SGBs) …………………..…………………..…………………..…………………..………………..7 8. BHIM (Bharat Interface for Money) …………………..…………………..…………………..…………………..………………….7 9. Unified Payments Interface (UPI) …………………..…………………..…………………..…………………..…………………....7 10. Sagarmala Programme…………………..…………………..…………………..…………………..…………………...................8 11. Interest Subvention Scheme for farmers for the year 2016-17…………………..…………………..………………….8 12. Mission Indradhanush…………………..…………………..…………………..…………………..…………………....................8 13. special economic zone (SEZ) …………………..…………………..…………………..…………………..…………………..........9 14. Diamond Quadrilateral…………………..…………………..…………………..…………………..…………………..................9 15. Transparency in Power Sector…………………..…………………..…………………..…………………..………………….......9 16. DigiLocker…………………..…………………..…………………..…………………..…………………..………………….................9 17. Standards & Labelling Programme…………………..…………………..…………………..…………………..………………..10 18. DBT in kerosene…………………..…………………..…………………..…………………..…………………..………………….......10 19. National Mineral Exploration Policy (NMEP)…………………..…………………..…………………..………………….....10 20. Benami Transactions (Prohibition) Amendment Act, 2016…………………..…………………..………………….....11 21. Permanent Residency Status (PRS) to foreign investors…………………..…………………..………………….........11 22. National Mission on Bio Economy…………………..…………………..…………………..………………….....................11 23. Public Debt Management Cell (PDMC) …………………..…………………..…………………..………………….............12 24. Lucky Grahak Yojana and Digi Dhan Vyapar Yojana…………………..…………………..…………………...............12 25. North East Industrial and Investment Promotion Policy (NEIIP) …………………..………………….................12 26. India INX…………………..…………………..…………………..…………………..…………………..…………………..................12 27. Modified Special Incentive Package Scheme (M-SIPS) …………………..…………………..…………………...........13 28. Electronics Development Fund (EDF)…………………..…………………..…………………..………………….................13 29. Demonetisation in India…………………..…………………..…………………..…………………..…………………...............13 30. Amended Technology Upgradation Fund Scheme (ATUFS)…………………..…………………..………………….....14 31. Trade Infrastructure for Export Scheme (TIES)…………………..…………………..…………………..…………………...14 32. Mission Fingerling…………………..…………………..…………………..…………………..………………….........................14 33. India’s largest Floating Solar PV Plant…………………..…………………..…………………..…………………................14 34. Bharat QR code…………………..…………………..…………………..…………………..…………………..…………………........15 35. Revenue Insurance Scheme for Plantation Crops (RISPC) …………………..…………………..…………………......15 36. Operation Clean Money (Swachh Dhan Abhiyan) …………………..…………………..…………………..................15 37. Rashtriya Rail Sanraksha Kosh…………………..…………………..…………………..…………………...........................16 38. Mission 41K…………………..…………………..…………………..…………………..…………………..………………….............16 39. Coal Mitra…………………..…………………..…………………..…………………..…………………..…………………...............16 40. DigiShala…………………..…………………..…………………..…………………..…………………..………………….................16

B. Monetary and Fiscal Policy

1. Google tax / Equalisation Levy…………..…………………..…………………..…………………..…………………..……….....18 2. FDI Inflows…………..…………………..…………………..…………………..…………………..…………………..………..............18 3. Minimum Support Price (MSP) …………..…………………..…………………..…………………..…………………..………....18 4. Merchant Discount Rate…………..…………………..…………………..…………………..…………………..………..............18 5. Fat Tax…………..…………………..…………………..…………………..…………………..…………………..………....................18



6. General Anti Avoidance Rules…………..…………………..…………………..…………………..…………………..……….......18 7. Non-bank financial companies (NBFCs) …………..…………………..…………………..…………………..……….............19 8. Wholesale Price Index (WPI) …………..…………………..…………………..…………………..…………………..………........19 9. Consumer Price Indices (CPI) …………..…………………..…………………..…………………..…………………..………........20 10. Strategic Disinvestment…………..…………………..…………………..…………………..…………………..………..............20 12. Universal Basic Income (UBI) …………..…………………..…………………..…………………..…………………..……….....20 13. Government shifts disinvestment advising role to Department of Economic Affairs…………..………......21

C. Banking Sector

1. Small Finance Banks…………..…………………..…………………..…………………..…………………..…………………..……….22 2. Green Bonds…………..…………………..…………………..…………………..…………………..…………………..………............22 3. Stressed Asset Fund…………..…………………..…………………..…………………..…………………..…………………..……….22 4. Export-Import Bank of India (Exim Bank) …………..…………………..…………………..…………………..………..........23 5. Banks Board Bureau (BBB) …………..…………………..…………………..…………………..…………………..………...........23 6. Payments banks…………..…………………..…………………..…………………..…………………..…………………..……….......23 7. Masala bonds…………..…………………..…………………..…………………..…………………..…………………..………..........24 8. Merger of State Bank of India (SBI) …………..…………………..…………………..…………………..…………………..……24 9. Non Performing Asset (NPA) …………..…………………..…………………..…………………..…………………..……….......25

D. External Sector

1. Advance Pricing Agreements (APAs) …………..…………………..…………………..…………………..………................27 2. Foreign Currency Non-Resident (FCNR) deposits…………..…………………..…………………..…………………..…....27 3. Trade Facilitation Agreement (TFA) …………..…………………..…………………..…………………..………..................27 4. Participatory Notes (P-Notes) …………..…………………..…………………..…………………..…………………..………......27 5. Multilateral Convention on Mutual Administrative Assistance in Tax Matters…………..……….................28 6. Bilateral Investment Treaty…………..…………………..…………………..…………………..…………………..………...........28 7. Society for Worldwide Interbank Financial Telecommunication (SWIFT) …………..…………………..………....28 8. Double Taxation Avoidance Agreement (DTAA) …………..…………………..…………………..…………………..………29 9. Money laundering…………..…………………..…………………..…………………..…………………..…………………..………....29 10. Anti-Dumping Duty…………..…………………..…………………..…………………..…………………..……….....................29 11. Countervailing duties (CVDs) …………..…………………..…………………..…………………..…………………..………......30 12. Safeguard Duty…………..…………………..…………………..…………………..…………………..…………………..……….......30 13. South Asia Training and Technical Assistance Centre (SARTTAC) …………..…………………..………...............30 14. International Chambers of Commerce (ICC) …………..…………………..…………………..…………………..………....30 15. Permanent Court of Arbitration (PCA) …………..…………………..…………………..…………………..…….............…31 16. BRICS Rating Agency…………..…………………..…………………..…………………..…………………..………...................31 17. External Commercial Borrowings (ECBs) …………..…………………..…………………..…………………..……….........31 18. Comprehensive Economic and Trade Agreement (CETA) …………..…………………..…………………..………......31 19. Market Economy Status (MES) …………..…………………..…………………..…………………..…………………..………...32 20. Base Erosion and Profit Shifting (BEPS) …………..…………………..…………………..…………………..………...........32 21. Multilateral Competent Authority Agreement for Country-by-Country Reporting (CbC MCAA)..........32 22. Oxfam Study…………..…………………..…………………..…………………..…………………..…………………..……..........…32 23. Foreign Investment Promotion Board (FIPB) …………..…………………..…………………..…………………..………...33 24. Investor-State Dispute Settlement (ISDS) mechanism…………..…………………..…………………..……..........…33

E. Reports / Ranking / Committees

1. Annual Survey of India’s City-Systems (ASICS) …………..…………………..…………………..…………………..………..34 2. Global Corruption Barometer for the Asia Pacific Region…………..…………………..…………………..……….......34



3. Logistics Performance Index 2016…………..…………………..…………………..…………………..…………………..……….34 4. Networked Readiness Index…………..…………………..…………………..…………………..…………………..……….........34 5. Shankar Acharya Committee…………..…………………..…………………..…………………..…………………..………........34 6. Sustainable Development Goal Index…………..…………………..…………………..…………………..………………….....35 7. Human Capital Index…………..…………………..…………………..…………………..…………………..…………………..……..35 8. Committees headed by Amitabh Kant…………..…………………..…………………..…………………..………...............35 9. Global Innovation Index (GII) 2016…………..…………………..…………………..…………………..………....................35 10. State of ICT in Asia and the Pacific 2016: Uncovering the Widening Broadband Divide…………..………..36 11. Annual Report of ‘Crime in India – 2015’…………..…………………..…………………..…………………..……….........36 12. Global Retail Development Index (GRDI) …………..…………………..…………………..…………………..………........36 13. Global Competitiveness Index (GCI) …………..…………………..…………………..…………………..………................36 14. World Economic Freedom Index (WEFI) …………..…………………..…………………..…………………..………..........36 15. Biopharmaceutical Competitiveness & Investment (BCI) Survey…………..…………………..………...............36 16. Ease of doing business index…………..…………………..…………………..…………………..…………………..……….......37 17. Ease of Doing Business Reforms Ranking 2015-16...............................................................................37 18. ‘South Asia’s Turn: Policies to Boost Competitiveness and Create the Next Export Powerhouse’........37 19. Report on Global Wealth…………..…………………..…………………..…………………..…………………..………............37 20. 2016 IHS Jane’s Defence Budgets report…………..…………………..…………………..…………………..………..........37 21. Ratan Watal Committee for Digital Payments…………..…………………..…………………..…………………..………38 22. World Economic Outlook (WEO) …………..…………………..…………………..…………………..…………………..………38 23. 2017 Inclusive Development Index (IDI) …………..…………………..…………………..…………………..……….........38 24. Fiscal Responsibility and Budget Management (FRBM) Committee…………..…………………..………...........39 25. Corruption Perception Index (CPI) …………..…………………..…………………..…………………..………...................39 26. Labour migration in India…………..…………………..…………………..…………………..…………………..………............39 27. India Innovation Index…………..…………………..…………………..…………………..…………………..………................39 28. 2017 International Intellectual Property Index (IIPI) …………..…………………..…………………..………............40 29. Economic Freedom 2017…………..…………………..…………………..…………………..…………………..……….............40 30. State of the World’s Human Rights Report…………..…………………..…………………..…………………..………......40 31. Financial Stability Report…………..…………………..…………………..…………………..…………………..………............40 32. World Investment Report…………..…………………..…………………..…………………..…………………..………...........40 33. World Happiness Report 2017…………..…………………..…………………..…………………..…………………..………....41 34. Global Wind Power Installed Capacity index…………..…………………..…………………..…………………..………...41 35. International Anti-Corruption Day…………..…………………..…………………..…………………..…………………..……41

F. Departments / Agencies

1. Common Services Centres (CSCs) …………..…………………..…………………..…………………..…………………..……….42 2. Food Safety and Standards Authority of India (FSSAI) …………..…………………..…………………..………...........42 3. Directorate of Revenue Intelligence…………..…………………..…………………..…………………..……..................…42 4. Happiness Department…………..…………………..…………………..…………………..…………………..………................42 5. Central Board of Direct Taxes…………..…………………..…………………..…………………..…………………..………......42 6. National Informatics Centre (NIC) …………..…………………..…………………..…………………..…………………..……..43 7. Financial Stability and Development Council (FSDC) …………..…………………..…………………..……….............43 8. Serious Fraud Investigation Office (SFIO) …………..…………………..…………………..…………………..……............43 9. Financial Intelligence Unit…………..…………………..…………………..…………………..…………………..………............43 10. Monetary Policy Committee…………..…………………..…………………..…………………..…………………..………......44 11. Export Credit Guarantee Corporation of India Ltd (ECGC) …………..…………………..…………………..………...44 12. National Pharmaceutical Pricing Authority (NPPA) …………..…………………..…………………..……….............44 13. Antrix Corporation…………..…………………..…………………..…………………..…………………..…………………..………44 14. National Committee on Trade Facilitation (NCTF) …………..…………………..…………………..………...............45 15. Competition Commission of India (CCI) …………..…………………..…………………..…………………..………..........45 16. National Industrial Corridor Development & Implementation Trust (NICDIT) …………..………...............45



17. Cell for IPR Promotion and Management (CIPAM) …………..…………………..…………………..………..............45 18. CERT-In (Indian Computer Emergency Response Team) …………..…………………..…………………..………......45 19. National Payments Corporation of India (NPCI) …………..…………………..…………………..…………………..……46 20. General Insurance Corporation of India (GIC) …………..…………………..…………………..…………………..……….46 21. International Financial Services Centre (IFSC) …………..…………………..…………………..…………………..……….46 22. Agricultural and Processed Food Products Export Development Authority (APEDA) …………..……….....46 23. Central Water Commission (CWC) …………..…………………..…………………..…………………..………..................46 24. Central Board of Excise and Custom (CBEC) …………..…………………..…………………..…………………..………....47 25. Securities and Exchange Board of India (SEBI) …………..…………………..…………………..…………………..………47

G. Miscellaneous

1. Enayam – India’s 13th Port…………..…………………..…………………..…………………..…………………..………..........48 2. Insurance Policy to Atomic Power Plant Operator…………..…………………..…………………..……….................48 3. Ponzi schemes…………..…………………..…………………..…………………..…………………..…………………..………........48 4. Diamond Quadrilateral…………..…………………..…………………..…………………..…………………..………................48 5. Skimming…………..…………………..…………………..…………………..…………………..…………………..………................48 6. Social engineering attack…………..…………………..…………………..…………………..…………………..……….............49 7. Launchpad…………..…………………..…………………..…………………..…………………..…………………..………..............49 8. Algorithmic trading…………..…………………..…………………..…………………..…………………..…………………..……….49 9. FOIN 2017…………..…………………..…………………..…………………..…………………..…………………..………...............49 10. 100 million for 100 million…………..…………………..…………………..…………………..…………………..………........49 11. Akodara becomes India’s first Digital Village…………..…………………..…………………..……….......................49 12. Geographical Indication (GI) …………..…………………..…………………..…………………..…………………..……….....50

H. Highlights of Economic Survey 2016-17 …………..…………………..…………………..…………………..………......51

I. Highlights of Budget 2017-18 …………..…………………..…………………..…………………..…………………..……….......52



NOTES Schemes / Government Initiatives

1. Tejaswini Project “Tejaswini” - Socio-Economic Empowerment of Adolescent Girls and Young Women

Project”

Market-driven skills training and secondary education for adolescent girls and young women.

The project is being delivered in 17 Districts of Jharkhand.

India signs Financing Agreement with World Bank for Tejaswini.

It is World Bank’s first project in India solely focused on the welfare of adolescent girls and young women (AGYW) aged between 14 and 24

2. Insolvency and Bankruptcy Code (IBC), 2016 Override other existing laws on matters pertaining to Insolvency and Bankruptcy.

Resolve insolvencies within 180 days. (Extendable upto 270 days) for the Company.

Debt Recovery Tribunal - Adjudicating authority for individuals.

National Company Law Tribunal - Adjudicating authority for corporate insolvency.

Insolvency and Bankruptcy Board of India to exercise regulatory oversight over insolvency professionals, insolvency professional agencies and information utilities.

Insolvency and Bankruptcy Board of India is under the Ministry of Corporate Affairs (MCA).

Enabling provisions to deal with cross border insolvency.

3. National Investment and Infrastructure Fund (NIIF) Fund created by the Government of India for enhancing infrastructure financing in

the country.

Different from the National Investment Fund.

It is set up as Category II Alternate Investment Fund (AIF) under the Securities and Exchange Board of India (SEBI) Regulations.

NIIF is India’s first sovereign wealth fund.

Objective Infrastructure development in commercially viable projects, both Greenfield and

Brownfield, including stalled projects.

To attract investment from both domestic and international sources.

It would serve as an umbrella fund with several funds underneath it.

4. Hydrocarbon Exploration and Licensing Policy (HELP) Uniform license for exploration and production of all forms of hydrocarbon.

Open acreage policy - Enable exploration and production (E&P) companies choose the blocks from the designated area.

Shift to Revenue sharing model, from previous production sharing model.

Marketing and pricing freedom for the crude oil and natural gas produced.

The decision will enhance domestic oil & gas production, bring substantial investment in the sector and generate sizable employment.

5. Electoral Bonds Introduced by Finance Minister during his Budget 2017 speech in order to bring some

transparency to the electoral funding process.



NOTES Authorised under a scheme under the Income Tax Act.

It will open for a limited period of time during the elections, or maybe a little before the elections.

These bonds can be donated only to a political party.

These are redeemable in only one account of that party, registered with the Election Commission.

6. Border haats (Border Markets) The border haats are markets that aim at promoting the wellbeing of the people

dwelling in remote areas across the borders of two countries.

Establishing traditional system of marketing the local produce through local markets.

The Border Haats allows to people living in border areas to trade in specified products in accordance with the regulations agreed and notified by both Governments.

Presently 4 Border Haats are already operational along India-Bangladesh border. They are (i) Kalaichar (Meghalaya). (ii) Balat (Meghalaya). (iii) Kamlasagar (Tripura) (iv) Srinagar (Tripura).

7. Sovereign Gold Bond Scheme (SGBs) SGBs are government securities denominated in grams of gold. They are substitutes

for holding physical gold.

The Sovereign Gold Bonds will be available both in demat and paper form.

The tenor of the bond is for a minimum of 8 years with option to exit in 5th, 6th and 7th years.

Bonds can be used as collateral for loans.

Minimum - 1 gram, Maximum – 500 grams.

Tradable through National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).

Fixed Interest rate of 2.5% per annum payable once in 6 months.

Capital Gains Tax exempted on redemption.

8. BHIM (Bharat Interface for Money) BHIM is Aadhaar-based payments app developed by the National Payment

Corporation of India (NPCI).

It can work even on basic phones as it supports USSD payments.

All major UPI connected Indian banks accepts money through BHIM app.

The app also allows user to scan a QR code. Payment can be done through scanning QR code.

9. Unified Payments Interface (UPI)

The National Payments Corporation of India (NPCI) launched “Unified Payments Interface (UPI)”.

The UPI is for mobile based payment method that powers multiple bank accounts into a single mobile application.

It facilitates ‘virtual address’ as a single payment identifier for sending and collecting money.

The single identifier will eliminate the need to exchange sensitive information such as bank account numbers during a financial transaction.

UIP is an advanced version of NPCI’s Immediate Payment Service (IMPS) which is a 24X7 funds transfer service.



NOTES 10. Sagarmala Programme

The Sagarmala project seeks to develop a string of ports around India’s coast.

Promote “Port-led development” along India’s 7500 km long coastline.

The Union Ministry of Shipping is the nodal ministry for this initiative.

Sustainable development of the population living in the Coastal Economic Zone (CEZ).

Improve port connectivity through rail corridors, freight-friendly expressways and inland waterways.

Develop skills of fishermen and other coastal and island communities.

Three pillars of development: o Enabling Port-led Development through appropriate policy and institutional

interventions. o Modernization and setting up of new ports. o Evacuation to and from hinterland.

Implementation: o To implement this, State governments would set up State Sagarmala

committees, headed by the chief minister or the minister in charge of ports. o At the central level, a Sagarmala Development Company (SDC) will be set

upto provide equity support to assist various special purpose vehicles (SPVs) set up for various projects.

11. Interest Subvention Scheme for farmers for the year 2016-17

Interest subvention is a form of waiver of some percentage of interest that promotes some particular industry and general public interest.

This could be to help the marginalized and the weaker sections of society.

This will help farmers getting short term crop loan payable within one year up to Rs. 3 lakhs at only 4% per annum.

The Central Government will provide interest subvention of 5 per cent per annum.

In case farmers do not repay the short term crop loan in time they would be eligible for interest subvention of 2% as against 5% available above.

12. Mission Indradhanush

Mission Indradhanush aimed to revamp the functioning of public sector banks so that PSBs can compete with the Private Sector Banks.

The mission is a brainchild of PJ Nayak committee.

It is launched by Ministry of Finance under the Department of Financial Services.

The mission includes the seven key reforms of appointments, board of bureau, capitalisation, de-stressing, empowerment, framework of accountability and governance reforms.

It aims to clean up the balance sheets of PSBs to ensure banks remain solvent and



NOTES fully comply with global capital adequacy norms, Basel-III.

13. special economic zone (SEZ)

SEZ is a geographical region that has economic laws different from a country’s typical economic laws.

Usually the goal is to increase foreign investments.

Any private/public/joint sector or state government or its agencies can set up an SEZ.

A SEZ is a designated duty free enclave to be treated as foreign territory for the purpose of trade operations and duties and tariffs.

Before recommending any proposals to the ministry of commerce and industry (department of commerce), the states must satisfy themselves that they are in a position to supply basic inputs like water, electricity, etc.

Companies may be offered tax holidays, where upon establishing in a zone they are granted a period of lower taxation.

The main objectives of the SEZ Act are:

Generation of additional economic activity.

Promotion of exports of goods and services.

Promotion of investment from domestic and foreign sources.

Creation of employment opportunities.

Development of infrastructure facilities.

14. Diamond Quadrilateral The Diamond Quadrilateral is a project of the Indian railways to establish high speed

rail network in India.

This quadrilateral will connect the four metro cities in India, i.e. Delhi, Mumbai, Kolkata and Chennai.

Six corridors identified are: o (i) Delhi-Mumbai, (ii) Mumbai-Chennai, (iii) Chennai-Kolkata, (iv) Kolkata-

Delhi and both diagonals i.e. (v) Delhi-Chennai and (vi) Mumbai-Kolkata routes.

This project is similar to Golden Quadrilateral which is a roadway project which connects the four metros by Express Ways.

The Golden Quadrilateral falls under National Highways Development Project.

15. Transparency in Power Sector In a bid to enhance transparency in power transmission sector of the country, the

government has launched the ‘TARANG’ Mobile App, ‘e-Trans’ & ‘DEEP’ e-bidding web portals.

16. DigiLocker It is dedicated personal storage space, linked to each resident’s Aadhaar number.

DigiLocker can be used to securely store e-documents as well as store Uniform Resource Identifier (URI) link of e-documents issued by various issuer departments.

The e-Sign facility provided as part of DigiLocker system can be used to digitally sign e-documents.

DigiLocker is one of the key initiatives under the Digital India Programme.

The initiative was launched by the Department of Electronics and Information Technology, under the Ministry of Communications and IT.

https://en.wikipedia.org/wiki/High-speed_rail_in_India


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

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

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

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

http://www.powermin.nic.in/

https://digilocker.gov.in/

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



NOTES Users can store their documents such as insurance, medical reports, PAN card,

passport, marriage certificate, school certificate and other documents in the digital format.

The storage space (maximum 10 MB at the time of launching & now upgraded to 1GB)

17. Standards & Labelling Programme The Bureau of Energy Efficiency initiated the Standards & Labelling programme for

equipment and appliances in 2006 to provide the consumer an informed choice about the energy saving and thereby the cost saving potential of the relevant marketed product.

The equipment/appliances are given a star rating of one to five; five stars being the most energy efficient.

The scheme is invoked for 21 equipment/appliances including 7 for which it is mandatory.

Some of the equipment/appliances covered under this programme include frost free (no frost) refrigerators, tubular fluorescent lamps (TFLs), room air-conditioners, direct cool refrigerators, distribution transformers, induction motors, pump sets, ceiling fans, liquefied petroleum gas (LPG) stoves, electric geysers, ballasts, computers, office equipment, and colour televisions.

18. DBT in kerosene Jharkhand has become the first state in the country to implement Direct Benefit

Transfer (DBT) in Kerosene.

Under the DBTK Scheme, PDS kerosene is being sold at non-subsidised price, and, subsidy, as admissible, is being transferred to consumers directly into their bank accounts.

This initiative was launched by Union Petroleum and Natural Gas Ministry on the lines of a similar DBT programme for LPG subsidy.

It aims at rationalising subsidy based on the approach to cut subsidy leakages but not the subsidy.

19. National Mineral Exploration Policy (NMEP)

The NMEP primarily aims at accelerating the exploration activity in the country through enhanced participation of the private sector.

The policy seeks to uncover full mineral potential in order to put the nation’s mineral resources (non-fuel and non-coal) to best use and maximize sectoral contribution to the Indian economy.

The Union Ministry of Mines will carry out auctioning of identified exploration blocks for exploration by private sector.

It will be done on the revenue sharing basis in case their exploration leads to auctionable resources. The revenue will be borne by the successful bidder of those auctionable blocks.

A National Geoscientific Data Repository (NGDR) will be set up to collate all baseline and mineral exploration information generated by various central and state government agencies and maintain these on a geospatial database.

Government proposes to establish a not-for-profit autonomous institution known as the National Centre for Mineral Targeting (NCMT) in collaboration with scientific and research bodies, universities and industry for scientific and technological research to address the mineral exploration challenges in the country.



NOTES To encourage mineral exploration in the country, the mines ministry has already notified the National Mineral Exploration Trust.

On the lines of UNCOVER project of Australia, the government intends to launch a special initiative to probe deep-seated/ concealed minerals deposits in the country.

20. Benami Transactions (Prohibition) Amendment Act, 2016

Benami Transactions: o The Benami transactions are those transactions in which the real beneficiary

is not the person in whose name the transaction {particularly purchase of property} has been done.

o A property that is held in the name of spouse or child for which the amount is paid out of known sources of income is not Benami.

o Joint property of brothers, sisters or other relatives for which amount is paid out of known resources of income is also not Benami.

o Property held by someone in a fiduciary capacity; that is, transaction involving a trustee and a beneficiary is also not Benami.

o Benami property may include assets of any kind including movable, immovable, tangible, intangible, any right or assets or legal documents. It also includes Gold and financial security.

The 2016 Act seeks to amend and strengthen Benami Transaction (Prohibition) Act, 1988.

As per the Act, properties held benami are liable for confiscation by the government, without payment of compensation.

According to the government, the four authorities who will conduct inquiries or investigations are the Initiating Officer, Approving Authority, Administrator and Adjudicating Authority.

21. Permanent Residency Status (PRS) to foreign investors

This status will be subject to the relevant conditions in the FDI Policy notified by the Central Government from time to time.

The PRS will be granted for a period of 10 years with multiple entry, which can be renewed for another 10 years.

In order to avail this scheme, the foreign investor will have to invest a minimum of 10 crores rupees within 18 months or 25 crores rupees within 36 months.

Further, the foreign investment should result in generating employment to at least 20 resident Indians every financial year.

For dwelling purpose, PRS holders will be allowed to purchase one residential property. Their spouse and dependents will be also allowed to undertake studies in India and take up employment in private sector.

22. National Mission on Bio Economy

The National Mission on Bioeconomy was launched in Shillong, Meghalaya by the Institute of Bio-resources and Sustainable Development (IBSD).

The purpose of the mission is to boost rural economy by utilizing bio-resources.

It also focuses on sustainable utilization of renewable biological resources for food, bio-energy and bio-based products through knowledge-based approaches.

Bioeconomy is a new concept and few countries like US, Canada, European Union (EU) and Australia have started initiatives in this field.

The Institute of Bio-resources and Sustainable Development (IBSD) functions under the Department of Biotechnology, Union Ministry of Science and Technology.



NOTES 23. Public Debt Management Cell (PDMC)

The Union Finance Ministry has set up a Public Debt Management Cell (PDMC) with the objective of deepening bond markets in the country.

Key Facts: o PDMC is an interim arrangement and will be upgraded to a statutory Public

Debt Management Agency (PDMA). o It will allow separation of debt management functions from RBI to PDMA in

a gradual and seamless manner. o PDMC will have only advisory functions in order to avoid any conflict with

the statutory functions of RBI.

Functions of PDMC: o Plan government borrowings, including market borrowings and other

borrowings, like Sovereign Gold Bond (SGB) issuance. o Manage government’s liabilities, improve cash forecasting, monitor cash

balances, foster a liquid and efficient market for government securities. o Advice government on matters related to capital market operations,

investment, administration of interest rates on small savings etc. o Develop an Integrated Debt Database System (IDMS) as a centralised data

base for all liabilities of government.

24. Lucky Grahak Yojana and Digi Dhan Vyapar Yojana The Union Government has launched Lucky Grahak Yojana to encourage consumers

and Digi Dhan Vyapar Yojana to encourage merchants for transition to digital payments.

These award based schemes were launched by the NITI (National Institution for Transforming India) Aayog.

National Payment Corporation of India (NPCI) will be the implementing agency for these schemes.

Transactions using USSD, UPI, RuPay and Aadhaar Enabled Payment System (AEPS) will only be covered under these schemes. Digital payments made through credit cards and e-wallets won’t be covered.

25. North East Industrial and Investment Promotion Policy (NEIIP)

The Department of Industrial Policy & Promotion (DIPP) has revised North East Industrial and Investment Promotion Policy (NEIIP), 2007.

The revision of policy stipulates mandatory disbursal of subsidies payable to all industrial units in northeast through Direct Benefit Transfer (DBT) mechanism by Chief Controller of Accounts (Industry).

26. India INX

Prime Minister Narendra Modi inaugurated India’s first international exchange India INX at the International Financial Service Centre (IFSC) of GIFT (Gujarat International Financial Tech) City Gandhinagar, Gujarat.

India INX is a wholly-owned subsidiary of the Bombay Stock Exchange (BSE). It will enable Indian firms to compete on equal footing with offshore firms.

It will facilitate international investors and NRIs to trade from anywhere in the world.

It will provide benefits in terms of waiver of security transaction tax, commodity transaction tax, dividend distribution tax, long term capital gain tax and income tax.



NOTES 27. Modified Special Incentive Package Scheme (M-SIPS)

The Union Cabinet in 2012 approved the M-SIPS to provide a special incentive package to promote large scale manufacturing in the Electronics System Design and Manufacturing (ESDM) sector to boost domestic electronic product manufacturing in the country.

The scheme provides subsidy for capital expenditure. The subsidy is 20% for investments in Special Economic Zones (SEZs) and 25% in non-SEZs.

ESDM products including telecom, IT hardware, consumer electronics, medical electronics, automotive electronics, solar photovoltaic, LEDs, LCDs, strategic electronics, avionics, industrial electronics, nano-electronics, semiconductor chips and chip components, other electronic components and EMS.

The incentives are provided on reimbursement basis (means first investment has to be made by the unit to claim the subsidy).

Amendments in the Modified Special Incentive Package Scheme (M-SIPS) for electronics manufacturing.

o These modifications will further incentivize investments in electronic sector and move towards Union Government’s goal of ‘Net Zero imports’ in electronics by 2020.

o Besides expediting investments into the Electronics System Design and Manufacturing (ESDM) sector in India, the amendments in M-SIPS are expected to create employment opportunities and reduce dependence on imports.

o The Policy covers all States and Districts and provides them an opportunity to attract investments in electronics manufacturing.

28. Electronics Development Fund (EDF)

The Union Government is targeting an investment of about Rs. 2,200 crore in start-ups working on new technologies in the electronic sector under the Electronics Development Fund (EDF) by 2019.

This investment aims at creating an eco-system to make India a global hub for electronics manufacturing.

EDF is the mother fund or fund of funds that will contribute to various funds for those who invest the money in companies for creation of intellectual property rights (IPR) in the field of electronics and IT.

29. Demonetisation in India

It is an act of stripping a currency unit of its status as legal tender.

The Union Government had announced that Rs. 500, Rs. 1,000 notes will cease to be legal tender.

The first demonetization in the independent India was done in the year 1946 and another one in the year 1978.

The legal basis for the order demonetizing currency can be found in Section 26 of the Reserve Bank of India Act, 1934.

Under sub-section (2) of this Section, the Union Government is given the power to declare that any notes issue by the Reserve Bank will no longer be legal tender.

Implications:

Money supply was reduced in the short run until the new notes got widely circulated in the market.

Real Estate and Property: The level of prices in this sector is expected to fall significantly as major part of the transaction is cash based.



NOTES This move will increase the amount of money deposited in Savings and Current Account of commercial banks.

Surge in the online transactions and other modes of payment.

30. Amended Technology Upgradation Fund Scheme (ATUFS) The Cabinet Committee on Economic Affairs (CCEA) has approved introduction of

Amended Technology Upgradation Fund Scheme (ATUFS) for technology upgradation of the textiles industry.

The ATUFS replaces existing Revised Restructured Technology Upgradation Fund Scheme (RR-TUFS) to give a boost to textile sector under Make in India campaign.

ATUFS targets: o Employment generation (including women) and global export by

encouraging garment and apparel industry. o Promote Technical Textiles which is a sunrise sector for export and

employment creation. o Improvement in quality and productivity by promoting conversion of

existing looms to better technology looms. o Encourage better quality in textile processing industry and keep check on

import of fabrics by the garment sector.

31. Trade Infrastructure for Export Scheme (TIES) The Union Ministry of Commerce & Industry has launched Trade Infrastructure for

Export Scheme for developing export linked infrastructure in states with a view to promoting outbound shipments.

TIES seek to bridge the critical infrastructure gap and provide forward and backward linkages to units engaged in trade activities.

It would focus on projects like customs checkpoints, last mile connectivity, border haats and integrated check posts.

An inter-ministerial empowered committee will sanction and monitor the projects. It will be headed by the commerce secretary.

All central and state agencies including Commodities Boards, Export Promotion Councils, SEZ authorities and Apex Trade Bodies recognised under EXIM policy of Central Government are eligible for financial support.

32. Mission Fingerling

The Union Ministry of Agriculture has launched Mission Fingerling, a programme to enable holistic development and management of fisheries sector in India.

The mission aims to achieve the target to enhance fisheries production from 10.79 mmt (2014-15) to 15 mmt by 2020-21 under the Blue Revolution.

Government has identified 20 States based on their potential and other relevant factors to strengthen the Fish Fingerling production and Fish Seed infrastructure in the country.

33. India’s largest Floating Solar PV Plant

State-run NTPC (National Thermal Power Corporation Limited) has installed India’s largest floating solar photovoltaic (PV) plant at Rajiv Gandhi Combined Cycle Power Plant (RGCCPP) at Kayamkulam in Kerala.

The 100 kWp (kilowatt peak) floating solar PV plant has been indigenously developed as a part of Union Government flagship ‘Make In India’ initiative.

Floating solar PV systems are fast emerging as an alternative to conventional



NOTES ground mounted PV systems which are land intensive. It can also be installed on saline water environment.

It has various benefits like conserving water through reduction of evaporation, increased power generation due to cooling effect on the panels, reduced installation time etc.

Installation potential of such type of floating systems in India is huge because of abundance of water bodies.

34. Bharat QR code

The Union Government has launched Bharat QR code, a quick response (QR) code to enable digital payments without card swiping machines.

It is world’s first interoperable payment acceptance solution launched by Indian Government to move towards less-cash economy.

Bharat QR code has been developed by jointly by National Payments Corporation of India (NPCI), Visa, MasterCard and American Express under instructions from Reserve Bank of India (RBI).

It works as common interface for the MasterCard/Visa/RuPay platforms and also facilitate acceptance of Aadhaar-enabled payments and Unified Payments Interface (UPI).

QR code: o QR code (Quick Response code) is a two-dimensional (matrix) machine-

readable bar code made up of black and white square. This code can be read by the camera of a smartphone.

o It is used for storing URLs or other information that link directly to text, emails websites phone numbers. It is capable of 360 degrees (omni-directional), high speed reading.

o QR Code can store up to 7089 digits as compared to conventional bar codes which can store max 20 digits. It encodes same amount of data in one-tenth the space of a traditional bar code.

o It carries information both horizontally and vertically. It has error correction capability and data stored in it can be restored even if it is partially damaged or dirty.

35. Revenue Insurance Scheme for Plantation Crops (RISPC)

The Union Ministry of Commerce and Industry has launched pilot Revenue Insurance Scheme for Plantation Crops (RISPC).

RISPC is the improved form of the Price Stabilization Fund (PSF) Scheme, 2003 which was closed in 2013.

It was launched for protecting growers of plantation crops from twin risks of yield loss due to pest attacks, adverse weather parameters etc. and income loss caused by fall in domestic and international prices.

It shall be covering tea, coffee, rubber, cardamom and tobacco plantations and shall be implemented by the commodity boards.

It will be implemented on a pilot basis for two years i.e. till 2018 in eight districts in West Bengal, Kerala, Andhra Pradesh, Assam, Karnataka, Sikkim and Tamil Nadu.

36. Operation Clean Money (Swachh Dhan Abhiyan)



NOTES The Income Tax Department (ITD) launched Operation Clean Money (Swachh Dhan Abhiyan), an e-platform to analyse large cash deposits made during the demonetisation window (9 November to 30 December 2016).

Under it, e-verification of large cash has been done using data analytics for comparing the demonetisation data with information in ITD databases.

37. Rashtriya Rail Sanraksha Kosh The Union Railway Ministry has decided to create a 1 lakh crore rupees safety fund

named Rashtriya Rail Sanraksha Kosh to strengthen safety measures on the rail network to prevent accidents.

The Rashtriya Rail Sanraksha Kosh will be a non-lapsable fund which will be utilised for safety measures.

The fund will help Indian Railways to accomplish its zero-accident mission by strengthening the safety measures on the rail network in a comprehensive way.

A high-level safety review committee headed by Dr. Anil Kakodkar in its report submitted in 2012, had projected an investment requirement of Rs. 1 lakh crore on safety over five years.

38. Mission 41K

Union Railway Ministry has unveiled ‘Mission 41K’ to save Rs. 41,000 crore on the Indian Railways’ expenditure on energy consumption over the next 10 years.

This target of ‘Mission 41K will be achieved by taking a slew of measures which include moving 90% of traffic to electric traction over diesel from present 50% of the total rail traffic.

The railways will also procure more and more electricity at cheaper rates through open market instead of sourcing it through DISCOMs.

The Electrification Mission will help Indian Railways to reduce dependence on imported fuel, change energy mix, and rationalize the cost of energy for Railways.

39. Coal Mitra

The Union Ministry of Coal has launched Coal Mitra, a web portal for allowing flexibility in utilization of domestic Coal.

The Coal Mitra Web Portal aims at optimum utilisation by private as well as public power companies of the coal.

It facilitates transfer of the coal reserves to more cost efficient State/Centre owned or Private sector generating stations.

The portal allows coal swapping between PSUs and the Private Sector in transparent manner and also helps to reduce operational and logistic costs, bringing power tariffs down for the consumers.

40. DigiShala

The Union Ministry of Electronics and Information Technology (MeitY) has launched a TV channel named ‘DigiShala’ to promote cashless transactions.

The channel was launched as part of the ‘Digidhan’ campaign which aims to spread awareness about digital transactions.

DigiShala is dedicated 24*7 and 365 days free-to-air TV channel to inform citizens about digital payment ecosystem, benefits and processes.

It is a satellite channel managed by Doordarshan (DD). It will be broadcasted nationally on DD Free Dish DTH service.

The services on the channel initially will be available in Hindi and English and later in



NOTES local languages as well.

It is not mandatory for the service provider and direct-to-home (DTH) airing it and customers may opt for it.



NOTES Monetary and Fiscal Policy

1. Google tax / Equalisation Levy It will apply to payments for online advertisements made by Indian business

entities to non-residents (such as Google, Yahoo, Twitter, Facebook) where the aggregate payment in a financial year to a non-resident exceeds Rs 1 lakh.

Only B2B transactions attract this levy.

India became the first country to impose equalisation levy, popularly being called Google Tax

2. FDI Inflows According to data released by Department of Industrial Policy & Promotion (DIPP),

India attracted $ 46 billion in 2016 which is 18% higher compared to previous year.

Highest FDI included – Services, Telecom, Trading, Computer Hardware and Software.

Bulk of the FDI came from Singapore, followed by Mauritius.

3. Minimum Support Price (MSP) Minimum Support Price (MSP) is a form of market intervention by the Government

of India to insure agricultural producers against any sharp fall in farm prices.

Announced by the Government of India at the beginning of the sowing season for certain crops.

The Cabinet Committee on Economic Affairs (CCEA), Government of India, determines the MSP based on the recommendations of the Commission for Agricultural Cost and Prices (CACP).

26 commodities are currently covered.

Procurement of agricultural crops is made by the Food Corporation of India (FCI), state agencies and cooperatives.

A counterpart of the MSP is the Market Intervention Scheme (MIS), under which the state government procures perishable commodities like vegetable items.

4. Merchant Discount Rate Merchant Discount Rate or MDR is a charge that merchants pay every time a debit

card or credit card is swiped at their end for a transaction by a customer.

This charge, typically 1% of the transaction, goes to the company that has installed the Point of Sale (PoS) machine, the network provider such as MasterCard, Visa or RuPay, and the card-issuing bank.

5. Fat Tax A fat tax is a tax or surcharge that is placed upon fattening food and beverages.

Kerala is the first state in India to introduce a 14.5% “fat tax” on pizzas, burgers, sandwiches and tacos sold through branded outlets.

This is in sync with the World Health Organization’s advocacy of using fiscal tools to promote healthy eating.

6. General Anti Avoidance Rules General Anti-Avoidance Rule (GAAR) is an anti-tax avoidance regulation to check tax

evasion and avoidance.



NOTES GAAR seeks to prevent companies from routing transactions through other countries to avoid taxes.

GAAR is set of rules under the Income Tax Act (under the proposed Direct Tax Code).

It contains provision allowing the government to retroactively tax overseas deals involving local assets.

It empowers officials to deny the tax benefits on transactions or arrangements which do not have any commercial substance or consideration other than achieving tax benefit.

It could also be used by the government to target participatory notes (P-Notes).

GAAR seeks to give the IT department powers to scrutinize transactions structured in such a way as to deliberately avoid paying tax in India.

It will not be invoked in cases where investments are routed through tax treaties that have a sufficient limitation of benefit (LOB) clause to address tax avoidance.

GAAR will not apply on foreign portfolio investor if its jurisdiction is based on non-tax commercial considerations and the main purpose is not to obtain tax benefits.

The Parthasarathy Shome panel was formed in 2012, for drawing up the final guidelines on GAAR and mainly to bring about tax clarity and address the concerns of foreign investors.

India will be the 17th nation in the world to have laws that aim to close tax loopholes.

At present, GAAR is in force in nations like Australia, Singapore, China and the UK.

7. Non-bank financial companies (NBFCs)

Non-bank financial companies (NBFCs) are financial institutions that provide banking services without meeting the legal definition of a bank, i.e. one that does not hold a banking license.

The Reserve Bank of India is entrusted with the responsibility of regulating and supervising the Non-Banking Financial Companies by virtue of powers vested under Reserve Bank of India Act, 1934.

NBFC cannot accept demand deposits (they can accept term deposits).

NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself.

Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs, unlike in case of banks.

The NBFCs do the business of loans and advances, acquisition of shares, stock, bonds, debentures, securities issued by Government.

A Non Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 of India.

8. Wholesale Price Index (WPI) In general, reflects the rate of change in prices of all goods and services in an

economy over a period of time.

In India, headline inflation is measured through the WPI – which consists of 676 commodities (services are not included in WPI in India).

It is measured on year-on-year basis i.e., rate of change in price level in a given month Vis a Vis corresponding month of last year. This is also known as point to point inflation.

In India, there are three main components in WPI – o Primary Articles (weight: 20.12%),



NOTES o Fuel & Power (weight: 14.91%) and o Manufactured Products (weight: 64.97).

This includes “Food Articles” in the Primary Articles (14.34%) and “Food Products” in the Manufactured Products category (9.97%).

(WPI) is computed by the Office of the Economic Adviser in Ministry of commerce & Industry, Government of India. WPI is released monthly.

Current WPI Base year is 2004-05.

WPI covers all goods including intermediate goods transacted in the economy.

9. Consumer Price Indices (CPI)

Consumer Price Indices (CPI) released at national level are: o CPI for Industrial Workers (IW) o CPI for Agricultural Labourers (AL)/ Rural Labourers (RL) o CPI (Rural/Urban/Combined)

While the first two are compiled and released by the Labour Bureau in the Ministry of Labour and Employment, the third by the Central Statistics Office (CSO) in the Ministry of Statistics and Programme Implementation.

In India, RBI uses CPI (combined) released by CSO for inflation purpose.

Base year for CPI (Rural, Urban, and Combined) is 2012.

The number of items in CPI basket include 448 in rural and 460 in urban. Thus, it makes it clear that CPI basket is broader than WPI basket.

CPI covers consumer goods and consumer services.

10. Strategic Disinvestment

In Strategic disinvestment the management control and a significant proportion of a PSU’s share goes to a private sector strategic partner.

Strategic disinvestment of a PSU is different from the ordinary disinvestment in which management of PSU is retained with Government.

For example, in a PSU, where the government holding 51%, and out of this, sale of 25% to the strategic partner while the government holding 26% share also is a case of strategic sale. Here, the remaining shares (49%) will be dispersed among the public.

11. Index of Industrial Production (IIP)

The Index of Industrial Production (IIP) is an index for India which details out the growth of various sectors in an economy

The IIP is compiled and published every month by Central Statistics Office (CSO) of the Union Ministry of Statistics and Programme Implementation.

It covers 682 items comprising Manufacturing (620 items), Mining (61 items) & Electricity (1 item).

The current base year is 2004-05.

The eight Core Industries comprise nearly 38 % of the weight of items included in IIP.

12. Universal Basic Income (UBI)

The Economic Survey 2016-17 tabled in Parliament has advocated for the concept



NOTES of Universal Basic Income (UBI) as an alternative to the various social welfare schemes in an effort to reduce poverty.

A basic income is a form of social security in which all citizens of a country regularly receive an unconditional sum of money, either from a government in addition to any income received from elsewhere.

It is based on the principles of universality and unconditionality. However, it forfeits other government aided benefits.

Recently, government of Finland announced the introduction on a trial basis for UBI involving 2,000 unemployed people.

In June 2016, Swiss voters in referendum had overwhelmingly rejected proposal to introduce basic income for all.

13. Government shifts disinvestment advising role to Department of Economic Affairs

The Union Government has transferred the advising role of Department of Investment and Public Asset Management (DIPAM) on utilisation of the proceeds from disinvestment to the Department of Economic Affairs (DEA).

The DEA in the Union Finance Ministry will now be in charge of financial policy in regard to the utilisation of proceeds of disinvestment channelised into the National Investment Fund (NIF).

The National Investment Fund was created in 2005 in which the proceeds from the disinvestment of Central Public Sector Enterprises (CPSEs) were to be channelised.



NOTES Banking Sector

1. Small Finance Banks The small finance bank will primarily undertake basic banking activities of

acceptance of deposits and lending to unserved and underserved sections including small business units, small and marginal farmers, micro and small industries and unorganised sector entities.

What they can do: o Take small deposits and disburse loans. o Distribute mutual funds, insurance products and other simple third-party

financial products. o Lend 75% of their total adjusted net bank credit to priority sector. o Maximum loan size would be 10% of capital funds to single borrower, 15%

to a group. o Minimum 50% of loans should be up to 25 lakhs.

What they cannot do: o Lend to big corporates and groups. o Cannot open branches with prior RBI approval for first five years. o Other financial activities of the promoter must not mingle with the bank. o It cannot set up subsidiaries to undertake non-banking financial services

activities. o Cannot be a business correspondent of any bank.

The guidelines they need to follow: o Promoter must contribute minimum 40% equity capital and should be

brought down to 30% in 10 years. o Minimum paid-up capital would be Rs 100 cr. o Capital adequacy ratio should be 15% of risk weighted assets, Tier-I should

be 7.5%. o Foreign shareholding capped at 74% of paid capital, FPIs cannot hold more

than 24%. o Priority sector lending requirement of 75% of total adjusted net bank credit. o 50% of loans must be up to Rs 25 lakh.

2. Green Bonds A green bond is a fixed income instrument for the purpose of raising debt capital

through markets.

Certifies that the proceeds will be used exclusively for specific “green” purposes.

Can provide a long-term source of debt capital for renewable infrastructure projects.

Green bonds are issued by multilateral agencies such as the World Bank, corporations, government agencies and municipalities.

Institutional investors and pension funds also have appetite for such bonds.

Axis Bank has launched India’s first internationally-listed certified green bond to finance climate change solutions around the world at London Stock Exchange (LSE).

3. Stressed Asset Fund It is commonly known as Bad Bank which invites investors to pool their money

together and buy bad loans from banks.

The idea is to acquire viable projects at a discount, revive them and sell them to investors.



NOTES When banks are not willing to lend more to the promoters of stressed companies or when the promoters are not in a position to infuse extra capital, then stressed funds will, after weighing the pros and cons, decide to invest in the bad debt of these companies

By selling bad loans, banks can strike them off their books and it frees up more capital that they could lend.

If the debt-ridden company manages to turn around, the once-distressed debt will be selling for a considerably higher price. The stressed asset funds will gain hugely from it.

Both corporate and retail debts are sold by banks.

4. Export-Import Bank of India (Exim Bank) Export–Import Bank of India was established in 1982 under the Export-Import Bank

of India Act 1981.

Export–Import Bank of India is the premier export finance institution in India

Key player in the promotion of cross border trade and investment.

Plays a major role in partnering Indian industries, particularly the Small and Medium Enterprises (SMEs), in their globalisation efforts.

They assist SMEs in import of technology and export product development to export production, export marketing, pre-shipment and post-shipment and overseas investment.

Exim Bank is managed by a Board of Directors, which has representatives from the Government, Reserve Bank of India, Export Credit Guarantee Corporation of India, a financial institution, public sector banks, and the business community.

5. Banks Board Bureau (BBB)

BBB will be a super authority (Autonomous Body) of eminent professionals and officials for public sector banks (PSBs). It will replace the Appointments Board of Government.

It is part of seven point Indradhanush Mission to revamp the Public Sector Banks (PSBs).

Functions: o Give recommendations for appointment of full-time Directors as well as

non-Executive Chairman of PSBs. o Give advice to PSBs in developing strategies for raising funds through

innovative financial methods and instruments to deal with stressed assets. o Guide banks on mergers and consolidations and also ways to address the

bad loans problem among other issues.

Former Comptroller and Auditor General (CAG) Vinod Rai has been appointed as the first Chairman of Banks Board Bureau (BBB).

Composition: o The bureau will have three ex-officio members and three expert members,

in addition to the Chairman.

6. Payments banks

The “Committee on Comprehensive Financial Services for Small Businesses and Low Income Households” was set up by the RBI in Sep 2013 under the chairmanship of Nachiket Mor recommended creation of Payment Banks.

Payment banks are non-full service banks, whose main objective is to accelerate financial inclusion.

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

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

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

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



NOTES The telecom companies, retailers, mobile wallet providers, large business houses and several others are the main applicants for payment banks.

Capital requirement: The minimum paid-up equity capital for payments banks is Rs. 100 crore.

Leverage ratio: The payments bank should have a leverage ratio of not less than 3%, i.e., its outside liabilities should not exceed 33.33 times its net worth (paid-up capital and reserves).

Promoter’s contribution: The promoter’s minimum initial contribution to the paid-up equity capital of such payments bank shall at least be 40% for the first five years from the commencement of its business.

Foreign shareholding: The foreign shareholding in the payments bank would be as per the Foreign Direct Investment (FDI) policy for private sector banks as amended from time to time.

Cash Reserve Ratio (CRR): Cash Reserve Ratio (CRR) with the Reserve Bank on its outside demand and time liabilities.

Statutory Liquidity Ratio (SLR): Invest minimum 75% of its “demand deposit balances” in Statutory Liquidity Ratio (SLR) eligible Government securities/treasury bills with maturity up to one year and hold maximum 25% in current and time/fixed deposits with other scheduled commercial banks for operational purposes and liquidity management.

Airtel launches India's first payments bank.

India Post Payments Bank is the third entity to receive payments bank permit after Airtel and Paytm.

Activities of Payment Banks:

Payments banks will mainly deal in remittance services and accept deposits of up to Rs 1 lakh.

They will not lend to customers and will have to deploy their funds in government papers and bank deposits.

They can accept demand deposits.

They can issue ATM/debit cards but not credit cards.

Distribution of non-risk sharing simple financial products like mutual fund units and insurance products, etc. is allowed.

7. Masala bonds

The Masala bond refers to a rupee-denominated bond through which Indian entities (private and public sector) can raise money from foreign markets in rupee, and not in foreign currency.

By issuing bonds in rupees, an Indian entity is protected against the risk of currency fluctuation, typically associated with borrowing in foreign currency.

Masala bonds also help in internationalization of the rupee and in expansion of the Indian bond markets.

These bonds are usually traded on the London Stock Exchange (LSE) and not in India.

The Housing Development Finance Corporation (HDFC) has become the first Indian company to issue rupee-denominated bonds “masala bonds” on London Stock Exchange (LSE).

Canada’s British Columbia province has become the first foreign government to issue of masala bonds.

8. Merger of State Bank of India (SBI)



NOTES The Union Cabinet chaired by the Prime Minister Narendra Modi has approved the merger of State Bank of India (SBI) with five of its associate/subsidiary banks.

These five subsidiary banks are State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore.

It is in pursuance of the Indradhanush action plan of the Central Government.

9. Non Performing Asset (NPA) A non performing asset (NPA) is a loan or advance for which the principal or interest

payment remained overdue for a period of 90 days.

In case of Agriculture/Farm Loans, the NPA varies for of Short duration crop loan (interest not paid for 2 crop seasons), Long Duration Crops (interest not paid for 1 Crop season).

Banks are required to classify NPAs further into Substandard, Doubtful and Loss assets.

o Substandard assets: Assets which has remained NPA for a period less than or equal to 12 months.

o An asset would be classified as doubtful if it has remained in the substandard category for a period of 12 months.

o Loss assets: As per RBI, “Loss asset is considered uncollectible and of such little value that its continuance as a bankable asset is not warranted, although there may be some salvage or recovery value.”

Laws relating to NPA: o SARFAESI – The Act empowers Banks/ Financial Institutions to recover their

NPAs without the intervention of the court, through acquiring and disposing secured assets in case of outstanding amounts greater than 1 lakh.

o Debt Recovery Tribunals (DRTs) and Debt Recovery Appellate Tribunals (DRATs) - The SARFAESI Act provides setting up of DRTs and DRATs for expeditious and exclusive disposal of suits filed by banks / FIs for recovery of their dues in NPA accounts with outstanding amount of Rs. 10 lakh and above.

o Lok Adalats: Section 89 of the Civil Procedure Code provides resolution of disputes through Alternative Dispute Redressal (ADR) methods such as Arbitration, Conciliation, Lok Adalats and Mediation.

Solutions proposed by RBI: o RBI guidelines for restructuring large stressed loans. o RBI has directed banks to report to Central Repository of Information on

Large Credit (CRILC) when principle/interest payment not paid between 61-90 days.

o 5/25 scheme: For existing and new projects greater than 500 crores and also for existing projects which have been classified as bad debt or stressed asset, bank can provide longer amortization periods of 25 years with the option of restructuring loans every 5 or 7 years

o Strategic Debt Restructuring Scheme: Under this scheme, banks are made as majority owners and they

will replace the existing management of the ailing company. It gives banks the power to turnaround the ailing company into a

financially viable one and recover their dues by selling the company to a new promoter.

The scheme provides for creation of Joint Lenders Forum which is to be given additional powers with respect to Management change in



NOTES the company and to convert existing loans into equity. o Scheme for sustainable structuring of stressed assets (S4A):

This allows banks to split the stressed account into two heads – a sustainable portion that the bank deems that the borrower can pay on existing terms and the remaining portion that the borrower is unable to pay(unsustainable).

The latter can be converted into equity or convertible debt giving lenders a chance to eventually recover funds if the borrower is unable to pay.

This scheme would not only strengthen the lenders’ ability to deal with stressed assets, but would also put real assets back on track, benefitting both banks and the promoters of troubled entities.



NOTES External Sector

1. Advance Pricing Agreements (APAs) The APA Scheme was introduced in the Income-tax Act in 2012 and the “Rollback”

provisions were introduced in 2014.

An advance pricing agreement (APA) is an ahead-of-time agreement between a taxpayer and a tax authority on an appropriate transfer pricing methodology.

APAs bring tax certainty, reduce litigation expenses and avoid risk of double taxation.

An APA brings extra revenue to the tax administration.

The APAs may be bilateral or unilateral.

The Central Board of Direct Taxes (CBDT) has entered into more than 140 Advance Pricing Agreements (APAs).

2. Foreign Currency Non-Resident (FCNR) deposits

FCNR account is a term deposit account that can be maintained by NRIs and PIOs in foreign currency.

Thus, FCNRs are not savings accounts but fixed deposit accounts.

The account can be opened in the name of NRI individuals (single/ joint) or with resident Indians on ‘former or survivor’ basis.

In October 2011, the RBI decided that authorised dealer banks in India may be permitted to accept FCNR deposits in any permitted currency.

‘Permitted currency’ mean a foreign currency which is freely convertible.

Interest income from FCNR accounts is exempt from Income Tax.

Deposit held under FCNR accounts is not taxable under Wealth Tax.

3. Trade Facilitation Agreement (TFA)

The TFA is the WTO’s first-ever multilateral accord that aims to simplify customs regulations for the cross-border movement of goods.

It was outcome of WTO’s 9th Bali (Indonesia) ministerial package of 2013.

The agreement contains provisions for faster and more efficient customs procedures, Lowering import tariffs and agricultural subsidies, Abolish hard import quotas and Reduction in red tape at international borders.

The Trade Facilitation Agreement (TFA) in Goods came into effect with its ratification by two-thirds members of WTO including India.

Trade Facilitation Agreement for Services: o The idea of a ‘TFA for Services’ – similar to the WTO’s ‘TFA for Goods’ —

was mooted by India soon after the WTO’s tenth Ministerial Conference in Nairobi in December 2015.

o It is aimed at making it easier for services professionals and skilled workers to move across borders for ‘short-term’ projects.

o Its objectives include streamlining procedures for global services trade, recognising services as a tradable item and for settlement of disputes.

4. Participatory Notes (P-Notes)

Participatory Notes are offshore derivative instruments issued by registered foreign institutional investors (FII) to overseas investors, who wish to invest in the Indian stock markets without registering themselves with SEBI.

SEBI Rules:

http://economictimes.indiatimes.com/news/economy/foreign-trade/India-ratifies-Trade-Facilitation-Agreement-of-WTO/articleshow/52110279.cms



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

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



NOTES o From January 2011, FIIs have had to follow KYC norms and submit details of transactions.

o Sebi also issued norms on transferability of P-Notes between two foreign investors and increased the frequency of reporting by P-Note issuers.

o Under the new norms, all the users of P-Notes would have to follow Indian KYC and Anti Money Laundering (ALM) Regulations, irrespective of their jurisdictions.

5. Multilateral Convention on Mutual Administrative Assistance in Tax Matters

Multilateral Convention on Mutual Administrative Assistance in Tax Matters was developed jointly by the OECD and the Council of Europe in 1988.

The Convention represents a wide range of countries, including all G20, BRIICS and OECD countries, financial centres and several developing countries.

India is among the 98 countries and jurisdictions that have already joined the Convention.

The convention regulates information exchange between states parties on the exchange of information regarding tax matters.

Panama has agreed to sign a multilateral tax treaty, which the Indian agencies believe will help them expedite investigations into the “Panama papers”.

6. Bilateral Investment Treaty A bilateral investment treaty (BIT) is an agreement establishing the terms and

conditions for private investment by nationals and companies of one state in another state.

This type of investment is called foreign direct investment (FDI). BIT increases the comfort level and boosts the confidence of investors. The distinctive feature of many BITs is that they allow for an alternative dispute

resolution mechanism, whereby an investor whose rights under the BIT have been violated could have recourse to international arbitration.

The first BIT was signed by India on March 14, 1994. Since then, till date, the Government of India has signed BITs with 83 countries.

Revised Indian model text for Bilateral Investment Treaty (BIT) o The revised Indian model text for Bilateral Investment Treaty (BIT) will

replace the existing Indian Model BIT. o "Enterprise" based definition of investment. o Non-discriminatory treatment through due process, national treatment,

protections against expropriation. o A refined Investor State Dispute Settlement (ISDS) provision requiring

investors to exhaust local remedies before commencing international arbitration.

o Bilateral Investment Treaty (BIT) between India and Cambodia is the first Bilateral Investment Treaty in accordance with the text of the Indian Model BIT.

7. Society for Worldwide Interbank Financial Telecommunication (SWIFT) It is a messaging network that financial institutions use to securely transmit

information and instructions through a standardized system of codes.

SWIFT India Domestic Services has rolled out services to provide harmonised



NOTES exchange of structured financial information between banks, the Reserve Bank of India, stock exchanges, clearing houses, corporations, and their customers.

8. Double Taxation Avoidance Agreement (DTAA)

A DTAA is a tax treaty signed between two or more countries.

Its key objective is that tax-payers in these countries can avoid being taxed twice for the same income.

A DTAA applies in cases where a tax-payer resides in one country and earns income in another.

DTAAs can either be comprehensive to cover all sources of income or be limited to certain areas such as taxing of income from shipping, air transport, inheritance, etc.

India has DTAAs with more than eighty countries, of which comprehensive agreements include those with Australia, Canada, Germany, Mauritius, Singapore, UAE, the UK and US.

DTAA with Mauritius: o India recently amended its Double Taxation Avoidance Agreement (DTAA)

with Mauritius to plug certain loopholes. o Now, a Mauritian entity will have to pay capital gains tax here while selling

shares in a company in India from April 2017. o Earlier, the company could avoid tax as it was not a ‘resident’ in India.

9. Money laundering

Money laundering is the process by which large amounts of illegally obtained money is given the appearance of having originated from a legitimate source.

What does Enforcement Directorate do? o Directorate of Enforcement is a specialized financial investigation agency

under the Department of Revenue, Ministry of Finance, Government of India, which enforces the following laws: –

o Foreign Exchange Management Act,1999 (FEMA) – A Civil Law, with officers empowered to conduct investigations into suspected contraventions of the Foreign Exchange Laws and Regulations, adjudicate, contraventions, and impose penalties on those adjudged to have contravened the law.

o Prevention of Money Laundering Act, 2002 (PMLA) – A Criminal Law, with the officers empowered to conduct investigations to trace assets derived out of the proceeds of crime, to provisionally attach/ confiscate the same, and to arrest and prosecute the offenders found to be involved in Money Laundering.

The Prevention of Money Laundering (PMLA) was enacted in 2002, but was amended thrice, first in 2005, then in 2009 and then 2012.

The Act impose obligation on banking companies, financial institutions and intermediaries to verify identity of clients, maintain records and furnish information.

10. Anti-Dumping Duty

Anti-Dumping Duty is a trade levy imposed by any government on imported products which have prices less than their fair normal values in their domestic market.

Anti-Dumping Duty is imposed under the multilateral World Trade Organisation (WTO) regime and varies from product to product and from country to country.

It varies from product to product and from country to country.

In India, anti-dumping duty is recommended by the Union Ministry of Commerce



NOTES (i.e. by Directorate General of Anti-dumping & Allied Duties (DGAD)), while the Union Finance Ministry imposes it.

So far, India has initiated maximum anti-dumping cases against “below-cost” imports from China.

Issue: o The Indian Steel Association (ISA) has asked the Central Government not to

impose any anti-dumping duty on Metallurgical Coke (met coke). o A levy of anti-dumping duty on met coke will have a cost-push effect on the

steel sector. It will fuel further the cost of steel making, resulting in an increase in the cost of finished steel.

o The Union Government has extended anti-dumping duty on import of certain Chinese products, used in garment, toys and footwear manufacturing.

11. Countervailing duties (CVDs)

Countervailing duties (CVDs), also known as anti-subsidy duties, are trade import duties imposed under World Trade Organization (WTO) rules to neutralize the negative effects of subsidies.

They are imposed after an investigation finds that a foreign country subsidizes its exports, injuring domestic producers in the importing country.

It is imposed in accordance with the GATT Article VI and the GATT Agreement on Subsidies and Countervailing Measures.

12. Safeguard Duty

The safeguard duty is tariff barrier imposed by government on the commodities to ensure that imports in excessive quantities do not harm the domestic industry.

It is mainly temporary measure undertaken by government in defence of the domestic industry which is harmed or has potential threat getting hared due to sudden cheap surge in imports.

13. South Asia Training and Technical Assistance Centre (SARTTAC)

The International Monetary Fund (IMF) has opened a first-of-its-kind South Asia Training and Technical Assistance Centre (SARTTAC) in New Delhi for economic capacity building in South Asia.

It will work to support local member countries of South Asia viz. India, Bangladesh, Bhutan, Maldives, Nepal and Sri Lanka to build human and institutional capacity and implement policies for growth and poverty reduction.

SARTTAC is financed mainly by its six member South Asia countries with additional support from Australia, South Korea, European Union and United Kingdom.

It is expected to become the focal point for the delivery of IMF capacity development services to South Asia.

14. International Chambers of Commerce (ICC)

ICC is the world’s largest business organisation that was founded in 1919.

Headquarters: Paris, France.

Motto: The World Business Organization.

It represents the private-sector’s views to national governments and intergovernmental bodies around the world.

It was the first international organization to be granted general consultative status with the United Nations Economic and Social Council.

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

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

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



NOTES The chief executive of Bharti Group, Sunil Bharti Mittal has been elected chairman of the International Chambers of Commerce (ICC).

15. Permanent Court of Arbitration (PCA) PCA is an intergovernmental organization established in 1899. It is located at The

Hague in the Netherlands.

It is not a court in the traditional sense, but a permanent framework for arbitral tribunals constituted to resolve specific disputes.

PCA seeks to facilitate arbitration and other forms of dispute resolution involving various combinations of states, state entities, international organizations and private parties.

It was the first permanent intergovernmental organization that provided a forum for the resolution of international disputes through arbitration and other peaceful means.

The PCA also administers cases under the arbitration rules of the United Nations Commission on International Trade Law (UNCITRAL).

16. BRICS Rating Agency

BRICS has agreed to set up an independent BRICS Rating Agency in its efforts to challenge western hegemony in the world of finance.

It was announced during the 8th BRICS summit held in Goa, India.

The BRICS Rating Agency will be based on market-oriented principles to strengthen the global governance architecture.

It will assist BRICS and other countries to rate infrastructure and sustainable projects in the emerging economies. Thus, it will further bridge the gap in global financial architecture.

Three global agencies (S&P, Fitch, Moody’s) based in western countries account for 90% of the rating market.

17. External Commercial Borrowings (ECBs)

Any money borrowed from foreign sources for financing the commercial activities in India are called ECBs.

The Central Government permits ECBs as a source of finance for Indian Corporates for expansion of existing capacity as well as for fresh investment.

The Reserve Bank of India (RBI) has permitted start-ups to raise external commercial borrowings (ECBs) of up to $3 million in a financial year for three year tenure.

The new rules issued by RBI aims at boosting innovation and promoting job creation in the country.

There will no cost-ceiling or restriction on the end use of the funds raised.

The ECBs can be raised from a country which is either a member of Financial Action Task Force (FATF) or either through FATF-Style Regional Bodies.

It may be bank loans, securitised instruments, buyers’ credit, suppliers’ credit, foreign currency convertible bonds, etc.

It should be noted that ECBs are not FDI.

18. Comprehensive Economic and Trade Agreement (CETA)

The European Union (EU) and Canada have signed Comprehensive Economic and Trade Agreement (CETA), a landmark trade deal.

CETA is a free free-trade agreement (FTA) between Canada and the EU.



NOTES It removes customs duties, open-up the services market and end restrictions on access to public contracts.

19. Market Economy Status (MES)

India is not inclined to automatically grant the coveted ‘Market Economy Status’ (MES) to China under World Trade Organisation (WTO) norms.

The main reason India is reluctant to grant MES to China is that it will severely curb India’s ability to impose anti-dumping duties on “unfairly priced” Chinese imports.

Earlier, US and the EU also had opposed to grant MES to China on the same issue.

Under WTO norms, once a country gets MES status, exports from it are to be accepted at the production costs and selling price as the benchmark.

20. Base Erosion and Profit Shifting (BEPS)

Base Erosion and Profit Shifting (BEPS) refers to those instances where gaps between different tax rules leads to tax avoidance causing harm to the government.

It refers to all those artificial arrangements where: o Due to gaps in application of the bilateral tax treaties, cross border

activities may go untaxed in any of the two countries. o No or low tax is paid by shifting profits to low tax jurisdictions and shifting

losses and high expenditures to high tax jurisdictions. In 2013, the OECD came up with an action plan to address the Base Erosion and

Profit Shifting menace. The 15 OECD action points seek to develop a more coherent international system to

address the problems of digital economy taxation, treaty abuse, transfer pricing, aggressive tax planning and disputes related to such problems.

India has also responded positively to the G20-OECD led BEPS project.

21. Multilateral Competent Authority Agreement for Country-by-Country Reporting (CbC MCAA)

CbC MCAA is a tax co-operation agreement to enable automatic sharing of country-by-country information.

The CbC MCAA aims to boost transparency by multinational enterprises (MNEs) by allowing signatories to bilaterally and automatically exchange country-by-country reports.

This exchange of information is facilitated as part of Action 13 of the base erosion and profit shifting (BEPS) Action Plan adopted by the OECD and G20 countries in 2013.

The agreement will help to ensure that tax administrations obtain better understanding of how MNEs structure their operations and also ensure that the confidentiality and appropriate use of such information is safeguarded.

The total number of signatories has increased to 57 including India (signed in May 2015).

22. Oxfam Study

According to study conducted by rights group Oxfam, India’s richest 1% now hold a huge 58% of the country’s total wealth, indicating rise income inequality. It is higher than the global figure of about 50%.

Oxfam International’s global inequality report.



NOTES Oxfam is an international confederation of charitable organizations focused on the

alleviation of global poverty.

23. Foreign Investment Promotion Board (FIPB)

The FIPB is an inter-ministerial body that offers a single window clearance for applications on Foreign Direct Investment (FDI) that are under the approval route.

The finance secretary is the chairman of the FIPB. It is housed in the Department of Economic Affairs, Union Ministry of Finance.

Presently, FDI proposals up to 3,000 crore rupees are cleared by the FIPB.

India allows FDI in most sectors through the automatic route, but in certain segments considered sensitive for the economy and security, then those proposals first have to be cleared by FIPB.

However, those proposals involving FDI of more than 3,000 crore rupees are given final clearance by the Cabinet Committee on Economic Affairs (CCEA) headed by Prime Minister.

24. Investor-State Dispute Settlement (ISDS) mechanism

The ISDS mechanism permits companies to drag governments to international arbitration without exhausting the local remedies.

It also allows them to claim huge amounts as compensation citing losses they suffered due to reasons, including policy changes.

The contentious ISDS mechanism already has been incorporated by investment pact by the EU and Canada.

India, along with Brazil, Argentina and some other nations rejected an informal attempt of European Union (EU) and Canada to work towards a global investment agreement at World Trade Organisation (WTO)-level.

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

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



NOTES NOTES Reports / Ranking / Committees

1. Annual Survey of India’s City-Systems (ASICS) Conducted by Janaagraha Centre for Citizenship and Democracy.

The survey highlighted inadequacies in urban governance that could affect public service delivery and quality of life.

Thiruvananthapuram tops city governance ranking

2. Global Corruption Barometer for the Asia Pacific Region Released recently by Transparency International (TI) – an anti-corruption global civil

society organisation.

India had the highest bribery rate among the 16 Asia Pacific countries.

Japan has the least bribery rate.

TI is an international non-governmental organization based in Berlin, Germany. Its purpose is to take action to combat corruption and prevent criminal activities arising from corruption.

It publishes annually Corruption Perceptions Index and Global Corruption Barometer.

3. Logistics Performance Index 2016 India has improved its ranking in the World Bank’s bi-annual “Logistics Performance

Index 2016“, jumping from 54th in 2014 to 35th in 2016.

The World Bank Group’s bi-annual report ‘Connecting to Compete 2016: Trade Logistics in the Global Economy’ captures Logistics Performance Index.

Sub-indices: o Efficiency of customs and border management clearance. o Ability to track and trace consignments. o Quality of trade and transport infrastructure. o Quality of logistics services. o Frequency with which shipments reach consignees within scheduled time.

4. Networked Readiness Index Global list of countries in terms of their readiness for transition to a digitised

economy and society.

The annual Networked Readiness Index is released by the Geneva-based World Economic Forum (WEF).

The index was released as the part of the WEF’s Global Information Technology Report.

India has slipped to the 91st position.

The list is topped by Singapore while Finland has retained its second place.

5. Shankar Acharya Committee

The finance ministry has set up a committee under former chief economic adviser Shankar Acharya to examine the desirability and feasibility of having a new fiscal year.

Currently, India follows the April-March fiscal year and all macroeconomic and company data

However, most countries follow a January-December fiscal year.

In 1867, British set India’s financial year from April 1 to March 31.



NOTES In 1984, LK Jha committee also recommended the change to 1st Jan to 31st Dec.

6. Sustainable Development Goal Index The Sustainable Development Solutions Network (SDSN) and the Bertelsmann

Stiftung launched a new Sustainable Development Goal Index.

It is a report card for tracking Sustainable Development Goals (SDG) progress and ensuring accountability.

India has ranked a low 110 out of 149 nations assessed.

The index is topped by Sweden and shows all countries face major challenges in achieving these ambitious goals.

No country has achieved the SDGs and even top Sweden scores “red” on several goals.

7. Human Capital Index It is released by World Economic Forum.

India’s rank is 105 out of 130 countries.

India is in the least position in the BRICS countries.

Top three scores: Finland, Norway and Switzerland.

It measures country’s ability to nurture, develop and deploy talent for economic growth.

8. Committees headed by Amitabh Kant Transforming India into a cashless economy.

o The Union Government has constituted a new committee to form a strategy to expedite the process of transforming India into a cashless economy.

o The committee will be headed by Niti Aayog CEO Amitabh Kant. It has been tasked with identifying various bottlenecks affecting access of digital payments.

Review E-Commerce Rules

o Committee to look at easing the policy regime for e-commerce players, including the rules for foreign direct investment (FDI).

9. Global Innovation Index (GII) 2016 It is published by Cornell University, INSEAD, and the World Intellectual Property

Organization (WIPO), in partnership with other organizations and institutions.

It is based on both subjective and objective data derived from several sources, including the International Telecommunication Union, the World Bank and the World Economic Forum.

GII 2016 Theme: “Winning with Global Innovation”.

Switzerland, Sweden, UK, U.S., Finland and Singapore lead the 2016 rankings.

Uses more than 80 indicators, including education, R&D, patent filings, knowledge and technology inputs and institutions.

India’s performance: o India climbed 15 spots, from 81 last year, to 66. o India has maintained the top spot in the Central and South Asia regions. o In information and communication technology service exports it ranks first

in the world.

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

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

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



NOTES 10. State of ICT in Asia and the Pacific 2016: Uncovering the Widening

Broadband Divide

The report is released by The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).

India is at 39th position in terms of fixed broadband adoption among Asia Pacific countries.

11. Annual Report of ‘Crime in India – 2015’ 63rd edition of ‘Crime in India – 2015’ report was recently released. Key facts:

o The National Crime Records Bureau publishes the report on annual basis. o First edition was published for the year 1953. o The report contains information on police recorded criminal cases pertaining to

the calendar year 2015. o There was a decrease in crimes against Scheduled Tribes, Scheduled castes and

Women.

12. Global Retail Development Index (GRDI) India has been ranked second position among 30 developing countries on ease of

doing business as per 2016 Global Retail Development Index (GRDI) released by London-based business consultancy A T Kearney.

The sharp pick up in GDP growth and better clarity regarding FDI regulations have helped India achieve a second ranking.

The study is unique as it identifies the markets that are most attractive in present and also their future potential.

13. Global Competitiveness Index (GCI) India has been ranked 39th among the 138 countries in the 2016-17 Global

Competitiveness Index (GCI).

The index was released as part of the World Economic Forum’s (WEF) Global Competitiveness Report for 2016-17.

In the 2016-17 edition of GCI, India has jumped 16 places compared to 55th position in 2015-16 GCI.

The index is calculated by aggregating indicators across 12 pillars in the report which covers both business and social indicators.

The GCI measures 12 pillars which include institutions, macro-economic environment, infrastructure, health and primary education, higher education and training, labour market efficiency, goods and market efficiency among others.

14. World Economic Freedom Index (WEFI) India has been ranked 112th out of 159 countries in the 2016 World Economic

Freedom Index (WEFI).

The report was published by the Centre for Civil Society, a public policy think tank along with Canada’s Fraser Institute.

The economic freedom index of a country is directly proportional to the freedom and opportunities available to its citizens.

15. Biopharmaceutical Competitiveness & Investment (BCI) Survey Indian pharmaceutical companies have ranked low at 19th position with an overall



NOTES

score of 59 out of 100 in the Biopharmaceutical Competitiveness & Investment (BCI) Survey.

The survey of 28 countries was commissioned by the Pharmaceutical Research and Manufacturers of America and executed by the Pugatch Consilium.

16. Ease of doing business index

India has been placed at 130th position among the 190 countries in the recently released World Bank’s ease of doing business index for the year 2017.

The index was released as part of the World Bank’s annual report Doing Business 2017: Equal Opportunity for All.

A higher ranking of country in this list means that its regulatory environment is more conducive and favourable for the starting and operation of firms.

17. Ease of Doing Business Reforms Ranking 2015-16. Andhra Pradesh and Telangana have jointly topped the Ease of Doing Business

Reforms Ranking 2015-16.

The ranking of the states was conducted by the Department of Industrial Policy and Promotion (DIPP) and the World Bank.

States were ranked on their implementation of DIPP-proposed 340-point Business Reform Action Plan in period between July 2015 and June 2016.

18. ‘South Asia’s Turn: Policies to Boost Competitiveness and Create the Next Export Powerhouse’ World Bank’s Report.

World Bank in its report has mentioned that India must take steps to improve ports and logistics and frame policies to reduce farm subsidies to emerge as an export powerhouse.

19. Report on Global Wealth

As per a report on global wealth published by Credit Suisse, the total quantum of wealth in India is rising but disparity between rich and poor is also rising.

The wealth in India is mostly dominated by property and other real estate. It makes up 86% of its estimated household assets.

20. 2016 IHS Jane’s Defence Budgets report

According to the recently released 2016 IHS Jane’s Defence Budgets report, India has become the world’s fourth largest defence spender.



NOTES

India has surpassed Russia, France, Japan and Saudi Arabia to become the world’s fourth largest defence spender.

United States, China, and the UK remain the top three defence spender in the world.

21. Ratan Watal Committee for Digital Payments

The Committee on Digital Payments headed by Ratan P. Watal was tasked to review existing payment systems in the country and recommend appropriate measures for encouraging Digital Payments.

It was having representatives from Reserve Bank of India (RBI), Unique Identification Authority of India (UIDAI), tax department and various industry bodies in the payments space.

22. World Economic Outlook (WEO)

The World Economic Outlook (WEO) update released by the International Monetary

Fund (IMF).

23. 2017 Inclusive Development Index (IDI)

India ranked 60th among the 79 developing countries in 2017 Inclusive Development Index (IDI) released in World Economic Forum’s (WEF) ‘Inclusive Growth and Development Report’.



NOTES It has three pillars: Growth and Development, Inclusion and Intergenerational Equity, and Sustainability in order to provide a more complete measure of economic development than GDP growth alone.

24. Fiscal Responsibility and Budget Management (FRBM) Committee

The Fiscal Responsibility and Budget Management (FRBM) Committee is headed by Shri N.K. Singh

The 5 member committee was headed by N.K. Singh, former Revenue and Expenditure Secretary and former MP. Its member included RBI Governor Urjit Patel, Chief Economic Advisor Arvind Subramanian, former Finance Secretary Sumit Bose, and National Institute of Public Finance and Policy Director Rathin Roy.

NK Singh Committee’s responsibility: o Review of the running of FRBM in the past and suggest changes to meet

contingencies. o Examining various associated aspects. o Examining the feasibility of flexible Fiscal Deficit Target. o Aligning fiscal activities with credit cycle.

25. Corruption Perception Index (CPI)

India has been ranked 79th out of 176 countries in the recently released Corruption Perception Index (CPI) for the year 2016 by the Berlin-based corruption watchdog Transparency International (TI).

The index has been complied by using World Bank data, the World Economic Forum (WEF) and other institutions.

It ranks countries on the score in the scale ranging from 0 (highly corrupt) to 100 (very clean).

New Zealand and Denmark in joint first place, followed by Finland (3rd), Sweden (4th).

26. Labour migration in India

According to Economic Survey 2016-17, the inter-state migration of workers in India has increased substantially to 90 lakh annually between 2011-16 period compared to the previous years.

The estimate of labour migration in India was based analysis of census data of 2011 and railway passenger traffic in the unreserved category and new methodologies including the Cohort-based Migration Metric (CMM).

It is first-ever estimate of internal work-related migration using railways.

Migration for work and education is accelerating. The acceleration of migration was particularly high for women and increased at nearly twice the rate of male migration in the 2000s.

The largest recipient of migrant workers was the Delhi region, which accounted for more than half of migration in 2015-16, while Uttar Pradesh and Bihar together accounted for half of total out-migrants.

27. India Innovation Index

The National Institution for Transforming India (NITI) Aayog and Confederation of Indian Industry (CII) jointly launched India Innovation Index.

The index has been jointly developed by NITI Aayog, DIPP and CII in consultation with World Economic Forum (WEF), World Intellectual Property Organization (WIPO), Cornell University, UNIDO, ILO, OECD, UNESCO, ITU etc.



NOTES The index’s objective is to rank Indian states on innovations through the portal that will capture data on innovation from all states on innovation and regularly update it in real time.

The pillars of index include the capacity of human capital and research, strength of institutions, supporting infrastructure and the level of business sophistication, among others.

It will be structured based on the best practices followed in Global Innovation Index (GII) indicators and additionally by adding India-centric parameters.

28. 2017 International Intellectual Property Index (IIPI)

India ranked low 43rd among the surveyed 45 nations in 2017 International Intellectual Property Index (IIPI).

The fifth annual index was released by US Chamber of Commerce’s Global Intellectual Property Centre (GIPC) in its report titled ‘The Roots of Innovation’.

29. Economic Freedom 2017

India was ranked 143rd out of 186 economies in the annual Index of Economic Freedom 2017 that measures the degree of economic freedom in the countries of the world.

The index was released by top US based Think Tank, The Heritage Foundation.

The Index of Economic Freedom ranks countries based on score ranging 0 to 100, with 0 being the least free and 100 the most free.

The score is based on ten factors of economic freedom, separated into four categories, using statistics from international organizations like World Bank, IMF, Economist Intelligence Unit and Transparency International.

30. State of the World’s Human Rights Report Amnesty International has released its State of the World’s Human Rights Report for

the year 2016-17.

The report has expressed concerns over a range of human rights violations in India.

It has slammed the use of legislation such as the Foreign Currency (Regulation) Act (FCRA) and the sedition law to silence government critics and crack down on civil society organisations.

It pointed out that India’s draft national education policy “made no mention of human rights education.”

31. Financial Stability Report

The Reserve Bank of India today releases the Financial Stability Report (FSR) once in 6 months.

The FSR reflects the overall assessment on the stability of India’s financial system and its resilience to risks emanating from global and domestic factors.

Besides, the Report also discusses issues relating to development and regulation of the financial sector.

32. World Investment Report

As per the recently released 2016 World Investment Report, India ranks 10th in FDI (Foreign Direct Investment) inflows.

It is released by United Nations Conference on Trade and Development (UNCTAD).



NOTES 33. World Happiness Report 2017

India ranked at 122 out of 155 countries in the World Happiness Report 2017 published by the UN Sustainable Development Solutions Network on the eve of International Day of Happiness (20 March).

The rankings are based on factors such as inequality, life expectancy, GDP per capita, public trust (i.e. a lack of corruption in government and business), and social support.

Top three Happiest Countries: Norway (1), Denmark (2), Iceland (3).

34. Global Wind Power Installed Capacity index

India ranked 4th in the Global Wind Power Installed Capacity index with cumulative installed wind power generation capacity of 25,088 MW in 2015.

The index was released was released as part Global Wind Report: Annual Market, flagship publication of the Global Wind Energy Council (GWEC).

The index was topped by China, followed by US and Germany with cumulative installed wind power generation capacity of 145362 MW, 74471 MW and 44947 MW respectively.

India has achieved the largest-ever wind power capacity addition of 3,423 MW in 2015-16, exceeding the target by 44%.

35. International Anti-Corruption Day

The International Anti-Corruption Day (IACD) is observed annually on December 9 to raise public awareness of corruption and what people can do to fight it.

It also highlights the role of the United Nations Convention against Corruption (UNCAC) in combating and preventing it.

2016 Theme: “United against corruption for development, peace and security”.

The UN General Assembly (UNGA) had designated December 9 as International Anti-Corruption Day by passing resolution 58/4 of October 31, 2003.

The UNCAC is the first legally binding, international anti-corruption instrument that provides a chance to mount a global response to corruption.



NOTES Departments / Agencies

1. Common Services Centres (CSCs) Common Services Centres (CSCs) are a strategic cornerstone of the Digital India

programme.

They are the access points for delivery of various electronic services to villages in India.

CSCs enable the three vision areas of the Digital India programme: o Digital infrastructure as a core utility to every citizen. o Governance and services on demand. o Digital empowerment of citizens.

2. Food Safety and Standards Authority of India (FSSAI) Established under Food Safety and Standards Act, 2006.

Ministry of Health & Family Welfare, Government of India is the Administrative Ministry for the implementation of FSSAI.

The Chairperson is in the rank of Secretary to Government of India.

Important functions o Lay down the Standards and guidelines in relation to articles of food o Accreditation of certification bodies engaged in certification of food safety

management system o Accreditation of laboratories o Scientific advice and technical support to Central Government and State

Governments in the matters of framing the policy and rules in areas of food safety and nutrition .

o Provide training programmes for persons who are involved in food businesses.

3. Directorate of Revenue Intelligence The Directorate of Revenue Intelligence was constituted on 4th December 1957, for

dealing exclusively on smuggling activities.

The Directorate of Revenue Intelligence functions under the Central Board of Excise and Customs (CBEC) in the Ministry of Finance, Department of Revenue.

It has now turned itself to the changing nature of crimes in the field of narcotics and economic crimes.

4. Happiness Department Madhya Pradesh has become the first state in the country to set up ‘Happiness

Department’.

Bhutan, the first country to come up with the concept of Gross National Happiness.

The World Happiness Report 2016 by the UN ranks India at 118th among 156 countries.

5. Central Board of Direct Taxes The Central Board of Direct Taxes is a statutory authority functioning under

the Central Board of Revenue Act, 1963.

It is a part of the Department of Revenue in the Ministry of Finance, Government of India.

It provides essential inputs for policy and planning of direct taxes in India.



NOTES It is responsible for administration of the direct tax laws through Income Tax Department.

It is India’s official Financial Action Task Force unit.

The CBDT Chairman and Members of CBDT are selected from Indian Revenue Service (IRS).

The Central Board of Direct Taxes (CBDT) has entered into several Advance Pricing Agreements (APAs).

6. National Informatics Centre (NIC) National Informatics Centre (NIC) is the premier science & technology organisation

of Union Government in information and communication technology (ICT) applications.

The NIC is a part of Ministry of Electronics and Information Technology's Department of Electronics & Information Technology.

Almost all Indian-government websites are developed and managed by NIC.

7. Financial Stability and Development Council (FSDC) The Central Government had established Financial Stability and Development

Council (FSDC) in December 2010 with the Finance Minister as it Chairman. The idea to create it was first mooted by the Raghuram Rajan Committee on

Financial Sector Reforms in 2008. Members: Heads of the financial sector regulatory authorities (i.e, RBI, SEBI, IRDA,

PFRDA), Finance Secretary and/or Secretary, Department of Economic Affairs (Union Finance Ministry), Secretary, Department of Financial Services, and Chief Economic Adviser.

Two Core functions: o Act as an apex level forum to strengthen and institutionalize the mechanism

for maintaining financial stability. o Promoting financial sector development in the country.

Other functions o Focus on financial literacy and financial inclusion. o Monitor macro-prudential supervision of the economy. o Assess the functioning of the large financial conglomerates.

8. Serious Fraud Investigation Office (SFIO) It is under the jurisdiction of the Ministry of Corporate Affairs, Government of

India.

The SFIO is involved in major fraud probes and is the co-ordinating agency with the Income Tax and CBI.

It is the agency which looks at white collar crimes in Corporate Sector.

9. Financial Intelligence Unit

It is under the jurisdiction of the Ministry of Finance, Government of India.

To provide quality financial intelligence for safeguarding the financial system from the abuses of money laundering, terrorism financing and other economic offences.

To become a highly agile and trusted organization that is globally recognized as an efficient and effective Financial Intelligence Unit.

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NOTES 10. Monetary Policy Committee The Monetary Policy Committee (MPC) is a committee of the central bank —

Reserve Bank of India, headed by its Governor.

It was set up by amending the RBI Act to provide for a statutory and institutionalised framework for MPC.

The 6 member MPC is entrusted with the task of fixing the benchmark policy interest rate (repo rate) to contain inflation within the target level.

The meetings of the MPC will be held at least 4 times a year and it will publish its decisions after each such meeting.

Composition of MPC: o Governor of RBI (ex officio Chairperson), Deputy Governor of RBI, in charge

of Monetary Policy (Member), One officer of RBI (Member) and three members appointed by Central Government as members.

o Each member will have one vote and the governor gets a casting vote in case of tie.

o While the majority voice of the committee will be final in deciding the interest rates.

o The government members to MPC will be appointed by the Central Government on recommendations of a search-cum-selection committee headed by the Cabinet Secretary, with RBI governor; Secretary, Economic Affairs; and three experts as members.

11. Export Credit Guarantee Corporation of India Ltd (ECGC)

The ECGC Limited is a company wholly owned by the Government of India. It provides export credit insurance support to Indian exporters and is controlled by the Ministry of Commerce.

Functions: o Provides a range of credit risk insurance covers to exporters against loss in

export of goods and services as well. o Offers guarantees to banks and financial institutions to enable exporters to

obtain better facilities from them. o Provides Overseas Investment Insurance to Indian companies investing in

joint ventures abroad in the form of equity or loan and advances.

12. National Pharmaceutical Pricing Authority (NPPA) NPPA is nodal government regulatory agency that controls the prices of

pharmaceutical drugs in India. It functions under the aegis of Union Ministry of Chemical and Fertiliser.

It advices Union Government in matters relate to drug policies and pricing and changes/ revisions in the drug policy.

NPPA decides the ceiling prices of essential medicines under The Drug (Prices Control) Order 2013.

Monitor the availability of drugs, identify shortages, if any, and to take remedial steps.

13. Antrix Corporation

It is the commercial arm of Indian Space Research Organisation (ISRO).

It functions under the aegis of Department of Space (DoS), an independent Department directly working under the Prime Minister.



NOTES 14. National Committee on Trade Facilitation (NCTF)

The Union Government has constituted a National Committee on Trade Facilitation (NCTF) to develop the pan-India road map for trade facilitation.

It has been constituted in line with the World Trade Organisation (WTO’s) Trade Facilitation Agreement (FTA), which India also has ratified.

The NCTF will be headed by Pradeep Kumar Sinha, who is the Cabinet Secretary of India.

It will be a national level body that will facilitate domestic co-ordination and implementation of TFA provisions.

15. Competition Commission of India (CCI) The CCI is quasi-judicial statutory body established under The Competition Act,

2002.

It established in 2003 to eliminate practices that adversely affect competition in different industries and protect interests of consumers and ensure freedom of trade.

Its predecessor was the MRTPC (Monopolies and Restrictive Trade Practices Commission) which was functional prior to 1991 Economic Reforms.

16. National Industrial Corridor Development & Implementation Trust (NICDIT)

The Union Government has approved the re-designation of the Delhi-Mumbai Industrial Corridor Project Implementation Trust Fund (DMICPTF) as National Industrial Corridor Development & Implementation Trust (NICDIT).

NICDIT will be the apex body to oversee integrated development of all industrial corridors across the country.

NICDIT will function under the administrative control of Department of Industrial Policy and Promotion (DIPP) i.e. Ministry of Commerce & Industry.

NICDIT will implement all the five proposed industrial corridors, together covering 15 States.

17. Cell for IPR Promotion and Management (CIPAM)

The CIPAM is nodal agency under the aegis of the Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry.

It is working to ensure effective implementation of the National IPR Policy 2016.

It has undertaken several measures to strengthen the IP ecosystem in the country.

18. CERT-In (Indian Computer Emergency Response Team)

CERT-In is a government-mandated nodal agency for information technology (IT) security established in 2004 under the aegis of the Indian Department of Information Technology, Ministry of Electronics and IT.

Mandate of CERT-In: o Protect Indian cyberspace and software infrastructure against destructive

and hacking activities. o Respond to computer security incidents, report on vulnerabilities and

promote effective IT security practices throughout the country. o Issue guidelines, vulnerability notes, advisories, and whitepapers regarding

to information security practices, prevention, procedures, response and reporting of cyber security incidents.



NOTES 19. National Payments Corporation of India (NPCI)

NPCI is the umbrella organisation for all retail payments system in India. It is being promoted by the Reserve Bank of India.

It was founded in 2008 as a not-for-profit organisation registered under section 25 of the Companies Act, 2013.

It has successfully played pioneering role in the development of a domestic card payment network called RuPay, reducing the dependency on international card schemes.

The National Payments Corporation of India (NPCI) has launched “Unified Payments Interface (UPI)” to revolutionise mobile payment system in the country.

National Payment Corporation of India (NPCI) is the implementing agency for Lucky Grahak Yojana and Digi-Dhan Vyapar Yojana.

20. General Insurance Corporation of India (GIC) GIC Re is the statutory body under the Department of Financial Services, Ministry

of Finance.

GIC originally was incorporated on 22nd November 1972, under the Companies Act, 1956.

In November 2000, GIC was notified as the Indian Reinsurer.

GIC Re is the only reinsurer in the country and wholly owned by Government of India.

Its vision is “to be a leading global reinsurer and risk solution provider”.

GIC Re provides reinsurance to the direct general insurance companies in the Indian market.

21. International Financial Services Centre (IFSC)

India’s first International Financial Services Centre (IFSC) became operational at Gujarat International Finance Tec (GIFT) City in Gandhinagar district of Gujarat.

It was setup as part of Special Economic Zone (SEZ).

With an IFSC in India, India now competes against global financial hubs like Dubai and Singapore to attract foreign investors who are willing to trade in foreign currencies.

An IFSC caters to customers outside the jurisdiction of the domestic economy. Such centres deal with flows of finance, financial products and services across borders.

22. Agricultural and Processed Food Products Export Development Authority (APEDA)

APEDA is statutory authority related to exports of agricultural products.

It functions under the aegis of Union Ministry of Commerce and Industry.

Its role is development of industries relating to scheduled products for export by way of providing financial assistance.

It looks at the export of fruits, vegetables, and their processed products, meat and meat products, poultry and dairy products.

It also looks at fixing of standards and specifications, improving packaging, marketing for the scheduled products for the purpose of exports.

The authority replaced the Processed Food Export Promotion Council (PFEPC).

23. Central Water Commission (CWC)

CWC is apex Technical Organization of India in the field of Water Resources. It is



NOTES presently functioning as an attached office of Union Ministry of Water Resources, River Development and Ganga Rejuvenation.

It is charged with the general responsibilities of initiating, coordinating in consultation of State Governments schemes for control, utilization and conservation of water resources throughout the country.

These schemes are meant for purpose of Flood Control, Irrigation, Navigation, Drinking Water Supply and Water Power Development.

The work of the Commission is divided among 3 wings namely, River Management Wing (RM), Designs and Research Wing (D&R) and Water Planning and Projects Wing (WP&P).

24. Central Board of Excise and Custom (CBEC)

CBEC is the nodal government agency on Indirect Taxes responsible for administering Customs, Central Excise, Service Tax and Narcotics in India.

Currently it operates and functions under the aegis of the Department of Revenue of Union Ministry of Finance.

It was established in 1855 by the then British Governor General of India as Customs & Central Excise department. Thus, it is one of the oldest government departments of India.

25. Securities and Exchange Board of India (SEBI)

SEBI is the statutory regulator for the securities market in India established in 1988. It was given statutory powers through the SEBI Act, 1992.

Mandate: Protect the interests of investors in securities; promote the development of securities market and to regulate the securities market.

SEBI has to be responsive to the needs of three groups, which constitute the market: o the issuers of securities

o the investors

o The market intermediaries.

It has three functions: quasi-legislative (drafts regulations in its legislative capacity), quasi-judicial (passes rulings and orders in its judicial capacity) and quasi-executive (conducts investigation and enforcement action in its executive function).

Headquarters: Mumbai, Maharashtra.



NOTES Miscellaneous

1. Enayam – India’s 13th Port The Centre has given its ‘in-principle’ approval to set up the country’s 13th major

port at Enayam, near Colachel in Tamil Nadu.

Aimed to make India a destination on the global east-west trade route and will help India act as a major gateway container port for cargo that is presently trans-shipped outside the country.

Projects like Sagarmala will also complement the new port at Enayam.

2. Insurance Policy to Atomic Power Plant Operator India’s 1st insurance policy covering public liability to an atomic power plant operator

has been issued to Nuclear Power Corporation of India Limited (NPCIL).

The insurance policy was issued by the country’s largest non-life insurer New India Assurance Company Ltd.

The Central government had announced in June 2015 the setting up of the Rs. 1,500- crore India Nuclear Insurance Pool to be managed by national reinsurer General Insurance Corporation (GIC Re).

3. Ponzi schemes A Ponzi can be any scheme in which the returns to promised to older investors are

paid from the money collected from new investors, and not actual profits from the investments.

Ponzi schemes are banned under the Prize Chit and Money Circulation (Banning) Act, 1978 and the State government concerned is the enforcement agency.

Though it is a Central Act, the respective State governments are the enforcement agency of this law.

Ponzi schemes do not fall under the regulatory purview of SEBI.

The Union Government has issued model guidelines for states titled the Direct Selling Guidelines 2016 framework to regulate direct selling and multi-level marketing businesses to protect consumers from Ponzi frauds.

4. Diamond Quadrilateral The Diamond Quadrilateral is a project of the Indian railways to establish high speed

rail network in India.

This quadrilateral will connect the four metro cities in India, i.e. Delhi, Mumbai, Kolkata and Chennai.

Six corridors identified are: o (i)Delhi-Mumbai, (ii) Mumbai-Chennai, (iii) Chennai-Kolkata, (iv) Kolkata-

Delhi and both diagonals i.e. (v) Delhi-Chennai and (vi) Mumbai-Kolkata routes.

This project is similar to Golden Quadrilateral which is a roadway project which connects the four metros by Express Ways.

The Golden Quadrilateral falls under National Highways Development Project.

5. Skimming

An electronic method of capturing a victim’s personal information used by identity thieves.

The skimmer is a small device that scans a credit card and stores the information



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NOTES contained in the magnetic strip.

6. Social engineering attack

Social engineering, in the context of information security, refers to psychological manipulation of people into performing actions or divulging confidential information.

It can be engineered at the banking and POS facilities, by gaining trust of the card owner as the fraudster poses as a member of staff.

7. Launchpad

E-commerce giant Amazon has launched its global start-ups program ‘Launchpad’ in India.

The program will enable Indian startups to sell their products overseas.

In this regard, Amazon India has tied up with Department of Industrial Policy and Promotion (DIPP)’s Start-up India and NASSCOM.

8. Algorithmic trading

Algorithmic trading in financial markets refers to transaction orders generated by using advanced mathematical models that involves automated execution of trade.

It uses mathematical models and software codes to make transaction decisions on exchanges and execute them at high speed.

This technology-driven trading enables traders to take advantage of any profit making opportunities arising in the market much before a human trader can even spot them.

At present, on the National Stock Exchange (NSE), algorithm trades accounts close to 16% of all trades. On the Bombay Stock Exchange (BSE), it was 8.56% in January 2017.

The Securities and Exchange Board of India (SEBI) is planning to further tighten the regulations for algorithmic trading to minimise instances of misuse of such systems.

9. FOIN 2017 The Festival of Innovation (FOIN) is a unique initiative of the Office of the President

of India.

FOIN has become a national celebration of creativity and innovation at and for grassroots.

FOIN will provide a window to innovative solutions for social development through student ideas and other technologies for agriculture, rural development, sanitation, health, women and child development, biotechnology and medical innovation.

10. 100 million for 100 million It is a campaign launched by Nobel laureate Kailash Satyarthi.

It targets 100 million youth, whose idealism, energy and enthusiasm would help liberate the 100 million children shackled in slavery and poverty across the world.

11. Akodara becomes India’s first Digital Village

Akodara village in Sabarkantha district of Gujarat has earned the coveted tag of becoming India’s first digital village.

The village was adopted by ICICI Bank under its Digital Village Project in 2015 and made cashless by adopting digital technology.



NOTES 12. Geographical Indication (GI)

Kerala’s Nilambur teak was added to the list of Kerala produces with the Geographical Indication (GI) tag.

Nilambur was christened the Mecca of Teak. Due to its superior mechanical and physical properties as well as aesthetic appearance, the teak was exported to England and other parts of the world.

Produces from Kerala with GI tag: Pokkali rice, Vazhakulam Pineapple, Tirur Betel vine, Wayanadan rice varieties Jeerakasala and Gandhakasala, Central Travancore Jaggery and Chengalikodan Nendran, a banana variety.

About Geographical Indication (GI): o GI tag is an insignia on products having a unique geographical origin and

evolution over centuries with regards to its special quality or reputation attributes.

o The status to the products marks its authenticity and ensures that registered authorised users are allowed to use the popular product name.

Benefits of GI Status: o Legal protection to the products. o Prevents unauthorised use of GI tag products by others. o Helps consumers to get quality products of desired traits. o Promotes economic prosperity of producers of GI tag goods by enhancing

their demand in national and international markets.

Legal Authorities associated with GI: It is covered as an element of intellectual property rights (IPRs) under the Paris Convention for the Protection of Industrial Property.

At international level, GI is governed by World Trade Organisation’s (WTO’s) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

In India, GI registration is governed by the Geographical Indications of goods (Registration and Protection) Act, 1999 which came into force in September 2003.

This Act is administered by the Controller General of Patents, Designs and Trade Marks, who is also the Registrar of Geographical Indications.

Darjeeling tea was the first product to accorded with GI tag in India.



NOTES Highlights of Economic Survey 2016-17

The survey was prepared by the Finance Ministry's Chief Economic Adviser Arvind Subramanian.

Growth

2017/18 GDP growth seen between 6.75 and 7.5 per cent year on year.

GDP growth rate at constant market prices for the current year 2016/17 is placed at 7.1 per cent.

The federal statistics office's estimate of 7.1 per cent growth for 2016/17 likely to be revised downwards.

Service sector is estimated to grow at 8.9 per cent in 2016/17.

Industrial growth rate expected to moderate to 5.2 per cent in 2016/17 from 7.4 per cent in 2015/16.

Fiscal Deficit

Implementation of wage hike, muted tax receipts to put pressure on fiscal deficit in 2017/18.

Need for fiscal prudence for both centre and states for fiscal health of the economy.

Fiscal windfall from low oil prices to disappear in 2017/18. Monetary Policy

Sharp rise in prices in 2017/18 may cap monetary easing headroom.

Market interest rates seen lower in 2017/18 due to demonetisation. Government debt

Government debt to GDP ratio in 2016 seen at 68.5 per cent down from 69.1 per cent in 2015.

Demonetisation

Remonetisation will ensure that the cash squeeze is eliminated by April 2017.

Supply of currency should follow actual demand and not be dictated by official estimate of desirable demand.

Government windfall arising from unreturned notes should be deployed towards capital spending.

Banks

Suggests setting up public sector asset rehabilitation agency to take charge of large bad loans in banks.

Central agency with government backing could overcome coordination and political issues on bad loans.

Taxation

Income tax rates and real estate stamp duties could be reduced.

Timetable for reducing corporate tax rate could be accelerated. Universal basic income

Universal Basic Income (UBI) proposal a powerful idea, but not ready for implementation.

UBI an alternative to plethora of state subsidies for poverty alleviation.

UBI would cost between 4 and 5 per cent of GDP.



NOTES Highlights of Budget 2017-18

Demonetisation

Demonetisation is expected to have a transient impact on the economy.

Demonetisation is a bold and decisive measure that will lead to higher GDP growth.

The effects of demonetisation will not spillover to the next fiscal. Agriculture sector

A sum of Rs. 10 lakh crore is allocated as credit to farmers, with 60 days interest waiver.

NABARD fund will be increased to Rs. 40,000 crore.

Government will set up mini labs in Krishi Vigyan Kendras for soil testing.

A dedicated micro irrigation fund will be set up for NABARD with Rs 5,000 crore initial corpus.

Dairy processing infrastructure fund will be initially created with a corpus of Rs. 2000 crore.

A model law on contract farming will be prepared and shared with the States. Rural population

The government targets to bring 1 crore households out of poverty by 2019.

During 2017-18, five lakh farm ponds will be taken up under the MGNREGA.

Over Rs 3 lakh crore will be spent for rural India. MGNREGA to double farmers' income.

Will take steps to ensure participation of women in MGNREGA up to 55%.

Space technology will be used in a big way to ensure MGNREGA works.

The country well on way to achieve 100% rural electrification by March 2018.

Swachh Bharat mission has made tremendous progress; sanitation coverage has gone up from 42% in Oct 13 to 60% now.

For youth

Will introduce a system of measuring annual learning outcomes and come out with an innovation fund for secondary education.

Skill India mission was launched to maximise potential. Will set up 100 India International centres across the country.

For the poor and underprivileged health care

Rs. 500 crore allocated for Mahila Shakthi Kendras. o These kendras will provide one stop convergent support services for

empowering rural women with opportunities for skill development, employment, health, nutrition and digital literacy.

Under a nationwide scheme for pregnant women, Rs. 6000 will be transferred to each person.

A sum of Rs. 1,84,632 crore allocated for women and children.

Affordable housing will be given infrastructure status.

Owing to surplus liquidity, banks have started reducing lending rates for housing.

Elimination of tuberculosis by 2025 targeted.

Health sub centres, numbering 1.5 lakh, willl be transformed into health wellness centres.

Two AIIMS will be set up in Jharkhand and Gujarat.

Will undertake structural transformation of the regulatory framework for medical education.

Aadhaar-based smartcards will be issued to senior citizens to monitor health. Infrastructure and railways

No service charge on tickets booked through IRCTC.



NOTES Raksha coach with a corpus of Rs. 1 lakh crore for five years (for passenger safety).

Unmanned level crossings will be eliminated by 2020.

3,500 km of railway lines to be commissioned this year up from 2,800 km last year.

SMS-based ''clean my coach service'' is put in place.

Coach mitra facility will be introduced to register all coach related complaints.

By 2019 all trains will have bio-toilets.

Five-hundred stations will be made differently-abled friendly.

Rs. 64,000 crore allocated for highways.

High speed Internet to be allocated to 1,50,000 gram panchayats.

New Metro rail policy will be announced with new modes of financing. Energy sector

A strategic policy for crude reserves will be set up.

Rs. 1.26,000 crore received as energy production based investments.

Trade infra export scheme will be launched 2017-18. Financial sector

FDI policy reforms - more than 90% of FDI inflows are now automated.

Shares of Railway PSE like IRCTC will be listed on stock exchanges.

Foreign Investment Promotion Board will be abolished.

Computer emergency response team for financial sector will be formed.

Pradhan Mantri Mudra Yojana lending target fixed at Rs 2.44 lakh crore for 2017-18.

Digital India - BHIM app will unleash mobile phone revolution. The government will introduce two schemes to promote BHIM App - referral bonus for the users and cash back for the traders.

Negotiable Instruments Act might be amended.

DBT to LPG consumers, Chandigarh is kerosene-free, 84 government schemes are on the DBT platform.

Head post office as the central office for rendering passport service.

Easy online booking system for Army and other defence personnel. Fiscal situation

Total expenditure is Rs. 21, 47,000 crore.

Plan, non-plan expenditure is abolished; focus will be on capital expenditure, which will be 25.4 %.

Expenditure for science and technology is Rs. 37,435 crore.

Total resources transferred to States and Union Territories is Rs 4.11 lakh crore.

Recommended 3% fiscal deficit for three years with a deviation of 0.5% of the GDP.

Revenue deficit is 1.9 %

Fiscal deficit of 2017-18 pegged at 3.2% of the GDP. Will remain committed to achieving 3% in the next year.

Funding of political parties

The maximum amount of cash donation for a political party will be Rs. 2,000 from any one source.

Political parties will be entitled to receive donations by cheque or digital mode from donors.

An amendment is being proposed to the RBI Act to enable issuance of electoral bonds. A donor can purchase these bonds from banks or post offices through cheque or digital transactions. They can be redeemed only by registered political parties.

Tax proposals

India’s tax to GDP ratio is not favourable.

Out of 13.14 lakh registered companies, only 5.97 lakh firms have filed returns for



NOTES 2016-17.

Proportion of direct tax to indirect tax is not optimal.

Out of 76 lakh individual assessees declaring income more than Rs. 5 lakh, 56 lakh are salaried.

Only 1.72 lakh people showed income of more than Rs. 50 lakh a year.

Rate of growth of advance tax in Personal I-T is 34.8% in the last three quarters of this financial year.

Proposal to have a carry-forward of MAT for 15 years.

Capital gains tax to be exempted for persons holding land from which land was pooled for creation of the state capital of Andhra Pradesh.

Under the corporate tax, in order to make MSME companies more viable, there is a proposal to reduce tax for small companies with a turnover of up to Rs 50 crore to 25%. About 67 lakh companies fall in this category. Ninety-six % of companies to get this benefit.

The government proposes to reduce basic customs duty for LNG to 2.5% from 5%.

The Income Tax Act to be amended to ensure that no transaction above Rs 3 lakh is permitted in cash.

The limit of cash donation by charitable trusts is reduced to Rs 2,000 from Rs 10,000. Personal income tax

Existing rate of tax for individuals between Rs. 2.5- Rs 5 lakh is reduced to 5% from 10%.

All other categories of tax payers in subsequent brackets will get a benefit of Rs 12,500.

Simple one page return for people with an annual income of Rs. 5 lakh other than business income.

People filing I-T returns for the first time will not come under any government scrutiny.

Tourism Sector

The Union Budget 2017-18 has announced that Government will set up five Special Tourism Zones in partnership with States.

To boost the image of India in the international travel market Incredible India 2.0 Campaign will be unveiled across the world in the financial year 2017-18.

Integrated Development of Tourist Circuits around specific themes under Swadesh Darshan scheme.

100 crore has been allocated for Pilgrimage Rejuvenation and Spiritual Augmentation Drive (PRASAD).

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