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Economic Survey 2015 Summary
Economic Survey 2015 Summary
A difficult phase in Indian fiscal history began with Lehman crisis of 2008. The fiscal
deficit increased by 4%, which was equally shared between reduction in revenue
due to large indirect tax cuts and rise in expenditures. In the initial years (20092011), current expenditures (public consumption) increased dramatically due to
rising subsidy bill (1% of GDP), increase in pay and allowances after the
implementation of 6th Pay Commission recommendation (0.4% of GDP) and social
benefit entitlements like MNREGA (0.3% of GDP).
Hence as a mid-term strategy Govt should focus on reducing the fiscal
deficit to 3% and eliminating the revenue deficit as per the FRBM Act. This is
essential for ensuring the credibility of the nation and also to bring India closer to its
emerging market peers. The adherence to fiscal in the mid-term is necessary
because the Govt come and go, but as a nation we need to instill confidence and
certainty in the mind of investor and this would not be possible if we keep changing
the targets of FRBM frequently. Govt should also reverse the trend of revenue deficit
and move towards the golden rule of 0% revenue deficit and ensuring that
borrowing is only for capital formation.
The above reduction in fiscal deficit should come through
rationalization of expenditure and switching of expenditure from consumption (via
rationalization of subsidies) to investment. This switch will be beneficial in the long
run by reigning in inflationary tendencies because investment will add to the
capacity and boost the supply side of economy.
Also, it is expected with the picking up of growth and implementation of
GST when combined with expenditure control will help us meet the fiscal target.
According to the history of growth surge in last decade, it is expected that after
implementation of GST and growth in economy, more tax revenue will be generated
for the govt due to tax buoyancy.
have connection bottom quintile of the household use only 10% of the
subsidy whereas top quintile uses 37% of the subsidy bill because rich
household consume more power due to their better lifestyle. Similarly,
bottom 50% of household use only 25% of LPG subsidy. Another example
would be the cross subsidization of railway fares in India. It benefits more the
rich household because bottom 80% of the household constitutes only 28% of
the total originating passengers.
2. Price Subsidies Distort the Market which ultimately hurt the poor In a free
market economy price plays a very important role in the resource allocation.
A subsidy in the price affects the decision making of the producer and
consumer resulting in misallocation of the resources and their suboptimal
usage. This ultimately dampens the aggregate productive and thus hurt the
poor. For Example:
Due to higher MSP offered for the rice and wheat, farmers resort to overcultivation of cereals and under-cultivation of non-MSP supported crops. This
demand and supply gap in non-MSP supported crops give rise to food inflation
which hurt the poor most because they tend to have uncertain income
streams and do not have the capability to withstand inflationary spikes.
Similarly subsidy in water leads to cultivation of water-intensive crops,
irrespective of the agro-ecological region, resulting in lowering of the water
table. Marginalized farmers without the infrastructure for irrigation are thus
hurt in the long run.
Similarly, due to high price elasticity of the poor farmer in fertilizer
consumption, fertilizer subsidy is more beneficial for the fertilizer producer
and rich farmer who are less elastic to the price. Also since price of fertilizer
is controlled, it offers no incentive to producer to supply fertilizer to remote
areas. Remote geographical locations are already economically poor and in
absence of agricultural inputs they are bound to remain poor in perpetuity. To
correct this anomaly Govt of India introduced freight subsidy for fertilizer
transportation but that is insufficient as railway freight rates are already very
high due to cross subsidization. This is how multiple subsidies sometimes
interact and hurt the poor.
Indian railway passenger fares are highly cross
subsidized due to which freight tariffs are one of the highest in the world. This
reduces the competitiveness of the Indian manufacturing and raises the cost
of manufactured goods. Also this leads to switching over of freight traffic from
railways to road transport adding to the problems like pollution, road
congestion, road accidents etc. This ultimately hurt the economy and mostly
the poor.
3. Structure of subsidy is extremely complex The implementation of subsidy is
extremely complex giving opportunity for corruption and making the market
highly inefficient. For example, in case of fertilizer they are firm specific and
import consignment specific, sometimes based on fixed quantity basis or
variable quantity and sometimes based on kind of fertilizer.
4. Large Scale leakage in the subsidy platform For example only 46% of the
distributed kerosene reaches the poor household, rest all is consumed in the
black market either for adulteration for petrol and diesel or as a fuel in small
businesses.
Above reason make it necessary for the Govt to rationalize the subsidy. The
rationalization of subsidy should not be seen as anti-poor. As already mentioned the
subsidy are regressive in nature and distort the market which hurt the poor. Also
leakage in the system reduces the effectiveness of the subsidy program. In fact with
the rationalization of subsidy Govt will be able to enhance its fiscal space which can
used in the social sector welfare schemes.
Transferring the subsidies directly in
cash form is an alternative to rationalize the subsidy program. With the growth of IT
and communication services it has become possible for the government to
implement direct transfer of subsidies. Direct transfer of subsidies offer various
benefits like
-
Govt does not intend to eliminate the subsidy but want to provide the support in
another form. The JAM trinity Jan Dhan Yojana, Aadhar and Mobile number allows
the Govt to offer support in a targeted and less distortive manner.
Scope of JAM
As of December 2014, 720 mio Aadhar cards have already been issued and with the
current subscription rate it is expected that by the end of 2015 it will cross 1 bio
mark.
Govt has launched the Jan Dhan Yojana
under which each poor household is provided with zero balance bank account and a
RuPay card. This enables the financial inclusion of the poor and greatly enhances
the capability of the govt to provide other financial services like insurance and
pension coverage. Linking the bank account with the Aadhar number is the
prerequisite for the transfer of subsidies and to this effect already 100 mio bank
accounts have been seeded with Aadhar number.
Two other viable alternatives for financial delivery are mobile money
and post office transfers. India has close to 900 mio plus mobile phone users with
600 mio unique subscribers. Moreover 370 mio of mobile phone users are based in
rural areas. Mobile thus offers are very viable solution to last mile connectivity.
Given Aadhar card number already having mobile number as one of the information
and phone operators showing interest in payment banks floated by RBI, mobile
money offers tremendous opportunity for the cash subsidy transfer.
India has a vast network of roughly 1.55 lakh post-offices with nearly
90% of them in rural areas. They have already earned the reputation and
experience of working in the remotest of the area which banks do not find
economically viable to open a branch. Thus, post-office could act as payment
transfer or regular bank if allowed by the RBI. They can register through an IFSC
code and open bank account linked with the Aadhar number.
Story of Indias stalled projects and way out for troubled PPP
As per the Economic survey India has close to 7% of GDP (8.8 lakh crore) worth of
projects pending in the public and private due to different reason. The situation has
improved a bit from last year when around 8.3% of GDP worth of projects was
stalled. An analysis of the same would give us better understanding why projects
are stalled.
Out of 8.8 lakh crore, 7 lakh crore are in the private sector and 1.8 lakh
crore in the public sector. Hence overwhelmingly large numbers of projects are
stalled in the private sector. Private projects are held up on account of poor market
conditions and non-regulatory factors contrary to the general perception of lack of
governmental clearances. Whereas majority of the public projects are stalled due to
absence of regulatory clearances. In private sector mainly manufacturing and
infrastructure projects and in public sector mainly infrastructure projects are stuck.
Manufacturing is stifled due to poor macro-economic environment.
With poor growth in demand from USA, Greece crisis in EU, slowing down of China
etc demand has decreased.
On the other hand electricity sector projects are hauled up due to lack of fuel
and feedstock problem. Coal India has not been able to provide raw material as per
its commitment in Fuel Supply Agreement. Production of coal has almost stagnated
in last 3-4 years.
to provide credit and new projects are not able to attract new bidders as seen in
NHAI bids. Also pension and insurance sector are reluctant to invest in infrastructure
due to inherent risk in the projects. The PPP projects are struggling for a variety of
reason dealing with the poorly designed framework, namely:
1. More focus on Revenue: Existing projects focus excessively on the revenue
earned by the Govt rather than the provision of services for the customer.
This leads to higher payment by the user for a sub-optimal service.
2. Misallocation of Risk: The risk of the projects are severely misallocated and
given to the parties who are not able to manage it. For Ex Traffic risks are
borne by the developer in the highway project when clearly traffic is not
under the control of developer.
3. Lack of Renegotiation avenues: There are no ex-ante structures for
renegotiation. There is no incentive for a bureaucrat to renegotiate a stalled
project in fact if done it can open the doors for charges of graft against the
bureaucrat. The structure asymmetrically favours failure of the projects over
renegotiation.
4. Excessive Overbidding: Contractors have relentlessly relied on excessive
overbidding to get the project and then exploit loopholes in the framework
through litigation at the later date to revise the contract.
5. Limited Penalties: The source of revenue for the projects is mostly user
collected charges. In case of gap between the revenue stream and project
cost Govt provides viability gap funding to make the project viable. This is
provided at the start of the project. Later even in the case of
underperformance or non-performance of the project Govt can only rely on
the termination of the contractor.
Thirdly, financing structure should attract the pension and insurance funds because
they have the capability to fund long term infrastructure projects. At the same time
Govt should also focus on building up the corporate bond market.
BANKING
Status of the Banking Sector in India
Currently banking sector of India is struggling with many problems like high
proportion of stressed assets, NPAs, difficulty in acquiring resources to meet the
BASEL 3 requirement and the need for Governance reform (PJ Nayak Committee
Reform). These are comparatively new problems but there are other problems which
have existed for long and are related to the policy and structure of the banking
industry in India.
Financial Repression: This reflects the policy challenge faced by the Indian banks.
The Indian financial system is afflicted with double financial repression. On the
assets side of the balance sheet this is caused by the SLR requirement that forces
the bank to hold government securities and priority sector lending that forces suboptimal allocation of financial resources. Financial repression on the liability side
arises from the high inflation from 2007 onwards which has led to negative real
interest rates and hence fall in household savings.
Structural Problem: This relates to the lack of competition and ownership. Lack of
increase in presence of private sector banks shows the lack of competition in the
market. The biggest anomaly is during the high growth phase of last decade which
was achieved by the private sector growth and investment was funded by the public
sector and the private sector banks growth was close to stagnant. So India
witnessed a growth led by private sector which was not funded by the private sector
banks.
How to deal with these problems?
SLR Reduction and its benefits
SLR has long history and has been started around in 1970s. Earlier they were
around 38% in the period before 1991 and later declined to close to 25%. Over the
years SLR has become the source of cheap financing for the Govts fiscal deficit and
hence reduction highly depends on the Govts fiscal position.
SLR is a form of financial repression in which government consumes the
public savings at the cost of private sector. Recently RBI has reduced the in steps
from 25% to 21.5%. With the projected growth of India in the coming years, reigning
in of the inflation and improvement of debt outstanding for India from 80% to 60%
offers a unique opportunity to further pursue reduction in SLR. Although the
reduction in SLR would lead to Govts cost of loan going up but with lowering of
inflation real interest would also come down negating the effect of increase due to
SLR.
Another benefit of SLR is that it offers the opportunity to the banks to
meet their recapitalization target for BASEL 3. With the reduction in the interest
rates, G-Secs have gone capital appreciation and banks can offload, if SLR reduction
is allowed, and use the capital gain for meeting the capital requirements under
BASEL 3.
SLR requirement has prevented the development and deepening of the
G-Secs market which in turn have hampered the growth of corporate bond market.
Corporate bond market is the need of the hour for the alternative financing of the
financially starved infrastructure projects.
Also the freed up capital due to reduction of SLR would create more
space in the balance sheet for the disbursement of the capital leading to higher
investment and growth
Rationalization of Priority Sector Lending
Govt has over the year tried to alleviate poverty and achieve inclusive growth
through equality of credit via priority sector lending scheme. Under the scheme it is
mandatory for the domestic public and private sector banks to disburse 40% of their
adjusted net bank credit in the pre-defined priority sectors like agriculture, housing
etc. For foreign banks with more than 20 branches in India they have to disburse
32%. Although scheme seems to be targeted approach of growth which is necessary
for inclusive growth but it is suffering from many problems. For example lets take
the example of agriculture sector:
-
Over the years credit to agriculture has increased tremendously. In fact in last
15 years it has grown 8 times in nominal terms and yet the contribution of
agriculture to GDP remains roughly same. This highlights that the allocation
of credit is not being used efficiently and has not resulted in growth of
agriculture.
There has been sharp increase in the large size loans highlighting the fact PSL
is being appropriated by the large and wealthy farmers.
The outstanding and defaulted loans against the credit made in agricultural
sector are mainly from urban and metropolitan areas. So the rich farmers are
defaulting more than the poor farmers. Also this highlights that the loan
waiver benefits more to rich farmer than the poor farmer.
There has been sharp decrease in disbursement of long term credit from 70%
in 1990-91 to 40% in 2011-12 which shows that credit is not being used for
asset creation which was the intended purpose of PSL.
March Rush - Disbursal of credit is concentrated around the last 4 months of
fiscal year. This is not the agriculture season when farmers need the credit.
This show the loans are disbursed inefficiently towards the end of year just to
meet the annual target.
Railways
IMF in its World Economic Report has highlighted the benefits of public investment
in infrastructure. In the short run it boosts aggregate demand and crown in the
private investment. In the long run, it adds to the capacity and check the inflation
by boosting the supply side. To boost the growth of Indian economy Govt of India
has selected railway as one of the avenue for public investment.
Issues?
Railway is closely linked with the other sectors of Indian economy like
manufacturing, tourism, transportation etc. Investment in railways has positive
spillover effect in terms of reduction of cost, boost agglomeration economies and
improve the competitiveness of the economy.
Over the years investment in railways has remained almost stagnant. The
consequences of the under investment:
-
APMC
With the liberalisation of economy in 1991 industrial sector was allowed to buy and
sell on their own choice but the agriculture sector has still not seen the benefits of
the same. Indian farmers, in many states, still have to sell their produce to APMC
licensed entities. A national market for agricultural produce has still not emerged.
The APMC act was passed with the dual intention of preventing exploitation of
farmers by traders and making sure they get the right price for their produce.
In the early years after independence, the farmers had to deal with money lenders.
Lack of credit sources and supply alternatives, the farmer had to sell his produce
to money lenders at the latters whims and fancies. The money lender also fixed
its selling price arbitrarily. Thus both the farmer and consumers were at loss.
In order to tackle this APMC Act was brought so as to regulate the market for
Agricultural Produce, mainly fruits and vegetables. Although other items were also
there. In this system every state setup its APMC i.e. Agricultural Produce Marketing
Committee. The role of it was similar to what FCI does in food grains. APMC procures
the fruits and vegetables of farmers and regulates its sale in regulated markets.
This system was successful in eliminating the dependency of farmers on money
lenders. But another type of spoil system developed. The middlemen i.e.
contractors, commission agents, suppliers, transporters etc have made a mockery
of the intended process. The result is large cartels among them. New entrants
find it extremely difficult to compete and negotiate so as sustain in this business.
Also the APMC staff is often found indulging in corrupt practices, thus neglecting this
foul system.
The provisions and issues with the act
1) Membership the act provides for timely elections for the membership of the
marketing committees. But, hardly any elections take place, thus run mostly by
bureaucrats. Hence red tapism and nepotism prevails.
2) License to traders to trade in the market yards, traders have to acquire a
license according to the act. But, in most states the issuing of new licenses has
come to a halt, thereby reducing competition and making it easier for the
established traders to exploit farmers.
3) Double commission by traders the traders buy from the farmers at a low
price, makes commission there. They sell to the consumers at a high price, earn
commission there. Thus, the customer and farmer are both affected.
4) Politicization There has been perception that the position of head of the
market committee at the state level and market board are occupied by political
influential. Licensed agents enjoy close relationship with these politicians and enjoy
monopoly power and hence lead to cartelization.
5) Monopoly of trader - Due to the act farmers are not allowed to sell their
produce in other markets like retail chains, exporters which are ready to offer better
prices saved from eliminating the middle man. This creates artificial monopoly of
the traders and act needs reform to remove the barrier entry for other players
6) Multiple Fees APMC levy multiple fees that are of substantial magnitude and
are non-transparent in nature. Such high level of taxes at the entry level has
cascading effects on the prices of the commodity.
7) Lack of Infrastructure Although the fees are collected like a tax but they
dont go to the state exchequer and does not require the approval of the state for
spending. This generates scope for corruption and it has been observed that the
proceeds are not invested properly and hence APMC mandis lack state of the art
infrastructure.
These and several other procedural and structural loopholes have led to increased
prices for customers. Leading to food inflation, lower savings and as a result
adversely affecting the whole economy. For the farmers, the price received for the
produce is low, reducing their spending power, as a result no expenditure on
improving farm productivity or education, health etc. which is vital for improving
their quality of life.
Though the model APMC act of 2003 seeks to address these issues by providing for
contract farming, expansion of licenses and provision of e-services to make market
yards more accountable and transparent. But, only 14 states have adopted the
act and the traders have become a powerful lobby preventing any reforms.
Thus, it is imperative that the states adopt the act and reform the marketing system
at the earliest.
Salient Features of the APMC Model Act 2003:
1. Creation of alternative market Model act provides for direct sale of produce
through contract farming. It also permits for setting up of specialized markets
Tax Reforms
GST
Introduction of the GST would be the biggest financial reform after Independence.
By subsuming a large number of indirect taxes into a single tax it would mitigate
cascading or double taxation in a major way and pave the way for common national
market. From the consumers point of view it would lessen the tax burden on goods
and from the Govts point of view due to transparent characteristic of GST it would
be easier to administer. It also makes perfect economic sense because introduction
of GST is expected to spur economic growth and make Indian goods competitive in
Indian and international markets.
Details of the GST Bill
1. GST would be applicable on the supply of goods or services as opposed to the
current practice of manufacture or on sale of goods or provision of services.
2. GST would be a destination based tax as opposed to the origin based tax i.e.
the tax would be levied at the point where sale is made rather than at the
point where production is done. Thats why many of the manufacturing states
like Gujarat were opposing it as it led to loss of their tax revenue. As a
compromise for the manufacturing states a non-vatable additional tax not
exceeding 1% would be levied by the centre and retained by the origin state
on inter-state supply of goods. This would be done at least for a period of 2
years. [Inter-state taxes have been the biggest source of nuisance in the tax
structure. They have created an opportunity of arbitrage for the marketers
and hence fostered wide scale corruption and tax avoidance and evasion.
3.
4.
5.
6.
7.
AGRICULTURE
Factors causing moderation in inflation:
-
Drop in the price of crude due to weak global demand and competition
generated by shale gas production in US
Softness in the prices of commodities especially edibles and coal
Tight monetary policy followed by the RBI resulting in the moderation of
demand
Rupee has been stable for last 1 year compared to other emerging peers.
This has stabilized the import prices and hence helped in reducing the
inflation
Moderation in wage growth rate specifically in rural areas has reduced the
demand of protein based items.
Base effect also contributed to the decline in headline inflation.
Extra allocation of 5 mio tonnes of rice to BPL and APL families in the state
pending the implementation of the National Food Security Act and allocation
of 10 mio tonnes of wheat for the open domestic market sale by FCI
Suggestion to the states to delist vegetables and fruits from the APMC. This
allowed free movement and sale of fruits and vegetables.
Bringing onion and potatoes under the purview of the Essential commodities
act. This gave state the power to define the stock limit to deal with the
cartelization and hoarding and making violation of stock a non-bailable
offence.
Moderation in the increase of MSPs and also creating disincentive for states
giving bonus on top of MSP by FCI not procuring grain from those states.
India is a highly diverse country with different soil and climatic zones,
requiring different and customized farm machinery.
Size of land holding in India is very small in India making use machinery
unviable.
Mechanization is capital intensive and due to lack of availability of credit
mechanization process has been hampered. Less than 3% of the agricultural
credit flow to mechanization.
Over the years credit to agriculture has increased tremendously. In fact in last
15 years it has grown 8 times in nominal terms and yet the contribution of
agriculture to GDP remains roughly same. This highlights that the allocation
of credit is not being used efficiently and has not resulted in growth of
agriculture.
There has been sharp increase in the large size loans highlighting the fact PSL
is being appropriated by the large and wealthy farmers.
The outstanding and defaulted loans against the credit made in agricultural
sector are mainly from urban and metropolitan areas. So the rich farmers are
defaulting more than the poor farmers. Also this highlights that the loan
waiver benefits more to rich farmer than the poor farmer.
There has been sharp decrease in disbursement of long term credit from 70%
in 1990-91 to 40% in 2011-12 which shows that credit is not being used for
asset creation which was the intended purpose of PSL.
March Rush - Disbursal of credit is concentrated around the last 4 months of
fiscal year. This is not the agriculture season when farmers need the credit.
This show the loans are disbursed inefficiently towards the end of year just to
meet the annual target.
4. IRRIGATION
Accelerated Irrigation Benefit Program.
Command Area Development Program CADP has been amalgamated with
the AIBP to reduce the gap between irrigation potential that has been created
and that is utilized.
5. SEEDS
The efficacy of all other inputs like fertilizer, irrigation etc is dependent and
greatly enhanced by the quality of seeds. It has been estimated that quality
of seeds accounts for 20-25% of productivity. We have enough quantity of
certified seeds for the cereals like rice and wheat but we have shortage of
quality seeds in pulses, soyabean, pea, potato etc. Since we are heavily
Sub Scheme
NHM
Target
group
/
area
of
operation
All states & UTs except states in
2.
HMNEH
3.
4.
NBM
NHB
Region.
All states & UTs
All states & UTs focusing on
5.
CDB
commercial horticulture
All States and UTs where coconut
6.
CIH
is grown.
NE states, focusing on HRD and
capacity building.
Special Provisions:
-
Gokul Gram will act as Centres for development of Indigenous Breeds and a
dependable source for supply of high genetic breeding stock to the farmers in
the breeding tract. The Gokul Gram will be self-sustaining and will generate
economic resources from sale of A2 milk, organic manure, vermi-composting,
urine distillates, and production of electricity from bio gas for in house consumption
and sale of animal products. The Gokul Gram will also function as state of the art in
situ training centre for Farmers, Breeders and MAITRIs.
----------- -------------- -------------- -------------- -------------- --------------- ----------------------------- -------------National Livestock Mission
With the rise in wage rate in rural areas demand for protein based food has gone up
fueling the inflation. To ensure a sustainable growth of the sector Govt of India has
launched a National Livestock Mission. The sector focuses on improving the
livestock production through quality feed and fodder, health care facilities, risk
coverage, effective extension and improved flow of credit.
Four sub-missions with in the NLM are:
1. Sub-Mission on Livestock Development - Includes activities to address the
concerns for overall development of livestock species including poultry, other
than cattle and buffalo, with a holistic approach.
2. Sub-Mission on Feed and Fodder Development - Designed to address the
problems of scarcity of animal feed and fodder resources. Scheme would
focus on improving the production and productivity of feed and fodder
through adoption of better technologies suited to the agro-climatic zones in
both arable and non-arable areas.
3. Sub-Mission on Skill Development, Technology Transfer and Extension The
extension services do not ensure last mile connectivity and technologies
developed in research institutes are not spread effectively to the farmers. The
mission would provide a platform for the dissemination of technology
developed to the farmers. It would ensure skill development of the farmers
with frontline field demonstration and direct engagement with the
researchers.
Food Management
Shanta Kumar Committee Report
Below is a summary of major recommendations of HLC keeping in mind how
procurement benefits can reach larger number of farmers; how PDS system can be
re-oriented to give better deal to economically vulnerable consumers at a lower cost
and in a financially sustainable manner; and finally how stocking and movement
operations can be made more efficient and cost effective in not only feeding PDS
but also in stabilizing grain markets.
1. On procurement related issues
- Transfer procurement operation to states and should focus only on
deficit states -> HLC recommends that FCI hand over all procurement
operations of wheat, paddy and rice to states that have gained sufficient
experience in this regard and have created reasonable infrastructure for
procurement. (AP, CG, Haryana, MP, Odisha and Punjab). FCI will accept only
the surplus (after deducting the needs of the states under NFSA) from these
state governments (not millers) to be moved to deficit states. FCI should
move on to help those states where farmers suffer from distress sales at
prices much below MSP, and which are dominated by small holdings, like
Eastern Uttar Pradesh, Bihar, West Bengal, Assam etc. This is the belt from
where second green revolution is expected, and where FCI needs to be proactive providing benefits of MSP and procurement to larger number of
farmers, especially small and marginal ones.
-
Check Distress sales and Use NWRs -> Negotiable warehouse receipt
system (NWRs) should be taken up on priority and scaled up quickly. Under
this system, farmers can deposit their produce to the registered warehouses,
and get say 80 percent advance from banks against their produce valued at
MSP. They can sell later when they feel prices are good for them. This will
bring back the private sector, reduce massively the costs of storage to the
government, and be more compatible with a market economy. GoI (through
FCI and Warehousing Development Regulatory Authority (WDRA)) can
encourage building of these warehouses with better technology, and keep an
on-line track of grain stocks with them on daily/weekly basis. In due course,
GoI can explore whether this system can be used to compensate the farmers
in case of market prices falling below MSP without physically handling large
quantities of grain.
-
practices. HLC's calculations reveal that it can save the exchequer more than
Rs 30,000 crores annually, and still giving better deal to consumers. Cash
transfers can be indexed with overall price level to protect the amount of real
income transfers, given in the name of lady of the house, and routed through
Prime Minister's Jan-Dhan Yojana (PMJDY) and dovetailing Aadhaar and Unique
Identification (UID) number. This will empower the consumers, plug high
leakages in PDS, save resources, and it can be rolled out over the next 2-3
years.
surplus stocks than buffer norms. Greater flexibility to FCI with business
orientation to operate in OMSS and export markets is needed.
Govt of India has taken several steps to boost industrial growth (remember to make
notes in detail under respective heads):
1. Ease of doing business
2. Make in India
3. E-Biz Project Under the project Govt is setting up a G2B portal for one stop
shop for delivery of services to businessmen. The project will provide services
from the inception over the entire life cycle of the business.
4. Skill Development
5. Streamlining Environment and Forest Clearances Process for online
submission of applications for environment, coastal regulation zone and
forest clearances have been started. The decision making has been
decentralized to a great extent to the state level strengthening federalism as
well as speeding up the decision making.
6. Labour Sector Reforms
with the states to allow local participation and decentralized planning and
implementation.
4. Boost to Exploration: The establishment of National Mineral Exploration Trust
has been proposed for the purpose of regional and detailed exploration. Trust
will be funded by an additional levy of not exceeding 2%.
5. Easy Transferability to encourage private players: To promote private players
and latest technology to be used, mining rights will be allowed to be
transferred easily.
6. Deterrents against illegal mining: Stricter fines and punishment
imprisonment up to 5 year or fine up to Rs 5 lakh per hectare of the area.