Raus Compass 2022 Economic Survey

CONTENTS
PREFACE OF BUDGET & ECONOMIC SURVEY 01 ►MILLETS 10
►WATER RELATED INITIATIVES 12
►MSME RELATED 13
PART-A: ►SKILL DEVELOPMENT 14
BUDGET 2022-23 ►EDUCATION 14
►HEALTH 14
►WOMEN EMPOWERMENT 15
Section-1 ►HOUSING FOR ALL 15
►PM DevINE 15
BASICS OF BUDGET ►ASPIRATIONAL BLOCKS PROGRAM 15
►VIBRANT VILLAGES PROGRAM 15

03 ►POST-OFFICE BANK 16
►FISCAL RESPONSIBILITY AND BUDGET MANAGEMENT ►DIGITAL BANKING UNITS 16

ACT, 2003 04
THEME-3: PRODUCTIVITY ENHANCEMENT &

INVESTMENT, SUNRISE OPPORTUNITIES,
Section-2 ENERGY TRANSITION AND CLIMATE ACTION
16
Context of Budget ►EASE OF DOING BUSINESS 2.0 & EASE OF LIVING 16
►e-PASSPORT 16
06 ►GREEN CLEARANCES 17
►URBAN DEVELOPMENT 17
THEME-1: PM GATI SHAKTI 06
►ENERGY TRANSITION AND CLIMATE ACTION 17
►PM GATI SHAKTI 06
►SOLAR POWER 18
►ROAD TRANSPORT 08
►CIRCULAR ECONOMY 18
►LOGISTICS SECTORS 08
►TRANSITION TO CARBON NEUTRAL ECONOMY 18
►RAILWAYS 08
►ENERGY EFFICIENCY IN INDIA 19
►KAVACH 08
►CLEAN & SUSTAINABLE MOBILITY 19
►MASS URBAN TRANSPORT (METRO SYSTEMS) 09
►BATTERY SWAPPING POLICY 19
►NATIONAL ROPEWAYS DEVELOPMENT PROGRAM (NRDP)
09 ►LAND RECORDS MANAGEMENT 19
►CAPACITY BUILDING FOR INFRASTRUCTURE PROJECTS ►EXPORT PROMOTION (SEZs) 20

09 ►SPECIAL ECONOMIC ZONES 20
►CAPACITY BUILDING COMMISSION 09 ►GOVERNMENT PROCUREMENT 22
►SURETY BONDS 23
THEME-2: INCLUSIVE DEVELOPMENT 10 ►CORPORATE EXIT 23
►AGRICULTURE 10 ►TELECOM SECTOR 24
►COMPARISON BETWEEN ORGANIC AND NATURAL ►SELF-RELIANCE IN DEFENCE 24
FARMING 10
i
THEME-4: FINANCING FOR INVESTMENTS ►DECODING THE THEME OF ECONOMIC SURVEY 2021-22
24 33
►AGILE APPROACH 33
►FISCAL MANAGEMENT 24
►BARBELL STRATEGY 34
►PUBLIC CAPITAL INVESTMENT 24
►SAFETY NETS FOR POOR AND VULNERABLE SECTIONS
►GREEN BONDS 25
34
►CENTRAL BANK DIGITAL CURRENCY 25
►SUPPLY SIDE MEASURES 35
►UNDERSTANDING CENTRAL BANK DIGITAL CURRENCY
►CONTRIBUTION OF DIFFERENT COUNTRIES TO $94
(CBDC) 26
TRILLION WORLD GDP 36
►GIFT-ISC 27
►TRENDS IN INDIA'S GDP SIZE AND GDP GROWTH RATES
►INFRASTRUCTURE STATUS 27 36
►HARMONISED MASTER LIST OF INFRASTRUCTURE ►MAJOR DRIVERS OF INDIAN ECONOMY 37

SECTOR 27
►TRENDS IN GROSS CAPITAL FORMATION (GCF) 37
►VENTURE CAPITAL AND PRIVATE EQUITY INVESTMENT
►TRENDS IN GROSS DOMESTIC SAVINGS 37
27
►TRENDS IN CONTRIBUTION OF DIFFERENT SECTORS TO
►BLENDED FINANCE 28
INDIA'S GDP 38
►FINANCIAL ASSISTANCE TO STATES FOR CAPITAL
►GROWTH OUTLOOK 38
INVESTMENT 28
THEME-5: TAX PROPOSALS 29 Section-2

►INTRODUCTION OF NEW 'UPDATED RETURNS' 29
►TAX RELAXATIONS FOR COOPERATIVES 29 State of Public Finances

►LITIGATION MANAGEMENT 30
►SCHEME FOR TAXATION OF VIRTUAL DIGITAL ASSETS 39

30
►BASICS ABOUT GOVERNMENT'S ACCOUNTING 39
►VIRTUAL DIGITAL ASSET 30
►TYPES OF FISCAL POLICIES 40
►LITIGATION MANAGEMENT 30
►MAIN FOCUS OF THE FISCAL POLICY 40
►CAPITAL GOODS SECTOR 30
►SNAPSHOT OF PUBLIC FINANCES 40
►CUSTOMS TAX 31
►TRENDS IN TAX-GDP RATIO 41
►TARIFF MEASURES TO ENCOURAGE BLENDING OF FUEL
31 ►TRENDS IN VARIOUS DEFICITS 41
►SOURCES OF DEFICIT FINANCING 42
►DEBT POSITION OF THE GOVERNMENT 42

PART-B: ►TRENDS IN CENTRE'S DEBT-TO-GDP RATIO 43
ECONOMIC SURVEY ►EXPENDITURE ON SUBSIDIES 44
►15TH FINANCE COMMISSION RECOMMENDATIONS 44

2021-22 ►EVOLUTION OF THE DISINVESTMENT POLICY OF THE
GOVERNMENT OF INDIA 45
►ASSET MONETISATION 46
Section-1 ►POLICY MEASURES TO ENHANCE THE EFFICIENCY OF
GOVERNMENT SPENDING 46
STATE OF THE ECONOMY ►RBI'S RETAIL DIRECT SCHEME 46
2020-21: A MACRO VIEW

33
ii
►RESOLUTION FRAMEWORK 2.0 FOR COVID RELATED
Section-3 STRESSED ASSETS OF INDIVIDUALS, SMALL BUSINESSES
AND MSMEs 58
EXTERNAL SECTOR ►BAD BANK IN INDIA 58
►DEPOSIT INSURANCE IN INDIA 59
48 ►NON-BANKING FINANCIAL COMPANIES (NBFCS) SECTOR

59
►GLOBAL ECONOMIC ENVIRONMENT 48 ►FACTORING IN INDIA 60
►TRENDS IN BALANCE OF PAYMENT (BoP) 49 ►MSCI EMERGING MARKETS INDEX AND INDIA’S WEIGHT
►INDIA'S MERCHANDISE TRADE (APRIL 2021 - NOV 2021) 49 60
►MERCHANDISE TRADE BALANCE 50 ►INSURANCE SECTOR 60
►TRADE IN SERVICES 50 ►PENSION SECTOR 61
►PRIVATE TRANSFERS/ REMITTANCES 50 ►PENSION SCHEMES FOR THE UNORGANISED SECTOR

61
►NET INVISIBLES 51
►INSOLVENCY AND BANKRUPTCY CODE 61
►CURRENT ACCOUNT BALANCE 51
►PRE-PACK INSOLVENCY PROCESS 61
►CAPITAL ACCOUNT BALANCE 51
►CROSS BORDER INSOLVENCY 62
►FOREX RESERVES 51
►NET INTERNATIONAL INVESTMENT POSITION (NIIP) 51
►EXTERNAL DEBT 52 Section-5

►TAPER WITHOUT TANTRUMS: INDIA’S EXTERNAL SECTOR
RESILIENCE 52
Prices and Inflation
►MAJOR SCHEMES FOR EXPORT PROMOTION 53
►ENABLING AN EFFICIENT LOGISTICS ECO-SYSTEM TO

BOOST EXPORTS 53
64
►GLOBAL INFLATION 64
►BASICS ABOUT INFLATION INDICES 65

Section-4 ►INFLATION TRENDS IN INDIAN ECONOMY 66
►RECENT TRENDS IN CPI RATE OF INFLATION 66

Monetary Management and ►TRENDS IN CPI-HEADLINE INFLATION 67
Financial Intermediation ►TRENDS IN WPI INFLATION 68
►DIVERGENCE BETWEEN WPI AND CPI 68
55 ►DRUG PRICING 69
►LONG TERM PERSPECTIVE FOR MANAGEMENT OF

►MONETARY DEVELOPMENTS 55 SUPPLY SIDE FACTORS 70
►LIQUIDITY CONDITIONS AND ITS MANAGEMENT 56
►STEPS TAKEN BY RBI TO IMPROVE LIQUIDITY

CONDITIONS IN THE ECONOMY 56 Section-6
►SPECIAL LONG-TERM REPO OPERATIONS (SLTRO) 57
►FACILITATING MORE EFFICIENT LIQUIDITY MANAGEMENT SUSTAINABLE DEVELOPMENT AND

FOR REGIONAL RURAL BANKS (RRBs) 57
►G-SAP 57 CLIMATE CHANGE

►VARIABLE RATE REVERSE REPO AUCTIONS (VRRR) 57
►PERFORMANCE OF BANKING SECTOR 57 71

►INDIA'S PROGRESS ON SUSTAINABLE DEVELOPMENT
GOALS (SDGs) 71
iii
►LAND FORESTS 72 ►INCREASE IN THE FOOD SUBSIDY BILL 86
►HIGHLIGHTS OF STATE OF FORESTS REPORT (SFR) 2021 ►STORAGE 87

72
►PLASTIC WASTE MANAGEMENT AND ELIMINATION OF

IDENTIFIED SINGLE USE PLASTICS 73
Section-8
►WATER 74
►INDIA'S EFFORTS FOR COMBATING CLIMATE CHANGE

INDIA'S NATIONALLY DETERMINED CONTRIBUTIONS
INDUSTRY AND INFRASTRUCTURE
UNDER PARIS AGREEMENT 74
►INDIA'S EFFORTS FOR COMBATING CLIMATE CHANGE 74 88

►MAJOR INITIATIVES AND ACHIEVEMENTS 75
►TRENDS IN CONTRIBUTION OF INDUSTRIAL SECTOR 88
►INDIA’S INITIATIVES AT THE INTERNATIONAL STAGE 75
►TRENDS IN INDEX OF INDUSTRIAL PRODUCTION (IIP) 89
►INDEX OF EIGHT CORE INDUSTRIES 89
Section-7 ►GROSS CAPITAL FORMATION IN INDUSTRIAL SECTOR 89
►FDI IN INDUSTRIES 89
AGRICULTURE & FOOD ►IMPORTANT CHANGES IN FDI POLICY 90
SECTOR WISE ISSUES AND INITIATIVES 91

MANAGEMENT ►MSME SECTOR 91
►PHARMACEUTICAL INDUSTRY 91
77 ►ELECTRONICS INDUSTRY 91
►TRENDS IN CONTRIBUTION OF AGRICULTURE SECTOR ►TEXTILES SECTOR 91

TO INDIA'S GVA 77
►INFRASTRUCTURE 91
►TRENDS IN GROWTH RATE OF INDIAN AGRICULTURE 78
►SUCCESS OF PPP 92
►TRENDS IN GROSS CAPITAL FORMATION IN
►RECENT CHANGES IN VIABILITY GAP FUNDING (VGF)
AGRICULTURE 78
SCHEME 92
►ENHANCING GROSS CAPITAL FORMATION (GCF) IN
►NATIONAL INFRASTRUCTURE PIPELINE (NIP) 92
AGRICULTURE 78
►NATIONAL MONETISATION PIPELINE (NMP) 92
►TRENDS IN CROPPING PATTERN 79
►ROAD SECTOR 92
►TRENDS IN CROP PRODUCTION 79
►RAILWAYS 92
►LARGEST PRODUCERS OF MAJOR CROPS 80
►CIVIL AVIATION 92
►TRENDS IN OPERATIONAL LANDHOLDINGS 80
►SHIPPING 92
►TRENDS IN PRODUCTION OF EDIBLE OILS 81
►UNDERSTANDING THE CONCEPT OF FLAGGING SHIPS IN
►AGRICULTURE PRICING POLICY AND MSP 81
INDIA 93
►CROP DIVERSIFICATION 82
►TELECOM SECTOR 93
►WATER AND IRRIGATION 82
►POWER 94
►AGRICULTURE MARKETING 82
►RENEWABLE ENERGY 94
►SWEET REVOLUTION 83
►NATURAL FARMING 83
►SITUATION ASSESSMENT SURVEY 83 Section-9

►ALLIED SECTORS: ANIMAL HUSBANDRY & DAIRYING 84
►FISHERIES 84 Services
►MECHANISATION OF INDIAN AGRICULTURE 85
►FOOD PROCESSING SECTOR 85 95

►FOOD MANAGEMENT 85 ►TRENDS IN CONTRIBUTION OF SERVICES SECTOR 95
iv
►FDI INFLOWS INTO SERVICES SECTOR 96 ►MAJOR INITIATIVES FOR STUDENTS DURING COVID-19
PANDEMIC 99
►TRADE IN SERVICES SECTOR 96
►MAJOR SCHEMES FOR SCHOOL EDUCATION DURING
►PATENTS IN INDIA 96
2021-22 99
►MAJOR SERVICES: SUBSECTOR WISE PERFORMANCE
►GROSS ENROLMENT IN HIGHER EDUCATION 100
AND RECENT POLICIES 96
►RECENT INITIATIVES IN HIGHER EDUCATION 100
►REMOVAL OF TELECOM REGULATIONS IN IT-BPO
SECTOR 96 ►SKILL DEVELOPMENT 100
►DRONE RULES, 2021 97 ►SKILL INDIA MISSION 100
►REVISED GUIDELINES FOR ACQUIRING AND PRODUCING ►STATUS OF EMPLOYMENT IN INDIA 100
GEOSPATIAL DATA 97
►FORMALISATION OF JOBS WITHIN INDIAN ECONOMY 101
►DIFFERENT CATEGORIES OF WORKERS 101
►HEALTH 102
Section-10 ►HIGHLIGHTS OF NFHS-5 REPORT 102
►DRINKING WATER AND SANITATION 103
SOCIAL INFRASTRUCTURE, ►RURAL DEVELOPMENT 103
►MULTI-DIMENSIONAL POVERTY INDEX (MPI) 103

EMPLOYMENT AND HUMAN ►ABOUT GLOBAL MULTIDIMENSIONAL POVERTY INDEX
(MPI) 103
DEVELOPMENT ►GLOBAL INDICES FOR REFORMS AND GROWTH (GIRG)
INITIATIVE 104
98 ►NATIONAL MULTI-DIMENSIONAL POVERTY INDEX 104
►TRENDS IN SOCIAL SECTOR EXPENDITURE 98
v
Dear Student,
The core essence of the civil services exam emanates from the dynamic nature of the topics that
we see in the test and the topic of economy can be seen as a torchbearer for dynamism in the
General Studies Paper-1.
The two most important resources that students must refer to for staying abreast with the
performance of the Indian Economy are:
a) The Annual Budget and
b) The Economic Survey
While going through these documents, you should focus not on the data and figures but on the
trends and the direction planned by the government for the economy. We have taken due care in
creating exam worthy material out of these documents so that you have right set of tools to go
through all things important from the perspective of the examination. This booklet is also a very
easy tool to revise the entire topic many times before you take the actual examination.
You can use this book as a stand-alone source for covering the Budget and Economic Survey from
the civil services exam perspective.
All the best!!!
Rau’s IAS Study Circle

Part – A
BUDGET
2022-23
Section-1
ASICS OF BUDGET
The Budget of the Central Government is not merely a parts in which Government Accounts are kept viz., (i)
statement of receipts and expenditure. Since The Consolidated Fund of India, (ii) The Contingency
Independence, it has become a significant statement of Fund of India and (iii) The Public Account of India. The
government policy. The Budget reflects and shapes, and Annual Financial Statement distinguishes the
is, in turn, shaped by the country’s economy. expenditure on revenue account from the
The Budget is prepared by Department of Economic expenditure on other accounts, as is mandated in the
Affairs, under Ministry of Finance. Constitution of India.
LIST OF DOCUMENTS LAID DOWN IN BUDGET 2. Demand for Grants is mandated by Article 113 of the
Constitution. Article 113 of the Constitution
1. Annual Financial Statement
mandates that the estimates of expenditure from the
2. Demand for Grants Consolidated Fund of India included in the Annual
3. Finance Bill Financial Statement and required to be voted by the
4. Statements made under FRBM Act Lok Sabha, be submitted in the form of Demands for
Grants. The Demands for Grants are presented to the
a. Macro-economic Framework Statement
Lok Sabha along with the Annual Financial Statement.
b. Medium Term Fiscal Policy cum Fiscal Policy
Generally, one Demand for Grant is presented in
Strategy Statement
respect of each Ministry or Department. However,
5. Expenditure Budget more than one Demand may be presented for a
6. Receipt Budget Ministry or Department depending on the nature of
7. Expenditure Budget expenditure. With regard to Union Territories without
Legislature, a separate Demand is presented for each
8. Memorandum Explaining Provisions of Finance Bill
of such Union Territories.
9. Output Outcome Monitoring Framework
3. Finance Bill is laid as a money bill for taxation under
10. Key features of budget Article 110 of the Constitution.
11. Implementation of Budget Announcements 2020-21 REVENUE BUDGET VS CAPITAL BUDGET
DETAILS
Criteria Revenue Budget Capital Budget
1. Annual Financial Statements is mandated by Article
112 of the Constitution. It shows the estimated Receipts which
receipts and expenditure of the Government of India Non-redeemable create liability
Receipts
for 2021-22 in relation to estimates for 2020-21 as receipts or reduce
also actual expenditure for the year 2019-20. The financial assets.
receipts and disbursements are shown under three
RAU’S IAS FOCUS SPECIAL EDITIONS | PRELIMS COMPASS (C3CURATION) for CSE 2022
3
BASICS OF BUDGET
Government for the ensuing financial year, key fiscal
Tax Revenue (Direct
measures and rationale for any major deviation in
and Indirect Taxes):
fiscal measures and an evaluation of current policies
GST, Income Tax, Debt Receipts:
of Central Government in line with fiscal management
Corporate Tax, Excise Market
principles.
Duty, Customs duty Borrowings.
Examples of (In Declining Order) 3. Macro-economic Framework Statement: Laid along
Non-Debt
Receipts with budget. Contains assessment of growth
Non-Tax Revenue: Receipts:
prospects, fiscal balance and external sector balance
Interest Receipts, Disinvestment,
of the economy with underlying assumptions.
Dividends and Profits Recovery of
of PSUs, User Loans 4. Medium-term Expenditure Framework Statement:
Charges, External Laid in the next session of the session in which
Grants etc. budget is presented. It sets forth a three-year rolling
target for prescribed expenditure indicators. It shall
Recurring: Incurred also highlight expenditure commitment of major
Non-Recurring:
for purposes other policy changes in new schemes and programs and
Expenditure Incurred for
than creation of explicit contingent liabilities.
Asset creation
Assets
FISCAL MANAGEMENT PRINCIPLES FOR CENTRAL
Interest Payments, GOVERNMENT
Subsidies, Salaries 1. Fiscal Deficit based target: Central Government's
Creation of
and Pensions, limit fiscal deficit to be less than 3% of GDP.
Examples of Roads, railways
Defence, Grants to
Expenditure etc. and loans 2. Debt based target: Central government will ensure
the States for
to States. that:
creation of Assets
etc. a. General government debt does not exceed 60% of
GDP by 2024-25. (General government debt refers
to collective debt of all states along with Central
►FISCAL RESPONSIBILITY AND Government).
BUDGET MANAGEMENT ACT, 2003 b. Central Government debt does not exceed 40% of
GDP by 2024-25.
OBJECTIVES OF FRBM ACT
3. Central government to not give additional guarantees
1. Ensuring Inter-generational equity in fiscal
to any loan of Consolidated Fund of India in excess of
management
0.5% of GDP.
2. Long term macro-economic stability by removing
fiscal impediments in the effective conduct of ESCAPE CLAUSE
monetary policy N K Singh Committee in its review of FRBM Act
3. Prudential debt management consistent with fiscal suggested changes in the act to make it effective tool for
sustainability through limit on Central Government counter-cyclical economic policy which means that when
borrowings, debt and deficits economic growth is strong deficits of governments
4. Greater transparency in fiscal operations of the should be reduced or even surplus can be generated.
Central Government However, in case of an economic downturn government
should take leadership and spend to lift all boats.
5. Conducting fiscal policy in a medium-term framework
Under the FRBM act, the Central Government shall
DOCUMENTS TO BE LAID DOWN BY CENTRAL
prescribe the annual targets for reduction of fiscal deficit
GOVERNMENT UNDER THE ACT
for the period.
1. Medium term Fiscal Policy Statement: Laid along
with budget. It sets three-year rolling targets for Conditions during which fiscal deficit targets can be
prescribed fiscal indicators. breached ie fiscal deficit higher than targeted.
2. Fiscal Policy Strategy Statement: Laid along with 1. Grounds of national security
budget. Contains policies of Central government on 2. Act of war
taxation, borrowing, expenditure, pricing of
3. National calamity
administered goods etc, strategic priorities of Central
4
BASICS OF BUDGET
4. Collapse of agriculture severely affecting farm output • Decline in real output growth of a quarter by at least
and incomes. three percent point below its average of previous four
5. Structural reforms in the economy with unanticipated quarters.
fiscal implications 4. RBI can buy and sell Central Government securities
6. Decline in real output growth of a quarter by at least from the secondary market or convert converts
three percent point below its average of previous Central Government Securities held by it with other
four quarters. Securities of the Central Government as mutually
agreed between the Reserve Bank and the Central
In these situations, fiscal deficit can exceed by 0.5% of
Government.
GDP of the target prescribed.
MEASURES FOR ENFORCEMENT
Conditions when fiscal deficit can be reduced than
targeted: Increase in real output growth by at least 3% • Central government to ensure greater transparency
point above its average of the previous 4 quarters. In in its fiscal operations and minimise secrecy in
this situation, fiscal deficit can be reduced by 0.5% over preparation of annual financial statements and
what is targeted. demands for grants.
BORROWING FROM RESERVE BANK • Union Minister of Finance to review targets and
trends in receipts and expenditure in relation to
1. Central Government to not borrow from RBI.
targets in budget on half-yearly basis.
2. Central Government can borrow from RBI for
• Central Government to prepare monthly statements
temporary mismatches in cash balance. (Ways and
of its accounts.
Means Mechanism)
• In case of shortage in revenue or excess of
3. An amendment was done in the FRBM Act, which
expenditure, Central Government to take steps to
allowed RBI to subscribe to primary issue of Central
increase revenue or reduce expenditure. (Nothing in
Government securities when one of the conditions for
this shall effect revenue charged on the Consolidated
invoking escape clause for increasing fiscal deficit is
fund).
present ie Centre can borrow from RBI in the
following cases: • No deviation is allowed from the target cast on the
Central Government except without approval of
• Grounds of national security
Parliament. However, if due to any unforeseen event
• Act of war a deviation occurs, Union Minister of Finance will
• National calamity make a statement in both houses of Parliament
• Collapse of agriculture severely affecting farm output highlight reasons, outcomes and remedial measures.
and incomes. • CAG to periodically review compliance of this Act by
• Structural reforms in the economy with unanticipated Central Government and table report in Parliament.
fiscal implications
5
Section-2
ONTEXT OF BUDGET
The Covid-19 pandemic and resulting social-distancing 4. Financing of Investments
and lockdowns adversely impacted economic growth in
FY 2020-21. The GDP of India contracted by 7.2%.
Also, due to the need to support livelihoods and THEME-1: PM GATI
increased demand for healthcare expenditure during
the pandemic, government expenditure
SHAKTI
However, Indian economy registered a sharp recovery It is a transformative approach for economic growth
in FY 2021-22. According to projections, GDP is expected and sustainable development.
to grow by 9.2%, highest among all large economies.
Focus Areas: PM Gati Shakti is driven by seven engines:
BUDGET FOR AMRIT KAAL
Roads, Railways, Ports, Mass Transport, Waterways and
India is entering 75th year of attaining its independence,
Logistics Infrastructure.
the government is celebrating this was 'Azadi ka Amrit
Mahotsav' and entering the 'Amrit Kaal' i.e., 25 yearlong
lead-up to 100 years of India's Independence.
►PM GATI SHAKTI
Goals for the government during the Amrit Kaal:
• It is a transformative approach for economic growth
1. Complementing macro-economic level growth focus
with a micro-economic level all-inclusive welfare and sustainable development.
focus. • It is focused on 7 priority areas: (1) Roads (2) Railways
2. Promoting digital economy & fintech, technology (3) Airports (4) Ports (5) Mass Transport (6)
enabled development, energy transition and climate
Waterways (7) Logistics Infrastructure. Infrastructure
action.
will be developed by both Central and State
3. Relying on virtuous cycle starting from private
governments as per Gati Shakti Master Plan.
investment with public capital investment helping to
crowd-in private investment. • PM Gati Shakti Master Plan will transform all the
PRIORITIES OF BUDGET FOR FY 2022-23 above 7 sectors for economic transformation,
1. PM Gati Shakti seamless multimodal connectivity and logistics
2. Inclusive Development efficiency.
3. Productivity Enhancement & Investment, Sunrise • Projects related to above 7 sectors in the National
Opportunities, Energy Transition and Climate Infrastructure Pipeline will be aligned with PM Gati
Action. Shakti Framework.
6
CONTEXT OF BUDGET
• Gati Shakti will focus on planning, financing including • National Master plan for Multi-modal connectivity
through innovative ways, use of technology and • Seeks to bring 16 Ministries together for integrated
speedier implementation. planning, design and execution of infrastructure
• Effective use of clean energy and coordinated efforts projects.
of Central and State governments along with Private • Monitor projects worth Rs 100 lakh crores.
Sector.
• Incorporate the infrastructure schemes of various
• These 7 sectors will be supported by complementary Ministries and State Governments like Bharatmala,
roles of Energy Transmission, IT & Communication, Sagarmala, UDAN etc.
Bulk Water & Sewerage and Social Infrastructure.
• Economic Zones like manufacturing clusters, defence
• Impact: World Class Modern Infrastructure, Logistics corridors, electronic parks, industrial corridors,
Synergy among different modes of movement for fishing clusters, agri zones will be covered to improve
both people and goods, increased productivity, connectivity & make Indian businesses more
accelerated economic growth and development. competitive.
PM GATI SHAKTI • Leverage technology including spatial planning tools
It is supposed to break departmental silos and with ISRO imagery developed by BiSAG-N
institutionalize holistic planning for stakeholders across (Bhaskaracharya National Institute for Space
major infrastructure projects. The PM Gati Shakti will Applications and Geoinformatics).
ensure that India of the 21st century does not waste
Note: An empowered group of secretaries, headed by
money or time due to lack of coordination in
the Cabinet secretary, will be formed to review and
infrastructure projects. Under the PM Gati Shakti
monitor the implementation of PM Gati Shakti. The
National Master Plan, everything, from roads to
Department for Promotion of Industry and Internal
railways, from aviation to agriculture, various ministries
Trade (DPIIT) will be the nodal ministry.
and departments would be linked.
6 PILLARS OF GATI SHAKTI
7
CONTEXT OF BUDGET
BENEFITS ►ROAD TRANSPORT
• PM Gati Shakti Master Plan for Expressways will be
formulated in 2022-23 to facilitate faster movement
of people and goods.
• National Highways network will be expanded by
25,000 km in 2022-23.
• Rs 20,000 crore will be mobilised through innovative
ways of financing to complement the public
resources.
►LOGISTICS SECTORS
1. Unified Logistics Interface Platform (ULIP): This
platform will facilitate data exchange among all
Local Multiplier effects: In India, the capital mode operators. It is designed for Application
Programming Interface (API). This will converge
expenditure multiplier is around 2.45, while the revenue
visibility of multi-modal transport across the existing
expenditure multiplier is 0.99 (RBI Bulletin, Dec 2020).
systems of various Departments/Ministries working
Thus, for a Rs. 1 crore increase in capital expenditure,
in silos.
GDP increases by Rs. 2.45 crores, whereas 1 crore
24 Digital Systems of 6 infrastructure ministries will
increase in revenue expenditure, the GDP increases
be integrated through ULIP. This will create a
only by Rs.0.99 crore. Hence, Capital Expenditure has
National Single Window Logistics Portal.
the potential to revive both demand and supply leading
Benefits:
to expeditious economic recovery and creation of more
a. Provide real time information to all stakeholders
employment opportunities.
b. Efficient movement of goods through different
Enhance Income levels of Farmers: PM Gati Shakti
modes
would help us in integrating rural economy with rest of
c. Reducing logistics cost and time
India through Roads, Railways, Ports, Airports, Digital
d. Assisting just-in-time inventory management
Infrastructure etc. Such integration would reduce post-
harvest losses, streamline agriculture supply chain, e. Eliminate tedious documentation
ensure success of E-NAM and boost exports. f. Improve international competitiveness
Reduce Logistics cost: The logistics cost account for g. Facilitates paperless/only electronic data transfer
around 12-14% of India's GDP, which is quite higher as leading to reduction in compliances.
compared to 8-10% in other economies. The higher 2. Open-source mobility stack for organising seamless
logistics cost reduces the competitiveness of travel of passengers will also be facilitated.
manufacturing sector, reduces our exports and hence 3. Contracts for implementation of Multimodal
critical to ensure $ 5 trillion economy. Logistics Park at four locations through PPP mode
will be awarded.
Promote Industrial Development: Provide multi-
modal connectivity to Economic Zones like
manufacturing clusters, defence corridors, electronic ►RAILWAYS
parks, industrial corridors etc. • Railways will develop new products and efficient
logistics services from small farmers and MSMEs.
Ensure efficient implementation of Infrastructure
projects: Promote inter-ministerial and inter- • Integration of Postal and Railway networks to provide
departmental coordination and hence reduce time, cost seamless solution for movement of parcels.
overruns, and improve ease of living for the people. • 'One Station-One Product' concept to be popularised
to help local businesses and supply chains.
8
CONTEXT OF BUDGET
• 2,000 km of railway network will be brought under Ropeways will also be built in congested urban areas
KAVACH, the indigenous technology for safety and where conventional mass transit systems are not
capacity augmentation in 2022-23. feasible.
• 400 new Vande Bharat Trains with better energy BENEFITS
efficiency and passenger riding experience. 1. Improved connectivity and convenience for
• 100 PM Gati Shakti Cargo Terminals for multimodal commuters
logistics facilities will be developed. 2. Promoting of tourism
3. Provide connectivity in very dense urban areas.
►KAVACH
An indigenously developed anti-collision device network ►CAPACITY BUILDING FOR
for railways. Designed with goal of 'zero accidents' in INFRASTRUCTURE PROJECTS
Railways. It is also known as Train Collision Avoidance
Capacity Building Commission will provide technical
System (TCAS).
support to Central, State and Infrastructure agencies to
KAVACH implementation will bring train movement to a upgrade their skills. This will ramp-up capacity in
halt automatically when it notices another train on the planning, design, financing (including innovative ways)
same line within a prescribed distance. Trains will also and implementation management of PM Gati Shakti
stop on their own when the digital system notices any Infrastructure Projects.
manual error or any other malfunctions.
It is SIL-4 certified which means after the adoption of
this technology there is the probability of a single error
►CAPACITY BUILDING
in 10,000 years. SIL stands for Safety Integrity Level, it is COMMISSION
defined as a relative level of risk reduction. There are • It is a body created by an executive order under the
four discrete levels: SIL 1, SIL 2, SIL 3, and SIL 4. The Department of Personnel and Training (DOPT) under
higher the SIL level, the higher the associated safety Ministry of Personnel, Public Grievances and
level, and the lower probability that a system will fail to Pensions.
perform properly.
• Central Government has approved the National
Program for Civil Services Capacity Building – Mission
►MASS URBAN TRANSPORT Karmayogi to enhance governance in the country
through transformational change in the Civil Service
(METRO SYSTEMS) Capacity Building. Capacity Building Commission
• Innovative ways of financing and faster (CBC) is the nodal agency for the implementation of
implementation will be encouraged for metro Mission Karmayogi.
systems. • CBC will be headed by a chairperson and two
• Multimodal connectivity between mass urban members. Secretariat of CBC will be headed by an
transport and railway stations will be facilitated. officer in the grade of Joint Secretary to Government
of India.
• Design of metro systems, including civil structures,
will be re-oriented and standardised for Indian FUNCTIONS OF CBC
conditions. • Evolving a harmonious de-siloed approach to
improve capacity and build shared resources.
►NATIONAL ROPEWAYS • Facilitate preparation of Annual Capacity Building

Plans of different agencies. Submit the collated Plans
DEVELOPMENT PROGRAM (NRDP)
for approval to PM’s Public Human Resource Council
NRDP will be developed in PPP mode to provide (PMHRC). Monitor and report the periodical progress
ecologically sustainable access and transportation of implementation of plan.
facility in difficult hilly areas. Usually, construction of • Prepare Annual HR Report on the health of Civil
roads in such areas causes ecological issues due to Services and making it public with approval of DoPT.
deforestation and leads to slope instability leading to
• Undertake Audit of Human Resources available in
landslides, road building is also costly in such areas.
Government and assess outcomes of capacity
9
CONTEXT OF BUDGET
building efforts. Present an evaluation of this audit building plans, creation of an eco-system of shared
for approval and guidance to the Cabinet Secretariat learning resources internal and external faculty).
Coordination Unit.
• Recommend on standardisation of training and THEME-2: INCLUSIVE
capacity building, pedagogy and methodology. Carry
out research on pedagogy, competency framework,
DEVELOPMENT
competency gap assessment etc. ►AGRICULTURE
• Recommend on policy interventions in areas of
• Chemical-free Natural Farming will be promoted
personnel/HR and Capacity Building to DoPT.
throughout the country. In the first stage, focus will
• Analyse data emit from iGOT-Karmayogi pertaining be on farmers in 5km wide corridor along river
to different aspects of capacity building such as Ganga.
content creation, competency mapping, feedback etc.
• Millets: 2023 has been announced as the
• Holding Annual Global Public HR Summit under the International Year of Millets. Support will be provided
overall guidance of PM’s Public Human Resource for post-harvest value addition, enhancing domestic
Council (PMHRC) and the Cabinet Secretariat consumption,
Coordination Unit and preparing outcome report of
• Oilseeds
the Summit.
• Kisan Drones
• Proving information to DoPT for the purpose of
• Comprehensive package for helping farmers adopt
Parliamentary oversight and CAG compliance.
suitable varieties of fruits and vegetables and use of
• Exercise functional supervision over institutions
appropriate production and harvesting techniques
engaged in training civil servants (For purposes of
according to the demand of food processing
adherence to and achievements of annual capacity
industry.
►COMPARISON BETWEEN
ORGANIC AND NATURAL FARMING
ORGANIC FARMING NATURAL FARMING
Philosophy Using naturally available resources Limited human intervention and leaving
optimally to enhance productivity leaving things to nature to manage.
Against use of Chemical
Yes. Yes.
Fertilizers and Pesticides?
Use of External Organic No usage of External Organic manure.
Organic manures like compost,
Fertilizers Decomposition of organic matter by
vermicompost, cow dung manure, etc.
microbes and earthworms is encouraged
are added to farmlands from external
right on the soil
sources
surface
Efforts needed Less efforts as there is no ploughing, tilling,
More efforts required in mixing of
weeding etc. (Just the way it would be in
manure, ploughing, tilling, weeding etc.
natural systems)
Approach to vermicompost Against Vermicompost as it encourages the
Organic farming is in favour of
decomposition of organic matter by
vermicompost
earthworms right on soil surface.
Cost involved Expensive due to requirement of bulk
Low-cost farming method
manures.
New Guidelines under Sub-Mission on Agricultural Rs. 10 lakhs, whichever is less for purchase of drones by
Mechanization the Farm Machinery Training & Testing Institutes, ICAR

institutes, Krishi Vigyan Kendras and State Agriculture
Grants up to 100% of the cost of agriculture drone or
10
CONTEXT OF BUDGET
Universities for taking up large scale demonstrations of ►MILLETS
this technology on the farmers’ fields.
• Millets are group of small, grained cereal food crops
Farmers Producers Organizations (FPOs) would be
which are highly tolerant to drought and other
eligible to receive grant up to 75% of the cost of
extreme weather conditions and are grown with low
agriculture drone for its demonstrations on the farmers’
chemical inputs such as fertilizers and pesticides.
fields.
• Most millet crops are native to India and are
Benefits of Drones in Indian Agriculture
popularly known as Nutri-cereals as they provide
The use of Unmanned Aerial Vehicles (UAVs) commonly
most of the nutrients required for normal functioning
known as drones have great potential to revolutionize
of human body.
Indian agriculture and ensure country’s food security.
• Millets are classified into Major Millets (Jowar, Bajra
Field and Soil Assessment: Before the start of season,
and Ragi) and Minor Millets (Foxtail, Proso millet,
data collected by drones regarding soil analysis can help
Kodo Millet) based on their grain size.
in planning which crop species to be grown, pattern of
planting, time of irrigation and nutrient application. IMPORTANCE OF MILLETS
Hence, it facilitates site specific management practices Millets such as Jowar, Bajra, Ragi etc. are dual purpose,
i.e., precision farming. nutrient dense, hardy and low input intensive crops
Plant establishment: Drones can simplify planting of that have potential to address malnutrition and climate
crops on a large scale with utmost accuracy and change, while promoting sustainable agriculture.
simultaneously reduce labour costs. Health benefits
Precision crop spraying: Drones can scan the crops on • Millets are three to five times more nutritious than
a real time basis and spray precise quantity of rice and wheat in terms of proteins, minerals and
insecticides and pesticides as per the need. Thus, it vitamins. Millets are rich in B vitamins, calcium, iron,
saves time and input costs for the farmers and reduce potassium, magnesium, zinc, apart from being
pesticide pollution. gluten-free, and low in glycaemic index (GI). These
Crop Monitoring: Massive scale surveillance of crops are more suitable for people with gluten allergies or
can provide details about development of a crop and high blood sugar levels.
highlight production inefficiencies, enabling better crop
• Reduction in Cholesterol, Sugar
management and higher productivity.
• FAO has recognised importance of Millets for
Irrigation management: Drones equipped with
meeting SDGs- 2, 3, 12 and 13.
thermal sensing cameras can provide details ranging
from moisture stressed condition to waterlogged Climate Resilience
conditions. Thus, it enables the farmers to take • Abiotic (drought, temperature and salinity) and Biotic
decisions on irrigation depending upon the present (pest and disease) stress tolerant
water status. • Integral part of Conservation agriculture
Livestock monitoring: Animals tagged with Radio • Climate change mitigation by carbon sequestration
Frequency Identification tags (RFID) can be better
Sustainable Production system
monitored with drones.
• 2.5 times lesser water requirement than rice
Productivity: Drones can significantly alleviate labor
pressure, while enhancing the crop coverage area per • Natural soil conditioner due to powerful root systems
day. This will provide significant ease of farming for • Multi-purpose: Food, Feed, Fodder, Biofuels and
farmers, who can use the time saved to conduct other Brewing
activities. • Potential to enhance income in rainfed areas
11
CONTEXT OF BUDGET
TRENDS IN PRODUCTION OF MILLETS IN INDIA
Global Production: India is the world's largest producer Declaration of 2023 as international year of Millets.
of millets. India, Niger, and China account for more than Strategies to promote Nutri-Cereals
55% of global production.
1. Special Agribusiness Zones (SABZ) for millets:
Domestic Production: Focus on development of millets which is popularly
• Absolute Area under Nutri-Cereals: Decline in area cultivated in the local areas. Examples: Sorghum in
under cultivation from 28 m ha in 2007-08 to 25 m ha Telangana, finger millet in Karnataka, pearl millet in
in 2017-18. Gujarat, and small millets in Madhya Pradesh. These
• Percentage of area under Nutri-Cereals: Decline in SABZs can develop around FPOs, farm gate level
percentage of area under Nutri-Cereals from 15% in primary processing facilities, ware housing units and
2007-08 to 12% in 2019-20. value-added food products.
• Production of Nutri-Cereals: Increase in total 2. Promoting Organic Millets to cater to increased

production from 40 million tonnes in 2007-08 to demand of the consumers.
almost around 45 million tonnes in 2017-18 mainly 3. Explore Trade opportunities: The export of Indian
on account of increase in productivity. millets has not been up to the mark as compared to
• Largest Producers: More than 90% of coarse cereals other cereal grains due to poor quality; farmers need
are grown in the states of Rajasthan, Karnataka, to be educated about quality concerns at all stages of
Maharashtra, MP etc. production and harvesting
• Major Millets: The three major millet crops currently 4. Federating millets farmers as Farmer Producer
growing in India are jowar (sorghum), bajra (pearl Organizations (FPOs)
millet) and ragi (finger millet). 5. Expanding the coverage of small millets under MSP.
INITIATIVES FOR BOOSTING PRODUCTION OF NUTRI- 6. Efficient implementation of PM-AASHA to
CEREALS undertake higher procurement of Millets
National Food Security Mission (NFSM): Targets to 7. Promotion of Contract farming for millets.
achieve thirteen million tonnes of additional food grains
production comprising of rice-5 MT, wheat- 3 MT,
pulses- 3 MT and Nutri-cum-coarse cereals-2 MT by ►WATER RELATED INITIATIVES
2019- 20 with an additional objective to enhance post- 1. Focus on River-Interlinking
harvest value addition for better price realization to a. Ken-Betwa Link Project to be taken up at an
farmers. estimated cost of Rs 44,605 crore.
Special Action Plan for better production of Nutri b. DPRs of following 5 river links have been finalised.
Cereals (Millets): Focus on increasing production and These projects will be taken up once consensus
productivity of Nutri Cereals in certain states. emerges between beneficiary states.
Declaration of higher MSP for the millets such as i. Damanganga-Pinjal
Jowar, Bajra and Ragi
ii. Par-Tapi-Narmada
Inclusion of Millets in the Public Distribution System
iii. Godavari-Krishna
(PDS)
12
CONTEXT OF BUDGET
iv. Krishna-Pennar single window facility for registration of MSMEs.
v. Pennar-Cauvery • Registration of MSMEs is done according to the new
2. Drinking Water and expanded definition of MSMEs.
Ministry of Jal Shakti is currently implementing a • MSMEs are given unique Udyam Registration
nationwide program called the Har Ghar Jal Yojana. This number.
program aims to give quality piped drinking water to all • Registration on the portal is free, paperless and
households in the rural areas of the country. based on self-declaration.
Currently, 8.7 crore households have piped water • Registration on Udyam portal facilitates quick
supply, out of this 5.5 crore households are provided registration of GeM portal (For government
tap water connection in last 2 years. procurement), TReDS Platform (for trade
receivables).
►MSME RELATED • MSMEs can using their Udyam registration can avail
financing under Priority Sector Lending, benefits of
1. Portals related to MSMEs:
schemes of Government such as Credit Guarantee
• Udyam, e-Shram, NCS and ASEEM portals will be Fund, Public Procurement Policy, additional edge in
interlinked. Government tenders & Protection against delayed
• To further formalise the economy and enhance payments etc.
entrepreneurial opportunities for all, scope of these 2. ASEEM Portal
portals will be expanded by:
ASEEM stands for 'Atma-nirbhar Skilled Employee
o Live and organic databases.
Employer Mapping'.
o Provide G2C, B2C and B2B services.
A portal devised by National Skill Development
o Expanded services such as credit facilitation,
Corporation (NSDC), under Ministry of Skill
skilling and recruitment
Development and Entrepreneurship.
2. Emergency Credit Line Guarantee Scheme (ECLGS)
Benefits of ASEEM Portal:
• This scheme was launched as part of Atma-Nirbhar
1. Understanding workforce demand-supply patterns
package to cushion MSME during the COVID-19
and gaps.
pandemic induced economic distress.
2. Facilitates better livelihood opportunities to the
• ECLGS provided much-needed additional credit to
candidates.
more than 130 lakh MSMEs and mitigate adverse
impact of the pandemic. 3. Maintaining high-quality, curated and digital profiles
of all skilled workforce.
• Budget proposals:
4. Provides smart insights and patterns to visualise
o Extension of ECLGS scheme to March 2023.
workforce information:
o Expansion of ECLGS guarantee cover by Rs 50,000
crore to total cover of Rs 5 lakh crore. a. Supply-demand patterns in top states in India
3. Credit Guarantee Trust for Micro and Small b. Popular job roles from supply & demand
Enterprise (CGTMSE) Scheme perspective
CGTMSE scheme will be revamped with required c. Demographics and other insights on placements
infusion of funds. d. Migration patterns based on skills, locations and
4. Raising and Accelerating MSME Performance salaries.
(RAMP) Program 5. IT based artificial intelligence driven interface for:
A Program of Ministry of MSME with support from a. Job application with access to hyper local jobs
World Bank with an outlay of Rs 6,000 crores. using machine learning and automated match
It aims to increase the competitiveness of MSME sector based on persona.
by (1) improving market access, (2) access to credit, (3) b. Demand and campaign management for
strengthen institutions and (4) governance at central employers to forecast current and future demand.
and state level. c. A management dashboard
1. Udyam Portal 3. NATIONAL CAREER SERVICE (NCS) PORTAL:
• It is a portal under Ministry of MSME which provides • It is a portal being operated by Directorate General of
13
CONTEXT OF BUDGET
Employment under Ministry of Labour and a. Aims to empower citizens to skill, reskill or upskill
Employment. through on-line training.
• It works towards bridging the gap between b. Provide API-based trusted skill credentials, payment
jobseekers and employers, candidates seeking and discovery layers to find relevant jobs and
training and career guidance, agencies providing entrepreneurial opportunities.
training and career counselling.
• It has three pillars: (1) ICT based NCS Portal (2) ►EDUCATION
Country wide set up of Model Career Centers (3)
1. SUPPLEMENTARY EDUCATION
interlinkage through employment exchanges.
Due to the pandemic induced closure of schools,
• The portal is supported by a toll-free number where
children particularly in rural areas mostly belonging to
support is available in 7 languages (Hindi, English,
SCs, STs and other weaker sections lost almost 2 years
Bengali, Kannada, Malayalam, Tamil and Telugu.
of formal education. Mostly, these are children in
4. e-SHRAM Portal: government schools.
• Ministry of Labour & Employment has developed To address the learning deficit of these groups of
eSHRAM portal which will function as National students, there is a need to impart supplementary
Database of Unorganized Workers (NDUW). The teaching and build a resilient mechanism for education
database will have details of name, Aadhaar ID, delivery.
occupation, address, educational qualification, skill a. One class-one TV Channel’: PM eVIDYA program will
types and family details etc. be expanded from 12 to 200 TV channels. This will
• A 12-digit Universal Account Number (UAN) will be enable all states to provide supplementary education
uniquely assigned to each unorganized worker after in regional languages for classes 1-12.
registration on eSHRAM portal. UAN number will be a b. Virtual Labs and e-labs: In vocational courses, to
permanent number i.e., once assigned, it will remain promote critical thinking skills and creativity, 750
unchanged for the worker’s lifetime. Virtual Labs in science and mathematics and 75
• Unorganized sector comprises of establishment/ skilling e-labs for simulated learning environment will
be set up.
units which are engaged in the production/ sale of
goods/ services and employs less than 10 workers. c. High-quality e-content in all spoken languages will be
So, the unorganised workers would include migrant developed for delivery by internet, mobile phones, TV
workers, construction workers, gig and platform and radio through Digital Teachers.
workers, etc. d. A competitive mechanism for development of quality
e-content by teachers will be set-up to empower and
• Benefits: After registering, the unorganised will get
equip them with digital tools of teaching and
an Accidental Insurance cover of 2 Lacs under
facilitate better learning outcomes.
Pradhan Mantri Suraksha Bima Yojana (PMSBY). In
future, all the social security benefits of unorganized 2. DIGITAL UNIVERSITY
workers will be delivered through this portal. In It will be established to provide access to students for
emergency and national pandemic like situations, world class quality universal education with
this database may be utilized to provide necessary personalised learning experience at their doorsteps.
assistance to the eligible unorganized workers. Education through this digital university will be made
available in different Indian languages and ICT formats.
Hub-spoke model: This university will be built in hub-
►SKILL DEVELOPMENT
spoke model, with the hub building cutting edge ICT
1. Skilling programs and partnerships with industry will expertise. Best public universities and institutions in the
be reoriented to promote continuous skilling country will collaborate as a network of hub-spokes.
avenues, sustainability and employability.
2. National Skill Qualification Framework (NSQF): ►HEALTH
Will be aligned with dynamic industry needs.
1. AYUSHMAN BHARAT DIGITAL MISSION
3. Digital Ecosystem for Skilling and Livelihood (DESH-
• An open platform for National Digital Health
Stack e-Portal) will be launched.
Ecosystem will be rolled out.
14
CONTEXT OF BUDGET
• It will consist of: ►PM DevINE
(a) Digital registries of health providers and health
• It stands for Prime Minister’s Development
facilities Initiative for North-East.
(b) Unique health identity • Implemented by North-Eastern Council.
(c) Consent framework • Under the Initiative, Projects can be proposed by
(d) Universal access to health facilities. central government ministries however, preference
2. NATIONAL TELE-MENTAL HEALTH PROGRAM will be given to projects proposed by States.
• This service will be launched to facilitate access to • Functions: Fund infrastructure (In the spirit of PM
quality mental health care counselling and care Gati Shakti) and social development projects based
services. on felt needs of the North-East.
• This program will be run by a network of 23 tele- • Enable livelihood activities for youth and women,
filling gaps in various areas.
mental health centres of excellence.
• NIMHANS, Bangalore will be nodal agency for the
Program with the International Institute of ►ASPIRATIONAL BLOCKS
Information Technology – Bangalore (IIITB) providing PROGRAM
technology support.
Balanced regional growth is a necessity for inclusive
development.
►WOMEN EMPOWERMENT Niti Aayog launched the Aspirational Districts Program,
Government recognises the potential of empowered focussed on improving quality of life of citizens in most
women for bright future and wants to pursue women- backward districts of the country.
led development. In pursuit of this: SIGNIFICANT PROGRESS HAS RESULTED FROM THIS
1. Many schemes under Ministry of Women and Child PROGRAM
Development have been comprehensively revamped. • 95% of these 112 districts have made significant
As part of this review of schemes, three schemes progress in
namely (1) Mission Shakti (2) Mission Vatsalya (3) However, in these districts, certain blocks continue to
Saksham Anganwadi and Poshan 2.0 were launched lag on developmental parameters. The Aspirational
for integrated benefit to women and children. Blocks Program will focus on such blocks in the
2. Saksham Anganwadis are a new generation Aspirational Districts.
anganwadis that have better infrastructure and
audio-visual aids, powered by clean energy and ►VIBRANT VILLAGES PROGRAM
providing improved environment for early child
This program has been launched to address the
development.
developmental challenges in border villages along the
Two lakhs existing anganwadis will be upgraded as northern border.
Saksham Anganwadi.
ACTIVITIES UNDER THE PROGRAM
1. Construction of village infrastructure.
►HOUSING FOR ALL 2. Housing
1. 80 lakh houses will be completed for identified 3. Tourist centers
eligible beneficiaries of PM Awas Yojana in both rural
4. Road connectivity
and urban areas.
5. Provision of decentralised renewable energy
2. Central and State governments will work together for
6. Direct to home access for Doordarshan and
reduction of time required for land and construction
educational channels
related approvals, for promoting affordable housing
of middle class and EWS in urban areas. 7. Support for livelihood generation
3. Central government will work with financial sector IMPLEMENTATION STRATEGY

regulators to expand access to capital along with 1. Additional funding for developmental activities under
reduction in cost of intermediation. the program.
15
CONTEXT OF BUDGET
2. Convergence of existing schemes. regardless of where they maintain their account. This
PROBLEMS OF BORDER VILLAGES will enable:
1. Sparse population. • Financial inclusion
2. Limited connectivity and infrastructure. • Access to accounts through net banking, mobile
banking ATMs,
3. Out-migration particularly of youth in search of
• Online transfer of funds between post office
accounts and bank accounts.
►POST-OFFICE BANK
100% of 1.5 lakh post offices will come on the core
►DIGITAL BANKING UNITS
banking system.
75 Digital Banking Units to be established in 75 districts
Core banking system: Networking of branches, which
by Scheduled Commercial Banks.
enables customers to operate their accounts, and avail
banking services from any post office on CBS network,
2. Second phase of Ease of Living and Ease of Doing

THEME-3: Business 2.0 will be launched, for improving
productive efficiency of capital and human resource
PRODUCTIVITY based on the idea of ‘trust-based governance’. This
ENHANCEMENT & phase will be guided by:

a. Active involvement of States.
INVESTMENT, SUNRISE b. Digitisation of manual processes and
interventions.
OPPORTUNITIES, ENERGY c. Integration of the central and state level systems
TRANSITION AND through IT bridges

d. Single point access for all citizen-centric services
CLIMATE ACTION e. Removal of overlapping compliances.
►EASE OF DOING BUSINESS 2.0 & d. Ground level assessment of the impact with
involvement of citizens and businesses will be
EASE OF LIVING encouraged.
1. Minimum government & maximum governance: As
part of effort for ease of doing business and trust-
►e-PASSPORT
based governance, over 25,000 compliances have
been reduced and 1486 Union laws have been e-Passports using embedded chip and futuristic
repealed. technology will be rolled out.
16
CONTEXT OF BUDGET
BENEFITS VISION FOR FUTURE URBANISATION
1. The small electronic chip all the information that is 1. Nurture Indian megacities and their hinterlands to
printed on your passport including name, date of become current centres of economic growth.
birth, address and other details. 2. Facilitate tier 2 and tier 3 cities to take on mantle of
2. Microchip will help immigration counters to quickly economic growth in future.
verify details of a traveller. 3. Reimagine cities as centres of sustainable living with
3. Security of biometric data opportunities for all, including women and youth.
4. Smooth passage through immigration posts globally STRATEGY FOR FUTURE URBANISATION
5. These passports are ICAO complaint 1. Focus on Urban Planning: Urban planning in India
6. They will be produced at India Security Press in lacks the necessary capacity to drive sustainable
Nashik, Maharashtra. urbanisation at scale. Urban planning needs to steer
a paradigm change.
7. Reduce the circulation of fake passports.
a. For this, a high-level committee will be formed to
recommend changes in urban sector policies,
►GREEN CLEARANCES capacity building, implementation and
PARIVESH Portal: It is a portal developed by Ministry of governance.
Environment, Forest and Climate Change (MOEFCC) for b. Support to be provided to States for urban
all green clearances. This portal was instrumental in capacity building.
reducing the time required for approvals significantly.
2. Reforms in urban regulations
Clearances for the following environmental regulations
can be taken using PARIVESH Portal. a. Town Planning Schemes, Transit Oriented
Development and Modernisation of Building
1. Environment Clearances under EIA Notification of
Byelaws to be implemented. This will facilitate
MOEFCC.
reforms for people to live and work closer to mass
2. Clearances under Wildlife Protection Act, 1972. transit systems.
3. Forest Clearances under Forest (Conservation) Act, b. Central Government’s financial support for mass-
1980 and CAMPA Act, 2016. transit systems and AMRUT scheme will be
4. Coastal Regulatory Zone clearances under CRZ leveraged for formulation of action plans and their
notifications of MOEFCC. implementation of transit-oriented development
The budget proposes to expand the scope of this portal and Town Planning Schemes by States.
to provide information to the applicants. 3. Capacity Building for Urbanisation: For developing
1. Based on the location of units, information about India specific knowledge in urban planning and
specific approvals will be provided. design and deliver certified training training in areas
related to urbanisation and urban planning.
2. Enable application of all four approvals through a
single form. a. Up to 5 existing institutions in different regions will
be designated as centres of excellence. These
3. Tracking of the application status through
centres will be provided endowment funds of Rs
Centralised Processing Centre – Green (CPC-Green).
250 crore each.
b. AICTE will take the lead to improve syllabus,
►URBAN DEVELOPMENT quality and access of urban planning courses in
According to estimates, by 2050, nearly half of India’s other academic institutions.
population is expected to be living in urban areas. Also,
urban areas are regions that drive economic growth,
►ENERGY TRANSITION AND
enhanced livelihood opportunities for demographic
dividend, innovation and reap benefits of agglomeration CLIMATE ACTION
economics. To better harness this potential of Climate change is one the greatest risks to sustainable
urbanisation orderly urbanisation is of critical development. Developing countries like India are most
importance. adversely impacted by it. Also, the poor and marginal
people are expected to be most vulnerable.
17
CONTEXT OF BUDGET
To contribute to the global cause of addressing climate • In such an economy, all forms of waste, such as
change, Prime Minister enunciated Panchamrit Strategy clothes, scrap metal and obsolete electronics, are
of India. returned to the economy or used more efficiently.
PANCHAMRIT STRATEGY FOR LOW CARBON • This can provide a way to not only protect the
SUSTAINABLE DEVELOPMENT environment, but use natural resources more wisely,
• India will get its non-fossil energy capacity to 500 develop new sectors, create jobs and develop new
gigawatt by 2030 capabilities.
• India will meet 50 per cent of its energy requirements
till 2030 with renewable energy ►TRANSITION TO CARBON
• India will reduce its projected carbon emission by NEUTRAL ECONOMY
one billion tonnes by 2030
1. Biomass co-firing: 5 to 7% biomass pellets will be
• India will reduce the carbon intensity of its economy
fired in thermal power plants resulting in Carbon di
by 45 per cent by 2030
oxide emissions savings of 38 MMT annually. This will
• India will achieve net zero by 2070 reduce stubble burning, check pollution, create an
In line with the Panchamrit strategy of low carbon additional stream of income for farmers and create
sustainable development, budget proposes various local employment opportunities. For this, Union
strategies for taking the country on a sustainable Ministry of Power has launched SAMARTH Scheme
development path and along with employment (Sustainable Agrarian Mission on use of Agro
generation. Residue in Thermal Power Plants). Biomass co-
firing is considered to be carbon neutral by
►SOLAR POWER UNFCCC.
India has laid down an aspirational goal of establishing 2. Energy Efficiency: Energy Service Company (ESCO)
280 GW of installed solar power capacity by 2030. To business model will be promoted for energy
facilitate this goal the budget proposes an additional efficiency and energy saving measures in large
allocation of Rs 19,500 crores for PLI Scheme for commercial buildings. It will facilitate capacity
incentivising domestic manufacturing of high efficiency building and awareness for energy audits,
solar modules. Priority will be given to fully integrated performance contracts and common measurement
units manufacturing solar PV modules from polysilicon. and verification protocol.
3. Coal Gasification and Coal to Chemical: Pilot
►CIRCULAR ECONOMY projects are expected to be launched for coal

gasification and coal to chemicals. These pilot
India plans for Circular Economy Transition; this will
projects will help the industry to evolve technical and
reduce material and resource intensity of the economy
financial viability for such projects. Ministry of Coal
as well as create large opportunities for new businesses
has launched National Coal Gasification Mission
and jobs particularly in recycling sector.
which aims to create 100 million tonnes capacity for
TO FACILITATE THIS, THE BUDGET PROPOSES coal gasification by 2030.
1. Action plans for 10 sectors such as E-waste, end of 4. Agro forestry: Policy and legislative changes will be
life vehicles, used oil waste, toxic and hazardous brought about to promote agro forestry and private
industrial waste are ready. forestry. Financial support will be provided to
2. Addressing important cross cutting issues of farmers belong to SC and ST communities to take up
infrastructure, reverse logistics, technology agro forestry.
upgradation and integration with informal sector.
BENEFITS
3. Active public policies covering regulations, extended
1. Increase green cover
producers’ responsibilities framework and innovation
2. Availability of wood and pulp for domestic industries
facilitation.
3. Increase incomes for farmers
ABOUT CIRCULAR ECONOMY
4. Build income resilience of farmers
• A circular economy entails markets that give
incentives to reusing products, rather than scrapping 5. Certain trees boost agricultural output.
them and then extracting new resources.
18
CONTEXT OF BUDGET
►ENERGY EFFICIENCY IN INDIA ►CLEAN & SUSTAINABLE

Energy Efficiency in India is regulated by the Energy MOBILITY
Conservation Act, 2001 (ECA). Bureau of Energy Budget proposes a shift to use of public transport in
Efficiency (BEE) is a statutory body created under the urban areas. This will be complemented by clean-tech
Energy Conservation Act, 2001 to assist in developing and governance solutions, special mobility zones with
policies and strategies with a thrust of self-regulation zero fossil-fuel policy and EV vehicles.
and market principles to promote energy efficiency and
reduce energy intensity of Indian economy. ►BATTERY SWAPPING POLICY
ENERGY SERVICE COMPANIES (ESCOs)
THE BUDGET PROPOSES THAT
• ESCO is a company that offers energy services,
1. Government will come up with a Battery Swapping
usually design, retrofitting and implementation of Policy.
energy efficiency projects after identifying energy
2. Encourage private sector to develop sustainable and
saving opportunities through energy audit of existing
innovative business models for ‘Battery or Energy
facilities.
as a Sector’.
• They can also indulge in energy infrastructure 3. Inter-operability standards for battery swapping to
outsourcing, power generation and energy supply, be formulated.
financing or assist facility’s owners in arranging
BENEFITS OF BATTERY SWAPPING POLICY FOR EVS:
finances for energy efficiency projects.
1. Space constraint in urban areas for setting up
• ESCO operates by providing a savings guarantee, risk
charging stations at scale.
management in the implementation of energy
2. Battery constitutes a very high percentage of costs of
efficiency projects and also perform measurement &
EVs. Battery swapping will increase affordability of
verification activities to quantify actual energy
EVs.
savings post implementation of energy efficiency
CHALLENGES
projects etc.
1. Lack of inter-operability standards for batteries.
• BEE does empanelment of ESCOs through a
process of grading carried out by SEBI accredited 2. Lack of development of ecosystem for battery
rating agencies. (For ex. CRISIL, CARE, ICRA etc.) charging.
3. Inadequate financing for EVs and EVs infrastructure.
►LAND RECORDS MANAGEMENT projects. According to the budget, the focus of land
resource management will be on improving land
Land is one of the critical inputs for development of
records management ecosystem in India. The proposed
infrastructure, industries and social development
initiatives in this regard are:
19
CONTEXT OF BUDGET
1. Unique Land Parcel Identification Number (ULPIN): consolidate all the processes and land records
States will be encouraged to adopt ULPIN to facilitate IT- databases.
based management of land records. This will enable land-related information to be available
2. Facility for transliteration of land records across all in a single window.
th
the languages part of 8 Schedule of Constitution.
3. National Generic Document Registration System
►EXPORT PROMOTION (SEZs)
(NGDRS): Adoption and linkage of NGDRS with the ‘One
Nation One Registration’ software will be promoted as Legislative reforms for SEZs: The budget proposes to
an option for uniform process for registration and introduce a new legislation to replace the current
‘anywhere registration’ of deeds & documents. Special Economic Zones Act. The proposed act will
enable the States to become partners in 'Development
UNIQUE LAND PARCEL IDENTIFICATION NUMBER
of Enterprise and Service Hubs'. This will cover all
(ULPIN)
large existing and new industrial enclaves to optimally
It is a 14-digit Alpha-numeric Unique ID for each land utilise available infrastructure and enhance
parcel. This is the next step in the Digital India Land competitiveness of exports.
Records Modernisation Program.
Taxation reforms for SEZs: Reforms in Customs
ULPIN number can be seen as ‘Aadhar number’ for land
Administration of SEZs will be undertaken making it
records.
completely IT driven and function on the Customs
The identification will be based on the longitude and National Portal with a focus on higher facilitation, with
latitude coordinates (Geo-coordinates) of the land only risk-based checks. This will result in ease of doing
parcel and is dependent on detailed surveys and geo- business by units located in SEZs.
referenced cadastral maps.
All land parcels in India will be assigned these ULPIN ids.
►SPECIAL ECONOMIC ZONES
Currently, this has been implemented in 13 States and
pilot testing is continuing in other 6 States. Special Economic Zone (SEZ) is a geographically
delineated duty-free enclave and deemed to be a
Department of Land Resources under Ministry of Rural
foreign territory for the purposes of trade operations
Development is implementing this project.
and duties and tariffs. All the territory outside the SEZ is
NATIONAL GENERIC DOCUMENT REGISTRATION
the Domestic Tariff Area (DTA). SEZs can be set up by
SYSTEM (NGDRS)
the Centre, State or a private entity.
It facilitates citizens to register their documents with a
Objectives: Generation of additional economic activity,
Registering Officer for the purpose of conservation of
promotion of exports, promotion of investment from
evidence, assurance of title, publicity of documents and
domestic and foreign sources, creation of employment
prevention of fraud. The system is web enabled, generic
opportunities along with the development of
and configurable and deployed as configurable
infrastructure facilities.
according to State specific Property Registration Act.
The project has been initiated by Department of Land INCENTIVES FOR THE SEZ UNITS
Resources, Ministry of Rural Development, and • Duty free import/domestic procurement of goods for
Government of India. development, operation and maintenance of SEZ
Benefits: units
1. Reduces administrative overhead of government • 100% Income Tax exemption on export income for
departments by minimising use of paper, registration SEZ units for first 5 years, 50% for next 5 years
time and appointments prior proceedings to the SR thereafter and 50% of the ploughed back export
office. profit for next 5 years.
2. All registration stakeholders on a single platform. • Exemption from Central Sales Tax, Exemption from
3. Citizen empowerment by enabling property valuation Service Tax and Exemption from State sales tax.
on a click achieving ease of doing business. These have now subsumed into GST and supplies to
INTEGRATED LAND MANAGEMENT INFORMATION SEZs are zero rated under IGST Act, 2017.
SYSTEM (ILMIS) PROJECT • Lower Compliance burden: Greater ease of doing
This information system aims to integrate and business by through single window mechanism, no
20
CONTEXT OF BUDGET
routine examination by customs authorities of EVOLUTION OF SEZS IN INDIA
export/import cargo; liberal economic laws etc. Export Processing Zones (EPZs): The first export
Supply of Goods and services by SEZ units to DTA are processing zone was set up in Kandla in 1965. It was
treated as imports into India. followed by Santacruz export processing zone in 1973.
MINIMUM LAND AREA REQUIREMENT EXIM Policy, 2000: EPZs at Kandla, Santa Cruz, Cochin
• SEZs for IT or IT enabled services, biotech or health: and Surat were converted into SEZs.
No minimum land requirement. SEZ Act 2005: Legal framework to provide for a stable
• Other SEZs: Contiguous land area of 50 hectares or economic environment for the promotion of Export of
more. (In certain states such as Goa, Sikkim etc., the goods in a quick, efficient and hassle-free manner
area will be 25 hectares or more) PERFORMANCE ANALYSIS OF SEZs
KEY ENTITIES IN THE SEZ SCHEME India has notified around 377 SEZs which have been
• Department of Commerce (DOC): Formulation and able to create around 2.5 million jobs and account for
review of the policy including regulatory framework 26% exports from India. However, as highlighted by
for SEZs. The highest decision-making body for SEZs Baba Kalyani Committee, unlike their counterparts in
i.e., the Board of Approval (BOA) is also administered China, SEZs in India have failed to become engines of
by the DOC. economic growth.
• Office of Development Commissioner: The office of

the Development Commissioner (DC) administers the
regulatory framework of SEZs.
CHALLENGES WITH SEZs
TAX RELATED PROBLEMS: The tax changes have years. However, this benefit is available to only those
increased the tax obligation on SEZ units and brought units that start operations before Jun 30,2020.
them almost on par with units in Domestic Tariff area • Decrease in Corporate tax rate to 15% for new
(DTA). domestic companies in the Domestic Tariff area
• Introduction of Minimum alternate Tax (MAT): (DTA)
MAT was introduced in 1987 to being Zero-tax • Sale of goods in DTA by SEZ units attract customs
companies under the tax bracket. Initially, developers duty
and Units in SEZs were not required to pay MAT.
PROBLEM WITH APPROACH: The success of SEZs in
However, in 2011, the Government decided to extend
China has been attributed to- Emphasis on
MAT even to SEZs.
Manufacturing- based SEZs, favorable location along the
• Introduction of Sunset clause on tax benefits coasts and focus on limited numbers of large-sized SEZs
(2017): SEZ Units enjoy phased tax holiday for 15 to have agglomeration effects. In contrast, the SEZs in
21
CONTEXT OF BUDGET
India are more Service sector-based, located away from ►GOVERNMENT PROCUREMENT
coasts and focus has been on a large number of small-
Government Procurement plays a large role in the
sized SEZs.
economy. Government is a large developmental actor
REGULATORY PROBLEMS such as absence of single
and develops both social and physical infrastructure, it
window approvals, Lack of Dedicated Courts to handle
also consumes large amounts of goods and services for
disputes, Non-Optimal Utilization of Land etc.
its day to day running. Government procurement is
EXTERNAL CHALLENGES regulated by General Financial Rules, 2017 issued by
• Foreign companies exiting China are getting attracted Department of Expenditure under Ministry of
to other countries (Vietnam, Bangladesh etc.) due to Finance.
higher tax benefits in their SEZs. Department of Expenditure, under Ministry of Finance
• Signing of FTAs has enabled DTA units to import has modernised government procurement rules in
goods at zero customs duty. 2021. Government procurement rules have been
STRATEGIES (BABA KALYANI COMMITTEE criticised for being too complex to allow government
agencies to execute public projects in time, within
RECOMMENDATION)
approved cost and with good quality. In this respect,
Need for strategic shift from islands of exports to CVC, CAG and NITI Aayog have asked government to
catalysts of economic and employment growth. explore ‘Alternative Procurement Methods’ while
Framework shift from export growth to broad-based adhering to probity and fairness.
Employment and Economic Growth (Employment and SALIENT FEATURES OF CHANGES INTRODUCED IN
Economic Enclaves-3Es): GENERAL FINANCIAL RULES, 2017 ARE
• SEZs to be renamed as 3 E's- Employment and 1. Use of transparent quality criteria besides cost
Economic Enclaves. in evaluation of complex tenders: Usually in
• Quantum of Incentives to SEZ Units be based on government procurement, lowest cost bidder is
given preference (L1 Bid offer). This over reliance on
multiple parameters such as Investment, Job
cost does not allow government departments to
Creation, Value addition, Technology adoption etc.
procure quality and innovative products and
Shift from supply driven to demand driven approach projects.
• Focus on few but large zones as future zones of 2. Timely payment of bills: 75% of running bills to be
excellence (Similar to Institutes of eminence in paid to contractors within 10 days.
Education sector) 3. Dispute resolution through arbitration: During
• Develop SEZs close to ports operation of the contracts, issues and disputes
arising due to lack of clarity in the contract become
• Focus on developing SEZs in key manufacturing hubs
the root cause for litigation. Litigation has adverse
such as Industrial Corridors etc.
implications on the timelines and overall cost of the
Shift from trade competitiveness to manufacturing project. Before resorting to arbitration/litigation,
competitiveness through high speed multi modal parties may opt for mutual discussion, mediation
connectivity. and conciliation for the resolution of disputes.
Ease of Doing Business (EoDB): Integrated online BUDGET PROPOSALS FOR GOVERNMENT
portal for new investments, easier operational PROCUREMENT
requirements and exits related matters. 1. Online e-Bill system: This system will enable
Infrastructure status to improve access to finance and suppliers and contractors to submit online their
enable long term borrowing. digitally signed bills and claims and track their status
from anywhere. This facility will enhance
Promote MSME participation in 3Es and enable
transparency, reduce delays in payments and
manufacturing enabling service players to locate in 3E.
promote paperless bills processing across central
Dispute resolution through arbitration and ministries for their procurements.
commercial courts. 2. Use of surety bonds as a substitute for bank
Formulation of separate rules and procedures for guarantees for government procurements: This
manufacturing and service SEZs. will reduce indirect cost for suppliers and work-
22
CONTEXT OF BUDGET
contractors. Gold importers may also find this • If the Contractor fails to complete the project on time
purposeful. IRDAI has released framework for surety or if the contractor does not fulfil any requirement
bonds. laid down by the Government, then Surety company
comes into picture and is required to compensate
the Obligee (Government) for the loss.
►SURETY BONDS
• Presently, these surety Bonds are commonly used in
• Surety Bond is form of contractual agreement
countries such as US, UK, Australia etc. Now, we are
between three parties- Principal (Contractor), Obligee
trying to create an enabling framework which would
(Government) and the Surety company. As part of
enable the Insurance companies to function as
such an agreement, the surety company gives an
surety companies.
undertaking that the principal (contractor) would
complete the project as per the timeline keeping in • Insurance Regulatory Development Authority of India
mind all the specifications laid down by the (IRDAI) regulates them.
Government.
WORKING MECHANISM OF SURETY BONDS
BENEFITS resolution of insolvency and bankruptcy has been a

• Presently, the NHAI requires the Contractors to challenging process. To ameliorate this situation that
furnish Bank guarantees for awarding Highway led to the twin balance sheet problems of unhealthy
projects. In case of failure of the contractor to adhere banks and unhealthy corporates has been tried to be
to the contract, the Banks would be required to resolved by following initiatives:
compensate the Government for the loss. This puts 1. Passing of the Insolvency and Bankruptcy Code
higher burden on the Banking sector. Creation of (IBC): The IBC has changed the balance of power in
enabling framework for surety bonds would reduce favour of creditors and incentivised promoters to
the burden on the Banks and help contractors to meet their dues or lose control over their firms.
avail surety from insurance companies. 2. Constitution of a Bad Bank and Resolution
• Provide Fillip to the Insurance Sector Agency: This will promote cleaning of bad loans and
• Ensure Completion of Highway projects without any NPAs sitting on balance sheets of banks and free
delays and cost escalations. bank capital for future lending and economic growth.
To take these initiatives further following initiatives are
proposed in the budget:
►CORPORATE EXIT
1. Regarding Insolvency and Bankruptcy Code:
Indian economy has been criticised for suffering with an
Amendments will be carried out to enhance the
‘exit problem’ wherein winding up of firms and
23
CONTEXT OF BUDGET
efficacy of the resolution process and facilitate 2. Defence R&D to be opened for industry, startups
cross border insolvency. and academia (25% of Defence R&D budget to be
2. Centre for Processing Accelerated Corporate Exit shared with industry, startups and academia).
(C-PACE): This facility will speed up voluntary 3. Private industry to be encouraged to take up design
winding-up of companies from the currently required
in collaboration with DRDO and other organisation
2 years to less than 6 months. Already several IT
through SPV model.
based initiatives have made registration of new
companies efficient. 4. Independent Umbrella Body to be set up for meeting
wide ranging testing and certification requirements.
►TELECOM SECTOR
1. Auction of 5G spectrum for roll out 5G mobiles
THEME-4: FINANCING FOR
services by private players.
2. Scheme for design-led manufacturing to build a INVESTMENTS
strong ecosystem for 5G as part of the PLI scheme.
3. 5% of Universal Service Obligation Fund (USOF)
annual collections to be allocated for enabling ►FISCAL MANAGEMENT
affordable access to broadband and mobile • Revised Fiscal Deficit in FY 2021-22 stands at 6.9% of
services in rural and remote areas. This will
GDP as against 6.8% projected in the Budget
promote R&D and commercialisation of technologies
Estimates. For the financial year FY 2021-22, fiscal
and solutions.
deficit has been projected at 6.4% of GDP.
4. Bharatnet: Contracts for laying of optical fibre in all
• In last years Budget, government announced a glide
villages, including remote areas, will be awarded
under the Bharatnet project. Completion of path for fiscal consolidation. Fiscal deficit has been
Bharatnet project is expected in 2025. Measures to projected to reach below 4.5% of GDP by 2025-26.
be taken for better and efficient use of optical fibre. Fiscal Indicators - Rolling Targets as a Percentage
of GDP
►SELF-RELIANCE IN DEFENCE Revised Budget
Government aims to reduce imports dependence and Estimates Estimates
promote Atma-Nirbharta in defence equipment for 2021-22 2022-23
Armed Forces.
1. Fiscal Deficit 6.9 6.4
NEED FOR ATMA-NIRBHARTA IN DEFENCE
EQUIPMENTS 2. Revenue Deficit 4.7 3.8
1. Critical for preserving national interest in the wake of 3. Primary Deficit 3.3 2.8
a hostile neighbourhood and constant threat of two 4. Tax Revenue (Gross) 10.8 10.7
front warfare.
5. Non-tax Revenue 1.4 1.0
2. Critical technologies are usually not shared by
countries. 6. Central Government 59.9 60.2
Debt
3. High end equipment is very costly and leads to large
outgo of foreign reserves.
4. Repair and maintenance of imported equipment is ►PUBLIC CAPITAL INVESTMENT
not adequate. The budget proposes steeply increase capital
5. Domestic manufacturing capacity will create expenditure by 35.4% to Rs 7.50 lakh crores in 2022-23
employment. from Rs 5.54 lakh crores in 2021-22. This amounts to 2.2
6. Large export potential of defence systems. times the capital expenditure done in 2019-20 and
amounts to 2.9% of GDP.
PROPOSALS FOR DEFENCE MANUFACTURING
Public investment will continue to pump prime
1. 68% of capital procurement budget to be earmarked
private investment and demand in 2022-23.
for domestic industry in 2022-23, up from 58% in
2021-22.
24
CONTEXT OF BUDGET
8. Biodiversity conservation.
9. A category which can notified by SEBI from time to
time.
Green Bond Principles (GBP) are voluntary process
guidelines that recommend transparency and
disclosure and promote integrity in the development of
the Green Bond market by clarifying the approach for
issuance of a Green Bond. They have been released by
International Capital Market Association (ICMA). It has
four components:
IMPORTANCE OF PUBLIC CAPITAL INVESTMENT 1. Use of Proceeds
1. Speedy and sustained economic revival. 2. Process of Project Evaluation and Selection
2. Multiplier effect of capital investment 3. Management of Proceeds
3. Employed generation 4. Reporting
4. Induces enhanced demand for manufactured inputs Climate Bonds Standard and Certification is a labelling
5. Crowding in of private investment scheme for bonds and loans. The standard contains
o
scientific criteria consistent with the 1.5 C target
declared in the Paris Climate Deal of 2015. It is an
►GREEN BONDS international certification scheme for green bonds run
• Sovereign Green Bonds will be issued for mobilising by non-profit Climate Bonds Initiative (CBI).
resources for green infrastructure as part of European Green Bond Standard (EUGBS) has been
government’s overall borrowing program. launched by the European Union as part of European
• Proceeds of Green Bonds will be deployed in public Union Green Deal. It is intended to be a voluntary ‘gold
sector projects which help in reducing the carbon standard’ for green bonds.
intensity of the economy.
GREEN BONDS ►CENTRAL BANK DIGITAL

Green bonds are debt securities issued for raising funds CURRENCY
that are to be exclusively utilised for projects and assets
Government has announced that the RBI will
which contribute to sustainable development and
introduce of Digital Rupee, which is a Central Bank
climate friendly purposes.
Digital Currency (CBDC). Digital Rupee will be based on
In India, issuing of green bonds is regulated by SEBI.
blockchain and other technologies.
According to SEBI, proceeds from issuance of green
BENEFITS OF CBDC
bonds can be utilised for the following purposes:
1. Give boost to digital economy.
1. Renewable and sustainable energy including solar,
2. More efficient and cheaper currency management
bioenergy, other sources of energy which use clean
system.
technology.
3. Payments using CBDC’s are final and thus reduce
2. Clean transportation including mass/public
settlement risk in the financial system.
transportation.
4. CBDCs would also potentially enable a more real
3. Sustainable water management including clean and
time and cost-effective globalisation of payment
drinking water, water recycling.
systems.
4. Climate change adaptation.
5. Cost of printing, transporting, storing and distributing
5. Energy efficiency including efficient and green
currency will be reduced.
buildings.
6. Countering rise of private virtual currencies: Citizens
6. Sustainable waste management including recycling,
and future investors of Private Cryptocurrencies will
waste to energy, efficient disposal of wastage.
have an avenue to invest in sovereign crypto-assets.
7. Sustainable land use including sustainable forestry
RISKS WITH CBDC
and agriculture, afforestation
1. Risk of cyber-attacks
25
CONTEXT OF BUDGET
2. Digital currency frauds • Also called as "Programmable money" as it can be
programmed for certain selected users or within
specific region of a country.
►UNDERSTANDING CENTRAL
• Types of CBDC
BANK DIGITAL CURRENCY (CBDC)
o Retail CBDC: CBDC that can be used for people
• Digital currency backed by the Central bank of a
for day-to-day transactions.
country. Just like currency notes issued by the Central
o Wholesale CBDC: CBDC that can be used only by
Bank, the CDBC is a legal tender and accepted for the
financial institutions such as Banks, NBFCs etc.
payment of various transactions within a country.
Fiat Currency CBDC Cryptocurrency Stable Coin
Issuer Central Bank Central Bank Private Entity Private Entity
Value Derives its value from Value pegged to other

Derives its value from
the guarantee currency such as Diem,
the guarantee provided None
provided by Central TruelNR (Refer to Budget
by Central Bank
Bank Video for more details)
Legal Tender May be given status of

May be given status of
Yes Yes Legal Tender Example:
Legal Tender
El Salvador
Medium of
Yes Yes May be allowed May be allowed.
Payment
Examples Physical Currency eDINAR, Sistema, Petro, Bitcoin, Ethereum,

Diem, TruelNR, Tether etc.
Notes e-krona etc. dogecoin etc.
Experiments of CBDC in other Countries The Subhash Chandra Garg Committee (2019) has
Tunisia: eDinar; Ecuador: SISTEMA; Venezuela: Petro; recommended a ban on private cryptocurrencies on
Sweden: e-Krona; China: Digital Yuan account of concerns such as volatility, instability,
security risk and risk of funding illegal activities.
Legal Framework for Issuance of CBDC
However, the committee has highlighted that an official
Presently, the RBI Act 1934 empowers the RBI to be the digital currency can have number of advantages such as
sole authority to issue currency notes. The Finance Bill • Promote cashless economy by reducing Cash-to-GDP
2020 has introduced amendments to the section 22 of ratio.
the RBI Act, 1934. Under the new amendments,
• Increase in Financial Inclusion
currency would include both physical and digital
• Stability and Resilience of payment system since
currency issued by the RBI.
CBDC would promote competition in the payment
POSSIBLE DESIGNS OF CBDC system and ensures that no single company
Direct Model: In case of Direct model, the Central Bank dominates the payment ecosystem
issues CBDC and enable customers to directly open • Counter the Stable coins such as Diem which could
account with itself. So, in this case, the Central Bank be used for making payments.
engages with the public for opening accounts,
• Increase in effectiveness of Monetary Policy
facilitating payments through CBDC etc.
• Push to development of Fintech sector
Indirect/Two-tiered model: In this case, the Central
• Provide a real time picture of economic activity and
Bank issues CBDC and customers would maintain with
hence better GDP estimates and efficient monetary
the Central Bank. But it would not directly engage with
policy formulation.
the customers. It would outsource activities such as
• Traceability of transactions would crack down on
opening accounts, facilitating payments etc. to other
corruption and money laundering.
Banks.
CHALLENGES AND CONCERNS
BENEFITS OF CBDC
Potential Disintermediation of Banks:
26
CONTEXT OF BUDGET
►INFRASTRUCTURE STATUS
Data Centres and Energy Storage Systems including
dense charging infrastructure and grid scale battery
systems to be included in harmonised list of
infrastructure.
►HARMONISED MASTER LIST OF

INFRASTRUCTURE SECTOR
It is notified by Department of Economic Affairs, under
Ministry of Finance.
Accelerate Bank runs: By providing depositors a safe
COMPONENTS OF HARMONISED MASTER LIST OF
and liquid alternative to bank deposits, CBDCs may
INFRASTRUCTURE SECTOR
accelerate bank runs during a period of financial stress.
It has 5 main components of:
Security risks and financial system abuses: CBDC
1. Transport & Logistics: Roads, Railways, Waterways,
may be susceptible to cyber-attacks and other security
Airports, Pipelines, Multi-modal logistics park etc.
breaches. Such attacks or breaches may be committed
2. Energy: Generation, transmission, distribution,
to misuse the CBDC for illicit activities.
storage of oil/gas/LNG.
Competition to private payment service providers:
3. Water & Sanitation: Solid waste management,
Introduction of CBDC could lead to direct competition
irrigation, water treatment plants etc.
with private payment providers (such as Paytm, Google
4. Communication: Telecommunication towers and
pay etc). This may reduce their incentives to invest in
services.
innovation.
5. Social & Commercial: Educational institutions,
Higher Burden on the RBI: If the RBI adopts "Direct sports, hospitals, tourism infrastructure, cold chain
Model", it will have to directly engage with the public for infrastructure, affordable housing, affordable rental
opening accounts and hence overall burden on the RBI housing complex, exhibition-cum-convention centres
could increase. This may in turn lead to neglect of its etc.
core activities. BENEFITS AND CONCESSIONS
Reputation risk: Security breaches on the CBDC may 1. Long term credit at concessional rates from banks
dent public confidence on the RBI. and financial institutions.
Data privacy issues: Traceability feature of CBDC 2. Easier access to long-term funds from insurance
would have impact on Right to Privacy of the companies, pension fund companies on easier terms.
Individuals. Hence, need for strong data regulation law 3. Easier access to overseas borrowing through External
in India. Commercial Borrowings (ECBs)
4. Eligible to borrow money from development banks
such as India Infrastructure Financing Company
►GIFT-ISC (IIFCL).
PROPOSALS FOR GIFT-ISC IN THE BUDGET 5. Easier access to investment from sovereign wealth
• Allowing Foreign Universities to offer technical funds (SWFs) of other countries.
courses in IFSC-GIFT City. These courses will be free
from domestic regulation and will be regulated by
►VENTURE CAPITAL AND PRIVATE
IFSC. This will facilitate availability of high-end human
EQUITY INVESTMENT
resources for financial services and technology.
Venture Capital is a mechanism wherein investors
• International Arbitration Centre to be set up at GIFT
support entrepreneurial talent by providing finance and
City: Will facilitate timely settlement of disputes
business skills to obtain long-term capital gains by
under international jurisprudence.
exploiting market opportunities.
• Focus on sustainable & climate finance.
27
CONTEXT OF BUDGET
The budget proposes to establish an expert committee as Climate Action, Deep-Tech, Digital Economy, Pharma
for scaling up venture capital financing and iron out and Agri-Tech.
regulatory issues facing the sector. • Government share will be limited to 20% of these
funds.
►BLENDED FINANCE • These funds will be private fund managers.
Government will promote thematic funds for blended
finance for encouraging important sunrise sectors such
►FINANCIAL ASSISTANCE TO 3. Excise revenue of States took a hit due to lockdowns

4. Enhanced expenditure commitment on boost
STATES FOR CAPITAL
healthcare and supporting livelihoods during the
INVESTMENT pandemic.
States have emerged as important actors in Interventions by Centre for bolstering State’s Capital
infrastructure creation and public investments for Expenditure:
improving quality of life of citizens. However, due to 1. Scheme for Financial Assistance to States for
COVID-19 pandemic, finances of State Government took Capital Investment
a hit due to following reasons:
Salient Feature:
1. Reduced GST collections
• Fifty-year interest free loans are made available to
2. GST compensation from Centre was not coming States.
promptly
28
CONTEXT OF BUDGET
• These loans are provided over and above the normal 2. Lowering of Corporate Income Tax rate: The
borrowing limits allowed to the States. lowering of corporate income tax rate to 25% from
• This will prompt states to boost capex and invest in 30% previously made corporates in India much
infrastructure. stronger. They have surplus to invest and further
contribute to India's growth story. This also improved
• Outlay for this scheme is being enhanced to Rs 1
India's attraction to foreign investors.
Lakh crore in FY 2022-23. This allocation will be used
3. Removing retrospective taxation: Government
for PM GATI SHAKTI and other related capital
investment of the States. It will also include 4. Technology in taxation: Initiatives such as faceless
components for: tax assessment and e-way bill etc. has made it more
difficult to evade taxes and improved tax compliance.
o Supplemental funding for priority segments of PM
Gram Sadak Yojana, including support for States’ 5. Rationalisation of personal income tax
share. Broadly, government is pursuing a stable and
o Digitisation of the economy, including digital predictable tax regime. Going forward, reforms in the
payments and completion of OFC network. taxation system will be brought about with the aim to
establish a trustworthy tax regime in India. The focus
o Reforms related to building bye-laws, town
will be on:
planning schemes, transit oriented development
and transferable development rights. 1. Simplification of tax system
2. Fifteenth Finance Commission Recommendations 2. Promotion of voluntary compliance by taxpayers

3. Reduction of taxation related litigation
States will be allowed a fiscal deficit of 4% of GSDP of
which 0.5% will be tied to power sector reforms.
►INTRODUCTION OF NEW
BORROWING POWER OF STATES
According to Article 293 of Constitution: 'UPDATED RETURNS'
1. State governments can only borrow from within the As Indian economy grows, people are undertaking
territory of India upon the security of Consolidated multiple complex financial transactions. Income Tax
Fund of the State, within such limits as may be fixed Department has established a robust framework of
by the legislature of the state. reporting of taxpayers’ transactions. This may prompt
some taxpayers that they have incorrectly estimated
2. Government of India can make loans to State
their income for the purpose of income tax. Presently, if
governments which are charged on Consolidated
income tax department finds out that some income has
Fund of India.
been missed out by the assessee, it goes through a
3. State governments which have outstanding loans lengthy process of adjudication.
from the central government cannot raise any loan.
To ameliorate such situation, the budget proposes to
4. While giving consent for borrowing to States, Centre provide a facility to filing ‘Updated Returns’ to taxpayers
government can impose certain conditions. to correct such errors. This updated return can be filed
within two years from the end of the relevant
assessment year.
THEME-5: SIGNIFICANCE
• This updated return reflects the trust reposed in the
TAX PROPOSALS taxpayers.
Tax revenues provide critical resources for government • Assessee herself can declare the income that she
to finance various developmental works. In recent may have missed earlier while filing her return.
years, there have been many changes in our taxation • Promote voluntary tax compliance.
structure. The important ones are: • Clogging of courts by tax cases prevented.
1. Introduction of Goods and Services Tax: This led to
complete overhauling of India's indirect tax regime. ►TAX RELAXATIONS FOR
This introduced a new era of cooperative federal
COOPERATIVES
indirect tax regime in India with both Centre and
States sharing and collecting indirect taxes. a. Reduced Alternate Minimum Tax (MAT) for
Cooperatives: Currently, cooperative societies are
29
CONTEXT OF BUDGET
required to pay 18.5 of MAT as compared to to provide for definition of Virtual Digital Asset.
companies which pay 15% of MAT. To provide a level The Act defines Virtual Digital Asset as:
playing field to cooperatives as compared to
1. Any information or code or number or token
companies, MAT for cooperatives is proposed to be
generated through cryptographic means providing
reduced to 15%.
a digital representation of value exchanged with or
b. Reduced Surcharge on Cooperatives: Surcharge on without consideration. Virtual Digital Assets can be
cooperatives having total income between 1 to 10 transferred, stored or traded electronically. They
crores to be reduced to 7% from currently 12%. can have some inherent value or function as a store
SIGNIFICANCE of value or Unit of Account or Used for Financial
1. Cooperatives will be able to retain more of their Transaction or Investment.
income. This will make them more financial resilient 2. A non-fungible token.
and invest for future growth. 3. Any other digital asset as notified by Central
2. Members of cooperatives are usually rural and Government.
farming communities will have greater incomes. Currencies such as Central Bank Digital Currency or any
other foreign currency is excluded from this tax.
►LITIGATION MANAGEMENT EXAMPLES OF VIRTUAL DIGITAL ASSET
To incentivise large scale manufacturing industries in 1. Bitcoin and other similar Altcoins such as Ethereum,
India, the government had earlier proposed a Ripple, Dogecoin etc.
concessional tax regime of 15% for newly incorporated 2. Stable coins: Value linked to currency, less volatility,
domestic manufacturing companies. This concessional supply limited. Example: TrueINR, Diem, Tether etc.
st
tax regime was to end by 31 March 2023. The budget
st 3. Non-Fungible Tokens
proposes to increase this by one year ie 31 March
2024. PROPOSALS FOR TAXATION OF VIRTUAL DIGITAL
ASSETS
SIGNIFICANCE
1. Any income from transfer of any virtual digital asset
1. Incentivise global large-scale manufacturers to invest
to be taxed at the rate of 30%.
in India.
2. No deduction in respect of any expenditure or
2. Integration of Indian suppliers with global value
allowance shall be allowed while computing such
chain.
income except cost of acquisition.
3. Boost to make in India.
3. Loss from transfer of virtual digital asset cannot be
4. Manufacturing sector has large forward and set off against any other income.
backward linkage. This will boost other sectors of
4. TDS on payment made in relation to transfer of
economy as well.
virtual digital asset at the rate of 1% above a certain
5. Boost exports and employment creation. monetary threshold. This will help capture
6. Help manufacturing firms to be more globally transaction details.
competitive. 5. Gift virtual digital asset to be taxed in the hands of
7. Higher retained earnings will allow firms to innovate. the recipient.
►SCHEME FOR TAXATION OF ►LITIGATION MANAGEMENT

VIRTUAL DIGITAL ASSETS Government has decided not to pursue appeals in cases
There has been a phenomenal increase in transactions where similar issues are pending before jurisdictional
in virtual digital assets. Government has decided to High Courts and Supreme Court. This will help in
introduce a specific tax regime for such virtual digital reducing repeated litigation between taxpayers and
assets. government.
►VIRTUAL DIGITAL ASSET

►CAPITAL GOODS SECTOR
DEFINITION OF VIRTUAL DIGITAL ASSET
Factors hindering growth of capital goods sector:
Income Tax has been amended by the Finance Bill 2022
30
CONTEXT OF BUDGET
1. Duty exemptions: Several duty exemptions (some Experience suggests reasonable tariffs aid and
running over three decades) have been granted to contribute to growth domestic industry and without
capital goods for various sectors like power, significantly impacting the cost of essential imports.
fertilisers, textiles, leather, footwear, food processing Thus, to ameliorate the situation of exemptions and
and fertilisers. These exemptions have hindered concessions that hurt domestic industry, the budget
growth of domestic capital goods sector. proposes to phase out concessional rates in capital
2. Project import duty concessions: This duty goods and project imports gradually and apply a
concessions have adversely impacted and deny level moderate tariff of 7.5%. However, certain exemptions
playing field to local producers in areas like coal for advanced machinery not manufactured in India will
mining projects, power generation, electricity continue.
transmission and distribution projects, railway and
metro projects.
►CUSTOMS TAX • Reforms in Customs Administration:

o Faceless customs administration.
Customs Taxation policy of the government is part of
strategy to both boost and protect domestic industry. o Liberalised procedures
To have a more responsive and efficient customs policy,
a comprehensive review and rationalisation of customs ►TARIFF MEASURES TO
taxation took place with aim to promote Make in India
and Atma-Nirbhar Bharat. These are:
ENCOURAGE BLENDING OF FUEL
• Phasing out of more than 350 exemptions entries. Government of India is implementing National Policy on
These include exemptions on certain agriculture Biofuels, 2018 that aims to indicative target of 20%
produce, chemicals, fabrics, medical devices and blending of ethanol in petrol and 5% blending of
drugs and medicines for which sufficient domestic biodiesel by 2030.
capacity exists. Budget proposes to impose additional differential
• Several concessional rates are being incorporated in excise duty of Rs 2 per litre on unblended fuel. This will
the Customs Tariff Schedule itself instead of encourage blending of fuel as consumer price of
prescribing them through notifications. unblended fuel will rise.
• Concessional duties on raw materials that go into

manufacturing of intermediate products.
31
Part – B
ECONOMIC
SURVEY
2021-22
Section-1
TATE OF ECONOMY
This chapter of Economic Survey discusses in detail the theme of the Economic Survey i.e., "Agile Approach". The
chapter also provides a bird's eye view of the Indian Economy in terms of Trends in GDP growth rates, Trends in
contribution of different sectors etc.
Important Topics Covered in this chapter
• Decoding Theme of Economic Survey 2021-22: Agile • Trends in India's GDP Size and GDP growth rates
Approach and Barbell Strategy • Major Drivers of Indian Economy
• Safety Nets for the poor and vulnerable sections • Trends in Gross Capital Formation (GCF) and Gross
• India's Unique response to focus on Supply Side Domestic Savings
Measures • Trends in contribution of different sectors to India's GDP
• Contribution of different countries to $ 94 Trillion World • Growth Outlook
GDP
The “Waterfall” framework has been the conventional

►DECODING THE THEME OF
method for framing policy in India. The Waterfall
ECONOMIC SURVEY 2021-22 approach entails a detailed, initial assessment of the
The Covid-19 pandemic is a "once-in-a-century" crisis. problem followed by a rigid upfront plan for
The Covid-19 pandemic has shown us as to how health implementation. This methodology works on the
crisis can well transform into socio-economic crisis. The premise that all requirements can be understood at the
Covid-19 can also be described as "Crisis of Uncertainty" beginning and therefore pre-commits to a certain path
- in terms of health, social and economic impacts. of action. This is the thinking reflected in five-year
Repeated waves of infection, supply-chain disruptions economic plans, and rigid urban masterplans.
and, more recently, inflation have created particularly On the other hand, the Agile approach is a well-
challenging times for policymaking. Hence, the established intellectual framework that is increasingly
Government has adopted the Agile Approach and used in fields like project management and technology
Barbell strategy, instead of conventional waterfall development. In an uncertain environment, the Agile
approach for the Policy making in India. framework responds by assessing outcomes in short
iterations and constantly adjusting incrementally.
►AGILE APPROACH
Waterfall Approach Agile Approach
Conventional Modern
Applicable when it is easier to predict the future Applicable during times of uncertainty
33
STATE OF ECONOMY
Relies on step-by-step approach: Relies on Feedback loops
• Understanding the problem • Understanding the problem
• Formulation and Design of Plans • Formulation and Design of Plans
• Efficient implementation • Efficient Implementation
• Monitor the outcomes
• Reformulation and Redesign of Plans
Formulation and Design of Plans- Done only once Plans get reformulated and redesigned based upon the
feedback loops
Linear Approach Incremental approach
Rigid- No Changes Flexible- Constant changes based upon feedback loops
Poor responsiveness to problems Higher responsiveness to problems
Examples: Examples:
• Formulation of Five-Year Plans in India • Imposition and lifting of lockdown
• Urban Master plans • Providing Safety nets to vulnerable sections
• Allocation of Funds to MGNREGA • Support to specific sectors
As part of Agile approach, the Government keeps

Kg per person per month, over and
monitoring High frequency indicators (HFIs) such as GST
above the regular monthly NFSA
collections, power consumption, mobility indicators,
food grains
digital payments, satellite photographs, cargo
• One Nation One Ration Card to
movements, highway toll collections, and so on. Based
ensure PDS benefit for people in
upon such feedback loops, the Government keeps
transit, especially migrant workers.
calibrating its policy responses to an evolving situation
rather than rely on pre-defined responses of a Waterfall
framework. • MGNREGS wage increased by Rs 20
over the wage rate of 2019-20
►BARBELL STRATEGY • Contribution of 12 per cent

employer and 12 per cent
The Barbell Strategy is based on two-pronged strategy employee’s share under Employees
on providing (a) Safety Nets to poor people for
Provident Fund (EPF) for 6 months
unpredictable negative outcomes in future and (b)
for establishments with up to 100
Supply Side measures to make Indian Economy more Employment
employees with 90 per cent earning
innovative, flexible, resilient to deal with the post covid-
less than Rs 15000/-
19 world.
• Aatmanirbhar Bharat Rojgar Yojana
(ABRY) to reduce the financial
►SAFETY NETS FOR POOR AND burden of the employers and
VULNERABLE SECTIONS encourages them to hire more
workers, implemented by EPFO
• Rs 500/month for 3 months to
women Jan Dhan Account holders • Restructuring of MSME default loans
• Rs 1000 to vulnerable sections – Aug 2020 and May 2021 Schemes
Cash
(widows, Divyangs, elderly) of RBI
Transfers
• Pradhan Mantri Kisan Samman Nidhi • Emergency Credit Line Guarantee
(PM-KISAN)- Rs 6000/- per year in Scheme – 100 per cent guarantee for
MSME
three instalments additional funding of up to Rs 4.5
lakh crore to businesses (esp.
• Pradhan Mantri Garib Kalyan Anna MSMEs) for COVID affected sectors
Food Yojana - Additional free of-cost food • Credit Guarantee Scheme (CGS) for
Security grains to 80 Crore National Food MSMEs
Security Act (NFSA) beneficiaries @ 5
34
STATE OF ECONOMY
of legacy issues like ‘retrospective tax’, privatisation,
• Suspension of initiation of corporate production-linked incentives and so on.
insolvency process under Insolvency
REASONS FOR FOCUS ON SUPPLY SIDE
and Bankruptcy Code for 1 year, and
increasing minimum threshold from • Focussing only on boosting demand without
Rs 1 lakh to Rs 1 crore focussing on supply side measures would have led to
demand-supply mismatch and hence inflation.
• Special Long Term Repo Operations
for Small Finance Banks • Indian policy-makers saw the disruptions caused by
Credit travel restrictions, lockdowns and supply-chain
• Lending by Small Finance Banks
breakdowns as an interruption of the economy’s
(SFBs) to MFIs for on-lending to be
supply-side. Although this also squeezed demand, it
classified as priority sector lending
is not correct to see the pandemic related economic
up to 31.3.2022
slowdown as just a demand problem as happens
• PM SVANidhi Scheme to provide with most economic cycles.
working capital loan to urban street
vendors to resume their businesses • The post-Covid world will be impacted by a wide
variety of factors – changes in technology, consumer
behaviour, geo-politics, supply-chains, climate
change and so on. All of these factors will also
►SUPPLY SIDE MEASURES interact in unpredictable ways with each other.
One of the distinguishing features of India’s economic Therefore, the post-Covid economy will not be
response has been an emphasis on supply-side reforms merely a re-inflation of the pre-Covid economy.
rather than a total reliance on demand management. Simply building it back with demand measures is not
These supply-side reforms include deregulation of a solution.
numerous sectors, simplification of processes, removal
• Production Linked Incentive Scheme approved for 14 Sectors

Industry
• Retrospective tax repealed to promote tax certainty and foreign investment.
• Rationalization of Adjusted Gross Revenue: Non-telecom revenue will be excluded from the
definition of Adjusted Gross Revenue.
Telecom • 100 per cent FDI under automatic route permitted in telecom sector
• No Spectrum Usage Charge (SUC) for spectrum acquired in future spectrum auctions.
• Spectrum sharing encouraged: The additional SUC of 0.5 per cent for spectrum sharing removed.
• Expansion in the factoring ecosystem: The earlier condition of NBFCs whose principal business
Financial was factoring has been removed and now all NBFCs are permitted to undertake factoring
sector business.
• Increase in deposit insurance from Rs 1 lakh to Rs 5 lakh per depositor per bank.
Revised definition of MSMEs:

MSME • Removal of distinction between manufacturing and service MSMEs.
• Upward revised definition of MSMEs in industry and service sector.
• New Public Sector Enterprise Policy and Asset Monetisation Strategy

Disinvestment • National Monetisation Pipeline Aggregate monetisation potential of Rs 6 lakh crore through core
assets of the Central Government over a four year period from 2021-22 to 2024-25.
Labour
Central Government notified four labour codes.
Reforms
35
STATE OF ECONOMY
Corporatisation of Ordnance Factory Board (OFB) approved and 7 new Defence Public Sector
Defence Undertakings created. FDI enhanced in Defence sector up to 74 per cent through the automatic
route and up to 100 per cent by government route
►CONTRIBUTION OF DIFFERENT According to World Bank, the total Nominal GDP of the
World as on September 2021 is around $ 94 trillion. The
COUNTRIES TO $94 TRILLION share of different countries to World's GDP ( as on Sep
WORLD GDP 2021) has been shown in figure below:
Top 5 countries in terms of GDP Size: USA, China, Japan, The Real GDP ( GDP at base year prices) has increased
Germany and UK. In 2020-21, India has slipped from from 133 lakh crores in 2020-21 to 144 lakh crores in
fifth place to sixth place. However, in terms of 2021-22. Similarly, the nominal GDP (GDP at current
Purchasing power parity (PPP), India is placed at 3rd market prices) has increased from 195 lakh crores in
Place behind China and USA. 2020-21 to 230 lakh crores in 2021-22.
►TRENDS IN INDIA'S GDP SIZE

AND GDP GROWTH RATES
Both Real GDP and Nominal GDP had registered
consistent increase in terms of absolute value before
2020-21. On account of covid-19, both Real GDP and
Nominal GDP contracted in 2020-21. However, both
Real GDP and Nominal GDP have now come back to
pre-COVID levels.
36
STATE OF ECONOMY
• Changes in Stock/Inventories: Increase in the
Inventory value
• Valuables: Valuables include precious metals and
stones, antiques and other art objects and other
valuables.
Trends in Gross Capital Formation (GCF)

Components 2010-11 2015-16 2019-20
1. Gross Fixed Public: Public: Public:
Capital 8% 7.5% 7%
Both Real GDP and Nominal GDP Growth rate had Formation Private: Private: Private:
registered consistent decline before 2020-21. Because
25% 21% 22%
of covid-19, both Real GDP and Nominal GDP growth
2. Change in Stocks 4.5% 2% 1%
rates contracted in 2020-21. However, both Real GDP
and Nominal GDP growth rate have now registered 3. Valuables 2.2% 1.5% 1%
growth rate. Total (1+2+3) 40% 32% 31%
IMPORTANT OBSERVATIONS
►MAJOR DRIVERS OF INDIAN
• There has been decline in GCF in the last decade
ECONOMY from 40% to 31%.
According to Expenditure method, GDP is calculated as • Share of Private Investment is higher than Public
C+G+I+ (X-M) where C denotes Private final Investment.
consumption expenditure (PFCE), G denotes
Government Final consumption Expenditure (GFCE), I
►TRENDS IN GROSS DOMESTIC
denotes Investment, X denotes Exports and M denotes
Imports. As shown in the figure below, the PFCE SAVINGS
accounts for the highest contribution followed by Trends in Gross Domestic Savings
Investment.
Sector 2010-11 2015-16 2019-20
2019-20 2020-21 2021-22
Sectors st st Household 24% 18% 20%
(1 RE) (PE) (1 AE)
Total Consumption 71.7 71.1 69.7 Private Corporate 10% 12% 10.5%
Government 11.2 12.5 12.2 Sector
Consumption Public 3% 1% 1%
Private Consumption 60.5 58.6 57.5
Total (1+2+3) 37% 31% 31.5%
Gross Fixed Capital 28.8 27.1 29.6
Formation IMPORTANT OBSERVATIONS
Net Export -2.5 -0.5 -3.0
• Gross Domestic Savings is contributed by Household
Exports 18.4 18.7 20.1 sector, Private Corporate and Public Sector.
Imports 21.0 19.2 23.1
• Decline in Gross Domestic Savings in the last decade
GDP 100.0 100.0 100.0
from 37% to 31.5%.
• Household Sector contributes for the largest share of
►TRENDS IN GROSS CAPITAL Savings in India.
FORMATION (GCF) • The Household Savings is categorized into:
Gross Capital Formation (GCF) is calculated as Gross a. Net Financial Savings
fixed capital formation (GFCF) + Changes in stocks
b. Physical Savings
(increase in stocks of inventories) + net acquisition of
valuables Note: The Physical Savings of the household sector
• Gross fixed capital formation: Creation of new account for the larger share in comparison to Net
assets, Machinery and Equipment, R&D and Financial Savings)
Increment in Cultivated Biological Resources
37
STATE OF ECONOMY
►TRENDS IN CONTRIBUTION OF
DIFFERENT SECTORS TO INDIA'S
GDP
Table: Sectoral share in Gross Value Added at Current Basic Prices
(Percentage)
S. Industry 2011-12 2012- 2013- 2014- 2015- 2016- 2017- 2018- 2019- 2020-
No. 13 14 15 16 17 18* 19" 20@ 21"
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
I Agriculture, forestry & 18.5 18.2 18.6 18.2 17.7 18.0 18.3 17.6 18.4 20.2
fishing
Crops 12.1 11.8 12.1 11.2 10.6 10.6 10.5 9.7 10.7 -
Livestock 4.0 4.0 4.1 4.4 4.6 4.8 5.1 5.1 5.2 -
Forestry and logging 1.5 1.5 1.5 1.5 1.5 1.5 1.4 1.5 1.3 -
Fishing and aquaculture 0.8 0.9 0.9 1.0 1.1 1.1 1.2 1.2 1.2 -
II Industry 32.5 31.8 30.8 30.0 30.0 29.3 29.2 29.0 26.7 25.6
Mining and quarrying 3.2 3.1 2.9 2.7 2.3 2.3 2.2 2.2 1.9 1.6
Manufacturing 17.4 17.1 16.5 16.3 17.1 16.7 16.6 16.3 14.7 14.3
Electricity, gas, water supply 2.3 2.3 2.5 2.5 2.7 2.5 2.7 2.6 2.6 2.7
& other utility services
Construction 9.6 9.2 8.9 8.5 7.9 7.7 7.7 7.9 7.4 7.0
III Services 49.0 50.0 50.6 51.8 52.3 52.6 52.5 53.4 55.0 54.3
GVA at basic prices 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
IMPORTANT OBSERVATIONS ►GROWTH OUTLOOK

• Share of Agriculture sector has remained stagnant 2021-22: The Indian economy is estimated to grow by
around 18%, except in 2020-21, when its share 9.2 per cent in real terms in 2021-22 (as per the First
increased to 20%. Advance Estimates), after a contraction of 7.3 per cent
• Amongst the sub-sectors in Agriculture, Crops in 2020-21.
account for the highest share. 2022-23: Growth in 2022-23 will be supported by
• The Share of Industrial Sector has steadily declined in widespread vaccine coverage, gains from supply-side
the last decade from 32% to 25%. reforms and easing of regulations, robust export
• The share of manufacturing sector has remained growth, and availability of fiscal space to ramp up
stagnant at 16%-17% in last decade. capital spending. Thus, India’s GDP is projected to grow
in real terms by 8.0-8.5 per cent in 2022-23.
• The share of services sector has increased in the last
decade from 49% to 55%.
38
Section-2
TATE OF PUBLIC
FINANCES
This chapter of the Economic Survey seeks to provide the bird's eye view of the Public Finances.It begins with
discussion of Central Government finances over the recent years, followed by analysis of the fiscal performance
during the current financial year. With respect to UPSC Prelims, one needs to be aware of basic concepts related to
Budgeting and recent trends in various macro-economic indicators such as Tax-GDP Ratio, Deficits, Debt etc.
The following Topics have been covered in the Chapter:
th
• Basics about Government Budgeting and Fiscal • 15 Finance Commission Recommendations
Policies • Evolution of the Disinvestment Policy of the Government of
• Focus of the Fiscal Policy India
• Snapshot of Public Finances • Asset Monetisation- Core and Non-Core Assets
• Trends in Tax-GDP Ratio • Policy Measures to enhance Efficiency of Government's
• Trends in Various Deficits expenditure
• Sources of Deficit Financing • RBI's Retail Direct Scheme
• Debt Position of the Government and recent trends
►BASICS ABOUT GOVERNMENT'S

ACCOUNTING
Criteria Revenue Budget Capital Budget
Receipts which create liability or

Receipts Non-redeemable receipts
reduce financial assets.
Tax Revenue (Direct and Indirect Taxes): GST, Income

Debt Receipts: Market Borrowings.
Tax, Corporate Tax, Excise Duty, Customs duty
Examples of Receipts Non-Debt Receipts: Disinvestment,
Non-Tax Revenue: Interest Receipts, Dividends and
Recovery of Loans
Profits of PSUs, User Charges, External Grants etc.
Recurring: Incurred for purposes other than creation of Non-Recurring: Incurred for Asset
Expenditure
Assets creation
39
STATE OF PUBLIC FINANCES
Examples of Interest Payments, Subsidies, Salaries and Pensions, Creation of Roads, railways etc. and
Expenditure Defence, Grants to the States for creation of Assets etc. loans to States.
►TYPES OF FISCAL POLICIES

Fiscal policy Recession Expansion Outcome
(FP) stance ( ↓ GDP) (GDP)
Contractionary FP Expansionary FP
Deepens recessions and amplifies
↓ Govt. Expenditure ↑ Govt. Expenditure
Pro-cyclical expansions, thereby increasing
or/and or/and
fluctuations in the business cycle.
↑ Taxes ↓ Taxes
Expansionary FP Contractionary FP
Softens the recession and moderates
↑ Govt. Expenditure ↓ Govt. Expenditure
Counter-cyclical the expansions, thereby decreasing
or/and or /and
fluctuations in the business cycle.
↓ Taxes ↑ Taxes
►MAIN FOCUS OF THE FISCAL as enhanced capital expenditure and schemes such as
Production linked incentive (PLI) scheme.
POLICY
Because of distress caused due to Covid-19 pandemic,
►SNAPSHOT OF PUBLIC FINANCES
the Government of India focused on the agile approach.
The Government has adopted a calibrated fiscal policy STATUS OF DEFICITS IN 2021-22
approach to the pandemic, which had the flexibility of • Revenue Deficit (Revenue Expenditure- Revenue
adapting to an evolving situation to support the Receipts): 4.7% of GDP;
vulnerable sections of society/firms and enable a
• Effective Revenue Deficit (Revenue Deficit- Grants to
resilient recovery. States for Capital Assets): 3.7% of GDP
During the initial phase of the pandemic, the fiscal
• Fiscal Deficit (Borrowings): 6.9% of GDP
policy focused on building safety-nets for the poor and
• Primary Deficit (Fiscal Deficit – Interest Payments):
vulnerable sections by providing them with food, direct
3.3% of GDP
benefits transfer and emergency credit to the MSMEs.
This was followed by a series of stimulus packages such
40
►TRENDS IN TAX-GDP RATIO
►TRENDS IN VARIOUS DEFICITS
41
►SOURCES OF DEFICIT FINANCING
Highest Source of Borrowings: Market borrowings (Dated Securities + T-Bills) > Securities against NSSF
►DEBT POSITION OF THE Government. The Total liabilities of the Central

Government include debt contracted against the
GOVERNMENT Consolidated Fund of India, technically defined as Public
The Debt position of the central Government can be Debt, as well as liabilities in the Public Account.
analyzed by looking at the total liabilities of the Central
Debt Status of the Central Government
Treasury Bills
Cash Management Bills
Public Debt Internal Ways and Means Advances

120 lakh crores Debt Dated Securities (30% of GDP)
Total Liabilities of (51.5% of GDP) 115 lakh
Government crores Special G-Secs- Recapitalization Bonds,
135 Lakh crores (49.5% of Sovereign Gold Bonds
GDP) Securities against NSSF
(59% of GDP)
External Loans from Multilateral Institutions (70% of
Debt External Debt)
5 lakh crores
Bilateral Debt (30% of External Debt)
(2% of GDP)
Liabilities under Public National Small Savings Fund
Account of India
State Provident Fund
15 lakh crores
(8% of GDP) Other deposits under Public Account of India
The Total liabilities of the central Government as on borrowings, the Public Debt is categorized into Internal
2021-22 stands at 135 lakh crores (59% of India's GDP). and External Debt.
The liabilities are categorized under two heads- Public Some of the major sources of Internal Debt are:
Debt and Liabilities under Public Account of India.
• Treasury Bills: Instruments to raise short-term loans
Depending upon the source of Government's
• Dated Securities: Used for raising long term loans
42
• Ways and means advances (WMA): Borrowings the NSSF is used to investment in special G-Secs and
from the RBI to meet immediate cash requirements hence considered to be Government's borrowings.
which can arise due to temporary mismatches in • Important Note: Presently, major part of Internal
receipts and expenditure. debt is dominated by market borrowings i.e.
• Sovereign Gold Bonds: Government securities Treasury Bills and Dated Securities. It is followed by
denominated in terms of Gold. Securities issued against NSSF.
• Bank Recapitalization Bonds: Bonds issued by the
Government to raise loans for undertaking
►TRENDS IN CENTRE'S DEBT-TO-
recapitalization of Public Sector Banks (PSBs)
• Securities issued against NSSF: The money
GDP RATIO
collected under various small savings schemes such Targets under the FRBM act
as Post office Deposits, National Savings Certificate, • Reduce Fiscal Deficit to 3% of GDP by end of 2021.
PPF etc. is deposited under National Small Savings
• Reduce General Government debt to below 60% by
Fund (NSSF) which is maintained as part of Public
end of 2024-25. ( Central Government: Below 40%;
Account of India. Certain percentage of funds under
State Governments: Below 20%).
Figure 21: Trends in General Government Debt and Deficits (as a per cent of GDP)
Figure 20: Major deficit and debt indicators of States
43
Figure 18: Trend in Centre’s Debt-GDP ratio
th
As shown in above figure, the overall debt of the centre 14 Finance Commission for 2015-20 period. The
was around 45% in 2018-19. By end of 2020-21, the adjustment of 1% is to provide for the newly formed
debt has increased to 59% of India's GDP. union territories of Jammu and Kashmir, and Ladakh
The overall GDP-GSDP ratio of the states has increased from the resources of the Centre.
from 25% in 2018-19 3 to 31% in 2020-21. CRITERIA FOR THE HORIZONTAL DISTRIBUTION OF
TAXES AMONG THE STATES
The criteria for distribution of central taxes among
►EXPENDITURE ON SUBSIDIES
states for 2021-26 period is same as that for 2020-21.
th th
Criteria 14 Finance 15 Finance
Commission Commission
Income Distance 50 45
Population (1971 17.5 Not Considered

Census)
Population (2011 10 15
census)
Demographic Not Considered 12.5

►15TH FINANCE COMMISSION Performance
RECOMMENDATIONS Forest Cover 7.5 Not Considered
The 15th Finance Commission headed by Mr. N.K. Singh
Forest and Not Considered 10
has submitted its recommendations. Usually, the
Ecology
Finance Commission recommendations are valid for a
period of 5 years. However, this time, the 15th Finance Area 15 15
Commission recommendations would be valid for a
Tax Effort Not considered 2.5
period of 6 years.
TH
IMPORTANT RECOMMENDATIONS OF 15 FINANCE Total 100 100
COMMISSION ( SECOND REPORT: 2021-26)
GRANTS-IN-AID
Vertical Devolution of Taxes: The share of states in
• The Terms of Reference of the Finance Commission
the central taxes for the 2021-26 period is
recommended to be 41%, same as that for 2020-21. require it to recommend grants-in-aid to the States.
This is less than the 42% share recommended by the These grants include: (i) revenue deficit grants, (ii)
44
grants to local bodies, and (iii) disaster management ►EVOLUTION OF THE
grants.
DISINVESTMENT POLICY OF THE
• Revenue Deficit Grants: These grants are usually
GOVERNMENT OF INDIA
assigned in order to cover the gap between the
Revenue expenditure and Revenue Receipts of the FIRST CONSTITUTIONAL AMENDMENT ACT 1951: The
citizen’s right to practise any profession or to carry on
states. The 15th Finance Commission has estimated
any occupation, trade or business conferred by article
that 17 states would face revenue deficit post-
19(1)(g) is subject to reasonable restrictions which the
devolution. To make up for this deficit, the
laws of the State may impose “in the interests of general
Commission has recommended revenue deficit public”’. The Act allowed for nationalisation or trading
grants worth Rs 2.9 lakh crores to these 17 states. by the state in any business.
• Sector Specific Grants: Sector-specific grants of Rs AIR CORPORATIONS ACT, 1953: Nationalisation of 9
1.3 lakh crores will be given to states for Health, Airlines- Air India, Air Services of India, Airways (India),
Bharat Airways, Deccan Airways, Himalayan Aviation,
Education, Agriculture etc.
Indian National Airways, Kalinga Airlines, and Air India
• Grants to local bodies: The total grants to local International. All these airlines were brought them
bodies for 2021-26 has been fixed at Rs 4.36 lakh under two PSEs, Indian Airlines, and Air India
crore. The grants will be divided between states International.
based on population and area in the ratio 90:10. LIFE INSURANCE CORPORATION ACT 1956: 154 Indian
FUNDING OF DEFENCE AND INTERNAL SECURITY insurers, 16 non-Indian insurers, and 75 provident
societies were nationalised into Life Insurance
• Present Status: Defence expenditure has, over time,
Corporation of India (LIC).
been characterised by a higher share of revenue
BANKING COMPANIES (ACQUISITION AND TRANSFER
expenditure, huge pension bills and lower capital
OF UNDERTAKINGS) ACT, 1970: Nationalisation of 14
expenditure with high dependence on import of Banks in 1969. This was followed by second round of
defence equipment. Bank Nationalisation in 1980.
• Recommendations: A dedicated non-lapsable fund Post 1991 Reforms: The liberalization reforms
called the Modernisation Fund for Defence and undertaken in 1991 ushered in an increased demand
Internal Security (MFDIS) should be constituted under for privatization/ disinvestment of PSUs.
the Public Account for capital expenditure in defence • First Phase: Sale of minority stake in bundles
and internal security. The fund will be funded through auction.
through (a) Transfers from the Consolidated Fund of • Second Phase: Separate Sale of each PSU
India (b) Disinvestment of defence PSUs (c) • Third Phase:
Monetisation of defence lands. o Strategic Disinvestment- Sale of substantial
portion of Government shareholding in identified
DISASTER MANAGEMENT
Central PSEs (CPSEs) up to 50 per cent or more,
The total States allocation for State Disaster Risk along with transfer of management control.
Management Fund (SDRMF) should be subdivided into o Launch of exchange traded funds (ETFs) - an
funding windows that encompass the full disaster equity instrument that tracks a particular index.
management cycle. The SDRF (State Disaster Response o Monetization of select assets of CPSEs.
Fund)should get 80 per cent of the total allocation and
o Buyback of Shares.
the SDMF (State Disaster Mitigation Fund) 20 per cent.
NEW PUBLIC SECTOR ENTERPRISE POLICY: The
Similarly, the Commission has recommended that NDRF
government has recently released a new ‘Public Sector
(National Disaster Response Fund) should get 80 per Enterprise Policy’ during Budget 2021-22. Under the
cent of the total allocation of the National Disaster Risk new policy, Various sectors will be classified
Management Fund and balance 20 per cent for National as strategic and non-strategic sectors. The policy has
Disaster Mitigation Fund. identified 4 sectors as strategic sectors: i) Atomic
45
energy, Space and Defence ii) Transport and MONETISATION OF NON-CORE ASSETS
Telecommunications iii) Power, Petroleum, Coal and Monetization of non-core assets include monetisation
other minerals iv) Banking, Insurance and financial of assets which are non-critical to the functioning of
services. PSUs. Some of these non-core assets include land and
In strategic sectors, there will be bare minimum buildings. While the monetization of core assets is
presence of the public sector enterprises. The steered by NITI Aayog, the initiative for monetization
remaining CPSEs in the strategic sector will be privatised of non-core assets is steered by the Department of
or merged with other CPSEs. In non-strategic sectors, Investment and Public Asset Management (DIPAM).
CPSEs will be privatised, otherwise shall be closed. The ‘National Land Monetisation Corporation’ (NLMC)
has been been incorporated as a 100 per cent Govt of
►ASSET MONETISATION India owned entity with an initial authorized share
capital of Rs 5000 crores and subscribed share capital of
Asset Monetisation is defined as transfer of core
Rs 150 crores
assets owned by the Government to the private sector
for a limited period. The core infrastructure assets
include roads, ports, airports, telecom, railways, ►POLICY MEASURES TO ENHANCE
warehousing, energy pipelines, power generation, THE EFFICIENCY OF GOVERNMENT
power transmission, hospitality and sports stadiums.
NMP does not include monetization of non-core
SPENDING
assets (such as land, buildings etc). Public procurement involves purchase of goods and
NMP is not privatisation since the ownership of the services by the Government with an aim to not only
assets would continue to remain with the Government. carry day-to-day tasks but to also create social and
The assets would be only transferred to the private economic infrastructure. Government has undertaken
sector for limited duration of time based upon the consistent efforts to boost the efficiency of public
contract. procurement policy.
GOVERNMENT e-MARKETPLACE (GEM) PORTAL
Note: Assets which are central to the business
One stop portal to facilitate online procurement of
objectives of the Government have been categorised as
common use Goods & Services required by various
Core Assets for the purposes of monetisation.
Government Departments / Organizations / PSUs. GeM
Global Examples: Asset Recycling Initiative (ARI) in
aims to enhance transparency, efficiency and speed in
Australia helped in raising over $ 17 billion for funding
public procurement. The purchases through GeM by
infrastructure. Similarly, Indonesia's Limited Concession
Government users have been authorized and made
Scheme (LCS) was also hugely successful.
mandatory by Ministry of Finance by adding a new Rule
NEED FOR NATIONAL MONETISATION PIPELINE No. 149 in the General Financial Rules, 2017.
(NMP)
NEW GUIDELINES FOR REFORMS IN PUBLIC
The NMP would help us meet the financing for the PROCUREMENT AND PROJECT MANAGEMENT
National Infrastructure Pipeline (NIP) which seeks to
Apart from the purchases of common goods from GeM,
spend Rs 111 lakh crores over the next 5 years for
the government also procures non-routine Goods,
financing world class infrastructure. As estimated by the
Services and Works like construction of highways,
Task Force for NIP (2019), traditional sources of capital
buildings, hiring of consultants etc. This is done using
are expected to finance 85% of the capital expenditure
the Central Public Procurement Portal as per the
under NIP. Remaining 15% is expected to be met
General Financial Rules (GFR) 2017.
through innovative mechanisms such as Asset
Monetisation and NaBFID.
►RBI'S RETAIL DIRECT SCHEME
The top 5 sectors which capture around 83 per cent of
the aggregate pipeline value include: Roads (27 per Platform to enable retail investors to buy G-Secs directly
cent) followed by Railways (25 per cent), Power (15 per from RBI. Individual Retail investors can open Gilt
cent), oil & gas pipelines (8 per cent) and Telecom (6 per Securities Account – “Retail Direct Gilt (RDG)” Account
cent). with the RBI.
46
• G-Secs which can be bought T-Bills, Dated Secs, BENEFITS FOR DIFFERENT STAKEHOLDERS
SDLs and Sovereign Gold Bonds. • Retail Investors: Risk-free Investment; Held in
• Who can open RDG Account? Retail investors DEMAT form; Can be sold easily in secondary market
having Bank account, PAN Card etc. fulfilling KYC to meet immediate cash requirements; can be used
norms. Non-Resident investors are also eligible. as collateral to borrow loans etc.
• Limits on Investment: RBI has imposed minimum • Government: Government has planned to borrow
and maximum investment limits for the retail around Rs 12 lakh crores from the market for the
investors. For example, minimum investment in the present financial year Make it easier for the
G-Secs should be Rs 10,000. The exact limits on Government to mobilize household deposits for
minimum and maximum investments is not undertaking long-term investment.
important from the perspective of UPSC exam. Economy: Deepen the G-Secs Market  Higher
Investment rates Promote Economic Growth.
47
Section-3
XTERNAL SECTOR
The Chapter of External Sector is an important chapter from the perspective of UPSC Prelims. Following Topics have
been covered in this chapter:
The following Topics have been covered in the Chapter:
• Global Economic Environment and future challenges • Current Account and Capital Account Balances
• Trends in Balance of Payment (BoP) • Present State of Forex Reserves
• India's Merchandise Trade - Exports and Imports and • Net International Investment Position (NIIP) and
Trade Balance recent trends
• Trade in Services • Taper without Tantrums: India’s external sector
resilience
• Private Transfers/Remittances
• Major Schemes for Export Promotion
• Net Invisibles
• Enabling an efficient Logistics eco-system to boost
exports
►GLOBAL ECONOMIC increase in both exports and imports. World Trade

Organization (WTO) in its October 2021 release has
ENVIRONMENT forecasted the global merchandise trade volume growth
The Global Trade has rebounded strongly after the covid- to be at 10.8 percent in 2021, followed by a 4.7 percent
19 pandemic. The increase in global demand and revival rise in 2022.
of manufacturing activity across the global has led to
48
EXTERNAL SECTOR
Note: WTO's goods trade barometer index is a leading • Impact on Developing economies: The rising
inflation may result in tightening of financial
indicator that signals changes in world trade growth two
to three months ahead of merchandise trade volume conditions, adversely affecting capital flows, putting
statistics. Its baseline value is 100, a value greater than pressure on exchange rate and slowing down growth
in emerging economies. Therefore, the revival in
100 suggests above -trend growth while a value below
100 indicates below-trend growth. inflation across the world now poses risks from both a
tighter global liquidity condition and exchange rate
FUTURE CHALLENGES FOR GLOBAL ECONOMY
volatility in global currency.
• Rising Inflation: The inflation in the global economy
• Supply Chain Disruptions: Shortage of shipping
has picked up due to strong revival of demand. For
containers, shortage of inputs such as semi
example, Inflation in USA touched 6.8% in November
conductors, higher freight rates etc.
2021, the highest in last 40 years, mainly on account
of rising energy prices and food prices.
►TRENDS IN BALANCE OF PAYMENT (BoP)
►INDIA'S MERCHANDISE TRADE Figure 6: Top ten Export Destinations in 2021-22

(April-November) [by Share in Per cent]
(APRIL 2021 - NOV 2021)
Merchandise Exports: During 2021-22 (April-December),
the merchandise exports recorded growth of 49.7 per
cent to US$ 301.4 billion, compared to corresponding
period of last year and 26.5 per cent over 2019-20 (April-
December), exceeding the pre-pandemic levels. Out of an
ambitious export target of US$ 400 billion set for 2021-
22, India has already attained more than 75 per cent of it
by exporting goods worth US$ 301.4 billion. Top 5 Export commodities: Petroleum Products, Pearls
and Precious Stones, Iron and Steel, Drug Formulations
and Gold Jewellery
49
EXTERNAL SECTOR
Top 3 Agricultural Exports: Marine Products, Rice Top 5 Import sources: China, UAE, USA, Saudi Arabia
(other than Basmati), Spices and Iraq
Top 5 Export Destinations for India: USA, UAE, China,
Bangladesh and Hong Kong ►MERCHANDISE TRADE BALANCE
Merchandise Imports: As the pandemic ebbed, India India’s merchandise trade balance for major countries
witnessed revival in domestic demand resulting in strong for the period of 2020-21 (April-November) as compared
import growth. The merchandise imports grew at the to 2019-20 (April-November) shows that India had the
rate of 68.9 per cent to US$ 443.8 billion in April- most favourable trade balance with USA followed by
December, 2021 over the corresponding period of last Bangladesh and Nepal. The highest trade deficit is with
year. China followed by Iraq and Saudi Arabia during April-
Top 5 Import Commodities: Crude Oil, Gold, Petroleum November, 2020-21 and April-November, 2019-20.
products, Pearls and Precious Stones and Coal
(US$ Billion)
Exports Imports Trade Balance
S. Apr-Nov 21 Apr-Nov 21 Apr-Nov21
Country Apr-Nov 20 Apr-Nov 20 Apr-Nov 20
no. (P) (P) (P)
1 USA 31.3 49.0 16.3 27.4 15.0 21.6
2 Bangladesh 5.1 9.2 0.6 1.3 4.4 7.9
3 Nepal 3.5 6.0 0.4 1.0 3.1 5.0
4 Turkey 2.3 5.1 0.9 1.3 1.4 3.8
5 Netherland 3.8 6.9 1.9 2.8 1.9 4.1
6 UK 4.6 6.8 2.6 4.3 2.0 2.5
7 Italy 2.6 5.4 2.2 3.2 0.4 2.1
8 Korea 2.9 4.8 7.1 11.1 -4.2 -6.3
9 Qatar 0.8 1.2 4.6 7.7 -3.8 -6.5
10 UAE 9.7 17.5 13.1 27.9 -3.4 -10.4
11 Saudi Arab 3.6 5.8 9.2 19.2 -5.6 -13.4
12 Iraq 1.0 1.3 7.6 18.5 -6.6 -17.2
13 Switzerland 0.9 0.9 5.8 17.8 -4.9 -16.9
14 China 13.6 15.6 38.8 59.0 -25.2 -43.4
Source: Department of Commerce Note: P: Provisional
►TRADE IN SERVICES Services Imports: Services imports rose by 21.5 per cent
to US$ 103.3 billion in 2021-22 (April-December) from the
Services Export: India has maintained its impressive
corresponding period a year earlier.
performance in world services trade in the post COVID-
Top 3 Import of services: Payments for business,
19 period. Despite pandemic induced global restrictions
Transport and Travel.
and weak tourism revenues, India’s services exports
recorded growth of 18.4 per cent to US$ 177.7 billion
►PRIVATE TRANSFERS/
during 2021-22 (April-December), over corresponding
period a year earlier.
REMITTANCES
As per the Migration and Development Brief Report of
Top 3 Export of Services: Computer Services (49%),
the World Bank (November 2021), India continues to be
Business Services and Transportation services. These 3
the largest remittance recipient country in the world in
services alone account for 80% of export of services from 2021 (in current US dollar terms) and has been so since
India. 2008. India is followed by China, Mexico, the Philippines,
50
EXTERNAL SECTOR
and Egypt. The remittances into India account for 2.9% of Foreign
A1. 44.4 80.1 31.5 25.4
GDP. Investment
As a share of gross domestic product, the top five Foreign Direct

A1.1 43.0 44.0 23.9 21.2
Investment (FDI)
recipients in 2020 were, by contrast, smaller economies:
Tonga, Lebanon, Kyrgyz Republic, Tajikistan, and El Foreign Portfolio
A1.2 1.4 36.1 7.6 4.3
Investment (FPI)
Salvador. The United States was the largest source
country for remittances in 2020, followed by the United A2. Loans 25.7 6.9 -1.1 10.4
Arab Emirates, Saudi Arabia, and the Russian Federation. A3. Banking Capital -5.3 -21.1 -9.0 4.4
Rupee Debt
A4. -0.1 -0.1 -0.1 -0.1
Service
►NET INVISIBLES
A5. Other Capital 18.5 -2.1 -4.0 25.4
Table 5: Net Invisibles and its component
Capital Account
(US$ Billion) B. Balance to GDP 2.9 2.4 1.5 4.5
Year / 2019-20 2020-21 2020- 2021-22 ratio (Percent)
Source: Reserve Bank of India Note: P: Provisional
Item 21 H1
(Net) H1 (P)
Invisibles 132.8 126.1 60.1 72.1
►FOREX RESERVES
Services 84.9 88.6 41.8 51.4 The foreign exchange reserves have crossed the
milestone of US$ 600 billion and touched US$ 635.4
Transfers 75.2 73.5 35.4 37.9
billion as at end of September 2021. As at end-November
Income -27.3 -36.0 -17.1 -17.2
2021, India was the fourth largest foreign exchange
Source: RBI Note: P: Provisional
reserves holder in the world after China, Japan and
Switzerland.
►CURRENT ACCOUNT BALANCE
The Forex reserves in India comprise of Foreign Currency
India registered current account surplus for the first time
assets (FCAs), Special Drawing Rights (SDRs), Reserve
in the last 17 years in 2020-21. The surplus in the Current
Position in the IMF and Gold. The largest source of Forex
Account was on account of sharp decline in imports into
reserves is FCAs followed by Gold.
the Indian economy last year.
However, in the first half of the current year (2021-22),
the Current Account balance has flipped into deficit of $
►NET INTERNATIONAL
3.1 bn (0.2% of GDP). INVESTMENT POSITION (NIIP)
Net International Investment Position (IIP) is the
►CAPITAL ACCOUNT BALANCE difference between the value of financial assets of
residents of an economy that are claims on non-
Foreign Investment, consisting of foreign direct
residents and the liabilities of residents of an economy to
investment (FDI) and foreign portfolio investment (FPI), is
non-residents at a point in time. It represents either a net
the largest component of the capital account.
claim on or a net liability to the rest of the world.
India has registered the highest ever annual FDI Inflow of
TRENDS IN NIIP
US$ 81 billion in the financial year 2020-21.
Sector attracting highest FDI inflows (2020-21): Figure 20: Net International Investment Position
Computer Software & Hardware (IIP)
a. Declining Net IIP and ratio to GDP
Largest Source of FDI into India (2020-21): Singapore,
USA and Mauritius
Table 7: Capital Account Balance
(US$ Billion, unless otherwise indicated)
S. Year / Item 2019- 2020- 2020- 2021-
No. (Net) 20 21 21 H1 22
H1 (P)
Capital Account
A. 83.2 63.7 17.3 65.6
(A1 to A5)
51
EXTERNAL SECTOR
b. Due to higher Asset Liabilities Ratio
Source: RBI Note: P: Provisional
►EXTERNAL DEBT
• Duration of loan- Short-term (less than 1 year) and long-term (more than 1 year)
Categorisation of External
Debt • Sovereign Debt (Government) and Non-Sovereign Debt ( Other than Government,
including private sector)
• Multilateral Debt: Debt from the multilateral institutions such as World Bank, IMF,
ADB etc.
• Bilateral Debt: Debt from sovereign countries such as Japan, Germany etc.
Major Heads under • Trade Credits/Export Credits: Loans and credits extended for imports directly by
External Debt overseas supplier, bank and financial institutions
• External Commercial Borrowings: loans from commercial banks, other commercial
financial institutions
• Non-Resident Deposits in Banks and Financial Institutions
• Cumulative External Debt: At end of Sep 2021, India’s external debt was placed at
US$ 590 billion (20% of the GDP).
• Composition of Debt: Non-Sovereign Debt (Non-Government Debt) : 16% of the GDP;
Sovereign Debt (Government Debt): 4% of the GDP.
• Components of Debt: External Commercial Borrowings (ECBs) accounting for 36% of
Present status of External
external debt remains the largest source of External Debt followed by Non-resident
Debt
deposits.
• Duration of Debt: Long term debt (maturity of more than 1 year) accounts for 83% of
external debt; Short-term debt (maturity of less than 1 year) accounts for 17% of
external debt
• Denomination of Debt: US dollar (51%); remaining in Rupee, Yen, SDR and Euro.
►TAPER WITHOUT TANTRUMS: pressures in advanced economies, particularly the US,

have reignited some fears of taper tantrum.
INDIA’S EXTERNAL SECTOR
However, India’s external sector is far better prepared
RESILIENCE this time to face any external shocks arising out of
tightening of the monetary policy stance by the advanced
In recent months, scaling back of pandemic-related
economies in coming months. This is on account of
stimulus programme amidst persistent inflationary
higher forex reserves and higher import cover.
52
EXTERNAL SECTOR
►MAJOR SCHEMES FOR EXPORT Export Promotion Capital Goods (EPCG) Scheme: This
Scheme allows exporters to import capital goods at zero
PROMOTION customs duty. In return, the exporters are required to
Remission of Duties or Taxes on Export Product fulfil the export obligation to the tune of six times the
(RoDTEP): India's various export promotion schemes import duties saved within a period of 6 years.
including Merchandise Exports from India Scheme Export Credit Guarantee Corporation of India Ltd.
(MEIS), were challenged by the United States in WTO in (ECGC) provides insurance cover to banks against risks in
early 2018. The final report of the WTO panel observed export credit lending to the exporter borrowers.
that MEIS is a "prohibited subsidy" and needs to be Government approved capital infusion of `4,400 crore to
withdrawn. Hence, Government has rolled out a new ECGC Ltd. over a period of five years, i.e. from 2021-2022
WTO compliant scheme, namely Remission of Duties and to 2025-2026
Taxes on Exported Products (RoDTEP), for all export
Advance Authorization Scheme: Advance
goods with effect from 1st January, 2021.
Authorization (AA): It is issued to allow duty free
Under this Scheme, duties and taxes levied at the import of inputs, which are physically incorporated in
Central, State and local levels, such as electricity duties export products.
and VAT on fuel used for transportation, which are not
Infusion of capital in EXIM Bank: Government of India
getting exempted or refunded under any other existing
infused capital of `750 crore in Export-Import Bank of
mechanism will be refunded to exporters. The credits
India (EXIM Bank) during the current financial year 2021-
can be used to pay basic customs duty on imported
22 through subscription to its share capital.
goods or transferred to other importers – facilitating
ease of transactions for exports.
Developing District as Export Hub: Under this initiative,
►ENABLING AN EFFICIENT
the focus is to make districts active stakeholders in the LOGISTICS ECO-SYSTEM TO BOOST
promotion of exports of goods/services produced/
EXPORTS
manufactured in the district. District Export Promotion
Committees (DEPCs) have been set up in each district. Despite multiple challenges, India has made substantial
Products with export potential (including agricultural, progress in trade-related logistics, reflected in leading
geographical indication (GI) & toy clusters) have been global indices. India scored 90.3 per cent in 2021 in
identified in all 739 districts across the country. This United Nations Economic and Social Commission for Asia
scheme would help in diversifying the portfolio of export Pacific’s (UNESCAP) latest Global Survey on Digital and
commodities. Sustainable Trade Facilitation.
53
EXTERNAL SECTOR
Logistics Sector in India
Challenges Initiatives
Higher Logistics Cost in India around 14 % of GDP • New Logistics Division in the Ministry of Commerce and
(U.S - 9 %. Japan-12 %) Industry (Bibek Debroy committee recommendation)
Unfavourable modal mix: India: Road-60%, Rail- • Draft National Logistics Policy - for higher economic
31%. Water-9%: International Benchmarks: growth.
Road-25-30%, Railways-50-55% , Waterways- 20- • Infrastructure status to Logistics sector.
25% • E-way bill - reduced truck turnaround time by 20%.
Poor coordination multiple Government • India has signed International Conventions:
ministries/departments. o UN TIR convention (Customs Convention on
Warehousing capacity and fragmented International Transport of Goods)
structure: 90% Unorganized; Poor adoption of o Trade Facilitation Agreement (TFA) of WTO has been
Technology; Manual loading and Unloading; Poor ratified -which aims to simplify custom procedure.
storage quality • LEADS Index - by Ministry of Commerce & Industry
Lack of Multi-modal connectivity to Industrial • Infrastructure creation - Bharatmala, Sagarmala, NIP etc.
corridors, manufacturing clusters, SEZs etc.
• Gati Shakti Master Plan- Promote cooperation and ensure
Poor Trade Facilitation: Higher Border synergies among multiple ministries and departments
compliance and document processing time.
Strategies needed
Reduce logistics cost as a % of GDP to 10% in line with best-in-class global standards
Optimize the current modal mix (road-60%,rail-31%,water-9%) in line with international benchmarks
Draft Logistics policy
• Integrated National Logistics Action Plan: to be reviewed by National Council headed by PM.
• National Logistics e-marketplace: Simplification of documentation for imports/ Exports
• Dedicated fund for Logistics
Warehousing: Ensuring standardization in logistics (warehousing, packaging, 3PL players, freight forwarders)
Multi Modal Logistics Park Authority (MMLPA) should be set up
54
Section-4
ONETARY
MANAGEMENT AND
FINANCIAL
INTERMEDIATION
The Chapter of Monetary Management and Financial Intermediation is an important chapter from the perspective of
UPSC Prelims. In previous year Prelims, questions have been asked both from Static part as well as current
developments in the field of Banking and Finance.
Following Topics have been covered in this chapter:
• Monetary Developments • Performance of NBFC Sector
• Liquidity Conditions and its management • Factoring in India
• Steps taken by RBI to improve liquidity conditions • MSCI Emerging Markets Index and India’s weight
in the economy- TLTROs, SLTROs, G-SAP etc. • Snapshot of Insurance and Pension Sector
• Performance of Banking Sector • Insolvency and Bankruptcy Code
• Bad Bank in India o Pre-Pack Insolvency Process
• Deposit Insurance in India and recent o Cross border Insolvency
developments
►MONETARY DEVELOPMENTS MONETARY AGGREGATES

Reserve Money (M0): The growth rates of monetary
Policy rates: The Monetary Policy Committee (MPC)
aggregates- including Reserve money, Broad money
maintained status quo on the policy repo rate during
were lower as compared to the last year. Reserve
April to December 2021 after a substantial cut of 115
money (M0) recorded a year-on-year (YoY) growth of 13
basis points (bps) during February to May 2020. The
per cent as compared to 14 per cent a year ago.
repo rate currently stands at 4 per cent, which is lowest
Expansion in M0 during 2021-22 was driven by bankers’
in the last decade. The RBI has continued to maintain
deposits with the RBI
accommodative policy stance as the inflation in the
economy has risen mainly on account of supply shocks, Broad Money: In 2021-22 ,the year-on-year growth of
which are expected to be transitory. broad money (M3) stood at 9.9 per cent as on 31st
55
MONETARY MANAGEMENT AND FINANCIAL INTERMEDIATION
December, as compared to 12.5 per cent a year ago. ►LIQUIDITY CONDITIONS AND ITS
The aggregate deposits has contributed most to the
expansion of M3 during the year so far. Amongst
MANAGEMENT
sources, bank credit to the government was a major Liquidity has remained in surplus in the system since
contributor to the increase in broad money. Banks’ mid-2019 in sync with the easing of monetary
higher investments in liquid and risk-free assets such as conditions. In 2021-22 so far, the RBI resumed normal
SLR securities and G-secs, resulted in higher net bank liquidity operations in a phased manner and engaged in
credit to the government. rebalancing liquidity from passive absorption under
Money Multiplier: Money multiplier- measured as a fixed rate reverse repo under its Liquidity Adjustment
ratio of M3 to M0 has been on the decline since 2017- Facility (LAF) to market based reverse repo auctions (like
18. As on 31st December 2021, Money multiplier stands Variable Rate Reverse Repo (VRRR)). At the same time it
at 5.3. The decrease in the money multiplier is on also ensured adequate liquidity in the system in
account of parking of surplus funds by the Banks with consonance with the accommodative monetary policy
the RBI under the Reserve Repo window. stance to support growth
►STEPS TAKEN BY RBI TO • Depending upon the maturity period of the loans,
there are different types of Repos in India. These are:
IMPROVE LIQUIDITY CONDITIONS
o Overnight Repos: (Maturity period of 1 day)
IN THE ECONOMY o Term Repos: There are different types of term
On-tap Targeted long Term Repo Operations repos depending upon the maturity period. Some
(TLTROs): The RBI conducted on tap TLTRO with tenors of the term repos include 7-day, 14-day, 21 day,
of up to three years for a total amount of up to Rs 1 lakh 28-day, 56-day.
crore. • The overnight repos are available to the Banks from
the RBI from Monday to Friday. However, the term
UNDERSTANDING REPO RATE
repos are available to the Banks only when the RBI
• Rate at which the banks borrow mainly short term notifies about the Term Repos (Usually 2-3 days in a
loans from the RBI. Under Repo mechanism, the week). Further, the interest rate on the term repos is
banks sell their G-Secs to the RBI with an agreement not same as the Repo rate. The Interest rate on the
to repurchase the G-Sec at a future date and at fixed Term repos is determined through auction and
price. The rate at which the banks repurchase the G- hence is usually higher than the Repo rate.
Secs from the RBI is known as the Repo rate. TOTAL FUNDS TO BE INJECTED: Up to Rs 1 Lakh crores.
56
INTEREST RATE: Repo Rate. G-SAP is a special kind of Open Market Operations
WHY IS IT CALLED ON-TAP? This facility can be availed (OMOs) wherein the RBI purchases G-Secs from the
by any bank as and when the need for liquidity arises. Banks. It is different from OMOs in mainly three ways:
DURATION: Applicable up to March 31, 2021 Firstly, under the OMOs, the RBI may either purchase
CONDITIONS: Liquidity availed by banks under the or sell G-Secs depending upon the market conditions.
scheme has to be deployed in corporate bonds, But, under the G-SAP, the RBI would only be purchasing
commercial papers, and non-convertible debentures G-Secs. The RBI would not be selling the G-Secs.
issued by entities in specific sectors. Liquidity availed
Secondly, the RBI uses OMOs either to inject or suck out
under the scheme can also be used to extend bank
excess liquidity depending upon the liquidity conditions.
loans to these sectors. ( hence, the name "Targeted").
But, the G-SAP is mainly used for controlling the yield
RATIONALE:
rates on the long term G-Secs.
• Reduce rate of Interest on the long-term loans.
Thirdly, the OMOs are carried out as per the discretion
• The reduction in the long-term rate of interest would
of the RBI. Hence, the Banks are not aware as to how
force the banks to reduce the rate of interest on
much G-Secs the RBI would purchase and when would it
short term loans. (The rate of interest on long term
purchase. Hence, under OMOs, the market is quite
loans is usually higher than
clueless with respect to what action RBI would take. But,
• that on short term loans)
under the G-SAP, the RBI comes out with a clear cut
• Incentivize the Banks to reduce their overall lending
commitment to purchase G-Secs within a definite time
rates and improve the monetary policy transmission.
period.
►SPECIAL LONG-TERM REPO

►VARIABLE RATE REVERSE REPO
OPERATIONS (SLTRO)
AUCTIONS (VRRR)
For small finance banks of Rs 10,000 crore to support
small business units, micro and small industries, and The 14-day Variable Rate Reverse Repo (VRRR) auctions
other unorganised sector entities adversely affected were deployed as the main operation under the
during the second wave of the pandemic. Liquidity Adjustment Facility (LAF). To manage the
liquidity conditions, variable rate reverse repo auctions
►FACILITATING MORE EFFICIENT of varying maturities were conducted apart from the
VRRR operations conducted every fortnight. The size of
LIQUIDITY MANAGEMENT FOR
14 day VRRR was gradually enhanced to Rs 7.5 lakh
REGIONAL RURAL BANKS (RRBs) crore by end of December 2021. During 2021-22 so far,
Earlier, the Regional Rural Banks (RRBs) were not average daily net absorptions under LAF amounted to
permitted to access the liquidity windows of the Reserve Rs 6.7 lakh crore.
Bank as well as the call/notice money market. Hence, to
facilitate more efficient liquidity management by the
RRBs, RBI has been decided to: ►PERFORMANCE OF BANKING
• Extend the Liquidity Adjustment Facility (LAF) and SECTOR
Marginal Standing Facility (MSF) to RRBs.
DECREASE IN GNPA AND NNPA
• Permit the RRBs to participate in the Call/Notice
The gross non-performing assets (GNPA) stands at 6.9%
money market, both as borrowers and lenders.
in Sep 2021. While, net NPA (NNPA) stands at 2.3% in
• Permit RRBs to issue Certificates of Deposit (CDs) to
March 2021.
eligible investors.
The decline in the NPAs, particularly when the economy
was hit by COVID-19 could be attributed to two factors
►G-SAP
(a) Banks have written-off NPAs worth Rs 2 lakh crores
RBI purchased G-secs (including state development
from their Balance sheets (b) Relief in the form of
loans) amounting to Rs. 1 lakh crore under G-SAP 1.0
moratorium on loan repayment provided by the RBI.
and Rs 1.2 lakh crore under G-SAP 2.0
57
CONDITIONS FOR CARRYING OUT DEBT
RESTRUCTURING
• Facility would be extended to only those loans which
were classified as Standard Loans as on March 31,
2021.
• Facility to undertake Debt Restructuring would be
available to the Banks only until September 30, 2020
• The Loans which have undergone Debt Restructuring
would continue to categorised as Standard Assets by
Banks
►BAD BANK IN INDIA

Capital Adequacy Ratio: The Capital Adequacy Ratio NATIONAL ASSET RECONSTRUCTION COMPANY
has continued to improve since 2015-16. Capital to Risk LIMITED (NARCL)
weighted Asset Ratio (CRAR) of SCBs increased from NARCL was incorporated in 2021 and has received a
15.84 per cent at end-September 2020 to 16.54 per cent certificate of registration from the RBI to commence the
at end-September 2021.The improvement in CRAR business of an Asset Reconstruction Company. NARCL
levels of PSBs was due to capital infusion by the will majorly be owned by Public Sector Banks. Canara
government alongside fund raising from the markets, bank is the Sponsor with shareholding of up to 12 per
while private sector banks tapped capital from market cent. NARCL would be capitalized through a
sources combination of equity and debt from various Banks and
will have a finite life of 5 years. It may acquire stressed
►RESOLUTION FRAMEWORK 2.0 assets of about Rs 2 lakh crore in multiple phases within
the extant regulations of RBI under 15:85 structure,
FOR COVID RELATED STRESSED implying that the consideration for acquisition will be 15
ASSETS OF INDIVIDUALS, SMALL per cent in Cash and 85 per cent in Security Receipts.
BUSINESSES AND MSMEs INDIA DEBT RESOLUTION COMPANY LIMITED (IDRCL)

IDRCL was incorporated in 2021 and will have minimum
Background: In August 2020, the RBI had come out
of 51 per cent ownership of Private sector Banks and
with the Resolution framework 1.0 deal with problem of
balance will be held by Public Sector Banks.
possible increase in NPAs. The framework enabled the
Banks to carry out debt-restructuring of the loans given ACQUISITION OF ASSETS BY NARCL
to Corporates as well as Individuals. As part of one-time NARCL will acquire assets by making an offer to the lead
debt restructuring, the Banks can extend the tenure of bank and the lead bank with an offer in hand (of NARCL)
loans, sanction additional loans, convert debt into will run a ‘Swiss Challenge’ process wherein other
Equity etc. This facility to undertake debt restructuring interested ARCs / Bidders will be invited to better the
was available only until the end of December 31, 2020. anchor offer made by NARCL. Once NARCL is declared
Now, the RBI has come out with Resolution Framework as a preferred bidder, NARCL shall initiate asset
2.0 for the entities who did not avail restructuring acquisition process and acquire the assets in the
during the first lockdown. underlying Trusts.
Rationale behind Debt Restructuring: Many RELATIONSHIP BETWEEN NARCL AND IDRCL
corporate and Individual borrowers may have a good NARCL and IDRCL’s relationship will be defined through
track record in repayment of loans, however, due to a debt management agreement where in NARCL will
COVID-19, they are not in a position to repay loans. aggregate and acquire the stressed assets and IDRCL, in
Hence, lack of provision of Debt Restructuring would be turn, will provide stressed assets management and
unfair to them. At the same time, lack of debt resolution services to NARCL on an exclusive basis. The
restructuring would lead to increase in NPAs, affect term of IDRCL shall be co-terminus with that of NARCL.
balance sheets of Banks leading to decrease in Credit ROLE OF THE GOVERNMENT
Creation and consequently prolong the economic
revival.
58
The government has provided a guarantee of up to Rs • Premium paid by banks to the DICGC: Under the
30,600 crore, which will back Security Receipts (SRs) Act, insured banks are required to pay a premium to
issued by NARCL. The government guarantee will be the DICGC on their deposits. The rate of premium
valid for 5 years. Guarantee available for these SRs may for a bank is notified by the DICGC with the prior
be invoked on completion of resolution or liquidation as approval of RBI. The Act limits the rate of premium
the case may be to cover the shortfall between actual (per annum) for a bank at 0.15% of its total
realization and face value of the asset. The government outstanding deposits. The act has now allowed the
will charge a guarantee fee on the amount which it DICGC to increase this maximum limit with the prior
guarantees, which will increase annually to incentivize approval of RBI.
the early and timely resolution. • Repayment by the bank to the Corporation: Under
the Act, once the DICGC makes payment to the
►DEPOSIT INSURANCE IN INDIA depositors, the insured bank becomes liable to repay
the same amount to the Corporation. Presently, the
INSURANCE OF THE BANK'S DEPOSITS
bank is required to repay within such time as
Currently, the Deposit Insurance and Credit Guarantee prescribed by the Board of Directors of the DICGC.
Corporation (DICGC) provide for insurance cover of Rs 5
The new amendment provides that the Corporation
lakh per depositor for deposits. In case of Bank failure,
may change this time limit for such period and on such
depositors can get back a maximum of Rs 5 lakh per
terms as prescribed by the Board through
account even if their deposits may far exceed Rs 5 lakh.
regulations. These regulations must also provide for: (i)
Coverage of Banks: Commercial banks, Regional rural prudential principles to assess the capability of the bank
banks, Local area banks (LABs), Payment Banks, Small to repay the Corporation, and (ii) prohibition on the
Finance Banks, and Cooperative banks. bank to discharge other specified liabilities until
Deposits Covered: Savings, Fixed, Current and repayment.
Recurring Deposits.
Deposits not Covered: Deposits of Central/State ►NON-BANKING FINANCIAL
Governments; Inter-Bank Deposits.
COMPANIES (NBFCs) SECTOR
Premium: Paid by the banks and hence the cost is not
directly borne by the deposit holder. The credit intensity of NBFCs, measured by NBFC credit
as a ratio of GDP has been rising consistently and stood
RECENT DEVELOPMENTS
at 13.7 at end March 2021. Industry remained the
Union Budget 2020-21 decided to increase the Deposit largest recipient of credit extended by the NBFC sector,
Insurance Coverage from 1 Lakh to Rs 5 Lakhs. followed by retail loans and services.
However, there was no timeline fixed for the depositors
to avail this insurance.
Banks under Moratorium: Under Section 45 of
Banking Regulation Act, the RBI has been empowered
to make an application before the Central Government
to put a Bank under the Moratorium. Based upon such
an application, the Government can place a bank under
moratorium. Presently, the depositors of Banks placed
under moratorium cannot avail deposit insurance. They
would have to wait until these Banks get rescued.
August 2021: Parliament passed the Deposit Insurance
and Credit Guarantee Corporation (Amendment) Bill
2021. Salient Features:
• Timeline for payment: New Amendment enables

the depositors to withdraw up to Rs 5 lakh within 90
days upon placing a Bank under moratorium.
59
►MSCI EMERGING MARKETS

INDEX AND INDIA’S WEIGHT
One of the most popular MSCI indices is the MSCI
Emerging Market (EM) index which tracks equity
performance of around 1500 companies across 25
emerging market countries including India. Many global
institutional investors use MSCI’s EM Index and several
such indices covering other markets and themes as part
of their passive investment strategy allocating capital in
line with the benchmark indices.
In 2020, Government relaxed the FPI limit for Indian
companies to the applicable Foreign Direct Investment
►FACTORING IN INDIA (FDI) sectoral limit (which is higher) with effect from
April 1, 2020. Accordingly, India’s weight in MSCI EM
Meaning: Factoring is a transaction where an entity
index immediately increased to 9.2 per cent from 8 per
sells its receivables (dues from a customer) to a third
cent. Remarkably, the increase in FPI limit to the
party (a ‘factor’ like a bank or NBFC) for immediate sectoral cap has acted as a catalyst for increasing
funds. All or part of invoice can be sold to a factor for weightage of Indian securities in other major equity
getting money immediately at competitive interest rate. indices
The factor then collects payments from the buyer of
goods and earns a commission in the form of some
interest.
FACTORING REGULATION ACT 2011: As per the

Factoring Act 2011, four types of entities were allowed
to engage in factoring business: Banks, Statutory
Corporations, NBFC-Factors (a specific category of
NBFCs engaged in factoring business) and companies.
Based upon recommendations of U.K. Sinha ►INSURANCE SECTOR

Committee, even other categories of NBFCs have been Insurance penetration is measured as the percentage
allowed to engage in factoring business. of insurance premium to GDP.
Insurance density is calculated as the ratio of premium
to population (measured in US$ for convenience of
international comparison)
Table 15: Penetration and Density in Life Insurance in India

Particulars 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Insurance 3.40 3.17 3.10 2.60 2.72 2.72 2.76 2.74 2.82 3.20
Penetration
Insurance 49.0 42.7 41.0 44.0 43.2 46.5 55.0 55.0 58.0 59.0
Density
Table 16: Penetration and Density in Non-Life Insurance in India

Particulars 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Insurance 0.70 0.78 0.80 0.70 0.72 0.77 0.93 0.97 0.94 1.00
Penetration
Insurance 10.0 10.5 11.0 11.0 12.0 13.2 18.0 19.0 20.0 19.0
Density
60
Eligibility: Unorganised Workers--> Less than Rs 15,000

Note: Both Insurance Penetration and density (Life and
monthly salary and in age group 18-40 years.
Non-Life) in India is much below the global average.
Minimum Assured Pension: Rs 3000/- per month after
attaining the age of 60 years.
►PENSION SECTOR
Family Pension: Death of Subscriber --> 50% of the
The total number of subscribers under New Pension
pension to the spouse
Scheme (NPS) and Atal Pension Yojana (APY) increased
Contribution by Subscriber: Depends upon age of
from 374.32 lakh as on September 2020 to 463 lakh as
entry.
on September 2021, recording a growth of 23.7 per cent
over the year. Ministry: Labour and Employment
ABOUT NATIONAL PENSION SYSTEM ATAL PENSION YOJANA
What is it?: Pension cum investment scheme to provide What is it?: Guaranteed pension of Rs.1000 to Rs.5000
old age security to Citizens of India. Regulated by (depending upon contribution) receivable at the age of
Pension Fund Regulatory and Development Authority 60 years.
(PFRDA) Eligibility: Primarily focussed on Unorganised workers (
Who can Join? Any individual citizen of India (both But any Indian Citizen in the age-group 18 to 40 years
resident and Non-resident) in the age group of 18-65 can join through their savings bank account or post
years office savings bank account)
DIFFERENT SECTORS Government Contribution: 50% of total prescribed

contribution up to Rs 1000 per annum. 2 Conditions:
A. Government Sector
1. Available only for a period of 5 years.
i. Central Government: The Central Government
had introduced the National Pension System 2. Subscribers should not be Income tax payers or
(NPS) with effect from January 1, 2004 (except for covered under any existing schemes.
armed forces). All the employees of Central Ministry: Ministry of Finance
Autonomous Bodies (CABs) who have joined on
or after the above-mentioned date are also
►INSOLVENCY AND BANKRUPTCY
mandatorily covered. Central Government/CABs
employee contributes towards pension from CODE
monthly salary along with matching contribution As on September 2021, the Code has rescued 421
from the employer. Corporate Debtors(CDs) through resolution plans and
ii. State Government: Even State Governments referred 1419 CDs for liquidation. The 421 CIRPs, which
have adopted this architecture. have yielded resolution plans by the end of September
B. Private Sector (Non-Government Sector): 2021 took on average 428 days (after excluding the time
excluded by the Adjudicating Authority) for the
i. Corporates
conclusion of the process.
ii. All Citizens of India: Any individual not being
covered by any of the above sectors has been
allowed to join NPS 2009 onwards.
►PRE-PACK INSOLVENCY
PROCESS
►PENSION SCHEMES FOR THE The Insolvency and Bankruptcy Code, 2016 was
amended through an Ordinance on April 4, 2021, to
UNORGANISED SECTOR
provide for a Pre-Packaged Insolvency Resolution
PRADHAN MANTRI SHRAM YOGI MAAN-DHAN Process (PPIRP) for corporate Micro, Small and Medium
What is it? : Voluntary and contributory pension Enterprises as an alternative insolvency resolution
scheme--> 50:50 contribution by subscriber and central process to ensure quicker outcomes.
Government.
61
Criteria CIRP Pre-Pack Insolvency Process
Can be initiated only by Debtor.
Who can Initiate? Either the Creditor or Debtor Debtor must obtain approval of at least 66% of its
financial creditors in terms of value.
Applicable to all companies, including
Applicability Applicable only to MSMEs.
MSMEs
Control of the company Passes on to Resolution professionals Promoters remain in control of the company
Restructuring of loans through Public Restructuring of loans through direct agreement
Resolution process
bidding between promoters and creditors
Can promoters take Promoters barred from bidding and
Promoters remain in control of the company.
over management? hence lose control of the company
No role in the initial resolution process as resolution
takes place through direct mediation between
promoters and creditors.
However, the new resolution plan between
promoters and creditors is open for Swiss Challenge
Can bid for the company as part of method. Example: Original promoter "X" agrees to
Role of External parties
Initial resolution process. pay 90% of the loan External party "Y" bids for
repayment of 95% of loan Option to the original
promoter to match up to bid of the External party i.e.
pay 95% of loan and keep the ownership of company
else ownership passes onto external party "V"' (Right
of First Refusal for Promoter "X")
Type of Model Creditor-in-possession model Debtor-in-possession model
Time Limit 330 Days 120 days
Majority required for
66% of the votes in terms of value 66% of the votes in terms of value
Resolution
►CROSS BORDER INSOLVENCY jurisdictions. The absence of standardized cross border

insolvency framework creates complexities and raises
Cross border insolvency signifies circumstances in
various issues such as:
which an insolvent debtor has assets and/or creditors in
• The extent to which an insolvency administrator may
more than one country.
obtain access to assets held in a foreign country.
PRESENT STATUS: Cross border insolvency is regulated
• Priority of payments- Whether local creditors may
by Section 234 and 235 of IBC. Section 234 empowers
have access to local assets before funds go to the
the Central Government to enter into bilateral
foreign administration or not.
agreements with other countries to resolve situations
about cross-border insolvency. Further, the Adjudicating • Recognition of the claims of local creditors in a
Authority can issue a letter of request to a court or an foreign administration.
authority (under Section 235) competent to deal with a • Recognition and enforcement of local securities,
request for evidence or action in connection with taxation system over local assets where a foreign
insolvency proceedings under the Code in countries administrator is appointed etc.
with the agreement (under Section 234). As can be seen, the current provisions under IBC are ad-
PROBLEMS hoc in nature and are susceptible to delay. Entering into
IBC at present has no standard instrument to mutual (reciprocal) agreements require individual long-
restructure the firms involving cross border drawn-out negotiations with each country. This leads to
62
uncertainty of outcomes of claims for creditors, debtors participate in and commence domestic insolvency
and other stakeholders as well. proceedings against a debtor.
PROPOSALS: Adoption of the United Nations • Recognition: It allows recognition of foreign
Commission on International Trade Law (UNCITRAL) proceedings and enables courts to determine relief
Model law on Cross border insolvency with certain accordingly.
modifications to make it suitable to the Indian context. • Cooperation: It provides a framework for
This law addresses the core issues of cross border cooperation between insolvency professionals and
insolvency cases with the help of four main principles: courts of countries.
• Access: It allows foreign professionals and creditors • Coordination: It allows for coordination in the
direct access to domestic courts and enables them to conduct of concurrent proceedings in different
jurisdictions.
63
Section-5
RICES AND INFLATION
This chapter of Economic Survey provides us with the analysis of the Inflation trends in the Indian Economy. It
highlights the reasons for the divergence between WPI and CPI in 2021-22 and other important developments.
Following Topics have been covered in the Chapter:
• Reasons for the rising Global Inflation • Supply Side measures taken by Government to control
• Difference between WPI and CPI Inflation
• Inflation Trends in Indian Economy • Trends in WPI Inflation
• Recent Trends in CPI rate of Inflation- Headline, • Divergence between WPI and CPI
Core and Refined Core • Drug Pricing Regime in India
• Long-Term supply-side measures needed
►GLOBAL INFLATION the highest since 1982. While in the UK it hit a nearly 30
years high of 5.4 per cent in December 2021 mainly on
The Global economy has started recovering from the
account of rising food prices
slowdown caused due to Covid-19 pandemic. However,
it has started facing the challenge of rising inflation. The
inflation in USA touched 7.0 per cent in December 2021,
64
PRICES AND INFLATION
Reasons for Global Inflation
Demand-Pull Inflation Cost Push Inflation
• Faster Economic Recovery post Covid-19 has led to • Global Supply chain disruptions such as Semiconductor
surge in demand for raw materials shortages
• Increase in Pent-up demand • Increase in metal prices (Copper, Iron ore. Nickel, Steel etc.)
• Fiscal Stimulus measures adopted by the Central • Increase in Energy Prices (Gas, Coal and Electricity)
Bank • Container shortage and rising freight costs
• Higher demand for certain electronic goods such as • Rise in food commodities
laptops and Phones
►BASICS ABOUT INFLATION INDICES

Difference between WPI and CPI
Criteria Wholesale Price Index Consumer Price Index (CPI)
Level Measures Inflation at Wholesale Measures Inflation at Retail level
level
Who Calculates? Office of Economic Advisor, Ministry National Statistical Office, MoSPI
of Commerce and Industry
Base year 2011-12 2012
th th
Released on 14 of Every Month 12 of Every Month
Number of Items covered 697 299
Categories and their • Primary Articles: (22.6%) • Food and beverages (45.86%)
respective weightages • Manufactured products (64.2%) • Pan, Tobacco and Intoxicants (2.38%)
• Fuel and Power (13.2%) • Clothing and Footwear (6.53%)
• Housing (10%)
• Fuel and Light (6.84%): Electricity, LPG,
Kerosene etc. (Does not include Petrol and
Diesel)
• Miscellaneous- Education, Healthcare,
Transportation and Communication etc.
(28.32%)
Weightage given to Food WPI-Food Index (24%): Food Consumer Food Price Index (CFPI): (39%) :
Articles articles from "Primary Articles" and Out of 12 sub-groups contained in 'Food and
"Manufactured Food Product". Beverages' group, CFPI is based on ten sub-
groups, excluding 'Non-alcoholic beverages'
and 'Prepared meals, snacks, sweets etc.
Impact of increase in Food Less impact on WPI as compared to Larger impact on CPI
items CPI
Weightage of Fuel and Power Included in separate category of Weightage (~8%): Included in (a) category of
Fuel and Power (13.2%) Fuel and light and (b) Category of
Transportation and Communication (Fuel for
Transportation)
Highest Weightage Manufactured products (64.2%) Food and Beverages (45.9%)
Services included No Yes
Indirect Taxes Included? No Yes
Targeted by RBI? No Yes. The RBI is required to maintain CPI rate of
inflation of 4% with a deviation of 2%.
65
►INFLATION TRENDS IN INDIAN ECONOMY

Table 1. General inflation based on different price indices (in per cent)
Indices 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2020-21^ 2021-22*
WPI -3.7 1.7 3.0 4.3 1.7 1.3 0.0 12.5
CPI - C 4.9 4.5 3.6 3.4 4.8 6.2 6.6 5.2
(Headline Inflation)
#
CPI-IW 5.6 4.2 2.9 5.6 7.3 5.2 5.2 5.0
CPI-AL 4.4 4.2 2.2 2.1 8.0 5.5 7.0 3.2
CPI-RL 4.6 4.2 2.3 2.2 7.7 5.5 6.8 3.5
IMPORTANT OBSERVATIONS the Dearness Allowance (DA) is presently linked to CPI-

Increase in rate of Inflation in 2021-22: . Overall, WPI IW.
Inflation has remained high in 2021-22 as compared to The Housing Price Indices (HPIs) are a broad measure of
CPI rate of inflation. movement of residential property prices observed
within a geographic boundary. The National Housing
Note: CPI-IW, CPI-AL and CPI-RL are published by
Bank (NHB) RESIDEX captures two housing price indices
Labour Bureau under the Ministry of Labour. The
i.e. HPI@ Assessment Prices and HPI@ Market Prices.
MGNREGA wages are presently linked to CPI-AL and the
government's proposal is to link it to CPI-RL. Further,
►RECENT TRENDS IN CPI RATE OF INFLATION
BASICS TO UNDERSTAND services. In case of India, it excludes the category of

CPI-Headline Inflation: The headline inflation simply "Fuel and Light" under CPI.
refers to the inflation in the CPI covering all the CPI-Refined Core Inflation: It excludes "Fuel and Light"
categories of goods and services. category under CPI as well as "Petrol and Diesel" which
CPI-Core Inflation: The core inflation excludes the are part of "Transport and Communication" under the
volatile categories such as food and fuel in order to category of Miscellaneous.
measure the increase in the prices of goods and
66
►TRENDS IN CPI-HEADLINE The average retail inflation which was 4.8 per cent in
2019-20, inched up to 6.2 per cent in 2020-21. Average
INFLATION retail inflation in 2021-22 (April-December) has declined
to 5.2 per cent.
SUPPLY SIDE MEASURES TAKEN BY GOVERNMENT India approved the creation of a Price Stabilization Fund
Creating a buffer stock of Pulses and Onion under (PSF) in 2015 with a corpus of Rs.500 crores as a Central
Price stabilisation Fund (PSF): The Government of Sector Scheme. Initially the fund was proposed to be
67
used for market interventions for onion and potato only Perishable essential commodities: For perishables,
and pulses were added subsequently. Operations Green scheme was launched in November
This scheme is implemented by Ministry of Consumer 2018. The scheme has later been expanded from TOP
Affairs, Food & Public Distribution. The PSF will be (Tomato, Onion, Potato) to TOTAL (41 perishables).
maintained as a Central Corpus Fund by Small Farmers Expansion of the scheme has resulted in widening the
Agribusiness Consortium (SFAC). impact in terms of the production clusters and
beneficiaries covered.
Import Policy: Reduction in the import duties on
Pulses, Edible oils to boost domestic availability.
Essential Commodities Act: Government has notified ►TRENDS IN WPI INFLATION
an Order the Essential Commodities Act to declare ‘Soya The WPI rate of Inflation in previous two years was
Meal’ as an Essential Commodities up to 30th June, 2022 lower - 1.7% (2019-20) and 1.3% (2020-21). However, in
by amending the Schedule of the Essential Commodities 2021-22 (April-December), the WPI rate of inflation has
Act, 1955. Stock limit on Soya Meal has been imposed increased to 25-year high of 12.5%.
for a period from 23rd December, 2021 up to 30th June,
2022.
►DIVERGENCE BETWEEN WPI AND March 2021 and December 2021, wholesale inflation
remained above the retail inflation. WPI inflation during
CPI the current year was higher than the CPI but there was
Between June 2019 and February 2021, wholesale also a significant widening of the divergence.
inflation was lower than retail inflation, while between
68
Divergence between WPI and CPI

Between June 2019- Feb 2021 WPI < CPI
Between Mar 2021 – Dec 2021 WPI > CPI
Why has CPI Inflation lowered? Why WPI Inflation has increased?
• Decline in Inflation in Food and Beverages which • Low Base Effect

accounts for 46% weightage in CPI • Increase in Prices of Primary Articles, Fuel and Power
• Decline in Vegetable Prices, Pulses etc. and Manufactured Products
• Supply side measures taken by the Government Cost-push Inflation due to supply side bottlenecks and
• Reduction in Import duties on Pulses and Edible higher international prices in metals, raw materials, Fuel
Oils etc.
• Buffer stock of Onion and Pulses

• Bringing Soya meal under Essential Commodities
Act, 1955
Main Drivers of Inflation in 2021-22 Main Drivers of Inflation in 2021-22

Fuel and light Fuel and Power (Weightage of 13% in WPI)
Transportation Manufactured Products (Weightage of 64% in WPI)
Low Weightage of 8% in CPI
►DRUG PRICING • Further, under Paragraph 19 of DPCO, the NPPA has

been given the following exceptional powers:
• Drug Price Control Orders (DPCO) are issued by the
o Fix the prices of even those drugs that are not
Government in exercise of the powers conferred
listed under NLEM. Example: In pursuance of
under the Essential Commodities Act, 1955, for
these powers, the NPPA has fixed the ceiling prices
enabling the Government to declare a ceiling price
of Cardiac Stents and Knee implants.
for lifesaving medicines to ensure that these
medicines are available at a reasonable price to the o Increase or decrease the prices of the drugs listed
general public. under NLEM. In pursuance of these powers, the
NPPA has recently increased the prices of the 21
• Price controls are applicable to “Scheduled drugs” or
essential medicines by almost 50%.
“Scheduled formulations” i.e. those medicines which
are listed out in the Schedule I of DPCO, also referred COVID-19 INITIATIVES
to as National List of Essential Medicines (NLEM). Based on recommendations of Standing Committee on
• The National Pharmaceutical Pricing Authority (NPPA) Affordable Medicines and Health Products (SCAMHP),
fixes the prices of controlled drugs and formulations NITI Aayog, NPPA capped the trade margin for Oxygen
and enforces prices and availability of the medicines Concentrators at 70 per cent on Price to Distributor
in the country. It is to be noted that the NPPA not (PTD) level on 3rd June 2021.
only fixes the prices of Essential Medicines, but it also Trade margins on Pulse Oximeter, Glucometer, Blood
ensures that the prices of the non-scheduled drugs Pressure Monitor, Nebulizer and Digital Thermometer
do not increase by more than 10% every year were also capped on July 13, 2021. As a result, most of
HOW ARE THE PRICES OF THE ESSENTIAL MEDICINES the brands of these devices have dropped prices up to
FIXED? 89 per cent.
• The prices of the medicines are fixed based on Most of drugs used for COVID management are
Market pricing model. The ceiling price of the scheduled drugs for which ceiling price has been given
Essential drugs is the fixed by calculating the simple by NPPA. Even in the case of a few non-scheduled
average price of all the brands having at least 1% of medicines like Remdesivir, which are part of COVID-19
the market share. protocol, on Government intervention, MRPs of various
69
brands of Remdesivir have been reduced voluntarily by Calibrated Import Policy: Knee jerk reactions to price
the major manufacturers/marketers. rise of essential commodities like pulses and edible oils
through frequent import duty/tariff revisions though
►LONG TERM PERSPECTIVE FOR providing immediate relief to the consumers in the way
of lower prices, send wrong signals to domestic
MANAGEMENT OF SUPPLY SIDE producers and create an environment of uncertainty. A
FACTORS long-term consistent approach is mandated.
Changing Production Patterns: Encouraging farmers Focus on transportation and storage infrastructure
to shift from cultivation of rice and wheat to pulses and for perishable commodities: Better storage and
oilseeds would help ensure that the country is self- supply chain management is required to ensure
reliant in pulses and oilseeds and assist in reducing availability in lean season and reduced wastages of
import dependence. horticulture and other perishable essential commodities
to reduce the seasonal spikes in prices for consumers.
70
Section-6
USTAINABLE
DEVELOPMENT AND
CLIMATE CHANGE
This chapter of Economic Survey highlights India's progress on meeting Sustainable Development Goals (SDGs). It also
highlights various initiatives taken by the Government to combat Climate change. Following Topics have been
covered in this chapter:
• India's progress on Sustainable Development Goals • Present Status of Water in India
(SDGs) • India's efforts for combating Climate Change
• Area under Forests- Global Level and State of Forests • Major Initiatives and Achievements
Report 2021 • India's major Initiatives at global level
• Plastic Waste Management and Elimination of
Identified Single Use Plastics
►INDIA'S PROGRESS ON • Developed by NITI Aayog in collaboration with the

Ministry of Statistics and Programme Implementation
SUSTAINABLE DEVELOPMENT (MoSPI), United Nations in India, and Global Green
GOALS (SDGs) Growth Institute.
Background: In September 2015, 193 countries • The 2019 Index spans 16 out of 17 SDGs with a
qualitative assessment on Goal 17. This marks an
including India committed to the Sustainable
improvement over the 2018 Index, which covered
Development Goals (SDGs) as detailed in the UN
only 13 goals.
resolution, “Transforming our world: the 2030 Agenda
for Sustainable Development”. The SDGs • If a State/UT achieves a score of 100, it signifies it has
achieved the 2030 national targets. The higher the
comprehensively cover social, economic and
score of a State/UT, the closer it is towards achieving
environmental dimensions and build on the Millennium
the targets.
Development Goals (MDGs), which covered the earlier
fifteen-year period from 2000 to 2015. • Classification criteria based on SDG India Index score
is as follows:
ABOUT SDG INDIA INDEX
o Aspirant: 0–49
71
SUSTAINABLE DEVELOPMENT AND CLIMATE CHANGE
o Performer: 50–64 Countries with largest area under forests (in
o Front Runner: 65–99 absolute values): Russia, Brazil, Canada, USA, China,
Australia. India is placed at 10th place.
o Achiever: 100
Countries with largest percentage of area under
INDIA’S PERFORMANCE
forests: Brazil, Peru, DRC, Russia, Indonesia. India is
• India’s overall score on the NITI Aayog SDG India placed at 8th place.
Index 2020- 21 improved to 66 from 60 in 2019-20
Countries with largest gain in the forests area in last
and 57 in 2018-19
decade: China, Australia, India, Chile and Vietnam. India
• The number of Front Runners (scoring 65-99) is placed at 3rd place.
increased to 22 states and UTs in 2020-21 from 10 in
2019-20.
• Kerala and Chandigarh were the top state and UT
respectively on SDG performance in 2020-21
►LAND FORESTS
Forest Area refers to area recorded as forest in
government records and is also called “recorded forest
area”.
►HIGHLIGHTS OF STATE OF FORESTS REPORT (SFR) 2021

Prelims Pointers on State of Forests Report 2021
• Tree canopy density of more than 10%

Definition of Forest
• More than 1 hectare in area
Cover
• Does not depend upon land use, ownership and legal status.
Total area 21.71% (Forest Cover) + 2.91% ( Tree Cover)  24.67% of total geographic area
Very Dense Forest: Tree Canopy density more than 70%

Types of Forest Cover Moderately Dense Forest: Tree Canopy density between 40% to 70%
Open Forest: Tree Canopy density of more than 10% (Accounts for highest Share)
Area Wise: Madhya Pradesh, Arunachal Pradesh, Chhattisgarh, Odisha and Maharashtra.
Percentage Wise: Mizoram (84.53%), Arunachal Pradesh (79.33%), Meghalaya (76.00%),
Performance of Manipur (74.34%) and Nagaland (73.90%).
States States/UTs with forest cover above 75%: Lakshadweep, Mizoram, Andaman & Nicobar
Islands, Arunachal Pradesh and Meghalaya
Top five states in terms of very dense forest: Arunachal Pradesh, Maharashtra and Odisha.
The north- eastern states of India Arunachal Pradesh, Assam, Manipur, Nagaland, Tripura,
Loss of Forest Cover
Mizoram, Meghalaya and Sikkim have lost 1,020 square kilometres of forest during 2019-2021.
Total Area and Trends: 4,992 sq km (0.15% of area) . An increase of 17 sq Km in mangrove

Mangrove Cover cover has been observed as compared to the previous assessment of 2019.
States with highest Mangrove Cover: West Bengal, Gujarat, AP, Maharashtra.
Forest Cover in Tiger General Trends: Overall decline in the forest cover across 52 Tiger Reserves and Lion
Reserves and Lion Conservation area
Conservation Areas Highest Increase in Forest area: Buxa (West Bengal), Anamalai (TN) and Indravati
72
(Chattisgarh)
Highest Decrease in Forest area: Bhadra (Karnataka) and Sundarbans (West Bengal)
Prelims Pointers on State of Forests Report 2021
• Tree canopy density of more than 10%

Definition of Forest
• More than 1 hectare in area
Cover
• Does not depend upon land use, ownership and legal status.
Total area 21.71% (Forest Cover) + 2.91% (Tree Cover)  24.67% of total geographic area
Very Dense Forest: Tree Canopy density more than 70%

Types of Forest Cover Moderately Dense Forest: Tree Canopy density between 40% to 70%
Open Forest: Tree Canopy density of more than 10% (Accounts for highest Share)
Area Wise: Madhya Pradesh, Arunachal Pradesh, Chhattisgarh, Odisha and Maharashtra.
Percentage Wise: Mizoram (84.53%), Arunachal Pradesh (79.33%), Meghalaya (76.00%),
Manipur (74.34%) and Nagaland (73.90%).
Performance of States
States/UTs with forest cover above 75%: Lakshadweep, Mizoram, Andaman & Nicobar
Islands, Arunachal Pradesh and Meghalaya
Top five states in terms of very dense forest: Arunachal Pradesh, Maharashtra and Odisha.
The north- eastern states of India Arunachal Pradesh, Assam, Manipur, Nagaland, Tripura,
Loss of Forest Cover Mizoram, Meghalaya and Sikkim have lost 1,020 square kilometres of forest during 2019-
2021.
Total Area and Trends: 4,992 sq km (0.15% of area) . An increase of 17 sq Km in mangrove

Mangrove Cover
cover has been observed as compared to the previous assessment of 2019.
States with highest Mangrove Cover: West Bengal, Gujarat, AP, Maharashtra.
General Trends: Overall decline in the forest cover across 52 Tiger Reserves and Lion
Forest Cover in Tiger Conservation area
Reserves and Lion Highest Increase in Forest area: Buxa (West Bengal), Anamalai (TN) and Indravati
Conservation Areas (Chattisgarh)
Highest Decrease in Forest area: Bhadra (Karnataka) and Sundarbans (West Bengal)
►PLASTIC WASTE MANAGEMENT other countries in the country and allows for recycling
of plastic waste generated in the country.
AND ELIMINATION OF IDENTIFIED
The following domestic regulatory actions have been
SINGLE USE PLASTICS taken in 2021:
In 2018, the Hon’ble Prime Minister announced that Plastic Waste Management Amendment Rules, 2021:
India would phase-out single use plastic by 2022. The Prohibit identified single use plastic items, which have
Hazardous and Other Wastes (Management and low utility and high littering potential. The manufacture,
Transboundary Movement) Rules, 2016 as amended import, stocking, distribution, sale and use of identified
regulate the import of identified plastic waste into the single-use plastic, including polystyrene and expanded
country by SEZ and EOUs. The regulation of import of polystyrene, commodities shall be prohibited with effect
plastic waste prevents dumping of plastic waste by from the July 1, 2022
73
Increased Thickness of Plastic Carry Bags: In order to ►INDIA'S EFFORTS FOR
stop littering due to light-weight plastic carry bags, the
COMBATING CLIMATE CHANGE
thickness of plastic carry bags has been increased from
fifty microns to seventy five microns with effect from INDIA'S NATIONALLY DETERMINED
September 30, 2021 and to one hundred and twenty CONTRIBUTIONS UNDER PARIS
microns with effect from December 31, 2022. Increased
AGREEMENT
thickness of plastic bags will also allow reuse.
• Reduce Emission Intensity of GDP by 33 to 35% below
Extended Producer Responsibility of the Producer, 2005 levels by 2030.
Importer and Brand Owner (PIBO): Plastic packaging • 40% electricity from non-fossil fuels by 2030.
waste, which is not covered under the phase out of
• Increase forest cover and create additional carbon
identified single use plastic items, shall be collected and sink equivalent to 2.5 to 3 billion tons of Carbon
managed in an environmentally sustainable way. The dioxide.
Guidelines for Extended Producer Responsibility being In order to coordinate India’s response on climate
brought out have been given legal force through Plastic change, an institutional framework of a high-level inter-
Waste Management Amendment Rules, 2021 ministerial Apex Committee for the Implementation of
Paris Agreement (AIPA) has been created.
Waste Management Infrastructure in the States/UTs
INDIA'S PERFORMANCE IN MEETING NDCs
is also being strengthened through the Swachh Bharat
Mission. • Reduction in the emission intensity of GDP by 24 per
cent between 2005-2016
Institutional Mechanism: All States/UTs have been
• Total carbon stock in the country’s forests is
requested to constitute a Special Task Force for
estimated to be 7,204 million tonnes,
elimination of single use plastics and effective
• share of non-fossil sources in installed capacity of
implementation of Plastic Waste Management Rules,
electricity generation was 40.20 per cent.
2016.
►INDIA'S EFFORTS FOR

►WATER COMBATING CLIMATE CHANGE
The extent of ground water extraction varies across the As a Party to the UNFCCC, India submitted its Second
country. The ground water assessment units (blocks/ Biennial Update Report (BUR) to the UNFCCC towards
taluks/ mandals/ tehsil/ firkas etc.) are categorized fulfillment of the reporting obligation under the
based on the Stage of Extraction (SoE) as Convention. As per the BUR, the emission intensity of
India’s GDP has reduced by 21 per cent over the period
• ‘Safe’ if SoE < 70 per cent;
of 2005-2014 which is the result of India’s proactive and
• ‘Semi-critical’ if SoE > 70 per cent and <= 90 per cent; sustained actions on climate change.
• ‘Critical’ if SoE >90 per cent and <=100 per cent National Action Plan on Climate Change (NAPCC):
Launched in 2008, India’s National Action Plan on
• ‘Over-exploited’ if SoE> 100 per cent
Climate Change (NAPCC) identifies a number of
During period of 2009-2020, units categorized as “safe”, measures that simultaneously advance the country’s
have declined from 2009 (73 per cent) to 2020 (64 per development and climate change related objectives of
cent). adaptation and mitigation through focused National
Missions.
• “Semi-critical” units have increased from 9 per cent in
2009 to 15 per cent in 2020. National Mission for Enhanced Energy Efficiency
(NMEEE): Under it, The Perform, Achieve and Trade
• “Critical” units has remained in the range of 3-5 per (PAT) scheme was designed on the concept of reduction
cent during 2004-2020. in Specific Energy Consumption.
• “Over-exploited” units, accounted for 14-17 per cent National Solar Mission: It aims to increase the share
of total assessment units during 2004-20. of solar energy in the total energy mix. Under the total
74
target of 100 GW, 32.5 GW of solar electric generation climate change and are not covered under on-going
capacity has been installed. schemes. The Scheme has been taken as Central Sector
National Water Mission: It focuses on monitoring of Scheme with National Bank for Agriculture and Rural
ground water, aquifer mapping, capacity building, water Development (NABARD) as the National Implementing
quality monitoring and other baseline studies. It seeks Entity.
to increase water use efficiency by 20%. International Platform on Sustainable Finance
National Mission for a Green India: It seeks to (IPSF): The IPSF acknowledges the global nature of
increase tree and forest cover by 5 mha. It also seeks to financial markets which has the potential to help
increase the quality of existing forests by additional 5 finance the transition to a green, low carbon and
mha. climate resilient economy by linking financing needs to
the global sources of funding. India joined the
National Mission on Sustainable Habitat: It is being
International Platform on Sustainable Finance (IPSF) in
implemented through three programmes: Atal Mission
October 2019.
on Rejuvenation and Urban Transformation, Swachh
Bharat Mission, and Smart Cities Mission. Energy
Conservation Building Rules 2018 for commercial ►MAJOR INITIATIVES AND
buildings has been made mandatory. ACHIEVEMENTS
National Mission for Sustainable Agriculture: It aims
National Hydrogen Mission: for generating hydrogen
at enhancing food security and protection of resources.
from green energy sources. Through technological
Key targets include covering 3.5 lakh hectare of area
advancements, hydrogen is being blended with CNG for
under organic farming, 3.70 under precision irrigation,
use as transportation fuel as well as an industrial input
4.0 lakh hectare under System of Rice Intensification,
to refineries.
3.41 lakh hectare under diversification to less water
Ethanol Blending Programme: Target of 20 per cent
consuming crop, 3.09 lakh hectare additional area
ethanol blending in petrol by 2025: 8.5 per cent ethanol
under plantation in arable land and 7 bypass protein
blending reached as of September 2021.
feed making. The mission has resulted in the formation
of National Innovations on Climate Resilient Agriculture, Net Zero Carbon Emission by 2030: Indian Railways
a network project. has set a target of Net Zero Carbon Emission by 2030,
primarily through sourcing its energy requirements
National Mission for Sustaining the Himalayan
through renewable energy sources
Ecosystem: It aims to evolve suitable management and
policy measures for sustaining and safeguarding the PM-KUSUM: Provide energy and water security, de-
Himalayan Ecosystem. dieselise the farm sector and generate additional
income for farmers by producing solar power
National Mission on Strategic Knowledge for
Climate Change: It seeks to build a knowledge system Development of Solar Parks and Ultra Mega Solar Power
that would inform and support national action for Projects: To facilitate large scale grid connected solar
ecologically sustainable development. Key power projects with a target capacity of 40 GW capacity
achievements include setting up of 11 Centres of by March 2024.
Excellence and 10 State Climate Change Centres. Offshore Wind Energy Policy to harness the potential
Climate Change Action program (CCAP) is a central of offshore wind energy along India’s coastline
sector scheme, initially launched in 2014 for duration of Wind solar hybrid policy: Framework for promotion of
five years. The scheme has now been extended up to large grid connected wind-solar PV hybrid projects for
2025-26, and consists of eight broad sub-components optimal and efficient utilization of transmission
including the National Action Plan on Climate Change infrastructure and land, reducing the variability in
(NAPCC) coordination, State Action Plan on Climate renewable power generation and achieving better grid
Change (SAPCC), National Institute on Climate Change stability.
Studies & Actions, National Carbonaceous Aerosols
Programme (NCAP), Long Term Ecological Observations
►INDIA’S INITIATIVES AT THE
(LTEO), International negotiations and capacity building.
Separate Fund for Climate Change: National INTERNATIONAL STAGE
Adaptation Fund on Climate Change (2015) supports Lifestyle for Environment (LIFE): In November 2021,
concrete adaptation activities for the States/UTs that the Hon’ble Prime Minister proposed a One-Word
are particularly vulnerable to the adverse effects of Movement in the context of climate: LIFE - Lifestyle for
75
Environment, at the COP 26 in Glasgow. This movement International Conference on Disaster Resilient
calls for coming together with collective participation, to Infrastructure (ICDRI), which discussed key global
take lifestyle for environment forward as a campaign issues around resilience of critical infrastructure
and as a mass movement for environmentally conscious sectors such as power, telecommunications and
life style health as well as urban infrastructure systems and
International Solar Alliance (ISA): ISA is the first treaty disaster risk financing.
based intergovernmental organization headquartered o In November 2021, the Hon’ble Prime Ministers of
in India. ISA is mandated to facilitate mobilization of India, UK, Australia, Fiji, Jamaica and Mauritius
USD 1 trillion in solar investments by 2030 for massive launched the Infrastructure for Resilient Island
scale-up of solar energy deployment. States (IRIS). This is a dedicated initiative for Small
Achievements: Island Developing States (SIDS) that provides
quality technical and financial services to make
• ISA has attained a Permanent Observer Status at the
SIDS infrastructure resilient to climate change and
UN General Assembly
disaster event.
• Green Grids Initiative- One Sun One World One Grid
o CDRI’s Global Flagship Report on Disaster and
(GGI –OSOWOG): Create a globally inter-connected
Climate Resilient Infrastructure aims to engage
green grid. A joint GGI-OSOWOG Secretariat is being
and focus global attention on the critical and
planned to be established at the ISA Secretariat
multi-faceted challenges posed to disaster and
COALITION FOR DISASTER RESILIENT climate-resilient infrastructure
INFRASTRUCTURE
o DRI Connect is a "network of networks" enabling
• launched on the side lines of UN Secretary General’s stakeholder access to knowledge resources and
Climate Action Summit in 2019 collaborative opportunities with their peers and
• International partnership of national governments, other actors
UN agencies, multilateral development banks, private Leadership Group for Industry Transition (LeadIT
sector to promote the resilience of new and existing Group): LeadIT was launched by India and Sweden, with
infrastructure systems to climate and disaster risks.
the support of the World Economic Forum at the UN
• Envisions enabling measurable reduction in Climate Action Summit in New York in September 2019,
infrastructure losses from disasters, including as one of the nine action tracks identified by the UN
extreme climate events. Secretary-General to boost climate ambitions and
• Recent Developments: actions to implement the Paris Agreement.
o In March 2021, the Hon’ble Prime Ministers of
India, UK, Italy and Fiji launched the third
76
Section-7
GRICULTURE &
FOOD MANAGEMENT
This Chapter presents an analysis of various aspects of Indian agriculture such as its contribution to GDP, important
trends in cropping pattern, operational landholdings, agricultural trade etc. It has also emphasized on the need to
focus on Enhancing Gross Capital Formation (GCF), promoting crop diversification and increased investment in R&D to
improve agricultural productivity. The need for sustainable agriculture through water conservation in irrigation and
natural farming has also been highlighted.
• Trends in contribution of Agriculture Sector and • Crop Diversification
growth rate • Water and Irrigation
• Trends in Gross Capital Formation in Agriculture • Agriculture Marketing
• Trends in Cropping Pattern • Sweet Revolution
• Trends in Crop Production • Situational Assessment of Agricultural Households
• Largest Producers of Major Crops (SAS)
• Trends in Operational Landholdings • Status of Allied Sector
• Trends in Production of Edible Oils • Food Management
• Agriculture Pricing Policy and MSP
AGRICULTURE SECTOR TO INDIA'S
GVA
77
AGRICULTURE & FOOD MANAGEMENT
• Share of Agriculture sector has remained stagnant at

around 17%-18%. In 2020-21, its share had increased
to more than 20%.
• Share of different allied sectors in decreasing order:

Crops > Livestock > Forestry > Fishing.
• Trends in contribution of different sub-sectors in last

decade
o Decline in the contribution of Crops
• The GCF in agriculture and allied sectors relative to
o Increase in the contribution of Livestock and GVA in this sector has been showing a fluctuating
Fishing trend from 18 per cent in 2011-12 to 16 per cent in
2019-20
• The GCF as percent of agricultural GDP(16%) is much
►TRENDS IN GROWTH RATE OF lower than the GCF of Indian Economy (around 30%
INDIAN AGRICULTURE of India's GDP).
• Further, out of total GCF of 16%, the private sector
alone accounts for 14.3% and public sector accounts
for remaining 2.7%.
• The Public Investment has remained stagnant at
around 2-3%, while the Private Investment has
shown fluctuating trend in the last deacde.
The agriculture and allied sectors grew at a positive ►ENHANCING GROSS CAPITAL
growth rate of 3.6 per cent during 2020-21. This became FORMATION (GCF) IN
possible due to good monsoon and various government
AGRICULTURE
measures to enhance credit availability, improve
• Government's expenditure on agricultural subsidies
investments, create market facilities, promote
is much higher at 8.2% of agricultural GDP. Hence,
infrastructure development in the agriculture sector the government needs to rationalise the agricultural
and increase provision of quality inputs to the sector. subsidies and money saved should then be used for
enhancing public sector investment in agriculture,
particularly for expanding irrigation and R&D.
►TRENDS IN GROSS CAPITAL
• Higher access to concessional institutional credit to
FORMATION IN AGRICULTURE
farmers.
78
• Greater participation of private corporate sector, • Crowd-in private sector investment through
whose investment rates are currently as low as 2 to 3 appropriate policy framework and increase in public
per cent in agriculture. investment.
►TRENDS IN CROPPING PATTERN
IMPORTANT OBSERVATIONS • Decrease in the percentage of area under nutri-

• Rice and wheat account for the largest area under cereals from 15% (2007-08) to 12% (2019-20)
cultivation.
• Stagnation in percentage of area under Rice and ►TRENDS IN CROP PRODUCTION
Wheat in the last decade. As per Fourth Advance Estimates for 2020-21, total food
• Stagnation in percentage of area under Pulses and grain production in the country is estimated at a record
Oilseeds. 308.65 million tonnes which is 11.15 million tonnes
higher than that during 2019-20.
Table 5.3 (a): Year-wise Production of major Crops
(Million Tonnes)
S. Crop 1950-51 1960- 1970- 1980- 1990-91 2000 01 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20"
No. 61 71 81
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18)
1 Foodgrains 50.82 82.02 108.42 129.59 176.39 196.81 244.49 259.29 257.13 265.05 252.03 251.54 275.11 285.01 284.95 296.65
Rice 20.58 34.58 42.22 53.63 74.29 84.98 95.98 105.30 105.23 106.65 105.48 104.41 109.70 112.76 116.48 118.43
Wheat 6.46 11.00 23.83 36.31 55.14 69.68 86.87 94.88 93.51 95.85 86.53 92.29 98.51 99.87 103.60 107.59
Maize 1.73 4.08 7.49 6.96 8.96 12.04 21.73 21.76 22.26 24.26 24.17 22.57 25.90 28.75 27.72 28.64
Nutri Cereals 15.38 23.74 30.55 29.02 32.70 31.08 43.40 42.01 40.04 43.29 42.86 38.52 43.77 46.97 43.06 47.48
2 Pulses 8.41 12.70 11.82 10.63 14.26 11.08 18.24 17.09 18.34 19.25 17.15 16.32 23.13 25.42 23.40 23.15
Gram 3.65 6.25 5.20 4.33 5.36 3.86 8.22 7.70 8.83 9.53 7.33 7.06 9.38 11.38 9.94 9.02
Tur (Arhar) 1.72 2.07 1.88 1.96 2.41 2.25 2.86 2.65 3.02 3.17 2.81 2.56 4.87 4.29 3.32 3.83
Lentil (Masur) — — 0.37 0.47 0.85 0.92 0.94 1.06 1.13 1.02 1.04 0.98 1.22 1.62 1.23 1.18
3 Oilseeds 5.16 6.98 9.63 9.37 18.61 18.44 32.48 29.80 30.94 32.75 27.51 25.25 31.28 31.46 31.52 33.42
Groundnut 3.48 4.81 6.11 5.01 7.51 6.41 8.26 6.96 4.70 9.71 7.40 6.73 7.46 9.25 6.73 10.10
Rapeseed & Mustard 0.76 1.35 1.98 2.30 5.23 4.19 8.18 6.60 8.03 7.88 6.28 6.80 7.92 8.43 9.26 9.12
Soybean — — 0.01 0.44 2.60 5.28 12.74 12.21 14.67 11.86 10.37 8.57 13.16 10.93 13.27 11.22
Sunflower — — 0.08 0.07 0.87 0.65 0.65 0.52 0.54 0.50 0.43 0.30 0.25 0.22 0.22 0.22
4 Cotton # 3.04 5.60 4.76 7.01 9.84 9.52 33.00 35.20 34.22 35.90 34.80 30.01 32.58 32.81 27.93 35.49
5 Jute & Mesta @ 3.31 5.26 6.19 8.16 9.23 10.56 10.62 11.40 10.93 11.68 11.13 10.52 10.96 10.03 9.82 9.91
6 Sugarcane 57.05 110.00 126.37 154.25 241.05 295.96 342.38 361.04 341.20 352.14 362.33 348.45 306.07 379.90 405.42 355.70
Source: Directorate of Economics and Statistics
* 4th Advance Estimates # Million bales of 170 kg. each @ Million bates of 180 kg. each
IMPORTANT OBSERVATIONS IN THE LAST DECADE • Increase in the production of Rice and Wheat in spite
• Increase in the production of all food grains. of stagnation in the percentage of area under Rice
and Wheat.
79
• Despite stagnation in area under Pulses, the overall Maize Karnataka, MP and Telangana
production of Pulses has increased in last decade.
Nutri-cereals Rajasthan, Karnataka and MP
• Despite decrease in the percentage of area under
nutri-cereals, there has been increase in the Total Pulses Rajasthan, Maharashtra and MP
production of nutri-cereals.
Total Food UP, MP and Punjab
• Increase in production all oilseeds except Soybean
grains
and Sunflower.
Important Note: Since 1951, there has been increase in Groundnut Gujarat, Rajasthan and TN
the per capita net availability of all food grains except
Rapeseed and Rajasthan, Haryana and UP
Pulses. The per capita availability of Pulses has reduced
Mustard
from 22 kgs per year (1951) to 20 kgs per year (2018)
Soybean MP, Maharashtra and Rajasthan
►LARGEST PRODUCERS OF Sunflower Karnataka, Odisha and Bihar

MAJOR CROPS Total Oilseeds Rajasthan, Gujarat and MP
Crop Top 3 Largest Producing States Sugarcane UP, Maharashtra and Karnataka
(In descending Order)
Cotton Gujarat, Telangana and Maharashtra
Rice West Bengal, UP and Punjab
Jute West Bengal, Bihar and Assam
Wheat UP, Madhya Pradesh and Punjab
►TRENDS IN OPERATIONAL LANDHOLDINGS

Category of Holdings Number of Holdings Area Average Size of Holdings
2005-06' 2010-11 2015-16(P) 2005-06* 2010-11 2015-16(P) 2005-06* 2010-11
(1) (2) (3) (4) (5) (6) (7) (8) (9)
Marginal 83694 92826 100251 32026 35908 37923 0.38 0.39
(Less than 1 hectare) (64.8) (67.1) (68.45) (20.2) (22.5) (24.03)
Small 23930 24779 25809 33101 35244 36151 1.38 1.42
(1.0 to 2.0 hectares) (18.5) (17.9) (17.62) (20.9) (22.1) (22.91)
Semi-Medium 14127 13896 13993 37898 37705 37619 2.68 2.71
(2.0 to 4.0 hectares) (10.9) (10.0) (9.55) (23.9) (23.6) (23.84)
Medium 6375 5875 5561 36583 33828 31810 5.74 5.76
(4.0 to 10.0 hectares) (4.9) (4.2) (3.80) (23.1) (21.2) (20.16)
Large 1096 973 838 18715 16907 14314 17.08 17.38
(10.0 hectares and above) (0.8) (0.7) (0.57) (11.8) (10.6) (9.07)
All Holdings 129222 138348 146454 158323 159592 157817 1.23 1.15
(100.0) (100.0) (100.0) (100.0) (100.0) (100.0)
Note: Based on landholdings, the farmers are • Decline in the share of the small armers from 18.5%
in 2005-06 to 17.6% in 2015-16.
categorized into
• Marginal (Less than 1 ha) • Share of Small and Marginal Farmers around 83% in
2015-16
• Small (1-2 ha)
Percentage of land cultivated by different
• Semi-Medium (2-4 ha)
categories of farmers
• Medium (4 to 10 ha)
• Percentage of land cultivated by small and marginal
• Large (More than 10 ha) farmers in 2005-06 was around 48%.
IMPORTANT OBSERVATIONS • Area operated by small and marginal farmers
Share of different categories of farmers increased from 41% in 2005-06 to 48% in 2015-16.
• Increase in the share of marginal farmers from 64.8% • Area operated by large farmers decreased from 11%
in 2005-06 to 68.45% in 2015-16. in 2005-06 to 9% in 2015-16.
80
►TRENDS IN PRODUCTION OF EDIBLE OILS
List of Oilseeds: Nine oilseeds are the primary source give a price assurance to the oil palm farmers for the
of vegetable oils in the country - Soybean, Groundnut, Fresh Fruit Bunches (FFBs). This will be known as the
Rape seed and Mustard, Sunflower, Safflower, Sesame, Viability Price (VP) which will protect the farmers from
Niger, Castor, linseed. the fluctuations of the international crude palm oil
Production: Soybean (34%), groundnut (27%), rapeseed (CPO) prices.
& mustard (27%) contributes to more than 88% of STRATEGY TO PROMOTE CULTIVATION OF OILSEEDS
production. • Increasing production through adoption of high
India is one of the major oilseeds growing country. The yielding varieties of seeds; soil and moisture
oilseed production in India has steadily increased since conservation techniques in rainfed areas; balanced
2016-17 onward after showing a fluctuating trend prior Utilisation of fertilisers; Intercropping of Oilseeds
to that. The oilseed production in India has grown by with other crops; Contract farming etc
almost 43 per cent from 2015-16 to 2020-21. • Encourage Cooperatives and FPOs and link them
Distribution: Andhra Pradesh & Gujarat (Groundnut), to oil processing Industries.
Haryana (Mustard), Karnataka (Groundnut), M.P • Reduce per capita consumption of edible oil and
(Soybean), Maharashtra (Soybean), Rajasthan (Mustard minimize import. Campaign for a healthy oil
& Soybean), Tamil Nadu (Ground nut), U.P (Mustard), consumption.
West Bengal (Mustard) contribute more than 95% of
• Addressing Import Duty Structure by raising the
total oilseed production in the country.
duty differential between the crude and refined oil
Demand-Supply mismatch: India is the world’s second
• Promotion of Secondary Sources (rice bran,
largest consumer and number one importer of
coconut, cotton seed, oil palm and TBOs)
vegetable oil. India has emerged as the largest
importer of vegetable oils in the world followed by • Enhancing capacity utilization of domestic
China & USA. Of imported edible oils, share of palm oil processing industries
is about 60% followed by soybean oil and sunflower. • Promoting consumption of coconut as edible oil.
INITIATIVES TO BOOST OILSEEDS PRODUCTION
• National Food Security Mission (NFSM)-Oilseeds & Oil ►AGRICULTURE PRICING POLICY
Palm: Distribution of quality seeds, improved
AND MSP
technologies, Distribution of micronutrients etc.
Declaration of MSP: The Cabinet Committee on
• Increase in the import duties on Vegetable Oils
Economic Affairs (CCEA) notifies MSP based on the
• Increase in the MSP on Oilseeds
recommendations of the Commission on Agricultural
• Guaranteed procurement through PM-AASHA Costs and Prices (CACP).
• Targeting Rice Fallow Areas (TRFA) for cultivation of Coverage of Commodities: As of now, CACP
Pulses and Oilseeds. recommends MSPs of 22 commodities, which comprise
• National Mission on Edible Oils - Oil Palm (NMEO-OP): 7 cereals (paddy, wheat, maize, sorghum, pearl millet,
Under the scheme, for the first time, Government will barley and ragi), 5 pulses (gram, tur, moong, urad,
81
lentil), 7 oilseeds (groundnut, rapeseed-mustard, dependence and higher incomes for the farmers. The
soyabean, sesamum, sunflower, safflower, Niger seed), report of the DFI Committee suggests that shifting some
and 3 commercial crops (copra, cotton and raw jute). area from staple cereals to high value produce can lead
NOTE: The CCEA declares the Fair and Remunerative Prices to a sizable increase in the returns for farmers.
(FRP) for the sugarcane. MSP does not enjoy statutory Initiatives: Crops Diversification Programme (CDP) is
backing. However, FRP enjoys statutory backing under being implemented in the original green revolution
Sugarcane (Control) Order, 1966, which is issued under the states viz. Punjab, Haryana and Western UP as a sub
Essential Commodities Act (ECA), 1955. Hence, there is scheme of Rashtriya Krishi Vikas Yojana (RKVY) since
statutory binding on sugar factories to pay the minimum 2013-14 to shift area under paddy cultivation towards
announced price and all those transactions or purchase at less water requiring crops such as oilseeds, pulses,
prices lower than this are considered illegal. coarse cereals, nutri cereals, cotton, etc. The CDP also
HOW ARE THE MSPS FIXED? focuses on shifting of areas under tobacco farming to
alternative crops/ cropping system in tobacco growing
The CACP considers various factors such as the cost of
States, namely, Andhra Pradesh, Bihar, Gujarat,
cultivation and production, productivity of crops, and
Karnataka etc.
market prices for the determination of MSPs. Different
methodologies may be used to calculate the MSPs.
These are ►WATER AND IRRIGATION
• A2 Approach, which includes cost of inputs such as Present Status: Water is a critical input for agriculture
seeds, fertilizer, labour; which accounts for about 80 per cent of the current
• A2+FL Approach, which includes A2 and the implied water use in the country. The share of net irrigated area
cost of family labour (FL); and accounts for about 49 per cent of the total net sown
area in the country and out of the net irrigated area,
• C2 Approach, which includes the implied rent on
about 40 per cent is irrigated through canal systems
land and interest on capital assets and A2+FL. Hence,
and 60 per cent through groundwater.
C2 approach is considered to be the most
comprehensive approach which can be used to Ground water extraction: The overall stage of ground
calculate the MSP. water development (ratio of annual ground water draft
and net annual ground water availability) in the country
Note: The National Commission on Farmers led by M.S.
is 63 per cent . This ratio which signifies the rate of
Swaminathan had recommended for the adoption of C2 extraction of ground water, is very high (more than 100
Approach for fixing the MSP. However, presently, the MSPs per cent) in the states of Delhi, Haryana, Punjab and
are fixed at least 50% more than cost of production as Rajasthan. These States may need to focus on both
calculated according to A2+FL approach. medium and long term ground water recharge and
conservation plans.
►CROP DIVERSIFICATION Initiatives taken:
Meaning: Crop Diversification refers to growing of • Micro Irrigation Fund (MIF) has been created with
more than one crop in the agricultural land such that it National Bank for Agriculture and Rural Development
leads to shift in the cropping pattern at an all India level. (NABARD)
Crop diversification can address hidden hunger, reduce • Promotion of micro irrigation under the Per Drop
inflation, promote sustainable practices and double More Crop component of Pradhan Mantri Krishi
farmers' income. Sinchayee Yojana
►AGRICULTURE MARKETING
Wholesale agricultural marketing is undertaken by the
network of 6946 regulated wholesale markets, set up
under the provision of respective State Agricultural
Produce Market Committee (APMC) Act.
Initiatives taken:
Significance: Crop diversification can be used as a tool
Agriculture Infrastructure Fund (AIF): To strengthen
to promote sustainable agriculture, reduction in import
the infrastructure in APMC mandis. All loans under the
82
AIF have interest subvention of 3 per cent per annum • Growing demand for honey in overseas market and
up to a limit of Rs 2 crores. This subvention is available hence scope for more export earnings
for a maximum period of 7 years. APMCs are eligible for Hence, the Government has launched National
multiple projects (of different infrastructure types) Beekeeping & Honey Mission (NBHM) to harness
within their designated market area. potential of Sweet Revolution. Going forward,
E-NAM Scheme to create "One Nation One Market". beekeeping should be considered as input of
Under the e-NAM Scheme, Government is providing agriculture, which could enhance efficacy of other
free software and assistance of ₹ 75 Lakh per APMC inputs and accordingly training should be provided to
mandi for related hardware including quality assaying farmers.
equipment and creation of infrastructure like cleaning,
grading, sorting, packaging and compost unit etc. As on
►NATURAL FARMING
1st of December, 2021, 1000 mandis of 18 States and 3
UTs have been integrated with e-NAM platform. • The main aim for promotion of Natural Farming is
elimination of chemical fertilisers and pesticides
“Formation and Promotion of 10,000 Farmer
usage and promotion of good agronomic practices.
Producer Organizations (FPOs)”: Central Sector
Natural Farming also aims to sustain agriculture
scheme to form and promote 10,000 new FPOs till 2027-
production with eco-friendly processes in tune with
28. Under the scheme, the formation and promotion of
nature to produce agricultural produce free of
FPO is based on Produce Cluster Area approach and
chemicals
specialized commodity-based approach. While adopting
cluster based approach, formation of FPOs focuses on • Natural farming in India is being promoted through a
dedicated scheme of Bharatiya Prakritik Krishi
“One District One Product” to enable product
Paddhati Programme (BPKP). The scheme
specialization.
promotes on-farm biomass recycling with major
stress on biomass mulching, use of on-farm cow
►SWEET REVOLUTION dung-urine formulations, periodic soil aeration and
The scientific practice of Beekeeping (Apiculture) has exclusion of all synthetic chemical inputs.
the potential to promote eco-friendly and sustainable
agriculture along with higher yields leading to increase
►SITUATION ASSESSMENT
in income levels of farmers. Hence, Just like White
Revolution, the Sweet Revolution can act as a major SURVEY
tool to promote socio-economic development. National Statistical Office (NSO) in its 77th round of
Beekeeping has great potential for the small and survey, conducted during the period 1st January 2019 to
marginal farmers, landless labourers etc. on account of 31st December 2019, carried out a survey on “Land and
following reasons: Livestock Holdings of Households and Situation
Assessment of Agricultural Households (SAS)”. The last
• Increases crop yields by 20-30% through cross
SAS was published in 2014.
pollination.
Definition of Agricultural Household: An agricultural
• Additional source of income for paid pollination
household was defined as a household receiving more
service
than Rs. 4000/- from agricultural activities (e.g.,
• Less capital Intensive and hence can be practised
cultivation of field crops, horticultural crops, fodder
by poor farmers
crops, plantation, animal husbandry, poultry, fishery,
• Requires no land and can be practised by landless piggery, bee-keeping, vermiculture, sericulture, etc.) and
labourers having at least one member self-employed in
• Other products such as bee pollen, bee-venom more agriculture during last 365 days.
costlier than honey ABOUT SITUATIONAL ASSESSMENT OF
• Nutritional Security: more than a third of the global AGRICULTURAL HOUSEHOLDS (SAS)
food basket is comprised of bee pollinated crops The SAS reports reveal insights on income of
agricultural households.
83
HIGHLIGHTS capita availability of milk has reached a level of 427

The average monthly income per agricultural household grams per day in 2020-21. India ranks 3rd in Egg
works out to be Rs 10218. The average monthly income Production and 8th in meat production in the world
per agricultural household was Rs 6426 as per the last IMPORTANT INITIATIVES
SAS Report of 2014. National Animal Disease Control Programme
• Highest source of Income: Income from Wages (NADCP) for control of Foot & Mouth Disease (FMD)
(40%) followed by Net Receipts from Crop production and Brucellosis: Complete control of FMD by 2025 with
(37%). The net receipts from the crop production (in vaccination and its eventual eradication by 2030. This
terms of absolute value) has increased by 22% as will result in increased domestic production and
compared to previous SAS Report of 2014. increased exports of milk and livestock products.
• Indebtedness: Percentage of indebted agricultural Animal Husbandry Infrastructure Development Fund

households: 50%. Average amount (Rs.) of (AHIDF): Facilitates investments in the establishment of
outstanding loan per agricultural household: Rs infrastructure for dairy and meat processing. Under this
74,000 scheme the Central Government provides 3 per cent
• Average Size of Landholdings: The average size of interest subvention to the borrower and credit
household ownership holdings has declined from guarantee up to 25 per cent of total borrowing.
0.725 hectare in 2003 to 0.592 hectare in 2013 and
further to 0.512 hectare in 2019. Increasing number ►FISHERIES
of small farmers and increasing importance of
Present Status: India is the second largest fish
livestock sector requires increased focus on the
producing country in the world accounting for 7.56 per
measures like development of small farm technology,
cent of global production. It contributes about 1.24 per
boosting non-farm businesses and development of
cent to the country’s GVA and over 7.28 per cent to the
allied activities including animal husbandry, dairying
agricultural GVA.
and fisheries.
Total Production: The total fish production in the
country stood at 14.16 million metric tonnes during
►ALLIED SECTORS: ANIMAL 2019-20. Of this, the marine fisheries contributed 3.78
HUSBANDRY & DAIRYING million metric tonnes and the inland fisheries
contributed 10.44 million metric tonnes. Inland
Livestock sector has grown at a compound annual
Fisheries account for larger share (74%) in comparison
growth rate of 8.15 per cent during last five years.
to marine fisheries (26%)
Present Status: India continues to be the largest
Largest Producer of Marine Fisheries: Gujarat,
producer of milk in the world. Milk production in the
Andhra Pradesh, Tamil Nadu.
country was 209 million tonnes in 2020-21. The per
84
Largest Producer of Inland Fisheries: Andhra • Financial Assistance to the farmers for buying
Pradesh, West Bengal, UP. environment friendly agricultural machinery
Largest producer of Fisheries (Both Inland and Farm Machinery Solutions (FARMS): Multi lingual
Marine): Andhra Pradesh, West Bengal, Gujarat. Mobile App which helps the farmers in getting rented
GOVERNMENT INITIATIVES farm machinery and implements through CHC in their
area.
• Fisheries and Aquaculture Infrastructure
Development Fund: The FIDF provides concessional
finance/ loan to the Eligible Entities (EEs), including ►FOOD PROCESSING SECTOR
State Governments/Union Territories (UTs) and State During the last five years ending 2019-20, Food
entities for development of identified fisheries Processing Industries (FPI) sector has been growing at
infrastructure facilities. The concessional finance an average annual growth rate of around 11.18 per
under the FIDF is provided by the Nodal Loaning cent. The sector constituted as much as 9.87 per cent of
Entities (NLEs) namely (i) NABARD, (ii) National GVA in manufacturing in 2019-20 at 2011-12 prices.
Cooperatives Development Corporation (NCDC) and Initiatives:
(iii) All scheduled Banks.
• Prime Minister-Formalization of Micro Food
• Pradhan Mantri Matsya Sampada Yojana Processing Enterprises (PM-FME): Under the
(PMMSY): Under PMMSY, key interventions include scheme, One District One Product (ODOP) status for
enhancing fish production and productivity, 137 unique products in 710 districts of 35 States/ UTs
modernizing and strengthening the value chain, has been approved by the Ministry.
creating fisheries and post-harvest infrastructure and
• Pradhan Mantri Kisan SAMPADA Yojana (PMKSY):
developing robust fisheries management and Under the umbrella central sector scheme PMKSY,
regulatory frameworks. the Ministry is implementing various component
• Extension to Kisan Credit Card Facility to Fisheries schemes, including (i) Mega Food Parks, (ii) Integrated
sector Cold Chain and Value Addition Infrastructure, (iii)
Infrastructure for Agro-processing Clusters, (iv)
Creation of Backward and Forward Linkages (v)
►MECHANISATION OF INDIAN
Creation / Expansion of Food Processing &
AGRICULTURE Preservation Capacities, (vi) Operation Greens and
Need for Agricultural Mechanization in India: Reduce (vii) Food Testing Laboratories
input costs by 25 per cent and rise in productivity by 20 • TOP Scheme: Operation Greens Scheme was
per cent, thereby affecting an increase in farm income, announced in the Union Budget for 2018-19 to
to the extent of 25-30 per cent. (Dalwai Panel) promote Farmer Producer Organisations (FPOs), agri-
Present Status of Agricultural Mechanization: It is in logistics, processing facilities and professional
the range of 40 to 45 per cent in comparison to USA management for Tomato, Onion and Potato (TOP)
crops. In pursuance of Budget announcement 2021-
(95%); Brazil (75%); China ( 57%).
22, the scope of this scheme has been expanded
GOVERNMENT INITIATIVES
from TOP to TOTAL (41 notified fruits and
Sub-Mission on Agricultural Mechanization (2014): vegetables).
Assistance to the Farmers for procurement of
agricultural machineries; Setting up of Custom Hiring
►FOOD MANAGEMENT
Centres (CHCs) and Demonstration of Newly Developed
Agricultural/ Horticultural Equipment The nodal agency which undertakes procurement and
storage of food grain is the Food Corporation of India
Promotion of Agricultural Mechanisation for in-situ
(FCI). The distribution of food grains is primarily under
Management of Crop residue
the National Food Security Act, 2013 (NFSA) and other
• Implemented in Punjab, Haryana, UP and NCT of welfare schemes of the Government and is governed by
Delhi the scale of allocation and its offtake by the
• Setting of Custom hiring centres beneficiaries.
85
per kg for nutri-cereals/wheat/rice respectively.
Identification of beneficiaries under the Act is under two
categories- households covered under Antyodaya Anna
Yojana (AAY) and Priority Households. Priority
Households are entitled to receive 5 kg per person per
month, AAY households, which constitute the poorest of
the poor, continue to receive 35 Kg of food grains per
household per month.
VARIOUS COMPONENTS OF FOOD MANAGEMENT Note: The Central Issue Price is the price at which
centre allocates food grains to the states. It can be
Procurement: The cost incurred by FCI for the
considered as the price at which food grains are sold
procurement of food grains is referred to as Economic
through the network of fair price shops. For instance, it
Cost of Food grains. It comprises of 3 components -
is Rs 1/2/3 per kg for nutri-cereals/wheat/rice
Pooled cost of grains (weighted MSP of stock of food
respectively. However, the central Issue Price (CIP) is
grains), Procurement incidentals (Labour charges,
defined in terms of Quintals (not in terms of Kg). Under
Transport charges, storage cost etc.) and cost of
the NFSA, the CIP is Rs 200/quintal in case of wheat and
distribution.
Rs 300/quintal in case of rice.
The States have also been encouraged to undertake the
GOVERNMENT INITIATIVES TO IMPROVE FOOD
procurement of food grains on their own through the
MANAGEMENT
Decentralised procurement scheme. It has been
introduced to reduce the transportation and storage • State Governments, particularly those undertaking
costs of FCI. Decentralized Procurement (DCP), are encouraged to
maximize procurement of wheat and rice.
Food grain stocking norms: The Government of India
has revised the Buffer Norms w.e.f. January, 2015 and • Strategic reserves of 5 million tonnes of food grains
the nomenclature of Buffer Norms has been changed to over the operational stocks are maintained to be
Food grain Stocking Norms. The buffer of Food grains is used in extreme situations.
maintained to meet the prescribed minimum stocking • Sale of wheat and rice is undertaken through Open
norms for food security, to ensure monthly releases of Market Sale Scheme (OMSS) (Domestic) so as to
food grains for supply through the TPDS/ Other Welfare check inflationary trend in prices of food grains.
Schemes, to meet emergency situations arising out of • PDS reforms such as One Nation - One Ration Card,
unexpected crop failure, natural disasters etc. and to Aadhaar authenticated distribution through e-POS
use the food grain stock in the Central Pool for market machines
intervention to augment supply so as to help moderate
• Fortification of Rice and its Distribution- Distributing
the open market prices.
fortified rice under Integrated Child Development
It has 2 components: Scheme and PM Poshan schemes to fight
Operational Stocks: For meeting monthly malnutrition and micronutrient deficiencies among
distributional requirement under TPDS and other pregnant women, lactating mothers, children etc
welfare schemes.
Strategic Reserves: To meet emergency situations.
►INCREASE IN THE FOOD
(Presently it is 5 MT)
Note: The norms are defined for a quarter of financial
SUBSIDY BILL
year i.e. how much buffer has to be maintained for each What constitutes Food subsidy?: Food subsidy
quarter of financial year. comprises of (i) subsidy provided to FCI for
Distribution of Food grains: The National Food procurement and distribution of wheat and rice under
Security Act 2013 provides for coverage of up to 75 per NFSA and other welfare schemes and for maintaining
cent of the rural population and up to 50 per cent of the the strategic reserve of food grains and (ii) subsidy
urban population for receiving food grains under provided to States for undertaking decentralized
Targeted Public Distribution System (TPDS), thus procurement. The acquisition and distribution costs of
covering about two thirds of the population of the food grains for the central pool together constitute the
country for receiving food grains at the rate of Rs 1/2/3 economic cost.
86
The Food subsidy bill is calculated as the difference Issue price (CIP).
between Economic cost of Food grains and Central
REASONS FOR INCREASE IN FOOD SUBSIDY BILL with FCI and State Agencies for storage of food grains
Increase in Economic Cost of Food grains was 961 LMT.
• Higher coverage of beneficiaries under NFSA as Private Entrepreneurs Guarantee Scheme (PEG):To
compared to erstwhile TPDS augment the existing storage capacity, construction of
godowns has been undertaken in PPP mode in 22
• Increase in MSP (Increase of one unit in real MSP
States under Private Entrepreneurs Guarantee (PEG)
leads to 0.48 unit increase in real economic cost
Scheme through private sector as well as CWC and
procurement)
SWCs.
• Higher procurement of food grains as against the
Construction of Steel Silos: Government of India has
stocking norms (due to Open Ended procurement
also approved an action plan for construction of steel
Policy)
silos in the country for a capacity of 100 LMT in Public
• Increase in storage cost Private Partnership (PPP) mode for modernizing storage
PROBLEMS WITH CENTRAL ISSUE PRICE (CIP) infrastructure and improving shelf life of stored food
• The CIP for NFSA beneficiaries has not been revised grains.
from Rs 200/quintal in case of wheat and Rs Online Depot Management System (ODMS): FCI is
300/quintal in case of rice. These rates were fixed implementing an Online Depot Management System
under the Act initially for a period of three years from (ODMS) to automate the entire process of depot
the date of commencement of the Act and thereafter operations including receipt of food grains at the depot,
were to be fixed by the Central Government from storage, maintenance activities and issue of food grains.
time to time, while not exceeding the minimum
support price. However, it has not been revised since
2013. This has resulted in widening of the gap
between the economic cost and CIP
• Uniform CIP for BPL and APL households
►STORAGE
The storage capacity available with the FCI, a part of
warehousing capacity available with the Central
Warehousing Corporation (CWC) and State
Warehousing Corporations (SWCs) and capacity hired
from private sector are used for storage of food grains
procured for central pool. The total capacity available
87
Section-8
NDUSTRY AND
INFRASTRUCTURE
This Chapter on 'Industry and Infrastructure" highlights as to how various Initiatives taken by the Government under
Atma Nirbhar Bharat has helped boost domestic manufacturing capacity. It analyses various aspects of Industrial sector
as such as Trends in Contribution of GVA, Trends in Growth of IIP, Sector- specific initiatives taken by the Government in
Pharmaceuticals, Electronics, MSMEs etc.
It also highlights the recent initiatives taken by the Government to boost infrastructure such as National Infrastructure
Pipeline (NIP), Gati Shakti Master Plan, National Monetisation Pipeline etc.
• Trends in contribution of Industrial Sector • Infrastructure- Roads, Railways, NIP,
• Trends in IIP and Eight Core Industries NMP etc.
• Gross Capital Formation in Industrial Sector • Flagging of Vessels in India
• Trends in FDI into India • Telecom Sector- Present Status and
• Sector-Wise Initiatives- MSME, Pharmaceutical, Electronics, Textile etc. Recent Reforms Package
INDUSTRIAL SECTOR
88
IMPORTANT OBSERVATIONS ►TRENDS IN INDEX OF
• The Industrial Sector contributes around 26% of the
INDUSTRIAL PRODUCTION (IIP)
GVA. Out of 26%, the manufacturing sector
contributes around 16%. The impact of the pandemic on the industrial sector is
reflected in the negative growth of 8.4 percent in 2020-
• Contribution of Industrial sector to GVA has declined
21. In April-November 2021-22 the IIP grew by 17.4 per
from 32% (2011-12) to 26% (2020-21)
cent as compared to (-15.3) per cent in the
• Share of Manufacturing sector has remained almost corresponding period of the previous year.
stagnant at around 16-17%
The supply side measures and pick up in demand are ►GROSS CAPITAL FORMATION IN
responsible for the significantly improved performance
of the industrial sector in 2021-22.
INDUSTRIAL SECTOR
During 2019-20, the share of industrial sector in total

►INDEX OF EIGHT CORE GFCF in the economy (at current prices) was recorded at
INDUSTRIES 30.1 per cent, which is slightly lower than 31 per cent in
It measures the performance of eight core industries i.e. the previous financial year.
Coal, Crude Oil, Natural Gas, Refinery Products,
Within the industrial sector, the share of manufacturing
Fertilizers, Steel, Cement and Electricity. These Eight
in GFCF was 51 per cent, followed by electricity at 23 per
Core Industries comprise 40.27 percent weight in the
cent, construction at 21 per cent, and mining with 5 per
IIP. The IIP is measured by National Statistical Office
whereas the Index of Eight core Industries is measured cent.
by Office of Economic Advisor, Ministry of Commerce
and Industry.
►FDI IN INDUSTRIES
The growth rate of the ICI index during the period of
April-November2021-22 was 13.7percent as compared FDI inflows in India stood at US $ 45 bn in 2014-15 and
to (-)11.1 percent in the corresponding period of last have continuously increased since then. India registered
financial year. This acceleration in ICI is mainly driven by
its highest ever annual FDI inflow of US$ 81.97 billion
improved performance in the steel, cement, natural gas,
(provisional) in the 2020-21 reflecting a growth of 10
coal and electricity
percent as compared to the previous year.
89
Prelims Pointers on Foreign Direct Investment (FDI) • Trends: India received its highest
ever FDI inflows of around $ 80 bn in
• Investment of 10% or more in a listed 2020-21
company. (Less than 10% Investment
• Top FDI Sources for FDI (2020-21):
Meaning treated as FPI)
Singapore, USA and Mauritius
• Investment in an unlisted Indian
• Top FDI Source between 2000-2019
Company (Irrespective of threshold)
(Cumulative) : Mauritius, Singapore
Government Route: Application in • Sectors attracting highest FDI:
Foreign Investment Facilitation Portal  Computer Software & Hardware,
Concerned Administrative Infrastructure
Ministry/Department. Proposals of more • States attracting highest FDI
Routes
than Rs 5000 crores to be approved by Inflows: Gujarat, Maharashtra and
CCEA. Karnataka
Automatic Route: No Prior Approval of
the Government or RBI
►IMPORTANT CHANGES IN FDI
Equities shares, Convertible debentures,
Eligible POLICY
Foreign Currency Convertible bonds
Instruments
(FCCBs), Depository Receipts Defence Sector: FDI in defence sector is allowed up to
74 per cent through automatic route (from earlier
Lottery Business; Gambling and betting 49percent) for companies seeking new industrial
including casinos; Chit funds and Nidhi licenses. FDI beyond 74 percent and up to 100 per cent
company; Trading in Transferable will be permitted under Government route.
Development Rights (TDRs); Real Estate
Prohibited Insurance Sector: FDI limit has been raised from 49
Business or Construction of Farm-
Sectors percent to 74 percent in Insurance Companies under
Houses; Manufacturing of Cigars;
the automatic route.
Activities/ sectors not open to private
sector investment viz., (i) Atomic energy Petroleum & Natural Gas sector: foreign investment
and (ii) Railway operations up to 100percent under the automatic route in cases
where the Government has accorded an ‘in-principle’
• Greenfield FDI approval for strategic disinvestment of a Public Sector
Types of FDI
• Brownfield FDI Undertaking (PSU) engaged in the Petroleum and
Natural Gas Sector.
• Countries attracting highest FDI:
Important Telecom sector: Foreign investment up to 100percent
USA ($ 250 bn); China; Hong Kong,
Pointers for th under automatic route in Telecom services sector.
Singapore and India- placed at 5
Prelims
Position)
90
SECTOR WISE ISSUES ►ELECTRONICS INDUSTRY

National Policy on Electronics 2019 (NPE 2019) seeks to
AND INITIATIVES position India as a global hub for Electronics System
Design and Manufacturing (ESDM) by encouraging and
►MSME SECTOR
driving capabilities in the country for developing core
The relative importance of MSMEs can be gauged from
components, including chipsets. Additionally, NPE 2019
the fact that the share of MSME GVA in total GVA
attempts to catalyse the growth of Indian electronics
(current prices) for 2019-20 was 33.08 per cent.
ecosystem through the
INITIATIVES
• Production Linked Incentive (PLI) Schemes for Large
• Change in Definition of MSMEs: The modified Scale Electronics Manufacturing
definition of MSMEs will facilitate expansion and
• PLI Scheme for IT Hardware;
growth of these enterprises. The resulting economies
of scale can enhance productivity without the MSMEs • Scheme for Promotion of Manufacturing of Electronic
losing out on several government incentives Components and Semiconductors(SPECS);
• CHAMPIONS portal: ICT based technology system • Modified Electronics Manufacturing Clusters 2.0 (EMC
for making the smaller units big by helping and 2.0)
handholding them. A network of control rooms is Recently, the government has approved an outlay of Rs.
created in a Hub & Spoke Model where hub is 76,000Crore (>US$ 10 Bn) for the development of
situated in the Ministry of MSME, New Delhi whereas Semiconductors and Display Manufacturing Ecosystem.
68 spokes are located across the country in various
Government’s intervention to boost this industry has
offices and institutions of Ministry.
come at a time when the global economy is facing an
acute shortage of semiconductors due to severe
►PHARMACEUTICAL INDUSTRY disruptions in supply chains.
Present Status: Indian Pharmaceutical industry ranks
third in the world in pharmaceutical production by ►TEXTILES SECTOR
volume. During2020-21, total pharma export US$ 24.4
Textile industry is the second largest employment
Bn against the total pharma import of US$7.0 Bn. India
is the largest supplier of generic medicines with a 20 generator in the country, next only to agriculture.
percent share in the global supply , thereby making the Initiatives:
country the “Pharmacy of the world”. Production-Linked Incentive (PLI) Scheme for Man
Problems: Although a prominent player in Made Fiber (MMF) segment and technical textiles.
formulations, the country is significantly dependent on PM MITRA: Setting up of 7 PM MEGA INTEGRATED
the import of bulk drugs that are used in the TEXTILES REGION AND APPAREL PARK (MITRA). PM
formulation of medicine. In certain cases, import MITRA inspired from 5F’s -farm to fibre; fibre to factory;
dependence varies between 80-100 percent. factory to fashion; fashion to foreign -will strengthen
INITIATIVES TAKEN the textile sector by developing integrated large scale
• Scheme for Promotion of Bulk Drug Parks that and modern industrial infrastructure facility for entire
envisages creation of world class infrastructure value-chain of the textile industry.
facilities in order to make Indian bulk drug industry a
global leader.
►INFRASTRUCTURE
• Production linked incentive (PLI) scheme for Bulk
Infrastructure is the backbone for any economy. The
drugs for promotion of domestic manufacturing of
extent and quality of infrastructure determines the
53 critical APIs in the country.
ability of the country to utilize its comparative
• Production linked incentive (PLI) scheme for
advantage and enables cost competitiveness. Given the
Pharmaceuticals
strong backward and forward linkages and the positive
• Production Linked Incentive (PLI) Scheme for externalities that infrastructure generates, it can be a
Promoting Domestic Manufacturing of Medical
vehicle for social and economic transformation.
Devices
91
►SUCCESS OF PPP The road network of the country consists of National

Highways(NH),State-Highways (SH),District Roads, Rural
As per the database of the World Bank on private
Roads, Urban Roads and Project Roads of over 63.71
participation in infrastructure, India is ranked second
lakh km of roads as on 31 March 2019, which is the
among developing countries both by the number of PPP
second-largest in the world, after the United States. The
Projects as well as the associated investments. Much of
extent of road construction per day increased
the Indian success in PPPs is attributed to development
substantially in 2020-21 to 36.5 kms per day from 28
of robust institutional structure, financial support, and
kms per day in 2019-20, a rise by 30.4 percent as
use of standardized documents like Model Concession
compared to the previous year.
Agreements across infrastructure sectors.
►RAILWAYS
►RECENT CHANGES IN VIABILITY
Indian Railways (IR) with over 68,000 route kms is the
GAP FUNDING (VGF) SCHEME third largest network in the world under single
The VGF Scheme aims at supporting infrastructure management. During the year 2018-19, Indian Railways
projects that are economically justified but may not be carried 120 crore tonnes of freight and 840 crore
financially viable (for example, Construction of Highway passengers making it the world’s largest passenger
between two cities with lower traffic volume). provides carrier and 4th largest freight carrier
Viability Gap Funding in the form of Grant (not in terms National Rail Plan 2030 envisages the creation of a
of loan) up to 20% of the Total Project Cost (TPC). The future ready railway system. Objective:
State Government or Government entity that owns the
• Increase the modal share of railways in freight to 40-
project may provide additional grants out of its budget
45% from the present level of 26-27%.
up to further 20% of the TPC.
• The Plan provides a pipeline of projects, which on
Reforms introduced under Aatma Nirbhar Package:
completion will increase railway capacity to capture
In order to boost Social Infrastructure, the Government
45% of freight traffic.
will enhance the quantum of Viability Gap Funding (VGF)
up to 30% each of Total Project Cost as VGF by the • 100% electrification of its network by December 2023
Centre and State/Statutory Bodies. For other sectors, VGF • Commission new Dedicated Freight Corridors and
existing support of 20 % each from Government of India also High Speed Passenger Corridor
and States/Statutory Bodies shall continue.
►CIVIL AVIATION
►NATIONAL INFRASTRUCTURE India is the third largest domestic market for civil
PIPELINE (NIP) aviation in the world.
• Total Investment: Rs 111 lakh crores over next 5 Disinvestment of Air India: Tata Sons Pvt. Ltd was
years. awarded 100 percent equity shareholding in Air India.
• Financing: Centre (39%), States (40%) and Private Privatization of Airports: Airports Authority of India
Sector (21%). (AAI) has awarded six airports namely, Ahmedabad,
Jaipur, Lucknow, Guwahati, Thiruvananthapuram and
• Share of Different sectors: Energy (24 per cent),
Mangaluru for Operations, Management and
Roads (19 per cent), Urban (16 per cent), and
Development to the highest bidder i.e., M/s Adani
Railways (13 per cent)
Enterprises Limited (AEL) under Public Private
Partnership (PPP) mode for a lease period of 50 years.
►NATIONAL MONETISATION
Udaan Scheme: A total of 43 airports have been
PIPELINE (NMP) operationalized since Udaan scheme was taken up.
Total indicative value of NMP for core assets of the
Central Government has been estimated at Rs 6.0 lakh ►SHIPPING
crore over 4-year period (5.4 percent of total
Present scenario: Around 95 per cent of India’s trade
infrastructure investment envisaged under NIP).
by volume and 68 per cent in terms of value is
transported by sea.
►ROAD SECTOR
92
Shipping Tonnage: India’s shipping tonnage was only BENEFITS ANNOUNCED FOR FLAGGING SHIPS IN
1.92 lakh Gross Tonnage (GT) on the eve of INDIA
independence. It increased gradually thereafter, but Recently, the Government has revised the "Make in
was practically stagnant at around 70 lakh GT till the India" policy for the public procurement. As per the
beginning of 2004-05. However, the tonnage tax regime stated policy, the Government would not issue global
introduced by the Government of India in that year tender for the procurement of services below the value
boosted the growth of the Indian fleet as well as its of Rs 200 crores. So, the preference would be given to
tonnage. domestically registered companies in case of public
Ports Sector: The Major Ports in the country have an procurement of services below Rs 200 crores.
installed capacity of 1,560 MTPA as in March, 2021 and In case of shipping Industry, it would mean that
handled traffic of 672 MT during 2020-21. The average preference would be given to Indian-flagged vessels for
turnround time at these major ports has reduced from the provision of services below Rs 200 crores.
62.11 hours in 2019-20 to 55.99 hours in 2020-21.
CONSTRAINTS IN FLAGGING SHIPS IN INDIA
According to the shipping Industry, there is lack of level
►UNDERSTANDING THE CONCEPT playing field between Indian-flagged vessels and
OF FLAGGING SHIPS IN INDIA foreign-flagged vessels on account of unfavourable tax
regime and poor operating conditions in India. The
Meaning: In the shipping sector, a ship flies the flag of
operating cost of Indian-flagged vessels is at least 40%
the country where it is registered and is subjected to
higher as compared to foreign-flagged vessels on
the tax jurisdiction. Hence, flagging ships in India would
account of higher taxes in India. That is why, most of the
mean that the Global ship owners would register their
global ship owners tend to register their ship in low-tax
ships in India. These Ships would fly Indian Flag and
jurisdiction such as Singapore and then these
would be involved in both International trade and
Singapore-flagged ships are used for carrying India's
Coastal Trade.
cargo.
Rationale: Countries across the world such as China,
Hence, unless the taxation structure and other
Japan etc. have developed a strong national shipping
operating conditions for the Indian-flagged vessels
fleet. Even a smaller country such as Singapore has
improve, the global vessel owners would be reluctant to
much more developed shipping fleet. However, in case
register their ships in India.
of India, as stated before, presently foreign owned
vessels account for almost 92% of India's cargo. We
need to realize that India has a vast coastline of 7,500 ►TELECOM SECTOR
km and strategic location closer to major shipping lines India is the world’s second-largest telecommunications
and hence it has the potential to get benefitted form the market. The total telephone subscriber base in India has
expanding maritime trade. Hence, going forward, we increased from 933 million in March 2014 to 1200.88
need to develop strong shipping fleet within India and million in March 2021.
reduce our dependence on the foreign owned vessels.
93
Tele density in India: The overall tele-density in India • Spectrum Tenure: In future Auctions, tenure of
stands at 90.45 per cent, the rural tele-density being spectrum would be increased from 20 to 30 years.
57.35 per cent and urban tele density being 160.71 per • No Spectrum Usage Charge (SUC) for spectrum
cent at the end of September 2019. acquired in future spectrum auctions.
Increase in Internet Penetration: Internet subscribers • Changes in FDI Norms for Telecom Sector:
has risen to 833.71 million in June 2021.96% have Presently, 49% FDI is allowed through the Automatic
broadband connection, while only remaining 4% have Route and up to 100% through the Approval Route.
narrowband connection. Now, the Government has decided to allow 100% FDI
Increase in Internet usage: India is now the global through the automatic route.
leader in monthly data consumption, with average
consumption per subscriber per month increasing from
►POWER
62 MB in 2014 to 9.8 GB in June 2019. The cost of data
has also reduced substantially, enabling affordable Installed Capacity: The installed capacity has increased
internet access for millions of citizens. from 3.56 lakh MW in March 2019 to 3.82 lakh MW in
March 2020.
TELECOM INFRASTRUCTURE AND CONNECTIVITY
Power generation capacity (fuel-wise): Thermal
BharatNet: The Government is implementing the
(67%), Renewable Energy (22%), Hydropower (10%),
flagship BharatNet Programme in a phased manner for
Nuclear (1%)
providing broadband connectivity to all the 2.5 lakh
Gram Panchayats (GPs) in the country. The broadband Power generation capacity (sector-wise): Private
infrastructures created under the project would be (46.4%), State (28.4%), Centre (25.1%)
available to all categories of service providers on non-
discriminatory basis. ►RENEWABLE ENERGY
Public Wi-Fi Access: Public Wi-Fi hotspots ensure last- • Renewable energy (excluding large hydro) constitutes
mile delivery of broadband to users and are much over 24.71 percent of the country’s installed power
easier to scale than adding new mobile towers. capacity and around 10.7 percent of the electrical
RECENT REFORMS PACKAGE FOR THE TELECOM energy generation for year 2020-21.
SECTOR • As of 31 October 2021, India’s total renewable energy
• Rationalization of Adjusted Gross Revenue: installed capacity (excluding hydro power above 25
Henceforth, AGR would include only the core MW) has reached over 103.05 GW.
revenue. Non-Core Revenue will be excluded from • During the last 7.5 years, if large hydro is included,
the calculation of AGR. This is set to reduce the the share of renewable energy in electric installed
financial burden on the Telcom operators in future. capacity is estimated to be about 38.27 percent (as of
• Moratorium on the payment of existing dues for a October 2021) and its share in electric energy
period of 4 years. This move is expected to ease generation is estimated to be about 26.96 percent
liquidity constraints of the Telecom Operators and (for the month of August 2021).
would help them to undertake investment in new age
technologies such as 5G.
94
Section-9
ERVICES
The Services sector contributes over 50 per cent to India’s GDP. While Covid-19 pandemic has had an adverse impact on
most sectors of the economy, the services sector has been the worst affected as its’ share in India’s GVA declined from
55 per cent in 2019-20 to 53 per cent in 2021-22. Within the services sector, the effect of Covid-19 has been varied. While
non-contact services such as information, communication, financial, professional and business services have remained
resilient, the impact has been much severe on contact-based services such as tourism, retail trade, hotel, entertainment
and recreation, etc.
Following Topics have been covered from the Chapter of Services:
• Trends in contribution of Services Sector • Removal of Telecom Regulations in IT-BPO Sector
• FDI Inflows into Services Sector • Drone rules, 2021
• Trade in Services Sector- Export and Imports • Revised Guidelines for Acquiring and Producing
• Patents in India Geospatial Data
SERVICES SECTOR
Share in GVA
Growth (YoY) (per cent)
(per cent)
2021-22 2018-19 2019-20 2020-21 2021-22 2021-22

Sector
(AE) (2nd RE) (1st RE) (PE) (AE)
Q1 Q2 H1
Total Services (Excluding
53 7.2 7.2 -8.4 8.2 11.4 10.2 10.8
construction)
Trade, hotels, transport,
communication & services 16.9 7.1 6.4 -18.2 11.9 34.3 8.2 18.4
related to broadcasting
Financial, real estate &
20.9 7.2 7.3 -1.5 4.0 3.7 7.8 5.8
professional services
Public administration, defence
15.2 7.4 8.3 -4.6 10.7 5.8 17.4 12.0
& other services*
IMPORTANT OBSERVATIONS Note: The services sector now accounts for more than
Among the various sub-sectors, the Financial, real 50 per cent of the Gross State Value Added (GSVA) in 12
estate and professional services account for the highest out of the 33 states and UTs. Chandigarh and Delhi
share of 21% of India's GVA. stand out with a particularly high share of services in
95
SERVICES
GSVA of more than 80 per cent while Sikkim’s share Percentage of Patents filed by Indians: The share of
remains the lowest at 26.8 per cent. Indian residents in total applications has increased from
20 per cent in 2010-11 to 40 per cent in 2020-21.
►FDI INFLOWS INTO SERVICES Improvement in Global Innovation Index from 81st in
2015-16 to 46th in 2021.
SECTOR
Problems: The number of patents granted in India is
• Services sector is the largest recipient of FDI inflows still a fraction compared to patents granted in China,
in India. According to the World Investment Report USA, Japan, and Korea.
2021 by the UN Conference on Trade and REASONS FOR LOWER FILING OF PATENTS
Development (UNCTAD), India was the fifth-largest
• Lower Expenditure on R&D (0.7% of GDP in 2020-21)
recipient of Foreign Direct Investment (FDI) in 2020
• Procedural delays and complexity of the process in
improving its rank by four places, from ninth position
filing patents
in 2019.
• No Time limit prescribed for granting Patents in India
• In 2020-21, India registered highest ever annual FDI
• Average pendency for final decision in acquiring
inflows of US$ 81.97 billion
patents in India is 42 months, which is higher in
comparison to other countries.
►TRADE IN SERVICES SECTOR • low number of patent examiners in India
EXPORTS
Total Exports: India has a dominant presence in global ►MAJOR SERVICES: SUBSECTOR
services exports. It remained among the top ten
WISE PERFORMANCE AND RECENT
services exporter countries in 2020, with its share in
world commercial services exports increasing from 3.4 POLICIES
per cent in 2019 to 4.1 per cent in 2020. India’s service Tourism Sector: In normal times, tourism sector is a
exports have however consistently hovered between 7.4 major contributor to GDP growth, foreign exchange
to 7.7 per cent of GDP. earnings and employment. However, the Covid-19
Composition: The composition of service exports has pandemic has had a debilitating impact on world travel
remained largely unchanged over the years. Software and tourism everywhere, including India.
services constitute the bulk of it at around 40-45 per INFORMATION TECHNOLOGY AND BUSINESS
cent, followed by business services at about 18-20 per PROCESS MANAGEMENT (IT-BPM) SERVICES
cent, travel at 11-14 per cent and transportation at 9-11 Contribution of sub-sectors: IT services constituted 51
per cent. per cent of the IT-BPM sector in 2020-21, followed by
Software & Engineering Services (20.8 per cent share)
IMPORTS
and BPM Services (19.8 per cent share)
Total Imports: India’s services imports exhibited
Export driven: A significant part (about 83 per cent) of
sharper decline of 8.4 per cent in 2020-21 in
the IT-BPM industry (excluding hardware) continues to
comparison with services exports primarily on account
be export driven, with export revenues in excess of US$
of fall in travel and transportation payments
149 billion in 2020-21.
Composition of Service Imports: The relative shares of
Export Market: USA accounts for the bulk of exports
the various constituents of service imports have also
followed by UK.
not varied much. Business services account for the
highest share of service imports.
►REMOVAL OF TELECOM
►PATENTS IN INDIA REGULATIONS IN IT-BPO SECTOR
IT and IT enabled service companies carrying out
Number of Patents filed: There has been gradual
services like tele-medicine, e-commerce, call centre,
increase in the filing and granting of patents in India.
network operation centre and other IT Enabled Services,
The number of patents filed in India has gone up from
by using Telecom Resources provided by Authorised
39,400 in 2010-11 to 58,502 in 2020-21.
Telecom Service Providers were required to be
Number of Patents granted: The patents granted in registered as Other Service Provider (OSP) and comply
India has gone up from 7,509 in 2010-11 to 28,391 in with the onerous obligations of the OSP Regulations.
2020-21. The application and approval processes were
96
SERVICES
cumbersome and compliance obligations such as in Reduction in Fees: For instance, the fee for a remote
relation to the sharing of infrastructure, work from pilot license fee has been reduced from Rs 3000 (for
home arrangements, use of EPABX and internet large drone) to Rs 100 for all categories of drones.
connectivity, etc. were tedious and made compliance Extended applicability of rules: Drones up to 500 kg
challenging. are now subject to regulations, compared to the earlier
The revised guidelines which resolve these issues limit of 300 kg. This brings drone taxis and heavy
are as follows: payload-carrying drones within the ambit of the rules.
Clear definition of OSP: The applicability of new Prior security clearance removed
guidelines is limited to entities that provide "Voice Relaxations on foreign companies: Foreign-owned
based BPO services" to its customers. Voice based BPO and controlled Indian companies can conduct drone
services is defined to mean call centre services. The new operations in India. Import of drones will be regulated
guidelines have explicitly clarified that non-voice-based by Directorate General of Foreign Trade (DGFT).
entities will not be governed by the OSP regime. Reduced penalties: The maximum penalty under new
Removal of registration requirement: No registration rules has been reduced from Rs 5 lakhs to Rs 1 lakh
certificate will be required for OSP centres in India.
Removal of requirement of bank guarantee: No bank ►REVISED GUIDELINES FOR
guarantee whatsoever will be required for any facility or ACQUIRING AND PRODUCING
dispensation under these guidelines.
GEOSPATIAL DATA
Removal of distinction between domestic and
international OSPs: The categorization of OSPs has On 15th February 2021 the Department of Science and
been done away with and one single OSP category has Technology released guidelines for the creation,
acquisition and use of geospatial data, including maps.
been introduced regardless of their domestic/
international business operations. Some key changes under the guidelines are as follows:
Work from home and remote locations allowed: The Introduction of a self-certification regime: All entities
agents at home/anywhere shall be treated as remote are now required to follow a self-certification process to
agents of the OSP centre show adherence to the guidelines, as opposed to
Interconnectivity between OSPs allowed: obtaining prior approval or licenses for the use of
geospatial data and maps.
Interconnection between two or more OSP centres of
the same or unrelated company is now permitted. Relaxation of restricted areas: Mapping activities are
Sharing the infrastructure: Infrastructure sharing prohibited only for specific attributes of highly sensitive
among OSPs is now allowed. locations, as opposed to restricted areas under the
previous regime.
►DRONE RULES, 2021 Specific permissibility for Indian Entities: Only Indian
In March 2021, the Ministry of Civil Aviation published owned and controlled entities are permitted to (i) use
the Unmanned Aircraft Systems (UAS) Rules, 2021. geospatial data above a certain special accuracy; (ii) use
These Rules were considered too stringent and specific technologies such as ground truthing and
restrictive as they involved considerable paperwork, verification; and (iii) conduct activities such as street
required permissions for every drone flight and very view surveying and surveying in Indian territorial
few “free to fly” green zones were available. waters. While non-Indian companies are not permitted
to undertake any of the above, they can license this
Based on the feedback, the Government decided to
data from Indian entities through the use of APIs, only
repeal the Unmanned Aircraft Systems (UAS) Rules,
for the purposes of serving their Indian customers,
2021 and replace the same with the liberalised Drone
Rules, 2021, which was notified on 25th August 2021. Relaxation on export restrictions: The guidelines
KEY FEATURES OF DRONE RULES 2021 INCLUDE permit the export of maps with resolutions up to a
1:100 resolution thereby relaxing the previous
Several approvals abolished; with the total forms to
threshold of 1:250000. Maps which are finer than the
be filled reduced from 25 to 5: Various approvals such
specified resolution threshold must be localised, and
as unique authorisation number, unique prototype
are only permitted to be stored and processed on
identification number, certificate of manufacturing, and
servers located within India.
operator permit etc. have been done away with. Certain
exemptions have also been introduced for nano/micro
drones.
97
Section-10
OCIAL
INFRASTRUCTURE AND
EMPLOYMENT
This chapter highlights the government's interventions in the field of social sector i.e. Education, Health, Skills,
Employment creation etc. To get holistic understanding related to this chapter, it is advisable to read and revise the
Prelims Compass Magazine on Government schemes and programmes with a special focus on schemes related to
Education, Health, Skill Development, Employment creation and so on.
Following Topics have been included in this chapter:
Following Topics have been covered from the Chapter of Services:
• Education • Employment
oMajor Initiatives for Students during COVID-19 • Status of Employment in India
pandemic • Formalisation of Jobs within Indian Economy
o Major Schemes for School Education during 2021-22 • Different categories of workers
o Gross Enrolment in Higher Education and recent • Health
initiatives • Drinking Water and Sanitation
• SKILL DEVELOPMENT and recent initiatives • Rural Development
►TRENDS IN SOCIAL SECTOR

EXPENDITURE
Table 1: Trends in Social Service Sector Expenditure by General Government
(Combined Centre and States)
Item 2014- 2015- 2016- 2017- 2018- 2019- 2020-21 2021-22
15 16 17 18 19 20 (RE) (BE)
(Rs. in lakh crore)
Total Budgetary Expenditure 32.85 37.61 42.66 45.16 50.41 54.11 65.24 71.61
Expenditure on Social Services: 7.68 9.16 10.41 11.40 12.78 13.65 16.34 19.06
i) Education 3.54 3.92 4.35 4.83 5.26 5.80 6.21 6.97
ii) Health 1.49 1.75 2.13 2.43 2.66 2.73 3.50 4.72
98
SOCIAL INFRASTRUCTURE AND EMPLOYMENT
iii) Others 2.65 3.48 3.93 4.13 4.86 5.13 6.63 7.37
(As percentage to GDP)
i) Education 2.8 2.8 2.8 2.8 2.8 2.8 3.1 3.1
ii) Health 1.2 1.3 1.4 1.4 1.4 1.3 1.8 2.1
iii) Others 2.1 2.5 2.6 2.4 2.6 2.5 3.4 3.3
(As percentage to total expenditure)
i) Education 10.8 10.4 10.2 10.7 10.4 10.7 9.5 9.7
ii) Health 4.5 4.7 5.0 5.4 5.3 5.0 5.4 6.6
iii) Others 8.1 9.3 9.2 9.1 9.6 9.5 10.2 10.3
(As percentage to social services)
i) Education 46.1 42.8 41.8 42.4 41.2 42.5 38.0 36.6
ii) Health 19.4 19.1 20.5 21.4 20.8 20.0 21.4 24.7
iii) Others 34.6 38.0 37.7 36.2 38.0 37.6 40.6 38.7
IMPORTANT OBSERVATIONS Digital Architecture will not only support teaching and
• Increase in the combined expenditure of Centre and learning activities but also educational planning,
States in Social Sector as percentage of GDP from governance administrative activities of the Centre and
6.2% in 2014-15 to 8.3% in 2020-21. the States Union Territories.
• Expenditure in Education : 3.1% of GDP ( Lower than VIDYANJALI: Vidyanjali portal enables the
targeted 6%). community/volunteers to interact and connect directly
• Expenditure in Health: 1.8% of GDP ( Lower than with schools of their choice to share their knowledge
targeted 2.5%). and skills as well as contribute in the form of
assets/material/equipment.
• Expenditure on Social Services as percentage of Total
expenditure has increased from 23% in 2014-15 to
25% in 2020-21. ►MAJOR SCHEMES FOR SCHOOL
EDUCATION DURING 2021-22
►MAJOR INITIATIVES FOR Samagra Shiksha Scheme: As an integrated scheme for
STUDENTS DURING COVID-19 school education, it covers the entire gamut from pre-
school to class XII. It treats school education as a
PANDEMIC
continuum, and is in accordance with Sustainable
PM e-VIDYA: Launched in May 2020, PM e-Vidya unifies Development Goal for Education (SDG-4).
all efforts related to digital/online/ on-air education to
NIPUN BHARAT MISSION: On 5th July 2021,
enable coherent multi-mode access to education. 4
government launched a National Mission on
Components:
Foundational Literacy and Numeracy called “National
• One Nation, One Digital Education (DIKSHA) Platform; Initiative for Proficiency in Reading with Understanding
• One Class, One TV channel through Swayam Prabha and Numeracy (NIPUN Bharat)” . The National Mission
TV Channels; lays down priorities and actionable agenda for
• Extensive use of Radio, Community Radio and States/UTs to achieve the goal of proficiency in
Podcasts; foundational literacy and numeracy for every child by
• For the differently-abled: One DTH channel is being grade 3.

operated specifically for hearing impaired students in PRADHAN MANTRI POSHAN SHAKTI NIRMAN (PM
sign language. POSHAN) SCHEME: The Scheme, earlier known as
NATIONAL DIGITAL EDUCATION ARCHITECTURE ‘National Programme for Mid-Day Meal in Schools”,
(NDEAR) covers all school children studying in Balvatika (just
before class I) and Classes I-VIII in Government and
The blueprint of NDEAR, a digital infrastructure for
Government-Aided Schools. PM POSHAN Scheme in
Education, was launched on 29th July, 2021. It will be set
schools has been approved for implementation over the
up within the context of a Digital-First Mindset where the
five-year period 2021-22 to 2025-26.
99
►GROSS ENROLMENT IN HIGHER Pradhan Mantri Kaushal Vikas Yojana (PMKVY):

PMKVY has two training components, viz., Short Term
EDUCATION Training (STT) and Recognition of Prior Learning (RPL).
Gross enrolment ratio in higher education recorded at Recognition of Prior Learning (RPL) seeks to align the
27.1 percent in 2019-20, slightly higher from 26.3 competencies of the unorganized workforce of the
percent in 2018-19. The Gross Enrolment Ratio for country with the standardized National Skill Qualification
Females (27.3%) is slightly higher than that of Males to enhance the employment opportunities.
(26.9%). Jan Shikshan Sansthan (JSS) Scheme: Provide
vocational skills to non-literate, neo-literates, persons
►RECENT INITIATIVES IN HIGHER with rudimentary level of education up to 8th and school
dropouts up to 12th standard in the age group of 15-45
EDUCATION
years. Under the scheme grant is released to Jan
• National Apprenticeship Training Scheme (NATS): Shikshan Sansthans (NGOs) for Skill Development.
Under the scheme students will be given
National Apprenticeship Promotion Scheme (NAPS):
apprenticeship in the emerging and frontier
Promotes apprenticeship training and the engagement
technology such as Artificial Intelligence, drone
of apprentices by providing financial support to
technology, new evolving and emergent areas
industrial establishments undertaking apprenticeship
including expertise required for Production Linked
program under The Apprentices Act, 1961
Incentive Scheme, and PM Gati Shakti Programme of
the Government. REFORMS UNDER APPRENTICESHIP RULES 1992
• Academic Bank of Credit would digitally store the • Increasing upper limit for engaging apprentices from
academic credits earned from various recognized 10 to 15 per cent of total strength of establishment;
Higher Educational Institutions (HEI) such that credits • Decreasing the size limit of an establishment with
so earned can be accounted for award of degree by mandatory obligation to engage apprentices from 40
any given HEI. to 30;
• e-PGPathshala : 154 Universities have come on • Payment of stipend for 1st year has been fixed rather
board for accepting credit transfer for courses offered than linking it to minimum wages;
through SWAYAM platform till now, thereby boosting
• 10 to 15 per cent hike in stipend for 2nd and 3rd year
mainstreaming of Massive Online Open Courses of apprenticeship;
(MOOCs).
• Duration of apprenticeship training for optional trade
• Unnat Bharat Abhiyan has been launched to cater can be from 6 months to 3 years.
the rural local needs by leveraging higher education.
• The minimum amount of stipend prescribed ranges
The objective of the scheme is to engage reputed
from Rs 5,000 per month - for school pass outs
higher educational institutions (central and state;
between Class 5th- 9th, to Rs 9,000 per month to
public and private) to understand and work in rural
graduate or degree apprentices in any stream.
areas.
Aatmanirbhar Skilled Employees Employer Mapping
(ASEEM) portal: Digital platform to match supply of
►SKILL DEVELOPMENT skilled workforce with the market demand.
According to the Periodic Labour Force Survey (PLFS) Pradhan Mantri Dakshta Aur Kushalta Sampann
2017-18 only 13.53 per cent of the workforce in the Hitgrahi Yojana (PM-DAKSH): National action plan for
productive age-group of 15-59 years has received skilling of marginalized persons including scheduled
training (2.26 per cent formal vocational/technical castes, backward classes and safai karamcharis.
training and 11.27 per cent informal training).
►STATUS OF EMPLOYMENT IN
►SKILL INDIA MISSION
INDIA
Skill India Mission focuses on re-skilling and up-skilling in
IMPORTANT TERMS TO UNDERSTAND
prominent trades. Under the Mission government
implements Pradhan Mantri Kaushal Vikas Yojana The enterprises are categorised are two types:
(PMKVY), Jan Shikshan Sansthan (JSS) Scheme and • Unorganised Sector: As per National Commission for
National Apprenticeship Promotion Scheme (NAPS). Enterprises in Unorganized Sector (NCEUS)
classification, “The unorganised sector consists of all
100
unincorporated private enterprises owned by (49%); Informal workers (51%)
individuals or households engaged in the sale and
production of goods and services operated on a Share of workers in Share of workers in
proprietary or partnership basis and with less than Unorganised sector: Unorganised sector:
ten total workers". Usually, these enterprises remain
Formal Workers 2011-12: Formal workers
outside the purview of Government's laws, rules and
(0.74%); Informal (0.4%); Informal Workers
regulations.
workers (99.26%) (99.6%)
• Organised Sector: Employ 10 or more employees
and are registered with the Government. 2017-18: Formal Workers
THE WORKERS ARE CATEGORISED ARE INTO TWO (0.74%); Informal workers
TYPES (99.26%)
• Informal Workers: These workers do not enjoy
employment security (Contractual workers), work
security (not entitled to compensation on account of • Increase in the share of employment in the Organized
any accident or disability during work) or social sector from 17% in 2011-12 to 19% in 2017-18.
security benefits ( lack of access to pension, insurance
• Increase in the total share of formal workers from 8%
etc). The Informal workers may be employed in both
in 2011-12 to 10% in 2017-18.
organised and unorganised sector.
• Formal Workers: These workers enjoy employment • Increase in the share of Formal workers in the
security, work security and social security benefits. Organized sector from 45% in 2011-12 to 49% in
These workers may be employed in both organised 2017-18.
and unorganised sector.
• Decrease in the share of Informal workers in the
Organized Sector from 55% in 2011-12 to 51% in
►FORMALISATION OF JOBS 2017-18.
WITHIN INDIAN ECONOMY
Present Share of Trends in share of ►DIFFERENT CATEGORIES OF
Employment (2017-18) employment WORKERS
• Unorganised sector Sector wise trend The NSO data classifies the workers on the basis of
(81%); Organised employment status into three categories i.e. self-
• 2011-12: Unorganised
Sector (19%) sector (83%); Organised employed workers; regular wage/salaried employees;
• Informal workforce sector (17%) and casual labourers.
(90%); Formal • The self-employed category (consists of employers,
• 2017-18: Unorganised
Workforce (10%) sector (81%); Organised own account workers and unpaid family labour)
Sector (19%) includes those who work for themselves and do not
Worker wise trends sell their labour power to anyone else in return for
wage. Own account workers include those who
• 2011-12: Informal Workers
(92%); Formal workers (8%) operated their enterprises on their own account
without hiring any labour during the reference period
• 2017-18: Informal Workers
(90%); Informal Workers while employers are those own account workers who
(10%) ran their enterprise by hiring labourers. However,

unpaid family labourers/helpers included those who
Share of workers in Share of workers in were engaged in their household enterprises
Organised sector: Organised sector:
• Regular wage/salaried employees are those who
Formal workers (49%); 2011-12: Formal workers receive predetermined wages/salary on regular basis.
Informal workers (51%) (45%); Informal workers (55%)
• Casual worker includes those who are hired for very
2017-18: Formal workers short time period on daily or monthly basis.
101
IMPORTANT OBSERVATIONS emerging diseases. It is the largest pan-India scheme for

• Share of different categories: Self-employed (52%); public health infrastructure since 2005.
Casual Workers (25%); Regular wage (23%) Pradhan Mantri Swasthya Suraksha Yojana (PMSSY)
• Largest share: Own account workers account for the is being implemented to correct regional imbalances in
largest share of workers (36%) followed by casual the availability of affordable reliable tertiary healthcare
workers (25%) and Regular wage/Salaried workers services and to augment facilities for quality medical
(23%) education in the country. Under PMSSY, construction of
• Regular wage/ Salaried Workers: Increase in the 22 new All India Institutes for Medical Science (AIIMS)
share of Workers from 18% in 2011-12 to 23% in and 75 Government Medical College up-gradation
2017-18. Projects has been approved and taken up for
implementation.
• Self-Employed Category: Proportion of Self-
employed workers remained unchanged at 52% Ayushman Bharat Digital Mission (ABDM): Develop
Increase in share of Own account workers and the backbone necessary to support the integrated digital
Employers; Decline in Unpaid Family Labourers; health infrastructure of the country. Services like the
• Casual Workers: Decrease in the Share from 30% to issue of Health ID, Healthcare Professionals Registry
25% (HPR), Health Facility Registry (HFR) and Health Records
(PHR) have been initiated.
►HEALTH e-Sanjeevani: In wake of COVID-19 pandemic, Ministry

of Health and Family Welfare upgraded e-Sanjeevani
The National Health Policy, 2017 provides for universal
application to enable patient-to-doctor tele-consultation
access to good quality health care services. The focus of
to ensure continuum of care and facilitate health
healthcare is on four important pillars - preventive
services to all citizens in the confine of their homes free
healthcare, providing affordable healthcare, building
of cost
medical infrastructure and mission mode interventions
for maternal health, child health and to combat
communicable and non-communicable diseases. ►HIGHLIGHTS OF NFHS-5 REPORT
Ayushman Bharat scheme seeks to provide for DEMOGRAPHY
Universal health coverage (UHC) by adopting two • Sex Ratio has improved from 991 (NFHS-4) to 1020
approaches (a) Creation of 1.5 lakh Health and Wellness (NFHS-5)
centres (HWCs) and Pradhan Mantri Jan Arogya Yojana • Total Fertility rate has reduced to below Replacement
(PM-JAY). The PM-JAY aims at providing a health level fertility at 2.0
insurance cover of Rs. 5 lakhs per family per year for
INFANT AND CHILD MORTALITY
secondary and tertiary care hospitalization. It seeks to
cover 50 crore people who belong to bottom 40% of • IMR has reduced from 40 to 35
India's population. Beneficiaries are identified through • Under 5 Mortality Rate has reduced from 49 to 42.
socio-economic caste census (SECC). NUTRITIONAL STATUS OF CHILDREN
PM-Ayushman Bharat Health Infrastructure Mission • Children under 5 years who are stunted:
(PM-ABHIM) is a mission to develop the capacities of Improvement from 38% to 35%
primary, secondary, and tertiary care health systems, • Children under 5 years who are underweight:
strengthen existing national institutions, and create new Improvement from 35.8% to 32%
institutions, to cater to detection and cure of new and
102
• Full immunisation among children improved from systems for long term and regular tap water supply in
62% to 76% at all India level. every home.
WEALTH HEALTH AND EMPOWERMENT • Making water everyone’s business by participation;
• Use of Family Planning Methods increased from 53% raising awareness, community mobilization and
to 66% handholding.
• Percentage of Institutional births improved from 79%

to 89%. Institutional delivery is 100% in Puducherry ►RURAL DEVELOPMENT
and Tamil Nadu.
Pradhan Mantri Awas Yojana-Grameen (PMAY-G):
• Married women who participate in household Envisages ‘Housing for All by 2022’ through a robust
decisions: Improvement from 84% to 87% monitoring mechanism and improved scheme
architecture. It aims to provide assistance for
►DRINKING WATER AND construction of 2.95 crore houses.
SANITATION Pradhan Mantri Gram Sadak Yojana (PMGSY): Provide

connectivity by way of an all-weather roads. World Bank
Jal Jeevan Mission (JJM) : Provide adequate safe drinking
(2019) in an evaluation of the scheme found that PMGSY
water through individual household tap connections to
roads had a positive impact on human capital formation
all households in rural India by 2024. The goal of the
in rural India
Mission is to enable every rural household to get
assured supply of potable-piped water at a service level
of 55 litre per capita per day (lpcd) regularly on long- ►MULTI-DIMENSIONAL POVERTY
term basis and also to ensure functionality of the tap INDEX (MPI)
water connections. MULTIDIMENSIONAL NATURE OF POVERTY: Poverty is
Special features of Jal Jeevan Mission are: mainly on account of multiple deprivations such as
• Shift of focus for water supply from ‘habitations (hand Education, Health, Housing, Employment etc. The
pumps, public standposts, etc. at a reasonable multidimensionality of poverty is an integral part of the
distance) to households’ (functional tap in house). Sustainable Development Goals. Target 1.2. refers to
reducing “at least by half the proportion of men, women
• Not limited only to creation of water supply
and children of all ages living in poverty in all its
infrastructure, focus is on assured supply of potable
dimensions according to national definitions”
water to every home.
• Local village community owns, operates & maintains
water supply system to ensure assured water supply ►ABOUT GLOBAL
to every home. MULTIDIMENSIONAL POVERTY
• Central role of women: minimum 50 percent INDEX (MPI)
members of Village Water & Sanitation Committee
RELEASED BY: United Nations Development Programme
(VWSC)/ Pani Samitis are to be women and
(UNDP) and the Oxford Poverty and Human
proportionate representation of weaker sections of
Development Initiative (OPHI).
society.
SCOPE: Incidence of multidimensional deprivation (a
• Priority to assured supply of potable-piped water in
headcount of those in multidimensional poverty) and its
schools, anganwadi centres and ashramshalas.
intensity (the average deprivation score experienced by
• Priority to villages/ habitations having water quality
poor people).
problems.
DIMENSIONS USED: Measures deprivation at the
• Surveillance of water quality: training to five persons
household and individual level in health, education and
in every village, preferably women, on using Field Test
standard of living, the same three dimensions as the
Kits for testing of water quality at village level.
Human Development Index.
• Water quality testing laboratories opened to public to
If someone is deprived in a third or more of ten
test samples on paying nominal charges.
indicators, the global index identifies them as ‘MPI poor’,
• Long-term drinking water security: Village Action Plan
and the intensity of their poverty is measured by the
(VAP) focusing on water sources, supply systems, grey
percentage of deprivations they are experiencing.
water reuse and operation & maintenance of these
103
HOW IS MPI CALCULATED? MPI is the product of the initiative, NITI Aayog is the nodal Ministry for the
incidence of multidimensional poverty (proportion of Multidimensional Poverty Index (MPI).
multidimensionally poor people) and the intensity of
multidimensional poverty (average share of weighted
►NATIONAL MULTI-DIMENSIONAL
deprivations among multidimensionally poor people).
POVERTY INDEX
HIGHLIGHTS OF GLOBAL MPI 2021 FOR INDIA: Around
28% of India's population are multi-dimensionally poor. PUBLISHED BY: NITI Aayog
However, as per the poverty line estimation based on RATIONALE: Aimed at deconstructing the Global MPI
Suresh Tendulkar methodology, 22% of population live and creating a globally aligned and yet customised MPI
below poverty line. for India.
OBJECTIVE
►GLOBAL INDICES FOR REFORMS • Provide insights on multidimensional poverty at the
AND GROWTH (GIRG) INITIATIVE subnational and district levels.
• Formulation of sectoral policies and targeted
Initiative under the Cabinet Secretary to track India's
interventions which contribute towards ensuring that
performance across 29 global indices including Human
“no one is left behind”.
Development Index (HDI), Global Hunger Index (GHI),
Global Competitiveness Index (GCI), Human Capital • Drive competition among the States and Union
Territories
Index (HCI), Global Innovation Index (GII) etc. Under this
Global MPI 2021 National MPI 2021
UNDP and the Oxford Poverty and Human
Published by NITI Aayog
Development Initiative (OPHI).
Health, Education and Living Standard. Each Health, Education and Living Standard. Each
Dimensions
dimension has been given weightage of 1/3. dimension has been given weightage of 1/3.
12 Indicators
10 Indicators • Health: Nutrition, Child & Adolescent
• Health: Child Mortality and Nutrition Mortality, Antenatal Care.
• Education: Years of Schooling and School • Education: Years of Schooling and School
Indicators
Attendance Attendance
• Living Standards: Cooking Fuel, Sanitation, • Living Standards: Cooking Fuel, Sanitation,
Drinking Water, Housing, Electricity, Assets. Drinking Water, Housing, Electricity, Assets,
Bank Account.
Criteria for
classifying person as Deprivation in at least 1/3rd of the weighted Deprivation in at least 1/3rd of the weighted
multi-dimensionally indicators. indicators.
poor
Percentage of multi-
dimensionally poor 28% 25%
people in India
Intensity of
44% 47%
Deprivation
HIGHLIGHTS OF NATIONAL MPI 2021 • States with highest percentage of poor people: Bihar
The National MPI 2021 have been formulated based (52%), Jharkhand and Uttar Pradesh.
upon data provided through National Family Health • States with lowest percentage of poor people: Kerala
Survey 4 (2015-16). (1.73%), Goa and Sikkim.
• 25% of people are multi dimensionally poor. The

intensity of deprivation at all India level is 47%.
104

Raus Compass 2022 Economic Survey

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CONTENTS

PREFACE OF BUDGET & ECONOMIC SURVEY 01 ►MILLETS 10

►WATER RELATED INITIATIVES 12

BUDGET 2022-23 ►EDUCATION 14

Section-1 ►HOUSING FOR ALL 15

►VIBRANT VILLAGES PROGRAM 15

►FISCAL RESPONSIBILITY AND BUDGET MANAGEMENT ►DIGITAL BANKING UNITS 16

THEME-3: PRODUCTIVITY ENHANCEMENT &

►CAPACITY BUILDING FOR INFRASTRUCTURE PROJECTS ►EXPORT PROMOTION (SEZs) 20

►HARMONISED MASTER LIST OF INFRASTRUCTURE ►MAJOR DRIVERS OF INDIAN ECONOMY 37

THEME-5: TAX PROPOSALS 29 Section-2

►TAX RELAXATIONS FOR COOPERATIVES 29 State of Public Finances

►SCHEME FOR TAXATION OF VIRTUAL DIGITAL ASSETS 39

►SOURCES OF DEFICIT FINANCING 42

►DEBT POSITION OF THE GOVERNMENT 42

ECONOMIC SURVEY ►EXPENDITURE ON SUBSIDIES 44

►15TH FINANCE COMMISSION RECOMMENDATIONS 44

2020-21: A MACRO VIEW

EXTERNAL SECTOR ►BAD BANK IN INDIA 58

►DEPOSIT INSURANCE IN INDIA 59

48 ►NON-BANKING FINANCIAL COMPANIES (NBFCS) SECTOR

►MERCHANDISE TRADE BALANCE 50 ►INSURANCE SECTOR 60

►TRADE IN SERVICES 50 ►PENSION SECTOR 61

►PRIVATE TRANSFERS/ REMITTANCES 50 ►PENSION SCHEMES FOR THE UNORGANISED SECTOR

►NET INTERNATIONAL INVESTMENT POSITION (NIIP) 51

►EXTERNAL DEBT 52 Section-5

►ENABLING AN EFFICIENT LOGISTICS ECO-SYSTEM TO

►BASICS ABOUT INFLATION INDICES 65

►RECENT TRENDS IN CPI RATE OF INFLATION 66

Financial Intermediation ►TRENDS IN WPI INFLATION 68

►DIVERGENCE BETWEEN WPI AND CPI 68

►LONG TERM PERSPECTIVE FOR MANAGEMENT OF

►LIQUIDITY CONDITIONS AND ITS MANAGEMENT 56

►STEPS TAKEN BY RBI TO IMPROVE LIQUIDITY

►FACILITATING MORE EFFICIENT LIQUIDITY MANAGEMENT SUSTAINABLE DEVELOPMENT AND

►G-SAP 57 CLIMATE CHANGE

►PERFORMANCE OF BANKING SECTOR 57 71

►HIGHLIGHTS OF STATE OF FORESTS REPORT (SFR) 2021 ►STORAGE 87

►PLASTIC WASTE MANAGEMENT AND ELIMINATION OF

►INDIA'S EFFORTS FOR COMBATING CLIMATE CHANGE

►INDIA'S EFFORTS FOR COMBATING CLIMATE CHANGE 74 88

►INDEX OF EIGHT CORE INDUSTRIES 89

Section-7 ►GROSS CAPITAL FORMATION IN INDUSTRIAL SECTOR 89

AGRICULTURE & FOOD ►IMPORTANT CHANGES IN FDI POLICY 90

SECTOR WISE ISSUES AND INITIATIVES 91

►TRENDS IN CONTRIBUTION OF AGRICULTURE SECTOR ►TEXTILES SECTOR 91

►SITUATION ASSESSMENT SURVEY 83 Section-9

►FOOD PROCESSING SECTOR 85 95

►DRONE RULES, 2021 97 ►SKILL INDIA MISSION 100

►DIFFERENT CATEGORIES OF WORKERS 101

Section-10 ►HIGHLIGHTS OF NFHS-5 REPORT 102

►DRINKING WATER AND SANITATION 103

SOCIAL INFRASTRUCTURE, ►RURAL DEVELOPMENT 103

►MULTI-DIMENSIONAL POVERTY INDEX (MPI) 103

98 ►NATIONAL MULTI-DIMENSIONAL POVERTY INDEX 104

►TRENDS IN SOCIAL SECTOR EXPENDITURE 98

General Studies Paper-1.