Crack Grade B: National Income Pyqs Asked From This Chapter: (Q1-3) Paragraph Based On GDP & National Income

Crack Grade B 1
National Income
PYQs asked from this chapter:
(Q1-3) Paragraph based on GDP & National Income
Q.1 Which of the following has been referred in the paragraph: GDP & NI
Q.2 Slowdown in Q4 is due to: decline in consumption part
Q.3 Earning per person: Per Capital Income
Q4. GDP-DEPRECIATION gives what? NDP
Q5. The term Animal Spirit was given by: John Maynard Keynes
Q6. Market value of final goods and services produced in a year is called?
GNP in case of goods and services produced by citizens; GDP in case of goods and services
produced within boundaries by everyone.
Q7. GDP measure Perspective: Consumer Perspective (GVA is Producers Perspective)
Q8. Consumer Goods are also referred as: Final Goods
Q9. National income is: Final Goods produced + Net Factor Income from abroad (NFIA)
Q10. GDP calculation does not include ………...
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Basic concept of Economics:
Economics is the study of how societies use scarce resources to produce valuable goods
and services and distribute them among different individuals. Adam Smith, named his
most influential work – An Enquiry into the Nature and Cause of the Wealth of Nations.
• What generates the economic wealth of a nation?

• What makes countries rich or poor?
These are some of the central questions of economics.
It is not that countries which are endowed with a bounty of natural wealth – minerals or
forests or the most fertile lands – are naturally the richest countries. In fact, the
resource rich Africa and Latin America have some of the poorest countries in the world,
whereas many prosperous countries have scarcely any natural wealth.
There was a time when possession of natural resources was the most important
consideration but even then, the resource had to be transformed through a production
process.
The economic wealth, or well-being, of a country thus does not necessarily depend on
the mere possession of resources; the point is how these resources are used in
generating a flow of production and how, as a consequence, income and wealth are
generated from that process.
Economics is divided into two major subfields, Microeconomics and
Macroeconomics.
Microeconomics is the study of decisions that people and businesses (individual
economic agents) make regarding the allocation of resources and prices of goods and
services. For example, the study of what mix of products an individual purchases with a
given amount of money is part of microeconomic study.
Macroeconomics, on the other hand, is the study of the national economy as a whole.
The study of variables at the country level such as Gross Domestic Product (GDP) and
how it is affected by the changes in the unemployment rate, interest rate and price levels
is part of the macroeconomic study.
Market, Command, and Mixed Economies
What are the different ways that a society can answer the questions of what, how, and
for whom? Different societies are organized through alternative economic systems, and
economics studies the various mechanisms that a society can use to allocate its scarce
resources.
We generally distinguish two fundamentally different ways of organizing an economy. At
one extreme, government makes most economic decisions, with those on top of the
hierarchy giving economic commands to those further down the ladder. At the other
extreme, decisions are made in markets, where individuals or enterprises voluntarily
agree to exchange goods and services, usually through payments of money. Let’s briefly
examine each of these two forms of economic organization.
In the United States, and increasingly around the world, most economic questions are
settled by the market mechanism. Hence their economic systems are called market

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economies. A market economy is one in which individuals and private firms make the
major decisions about production and consumption.
A system of prices, of markets, of profits and losses, of incentives and rewards
determines what, how, and for whom. Firms produce the commodities that yield the
highest profits (the what) by the techniques of production that are least costly (the how).
Consumption is determined by individuals’ decisions about how to spend the wages and
property incomes generated by their labour and property ownership (the for whom).
The extreme case of a market economy, in which the government keeps its hands off
economic decisions, is called a laissez-faire economy.
By contrast, a command economy is one in which the government makes all important
decisions about production and distribution. In a command economy, such as the one
which operated in the Soviet Union during most of the twentieth century, the
government owns most of the means of production (land and capital); it also owns and
directs the operations of enterprises in most industries; it is the employer of most
workers and tells them how to do their jobs; and it decides how the output of the society
is to be divided among different goods and services. In short, in a command economy,
the government answers the major economic questions through its ownership of
resources and its power to enforce decisions.
No contemporary society falls completely into either of these polar categories. Rather, all
societies are mixed economies, with elements of market and command.
Four Sectors of the Economy:
From the economic point of view, a mixed economy is divided into four sectors.
1. Private Sector:
All the enterprises owned by the private individuals or group of individuals belong to the
private sector. The private sector consists of companies/firms/enterprises in India which
are not owned by the government.
Figure: The four factors/inputs of production combining together to produce output and
the classification of output (goods and services) into consumption and capital goods.
The four inputs that an
enterprise requires to
produce output (goods and
services) are called the four
"factors of production" or
the "inputs of production".
These four factors of
production are the following
(as shown in the figure):
• Entrepreneur: The
person who takes the
risk and starts a new
business. This person

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puts in initial money in the enterprise and in return expects "Profit". The
entrepreneur is a human being and he belongs to the household sector.
• Capital: In today's world, capital can be physical, financial or intellectual. But from
an economic point of view, only the physical capital goods are considered as capital.
So, capital includes the building, machinery, equipments etc. The return for the
capital is called "Interest".
• Natural Resources: Natural resources include land and raw materials which are
naturally available and are not produced through manmade processes. The return
for the natural resources is called "Rent".
• Labour: It is the human labour which may be physical or mental i.e. it can be
unskilled, semi-skilled or skilled. When a human being provides his labour to the
enterprise, in return he/she expects wages. The labour (who is providing the labour
services) is a human being and belongs to the household sector.
2. Government Sector:
This sector includes public administration, police, defence, framing of laws and
enforcing them. Apart from imposing taxes and spending money on various
infrastructure and healthcare services and education etc., government also undertakes
production activity through its companies like Coal India Ltd. (CIL), National Thermal
Power Corporation (NTPC) etc. So, all the companies owned by the Central or State
Governments i.e. Public Sector Undertakings (PSUs) also belong to the government
sector.
3. Household Sector:
A household is a single individual who takes decisions relating to her own consumption,
or a group of individuals for whom decisions relating to consumption are jointly
determined. So, if a single individual is living alone then he will be considered as one
household. And if a person is living with his wife and two children then all the four will
constitute one household as the decisions relating to consumption of food and other
items are decided jointly. Similarly, if 100 students are living in a hostel then their
consumption decisions are taken jointly and hence all 100 students will constitute one
household.
We should always remember that households consist of people. These people work in
firms as workers and earn wages. They are the ones who work in the government
departments and earn salaries and they are the owners of firms and earn profits. So, all
the human beings (population) belong to household sector.
Suppose a person named "John" works in "Coal India Ltd. (CIL)" which is a
government company then John belongs to the household sector and the company
CIL belongs to the government sector.

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John works in CIL
Household Sector Government Sector
Reliance Industries Ltd. (RIL) is owned by Mukesh Ambani but Mukesh Ambani belongs
to the household sector and "RIL" (which is a passive object and on whose name all
the business is being carried out) belongs to the private sector .
Mukes Mukesh Ambani owns RIL
Household Sector Private Sector
4. External Sector:
This sector consists of the exports and imports of goods and services flowing into the
country or out of the country. It also includes the financial flows from and into the
domestic country.
Key Terms
1. Final Goods: Final goods are goods that are ready for consumption or use by the
end consumer. These goods have undergone all stages of production and are not
meant to be further processed. They are the end result of production and are
intended for direct consumption. For example, a loaf of bread purchased from a
bakery for immediate consumption is a final good.
2. Consumer Goods: Consumer goods are products that are directly purchased by
individuals for their own consumption or use. They can be further categorized into
durable and non-durable goods. Durable consumer goods are expected to last for
a longer time, such as cars or appliances, while non-durable consumer goods are
consumed relatively quickly, like food and toiletries.
3. Consumer Durables: Consumer durables are a subset of consumer goods that are
designed to last for an extended period. These goods provide value over time and
are not consumed in one use. Examples of consumer durables include
refrigerators, washing machines, and smartphones.
4. Capital Goods: Capital goods are goods that are used in the production of other
goods and services. They are not meant for immediate consumption but are
instead used to enhance production efficiency or create other goods. Examples of
capital goods are machinery, equipment, and tools used in manufacturing
processes.

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5. Intermediate Goods: Intermediate goods are products that are used as inputs in
the production of other goods. They are not meant for final consumption
themselves but are necessary for the production process. For instance, flour used
to make bread is an intermediate good in the bread-making process.
6. Stock: Stock refers to the quantity of goods or assets that a company holds at a
specific point in time. It can refer to physical goods held in inventory or financial
assets such as shares of a company's stock.
7. Flow: Flow refers to the movement or transfer of goods, services, or money over a
specific period. It represents the rate at which these economic variables are
changing. For example, the flow of income refers to the total income earned by
individuals or businesses over a given time period.
8. Depreciation: Depreciation is the reduction in the value of capital goods over time
due to wear and tear, obsolescence, or other factors. It represents the decrease in
the market value of an asset as it ages.
Investment
That part of the final output which comprises of physical capital goods is called gross
investment. So, investment in a country is not measured as money put in a business or
any economic activity but it is basically that portion of the final output (GDP) which
consists of capital goods.
Consider the following diagram:
Suppose there is only one factory (capital good) in a country, which is worth Rs. 1 lakh
and is producing consumption goods worth Rs. 700 and capital goods worth Rs. 300 in a
particular year (say 2015-16) in an economy. This means that the GDP will be Rs. 1000
(which is the total production of both consumption and capital goods) and the gross
investment in the economy will be Rs. 300 or (Rs 300/Rs1000) 30%, as investment is
measured as the percentage of output which consists of capital goods.
In the above example, if the country imports capital goods worth Rs. 100 in the year
2015-16 then the gross investment will be Rs. 300 + Rs. 100 i.e. Rs. 400 and investment
percent will be Rs. 400/ Rs. 1000 = 40%. This is because Rs. 100 worth of capital goods
is getting added in the economy. But if we also export capital goods worth Rs 40 then
the gross investment will be Rs. 300 + (Rs. 100 - Rs. 40) i.e. Rs. 360 and investment
percent will be 36%. Investment in the economy is also called Gross Fixed Capital
Formation which mainly refers to the value of new machinery and equipment plus the
value of new construction activity undertaken during the year. Investment also includes
net acquisition of valuables like precious articles, gems and stones, silver, gold, platinum
and gold and silver ornaments.
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Now when the factory runs for a year then wear and tear happens in the factory which is
called depreciation. Depreciation is also defined as consumption of physical capital. In
the above example Rupees one lakh worth of capital goods produce Rs. 700 consumption
goods and Rs. 300 capital goods, but during this production process suppose there is
wear and tear of Rs. 50 in the factory. This implies that to produce Rs. 700 of
consumption goods and Rs. 300 of capital goods there is a loss of Rs. 50 of capital goods
in the economy i.e. net production of capital goods (investment) in the economy is Rs.
300 minus Rs. 50.
Net Investment = Gross Investment - Depreciation
= Rs. 300 - Rs. 50
= Rs. 250
Categories of an ECONOMY: The economic activities are broadly classified into
three broad categories, which are known as the three sectors of the economy:
1. Primary Sector: This sector includes all those economic activities where there is
the direct use of natural resources as agriculture, forestry, fishing, fuels, metals,
minerals, etc. Broadly, such economies term their agricultural sector as the
primary sector. This is the case in India.
2. Secondary Sector: This sector is rightly called the manufacturing sector, which
uses the produce of the primary sector as its raw materials. Since manufacturing
is done by the industries, this sector is also called the industrial sector—
examples are production of bread and biscuits, cakes, automobiles, textiles, etc.
3. Tertiary Sector: This sector includes all economic activities where different
‘services’ are produced such as education, banking, insurance, transportation,
tourism, etc. This sector is also known as the services sector.
Circular Flow of Income
Fig – Circular Flow of Income in a simple economy

The circular flow of income is a fundamental concept in economics that illustrates how
money, goods, and services flow through an economy between households and
businesses. It depicts the interconnectedness of economic activities and the way income

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is generated, distributed, and spent within an economy. This model helps us understand
the interaction between different sectors of the economy.
The circular flow of income involves two main components: the product market and the
factor market.
1. Product Market: In the product market, households purchase goods and services
produced by businesses. This is where households act as consumers. They spend
money to buy products such as groceries, clothing, electronics, and services like
healthcare and entertainment.
2. Factor Market: In the factor market, businesses purchase factors of production
(resources) from households. These factors include labour (workforce), land,
capital (machinery and equipment), and entrepreneurship. Businesses pay wages,
rent, interest, and profits to households in exchange for these factors of
production.
Here's how the circular flow of income works:
1. Households:
• Households provide labour, land, capital, and entrepreneurship to
businesses in exchange for income (wages, rent, interest, and profits).
• Households also act as consumers by purchasing goods and services from
businesses in the product market.
2. Businesses:
• Businesses use the factors of production acquired from households to
produce goods and services.
• They sell these goods and services to households in the product market,
generating revenue.
The circular flow of income illustrates the continuous movement of money and products
between households and businesses. It shows how income earned by households in the
factor market becomes spending in the product market and how that spending becomes
revenue for businesses, which then goes back to households as income. This cycle
continues as long as economic activity occurs.
However, it's important to note that the circular flow model is a simplified representation
of the economy. In reality, governments, international trade, and financial institutions
introduce additional complexities to the flow of income and goods. Nevertheless, the
circular flow concept provides a foundation for understanding the basic interactions
within an economy.
In summary, the circular flow of income illustrates the ongoing cycle of production,
income generation, and consumption between households and businesses in an
economy, helping us comprehend the core dynamics of economic activity.

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GDP
The total final value of goods and services produced within the domestic boundary of a
country in a specified time period (generally a financial year) is called Gross Domestic
Product
Product or Value-Added Method

The product or value-added method is one of the approaches used to calculate Gross
Domestic Product (GDP). This method focuses on calculating GDP by summing up the
value added at each stage of production in the economy.
• Understanding Value Added:

Value added refers to the difference between the value of output (goods and services)
produced by a business or industry and the value of inputs (raw materials, intermediate
goods) used in the production process. In essence, it's the contribution that each
business makes to the final product.
• Calculating GDP Using the Value-Added Method:

To calculate GDP using the value-added method, you need to consider the value added
at each stage of production in various sectors of the economy. The value added at each
stage is the difference between the value of output and the value of intermediate inputs.
The formula for calculating GDP using the value-added method is:
o GDP = Value added in all sectors of the economy
Example:
Let's consider a simplified example involving three sectors: agriculture, manufacturing,
and retail.
• Agriculture produces raw materials worth Rs 1,000.

• Manufacturing uses these raw materials to produce goods worth Rs 2,000.
• Retail sells these goods to consumers for Rs 3,000.
Value added at each stage:
• Agriculture: Rs 1,000 (output) - Rs 0 (intermediate inputs) = Rs 1,000

• Manufacturing: Rs 2,000 (output) - Rs 1,000 (intermediate inputs) = Rs 1,000
• Retail: Rs 3,000 (output) - Rs 2,000 (intermediate inputs) = Rs 1,000
• Sum of value added = Rs 1,000 + Rs 1,000 + Rs 1,000 = Rs 3,000
In this example, the GDP calculated using the value-added method is Rs 3,000.
The value-added method provides insights into how different sectors contribute to the
overall economy and helps avoid double-counting by focusing on the value added at each
stage. It's one of the key methods used to measure GDP and provides a comprehensive
view of economic activity within a country.

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Income Method
The income method is another approach used to calculate Gross Domestic Product
(GDP). This method focuses on calculating GDP by summing up all the incomes earned
by individuals and businesses in an economy.
Identifying Different Sources of Income:
The income method considers various sources of income earned within an economy.
These sources include wages and salaries, rents, interest, profits, and taxes minus
subsidies on production and imports.
Calculating GDP Using the Income Method:
To calculate GDP using the income method, you need to consider the different categories
of income earned within an economy and sum them up. The formula for calculating GDP
using the income method is:
GDP = Profit + Interest + Wages + Rent
For instance, let's consider a simplified example involving a nation with a single
company.
• Profit: Rs 10,000
• Total Interest: Rs 5,000
• Total Wages: Rs 2,000
• Total Rent Accrued: Rs 1000
Using the formula:

GDP = Profit + Interest + Wages + Rent
= Rs 10,000 + Rs 5,000 + Rs 2,000 + Rs 1,000
= Rs 18,000
In this example, the GDP calculated using the income method is Rs 18,000.
The income method provides insights into how income is generated and distributed
within an economy. It captures the total earnings of both individuals and businesses
and is an important way to measure economic activity. The results obtained from the
income method should theoretically match those obtained from the expenditure and
value-added methods, providing a cross-check on the accuracy of GDP calculations.

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Expenditure Method
The expenditure method is one of the approaches used to calculate Gross Domestic
Product (GDP), which measures the total economic output of a country over a specific
period. This method focuses on calculating GDP by summing up all the expenditures
made in an economy on final goods and services.
Here's how the expenditure method works:
1. Categorizing Expenditures: The expenditure method considers different
categories of expenditures that contribute to economic activity. These categories
include consumption, investment, government spending, and net exports.
2. Calculating GDP Using the Expenditure Method: To calculate GDP using the
expenditure method, you need to consider the different components of
expenditures and sum them up. The formula for calculating GDP using the
expenditure method is:
GDP = C + I + G + (X - M)
Here's a breakdown of the components:
• C (Consumption): This represents the total expenditures made by
households on goods and services for their own use. It includes spending on
durable goods (e.g., cars, appliances), nondurable goods (e.g., food,
clothing), and services (e.g., healthcare, education).
• I (Investment): Investment refers to expenditures made by businesses on
capital goods (machinery, equipment, factories) and changes in business
inventories. It also includes residential construction.
• G (Government Spending): This represents government expenditures on
goods and services. It includes spending on public services, defense,
infrastructure projects, and government employee salaries.
• X (Exports) and M (Imports): Net exports represent the difference between
a country's exports (goods and services sold to other countries) and its
imports (goods and services purchased from other countries).
3. Example: Let's consider a simplified example involving a small economy with the
following expenditure components:
• Consumption (C): Rs 10,000
• Investment (I): Rs 5,000
• Government Spending (G): Rs 3,000
• Exports (X): Rs 2,000
• Imports (M): Rs 1,000
Using the formula:
GDP = C + I + G + (X - M) = Rs 10,000 + Rs 5,000 + Rs 3,000 + (Rs 2,000 - Rs 1,000) =
Rs 19,000

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In this example, the GDP calculated using the expenditure method is Rs 19,000.
The expenditure method provides insights into how spending by households, businesses,
and the government contributes to economic activity. It captures the overall demand for
goods and services within an economy. It's worth noting that the results obtained from
the expenditure method should theoretically match those obtained from the income and
value-added methods, providing a cross-check on the accuracy of GDP calculations.
Other Important Terms
1. Factor Cost: Factor cost refers to the total cost of production incurred by
producers in an economy when they hire and utilize factors of production, such as
labour, capital, and land.
• It includes payments made to all factors of production, including wages,

rents, interest, and profits.
• Factor cost focuses on the income earned by factors of production during

the production process, regardless of any taxes or subsidies.
Factor Cost = Total Payments to Factors of Production (Wages + Rents + Interest

+ Profits)
OR
Factor Cost = Market Price + Product Subsidies + Production Subsidies – Product
Tax – Production Tax
2. Market Prices: Market prices, also known as transaction prices, are the prices at
which goods and services are exchanged in the marketplace between buyers and
sellers.
• These prices are influenced by supply and demand dynamics, production

costs, competition, and other market forces.
• Market prices include all costs, taxes, and subsidies that affect the price
paid by the consumer.
Market Price = Factor Cost - Product Subsidies - Production Subsidies + Product

Tax + Production Tax

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Gross National Product
Gross National Product (GNP) is a macroeconomic measure that represents the total
economic output produced by the residents of a country, regardless of whether they are
located within the country's borders or abroad. It includes the total value of goods and
services produced by a country's citizens and businesses, both domestically and
internationally, during a specific time period, usually a year.
GNP is closely related to concepts like Gross Domestic Product (GDP), but GNP considers
the income earned by a country's residents from abroad and the income sent by its
residents to foreign countries. This is why GNP can differ from GDP, especially for
countries heavily involved in international trade and investments.
GNP = GDP + NFIA
Where NFIA = Net Factor Income from Abroad = Factor Income earned by the domestic
factors of production employed in the rest of the world - Factor Income earned by the
factors of production of the rest of the world employed in the domestic economy
NDP = GDP – Depreciation
NNP = GNP – Depreciation = Net Disposable Income = National Income

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Nominal and Real GDP
Nominal GDP and real GDP are both measures of a country's economic output, but they
differ in how they account for the effects of inflation. Inflation is the general increase in
prices of goods and services over time, which can distort economic measurements if not
properly considered. Here's the difference between nominal GDP and real GDP:
1. Nominal GDP: Nominal GDP is the total value of all goods and services produced
within a country's borders during a specific time period, usually a year or a
quarter, without adjusting for inflation. It represents the current market prices of
goods and services at the time of production.
Nominal GDP provides a straightforward measure of a country's economic output, but it
doesn't account for changes in the price level over time. Therefore, if there's inflation,
nominal GDP might increase not only due to increased production but also due to higher
prices.
2. Real GDP: Real GDP, on the other hand, adjusts nominal GDP for the effects of
inflation, providing a more accurate representation of a country's economic growth
or decline. It measures the total value of goods and services produced within a
country's borders, but the prices used in the calculation are constant and based
on a specific base year, effectively removing the impact of inflation.
Real GDP allows economists and policymakers to compare economic performance across
different time periods more accurately because it eliminates the distortion caused by
changing price levels. By using constant prices, real GDP focuses on the actual physical
output of the economy, rather than being influenced by fluctuating prices.
Understanding Nominal and Real GDP
Let’s take an example, In India, a company X manufactured 1 Kg of Rice Flour and sold
it at Rs 100 per Kg in 2023.
Nominal GDP is defined as the final value of all goods & services produced in the
country within a year based on CURRENT PRICES.
Nominal GDP = Current Price * Quantity Produced
Assuming, there is only one company, so India’s Nominal GDP would be 1 Kg * Rs 100
per Kg = Rs 100.
Now, in 2024, the same company manufactured same amount of Rice Flour. However, it
sold the rice flour at Rs 115 per Kg [Price rose due to Inflation].
Based on above information, India’s Nominal GDP would be = 1kg * Rs 115 per Kg = Rs
115.
Also, in 2025, the company X, however, produced 1.5 kg of rice flour. But sold it at Rs
120
So, India’s Nominal GDP would be = 1.5 Kg * Rs 120 per Kg = Rs 180

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However, if we want to calculate Real GDP, which only focuses on real output and does
not take into consideration the inflationary tendencies, we use below formula
Real GDP = Base Price * Quantity Produced
Assuming the base price to be Rs 100 [Taking 2023 as base year], the Real GDP for
2023, 2024 and 2025 is calculated in the following table.
Year 2023 [Base] 2024 2025
Quantity Produced 1 Kg 1 Kg 1.5 Kg
Current Price Rs 100 per Kg Rs 115 per Rs 120 per
[Also, the Base Kg Kg
Price]
Nominal GDP [Current Price * Quantity Rs 100 Rs 115 Rs 180
Produced]
Real GDP [Base Price * Quantity Rs 100 Rs 100 Rs 150
Produced]

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National Income Accounting in INDIA
National Income Estimates [2022-23]
The National Statistical Office (NSO), Ministry of Statistics and Programme
Implementation (MoSPI) is releasing the Provisional Estimates (PE) of National Income
for 2022-23 and Quarterly Estimates of Gross Domestic Product (GDP) for the quarter
January-March of 2022-23 (Q4 2022-23) along with the corresponding estimates of
expenditure components of GDP both at Constant and Current Prices.
• Real GDP or GDP at Constant (2011-12) Prices in the year 2022-23 is estimated
to attain a level of ₹160.06 lakh crore. The growth in real GDP during 2022-23 is
estimated at 7.2 per cent as compared to 9.1 per cent in 2021-22.
• Nominal GDP or GDP at Current Prices in the year 2022-23 is estimated to
attain a level of ₹272.41 lakh crore, as against ₹234.71 lakh crore in 2021-22,
showing a growth rate of 16.1 percent.
• The sector-wise estimates have been compiled using indicators like
o Index of Industrial Production (IIP),
o Financial performance of Listed Companies in the Private Corporate sector
based on available quarterly financial results for these companies,
o Third Advance Estimates of Crop Production for 2022-23,
o Production of Major Livestock Products,
o Fish Production,
o Production/ Consumption of Cement and Steel,
o Net Tonne Kilometres and Passenger Kilometres for Railways,
o Passenger and Cargo traffic handled by Civil Aviation,
o Cargo traffic handled at Major Sea Ports,
o Sales of Commercial Vehicles,
o Bank Deposits & Credits,
o Accounts of Central & State Governments, etc., available for the financial
year 2022-23.
About NSO
It is the statistics wing of the Ministry of Statistics and Programme Implementation. It
consists of
• Central Statistical Office

• National Sample Survey Office
NSO is mandated with the following responsibilities:
• Acts as the nodal agency for planned development of the statistical system in the
country, lays down and maintains norms and standards in the field of statistics,
involving concepts and definitions, methodology of data collection, processing of
data and dissemination of results;
• Coordinates the statistical work in respect of the Ministries/Departments of the
Government of India and State Statistical Bureaus (SSBs), advises the
Ministries/Departments of the Government of India on statistical methodology and
on statistical analysis of data;
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• Prepares national accounts as well as publishes annual estimates of national
product, government and private consumption expenditure, capital formation,
savings, estimates of capital stock and consumption of fixed capital, as also the
state level gross capital formation of supra-regional sectors and prepares
comparable estimates of State Domestic Product (SDP) at current prices;
• Maintains liaison with international statistical organizations, such as, the United
Nations Statistical Division (UNSD), the Economic and Social Commission for Asia
and the Pacific (ESCAP), the Statistical Institute for Asia and the Pacific (SIAP), the
International Monetary Fund (IMF), the Asian Development Bank (ADB), the Food
and Agriculture Organizations (FAO), the International Labour Organizations (ILO),
etc.
• Compiles and releases the Index of Industrial Production (IIP) every month in the
form of ‘quick estimates’; conducts the Annual Survey of Industries (ASI); and
provides statistical information to assess and evaluate the changes in the growth,
composition and structure of the organized manufacturing sector;
• Organizes and conducts periodic all-India Economic Censuses and follow-up
enterprise surveys, provides an in-house facility to process the data collected
through various socio-economic surveys and follow-up enterprise surveys of
Economic Censuses;
• Conducts large scale all-India sample surveys for creating the database needed for
studying the impact of specific problems for the benefit of different population
groups in diverse socio-economic areas, such as employment, consumer
expenditure, housing conditions and environment, literacy levels, health,
nutrition, family welfare, etc;
• Examines the survey reports from the technical angle and evaluates the sampling
design including survey feasibility studies in respect of surveys conducted by the
National Sample Survey Organizations and other Central Ministries and
Departments;
• Dissemination of statistical information on various aspects through a number of
publications distributed to Government, semi-Government, or private data users/
agencies; and disseminates data, on request, to the United Nations agencies like
the UNSD, the ESCAP, the ILO and other international agencies;
• Releases grants-in-aid to registered Non-Governmental Organizations and
research institutions of repute for undertaking special studies or surveys, printing
of statistical reports, and financing seminars, workshops and conferences relating
to different subject areas of official statistics.
GDP Calculation methodology by National Statistical Office (NSO)
NSO calculates GDP by Value Added Method and Expenditure Method both. Under
Value Added Method, it calculates the value addition done by various economic activities
viz:
• Agriculture, Forestry and Fishing
• Mining and Quarrying
• Manufacturing
• Electricity, Gas, water supply and other utility services
• Construction

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• Trade, Hotels and transport, and communication and services related to
broadcasting
• Financial, Insurance, real estate and professional services
• Public administration and defence and other services
Under Expenditure Method, it adds up the various components of expenditure viz:
• Private Final Consumption Expenditure (it is basically household expenditure)
• Government Final Consumption Expenditure
• Gross Fixed Capital Formation
• Net of Exports and Imports
(In certain cases where we are not able to measure estimates at constant prices, then the
CPI and WPI index is used as deflators).
Though GDP measured from either side should be equal, since reliable data is not
available for private consumption expenditure, there is always a difference in the two
ways of measuring GDP. The difference is usually put as “discrepancies” in the
expenditure approach of measuring GDP.

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GDP and Welfare
As we know, if a person has more income, he or she can buy more goods and services
and his or her material well-being improves. So, we may be tempted to believe that
higher level of GDP of a country is an index of greater well-being of the people of that
country. But this may not be true because of the following reasons:
1. Distribution of GDP:
Rise in GDP may not increase welfare because the rise in GDP may be concentrated in
the hands of a very few individuals or firms. In such a case the welfare of the entire
country cannot be said to have increased.
For example, if in a country in a particular year there are 10 people who are contributing
to produce an item of Rs. 1000, so the GDP will be Rs. 1000. But if Rs 900 is going to
one person and the rest of the 9 persons are getting just Rs. 100 (by income method of
GDP calculation), that means the well-being of the 9 persons is quite poor.
2. Non-monetary exchanges:
Many activities in an economy are not evaluated in monetary terms. The exchanges
which take place in the informal sector without the help of the money (barter exchanges)
are not registered as part of economic activity.
In developing countries, where many remote regions are underdeveloped, these kinds of
exchanges do take place, but they are generally not counted in the GDPs of these
countries. This is a case of underestimation of GDP.
3. Externalities:
Externalities refer to the benefits (or harms) a firm or an individual causes to another for
which they are not paid (or penalized). Externalities do not have any market in which
they can be bought and sold.
For example, let us suppose there is a chemical factory producing certain chemicals but
in the process of production it is generating certain waste materials which is getting
dumped in the nearby river. The chemicals produced by the factory will be counted as
part of the country's GDP. But dumping of waste in the river may cause harm to the
people who use water of the river and their well-being will fall.
Therefore, if we take GDP as a measure of welfare of the economy we shall be
overestimating the actual welfare. This is an example of negative externality. There can
be cases of positive externalities as well. In such cases GDP will underestimate the
actual welfare of the economy.
Green GDP
The green GDP is the measurement of GDP growth with the environmental consequences
of that growth factored in. Green GDP accounts for the monetized loss of biodiversity,
costs caused by climate change etc. It is a measure of how a country is prepared for
sustainable development.
As far back as in 2009, the Centre had announced its intention to unveil “green GDP”
figures that account for the environmental costs of depletion and degradation of natural

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resources into the country’s economic growth figures. Subsequently, the Ministry of
Statistics and Programme Implementation set up an expert group in 2011 led by Partha
Dasgupta, to work out a framework for green national accounts in India, which
submitted its report in March 2013. The process, which was supposed to culminate in
2015, is yet to be completed.
World Bank and IMF Classification of Countries
World Bank classifies the world's economies based on estimates of gross national
income (GNI) per capita based on nominal exchange rate. The GNI per capita estimates
are also used as input to the World Bank's operational classification of economies that
determines lending eligibility. As per the July 2023 data, the following is the
classification of world economies: (in Dollars)
For the current 2024 fiscal year, low-income economies are defined as those with a
GNI per capita, calculated using the World Bank Atlas method,
1. Low-income economies with a GNI per capita of $1,135 or less;
2. Lower middle-income economies are those with a GNI per capita between $1,136
and $4,465;
3. Upper middle-income economies are those with a GNI per capita between $4,466
and $13,845;
4. High-income economies are those with a GNI per capita of $13,846 or more.
India belongs to the "Lower Middle" group as its GNI per capita is $2390 in terms of
nominal exchange rate. As per the PPP exchange rate, India's GNI per capita is $8230.
The World Economic Outlook (WEO, IMF) classifies the world into two major groups:
This above classification is based on three parameters:

• Per capita income (using PPP exchange rate)
• Export diversification
• Degree of integration into the global financial system

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GDP Deflator: The Gross Domestic Product (GDP) deflator is a measure of general price
inflation. It is calculated by dividing nominal GDP by real GDP and then multiplying by
100.
GDP Deflator = (Nominal GDP/ Real GDP) x 100

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Nominal Exchange Rate, PPP Exchange Rate and Real Exchange Rate
Nominal Exchange Rate (NER)
NER = Value of foreign currency expressed in terms of domestic currency.
For example, value of 1 dollar expressed in terms of Indian Rupees (currently $ 1 = Rs.
69)
NER means how many rupees somebody will get when he sells one dollar in the
exchange market. The NER depends on the market forces of demand and supply. If more
and more people are purchasing dollars in the exchange market, then the demand of
dollar increases and dollar will become stronger or appreciate. But if more and more
tourists are coming to India and are converting their dollars and demanding rupees then
rupee will appreciate.
Purchasing Power Parity Exchange Rate
Suppose NER is $1 = Rs.70 (for simple calculation) and India and US produces just
burgers.
India US
And Burger Price Rs. 35 $1
PPP exchange rate means that if $1 can purchase one burger in US then that same
burger can be purchased in how many rupees in India.
To calculate PPP exchange rate in the above case, we just need to compare the prices of
the burger in both the countries.
In the above case by comparing the prices of burger in India and US, we get, $1 = Rs. 35.
So, $1 = Rs. 35 is the PPP exchange rate. And this implies that whatever Rs. 35 can
purchase in India, $1 can purchase in US i.e. purchasing power of Rs. 35 in India is
equal to purchasing power of $1 in US.
Above was a case of just one product. If both the countries are producing several
commodities then consider a basket of commodities which are produced in both the
countries and compare the prices, whatever we will get will be the PPP exchange rate.
Consider another example

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Suppose the price of the basket of commodities in India is Rs 1200 and the price of the
same basket of commodities in US is $100. This means that purchasing power of Rs.
1200 in India is same as purchasing power of $100 in US.
So, PPP exchange rate will be Rs. 1200 = $ 100
i.e. $1 = Rs 12
And so, if the inflation rate is different in both the countries then PPP exchange rate will
change. But if there is same inflation rate or no inflation then PPP exchange rates will
not change over time and will be constant.
When Nominal Exchange Rate becomes equal to PPP exchange rate, we say that the
currencies of the two countries are at purchasing power parity.
As per IMF "The purchasing power parity between two countries is the rate at which the
currency of one country needs to be converted into that of a second country to ensure that
a given amount of the first country's currency will purchase the same volume of goods and
services in the second country as it does in the first."
Real Exchange Rate: Consider the above example of burger
In the present situation, US will import burgers from India (or India will export burgers
to US) because a US person will get one burger in $1 and if he sells his $1 and buys Rs.
70 from the exchange market then with Rs. 70 he can purchase two burgers from India.
(Considering transportation cost is negligible.)
Whether India will continue to export burgers to US or not will depend on three
parameters.
• Price of Burger in US (if it increases, exports to US will increase)
• Price of Burger in India (if it increases, exports to US will reduce)
• Nominal Exchange Rate (if it increases, exports to US will increase)
Whether India's exports/trade are competitive with US or not will also depend on these
three parameters
• Price of Burger in US (if it increases, India's export competitiveness will increase)
• Price of Burger in India (if it increases, India's export competitiveness will reduce)

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• Nominal Exchange Rate (if it increases, India's export competitiveness will
increase)
It implies that, trade competitiveness is directly proportional to Price of Burger in US,
trade competitiveness is inversely proportional to Price of Burger in India, and
trade competitiveness is directly proportional to Nominal Exchange Rate.
Nominal Exchange Rate

Real Exchange Rate =
PPP Exchange Rate
= ($1) X (Rs. 70/$)
(Rs. 35)
=2
Till Real Exchange Rate > 1, India will continue to export its burgers to US. If Real
Exchange Rate becomes equal to 1, then export & import will stop. If Real Exchange
Rate < 1, then US will start exporting its burgers to India.
So Real Exchange Rate determines export competitiveness between two countries.
When Real Exchange Rate = 1, Nominal Exchange Rate = PPP Exchange rate and we say
that the currencies are at purchasing power parity. This means that goods cost the same
in two countries when measured in the same currency.
If India wants to measure its export competitiveness with all its trading partners with just
one parameter, then it calculates Real Effective Exchange Rate which is a weighted
average (with respect to trade value) of the Real Exchange Rates of its trading partners.
Similarly, if India wants to calculate its nominal exchange rate with respect to a group of
other countries, then it can calculate Nominal Effective Exchange Rate.

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Inflation
Q1. Inflation target- Band of inflation? 2-6%
(Q2-4) Paragraph on IIP Revision
Q2. Why base year is revised? Adoption of international standards of practice?
Q3. Identify true statement regarding IIP revision
Q4. Introduced index for capital goods creation, Name the index: Cost Inflation Index
Q5. Inflation theory which combines both the Pull Back and Push Back to explain the inflation
(Options were Market Power Theory, Mark up theory, Bottle Neck theory, Monetary
Theory)

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Inflation: The concept of Inflation refers to a sustained rise in the general level of prices
of goods and services in an economy over a period of time. For a layman, inflation is just
price rise.
Inflation leads to fall in purchasing power. When the price level rises, each unit of
currency buys fewer goods and services; consequently, inflation is also erosion in the
purchasing power of money — a loss of real value in the internal medium of exchange and
unit of account in the economy.
A chief measure of price inflation is the inflation rate, i.e. the annualized percentage
change in a general price index over time.
A rise in the general level of prices; a sustained rise in the general level of prices; persistent
increases in the general level of prices; an increase in the general level of prices in an
economy that is sustained over time; rising prices across the board—is inflation. These
are some of the most common academic definitions of inflation. When the general level of
prices is falling over a period of time this is deflation, the opposite situation of inflation. It
is also known as disinflation. But in contemporary economics, deflation or disinflation not
used to indicate fall in prices. Instead, a price rise is termed a ‘rise in inflation’ and a price
fall is termed a ‘fall in inflation’. As instruments of deflation, the policy includes fiscal
measures (as for example, tax increase) or monetary measures (as for example, increase
in interest rate).
Effect of inflation:
Inflation has both positive and negative effects on an economy. Negative effects of inflation
include loss in stability in the real value of money and other monetary items over time,
uncertainty about future inflation may discourage investment and saving, and high
inflation may lead to shortages of goods if consumers begin hoarding out of concern that
prices will increase further in the future. Positive effects include a mitigation of economic
recessions and debt relief by reducing the real level of debt.
CAUSES OF INFLATION: There are many factors that can trigger inflationary pressure in
an economy. The most important of these are:
Demand-Pull Inflation: It is a rise in general prices caused by increasing aggregate

demand for goods and services. Increasing quantity of money in the hands of the people
increases the aggregate demand for goods and services, and if aggregate supply does not
follow the suit, prices rise. (Demand exceeding supply leads to shortage and hence, an
increase in price). This was a Keynesian idea.
Cost-Push Inflation: It is a type of inflation caused by substantial increases in the cost
of production of important goods or services where no suitable alternative is available. For
example, if prices of some key inputs like oil rise, producers will have to either adjust
output supply or translate the higher costs into higher output prices. When output
declines because of cost pressure on producers, there will be a shortage in output markets
and as a result prices will rise.
Inflation Control measures: From the above-given reasons for inflation and the measures
to control it, In practice, governments around the world distance themselves from this
debate and have been taking recourse to all possible options while controlling inflation.
The governments resort to the following options to check rising inflation:
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(i) As a supply side measure, the government may go for import of goods which are in
short-supply—as a short-term measure (as happened in India in the case of ‘onion’ and
meeting the buffer stock norm of wheat). As a long-term measure, governments go on to
increase the production to matching the level of demand. Storage, transportation,
distribution, hoarding are the other aspects of price management of this category.
(ii) As a cost side measure, governments may try to cool down the price by cutting down
the production cost of goods showing price rise with the help of tax breaks—cuts in the
excise and custom duties (as happened in June 2003 in India in the case of crude oil and
steel). This helps as a short-term measure. In the long-term, better production process,
technological innovations etc., are helpful. Increasing income of the people is the monetary
measure to avoid the heat of such inflation.
(iii) The governments may take recourse to tighter monetary policy to cool down either the
demand-pull or the cost-push inflations. This is basically intended to cut down the money
supply in the economy by siphoning out the extra money (as RBI increases the Cash
Reserve Ratio of banks in India) from the economy and by making money costlier (as RBI
increases the Bank Rate or Repo Rate in India). This is a short-term measure. In the long-
run, the best way is to increase production with the help of the best production practices.
TYPES OF INFLATION: Depending upon the range of increase, and its severity, inflation
may be classified into three broad categories:
1. Low Inflation: Such inflation is slow and on predictable lines, which might be called
small or gradual. This is a comparative term which puts it opposite to the faster,
bigger and unpredictable inflations. Low inflation takes place in a longer period and
the range of increase is usually in ‘single digit’. Such inflation has also been called
as ‘creeping inflation’. We may take an example of the monthly inflation rate of a
country for six months being 2.3 per cent, 2.5 per cent, 2.7 per cent, 2.9 per cent,
3.1 per cent and 3.3 per cent. Here the range of change is of 1.0 per cent and over
a period of six months.
2. Galloping Inflation: This is a ‘very high inflation’ running in the range of double-
digit or triple digit (i.e., 20 per cent, 100 per cent or 200 per cent in a year). In the
decades of 1970s and 1980s, many Latin American countries such as Argentina,
Chile and Brazil had such rates of inflation—in the range of 50 to 700 per cent. The
Russian economy did show such inflation after the disintegration of the ex-USSR in
the late 1980s. Contemporary journalism has given some other names to this
inflation hopping, inflation, jumping, inflation and running or runaway
inflation.
3. Hyperinflation: This form of inflation is ‘large and accelerating’ which might have
the annual rates in million or even trillion. In such inflation not only the range of
increase is very large, but the increase takes place in a very short span of time,
prices shoot up overnight. Some recent examples of hyperinflation had been the
Bolivian inflation of mid-1985 (24,000 per cent per annum) and the Yugoslavian
inflation of 1993 (20 per cent per day).

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OTHER VARIANTS OF INFLATION: Other than the three broad categories we analyzed above,
some other variants of inflation are also considered by governments in their policymaking:
I. Bottleneck Inflation: This inflation takes place when the supply falls drastically and the
demand remains at the same level. Such situations arise due to supply-side accidents, hazards or
mismanagement which is also known as ‘structural inflation’. This could be put in the ‘demand-
pull inflation’ category.
II. Core Inflation: This nomenclature is based on the inclusion or exclusion of the goods and
services while calculating inflation. Popular in western economies, core inflation shows price rise
in all goods and services excluding energy and food articles. In India, it was first time used in the
financial year 2000–01 when the government expressed that it was under control—it means the
prices of manufactured goods were under control.
This was criticized by experts on account of excluding food articles and energy out of the inflation
and feeling satisfied on the inflation front. Basically, in the western economies, food and energy
are not the problems for the masses, while in India these two segments are of most vital importance
for the common people.
III. Reflation: Reflation is a situation often deliberately brought by the government to reduce
unemployment and increase demand by going for higher levels of economic growth. Governments
go for higher public expenditures, tax cuts, interest rate cuts, etc. Fiscal deficit rises, extra money
is generally printed at higher level of growth, wages increase and there is almost no improvement
in unemployment.
Reflation can also be understood from a different angle—when the economy is crossing a cycle of
recession (low inflation, high unemployment, low demand, etc.) and government takes some
economic policy decisions to revive the economy from recession, Governments go for higher public
expenditures, tax cuts, interest rate cuts, wage increase etc. then certain goods see sudden and
temporary increase in their prices, such price rise is also known as reflation.
IV. Stagflation: Stagflation is a situation in an economy when inflation and unemployment both
are at higher levels, contrary to conventional belief. Such a situation first arose in the 1970s in
the US economy and in many Euro-American economies. When the economy is passing through
the cycle of stagnation (i.e., long period of low aggregate demand in relation to its productive
capacity) and the government shuffles with the economic policy, a sudden and temporary price
rise is seen in some of the goods—such inflation is also known as stagflation. Stagflation is
basically a combination of high inflation and low growth.
V. Deflation: When the general level of prices is falling over a period of time this is deflation, the
opposite situation of inflation. Or when inflation falls below zero, the economy is said to be in a
state of deflation.
VI. Disinflation: Disinflation is a situation when the rate of inflation tends to fall over time but
remains positive. Put in the form of an example, deflation would be an inflation rate of -1%, while
disinflation would be a change in the inflation rate from 3% one year to 2% in the next year.
VII. Creeping Inflation: When the rise in prices is very slow (less than 3% per annum) like that
of a snail or creeper, it is called creeping inflation. Such an increase in prices is regarded safe and
essential for economic growth.
VIII. Walking Inflation: When prices rise moderately and the annual inflation rate is a single digit
(3% - 10%), it is called walking or trotting inflation. Inflation at this rate is a warning signal for the
government to control it before it turns high.

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OTHER IMPORTANT TERMS:
Inflationary Gap: The excess of total government spending above the national income
(i.e., fiscal deficit) is known as inflationary gap.
Deflationary Gap: The shortfall in total spending of the government (i.e., fiscal surplus)
over the national income creates deflationary gaps in the economy. This is a situation of
producing more than the demand and the economy usually heads for a general slowdown
in the level of demand. This is also known as the output gap.
Inflation Accounting: When a firm calculates its profits after adjusting the effects of
current level of inflation, this process is known as inflation accounting.
Inflation Premium: An inflation premium is the part of prevailing interest rates that
results from lenders compensating for expected inflation by pushing nominal interest
rates to higher levels.( Difference between existing rate and interest rate after inflation).
Phillips Curve: It is a graphic curve which advocates a relationship between inflation and
unemployment in an economy. As per the curve there is an inverse relationship between
them. The curve suggests that lower the inflation, higher the unemployment and higher
the inflation, lower the unemployment.
Inflation Targeting: The announcement of an official target range for inflation is known
as inflation targeting. It is done by the Central Bank in an economy as a part of their
monetary policy to realise the objective of a stable rate of inflation (the Government of
India asked the RBI to perform this function in the early 1970s).
India commenced inflation targeting ‘formally’ in February 2015 when an agreement

between the GoI and the RBI was signed related to it—the Agreement on Monetary Policy
Framework. The agreement provides the aim of inflation targeting in this way—’it is
essential to have a modern monetary framework to meet the challenge of an increasingly
complex economy. Whereas the objective of monetary policy is to primarily maintain price
stability, while keeping in mind the objective of growth. The major highlights of the
agreement is as given below:
• RBI will aim to keep inflation level in the range of 2-6%.
• Every six months, the RBI to publish a document explaining:

a. Source of inflation;
b. Forecasts of inflation for the period between six to eighteen months from the
date of the publication of the document; and
• If the RBI fails to meet the target it shall set out in a report to the GoI:
a. the reasons for its failure to achieve the target under set in this agreement;
b. remedial actions proposed to be taken by the RBI; and
c. an estimate of the time-period within which the target would be achieved
pursuant to timely implementation of proposed remedial actions.
• Any dispute regarding the interpretation or implementation of the agreement

to be resolved between the Governor, RBI and the GoI.

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Skewflation: When there is a price rise of one or a small group of commodities over a
sustained period of time, without a traditional designation.
GDP Deflator: This is the ratio of GDP at Current Prices to GDP at Constant Prices. If
GDP at Current Prices is equal to the GDP at Constant Prices, GDP deflator will be 1,
implying no change in price level.
To understand GDP Deflator, consider an example where India is producing 10kg of wheat at the
market price of Rs. 10 in 2012 and 11kg of wheat at Rs. 10.5 in 2013.
2012 2013
Wheat 10kg X Rs. 10 11kg X Rs. 10.5
If we want to know the inflation from 2012 to 2013 then we can see that it is 5% (Rs. 10 to Rs.
10.5). But inflation can be calculated in another way also by keeping the quantity constant in both
the years .
In the above example, Nominal GDP of 2013 = 11kg X Rs. 10.5 = Rs 115.5
and, Real GDP of 2013 = 11kg X Rs. 10 = Rs 110
If we divide Nominal GDP of 2013 by Real GDP of 2013, what we get is the change in price because
in Nominal GDP and Real GDP of 2013, the quantity is same (constant) i.e. 11kg.
So, Change in price from 2012 to 2013 = Nominal GDP of 2013

Real GDP of 2013
= 11kg X Rs. 10.5 = Rs 115.5 = 1.05

11kg X Rs. 10 Rs. 110 1
Which means the prices have increased by 1.05 times i.e. inflation is 5%. And this ratio of Nominal
GDP/ Real GDP is called the GDP deflator;
So, GDP Deflator = Nominal GDP

Real GDP
GDP deflator is published by CSO.
The following are some basic differences in CPI, WPI and GDP deflator:
• In wholesale market services are not traded, so WPI does not include the inflation in services,
while CPI and GDP deflator capture inflation in services also.
• The goods purchased by consumers in the retail market do not represent all the goods produced
in the country (capital goods are purchased by the companies), so CPI does not include such
capital goods but GDP deflator takes into account all such goods and services produced in the
country.

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• CPI and WPI include prices of goods produced domestically and imported both but GDP deflator
does not include prices of imported goods.
• The weights are constant (in the basket) in CPI and WPI, but they differ according to production
level of each good and services in GDP deflator.
BASE EFFECT: It refers to the impact of the rise in price level (i.e., last year’s inflation) in
the previous year over the corresponding rise in price levels in the current year (i.e.,
current inflation).
For example –
Case 1 – The price index of January 2016 (base year) is 110 and that of January 2017 is
120.
Now Inflation of Jan 2017 = (120-110)/110 *100 which comes out to be 9.09%.
Case 2 – The price index for March 2017 (base year) is 180 and that of March 2018 is 190.
Now Inflation of March 2018 = (190-180)/180*100 which comes out to be 5.55%.
Now we see in both the case the increase in price index is 10 but the rate of inflation is
different. This is due to the base effect.
Base effect in terms of GDP:

In 2019-20, India’s GDP was at ₹145.7 lakh crore and ₹134.4 lakh crore in 2020-21 and
in 2021-22 ₹149.2 lakh crore.
The 11 per cent growth in 2021-22 on the lower base of ₹134.4 lakh crore in 2020-21 have
taken the GDP to ₹149.2 lakh crore.
This means the GDP is just 2.4% more than where it was in 2019-20 and the 11 per cent
growth will be due to the abnormal contraction in 2020-21 owing to the coronavirus
pandemic. That’s how the base effect will play its part in the expected growth.
MEASURES OF INFLATION: The rate of inflation is measured on the basis of price indices
which are of two kinds—Wholesale Price Index (WPI) and Consumer Price Index (CPI).
A price index is a measure of the average level of prices, which means that it does not
show the exact price rise or fall of a single good. The rate of inflation is the rate of change
of general price level which is measured as follows:
Rate of inflation (year x) = Price level (year x) –Price level (year x-1) / Price level (year x-
1)×100
This rate shows up in percentage form (%), though inflation is also shown in numbers,
i.e., digits. A price index is a weighted average of the prices of a number of goods and
services. In the index the total weight is taken as 100 at a particular year of the past (the
base year), this when compared to the current year shows a rise or fall in the prices of
current year, there is a rise or fall in the ‘100’ in comparison to the base year—and this
inflation is measured in digits.
INFLATION IN INDIA: Every economy calculates its inflation for efficient financial
administration as the multi-dimensional effects of inflation make it necessary. India

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calculates its inflation on two price indices, i.e., the wholesale price index (WPI) and the
consumer price index (CPI). While the WPI-inflation is used at the macro-level
policymaking, the CPI-inflation is used for micro-level analyses. The inflation at the WPI
is the inflation of the economy. Both the indices follow the ‘point-to-point’ method and
may be shown in points (i.e., digit) as well as in percentage relative to a particular base
year.
Wholesale Price Index: The Office of the Economic Adviser in the Office of Economic Adviser,
Department for Promotion of Industry and Internal Trade, Ministry of Commerce & Industry is
responsible for compiling WPI and releasing it.
The first Economic Adviser to the Government of India in pre-Independence India, Sir Theodore
E.G. Gregory (period 1937-1946) had started the ‘Quick’ series, using the week ended August 19,
1939 as base and computed the index from the week commencing January 10, 1942.
Six revisions have taken place introducing the new base years, viz., 1952-53, 1961-62, 1970-71,
1981-82, 1993-94 and 2004- 05.
The new series of WPI with base year of 2011-12 is the seventh revision of WPI.
WPI is used as a deflator of various nominal macroeconomic variables including Gross Domestic
Product (GDP). The WPI based inflation estimates also serve as an important determinant, in
formulation of trade, fiscal and other economic policies by the Government. WPI is also used for
the purpose of escalation clauses in the supply of raw materials, machinery and construction
work.
Wholesale Price Index (WPI) is measured by the Office of the Economic Adviser, Department for
Promotion of Industry and Internal Trade is entrusted with the task of releasing this index.
Wholesale Price Index (WPI) are released on the 14th of every month (or next working day) with a
time lag of two weeks of the reference month.
New Series of WPI: For the new series with base 2011-12=100, a Working Group
was constituted on 19th March 2012 chaired by Late Dr. Saumitra Chaudhuri,
Member, erstwhile Planning Commission and comprised most stakeholders. In light of the
recommendations the government recently announced the New Series of Wholesale Price Index
with base 2011-12=100 and also added a new WPI food index to capture the rate of inflation in
food items.
Features of the Revised Series of WPI: In the updated WPI basket, the number of items has been
increased to 697.
The number of quotations are increased to 8331, an increase by 2849 quotations (52%).
In the revised series, WPI will continue to constitute three major groups namely
• Primary article (117 items-22.62% weightage) ,
• Fuel & Power( 16 items-13.15% weightage) and
• Manufacturing products ( 564 items-64.23% weightage).
In the new WPI series, elementary price index (i.e. at the item level) has been computed using the
geometric mean of the price relatives (Jevons’ Index) as opposed to the practice of taking
arithmetic mean of price relatives (Carli Index) as was the case in the previous WPI series.
The index is compiled as per the methodology approved by the Technical Advisory Committee
(TAC).

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Technical Review Committee (TRC) is chaired by Secretary, Department for Promotion of
Industry and Internal Trade. This committee will meet at least once a year for inter-alia
recommending methodology for improving the coverage and quality of WPI like identifying new
items that need to be included in the item basket and removing those that have lost its relevance
or are no longer being produced.
Consumer Price Index (CPIs):
In India, segment specific Consumer Price Index (CPIs), namely CPI (IW), CPI (AL+RL), CPI
(Rural/Urban/Combined) are being compiled regularly, catering to the need of specific population
group. CPI (UNME) which has been discontinued w.e.f. December, 2010, was meant for urban
non-manual employees (UNME).
The following CPIs are being measured in India:
• CPI (IW)- Consumer Price Index for Industrial Workers
• ALL-INDIA CONSUMER PRICE INDEX NUMBERS FOR AGRICULTURAL AND RURAL

LABOURERS
• CPI (Rural/Urban/Combined)
Of these, the first two are compiled by the Labour Bureau in the Ministry of Labour and
Employment. Fourth is compiled by the National Statistical Office (NSO) in the Ministry of
Statistics and Programme Implementation.
CPI-IW: (Revised base year: 2016=100): The Labour Bureau, an attached office of the M/o
Labour & Employment, has been compiling Consumer Price Index for Industrial Workers
every month on the basis of retail prices of 463 commodities collected from 317 markets
spread over 88 industrially important centres in the country. The index is compiled for 88
centres and All-lndia and is released for every month on the last working day of succeeding
month.
• The number of selected markets for collection of retail price data has also been
increased to 317 markets
• The number of items directly retained in the index basket has increased to 463 items
as against 392 items in the 2001 series.
• The number of States/UTs has increased to 28 under 2016 series as against 25 in
the 2001 series.
In the new series, as per the direction of Technical Advisory Committee (TAC) on Statistics
of Prices and Cost of Living (SPCL), the Geometric mean based methodology (GM of Price
Relatives) is used for compilation of indices as againstArithmetic mean used in 2001
series.
The index is compiled using weights derived from the Working Class Family Income and
Expenditure Survey.

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The wages/salaries of the central government employees are revised on the basis of the
changes occurring in this index, the dearness allowance (DA) is announced twice a year.
When the Pay Commission recommends pay revisions, the base is the CPI (IW).
CPI -IW group items:
Sr. No. Groups
I Food & Beverages (Highest weightage)
II Pan, Supari, Tobacco & Intoxicants (least weightage)
III Clothing & Footwear
IV Housing (3rd highest weightage)
V Fuel & Light
VI Miscellaneous (2nd highest weightage)
ALL-INDIA CONSUMER PRICE INDEX NUMBERS FOR AGRICULTURAL AND RURAL

LABOURERS: (Base: 1986-87:100)
The Labour Bureau under MINISTRY OF LABOUR & EMPLOYMENT has been compiling CPI
Numbers for Agricultural Labourers since September, 1964.
Consumer Price Index Numbers for Agricultural Labourers and Rural Labourers (CPI AL&RL) on
base: 1986-87=100, which serve as a guiding factor for fixation and revision of minimum wages of
labourers engaged in agricultural occupations under the Minimum Wages Act, 1948 are compiled,
maintained and disseminated by the Labour Bureau.
These indices, besides being utilized for wage indexation are also utilized for revising cooking cost
under Pradhan Mantri Poshan Shakti Nirman Scheme (PM POSHAN) , measuring the inflation and
for research & policy making.
The Consumer Price Index Numbers for Agricultural Labourers (CPI-AL) and Rural Labourers (CPI-
RL) on base 1986-87=100 are being compiled on monthly basis by utilising the price data collected
by the Field Operations Division of the National Statistical Office from 600 sample villages spread

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over 66 National Sample Survey (NSS) regions of 20 States and released on 20th of the
succeeding month.
The CPI-AL&RL are compiled as per the methodology approved by the Technical Advisory
Committee on Statistics of Prices and Cost of Living (TAC on SPCL)
Rural Labour Households are those households whose income during the last 365 days from
wage paid manual labour (agricultural and/or non-agricultural) was more than either from paid
non-manual employment or from self- employment.
Agricultural Labour household: The rural labour households, which derive 50 per cent or more
of their total income from wage paid manual labour in agricultural activities, are treated as
agricultural labour households.
Components of CPI (AL&RL):
CPI (Rural/Urban/Combined) :
CPI measures the average change in prices of fixed baskets of goods and services that
households purchase for the purpose of consumption. It is also called Retail Inflation.
The National Statistical Commission (NSC), under Dr. C. Rangarajan, in its Report
(2001) recommended the compilation of CPI for rural and urban areas.
It was in 2011 that the government announced a new Consumer Price Index (CPI) – CPI
(Rural); CPI (Urban) and by combining them into a ‘national’ CPI-C (where ‘C’ stands for
‘Combined’).
The National Statistics Office (NSO), Ministry of Statistics and Programme Implementation
has revised the Base Year of the Consumer Price Index (CPI) from 2010=100 to 2012=100.
The number of Groups, which was five in the old series, has now been increased to
following six:
Food and beverages (45.86% weightage combined of rural and urban CPI)
Pan, tobacco and intoxicants (2.38% weightage combined of rural and urban CPI)
Clothing and Footwear (6.53 % weightage combined of rural and urban CPI)
Housing (10.07 % weightage combined of rural and urban CPI)
Fuel and Light (6.84 % weightage combined of rural and urban CPI)

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Miscellaneous (28.32 % weightage combined of rural and urban CPI)
‘Pan, tobacco and intoxicants’, which was a Sub-group under the group ‘Food, beverages
and tobacco’, has now been made as a separate group. Accordingly, the group ‘Food,
beverages and tobacco’ has been changed to ‘Food and beverages’.
The elementary/item indices are now being computed using Geometric Mean (GM) of the
Price Relatives of Current Prices with respect to Base Prices of different markets in
consonance with the international practice.
The basket of items and their weighing diagrams have been prepared using the Modified
Mixed Reference Period (MMRP) data of Consumer Expenditure Survey (CES), 2011-12, of
the 68th Round of National Sample Survey (NSS).
The Reserve Bank of India (RBI) has started using CPI-combined as the sole inflation
measure for the purpose of monetary policy after the recommendation of Urjit Patel
committee. As per the agreement on Monetary Policy Framework between the
Government and the RBI dated February 20, 2015 the sole of objective of RBI is price
stability and a target is set for inflation as measured by the Consumer Price Index-
Combined.
WPI is released monthly and annually and also CPI is released monthly and annually.
CPI is being released with two weeks lag time

Core inflation is calculated by excluding the more volatile components like food and fuel
from consumer price index (CPI)
Some official and nonofficial versions of the suitable range of inflation pointed out
from time to time:
(i) The Chakravarty Committee (1985) treated 4 per cent inflation as acceptable for the
economy in its report on the monetary system. He also added that this level of price rise
will facilitate the purpose of attracting investment for the desired level of growth.
(ii) The Government of India accepted a range of 4 to 6 per cent inflation as acceptable for
the economy citing the world average of 0 to 3 per cent at the time (1997–98).
(iii) The RBI Governor C. Rangarajan advocated that inflation rate must come down
initially to 6 to 7 per cent and eventually to 5 to 6 per cent on an average over the years.
(iv) The Tarapore Committee on Capital Account Convertibility recommended an

acceptable range of 3 to 5 per cent inflation for the three year period (1997–98 to 1999–
2000).
In February 2015, India formally commenced the process of ‘inflation targeting’.

Now, the new monthly CPI (C), is taken as the measure of headline inflation and is
tracked by the RBI to anchor its monetary policy and the healthy annual range for
it is between 2 to 6 per cent.
Headline inflation: Headline inflation is a measure of the total inflation within an

economy, including commodities such as food and energy prices.

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INDEX OF INDUSTRIAL PRODUCTION: The all India index of Industrial Production (IIP)
is a composite indicator that measures the short-term changes in the volume of production
of a basket of industrial products during a given period with respect to that in a
chosen base period.
It is compiled and published monthly by the National Statistics Office (NSO), Ministry of
Statistics and Programme Implementation.
The Quick Estimates of Index of Industrial Production (IIP) are released on 12th of every
month (or previous working day if 12th is a holiday) with a six weeks lag.
The base year of the all-India Index of Industrial Production (IIP) has also been revised
from 2004-05 to 2011-12 to not only reflect the changes in the industrial sector but to
also align it with the base year of other macroeconomic indicators like the Gross Domestic
Product (GDP), Wholesale Price Index (WPI).
Technical Review Committee, chaired by Secretary, Ministry of Statistics & PI. This
Committee will meet at least once a year for identifying new items that need to be included
in the item basket and removing those that have lost its relevance in the industrial sector
or are no longer being produced.
IIP in the revised series will continue to represent the Mining, Manufacturing and
Electricity sectors. The revised series uses the National Industrial Classification (NIC) 2008
for the purpose of classification of industrial production. The unit coverage of IIP will, as
before, cover entities in the organized sector units registered under the Factories Act,
1948.
The items selected for new series of IIP with base 2011-12 comprised of 809 items, which
were clubbed in 405 item groups pertaining to Manufacturing Sector. Mining and
Electricity sectors will be represented by a single item index.
The sectoral composition of the IIP is as follows:

Sector(weights%) Items
Mining (14.373%) 1
Manufacturing (77.633%) 405
Electricity (7.994%) 1
The electricity sector now includes data from renewable energy sources.
Note: The Index of Eight Core Industries (BASE: 2011-12=100) comprises 40.27 per
cent of the weight of items included in the Index of Industrial Production (IIP). Coal, crude
oil, natural gas, refinery products, Fertilizers, Steel, cement, electricity. Refinery products
(28.04%) have highest weightage and fertilizers(2.63%) have lowest weightage in the Index
of Eight Core Industries comprise.
The Office of the Economic Adviser in the Office of Economic Adviser, Department for
Promotion of Industry and Internal Trade, Ministry of Commerce & Industry is responsible
for releasing Index of Eight Core Industries.
It is being released with one month time lag (i.e. April Month will be released on 31st May).
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Revision of Current Series of WPI 2011-12 To New Series 2017-18: The base year
revision of WPI is a periodical exercise. The last revision has been done considering 2011-
12 as a base year which was introduced in 2017 on which the current series of WPI is
based.
The Government of India has decided to constitute a Working Group for the revision of the
current series of Wholesale Price Index (Base 2011-12) under the chairmanship of Prof.
Ramesh Chand, Member, Niti Aayog.
Technical Advisory Committee (TAC) on Statistics of Prices and Cost of Living (SPCL) in its
68th meeting held in August 2020 has approved the financial year 2017-18 as the base
year for the new series of WPI.
The current revision is the eighth since its introduction.
Based on the recommendations of the WG, five subgroups have been constituted on
Agricultural Items; Mining, Fuel & Power; Manufacturing; Services; and Analytical and
Conceptual Issues.
WPI has three major groups namely “Primary Articles”, “Fuel & Power” and “Manufactured
Products”:
(a) Primary Articles has four groups namely “Food Articles”, “Non-food Articles”, “Mineral”
and “Crude Petroleum and Natural Gas”. Agricultural Item are covered in first two groups
of “Primary Articles”.
(b) Mining, Fuel & Power group consists of three groups i.e Coal, Mineral Oils, and
Electricity.
(c) Manufactured Products group has 22 groups based on National Industrial

Classification (NIC-2008).
The Sub Group of Fuel and Power has proposed to shift Crude Oil & Natural Gas from
‘Primary Articles’ group to ‘Fuel & Power’ group for better representation as major fuels.
In the current series of WPI, the electricity index is computed based on the price quotations
of power generating stations only from Hydro and Thermal power stations. It is proposed
to build three indices Hydro Electricity, Thermal Electricity and Solar Electricity index.
Thermal Electricity is further bifurcated into Thermal Coal and Thermal Gas Electricity
Index.
1176 items in the WPI basket is proposed in New Series (there is 697 in 2011-12).
In the case of agricultural commodities, new items have been included, such as medicinal
plants like isabgol, aloe vera and menthol; fennel seed and methi seed (spices and
condiments); moth (pulses); mushroom (vegetables); and watermelon (fruit).

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Primary articles will likely account for a larger share, 24.83 per cent, from 22.62 per cent.
Manufactured goods will continue to comprise the biggest share in the WPI at 63.93 from 64.2.
The high-level panel has also recommended releasing six business services price indices --
banking, insurance, securities, air transport, telecom, and railways:

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PRODUCER PRICE INDEX (PPI):It is an index designed to measure the average change in the
price of goods and services from the point of view of producer either as they leave the place of
production, called Output PPI as they enter the production process, called Input PPI.
PPI is an improvement over WPI, since it is free from the bias of multiple counting inherent in an
aggregate commodity basket.
Weight of an item in WPI is based on net traded value defined as value of output adjusted for net
imports, whereas in PPI, weights are derived from Supply Use Table (SUT).
A WG on PPI was constituted on 21st August 2014 under the chairmanship of Dr. B N Goldar for
PPI.
Now working group of WPI under the chairmanship of Prof. Ramesh Chand, Member, Niti Aayog
recommended that the PPI may be released on experimental basis and its weight of 2017-18 may
be updated once the MOSPI release the Use Table.

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UNFCCC, MoEFCC, NAPCC, SAPCC, INDC,

IPCC, COP, SDG & Other Environmental
Issues
www.crackgradeb.com |info@crackgradeb.com | 9310558455

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Sustainable Development and Environmental issues
Q1. Brundtland commission’s alternative name: World commission on environment and

development
Q2. First Multilateral Organization having its secretariat in India: ISA
Q3. Number of SDG goals and targets? 17 goals and 169 targets
Q4. SDG Targets are to be achieved by: 2030
(Q5-8) Paragraph based questions: (SDG INDEX)

Q5. Which of the following is not true about SDG index:
a. The Index has been constructed spanning across 13 out of 17 SDGs.
b. SDG 17 was left out because the Goal is focused on international partnerships, being less
relevant for domestic level policy actions.
c. The SDG India Index was used to rank the States/UTs according to their progress on
the 78 Priority Indicators
Q6. Each of the 17 Sustainable Development Goals are mapped with a set of …… targets to be
achieved by 2030: 169 targets
Q.7 NITI AAYOG’s partners in this process were ……. and United Nations in India: Global Green
Growth Institute (Seoul, South Korea)
Q.8 Which of the following state/UT is not in the category of front runner in SDG index: Andhra
Pradesh, Puducherry, Tamil Nadu, Kerala
Q9. Global Green new Deal theme of the report released by: UNEP
Q10.Green Bonds were released by: World Bank
Q11. Which country decided to opt out of Paris climate framework? USA
Q12.The 2030 Agenda for Sustainable Development,” which was agreed upon by the 193
Member States of the United Nations was organized by: UN Secretariat
Q13. Which of the following is not among the 5Ps of SDG:

a. Perspective
b. People
c. Planet
d. Prosperity
e. Peace and Partnership
Q14. Discuss India's commitment to climate change in light of socio-economic, health and
developmental projects. (DESCRIPTIVE)

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Sustainable development: Sustainable development is development that meets the needs of the
present without compromising the ability of future generations to meet their own needs. It contains
within it two key concepts:
• the concept of 'needs', in particular the essential needs of the world's poor, to which
overriding priority should be given; and
• the idea of limitations imposed by the state of technology and social organization on the
environment's ability to meet present and future needs.
For sustainable development to be achieved, it is crucial to harmonize three core elements:

economic growth, social inclusion and environmental protection. These elements are
interconnected and all are crucial for the well-being of individuals and societies.
Evolution of Sustainable Development

Brundtland Commission
The above definition of Sustainable Development was given by Brundtland Commission.

Brundtland Commission was a commission established by the United Nations in 1983 as World
Commission on Environment and Development (WCED). The commission was created to
address the growing concern “about the accelerating deterioration of the human environment and
natural resources and the consequences of that deterioration for economic and social
development.”
Thereafter, in 1987, the World Commission on Environment and Development submitted its
report, which is also known as Bruntland Commission Report wherein an effort was made to link
economic development and environment protection. In 1992, Rio Declaration on Environment
and Development codified the principle of Sustainable Development.
The outcome of this commission was the “Brundtland Report”. The title of this report was “Our
Common Future”. This report gave the definition: “Development that meets the needs of the
present without compromising the ability of future generations to meet their own needs.”
and this definition is quoted first of all when anybody discusses about the sustainability.
Our Common Future is also known as the Brundtland Report in recognition of former Norwegian
Prime Minister Gro Harlem Brundtland's role as *Chair of the World Commission on Environment
and Development.
Earth Charter/Earth Summit
“Our Common Future” the report of the “Brundtland Commission” came out with a new guide to
sustainable development. The “Brundtland Commission”, called for “a universal declaration” and
“new charter” to set “new norms” to guide the transition to sustainable development.
The Earth Charter was proposed during the preparatory process to the UN Conference on
Environment and Development — best known as the Earth Summit — held in Rio de Janeiro,
Brazil, in 1992.
After the Rio Summit or Earth Summit in 1992, in 1994, Maurice Strong (Chairman of the Earth
Summit) and Mikhail Gorbachev, working through organizations they each founded (the Earth
Council and Green Cross International respectively), restarted the Earth Charter as a civil society
initiative, with the help of the government of the Netherlands. Earth Charter is a 2,400 word
document divided into 4 sections, called four pillars and sixteen main principles containing sixty-
one supporting principles.
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Millennium Development Goals

Between 2000 and 2015, there were 8 Millennium Development Goals with 21 targets. The MDGs
targeted developing countries, particularly the poorest, while the SDGs apply to all countries,
developed and developing.
Sustainable Development Goals (SDGs)

The 193 Member States of the United Nations officially adopted a new sustainable development
agenda entitled, “Transforming Our World: The 2030 Agenda for Sustainable Development”
at the Sustainable Development Summit held at UN Headquarters in New York in September 2015.
This agenda contains 17 Goals and 169 targets.
The Sustainable Development Goals (SDGs) start on 1 January 2016 and are expected to be
achieved by 31 December 2030. However, some targets that build on pre-set international
agreements are expected to be achieved sooner.
This universal, integrated and transformative agenda aims to spur actions that will end poverty
and build a more sustainable world over the next 15 years. This agenda builds on the achievements
of the Millennium Development Goals (MDGs), which were adopted in 2000 and guided
development action for the last 15 years. The MDGs have proven that global goals can lift millions
out of poverty.
The decision to launch a process to develop a set of SDGs was made by UN Member States at the
United Nations Conference on Sustainable Development (Rio+20), held in Rio de Janeiro in June
2012.
The Addis Ababa Action Agenda that came out of the Third International Conference on Financing
for Development held in Addis Ababa from 13-16 July 2015. provided concrete policies and
actions to support the implementation of the new agenda for SDGs.
At the global level, the 17 Sustainable Development Goals (SDGs) and 169 targets of the new
agenda will be monitored and reviewed using a set of global indicators. The global indicator
framework, to be developed by the Inter Agency and Expert Group on SDG Indicators (IAEA-SDGs).
The Goals and targets will stimulate action over the next 15 years in areas of critical importance:
people, planet, prosperity, peace and partnership.
• People - to end poverty and hunger, in all their forms and dimensions, and to ensure that
all human beings can fulfil their potential in dignity and equality and in a healthy
environment.
• Planet - to protect the planet from degradation, including through sustainable
consumption and production, sustainably managing its natural resources and taking
urgent action on climate change, so that it can support the needs of the present and future
generations.
• Prosperity - to ensure that all human beings can enjoy prosperous and fulfilling lives and
that economic, social and technological progress occurs in harmony with nature.
• Peace - to foster peaceful, just and inclusive societies free from fear and violence. There
can be no sustainable development without peace and no peace without sustainable
development.
• Partnership - to mobilize the means required to implement this agenda through a
revitalised global partnership for sustainable development, based on a spirit of strengthened

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global solidarity, focused in particular on the needs of the poorest and most vulnerable and
with the participation of all countries, all stakeholders and all people.
List of Sustainable Development Goals
• Goal 1. End poverty in all its forms everywhere

• Goal 2. End hunger, achieve food security and improved nutrition and promote sustainable
agriculture
• Goal 3. Ensure healthy lives and promote well-being for all at all ages
• Goal 4. Ensure inclusive and equitable quality education and promote lifelong learning
opportunities for all
• Goal 5. Achieve gender equality and empower all women and girls
• Goal 6. Ensure availability and sustainable management of water and sanitation for all
• Goal 7. Ensure access to affordable, reliable, sustainable and modern energy for all
• Goal 8. Promote sustained, inclusive and sustainable economic growth, full and
productive employment and decent work for all
• Goal 9. Build resilient infrastructure, promote inclusive and sustainable industrialization
and foster innovation
• Goal 10. Reduce inequality within and among countries
• Goal 11. Make cities and human settlements inclusive, safe, resilient and sustainable
• Goal 12. Ensure sustainable consumption and production patterns
• Goal 13. Take urgent action to combat climate change and its impacts*
• Goal 14. Conserve and sustainably use the oceans, seas and marine resources for
sustainable development
• Goal 15. Protect, restore and promote sustainable use of terrestrial ecosystems,
sustainably manage forests, combat desertification, and halt and reverse land degradation
and halt biodiversity loss
• Goal 16. Promote peaceful and inclusive societies for sustainable development, provide
access to justice for all and build effective, accountable and inclusive institutions at all
levels
• Goal 17. Strengthen the means of implementation and revitalize the global partnership
for sustainable development

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Mnemonics to read SDG
Status of Sustainable development goals and India:

Read SDG Index by NITI AAYOG uploaded separately

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Climate Change
United Nations Framework Convention on Climate Change (UNFCCC)
It was adopted at the Earth Summit in Rio de Janeiro, Brazil, in June 1992. The Convention
entered into force in 1994 and now has 197 parties. Its original objective was the stabilization of
GHG concentrations in the atmosphere by 2000 at a level that would prevent dangerous
anthropogenic interference in the climate system, but it did not call for parties to reduce emissions
of carbon dioxide, methane and other GHGs that have contributed to a warming of the Earth’s
mean surface temperature.
The United Nations Climate Change Conferences are yearly conferences held in the framework of
the United Nations Framework Convention on Climate Change (UNFCCC). They serve as the formal
meeting of the UNFCCC Parties (Conference of the Parties, COP) to assess progress in dealing
with climate change, and beginning in the mid-1990s, to negotiate the Kyoto Protocol to establish
legally binding obligations for developed countries to reduce their greenhouse gas emissions. From
2005 the Conferences have also served as the "Conference of the Parties Serving as the
Meeting of Parties to the Kyoto Protocol" (CMP).
The secretariat of the United Nations Framework Convention on Climate Change is located
in Bonn, Germany.
Kyoto Protocol
The Kyoto Protocol (COP3) is an international agreement linked to the United Nations Framework
Convention on Climate Change, which commits its Parties by setting internationally binding
emission reduction targets.
Recognizing that developed countries are principally responsible for the current high levels of GHG
emissions in the atmosphere as a result of more than 150 years of industrial activity, the Protocol
places a heavier burden on developed nations under the principle of "common but differentiated
responsibilities."
The Kyoto Protocol was adopted in Kyoto, Japan, on 11 December 1997 and entered into force on
16 February 2005. The detailed rules for the implementation of the Protocol were adopted at COP
7 in Marrakesh, Morocco, in 2001, and are referred to as the "Marrakesh Accords." Its first
commitment period started in 2008 and ended in 2012. The Kyoto Protocol has two commitment
periods: 2008-12 and 2013-20.
By 2008-2012, countries have to reduce their GHG emissions by an average of 5% below their
1990 levels
The second commitment period was agreed on in 2012, known as Doha Amendment to the
Protocol. Parties committed to reducing GHG emissions by at least 18% below 1990 levels in
the eight-year period from 2013 to 2020 during the second commitment period;
The Kyoto Protocol is an international treaty which extends the 1992 United Nations Framework
Convention on Climate Change (UNFCCC) that commits State Parties to reduce greenhouse
gas emissions, based on the scientific consensus that
a) global warming is occurring and
b) it is extremely likely that human-made CO2 emissions have predominantly caused it..
The Kyoto Protocol emission target gases include

1. Carbon dioxide (CO2),
2. Methane (CH4),

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3. Nitrous oxide (N2O),
4. Sulphur hexafluoride (SF6),
5. groups of hydro fluorocarbons (HCFs) and
6. groups of Per fluorocarbons (PFCs).
The Kyoto mechanisms are:
• International Emissions Trading: Parties with commitments under the Kyoto Protocol
have accepted different targets for limiting or reducing emissions. These targets are
expressed as levels of allowed emissions, or “assigned amounts,” over the 2008-2012
commitment period. The allowed emissions are divided into “assigned amount
units” (AAUs). Emissions trading, as set out in Kyoto Protocol, allows countries that have
emission units to spare - emissions permitted them but not "used" - to sell this excess
capacity to countries that are over their targets.
Thus, a new commodity was created in the form of emission reductions or removals. Since
carbon dioxide is the principal greenhouse gas, people speak simply of trading in carbon.
Carbon is now tracked and traded like any other commodity. This is known as the "carbon
market."
• Clean Development Mechanism (CDM):

• The Clean Development Mechanism (CDM), defined in Article 12 of the Protocol,
allows a country with an emission-reduction or emission-limitation commitment
under the Kyoto Protocol to implement an emission-reduction project in developing
countries. Such projects can earn saleable certified emission reduction (CER) credits,
each equivalent to one tonne of CO2, which can be counted towards meeting Kyoto
targets.
• E.g. of CDM: USA takes up or finances some environment benefitting project in
India (solar power projects, wind power projects, afforestation etc.) and earns
some carbon credits (certified emission reduction credits). Now it shows these
earned carbon credits to the world and tells them how it is working towards
meeting its Kyoto targets. Such projects can earn saleable certified emission
reduction (CER) credits, each equivalent to one tonne of CO2, which can be
counted towards meeting Kyoto targets.
o The CDM is the main source of income for the UNFCCC Adaptation Fund, which was
established to finance adaptation projects and programmes in developing country
Parties to the Kyoto Protocol that are particularly vulnerable to the adverse effects of
climate change. The Adaptation Fund is financed by a 2% levy on Certified Emissions
Reduction issued by the CDM.
• Joint implementation (JI): The mechanism known as "joint implementation", defined in

Article 6 of the Kyoto Protocol, allows a country with an emission reduction or limitation
commitment under the Kyoto Protocol to earn emission reduction units (ERUs) from an
emission-reduction or emission removal project in another country, each equivalent to one
tonne of CO2, which can be counted towards meeting its Kyoto target. As the host Party
gains from foreign investment and knowledge transfer, the joint implementation gives
Parties a flexible and economical way to fulfill a portion of their Kyoto commitments.
Targets for the first commitment period: The targets for the first commitment period of the
Kyoto Protocol cover emissions of the six main greenhouse gases, namely:
• Carbon dioxide (CO2);
• Methane (CH4);
• Nitrous oxide (N2O);
• Hydrofluorocarbons (HFCs);
• Perfluorocarbons (PFCs); and
• Sulphur hexafluoride (SF6)

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Adaptation Fund (AF)
It was established in 2001 to finance concrete adaptation projects and programmes in developing
country that are Parties to the Kyoto Protocol of the United Nations Framework Convention on
Climate Change (UNFCCC) that are particularly vulnerable to the adverse effects of climate change.
• Financing: The Adaptation Fund is financed with a share of proceeds from the clean
development mechanism (CDM) project activities and other sources of funding. The share
of proceeds amounts to 2 per cent of certified emission reductions (CERs) issued for a
CDM project activity.
• Administrative Management: The Adaptation Fund is supervised and managed by
the Adaptation Fund Board (AFB). The AFB is composed of 16 members and 16 alternates
and meets at least twice a year (Membership of the AFB).
o The World Bank (WB) serves as trustee of the Adaptation Fund on an interim
basis. WB Secretariat: Washington DC
Since 2010, the Adaptation Fund has committed over 1 billion for climate change adaptation and
resilience projects and programmes, including 160 concrete, localized projects in the most
vulnerable communities of developing countries around the world with over 43 million total
beneficiaries.
Paris Agreement
The Paris Agreement is a legally binding international treaty on climate change. It was adopted by
196 Parties at the UN Climate Change Conference (COP21) in Paris, France, on 12 December
2015. It entered into force on 4 November 2016.
The Paris Agreement opened for signature on 22 April 2016 – Earth Day – at UN Headquarters in
New York. It entered into force on 4 November 2016, 30 days after the so-called “double threshold”
(ratification by 55 countries that account for at least 55% of global emissions) had been met.
Some of the key aspects of the Agreement are set out below:
1. Long-term temperature goal – The Paris Agreement, in seeking to strengthen the global
response to climate change, reaffirms that its overarching goal is to hold “the increase in the global
average temperature to well below 2°C above pre-industrial levels” and pursue efforts “to limit
the temperature increase to 1.5°C above pre-industrial levels.
2. Global peaking and 'climate neutrality' – To achieve this temperature goal, Parties aim to
reach global peaking of greenhouse gas emissions (GHGs) as soon as possible, recognizing peaking
will take longer for developing country Parties, so as to achieve a balance between anthropogenic
emissions by sources and removals by sinks of GHGs in the second half of the century.
However, in recent years, world leaders have stressed the need to limit global warming to 1.5°C by
the end of this century. That’s because the UN’s Intergovernmental Panel on Climate Change
indicates that crossing the 1.5°C threshold risks unleashing far more severe climate change
impacts, including more frequent and severe droughts, heatwaves and rainfall.
To limit global warming to 1.5°C, greenhouse gas emissions must peak before 2025 at the
latest and decline 43% by 2030.
The Paris Agreement is a landmark in the multilateral climate change process because, for the
first time, a binding agreement brings all nations together to combat climate change and adapt to
its effects.

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3. Mitigation – The Paris Agreement establishes binding commitments by all Parties to prepare,
communicate and maintain a nationally determined contribution (NDC) and to pursue domestic
measures to achieve them. It also prescribes that Parties shall communicate their NDCs every
5 years and provide information necessary for clarity and transparency.
4. Sinks and reservoirs –The Paris Agreement also encourages Parties to conserve and enhance,
as appropriate, sinks and reservoirs of GHGs.
5. Voluntary cooperation/Market- and non-market-based approaches – The Paris Agreement

recognizes the possibility of voluntary cooperation among Parties to allow for higher ambition and
sets out principles – including environmental integrity, transparency and robust accounting – for
any cooperation that involves internationally transferal of mitigation outcomes
6. Adaptation – The Paris Agreement establishes a global goal on adaptation – of enhancing

adaptive capacity, strengthening resilience and reducing vulnerability to climate change in the
context of the temperature goal of the Agreement. It aims to significantly strengthen national
adaptation efforts, including through support and international cooperation. It recognizes that
adaptation is a global challenge faced by all
7. Loss and damage – The Paris Agreement recognizes the importance of averting, minimizing and
addressing loss and damage associated with the adverse effects of climate change, including
extreme weather events and slow onset events, and the role of sustainable development in reducing
the risk of loss and damage
8. Finance, technology and capacity-building support– The Paris Agreement reaffirms the
obligations of developed countries to support the efforts of developing country Parties to build
clean, climate-resilient futures, while for the first time encouraging voluntary contributions by
other Parties. The agreement also provides that the Financial Mechanism of the Convention,
including the Green Climate Fund (GCF), shall serve the Agreement.
Meaning of Adaptation and Mitigation

Mitigation – Reducing climate change: It involves reducing the flow of heat-trapping greenhouse
gases into the atmosphere, either by reducing sources of these gases (for example, the burning of
fossil fuels for electricity, heat, or transport) or enhancing the “sinks” that accumulate and store
these gases (such as the oceans, forests, and soil).
The goal of mitigation is to avoid significant human interference with Earth's climate, “stabilize
greenhouse gas levels in a timeframe sufficient to allow ecosystems to adapt naturally to climate
change, ensure that food production is not threatened, and to enable economic development to
proceed in a sustainable manner”.
Adaptation – adapting to life in a changing climate: It involves adjusting to actual or expected

future climate. The goal is to reduce our risks from the harmful effects of climate change (like sea-
level rise, more intense extreme weather events, or food insecurity). It also includes making the
most of any potential beneficial opportunities associated with climate change (for example, longer
growing seasons or increased yields in some regions).
Carbon Credit
A carbon credit is a generic term for any tradable certificate or permit representing the right to
emit 1 tonne of carbon dioxide or carbon dioxide equivalent.

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How does the Paris Agreement work?
Implementation of the Paris Agreement requires economic and social transformation, based on
the best available science. The Paris Agreement works on a five-year cycle of increasingly
ambitious climate action -- or, ratcheting up -- carried out by countries. Since 2020, countries
have been submitting their national climate action plans, known as nationally determined
contributions (NDCs). Each successive NDC is meant to reflect an increasingly higher degree of
ambition compared to the previous version.
Recognizing that accelerated action is required to limit global warming to 1.5°C, the COP27 cover
decision requests Parties to revisit and strengthen the 2030 targets in their NDCs to align with
the Paris Agreement temperature goal by the end of 2023, taking into account different national
circumstances.
Nationally Determined Contributions (NDCs)

In their NDCs, countries communicate actions they will take to reduce their greenhouse gas
emissions in order to reach the goals of the Paris Agreement. Countries also communicate in their
NDCs actions they will take to build resilience to adapt to the impacts of climate change.
Long-Term Strategies
To better frame the efforts towards the long-term goal, the Paris Agreement invites countries to
formulate and submit long-term low greenhouse gas emission development strategies (LT-
LEDS). LT-LEDS provide the long-term horizon to the NDCs. Unlike NDCs, they are not
mandatory.
In 2023, the first “global stocktake” will assess progress on Paris Agreement goals and chart a
way forward. This process, to be concluded at COP28, will further encourage countries to take
ambitious climate actions that keep warming below 1.5 degrees Celsius.
[The global stocktake has been done. Check out the COP28 Highlights in the later sections
of the PDF]
INDCs (Intended Nationally Determined Contributions):

The INDCs (Intended Nationally Determined Contributions) are plans by governments
communicated to the UNFCCC regarding the steps they will take to address climate change
domestically.
As per the COP 19 decision (Warsaw 2013), all Parties were requested to prepare their INDCs,
without prejudice to the legal nature of the contributions towards achieving the objectives of the
Convention and communicate well in advance of COP 21.
India’s INDC
India submitted its INDC to the UNFCCC by early October 2015. It is comprehensive and covers
all elements, i.e. adaptation, mitigation, finance, technology and capacity building.
India’s goal is to reduce the overall emission intensity and improve the energy efficiency of its
economy over time.
It also covers concerns to protect the vulnerable sectors and segments of its society.
Therefore, in accordance with the aforesaid provision of the Paris Agreement read with
relevant decisions, India hereby communicates an update to its first NDC submitted earlier
on October 2, 2015, for the period up to 2030, as under:

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1. To put forward and further propagate a healthy and sustainable way of living based on
traditions and values of conservation and moderation, including through a mass movement
for ‘LIFE’– ‘Lifestyle for Environment’ as a key to combating climate change
2. Emissions intensity India is now committing itself to at least 45% reduction in emissions
intensity of GDP (emissions per unit of GDP) from 2005 levels.
3. Non fossil fuel-based energy – To meet 50% of cumulative electric power installed capacity
from non-fossil fuel-based energy resources by 2030.
4. Power - 500 GW of non-fossil fuel installed power generation capacity by 2030.
5. Absolute Emission - Cutting absolute emissions by one billion tonnes, presumably from
projected business-as-usual (BAU) 2030 levels.
6. Net-zero emissions – To be achieved by 2070
7. To better adapt to climate change by enhancing investments in development programmes
in sectors vulnerable to climate change, particularly agriculture, water resources,
Himalayan region, coastal regions, health and disaster management.
8. To mobilize domestic and new & additional funds from developed countries to implement
the above mitigation and adaptation actions in view of the resource required and the
resource gap.
9. To build capacities, create domestic framework and international architecture for quick
diffusion of cutting-edge climate technology in India and for joint collaborative R&D for such
future technologies.
Green Climate Fund (GCF): The Green Climate Fund (GCF) is a new global fund created to
support the efforts of developing countries to respond to the challenge of climate change. GCF
helps developing countries limit or reduce their greenhouse gas (GHG) emissions and adapt to
climate change. It seeks to promote a paradigm shift to low-emission and climate-resilient
development, taking into account the needs of nations that are particularly vulnerable to climate
change impacts.
The decision to set up the Green Climate fund (GCF) was taken at COP 16 in Cancun on December
2010 and the GCF was operationalized in COP 17 in Durban in 2011.
The GCF is head quartered in Songdo, Incheon City, Republic of Korea.
When the Paris Agreement was reached in 2015, the Green Climate Fund was given an important
role in serving the agreement and supporting the goal of keeping climate change well below 2
degrees Celsius.
As per the international agreement, advanced economies should provide an annual assistance of
$100 billion, through public and private sources, by 2020 — the deadline is now extended to 2025.
In India, NABARD is accredited as National Implementing Entity. NABARD is eligible to submit

large size projects having outlay of more than USD 250 million.
GCF is mandated to invest 50% of its resources to mitigation and 50% to adaptation in grant
equivalent. At least half of its adaptation resources must be invested in the most climate vulnerable
countries (small island developing states (SIDS)., least developed countries (LDCs), and African
States).
GCF aims to achieve goal by four transitions:

• built environment; energy & industry;
• human security,
• livelihoods and wellbeing;
• land-use, forests and ecosystems
and employing a four-pronged approach:
1. Transformational planning and programming
2. Catalysing climate innovation
3. De-risking investment to mobilize finance at scale

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4. Mainstreaming climate risks and opportunities into investment decision
Governing of Fund
• The GCF Board is charged with the governance and oversight of the Fund’s management.
It was established by 194 sovereign governments party to the UN Framework Convention
on Climate Change (UNFCCC).
• The Board is independent and guided by the Conference of the Parties (COP) to the
Convention.
• It is governed by a Board of 24 members and initially supported by a Secretariat.
The World Bank serves as the interim trustee of the GCF, and the Fund functions under the
guidance of and remains accountable to the UNFCCC Conference of Parties.
Steps Taken by Indian Government:
1. Ratifying Paris Agreement: The 21st Conference of Parties (COP 21) under the United
Nations Framework Convention on Climate Change (UNFCCC) successfully concluded in Paris
after intense negotiations by the Parties followed by the adoption of the Paris Agreement on
post-2020 actions on climate change. This universal agreement will succeed the Kyoto
Protocol. Unlike the Kyoto Protocol, it provides a framework for all countries to take action
against climate change. Placing emphasis on concepts like climate justice and sustainable
lifestyles, the Paris Agreement for the first time brings together all nations for a common
cause under the UNFCCC. One of the main focus of the agreement is to hold the increase in
the global average temperature to well below 2°C above pre- industrial level and on driving
efforts to limit it even further to 1.5°.
2. National Clean Energy and Environment Fund (NCEEF): The National Clean Energy Fund
(NCEF) was created in 2010-11 using the carbon tax - clean energy cess - for funding research
and innovative projects in clean energy technologies of public sector or private sector entities,
upto the extent of 40% of the total project cost. Assistance is available as a loan or as a viability
gap funding, as deemed fit by the Inter-Ministerial group, which decides on the merits of such
projects.
The Fund is designed as a non-lapsable fund under Public Accounts and with its secretariat
in Plan Finance II Division, Department of Expenditure, Ministry of Finance.
Further, the coal cess has been increased to Rs. 400 per tonne in the Union budget 2016-17
and the same has been renamed as “Clean Environment Cess”. Accordingly, the name of NCEF
has been changed to National Clean Energy and Environment Fund (NCEEF)
3. NAPCC: National Action Plan on Climate Change (NAPCC):

The National Action Plan on Climate Change (NAPCC) was released by the Prime Minister on
30th June 2008.
Government of India is implementing the National Action Plan on Climate Change (NAPCC)
with a focus on promoting understanding of climate change and establishing linkage between
adaptation and mitigation consistent with the national priority for achieving sustainable
development and to fulfill India's Intended Nationally Determined Contribution (INDC) to the
UNFCCC under Paris Agreement.
The Principles of NAPCC are:

• Protecting the poor through an inclusive and sustainable development strategy,
sensitive to climate change
• Achieving national growth and poverty alleviation objectives while ensuring ecological
sustainability
• Efficient and cost-effective strategies for end-use demand-side management
• Extensive and accelerated deployment of appropriate technologies for adaptation and
mitigation

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• New and innovative market, regulatory, and voluntary mechanisms for sustainable
development
• Effective implementation through unique linkages – with civil society, LGUs, and public-
private partnerships
It comprises of eight national missions representing:
1. National Solar Mission (under MNRE)

2. National Mission for Enhanced Energy Efficiency (under Ministry of Power)
3. National Mission on Sustainable Habitat (under Ministry of Housing and
Urban Affairs)
4. National Water Mission (under MoJS)
5. National Mission Sustaining the Himalayan Ecosystem (under MoS&T)
6. National Mission for a Green India (under MoEFCC)
7. National Mission for Sustainable Agriculture (under Ministry of Agriculture)
8. National Mission on Strategic Knowledge for Climate Change (under MoS&T)
An Executive Committee on Climate Change (ECCC) under the Chairmanship of Principal

Secretary to Prime Minister has been set up for assisting the Prime Minister’s Council on
Climate Change in evolving a coordinating response to issues relating to climate change with
regular monitoring of the eight National missions along with other initiatives on Climate
Change and coordinating with various agencies.
1. National Solar Mission: The NSM was launched in January 2010. The objective of the
National Solar Mission is to establish India as a global leader in solar energy, by creating
the policy conditions for its diffusion across the country as quickly as possible. The Mission
adopts a three-phase approach, Phase 1 (up to 2012 - 13), Phase 2 (2013 - 17) and Phase
3 (2017 - 22). The immediate aim of the Mission is to focus on setting up an enabling
environment for solar technology penetration in the country both at a centralized and
decentralized level.
2. National Mission for Enhanced Energy Efficiency (NMEEE): NMEEE aims to strengthen
the market for energy efficiency by creating conducive regulatory and policy regime and has
envisaged fostering innovative and sustainable business models to the energy efficiency
sector. The Mission is implemented since 2011
NMEEE consists of four initiatives to enhance energy efficiency in energy intensive
industries:
● Perform, Achieve and Trade (PAT)
● Market Transformation for Energy Efficiency (MTEE)
● Energy Efficiency Financing Platform (EEFP)
● Framework for Energy Efficient Economic Development (FEEED)
3. National Mission on Sustainable Habitat: The National Mission on Sustainable Habitat
was approved by the Prime Minister‘s Council for Climate Change in June 2010. The key
deliverables of the Mission include:
● Development of sustainable habitat standards that lead to robust development
strategies while simultaneously addressing climate change related concerns
● Preparation of city development plans that comprehensively address adaptation
and mitigation concerns
● Preparation of comprehensive mobility plans that enable cities to undertake long-
term, energy efficient and cost-effective transport planning
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● Capacity building for undertaking activities relevant to the Mission
4. National Water Mission will ensure integrated water resource management helping to
conserve water, minimize wastage and ensure more equitable distribution both across and
within states. The Mission will take into account the provisions of the National Water Policy
and develop a framework to optimize water use by increasing water use efficiency by 20 per
cent through regulatory mechanisms with differential
5. National Mission for sustaining the Himalayan Eco-system: This particular mission
sets the goal to prevent melting of the Himalayan glaciers and to protect biodiversity in the
Himalayan region.
The mission attempts to address some important issues concerning
● Himalayan Glaciers and the associated hydrological consequences
● Biodiversity conservation and protection
● Wildlife conservation and protection
● Traditional knowledge societies and their livelihood and
● Planning for sustaining the Himalayan Ecosystem
6. National Mission for a Green India (GIM): The Cabinet Committee on Economic Affairs
approved a proposal of the Ministry of Environment and Forests for a National Mission for
a Green India (GIM) as a Centrally Sponsored Scheme. GIM puts ―greening in the context
of climate change adaptation and mitigation. Greening is meant to enhance ecosystem
services such as carbon sequestration and storage (in forests and other ecosystems),
hydrological services and biodiversity; as well as other provisioning services such as fuel,
fodder, small timber and non- timber forest products (NTFPs)
The objectives of the Mission are:
● Increased forest/tree cover on 5 m ha of forest/non-forest lands and improved
quality of forest cover on another 5 m ha (a total of 10 m ha)
● Improved ecosystem services including biodiversity, hydrological services and
carbon sequestration as a result of treatment of 10 m ha
● Increased forest-based livelihood income of about 3 million households living in
and around the forests
● Enhanced annual CO2 sequestration by 50 to 60 million tonnes in the year 2020
7. National Mission for Sustainable Agriculture (NMSA) has been made operational from
the year 2014-15, it aims at making agriculture more productive, sustainable, remunerative
and climate resilient by promoting location specific integrated /composite farming systems;
soil and moisture conservation measures; comprehensive soil health management; efficient
water management practices and mainstreaming rain-fed technologies.
8. National Mission on Strategic Knowledge for Climate Change (NMSKCC) seeks to
build a vibrant and dynamic knowledge system that would inform and support national
action for responding effectively to the objective of ecologically sustainable development
National Adaptation Fund on Climate Change (NAFCC):
• National Adaptation Fund on Climate Change (NAFCC) was launched in 2015
with an initial outlay of Rs. 350 crores to meet the cost of adaptation to climate
change for the State and Union Territories of India that are particularly
vulnerable to the adverse effects of climate change.
• The overall aim of the fund is to support concrete adaptation activities which are
not covered under on-going activities through the schemes of State and National
Government that reduce the adverse effects of climate change facing community,
sector and states.

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• The Scheme was continued beyond 12th Five Year Plan till 31st March, 2020
with an additional outlay of Rs. 364 Crore. The Fund is meant to assist National
and State level activities to meet the cost of adaptation measures in areas that
are particularly vulnerable to the adverse impacts of climate Change.
• The Scheme has been taken as Central Sector Scheme with National Bank for
Agriculture and Rural Development (NABARD) as the National Implementing
Entity (NIE). Besides, enhancing adaptive capacity at national and state level,
national conference / workshop, awareness/ information dissemination,
Research and Development and establishing a coordination and monitoring unit
have also been proposed.
9. State Action Plans on Climate Change (SAPCC) aim to create institutional capacities
and implement sectoral activities to address climate change. These plans are focused on
adaptation with mitigation as co-benefit in sectors such as water, agriculture, tourism,
forestry, transport, habitat and energy. SAPCCs have been endorsed by the National
Steering Committee on Climate Change (NSCCC) at the MoEF&CC.
MoEF&CC has also provided financial support to states for enhancing their capacities for
undertaking climate change activities.
National Clean Air Programme (NCAP): National Clean Air Programme (NCAP) is a national-level
strategy for reducing the levels of air pollution at both the regional and urban scales. Target is for
reduction of 20-30% of PM2.5 and PM10 concentration by 2024.
Improve air quality in 131 non-attainment cities.
In 2022, the government has increased the target to 40% reduction in Particulate Matter by 2026.
NATIONAL AIR QUALITY MONITORING PROGRAMME: Central Pollution Control Board is

executing a nation-wide programme of ambient air quality monitoring known as National Air
Quality Monitoring Programme (NAMP). The network consists of manual operating stations
covering all the states and UTs in the country.
Under NAMP, four air pollutants viz. SO2, NO2, suspended particulate matter (PM10), and fine
particulate matter (PM2.5) have been identified for regular monitoring at all the locations.
In addition, there are real-time Continuous Ambient Air Quality Monitoring stations (CAAQMS) in
various cities across states, monitoring 08 pollutants viz. PM10, PM2.5, SO2, NOx , ammonia
(NH3), CO, ozone (O3), and benzene. PM10 are inhalable coarse particles, which are particles with
a diameter between 2.5 and 10 micrometers (μm) and PM2.5 are fine particles with a diameter of
2.5 μm or less.
Particulates are the deadliest form of air pollutants due to their ability to penetrate deep into the
lungs and blood streams unfiltered. The smaller PM2.5 are particularly deadly as it can penetrate
deep into the lungs.
The monitoring of pollutants is carried out for 24 hours (a 4-hourly sampling for gaseous
pollutants and an 8-hourly sampling for particulate matter) twice a week, to have 104 observations
in a year.
The monitoring is being carried out with the help of the Central Pollution Control Board (CPCB),
State Pollution Control Boards (SPCB), Pollution Control Committees (PCC), National
Environmental Engineering Research Institute (NEERI).

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NATIONAL AMBIENT AIR QUALITY STANDARDS (NAAQS) Ambient air quality refers to the
condition or quality of the outdoor air. NAAQs are the standards for ambient air quality with
reference to various identified pollutant notified by the CPCB under the Air (Prevention and Control
of Pollution) Act, 1981.
International Solar Alliance (ISA):

Vision: Let us together make the sun brighter.
Mission: Every home no matter how far away, will have a light at home
The International Solar Alliance (ISA) is an action-oriented, member-driven, collaborative platform
for increased deployment of solar energy technologies as a means for bringing energy access,
ensuring energy security, and driving energy transition in its member countries.
The ISA strives to develop and deploy cost-effective and transformational energy solutions powered
by the sun to help member countries develop low-carbon growth trajectories, with particular focus
on delivering impact in countries categorized as Least Developed Countries (LDCs) and the Small
Island Developing States (SIDS).
Being a global platform, ISA’s partnerships with multilateral development banks (MDBs),
development financial institutions (DFIs), private and public sector orgnaisations, civil society and
other international institutions is key to delivering the change its seeks to see in the world going
ahead.
The ISA is guided by its ‘Towards 1000’ strategy which aims to mobilise USD 1,000 billion of
investments in solar energy solutions by 2030, while delivering energy access to 1,000 million
people using clean energy solutions and resulting in installation of 1,000 GW of solar energy
capacity. This would help mitigate global solar emissions to the tune of 1,000 million tonnes of
CO2 every year. For meeting these goals, the ISA takes a programmatic approach.
Currently, the ISA has 9 comprehensive programmes, each focusing on a distinct application
that could help scale deployment of solar energy solutions. Activities under the programmes
focuses on 3 priority areas – Analytics & Advocacy, Capacity Building, and Programmatic
Support, that help create a favourable environment for solar energy investments to take root in
the country.
The ISA was conceived as a joint effort by India and France to mobilize efforts against climate
change through deployment of solar energy solutions. It was conceptualized on the sidelines of the
21st Conference of Parties (COP21) to the United Nations Framework Convention on Climate
Change (UNFCCC) held in Paris in 2015. With the amendment of its Framework Agreement in
2020, all member states of the United Nations are now eligible to join the ISA.
118 countries have signed the ISA Framework Agreement. 95 countries have signed and ratified
the ISA Framework Agreement. (Hungary 95th country)
The International Solar Alliance (ISA) is to headquartered at the National Institute of Solar Energy
(NISE) in Gwalpahari, Gurugram, India.
The Indian government has dedicated five acres of land on the NISE campus for ISA's future
headquarters; it also has contributed ₹1.75 billion (US$27 million) to the fund to build the ISA
campus and for meeting expenditures for the ISA's first five years.

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Green bond: A green bond is like any other regular bond but with one key difference: the money
raised by the issuer are earmarked towards financing `green' projects, i.e. assets or business
activities that are environment-friendly. Such projects could be in the areas of renewable energy,
clean transportation and sustainable water management.
In 2007, green bonds were launched by few development banks such as the European Investment
Bank and the World Bank. Subsequently, in 2013, corporates too started participating, which led
to its overall growth. Back home, Yes Bank was the first bank to come out with a issue worth Rs
1,000 crore in 2015. Following this, few other banks too had green bond issuances. CLP India,
was the first Indian company to tap this route.
SEBI's indicative list includes renewable and sustainable energy such as wind and solar, clean
transportation, sustainable water management, climate change adaptation, energy efficiency,
sustainable waste management and land use and biodiversity conservation.
Environment related Initiatives by GOI:
The Ministry of Environment, Forest and Climate Change (MoEFCC) is the nodal agency in
the administrative structure of the Central Government for the planning, promotion, co-ordination
and overseeing the implementation of India's environmental and forestry policies and programmes.
The Ministry also serves as the nodal agency in the country for the United Nations Environment
Programme (UNEP), South Asia Co-operative Environment Programme (SACEP), International
Centre for Integrated Mountain Development (ICIMOD) and for the follow-up of the United Nations
Conference on Environment and Development (UNCED). The Ministry is also entrusted with issues
relating to multilateral bodies such as the Commission on Sustainable Development (CSD), Global
Environment Facility (GEF) and of regional bodies like Economic and Social Council for Asia and
Pacific (ESCAP) and South Asian Association for Regional Co-operation (SAARC) on matters
pertaining to the environment.
The broad objectives of the Ministry are:

• Conservation and survey of flora, fauna, forests and wildlife
• Prevention and control of pollution
• Afforestation and regeneration of degraded areas
• Protection of the environment and
• Ensuring the welfare of animals
These objectives are well supported by a set of legislative and regulatory measures, aimed at the
preservation, conservation and protection of the environment. Besides the legislative measures,
the National Conservation Strategy and Policy Statement on Environment and
Development, 1992; National Forest Policy, 1988; Policy Statement on Abatement of
Pollution, 1992; and the National Environment Policy, 2006 also guide the Ministry's work.
Compensatory Afforestation Fund Management and Planning Authority (CAMPA):

Establishment in 2004, the Ministry of Environment and Forests constituted the Compensatory
Afforestation Fund Management and Planning Authority (CAMPA) to oversee and manage
the Compensatory Afforestation Fund (CAF) as directed by the Supreme Court.
The Hon’ble Supreme Court on 10th July 2009 issued orders that there will be a Compensatory
Afforestation Fund Management and Planning Authority (CAMPA) as National Advisory Council
under the chairmanship of the Union Minister of Environment & Forests & Climate change for
monitoring, technical assistance and evaluation of compensatory afforestation activities.
National CAMPA Advisory Council has been established as per orders of The Hon’ble
Supreme Court with the following mandate:

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• Lay down broad guidelines for State CAMPA.
• Facilitate scientific, technological and other assistance that may be required by State CAMPA.
• Make recommendations to State CAMPA based on a review of their plans and programmes.
• Provide a mechanism to State CAMPA to resolve issues of an inter-state or Centre-State
character.
The CAMPA funds are utilised for compensating the loss of forest land and ecosystem services by
raising of compensatory afforestation, improving quality of forests through assisted natural
regeneration, enrichment of biodiversity, improvement of wildlife habitat, control of forest fire,
forest protection and soil and water conservation measures.
The Compensatory Afforestation Fund (CAF Act), 2016 and Rules, 2018 provide elaborate
guidelines and activities for utilization of CAMPA Fund.
NAGAR VAN YOJANA (NVY) scheme by Ministry of Environment, Forest & Climate Change
The total estimated cost of Nagar Van Yojana is Rs.895 crore for the period of 2020-21 to 2024-25
for implementation from the National Funds under Compensatory Afforestation Fund Management
and Planning Authority (CAMPA)
Objectives:
1. Creating green space and aesthetic environment in an urban set up.
2. Creating awareness about plants and biodiversity and developing environment stewardship.
3. Facilitating in-situ conservation of important flora of the region.
4. Contributing to environmental improvement of cities by pollution mitigation, providing cleaner
air, noise reduction, water harvesting and reduction of heat islands effect.
5. Extending health benefits to residents of the city and
6. Helping cities become climate resilient
General guidelines:
1. The scheme is proposed to be implemented for a period of five years starting from 2020-21 to
2024-2025.
2. The scheme aims at developing 400 Nagar Vans and 200 Nagar Vatikas across the country in
cities having Municipal Corporation/Municipal Council/Municipalities.
3. Nagar Van may be developed over a minimum area of 10 ha and a maximum of 50 ha within 5
km limits of Municipal Corporation/Municipal Council/Municipality.
4. Nagar Vatika may be developed in an area of minimum 1 ha and maximum of 10 ha within the
city limits.
5. The Scheme aims at development of Nagar Van/Nagar Vatika primarily on forest or other land
available for greening/tree planting within the limits of municipalities or in its vicinity located
within 5 km limit.
6. Nagar Van/Nagar Vatika may be developed on forest or other vacant non-forest public land.
7. The area selected shall be accessible to city dwellers/general public.
8. Nagar Van should have minimum of 2/3rd area under woodland/ tree cover and may be
considered on lands other than forest land for expanding green cover in urban spaces.
9. Implementing agencies other than Forest Departments such as Municipalities may also be
considered for development of Nagar Van/Nagar Vatika based on recommendations of State
Governments.

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10. Educational institutions, Universities, Government/Non-Government organisations/ULB may
also take up ‘Nagar Van/Vatika’ on land owned by them and the proposals are to be routed through
State Government.
11. Participation of local people, students in plantations may be encouraged to create a sense of
ownership. Innovative concepts like creation of Panchvati, Aushadhi Vatika, Nakshatra Van,
Oxyzones etc. may be taken up to attract people in plantation activities.
12.The Ministry will provide one time development and non-recurring grant to the implementing
agency for creation of an area of Nagar Van/Vatika to a maximum extent of Rs. 2.0 crores for 50
ha. Balance cost will be met by the implementing agency through its own resources
The National Green Tribunal has been established on 18.10.2010 under the National Green
Tribunal Act 2010 ( is an Act of the Parliament of India) for effective and expeditious disposal of
cases relating to environmental protection and conservation of forests and other natural resources
including enforcement of any legal right relating to environment and giving relief and
compensation for damages to persons and property and for matters connected therewith or
incidental thereto.
The Tribunal shall not be bound by the procedure laid down under the Code of Civil Procedure,
1908, but shall be guided by principles of natural justice.
The Tribunal is mandated to make and endeavour for disposal of applications or appeals finally
within 6 months of filing of the same.
Initially, the NGT is proposed to be set up at five places of sittings and will follow circuit procedure
for making itself more accessible. New Delhi is the Principal Place of Sitting of the Tribunal and
Bhopal, Pune, Kolkata and Chennai shall be the other 4 place of sitting of the Tribunal.
The NGT has the power to hear all civil cases relating to environmental issues that are linked to
the following laws -
• The Water (Prevention and Control of Pollution) Act, 1974;
• The Forest (Conservation) Act, 1980;
• The Air (Prevention and Control of Pollution) Act, 1981;
• The Environment (Protection) Act, 1986;
• The Public Liability Insurance Act, 1991;
• The Biological Diversity Act, 2002.
There is a bar on civil court to take cases under these listed laws in Schedule 1 of NGT act.
The NGT has not been vested with powers to hear any matter relating to the Wildlife (Protection)
Act, 1972, the Indian Forest Act, 1927 and various laws enacted by States relating to forests, tree
preservation etc.
Green Mobility:
The National Policy on Biofuels 2018, provides an indicative target of 20% ethanol blending under
the Ethanol Blended Petrol (EBP) Programme by 2025.
Under the new National Policy on Biofuels, the central government has expanded the scope of raw
material for ethanol production by allowing use of various agro-waste products.
Also advanced vehicle emission and fuel quality standards– BSIV from 2017 and BS-VI from 2020.
Understanding National Air Quality index (AQI):

• AQI is a number used to communicate to the public how polluted the air currently is or how
polluted it is forecasted to become.
• As AQI increases, an increasingly large percentage of the population is likely to experience
increasingly adverse health effects.
• The AQI is most commonly used by Central Pollution Control Board (CPCB) to describe ground-
level ozone levels.

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• The classifications of air quality are part of a 6 grade, colour coded taking into account 8
pollutant levels.
AQ sub-index and health breakpoints are evolved for eight pollutants (PM10, PM2.5, NO2, SO2,
CO, O3, NH3, and Pb) for which short-term (upto 24-hours)
Green Good 0 to 50
Yellow Moderate 51 to 100
Orange Unhealthy for sensitive groups 101 to 150
Red Unhealthy 151 to 200
Purple Very Unhealthy 201 to 300
Maroon Hazardous 301 to 500
United Nations Development Programme (UNDP) is the United Nations' global development
network. Headquartered in New York City.
UNDP advocates for change and connects countries to knowledge, experience and resources to
help people build a better life.
It provides expert advice, training and grants support to developing countries, with increasing
emphasis on assistance to the least developed countries. It promotes technical and investment
cooperation among nations.
The status of UNDP is that of an executive board within the United Nations General Assembly. The
UNDP Administrator is the third highest-ranking official of the United Nations after the United
Nations Secretary-General and Deputy Secretary-Genera
UNDP is based on the merging of the United Nations Expanded Programme of Technical
Assistance, created in 1949, and the United Nations Special Fund, established in 1958. UNDP, as
we know it now, was established in 1966 by the General Assembly of the United Nations.
UNDP's role: The SDGs came into effect in January 2016, and they will continue guide UNDP
policy and funding for the next 15 years.
As the lead UN development agency, UNDP is uniquely placed to help implement the Goals through
our work in some 170 countries and territories. Our strategic plan focuses on key areas including
poverty alleviation, democratic governance and peacebuilding, climate change and disaster risk,
and economic inequality. UNDP provides support to governments to integrate the SDGs into their
national development plans and policies. This work is already underway, as we support many
countries in accelerating progress already achieved under the Millennium Development Goals.
Mission and vision: UNDP’s mandate is to end poverty, build democratic governance, rule of law,
and inclusive institutions. We advocate for change, and connect countries to knowledge,
experience and resources to help people build a better life.
UNDP focuses on helping countries build and share solutions in three main areas:
• Sustainable development
• Democratic governance and peace building
• Climate and disaster resilience
In all our activities, UNDP encourages the protection of human rights and the empowerment of
women, minorities and the poorest and most vulnerable. The annual Human Development
Report, commissioned by UNDP, focuses the global debate on key development issues, providing
new measurement tools, innovative analysis and often controversial policy proposals. The global
Report's analytical framework and inclusive approach carry over into regional, national and local
Human Development Reports, also supported by UNDP.

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Environmental Performance Index (EPI)
The Environment Performance Index (EPI) is an international ranking system that measures the
environmental health and sustainability of countries.
The EPI, a biennial index, was started in 2002 as Environmental Sustainability Index by the World
Economic Forum. The Environmental Performance Index (EPI) is published by the Yale Center for
Environmental Law and Policy and the Center for International Earth Science Information
Network, Columbia University.
The 2022 Environmental Performance Index (EPI) provides a data-driven summary of the state of
sustainability around the world. Using 40 performance indicators across 11 issue categories, the
EPI ranks 180 countries on their progress toward improving environmental health, protecting
ecosystem vitality, and mitigating climate change.
The 2022 Environmental Performance Index is made possible by the generous support of the
McCall MacBain Foundation
The 2022 EPI Framework, illustrating 3 policy objectives, 11 issue categories, and 40
indicators:
1. Climate change mitigation

2. Air Quality (household solid fuels and PM2.5 exposure)
3. Waste Management
4. Water & Sanitation
5. Heavy Metals (lead exposure)
6. Biodiversity & Habitat
7. Ecosystem services
8. Fisheries
9. Agriculture (sustainable practice)
10. Acid Rain
11. Water resources (wastewater treatment)
The above 11environmental issue categories are divided into three policy objectives
viz. Climate, Environment health and Ecosystem Vitality.
EPI 2022 ranked India at the bottom 180th rank among 180 countries with a score of 18.9.
Denmark tops the 2022 rankings, the United Kingdom and Finland place 2nd and 3rd,
World Environment Day: 5 June,

The United Nation, aware that the protection and improvement of the human environment is a
major issue, which affects the well-being of people and economic development throughout the
world, designated 5 June as World Environment Day. The celebration of this day provides us with
an opportunity to broaden the basis for an enlightened opinion and responsible conduct by
individuals, enterprises and communities in preserving and enhancing the environment. World
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Environment Day is the biggest annual event for positive environmental action and takes place
every 5 June.
Ozone Cell:
Ozone Layer Protection: Ozone, a tri-atomic molecule of oxygen is formed from oxygen naturally
in the upper levels of the Earth’s atmosphere by high-energy Ultraviolet (UV) radiation from the
Sun. The UV radiation breaks down oxygen molecules, releasing free atoms, some of which bond
with other oxygen molecule to form ozone. About 90 per cent of ozone formed in this way lies
between 10 and 50 kilometers above the Earth’s surface, called the Stratosphere. The ozone found
in this part of the atmosphere is called the ozone layer.
The ozone layer absorbs all the harmful UV-B radiations emanating from the Sun. It protects plant
and animal life from UV-B radiation. The UV-B radiation has the potential to cause skin cancer,
eye cataract, suppress body’s immune system, decrease crop yield etc., which led to the adoption
of the Vienna Convention for the Protection of the Ozone Layer in 1985 and the Montreal
Protocol on Substances that Deplete the Ozone Layer in 1987. The mandate of the Montreal
Protocol is to phase out the production and consumption of the Ozone Depleting Substances
(ODSs).
India is a Party to the Vienna Convention for the Protection of the Ozone Layer and the Montreal
Protocol on Substances that Deplete the Ozone Layer and it’s all the amendments/adjustments.
Currently HCFCs are being phased out as per the accelerated phase out schedule of the Montreal
Protocol. The MoEF&CC has set up the Ozone Cell as a National Ozone Unit (NOU) to render
necessary services for effective and timely implementation of the Protocol and its ODS phase-out
program in India.
Kigali Amendment to the Montreal Protocol for phase-down of HFCs: The 28th Meeting of
Parties to the Protocol held in Kigali in 2016 adopted an amendment to the Protocol which is
historic and aimed at phasing down the HFCs that contribute to global warming.
HFCs do not deplete the Ozone layer, however, they have high global warming.
International Conventions/Protocols:
Stockholm Convention on Persistent Organic Pollutants (POPs) is a global treaty to protect
human health and the environment from POPs. The Convention sought initially 12 chemicals, for
restriction or elimination of the production and release. Now, the Convention covers 23 chemicals.
Minamata Convention on Mercury: At the Conference of Plenipotentiaries held from 9th-

11th October 2013 in Minamata and Kumamoto, Japan, the “Minamata Convention on Mercury”,
a global treaty to protect human health and the environment from the adverse effects of mercury,
was formally adopted and opened for signature by States and regional economic integration
organizations. India has signed the Convention on 30th September 2014.
Ramsar Convention on Wetland: The Convention on Wetlands, signed in Ramsar, Iran, in 1971,
is an intergovernmental treaty which provides the framework for national action and international
cooperation for the conservation and wise use of wetlands and their resources.
The Intergovernmental Panel on Climate Change: The IPCC provides regular assessments of
the scientific basis of climate change, its impacts and future risks, and options for adaptation and
mitigation. Created in 1988 by the World Meteorological Organization (WMO) and the United
Nations Environment Programme (UNEP), the objective of the IPCC is to provide governments at
all levels with scientific information that they can use to develop climate policies. IPCC reports are
also a key input into international climate change negotiations.
The IPCC is an organization of governments that are members of the United Nations or WMO. The
IPCC currently has 195 members. Thousands of people from all over the world contribute to the
work of the IPCC. For the assessment reports, IPCC scientists volunteer their time to assess the
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thousands of scientific papers published each year to provide a comprehensive summary of what
is known about the drivers of climate change, its impacts and future risks, and how adaptation
and mitigation can reduce those risks. Headquarter location: Geneva, Switzerland
The IPCC is divided into three Working Groups and a Task Force. Working Group I deals with The
Physical Science Basis of Climate Change, Working Group II with Climate Change Impacts,
Adaptation and Vulnerability and Working Group III with Mitigation of Climate Change. The main
objective of the Task Force on National Greenhouse Gas Inventories is to develop and refine a
methodology for the calculation and reporting of national greenhouse gas emissions and removals.
Carbon credit: A carbon credit is a generic term for any tradable certificate or permit representing
the right to emit one tonne of carbon dioxide or the equivalent amount of a different greenhouse
gas.
Carbon credits and carbon markets are a component of national and international attempts to
mitigate the growth in concentrations of greenhouse gases (GHGs). One carbon credit is equal to
one tonne of carbon dioxide, or in some markets, carbon dioxide equivalent gases. Carbon trading
is an application of an emissions trading approach. Greenhouse gas emissions are capped and
then markets are used to allocate the emissions among the group of regulated sources.
Emissions Trading: Greenhouse gas emissions a new commodity Parties with commitments
under the Kyoto Protocol have accepted targets for limiting or reducing emissions. These targets
are expressed as levels of allowed emissions, or assigned amounts. The allowed emissions are
divided into assigned amount units (AAUs).
A Certified Emissions Reduction, also known as CER, is a certificate issued by the United
Nations to member nations for preventing one tonne of carbon dioxide emissions. These are usually
issued to member states for projects achieving greenhouse gas reductions through the use of Clean
Development Mechanisms (CDM). CDMs make it possible for these projects to occur and set a
baseline for future emission targets.
Major Greenhouse gases emitting countries:

China is the biggest emitter at 26.4% of global greenhouse gas emissions, followed by the United
States at 12.5%, India at 7.06%, and the European Union at 7.03%.
Carbon dioxide (CO2) comprises 74.1% of greenhouse gas emissions.

Most CO2 emissions (92%) are from the use of fossil fuels, especially for generation of electricity
and heat, transportation, and manufacturing and consumption.
Methane (CH4) make up 17.3% of total greenhouse gas emissions, respectively, mostly from
agriculture.
Energy consumption is by far the biggest source of human-caused greenhouse gas emissions.
Climate Change Fund: In keeping with the commitment of NABARD to address impact of climate
change the “Climate Change Fund” was created out of the profit of NABARD during 2016-17 for
facilitating attempts to address impacts of climate change especially towards fostering sustainable
development. NABARD contributes annually from its profit towards the corpus of the fund.
Institution of the “Climate Change Fund” is a unique initiative of NABARD as a Development

Financial Institution to foster sustainable development and contribute meaningfully towards
national priorities.
• Objective: To promote and support activities aimed towards addressing climate change
impacts, adaptation and mitigation measures, awareness generation, knowledge sharing
and facilitate sustainable development.

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United Nations Environment Programme (UN Environment) is the leading global environmental
authority that sets the global environmental agenda, promotes the coherent implementation of the
environmental dimension of sustainable development within the United Nations system, and
serves as an authoritative advocate for the global environment. It was founded by Maurice Strong,
its first director, as a result of the United Nations Conference on the Human
Environment (Stockholm Conference) in June 1972 .
The United Nations Environment Programme (UNEP) is the leading global authority on the
environment.
UNEP’s mission is to inspire, inform, and enable nations and peoples to improve their quality
of life without compromising that of future generations.
UNEP is here to lead this transformation with its 193 Member States, and in partnership with
other UN agencies and stakeholders.
The Environment Fund is UNEP's core source of flexible funds, providing the bedrock of the work
worldwide.
In addition, earmarked funds (funds given or "earmarked" to a specific project, theme, country
etc.) enable UNEP to expand and replicate the programme in more countries and with more
partners. Main providers of earmarked funds include the Global Environment Facility,
the Green Climate Fund and the European Commission.
Headquartered in Nairobi, Kenya
The Environment Fund, established already in 1973 by the UN General Assembly, is the core
financial fund of the UN Environment Programme (UNEP).
Since 2012, UNEP membership encompasses all 193 UN Member States, who are responsible for
funding the programme.
• The Environment Fund is used for:
o Implementation of the Medium-Term Strategy and its programmes;
o Keeping the environment under review. For example, flagship scientific publications
such as the Global Environment Outlook, the Global Chemicals Outlook and
the Emissions Gap Report translate the best available scientific knowledge into
information relevant for decision makers, who then can turn policy into action;
o Identification of new emerging environmental issues
Green Good Deeds, the societal movement launched by the Union Minister for Environment,
Forest & Climate Change, Dr Harsh Vardhan, to protect environment and promote good living in
the country, has found acceptance by the global community.
COP26: Together for our planet in 2021

• The 26th UN Climate Change Conference of the Parties (COP26) was held in Glasgow.
• These meetings are held every year to construct a global response to climate change.
The following were agreed upon in the Glasgow Climate Pact by the nations of the world:
1. Countries reaffirmed the Paris Agreement goal of limiting the increase in the global average
temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit it to
1.5 °C.
2. Countries stressed the urgency of action when carbon dioxide emissions must be reduced
by 45 percent to reach net-zero around mid-century. But with present climate plans and
the Nationally determined Contributions are falling far short.
3. The countries agreed to a provision calling for a phase-down of coal power and a phase-
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4. Developed countries came to Glasgow falling short on their promise to deliver US$100
billion a year for developing countries and expressed confidence that the target would be
met in 2023.
5. The Glasgow Pact calls for a doubling of finance to support developing countries in adapting
to the impacts of climate change and building resilience
6. Countries reached an agreement on the remaining issues of the so-called Paris rulebook,
the operational details for the practical implementation of the Paris Agreement.
Emissions intensity – It is the total amount of emissions emitted for every unit of GDP.
COP27 in 2022 ‘Together for implementation’: The 2022 United Nations Climate Change Framework
Convention (UNFCCC) Conference of Parties (COP), commonly referred to as COP27, concluded
recently in Sharm el-Sheikh (Egypt). The COP is the apex decision-making body of the United
Nations Climate Change Framework Convention (UNFCCC). The COP has been held annually since
the first UN climate agreement in 1992.
Major Outcomes of the COP27
• The United Nations Climate Change Conference COP27 signed an agreement to
provide "loss and damage" funding to vulnerable countries.
• At COP27, a new five-year work program was launched to promote climate technology
solutions in developing countries.
• A mitigation work programme was launched aimed at urgently scaling up mitigation
ambition and implementation.The work programme will start immediately following
COP27 and continue until 2030, with at least two global dialogues held each year.
• Delegates at the UN Climate Change Conference COP27 wrapped up the second technical
dialogue of the first global stocktake, a mechanism to raise ambition under the Paris
Agreement.
• Of the US$ 100 billion a year promised to poor countries, only about US$ 20 billion goes to
adaptation measures (like Building flood defences, preserving wetlands, restoring mangrove
swamps and regrowing forests). In Glasgow, countries had agreed to double that proportion,
but at COP27 some countries sought to remove that commitment. However, after some
differences it was reaffirmed
• Sharm-El-Sheikh Adaptation Agenda: It outlines 30 Adaptation Outcomes to enhance
resilience for 4 billion people living in the most climate vulnerable communities by 2030.
• Action on Water Adaptation and Resilience Initiative (AWARe): It has been launched to
reflect the importance of water as both a key climate change problem and a potential
solution.
• African Carbon Market Initiative (ACMI): It was launched to support the growth of carbon
credit production and create jobs in Africa
Loss and Damage (L&D) - L&D refers to impacts of climate change that cannot be avoided either
by mitigation or adaptation.
United Nations Climate Change Conference (COP28):
The 28th Conference of Parties (COP-28) was held in Dubai, United Arab Emirates (UAE), from
30th November to 12th December 2023, where the representatives from 197 countries
showcased their efforts to limit global warming and held discussions to prepare for future climate
change.

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This was the first time when the countries formally assessed their progress under the 2015
Paris climate agreement.
The delegates at COP-28 also discussed the adaptation and mitigation efforts required to achieve
significant positive outcomes in the coming years towards tackling climate change.
Highlights of COP28:
Global Stocktake:
Global stocktake is a process for countries to see where they’re collectively making
progress towards meeting the goals of the Paris Agreement. As per the Paris Agreement (2015), it
was decided that countries would assess their progress for the first time in 2023 and, then, every
five years.
It noted that there is a need to cut 43% of GHG emissions by 2030, compared to 2019 levels and
countries are off-track in meeting their climate goals.
COP28 released the fifth iteration of the Global Stocktake (GST), adopting eight steps to limit
global temperature rise to 1.5 degrees C. These steps include:
1. Tripling renewable energy capacity globally and doubling the global average annual rate
of energy efficiency improvements by 2030;
2. Accelerating efforts towards the phase down of unabated coal power;
3. Accelerating efforts globally towards net zero emission energy systems, utilizing zero- and
low-carbon fuels well before or by around mid-century;
4. Transitioning away from fossil fuels in energy systems, in a just, orderly, and equitable
manner, accelerating action in this critical decade, so as to achieve net zero by 2050 in
keeping with the science;
5. Accelerating zero- and low-emission technologies, including, inter alia, renewables, nuclear,
abatement and removal technologies such as carbon capture and utilization and storage,
particularly in hard-to-abate sectors, and low-carbon hydrogen production;
6. Accelerating and substantially reducing non-carbon-dioxide emissions globally including,
in particular, methane emissions by 2030;
7. Accelerating the reduction of emissions from road transport on a range of pathways,
including through development of infrastructure and rapid deployment of zero and low-
emission vehicles; and
8. Phasing out inefficient fossil fuel subsidies that do not address energy poverty or just
transitions, as soon as possible.
Transition Away from Fossil-Fuel: Nearly 200 countries agreed to "transition away from fossil
fuels in energy systems" at the COP28. The agreement is the first-time countries have made this
pledge.
Global Renewables and Energy Efficiency Pledge- Signatory countries to work together to triple
the world's installed renewable energy generation capacity to at least 11,000 GW by 2030. The
countries must collectively double the global average annual rate of energy efficiency
improvements from around 2% to over 4% every year until 2030.
Loss and Damage Fund- Operationalization of the Loss and Damage (L&D) fund aimed at
compensating countries grappling with climate change impacts. Commitments worth about US$
800 million had been made to the Fund. The World Bank will be the "interim host" of the fund for
four years.
Global Goal on Adaptation: The draft text on the Global Goal on Adaptation (GGA> was
introduced at COP 28. It aims to enhance climate change adaptation by increasing awareness and
funding towards countries' adaptation needs in the context of the 1.5/2°C goal of the Paris
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The Global Cooling Pledge: 66 national government signatories committed to working together
to reduce cooling related emissions across all sectors by at least 68% globally relative to 2022
levels by 2050.
Declaration to Triple Nuclear Energy- The declaration launched at COP28 aims to triple global
nuclear energy capacity by 2050. It was endorsed by 22 National Governments.
Coal Transition Accelerator- France, in collaboration with various countries and organizations,
introduced the Coal Transition Accelerator. The initiative aims to leverage best practices and
lessons learned for effective coal transition policies.
CHAMP Initiative- Coalition for High Ambition Multilevel Partnership (CHAMP) for Climate Action
was launched at COP 28. This initiative aims at efficient planning, financing, implementation, and
monitoring of climate strategies
Climate Finance: Under the New Collective Quantified Goal (NCQG) for climate finance, wealthy
nations owe developing countries USD 500 billion in 2025.
Powering Past Coal Alliance (PPCA): PPCA, a coalition involving governments, businesses, and
organizations, focuses on transitioning from unabated coal power to clean energy. At COP28,
PPCA welcomed new national and subnational governments, advocating for cleaner energy
alternatives. India is not part of PPCA as it has not committed to phasing out of coal.
COP29 in 2024 will be held at Baku, Azerbaijan.
Major Highlights [India Engagements @ COP28]

PM Narendra Modi at the COP-28 Presidency’s Session on "Transforming Climate
Finance”
During his address, the Prime Minister voiced the concerns of the Global South and
reiterated the urgency of making the means of implementation, particularly climate
finance, available to the developing countries to achieve their climate ambitions and
implement their NDCs.
PM Modi also welcomed the operationalization of the Loss and Damage Fund and
establishment of the UAE Climate Investment Fund at COP-28 and called for the COP-28
to deliver on the following issues related to Climate Finance.

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Green Credit Initiative:

o The Green Credit Initiative has been conceptualized as a mechanism to
incentivize voluntary pro-planet actions, as an effective response to the
challenge of climate change.
o It envisions the issue of Green Credits for plantations on waste/degraded
lands and river catchment areas, to rejuvenate and revive natural
ecosystems.
o The Green Credit Initiative, launched at COP28, aligns with Mission
LiFE which aims to minimise per capita carbon footprint by promoting
mindful utilisation instead of wasteful consumption.
▪ Phase II of the Leadership Group for Industry Transition (Lead IT 2.0):
o It will focus on inclusive & just industry transition, co-development
and transfer of low-carbon technology, and financial support to emerging
economies for industry transition.
▪ Global River Cities Alliance (GRCA):

o It was launched at COP 28, led by the National Mission for Clean Ganga
(NMCG) under the Ministry of Jal Shakti, Government of India.
o The Global River Cities Alliance (GRCA), was launched at COP28, the
United Nations Climate Change Conference in Dubai, United Arab
Emirates with countries namely India, Egypt, Netherlands, Denmark,
Ghana, Australia, Bhutan, Cambodia, Japan and river-cities of The
Hague (Den Haag) from the Netherlands, Adelaide from Australia, and
Szolnok of Hungary and International funding agencies the World Bank,
Asian Development Bank (ADB), Asian Infrastructure Investment Bank
(AIIB) and knowledge management institution like KPMG entering into a
partnership, widely expanding the reach of the existing River Cities
Alliance (RCA), formed by NMCG in association with National Institute
of Urban Affairs (NIUA) in 2021.
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o It extends the River Cities Alliance, initially established by NMCG in 2021
in association with National Institute of Urban Affairs (NIUA).
o It is a unique alliance covering 275+ global river cities in 11 countries,
international funding agencies and knowledge management partners and
is the first of its kind in the world.
o GRCA highlights India's role in sustainable river-centric
development and climate resilience.
o This platform will facilitate knowledge exchange, river-city twinning, and
dissemination of best practices.
o GRCA aims to foster global collaboration for river conservation and
sustainable water management.
▪ Quad Climate Working Group (QCWG) on Localised Climate Action:
o The event focused on recognizing and amplifying the role of local
communities, and regional governments in supporting sustainable
lifestyles.
▪ Green Development Pact: it provides pathways for nations in their journey towards
achieving energy, climate, environment and disaster resilience-related objectives.
Green Development Pact includes key ambitions such as tripling of global renewable
capacity by 2030.
▪ Highlighting the significance of lending to MSMEs in Renewable Energy
sector: highlighted the significance of lending to Micro, Small & Medium
Enterprises (MSMEs) in the Renewable Energy sector, emphasizing both its
economic and environmental contributions. The commitment involves
increasing the participation of MSMEs in the Renewable Sector through
accessible loan facilities, reinforcing the organization's dedication to a
sustainable future.
▪ India at Mangrove Alliance for Climate Ministerial Meeting at COP-28
Summit: Union Minister for Environment, Forest and Climate Change, Shri
Bhupender Yadav addressed the Mangrove Alliance for Climate Ministerial
Meeting at COP-28.
▪ Side event hosted at the India pavilion at the UN Climate Conference
COP-28: Impacts and implications of Climate Change Vulnerability in the
Himalayan Region and ways of creating ‘Climate Resilient Development in
the Indian Himalayan Region by making mountain communities green and
resilient were discussed in the side event hosted at the India pavilion at the
UN Climate Conference COP-28.The experts at the side event elaborated on
the importance of the National Mission for Sustaining the Himalayan
Ecosystem (NMSHE) launched as part of National Action Plan on Climate
Change (NAPCC), to better understand the linkages between climate change
and the Himalayan ecosystem for improved adaptation.
India’s National Statement at COP-28:
• Shri Bhupender Yadav presented India’s national statement at COP28 in Dubai on
December 9, 2023. He reaffirmed India's commitment underlined by PM Narendra Modi to
work together for the common objective of a greener, cleaner, and healthier planet as we
have One Earth, we are One Family and we share One future. He said, “India has been at
the forefront of supporting action-oriented steps at the global level in response to climate
change.

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• We have always held the view that people and the planet are inseparable and that human
well-being and Nature are intrinsically linked. In our endeavour to decouple economic
growth from greenhouse gas emissions, India has successfully reduced the emission
intensity vis-à-vis its GDP by 33% between 2005 and 2019, thus achieving the initial NDC
target for 2030, 11 years ahead of the scheduled time. India has also achieved 40% of
electric installed capacity through non-fossil fuel sources, nine years ahead of the target for
2030.
• Between 2017 and 2023, India has added around 100 GW of installed electric capacity, of
which around 80% is attributed to non-fossil fuel-based resources. We have therefore
revised our NDCs upwards indicating our deep commitment towards enhanced climate
action.”
• Highlighting India’s significant role and contribution towards climate action at the
international level, he added, “In addition to its domestic initiatives, India’s contribution to
climate action has been significant through its international efforts such as International
Solar Alliance (ISA), Coalition for Disaster Resilient Infrastructure (CDRI), creation of
LeadIT, Infrastructure for Resilient Island States (IRIS) and the Big Cat Alliance.
• The Global Biofuel Alliance, launched when the G20 leaders met in New Delhi earlier this
year, seeks to serve as a catalytic platform fostering global collaboration for advancement
and widespread adoption of biofuels.”
Global Green Credit Initiative: GGCI stands for the Global Green Credit Initiative launched by
India’s Prime Minister at COP28. It's an international initiative fostering environmental
consciousness and sustainability through various programs and collaborations.
The Green Credit Initiative has been conceptualized as a mechanism to incentivize voluntary pro-
planet actions, as an effective response to the challenge of climate change. It envisions the issue
of Green Credits for plantations on waste/degraded lands and river catchment areas, to
rejuvenate and revive natural eco-systems
This global initiative aims to facilitate global collaboration, cooperation and partnership through
exchange of knowledge, experiences and best practices in planning, implementation and
monitoring of environment positive actions through programs/mechanisms like Green Credits.
The Green Credit Rules, 2023 by Ministry of Environment, Forest and Climate Change
the Green Credit programme is independent of the carbon credit under the Carbon Credit Trading
Scheme, 2023 made under the Energy Conservation Act, 2001 (52 of 2001), an environmental
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activity generating green credit may have climate co-benefits, such as reduction or removal of
carbon emissions and an activity generating green credit under Green Credit programme may
also get carbon credit from the same activity under the said Scheme.
The Indian Council of Forestry Research and Education (ICFRE) is the administrator of the
programme.
Objectives of Green Credit programme:
• The green credit programme shall incentivise environmental positive actions through
market-based mechanism and generate green credit, which shall be tradable and made
available for trading on a domestic market platform.
• The green credit will arise from taking measures by a person of any environment activities.
• The green credit programme shall encourage industries, companies and other entities to
meet their existing obligations or other obligations under any law for the time being in
force, and encourage other persons and entities, to undertake voluntary environmental
measures by generating or buying green credit:
The Green Credit program encompasses measures which includes following eight key types
of activities aimed at enhancing environmental sustainability:
(i) tree plantation—to promote activities for increasing the green cover across the country;
(ii) water management—to promote water conservation, water harvesting and water use
efficiency or water savings, including treatment and reuse of wastewater;
(iii) sustainable agriculture—to promote natural and regenerative agricultural practices and
land restoration to improve productivity, soil health and nutritional value of food produced;
(iv) waste management—to promote circularity, sustainable and improved practices for waste
management, including collection, segregation, and environmentally sound management;
(v) air pollution reduction—to promote measures for reducing air pollution and other pollution
abatement activities;
(vi) mangrove conservation and restoration—to promote measures for conservation and
restoration of mangroves;
(vii) ecomark label development—to encourage manufacturers to obtain ecomark label for their
goods and services;
(viii) sustainable building and infrastructure—to encourage the construction of sustainable
buildings and other infrastructure using environment friendly technologies and materials
Important highlights of The Green Credit Rules, 2023:
• Green Credit” means a singular unit of an incentive provided for a specified activity,
delivering a positive impact on the environment
• A person or entity desirous of obtaining green credit shall register the activity with the
Administrator for any activity referred above.
• An application for registration shall be made to the Administrator electronically through
a website established by the Central Government for that purpose.
• On receipt of the application, the Administrator (ICFRE) shall cause the activity to be
verified by a designated agency.
• The designated agency shall, after making such verification and inquiry as it may deem
necessary, in accordance with the guideline made in this behalf, submit a report to the
Administrator verifying the activities undertaken by the applicant.
• On receipt of the report verifying the activities undertaken by the applicant, the
Administrator shall grant the applicant a certificate of green credit.
• The methodology for evaluation and verification of the activities undertaken for the
purpose of calculation of green credit shall be such as may be determined by the
Administrator.
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• The Administrator shall seek approval of the Central Government for guidelines and
methodologies.
• A Steering Committee to be constituted by the Central Government shall be responsible
for the monitoring of the implementation of the Green Credit programme under these
rules.
o The Steering Committee shall comprise of representatives from the Ministries or
Departments, experts from the field of environment, industry associations and
other relevant stakeholders as the Central Government may consider appropriate
• The Central Government, based on the recommendations of the Administrator, may
constitute Technical Committees for each activity which shall assist the Administrator
in implementation of the Green Credit programme under these rules.
o Each Technical Committee shall comprise of members from the Ministries and
Departments, organisations and experts having the knowledge and experience in
the field related to the activity.
• Green Credit Registry:
• The Administrator or designated agency shall establish and maintain a Green Credit
Registry for the registration and issuance of each Green Credit.
• The Registry shall be an electronic database, which, inter alia, shall contain common
data elements relevant to the registration and issuance of green credit.
• The Registry shall discharge the following functions, namely:
(a) registration of activities and issuance of green credit;
(b) ensure accurate accounting of the issuance of green credit;
(c) maintain secure database with all required and essential security protocols;
(d) any other function assigned to it by the Administrator
• Trading platform:
(1) The Administrator shall establish and maintain a trading platform with the approval of
the Central Government.
(2) The trading platform shall perform functions regarding the trading of green credit, in
accordance with the guidelines made by the Administrator with the approval of the Central
Government.
• The activities of the Administrator, designated agency, Registry, trading platform and
knowledge and data platform shall be audited within a period of one year at the end of
every third financial year by independent auditors to be appointed by the Central
Government on the recommendation of the Steering Committee.
• The Administrator shall submit an action taken report on the audit report to the Central
Government within a period of six months from the date of the receipt of the audit
report.
ECOMARK SCHEME by Ministry of Environment, Forest and Climate Change under
Environment (Protection) Act, 1986
The Central Pollution Control Board administers the Ecomark Scheme in partnership with Bureau
of Indian Standards (BIS), which is the national body for standards and certification.
Ecomark Scheme inter-alia provided a tool to the consumers to pursue sustainable consumption
patterns as well as to the industry to implement environment-friendly processes or production
methods.
Introduction –
• The Ecomark Certification Rules (hereinafter referred to as ‘the Ecomark Rules’) is for
labelling of products which will have lesser adverse impacts on the environment, with the
objective to encourage the consumers to adopt such products as well as the manufacturers
for transitioning to production of Ecomark certified products for promoting sustainability
• The Ecomark Rules will promote environmentally friendly products and ensure
environmental performance of such products w.r.t. resource consumption and
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environmental impacts, in particular the impact on climate change, the impact on nature
and biodiversity, energy consumption, generation of waste, emissions to all environmental
media, pollution through physical effects and use and release of hazardous substances
• The Ecomark Rules will provide labelling to products that meet approved environmental
criteria.
Objectives –
(1) The Ecomark Rules are intended to encourage the demand for environmental friendly products
that cause lesser adverse impacts on the environment thereby supporting the principles of ‘LiFE
(Lifestyle for Environment)’, promoting resource efficiency & circular economy and preventing
misleading information on environmental aspects of products.
(2) The overall objectives of the Ecomark Rules are as follows:-

a. build consumer awareness on environmental issues and of the implications of their choices,
thereby generating a change towards more environmental friendly behaviour and consumption
patterns;
b. encourage manufacturers for transitioning to production of Ecomark certified products;
c. prevent misleading and deceptive information with respect to fraudulent use of Ecomark label.
Important definitions:
• Ecomark Certificate’ means a certificate issued under the Ecomark Rules by the
Administrator authorising a person or a body of persons to mark its product with the
Ecomark;
• ‘Designated Ecomark Verifier’ means an agency/person designated to carry out verification
of the product against set criteria;
• ‘Ecomark Certificate Holder’ means a business operator authorized by an Ecomark
Administrator to use Ecomark label;
• ‘Extended Producer Responsibility (EPR)’ means an environmental strategy in which a
producer’s responsibility for a product is extended to the post-consumer stage of a product’s
life cycle especially for recycling, and disposal of their products once those products are
designated as no longer useful by consumers.
• Criteria for Ecomark –

(1) Environmental criteria for each product /product category under Ecomark Rules shall
be notified by the Central Government. The criteria shall be for broad environmental levels
and aspects, with specific criteria at the product level.
(2) Certification of Standards Body (national or international) for quality and safety, or
mandate of Quality Control Orders shall be pre-requisite for Ecomark.
Products will be examined in terms environmental impacts which include, but not limited
to the following:
i. That they have substantially less potential for pollution, environmental impact, minimize or
eliminate generation of waste and environmental emissions, than other comparable products;
ii. That they are recyclable and/or made from recycled products where comparable products are
not;
iii. That they make significant contribution to saving non-renewable resources, including non-
renewable energy sources and natural resources, compared to comparable products;
iv. That the product contributes to reduction in respect of such product primary criteria, which
have adverse impacts on the environment, that are specifically set for each of the product/product
categories;
Product primary criteria shall inter-alia include, but not limited to the following –

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The Central Government will administer the Ecomark Rules with an objective to enhance the
efforts for protecting and conserving the environment in the country. The governance of the
Ecomark Rules for its effective implementation shall vest in the Steering Committee. The
Steering Committee will comprise representatives from the concerned Ministries/Departments,
domain experts, representatives from industry associations, consumer groups and other relevant
stakeholders.
The Central Pollution Control Board shall be the Administrator of the Ecomark Rules and shall
be responsible for implementation of the Ecomark Rules.
The Administrator may constitute Technical Committees comprising of members having

requisite knowledge from the specified categories, representatives from concerned
Ministries/Departments, subject matter experts, representatives from industry associations and
other stakeholders;
Ecomark Portal: This Portal would function under the supervision of the Administrator
• Producers/Exporters/Importers of Ecomark/other recognized domestic or international
voluntary ecolabel products or mutually recognized international ecolabel products; to be
registered on the centralized online Ecomark Portal. No entity shall carry out any business
without registration
Annual implementation report (for the period 1st April to 31st March) providing information
about the compliance of provisions of this notification shall be submitted by all registered entities,
by 30th June of the next financial year, to the Administrator.
The Administrator by itself or through Designated Ecomark verifiers shall verify compliance
with ecolabelling criteria for the award/renewal of certificate to products under the Ecomark
Rules. Designated Ecomark Verifiers shall be accredited entities.
Market surveillance shall inter-alia include picking samples from market, keeping an eye on
misuse of Ecomark, raiding suspected places etc. It shall be different from the activities to be
undertaken by Designated Ecomark verifiers.
• The Administrator shall by itself or through its empanelled third-party market surveillance
agencies, evaluate that the product for compliance according to the certification, on a
regular basis.
• Market surveillance third party agencies shall file annual returns in the prescribed form on
the Ecomark Portal on or before 31st May of the succeeding year, to which the return
relates.

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The State Pollution Control Board (SPCB)/ Pollution Control Committee (PCC) shall create
awareness about the Ecomark Rules through media, publications, advertisements, posters or by
such other means of communication with the support of Local Bodies;
The Central Government on recommendation of the Steering Committee may incentivize

Ecomark through any program related to protection and conservation of environment.
Implementation Committee: A Committee shall be constituted by the Central Government under

chairpersonship of Chairman, Central Pollution Control Board to recommend measures to Steering
Committee for effective implementation of the Ecomark Rules.
• The Committee shall comprise of representatives of the concerned Ministries/Departments,
representatives of industry associations and other relevant stakeholders. The Chairperson
of the Committee may co-opt any stakeholder/expert to this Committee;
Carbon Credit Trading Scheme, 2023 by Ministry of Power:

• India’s Carbon Credit Trading Scheme, 2023 (CCTS 2023) was notified by the Government
of India on 28 June 2023 under the Energy Conservation Act, 2001, to develop the country’s
first-ever domestic carbon market. The notification underlines the necessary framework and
the roles of diverse stakeholders for the development and functioning of the Indian Carbon
Market (ICM). The market will be driven by setting Greenhouse Gas (GHG) emission
intensity reduction targets in line with India’s Nationally Determined Contributions (NDC)
for selected entities to be obligated under CCTS 2023.
• The CCTS 2023 entails the formation of a National Steering Committee or Indian Carbon
Market (NSCICM) for the governance and direct oversight of the ICM. The committee will be
chaired by the Secretary; Ministry of Power (MoP); and co-chaired by the Secretary, Ministry
of Environment, Forests and Climate Change (MoEF&CC).
• The Bureau of Energy Efficiency (BEE) will be the administrator for the ICM and will be
responsible for the development of the GHG emissions trajectory and the targets for the
entities to be obligated under the notification.
• The Grid Controller of India Limited will be the designated agency for the maintenance
of the ICM Registry and will register the obligated entities and maintain the record of the
transactions among the obligated entities, among other functions.
• The Central Electricity Regulatory Commission (CERC) will be the regulator for the
trading of carbon credit certificates. They will safeguard the interests of the buyers and the
sellers, decide on the frequency of trading, and take action to prevent fraud or mistrust.
The CERC will register the power exchanges to trade the carbon credit certificates and
decide on and notify the rules of trading periodically.
• carbon credit” means a value assigned to a reduction or removal or avoidance of
greenhouse gas emissions achieved and is equivalent to one ton of carbon dioxide equivalent
(tCO2e);
• “greenhouse gases” means those gaseous constituents of the atmosphere, both natural
and anthropogenic, that absorb and re-emit infrared radiation and the expression
greenhouse gases include, but not limited to, carbon dioxide (CO2), methane (CH4), nitrous
oxide (N2O), hydrochlorofluorocarbons (HCFCs), hydrofluorocarbons (HFCs),
perfluorocarbons (PFCs), and sulfur hexafluoride (SF6)
• “Indian carbon market framework” (ICMF) means a national framework established with
an objective to reduce or remove or avoid the greenhouse gases emissions from the Indian
economy by pricing the greenhouse gases emission through trading of the carbon credit
certificates;
PARIVESH

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PARIVESH is a web based, role-based workflow application which has been developed for
online submission and monitoring of the proposals submitted by the proponents for seeking
Environment, Forest, Wildlife and CRZ Clearances from Central, State and district level
authorities. It automates the entire tracking of proposals which includes online submission
of a new proposal, editing/updating the details of proposals and displays status of the
proposals at each stage of the workflow.
To enhance user experience on PARIVESH with modern day web application, Ministry
has expanded the scope of existing PARIVESH (2.0) leveraging on emerging technology
such as GIS, Advance Data Analytics, etc. for providing faster decisions on Green Clearances
and robust compliance monitoring by end-to-end online appraisal and grant of clearances.
An upgraded version of existing PARIVESH is supplemented with unique modules (Know
Your Approval, Know Your Customer, Decision Support System etc).
Major modules in PARIVESH 2.0 viz: end to end online processing of Category A and B
environmental clearance proposals was developed and rolled out at Central and STATE-level,
respectively. In addition, all major functionalities of other major clearances (FC/WL&CRZ)
have been developed and rolled out. In CRZ clearance, all nine State Coastal Zonal
Management Authority were onboarded, for the first time, on PARIVESH 2.0 for online
submission and processing of applications. Furthermore, PARIVESH 2.0 is also integrated
with Gatishakti and National Single window portal.
From July 1, 2022, India banned single-use plastic items that have low utility but are frequently
littered around, such as plastic straws. The aim of the ban is to curb plastic pollution, since single-
use plastic harms terrestrial and aquatic ecosystems.
Sovereign Green Bond Framework by Department of Economic Affairs, Ministry of finance
Thematic bonds are fixed-income securities issued in capital markets to raise financing for
projects and activities related to a specific theme, such as climate change, education, housing,
ocean and marine conservation, and the sustainable development goals. Green bonds are a kind
of thematic bonds, the other categories being social bonds, sustainability bonds and
sustainability linked bonds.
A green bond is a debt instrument with which capital is being raised to fund ‘green’
projects, which typically include those relating to renewable energy, clean transportation,
sustainable water management etc
The first green bond was issued by the World Bank in 2008
Background:
India’s commitment to the preservation of the environment is enshrined in Article 48-A of the
constitution.
Over the years, India has taken steps both at national and sub-national levels to balance
environmental sustainability with economic growth.
Initiatives such as the Namami Gange Mission, plastic waste management, National Clean
Air Programme are a few examples of these.
As a populous, tropical developing country, India faces a bigger challenge in coping with the
consequences of climate change than most other countries. Climate Change is a global
phenomenon but with local consequences.
Realizing this, the National Action Plan on Climate Change (NAPCC) was launched in 2008
with eight National Missions.
The NAPCC aims at fulfilling developmental objectives with a focus, inter alia, on reducing
emission intensity of the economy, improving energy efficiency, increasing the forest cover and
developing sustainable habitat standards.
The National Adaptation Fund on Climate Change (NAFCC) was launched in 2015 with an
objective to enhance the adaptive capacity of the most vulnerable sections of the population and
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ecosystems focusing on the climate-sensitive sectors such as agriculture, water, forestry and the
coastal and Himalayan ecosystem.
India adopted an ambitious Nationally Determined Contribution (NDC) under the Paris Agreement
on a ‘best effort basis’ keeping its developmental imperatives in mind.
India’s third biennial update report submitted to the UNFCCC in 2021 reports a reduction in
emission intensity between 2005 to 2016 to be 24 per cent. According to the Central Electricity
Authority, India’s share of non-fossil fuel sources in installed capacity of electricity generation
increased from 30.5 per cent in March 2015 to 40.2 per cent at the end of December 2021.
Further, the National Hydrogen Mission for generating hydrogen from green energy sources
which aims to use hydrogen blended with CNG as a transportation fuel and an industrial input
to refineries to lower carbon emission and improve air quality has also been announced.
At COP 26, India underlined the need to start the one-word movement 'LIFE' which means
'Lifestyle For Environment' urging for mindful and deliberate utilization instead of mindless and
destructive consumption of natural resources. The Hon’ble Prime Minister of India in Glasgow in
November 2021 further enhanced the ambition on addressing climate. These include five nectar
elements (Panchamrit) of India’s climate action
1. Reach 500GW non-fossil energy capacity by 2030

2. 50 per cent of its energy requirements from renewable energy by 2030
3. Reduction of total projected carbon emissions by one billion tonnes from
now to 2030
4. Reduction of the carbon intensity of the economy by 45 per cent by 2030,
over 2005 levels
5. Achieving the target of net zero emissions by 2070
India’s updated NDC will be implemented over the period 2021-2030 through programs and
schemes of relevant Ministries/departments and with due support from States and Union
Territories
The Net Zero target by 2030 by Indian Railways alone will lead to a reduction of emissions by 60
million tonnes annually. Similarly, India’s massive LED bulb campaign is reducing emissions by
40 million tonnes annually.
In keeping with the ambition to significantly reduce the carbon intensity of the economy,
the Union Budget 2022-23 announced the issue of Sovereign Green Bonds:
‘As a part of the government’s overall market borrowings in 2022-23, sovereign Green Bonds will be
issued for mobilizing resources for green infrastructure. The proceeds will be deployed in public
sector projects which help in reducing the carbon intensity of the economy.’
Sovereign Green Bond Framework:

Department of Economic Affairs, Ministry of Finance reserves the right to modify this Framework
according to international best practices or in accordance with the Government of India’s
international commitments and environmental priorities.
The framework is designed to comply with four components and key recommendations of the
International Capital Market Association (ICMA) Green Bond Principles (2021)
The four core components as outlined by ICMA green bond principles are:
i. Use of proceeds;
ii. Project evaluation and selection;
iii. Management of proceeds; and
iv. Reporting.

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A ‘green project’ classification is based on the following principles:
• Encourages energy efficiency in resource utilization
• Reduces carbon emissions and greenhouse gases
• Promotes climate resilience and/or adaptation
• Values and improves natural ecosystems and biodiversity especially in accordance with
SDG principles
Government of India will use the proceeds raised from Sovereign Green Bonds (SGrB) to
finance and/or refinance expenditure (in parts or whole) for eligible green projects in 9
categories:
1. Renewable Energy
2. Energy Efficiency
3. Clean Transportation
4. Climate Change Adaptation
5. Sustainable Water and Waste Management
6. Pollution Prevention and Control
7. Green Buildings
8. Sustainable Management of Living Natural Resources and Land Use
9. Terrestrial and Aquatic Biodiversity Conservation
All eligible Green Expenditures will include public expenditure undertaken by the Government in
the form of investment, subsidies, grants-in-aid, or tax foregone (or a combination of all or some
of these) or select operational expenditures, R&D expenditures in public sector projects that help
in reducing the carbon intensity of the economy and enable country to meet its Sustainable
Development Goals (SDGs).
Equity is allowed only in the sole case of metro projects under ‘Clean Transportation’
category, as all metro projects in the country access the public share of their total funding through
equity investments. Metro projects are implemented through Special Purpose Vehicles (SPVs)
meant exclusively for metro transportation projects, and no other project related funding are
permissible.
The eligible expenditures are limited to government expenditures that occurred maximum 12
months prior to issuance.
It will be endeavoured that all the proceeds get allocated to projects within 24 months following
issuance.
Any expenditure already financed and/or refinanced by dedicated source/ other Government
agency will be excluded to ensure suitable oversight and avoid double-counting.
Excluded Projects:
• Projects involving new or existing extraction, production and distribution of fossil fuels, including
improvements and upgrades; or where the core energy source is fossil-fuel based
• Nuclear power generation
• Direct waste incineration
• Alcohol, weapons, tobacco, gaming, or palm oil industries
• Renewable energy projects generating energy from biomass using feedstock originating from
protected areas
• Landfill projects
• Hydropower plants larger than 25 MW
Expenditures directly related to fossil fuel are excluded. However, investments/expenditures
aimed at a relatively cleaner Compressed Natural Gas (CNG) is allowed as an ‘eligible expenditure’
when used in public transportation projects only. Subsidy/incentive for private transportation
using CNG is neither envisaged nor included

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Green Finance Working Committee” (GFWC): Ministry of Finance has constituted a “Green
Finance Working Committee” (GFWC) with representation from relevant line ministries and
chaired by Chief Economic Adviser, Government of India. GFWC will meet at least twice a year to
support Ministry of Finance with selection and evaluation of projects and other relevant work
related to the Framework. Initial evaluation of the project will be the responsibility of the concerned
Ministry/Department in consultation with experts.
GFWC has been established with clear lines of authority to oversee and validate key decisions on
issuance of Sovereign green bonds under the Chairmanship of Chief Economic Adviser,
Government of India and members from implementing departments, Ministry of Environment,
Forests and Climate Change (MoEFCC), Niti Aayog (India’s premier public policy think-tank),
Budget Division of Department of Economic Affairs (DEA) and Infrastructure Finance Secretariat,
DEA.
For every successive year, GFWC will meet to identify a fresh set of eligible expenditures in line
with the Framework in consultation with Line Ministries.
Ministries that are currently not part of GFWC will also be consulted for generating awareness
towards sustainability and green projects within their purview, to identify new projects
Principles of selection of green projects by GFWC:

• Eligible green expenditures are mapped to the environmental objectives of ICMA Green
Bond principles, UN Sustainable Development Goals (SDGs)
• Eligible Green Expenditures must have alignment with the objectives of National
Conservation Strategy and Policy Statement on Environment and Development, 1992;
National Forest Policy, 1988; Policy Statement on Abatement of Pollution, 1992; and the
National Environment Policy, 2006 Additionally all such expenditures will adhere to
minimum social safeguards as accorded by the Constitution as well as the laws of the
country (such as The Right to Fair Compensation and Transparency in Land Acquisition,
Rehabilitation and Resettlement Act, 2013)
Management of Proceeds: The proceeds will be deposited to the Consolidated Fund of India (CFI)
in line with the regular treasury policy, and then funds from the CFI will be made available for
eligible green projects.
For the purposes of ensuring that the proceeds’ allocation and accounting is transparent, clear
and beyond doubt, a separate account will be created and maintained by the Ministry of Finance
Government of India.
Public Debt Management Cell (PDMC) will keep a track of proceeds within the existing guidelines
regarding debt management, and monitor the allocation of funds towards eligible green
expenditures.
Unallocated proceeds, if any, will be carried forward to successive years for investment in eligible
green projects only.
It will be endeavoured that all proceeds are allocated within a span of two years from the date of
issuance.
Ministry of Finance will set up a dedicated information system with a view to maintaining a
complete Green Register including the details of the green bond issuance, proceeds generated,
allocations made to eligible projects including information about the eligible projects (summary of
the project details, allocation of proceeds to each project, expected climate impact and the extent
of unallocated proceeds, both aggregate as well as project-wise).

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An amount at least equal to the net proceeds from the completed issuances under this Framework
will be allocated to the financing and/or refinancing of expenditures that meet the eligibility
criteria.
Allocation and utilization of Green Bonds is also under the purview of audit by Comptroller and
Auditor General (CAG)
External Review: This Green Bond Framework has been reviewed by CICERO which has issued
an independent Second Party Opinion. It has approved the alignment of the Sovereign Green Bond
Framework of the Government of India with the ICMA Green Bond Principles.
It rated India’s green bond framework as ‘medium green’ with ‘good’ governance. The framework
lists nine broad categories of eligible green projects to fulfil various environmental objectives
such as reducing greenhouse gas emissions, encouraging energy efficiency, promoting climate
adaptations and improving natural ecosystems.
Centre for International Climate Research (CICERO), Norway is an interdisciplinary climate

research institute established in 1990. CICERO is a world-leading institute which delivers high-
quality research that helps society to respond to the climate challenge and strengthen
international climate cooperation
Framework for acceptance of Green Deposits:
• All Scheduled Commercial Banks including Small Finance Banks

(excluding Regional Rural Banks, Local Area Banks and Payments Banks)
All Deposit taking Non-Banking Finance Companies (NBFCs) including Housing Finance
Companies (HFCs)
• To encourage regulated entities (REs) to offer green deposits to customers, protect
interest of the depositors, aid customers to achieve their sustainability agenda, address
greenwashing concerns and help augment the flow of credit to green
activities/projects.
• green deposit” means an interest-bearing deposit, received by the RE for a fixed period
and the proceeds of which are earmarked for being allocated towards green finance;
• green finance” means lending to and/or investing in the activities/projects meeting the
requirements prescribed of these guidelines that contributes to climate risk mitigation,
climate adaptation and resilience, and other climate-related or environmental objectives -
including biodiversity management and nature-based solutions;
• greenwashing” means the practice of marketing products/services as green, when in
fact they do not meet requirements to be defined as green activities/projects.
• REs shall issue green deposits as cumulative/non-cumulative deposits. On maturity,
the green deposits would be renewed or withdrawn at the option of the depositor. The
green deposits shall be denominated in Indian Rupees only.
• REs shall put in place a comprehensive Board-approved policy on green deposits
laying down therein, all aspects in detail for the issuance and allocation of green
deposits. A copy of the above policy on ‘Green Deposits’ shall be made available on the
website of the RE.
• The eligible green activities/project:
1. Renewable Energy
2. Energy Efficiency
3. Clean Transportation
4. Climate Change Adaptation

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5. Sustainable Water and Waste Management
6. Pollution Prevention and Control
7. Green Buildings
8. Sustainable Management of Living Natural Resources and Land Use
9. Terrestrial and Aquatic Biodiversity Conservation
Exclusions:
• Projects involving new or existing extraction, production and distribution of fossil

fuels, including improvements and upgrades; or where the core energy source is
fossil-fuel based
• Nuclear power generation.
• Direct waste incineration.
• Alcohol, weapons, tobacco, gaming, or palm oil industries.
• Renewable energy projects generating energy from biomass using feedstock
originating from protected areas.
• Landfill projects.
• Hydropower plants larger than 25 MW
National Green Hydrogen Mission

Implemented by Ministry of New and Renewable Energy
India has set its sight on becoming energy independent by 2047 and achieving Net Zero by 2070.
To achieve this target, increasing renewable energy use across all economic spheres is central to
India's Energy Transition. Green Hydrogen is considered a promising alternative for enabling this
transition. Hydrogen can be utilized for long-duration storage of renewable energy, replacement of
fossil fuels in industry, clean transportation, and potentially also for decentralized power
generation, aviation, and marine transport.
Energy use has doubled in the last 20 years and is likely to grow by at least another 25% by 2030.
India currently imports over 40% of its primary energy requirements, worth over USD 90 billion
every year
The National Green Hydrogen Mission was approved by the Union Cabinet on 4 January
2023 with an outlay of ₹ 19,744 crore from FY 2023-24 to FY 2029-30, with the intended
objectives of:
• Making India a leading producer and supplier of Green Hydrogen in the world
• Creation of export opportunities for Green Hydrogen and its derivatives
• Reduction in dependence on imported fossil fuels and feedstock
• Development of indigenous manufacturing capabilities
• Attracting investment and business opportunities for the industry
• Creating opportunities for employment and economic development
• Supporting R&D projects
The initial outlay for the Mission will be 19,744 crore, including an outlay of 17,490 crore for the
SIGHT programme, 1,466 crore for pilot projects, 400 crore for R&D, and 388 crore towards other
Mission components
The following components have been announced as part of the Mission:
• Facilitating demand creation through exports and domestic utilization;
• Strategic Interventions for Green Hydrogen Transition (SIGHT) programme, which includes
incentives for manufacturing of electrolysers and production of green hydrogen;

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• Pilot Projects for steel, mobility, shipping etc.;
• Development of Green Hydrogen Hubs;
• Support for infrastructure development;
• Establishing a robust framework of regulations and standards;
• Research & Development programme;
• Skill development programme; and
• Public awareness and outreach programme.
MISSION OUTCOMES
The mission outcomes projected by 2030 are:
• Development of green hydrogen production capacity of at least 5 MMT (Million
Metric Tonne) per annum with an associated renewable energy capacity addition of
about 125 GW in the country
• Over Rs. Eight lakh crore in total investments
• Creation of over Six lakh jobs
• Cumulative reduction in fossil fuel imports over Rs. One lakh crore
• Abatement of nearly 50 MMT of annual greenhouse gas emissions
TYPES OF HYDROGEN BASED ON EXTRACTION METHODS

Depending on the nature of the method of its extraction, hydrogen is categorised into three
categories, namely, Grey, Blue and Green.
• Grey Hydrogen: It is produced via coal or lignite gasification (black or brown), or via
a process called steam methane reformation (SMR) of natural gas or methane (grey).
These tend to be mostly carbon-intensive processes.
• Blue Hydrogen: It is produced via natural gas or coal gasification combined with
carbon capture storage (CCS) or carbon capture use (CCU) technologies to reduce
carbon emissions.
• Green Hydrogen: It is produced using electrolysis of water with electricity generated
by renewable energy. The carbon intensity ultimately depends on the carbon
neutrality of the source of electricity (i.e., the more renewable energy there is in the
electricity fuel mix, the "greener" the hydrogen produced).
Ministry of New and Renewable Energy (MNRE) will be responsible for overall coordination and
implementation of the Mission. The Mission Secretariat, headquartered in MNRE, will formulate
schemes and programmes for financial incentives to support production, utilization and export of
Green Hydrogen and its derivatives
Ministry of Power (MoP) will implement policies and regulations to ensure delivery of renewable
energy for Green Hydrogen production at least possible costs including through development of
the necessary power system infrastructure.
Ministry of Petroleum and Natural Gas (MoPNG) will facilitate uptake of Green Hydrogen in
refneries and city gas distribution through both Public Sector Entities and private sector.
MISSION GOVERNANCE FRAMEWORK: An Empowered Group (EG) chaired by the Cabinet

Secretary and comprising Principal Scientific Adviser to the Government of India, CEO, NITI
Aayog, and Secretaries of Ministries of New and Renewable Energy, Petroleum and Natural Gas,
Power, Road Transport and Highways, Steel, Heavy Industries, Ports, Shipping and Waterways,
Skill Development and Entrepreneurship; and Departments of Fertilizers, Science and Technology,

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Scientific and Industrial Research, Promotion of Industry and Internal Trade; and experts from
the industry will be set up. The EG will oversee the Mission activities, provide guidance,
continuously monitor progress, recommend policy interventions to be made in furtherance of
mission objectives
Mission LiFE is an India-led global mass movement to nudge individual and community action to
protect and preserve the environment. At the 26th session of the Conference of the Parties
(COP26) to the United Nations Framework Convention on Climate Change (UNFCCC) held in
Glasgow, United Kingdom, India shared the mantra of LiFE - Lifestyle for Environment - to
combat climate change. India is the first country to include LiFE in its Nationally Determined
Contributions (NDCs).
It is estimated that global economy could lose up to 18% of GDP by 2050 without urgent action by
one and all.
The average carbon footprint of a person in India is 0.56 tonnes per year, compared to the global
average of 4 tonnes. (India’s per capita carbon footprint is 60 per cent lower than the global
average)
According to the United Nations Environment Programme (UNEP), if one billion people out of
the global population of eight billion adopt environment-friendly behaviours in their daily
lives, global carbon emissions could drop by approximately 20 per cent.
Objectives of Mission LiFE:
• Mission LiFE seeks to translate the vision of LiFE into measurable impact.
• Mission LiFE is designed with the objective to mobilise at least one billion Indians and other
global citizens to take individual and collective action for protecting and preserving the
environment in the period 2022 to 2027.
• Within India, at least 80% of all villages and urban local bodies are aimed to become
environment-friendly by 2028.
• It aims to nudge individuals and communities to practise a lifestyle that is synchronous
with nature and does not harm it.
• Those who practice such a lifestyle are recognised as ‘Pro Planet People (P3)’.
As a global programme, Mission LiFE envisions three core shifts in our collective approach
towards sustainability. These are:
• Change in Demand (Phase I): Nudging individuals across the world to practice
simple yet effective environment-friendly actions in their daily lives
• Change in Supply (Phase II): Changes in large-scale individual demand are expected
to gradually nudge industries and markets to respond and tailor supply and
procurement as per the revised demands
• Change in Policy (Phase III): By influencing the demand and supply dynamics of
India and the world, the long-term vision of Mission LiFE is to trigger shifts in large-
scale industrial and government policies that can support both sustainable
consumption and production
The LiFE 21-Day Challenge is launched to enable Indians to take one simple environment-
friendly action per day for 21 days and eventually develop an environment-friendly
lifestyle.

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As a part of Mission LiFE, a comprehensive and non-exhaustive list of 75 individual LiFE actions
have been identified across 7 themes – save water, save energy, reduce waste, reduce e-waste,
reduce single-use plastics, adopt sustainable food systems, and adopt healthy lifestyles
The theme for this year’s World Environment Day is “Solutions to Plastic Pollution”, a topic
which aligns with one of the 7 themes of Mission LiFE
27th COP: The Sharm El-Sheikh, Egypt
28TH COP: Dubai, United Arab Emirates (UAE).
Environmental Information, Awareness, Capacity Building and Livelihood Programme
(EIACP)
The Environmental Information, Awareness, Capacity Building and Livelihood Programme (EIACP)
is one of the Central Sector sub-scheme being implemented in alignment with Mission LiFE. As a
part of the current mass mobilization campaign, 60 EIACP Centres are actively engaged in
promoting awareness about sustainable actions that individuals can undertake.
Environment Education Programme (EEP): The Environmental Education Programme (EEP) is
a Central Sector sub-scheme being implemented for imparting non-formal environment education
through inter alia initiatives for strengthening Eco-club activities in schools and colleges. Sharing
the common goal of promoting sustainable lifestyle, EEP is implemented in full alignment with
Mission LiFE, through State/UT-level Implementing Agencies.
MISHTI: “Mangrove Initiative for Shoreline Habitats and Tangible Incomes” was announced
in the Union Budget 2023-24 to promote and conserve mangroves. Mangroves are unique, natural
eco-system having very high biological productivity and carbon sequestration potential, besides
working as a bio-shield.
MISHTI Programme was launched today with active participation of coastal States and UTs.
The Programme will cover approximately 540 sq km area across nine (9) coastal States and four
(4) UTs in five years (2023-2028).
It will create around 22.8 million man-days with estimated carbon sink of 4.5 million tons of
Carbon. It will also create potential areas for nature tourism and livelihood potential for local
communities.
Mangrove plantation drive at more than 75 mangrove sites was also organized.
This drive witnessed the participations through the plantation activities by public representatives,
local people, village communities, educational institutes and other stakeholders.
Objective:
To take up mangrove reforestation and afforestation along the coastal districts of India by adopting
best practices that already exist in India as well as from other countries including Indonesia.
To develop mangrove associated ecotourism initiatives and livelihood generation in coastal states.
India State of Forest Report (ISFR)
India is amongst one of the few countries having a robust scientific system for periodic assessment
of Forest Cover, Forest Inventory and inventory of Trees Outside Forest. Forest Survey of India
(FSI), an organization of Ministry of Environment, Forest & Climate Change carries out these
assessments and publishes the findings in its biennial report as 'India State of Forest Report
(ISFR)'.
The first State of the Forest Report was published in 1987 and the current report (ISFR 2021)
is 17th in the series. The ISFR provides valuable inputs for planning, policy formulation and
evidence-based decision making both at National and State level.

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The Forest Cover as reported in ISFR includes all patches of land with a tree canopy density of
more than 10% and with area having more than 1 ha, irrespective of land use, ownership and
species of trees.
It is assessed by a wall-to-wall mapping exercise using remote sensing followed by extensive
ground truthing. Results of the nation-wide Forest Cover Mapping exercise are presented on
1:50,000 scale in three canopy density classes viz
• Very Dense Forest (canopy density > 70%),
• Moderately Dense Forest (canopy density 40-70%) and
• Open Forest (canopy density 10-40%)
The tree cover is assessed following a methodology involving remote sensing-based stratification
and observations on sample plots laid in the strata as part of the National Forest Inventory.
Tree cover includes all patches of trees less than 1 ha.
Key Findings of ISFR 2021
• The total forest cover of the country is 7,13,789 sq km which is 21.71% of the
geographical area of the country.
• The tree cover of the country is estimated as 95,748 sq km which is 2.91% of the
geographical area.
• Thus, the total Forest and Tree cover of the country is 8,09,537 sq km which is 24.62%
of the geographical area of the country.
• The current assessment shows an increase of 1,540 sq km (0.22%) of forest cover, 721
sq km (0.76%) of tree cover and 2,261 sq km (0.28%) of forest and tree cover put
together, at the national level as compared to the previous assessment i.e. ISFR 2019.
• The top five States in terms of increase in forest cover are
o Andhra Pradesh (647 sq km),
o Telangana (632 sq km),
o Odisha (537 sq km),
o Karnataka (155 sq km) and
o Jharkhand (110 sq km).
• Forest cover in the hill districts of the country is 2,83,104 sq km, which is 40.17% of the
total geographical area of these districts. The current assessment shows a decrease of 902
sq km (0.32%) in 140 hill districts of the country.
• The total forest cover in the tribal districts is 4,22,296 sq km, which is 37.53% of the
geographical area of these districts. The current assessment shows a decrease of 655 sq km
of forest cover inside the RFA/GW in the tribal districts and an increase of 600 sq km
outside.

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• Total forest cover in the North Eastern region is 1,69,521 sq km, which is 64.66% of
its geographical area. The current assessment shows a decrease of forest cover to the extent
of 1,020 sq km (0.60%) in the region.
• Mangrove cover in the country has increased by 17 sq km (0.34%) as compared to the

previous assessment.
• The total growing stock of wood in the country is estimated as 6,167.50 million cum
comprising 4388.15 million cum inside forest areas and 1779.35 million cum outside
recorded forest areas (TOF). The average growing stock per hectare in forest has been
estimated as 56.60 cum.
• Total bamboo bearing area of the country is estimated as 1,49,443 sq km. There is a
decrease of 10,594 sq km in bamboo bearing area as compared to the estimate of ISFR
2019.
• In the present assessment, total carbon stock in forest is estimated as 7,204.0 million
tonnes. There is an increase of 79.4 million tonnes in the carbon stock of the country as
compared to the last assessment of 2019. The annual increase is 39.7 million tonnes, which
is 145.6 million tonnes CO2 eq.
• Soil Organic Carbon (SOC) represents the largest pool of carbon stock in forests, which
has been estimated as 4,010.2 million tonnes. The SOC contributes 56% to the total forest
carbon stock of the country.
• Fire prone forest areas of different severity classes have been mapped in the grids of 5km
x 5km based on the frequency of forest fires. The analysis reveals that 22.27% of the forest
cover of the country is highly to extremely fire prone.

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INDUSTRIAL POLICY
(Q1-3) Paragraph based on Industrial Policy:

Q.1 This will be the third policy after the ones released in 1956 and 1991”
Ans: Industry 4.0
Q.2 By which department the referred policy will be released?

Ans: The Department for Promotion of Industry and Internal Trade (DPIIT), under the
Commerce and Industry ministry
Q.3 Which of the following is / are true about referred policy:

Ans: All of the above as objectives of industry 4.0 was given in multiple options
Q4. DIPP (The Department of Industrial Policy & Promotion) comes under which ministry-
Ministry of commerce and industry
Q5. DIPP Collaboration with which institution: World Bank
Q6. What are three measures related to disinvestment of Strategic sectors and non-
strategic sectors in Union Budget 2021-22. Discuss. (DESCRIPTIVE)
i. Rationale
ii. Impact

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What is Industry?
• Industry is a part of secondary sector of economy which is responsible for

processing of raw materials from primary sector into valuable goods.
INDUSTRY 1.0 INDUSTRY 2.0

Mechanization -industrialisation Electrification – industrialisation
through water and steam through electric energy
(18th century) (19th century )
INDUSTRY 3.0 INDUSTRY 4.0

Automation – use of IT systems and Digitilization – Digital tools
electronics like IoT, robotics ,AI ,etc.
(20th century) (20-21st century)
INDUSTRY 5.0
Personalization – Sustainability ,
renewable resources,etc
(21st century)
First Industrial Revolution: 1765 [Explained in 3rd lecture of Industrial Policy]

The first industrial revolution began in Britain in the late 18th century, with the
mechanisation of the textile industry. Tasks previously done laboriously by hand in
hundreds of weavers' cottages were brought together in a single cotton mill, and the factory
was born. It witnessed the emergence of mechanization, a process that replaced
agriculture with industry as the foundations of the economic structure of society. Mass
extraction of coal along with the invention of the steam engine created a new type of energy
that thrusted forward all processes.
Second Industrial Revolution: 1870

Nearly a century later at the end of the 19th century, new technological advancements
initiated the emergence of a new source of energy: electricity, gas and oil. As a result, the
development of the combustion engine set out to use these new resources to their full
potential. Methods of communication were also revolutionized with the invention of the
telegraph and the telephone and so were transportation methods with the emergence of
the automobile (Ford's mass production techniques) and the plane at the beginning of the
20th century.
Third Industrial Revolution: 1969

Nearly a century later, in the second half of the 20th century, a third industrial revolution
appeared with the introduction of electronics and information technology. For industry,

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this revolution gave rise to the era of high-level automation in production, thanks to two
major inventions: automatons (programmable logic controllers) and robots.
The first industrial revolution used water and steam to mechanize production, the second
used electric energy to create mass production and the third used electronics and
information technology to automate production. Today, a fourth industrial revolution is
underway which builds upon the third revolution and the digital revolution that has been
taking place since the middle of the last century. This fourth revolution with exponential
expansion is characterized by merging technology that blurs the lines between the
physical, digital and biological spheres to completely uproot industries all over the world.
The extent and depth of these changes are a sign of transformations to entire production,
management and governance systems.
Fourth Industrial Revolution (Industry 4.0): Smart Manufacturing
"Data is often referred to as the raw material of the twenty-first century."
With rapid development in the fields of information technology and hardware, the world is
about to witness a fourth industrial revolution i.e. Industry 4.0, which is rooted in a new
technological phenomenon - digitalization. This digitalization enables us to build a new
virtual world from which we can steer the physical world.
While Industry 3.0 focussed on the automation of single machines and processes, Industry
4.0 concentrates on the end-to-end digitisation of all physical assets and their integration
into digital ecosystems with value chain partners. Driven by the power of big data, high
computing capacity, artificial intelligence and analytics, Industry 4.0 aims to completely
digitise the manufacturing sector. Driven by the amalgamation of emerging technologies
like advanced robotics and cyber-physical systems, it is making it possible the meeting of
the real and virtual worlds.
Industry 4.0 is the next phase in bringing together conventional and modern technologies
in manufacturing to create "smart factories”. Such factories consist of machines (in the
entire production chain) that are digitally connected and can learn from the large amount
of data generated and then make autonomous decisions.
Industry 4.0: India’s New industrial policy: “Keeping in view Industry 4.0, a new
industrial policy will be announced shortly by Department for Promotion of Industry and
Internal Trade (DPIIT). The new policy will replace the industrial policy of 1991 which was
prepared in the backdrop of balance of payment crisis. This will be the third industrial
policy after the ones released in 1956 and 1991.
Industry 4.0 related Initiatives

SAMARTH Udyog Bharat 4.0
SAMARTH Udyog Bharat 4.0 is an Industry 4.0 initiative of Ministry of Heavy Industry &
Public Enterprises, Government of India under its scheme on Enhancement of
Competitiveness in Indian Capital Goods Sector.
Five centres of I4.0 having a unique identity for spreading awareness and branding
have been sanctioned under SAMARTH Udyog. It is emphasized that these centres would

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have resource sharing, common platform of industry 4.0 and network each other’s
resources so that the utilization of resources is maximised.
In Phase II of the Capital Goods Scheme, C4i4 Pune has been entrusted with the
responsibility of establishing 10 additional Industry 4.0 centers at various locations
across India.
• Center for Industry 4.0 (C4i4) Lab Pune

• IITD-AIA Foundation for Smart Manufacturing
• I4.0 India at IISc Factory R & D Platform
• Smart Manufacturing Demo & Development Cell at CMTI
• Industry 4.0 projects at DHI CoE in Advanced Manufacturing Technology, IIT
Kharagpur
Industrial Policy
The industrial policy means the procedures, principles, policies rules and regulations
which control the industrial undertaking of the country and pattern of industrialization.
It explains the approach of Government in context to the development of industrial sector.
In India the key objective of the economic policy is to “achieve self-reliance in all sectors
of the economy and to develop socialistic pattern of society”. The industrial policy in the
pre-reform period i.e. before 1991 put greater emphasis on the state intervention in the
field of industrial development.
The main objectives of the Industrial Policy of the Government are
• to maintain a sustained growth in productivity;
• to enhance gainful employment;
• to achieve optimal utilisation of human resources;
• to attain international competitiveness; and
• to transform India into a major partner and player in the global arena.
The first industrial policy was in 1948 that gave a basic framework to a mixed economy.
Second Industrial Policy in 1956 provided the whole regulatory framework for a public
sector oriented industrial development. Industrial Policy 1991 or the New Industrial
Policy made a total change in industrial regulation as well as the entire economic
management by bringing what we call the economic reforms.
Evolution of Industrial Policy in India
INDUSTRIAL POLICY RESOLUTION INDUSTRIAL POLICY RESOLUTION
1948 1956

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• State had monopoly in three fields - • It divided industries into three
Arms and ammunition, atomic categories:
energy and rail transport. 1. Schedule A: Monopoly of
• It introduced a form of institutional the State (Atomic energy)
network for the development of the 2. Schedule B: Mixed sector of
industry which is called the mixed Public and Private enterprise
economy model. (machine tools)
• The government was allowed to take 3. Schedule C: Industries for
an active role in industrialization Private Sector (Not listed in
and the private sector was allowed any schedule)
but under the direction and
regulation of the government. • It emphasized the mutual
• The policy introduced a threat of dependence of public and private
nationalization whereby the existing sectors.
industry in the private sector was • It called for reduction in regional
subject to a takeover by the inequalities and focused on growth
government after a performance of small-scale industries.
review • For example, it promoted transport
• It also accepted importance of small and power facilities in backward
and cottage industries for their regions under this policy.
contribution in production and • Similar to 1948 resolution, it aimed
employment generation at local to strengthen mixed economy
level. structure.
The Industrial Policy Resolution, 1956 was to be implemented through a system of

licensing and controls that was institutionalized by the Industries Development and
Regulation Act 1951, Monopolies and Restrictive Trade Practices 1969, and Foreign
Exchange Regulation Act 1973. Their features are mentioned below:
IDRA,1951 MRTP,1969 FERA,1973
Restrictive provisions: • It was enacted to • Purpose of this Act

prevent monopoly was to regulate
• Registration and and promote dealings in forex.
licensing of industrial competition among • Exports were not
undertakings industries. allowed as there
• Enquiry of industries • MRTP Commission were reluctance that
listed in the schedule was established and domestic availability
permission has to be will go down
Reformative Provisions taken for merger, • The dollar was
acquisition, heavily regulated
• Direct regulation by appointments, etc. • Foreign investment
the government was also controlled
• Establishment of under this act.
Central Advisory
Council for
cooperation from
workers.

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Industrial policy 1991 set out directions for industrialisation in an economy that began
its journey in liberalisation. It dealt with liberalising licensing and measures to encourage
foreign investments. A policy for public sector enterprises and the Monopolies and
Restrictive Trade Practices Act were introduced.
Elements of Industrial Policy, 1991: The Government decided to take series of initiatives
in key areas:
The important elements of NIP can be classified as follows:
1. Public sector de-reservation and privatization of public sector through dis-
investment;
2. Industrial Delicensing;
3. Amendments of Monopolies and Restrictive Trade Practices (MRTP) Act, 1969;
4. Liberalised Foreign Investment Policy;
5. Foreign Technology Agreements (FTA);
6. Dilution of protection to SSI and emphasis on competitiveness enhancement.
1. Public Sector De-Reservation and Privatization through Dis-Investment: Till 1991,
Public Sector was assigned a pre-eminent position in Indian Industry to enable it to
achieve “commanding heights of the economy” under the Industrial Policy Resolution
(IPR), 1956.
Need for De-Reservation
Serious problems observed in the Public Sector Enterprises include insufficient
growth in productivity, poor project management, over-manning, lack of continuous
technological upgradation, and inadequate attention to R&D and human resource
development. In addition, public enterprises have shown a very low rate of return on the
capital invested.
This has inhibited their ability to re-generate themselves in terms of new investments
as well as in technology development. The result is that many of the public enterprises
have become a burden rather than being an asset to the Government.
Accordingly, areas of strategic importance and core sectors were exclusively reserved for
public sector enterprises. Public enterprises were accorded preference even in areas where
private investments were possible.
De-reservation of public sector: Sectors that were earlier exclusively reserved for public
sector were reduced. However, pre-eminent place of public sector in 5 core areas like arms
and ammunition, atomic energy, mineral oils, rail transport and mining was continued.
As per Industrial Policy 1991, the priority areas for growth of public enterprises in
the future will be the following.
• Essential infrastructure goods and services.
• Exploration and exploitation of oil and mineral resources.

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• Technology development and building of manufacturing capabilities in areas which
are crucial in the long-term development of the economy and where private sector
investment is inadequate.
• Manufacture of products where strategic considerations predominate such as
defence equipment.
• At the same time the public sector will not be barred from entering areas not
specifically reserved for it.
Sectors exclusively reserved for Public Sector
1. Atomic Energy (Production, Separation or enrichment of special fissionable
materials and substances and operation of the facilities)
2. Railway operations other than construction, operation and maintenance of the
following:
(i) Suburban corridor projects through PPP, (ii) High speed train project,
(iii) dedicated freight lines, (iv) Rolling stock including train sets, and
locomotives/coaches manufacturing and maintenance facilities, (v)
Railway Electrification, (vi) Signalling systems, (vii) freight terminals, (viii)
Passenger terminals, (ix) infrastructure in industrial park pertaining to
railway line/sidings including electrified railway lines and connectivity to
main railway lines and (x) Mass Rapid Transport systems.
2. Industrial Delicensing: The removal of licensing requirements for industries, domestic

as well as foreign, commonly known as “de-licensing of industries” is another important
feature of NIP.
Till the 1990s, licensing was compulsory for almost every industry, which was not reserved
for the public sector. This licensing system was applicable to all industrial enterprises
having investment in fixed assets (which include land, buildings, plant & machinery)
above a certain limit. With progressive liberalization and deregulation of the economy,
industrial license is required in very few cases.
Industrial licenses are regulated under the Industries (Development and Regulation) Act
1951. Industrial undertakings to be located within 25 kms of the standard urban area
limit of 23 cities having a population of 1 million as per 1991 census require an industrial
license.
Industries subjected to compulsory Licensing in India
Industrial licensing has, therefore, been abolished for most of the industries and there
are only 4 industries at present related to security, strategic and environmental
concerns, where an industrial license is currently required:
• Electronic aerospace and defence equipment: All types.
• Industrial explosives including detonating fuses, safety fuses, gunpowder,
nitrocellulose and matches.
• Specified Hazardous chemicals i.e. (i) Hydrocyanic acid and its derivatives;
(ii) Phosgene and its derivatives and (iii) Isocyanates & Disocyanates of
hydrocarbon, not elsewhere specified (example Methyl Isocyanate).
• Cigars and cigarettes of tobacco and manufactured tobacco substitutes.

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3. Amendment of Monopolies and Restrictive Trade Practices (MRTP) Act, 1969: An
important objective of India’s earlier industrial policies was to prevent emergence of private
monopolies and concentration of economic power in a few individuals. Accordingly,
Monopolies and Restrictive Trade Practices (MRTP) Act, 1969 was enacted and MRTP
Commission was set up as a permanent body to periodically review industrial ownership,
advice the government to prevent concentration of economic power, investigate
monopolistic trade practices and inquire into restrictive trade practices, which are
prejudicial to public interest.
An MRTP firm was mainly defined in terms of asset size. An MRTP company had to obtain
prior approval of the government for setting up a new enterprise as well as for expansion.
However, MRTP Act was applicable only to private sector companies.
Since 1991 MRTP Act has been restructured and pre-entry restrictions have been removed
with regard to prior approval of the government for the establishment of a new
undertaking, expansion, amalgamation, merger, take over, and appointment of directors
of companies. The asset restriction and market share for defining an MRTP firm has been
done away with. MRTP Act is now applicable to both private and public sector enterprises
and financial institutions.
Today only restrictive trade practices of companies are monitored and controlled. The
MRTP act has been replaced by the Competition Act, 2002. This law aims at upholding
competition in the Indian market. The competition commission of India has been
established in 2003 which mainly control the practice that have an adverse impact on
competition.
4. Liberalized Foreign Investment Policy: India’s earlier industrial policies welcomed
FDI but emphasized that ownership and control of all enterprises involving foreign equity
should be in Indian hands. The NIP radically reformed foreign investment policy to attract
foreign investment. As per Industrial Policy 1991, the government has been decided to
provide approval for direct foreign investment upto 51% foreign equity in such industries.
There shall be no bottlenecks of any kind in this process. This group of industries has
generally been known as the "Appendix I Industries" and are areas in which FERA
companies have already been allowed to invest on a discretionary basis.
5. Foreign Technology Agreements: With a view to injecting the desired level of
technological dynamism in Indian industry, Government will provide automatic approval
for technology agreement related to high priority industries within specified parameters.
Indian companies will be free to negotiate the terms of technology transfer with their
foreign counterparts according to their own commercial judgement.
In order to help this process, the hiring of foreign technicians and foreign testing of
indigenously develope4chnologies, will also not require prior clearance as prescribed so
far, individually or as a part of industrial or investment approvals.

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PUBLIC SECTOR UNDERTAKINGS
• Public Sector Undertakings are the business units owned managed and controlled
by the govt. with a view to maximizing social welfare and upholding public interest
are known as Public Sector Enterprises (PSEs)
MAHARATNA: The CPSEs meeting the following criteria are eligible to be considered for
grant of Maharatna status.
➢ Having Navratna status

➢ Listed on Indian stock exchange with minimum prescribed public shareholding
under SEBI regulations
➢ An average annual turnover of more than Rs. 25,000 crores during the last 3 years
➢ An average annual net worth of more than Rs. 15,000 crores during the last 3 years
➢ An average annual net profit after tax of more than Rs. 5,000 crores during the last
3 years
➢ Should have significant global presence/international operations.
NAVRATNA: The CPSEs which are Miniratna I, Schedule ‘A’ and have obtained
‘excellent’ or ‘very good’ MOU rating in three of the last five years and having composite
score of 60 or above in following six selected performance indicators are eligible to be
considered for grant of Navratna status. (Maximum weight – 100)
Net Profit to Net worth 25
Manpower cost to total cost of 15

production
PBDIT to capital employed 15
PBDIT to Turnover 15
Earning per share 10
Inter Sectoral Performance 20
MINI RATNA
• Miniratna Category-I status: - The CPSEs which have made profit in the last three
years continuously, pre-tax profit is Rs.30 crores or more in at least one of the three
years and have a positive net worth are eligible to be considered for grant of
Miniratna-I status.
• Miniratna Category-II status: - The CPSEs which have made profit for the last
three years continuously and have a positive net worth are eligible to be
considered for grant of Miniratna-II status.
• Miniratna CPSEs should have not defaulted in the repayment of loans/interest

payment on any loans due to the Government.

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• Miniratna CPSEs shall not depend upon budgetary support or Government
guarantees.
Policy of Strategic Disinvestment

The government aims at making use of disinvestment proceeds to finance various social
sector and developmental programmes and also to infuse private capital, technology and
best management practices in Central Government Public Sector Enterprises.
Fulfilling the governments’ commitment under the AtmaNirbhar Package of coming up
with a policy of strategic disinvestment of public sector enterprises, the Minister
highlighted the following as its main features:
1. Existing CPSEs, Public Sector Banks and Public Sector Insurance Companies to
be covered under it.
2. Two-fold classification of Sectors to be disinvested:
a. Strategic Sector: Bare minimum presence of the public sector enterprises
and remaining to be privatised or merged or subsidiarized with other CPSEs
or closed. Following 4 sectors to come under it:
1. Atomic energy, Space and Defence
2. Transport and Telecommunications
3. Power, Petroleum, Coal and other minerals
4. Banking, Insurance and financial services
b. Non- Strategic Sector: In this sector, CPSEs will be privatised, otherwise
shall be closed.
Ministry of Finance Year Ender 2023

[Department of Investment and Public Asset Management
(DIPAM)
In the year 2023, the Department of Investment and Public Asset Management (DIPAM)
demonstrated a steadfast commitment to value creation, strategic divestment, and
consistent financial planning.
• In the realm of Initial Public Offerings (IPO), DIPAM successfully launched the
IPO for the Indian Renewable Energy Development Agency (IREDA).
• The Offer for Sale (OFS) route has been actively pursued by the government for
divesting its shareholding in CPSEs. Noteworthy transactions in CPSEs like HAL,
Coal India Limited, RVNL, SJVN Limited, and HUDCO have collectively yielded Rs.
10,860.91 crore.
• DIPAM's has also implemented a Consistent Dividend Policy over the years, with
the total dividend receipts from CPSEs in FY 2022-23 at an impressive Rs.
59,533 crores, surpassing the Revised Estimates.
• In the current fiscal year, the government has realised Rs. 26,644 crores as
dividend receipts from CPSEs as of December 4, 2023.
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• Looking ahead, DIPAM is actively pursuing strategic disinvestment in entities
such as IDBI Bank Limited, PDIL, HLL Life Care Limited, NMDC Steel Limited,
Shipping Corporation of India, and BEML Ltd. with Expressions of Interest (EoIs)
have been issued for these transactions.
Micro, Small & Medium Enterprises

Economic development of a nation is closely associated with the growth of its industrial
sector. Industrial sector is composed of Large, Medium, Small and Micro enterprises.
While large industries help in the overall economic development of a nation, the
contribution of MSMEs is quite significant in employment generation, industrial
production and exports.
Importance of MSMEs
MSME industries have the advantage of labour intensiveness, low cost technology, low
capital/investment, short gestation period and their strong forward and backward
linkages with other sectors. The following are certain facts regarding MSMEs:
• MSMEs contribute 30% to India’s output/GDP

• MSMEs contribute 45% to manufacturing output/GDP
• MSMEs contribute 40% of to exports
• There are around 6.34 crore MSMEs (out of which 90% are informal) employing
more than 11 crore workers
Policy for Micro, Small & Medium Enterprises Sector: In accordance with the provision
of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 the Micro, Small
and Medium Enterprises (MSME) are classified in two Classes:
• Manufacturing Enterprises: The enterprises engaged in the manufacture or

production of goods pertaining to any industry specified in the first schedule to the
industries (Development and regulation) Act, 1951) or employing plant and
machinery in the process of value addition to the final product having a distinct
name or character or use. The Manufacturing Enterprises are defined in terms of
investment in Plant & Machinery.
• Service Enterprises: The enterprises engaged in providing or rendering of services

and are defined in terms of investment in equipment.
MSME classification criteria [New Definition]

(i) a micro enterprise, where the investment in Plant and Machinery or Equipment
does not exceed one crore rupees and turnover does not exceed five crore rupees;
(ii) a small enterprise, where the investment in Plant and Machinery or Equipment
does not exceed ten crore rupees and turnover does not exceed fifty crore rupees;
(iii) a medium enterprise, where the investment in Plant and Machinery or Equipment
does not exceed fifty crore rupees and turnover does not exceed two hundred and
fifty crore rupees.

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To achieve the target of becoming a 5 trillion-dollar economy, the contribution of MSME

sector to India's GDP needs to be increased from 29% to 50% by 2025. This will only be
attained by addressing numerous issues that have been marring the sector.
Issues faced by the MSME sector
Credit
• As per RBI’s sectoral deployment of credit report-December 2023, MSMEs

received merely 14.9% out of total bank credit.
• As per a BCG report, around 40% of MSME lending is done through the informal
sector
Delay in Payments
• As per a recent GAME report, 80% of the annual delayed payments were owed
to micro and small suppliers, restricting their cash flows and pushing them
towards bankruptcy
Lack of Technological Adoption
• Limited resources prevent investment in research and development

• Poor skilled labour also prevents technological adoption as it requires training
Low Quality Production
• Non-availability of suitable tech creates a perception of low-quality production

• This, in turn, hurts their product's export competitiveness
Lack of Access to Markets
• Ineffective Marketing Strategies; Market Uncertainty

• Asymmetrical competition with Multi-National Companies
Legal: Limitations imposed by legal compliances of labour laws, taxation and exit policies
restrict the growth of the sector
Infrastructure Deficit: Lack of essential infrastructure in rural areas affect the capacity
building and scaling of these enterprises
Incentive to remain small: As per Economic Survey 18-19, size-based incentives given
to MSMEs has resulted into the proliferation of small firms that are contrary to popular
opinion restricts job creation
Role of government in the promotion of MSME sector

The majorities of people living in rural areas draw their livelihood from agriculture and
allied sectors. However, the growth and balanced development of other sectors such as
industry and services are also necessary to sustain the growth of Indian economy in an

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inclusive manner. The socio-economic policies adopted by the Indian Govt. since the
Industries (Development and Regulation) Act, 1951 have laid stress on MSMEs as a means
to improve the country’s economic conditions.
The primary responsibility of promotion and development of MSMEs is of the State
Governments. However, the Government of India, supplements the efforts of the State
Governments through various initiatives. The role of the Ministry of Micro, Small and
Medium Enterprises and its organizations is to assist the States in their efforts to
encourage entrepreneurship, employment and livelihood opportunities and enhance the
competitiveness of MSMEs in the changed economic scenario.
Following are some of the new initiatives undertaken by the Government of India for the
promotion and development of MSMEs: -
• Udyog Aadhar Number: MSMEs can file one page registration form (Udyog Aadhar
Memorandum) that would constitute a self- declaration format under which the
MSME will self-certify its existence, bank account details, promoter/owner’s
Aadhaar detail and other basic details, based on which MSMEs will be issued a
unique identifier i.e. “Udyog Aadhar Number” which enable MSMEs to seek
information and apply online about various services being offered by all Ministries
and Departments. (based on KV Kamath committee report)
• ASPIRE: Government has launched A Scheme for Promoting Innovation and Rural
Entrepreneurs (ASPIRE) with the objective of setting up a network of technology
centres and incubation centres to accelerate entrepreneurship and promote start-
ups for innovation and entrepreneurship in rural and agriculture-based industries.
• Employment Exchange: Government of India has launched Employment Exchange
for Industries to facilitate match making between prospective job seekers and
employers
• Government has created a framework for revival and rehabilitation of MSMEs
• Faster access to credit: MSMEs are provided in-principle approval of working
capital and term loan worth Rs. 1 lakh to Rs. 1 crore in 59 minutes
• CHAMPIONS: In May, 2020, the GoI launched CHAMPIONS online platform to help
and handhold the MSMEs. ‘CHAMPIONS’ stands for Creation and Harmonious
Application of Modern Processes for Increasing the Output and National Strength.
It is an ICT based technology system aimed at making the smaller units big by
solving their grievances, encouraging, supporting, helping and handholding them
throughout the business lifecycle. The platform facilitates a single window solution
for all the needs of the MSMEs.
• Change in definition of MSMEs: MSMEs can expand their business up to a
turnover of Rs. 250 crore (and investment up to Rs. 50 cr) and can still enjoy the
benefits of being MSMEs
• Schemes launched under Aatma Nirbhar Bharat: Distressed MSME Funds, Fund of
Funds (Mother Funds), Emergency Credit Line Guarantee Scheme

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Khadi and Village Industries Commission (KVIC)
KVIC is a statutory body established in 1956 as per “The Khadi and Village Industries
Commission Act 1956”.
• The social objective of providing employment

• The economic objective of producing saleable articles
• The wider objective of creating self-reliance amongst the poor and building up of a
strong rural community spirit
Functions of KVIC:
• To plan and organise training of persons employed or desirous of seeking

employment in khadi and village industries
• To build up reserves of raw materials and implements/tools and supply them to
persons engaged or likely to be engaged in production of khadi or village industries
• To promote sale and marketing of khadi or products of village industries or
handicrafts
• To encourage and promote research in the technology used in khadi and village
industries
• To provide financial assistance to institutions or persons engaged in the
development and operation of khadi or village industries and guide them through
supply of designs, prototypes and other technical information
• To promote and encourage co-operative efforts among the manufacturers of khadi
or persons engaged in village industries
North East Industrial & Investment Promotion Policy (NEIIPP)

With a view to give a further boost to industrialization in the North Eastern Region,
the erstwhile North East Industrial Policy (NEIP), 1997 was revised and a new policy,
namely North East Industrial & Investment Promotion Policy (NEIIPP) 2007, was notified
w.e.f. 1.4.2007 which will remain in force upto 31.03.2017. Benefits under NEIIPP, 2007
have also been extended, for the first time, to select Service Sector units, Bio-technology
units and Power Generating units (up to 10 MW), besides industries in the manufacturing
Sector.
Scheme Objectives: - The objective of the scheme is to boost industrialization in North

Eastern Region.
DPIIT is the implementing agency of NEIIPP, 2007. North Eastern Development

Finance Corporation Ltd. (NEDFi), Guwahati is the nodal agency for disbursal of
subsidies under various subsidy schemes of NEIIPP, 2007.

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Industrial Ecosystem: Organizations and Institutions
DPIIT
• The Department for Promotion of Industry and Internal Trade (DPIIT) earlier
Department of Industrial Policy and Promotion under Ministry of commerce and
Industry was established in 1995 and has been reconstituted in the year 2000 with
the merger of the Department of Industrial Development.
• Earlier separate Ministries for Small Scale Industries & Agro and Rural Industries
(SSI&A&RI) and Heavy Industries and Public Enterprises (HI&PE) were created in
October, 1999. The industrial policy is being implemented by the DPIIT.
UNIDO
• The United Nations Industrial Development Organization (UNIDO),

French/Spanish acronym ONUDI, is a specialized agency in the United Nations
system, headquartered in Vienna, Austria.
• The Organization's primary objective is the promotion and acceleration of

industrial development in developing countries and countries with economies in
transition and the promotion of international industrial cooperation. It is also a
member of the United Nations Development Group.
• The Department for Promotion of Industry and Internal Trade (DPIIT) is the
nodal Department in Government of India for coordinating and implementing
programmes with United Nations Industrial Development Organization (UNIDO) in
India.
National Manufacturing Policy (NMP)

In order to bring about a quantitative and qualitative change and to give necessary
impetus to the manufacturing sector, the Department has notified the National
Manufacturing Policy (NMP) in 2009 with the objective of enhancing the share of
manufacturing in GDP to 25% and creating 100 million jobs by 2022.
The favourable demographic profile with over 60% of population in the working age group
of 15-59 implies that India has to create nearly 220 million employment opportunities by
2025.
The policy is based on the principle of industrial growth in partnership with the States.
The Central Government will create the enabling policy frame work, provide incentives for
infrastructure development on a Public Private Partnership (PPP) basis through
appropriate financing instruments, and State Governments will be encouraged to adopt
the instrumentalities provided in the policy.
The Department has taken up the implementation of the policy in consultation with
concerned Central Government agencies as well as the States.

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National Investment and Manufacturing Zones
(NIMZs) are an important instrumentality of the Policy. These zones have been conceived
as large integrated industrial townships with state-of-art-infrastructure; land use on the
basis of zoning; clean and energy efficient technology; necessary social infrastructure; skill
development facilities, etc. to provide a conducive environment for manufacturing
industries. So far Fourteen NIMZs have been granted in-principal approval outside the
DMIC region, out of which NIMZs at Prakasam in Andhra Pradesh; Medak in Telangana
and Kalinga Nagar, Jajpur district in Odisha have been granted final approval.
SEZs
Special economic zones (SEZs) in India are areas that offer incentives to resident
businesses. SEZs typically offer competitive infrastructure, duty free exports, tax
incentives, and other measures designed to make it easier to conduct business.
Accordingly, SEZs in India are a popular investment destination for many multinationals,
particularly exporters.
India was one of the first in Asia to recognize the effectiveness of the Export Processing
Zone (EPZ) model in promoting exports, with Asia's first EPZ set up in Kandla in 1965.
With a view to overcome the shortcomings experienced on account of the multiplicity of

controls and clearances; absence of world-class infrastructure, and an unstable fiscal
regime and with a view to attract larger foreign investments in India, the Special Economic
Zones (SEZs) Policy was announced in April 2000.
The Special Economic Zones Act, 2005, was passed by Parliament in May, 2005 which
received Presidential assent on the 23rd of June, 2005.
The main objectives of the SEZ Act are:

• generation of additional economic activity
• promotion of exports of goods and services
• promotion of investment from domestic and foreign sources
• creation of employment opportunities
• development of infrastructure facilities
The SEZ Rules provide for:

• Simplified procedures for development, operation, and maintenance of the Special
Economic Zones and for setting up units and conducting business in SEZs;
• Single window clearance for setting up of an SEZ;
• Single window clearance for setting up a unit in a Special Economic Zone;
• Single Window clearance on matters relating to Central as well as State
Governments;
• Simplified compliance procedures and documentation with an emphasis on self
certification
As of 2023, India has 272 operational SEZs with a combined employment of 2.8 million
people. These SEZs generated approximately US$133 billion in exports, with service
exports making up around 60 percent of this total.
Goods exports from Indian SEZs reached US$61 billion in FY 2022-23.

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Kandla SEZ in Gujarat alone accounted for US$38 billion in export value. Investments
into these SEZs grew to INR 656 billion (US$7.87 billion) as of December 2022,
per data from Statista (US$1=INR83.26).
Make in India
• Govt. of India launched the “Make in India” campaign in Sept. 2014 which is the
first of its kind for the manufacturing sector as it addresses areas of regulation,
infrastructure, skill development, technology, availability of finance, exit
mechanism and other pertinent factors
• It contains a vast number of proposals including easier norms and rules designed
to get foreign companies to set up shop and make the country a manufacturing
powerhouse
• Since its launch, Make in India initiative has made significant achievements and
presently focuses on 27 sectors under Make in India 2.0. Department for Promotion
of Industry and Internal Trade is coordinating action plans for manufacturing
sectors (15), while Department of Commerce is coordinating service sectors (12).
Targets under Make in India
• Increase in manufacturing sector growth to 12-14% per annum

• Increase in the share of manufacturing in country’s GDP from 15% to 25% by 2025
• Create 100 million additional jobs by 2022 in manufacturing sector
• Increase in domestic value addition and technological depth in manufacturing
• Enhance the global competitiveness of the Indian manufacturing sector
• Create appropriate skill sets among rural migrants & urban poor for inclusive
growth
• Ensure sustainability of growth, particularly with regard to environment
Start-ups and Policy Enablers for Innovation

As per Ministry of Commerce & Industry (DPIIT), an entity shall be considered as a
Startup:
Up to a period of ten years from the date of its incorporation

• Turnover of the entity since its incorporation has not exceeded Rs. 100 crores in
any FY
• The entity is working towards innovation, development or improvement of products
or process or services, or if it is a scalable business model with a high potential of
employment generation and wealth creation
Government has launched various schemes over the past few years to promote a
culture of entrepreneurship, innovation and start-ups in the country:
• Stand Up India: It is aimed at promoting entrepreneurship and job creation at the

grassroots level, especially keeping in mind the SCs/STs and women
• Start Up India: Aimed at promoting bank financing for startup ventures to boost
entrepreneurship and encourage job creation. Rural India’s version of Startup India
has been named Deen Dayal Upadhyaya Swaniyojan Yojana
• Atal Innovation Mission (AIM): Govt’s flagship initiative to promote a culture of
innovation and entrepreneurship in the country. AIM’s objective is to develop new
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programmes and policies for fostering innovation in different sectors of the economy,
provide platform and collaboration opportunities for different stakeholders create
awareness and create an umbrella structure to oversee innovation ecosystem of the
country.
• Chunauti: Govt. of India (MeitY) launched Project “Chunauti” (challenge) - Next
Generation Startup Challenge Contest to further boost startups and software
products with special focus on Tier-II towns of India. It aims to identify around 300
startups working in identified areas and provide them seed fund of up to Rs. 25
Lakhs and other facilities.
• Priority Sector Lending (PSL): Startups have now been included under the priority
sector lending rules of RBI for credit from banks
• Tax exemption: Startups can avail tax holiday for 3 consecutive financial years out
of its first ten years since incorporation
• State Rankings: DPIIT provides ranking of States based on the various policy
initiatives regarding promotion and support of startups
• Knowledge Involvement in Research Advancement through Nurturing (KIRAN)
Scheme
• The Biotechnology Ignition Grant (BIG) scheme
• Govt. Connect: Dept. of Animal Husbandary & Dairying has conducted a grand
challenge in association with Startup India to award top startups with Rs. 5 lakhs
in 5 categories
• Corporate Connect: Facebook in partnership with Startup India disbursed cash
grants of $50,000 each to the top 5 selected startups.
With more than 40,000 startups registered and recognized by the Govt, India has the 3rd
largest startup ecosystem in the world. As per the Economic Survey 2019-20,
Maharashtra, Karnataka and Delhi are the top three performers in terms of State-wise
distribution of recognized startups in India.
Land banks
Govt. of India (DPIIT, Ministry of Commerce and Industry) is in the process of creating
a "National Land Bank Portal" which will map around 5 lakh hectares of land, spread
across various industrial belts and special economic zones.
Building land banks allows Govt. to offer land to private investors right away, rather
than having to wait for the lengthy process of land acquisition each time an investor wants
land. Investors also get interested to know that the land is acquired and available, and
that they won’t run into political problems down the road.
21 States already have GIS enabled land banks which will be integrated with the National
Land bank. State Govt.’s has built land banks from private land, common land, forest land
and if some land was acquired by a company but did not start the work, so govt takes the
possession of the land and puts into land bank. (Land is a state subject and hence till now
mostly states have created their own land banks).
DPIIT is just creating a national portal which will integrate all the land banks across the
country with other useful information for the investors and hence if a foreign investor is
coming, he will not have to look for land in every state, rather he can check the 'National
Land Bank Portal'. Investors will be able to locate the land and will have access to details

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of logistics, land & rail connectivity and even raw material supply which will make it easy
for them to start a project.
National GIS-Enabled Land Bank System
In the first phase, Government has integrated Industrial Information System (IIS) portal
with the GIS System of six States to provide updates on land availability and plot level
information to investors anywhere in the world on real time basis and help them make
informed decisions.
Website: https://iis.ncog.gov.in/parks/login1
National Single Window System

The National Single Window System (NSWS) is a digital platform to guide in identifying
and applying for approvals according to business requirements.
The Know Your Approvals (KYA) module includes guidance for 32 Central
Departments and 32 States.
The portal hosts applications for approvals from 31 Central Departments and 22 State
Governments. These approvals can be applied through NSWS.
The platform is built to serve as an advisory tool to identify approvals based on user
input and is to be used for guidance purpose only.

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Labour Policy
Q1. Which of the following is not an objective of Four labour codes: to delegitimize strikes
Covered in Labour codes chapter
1.
Labour codes
Needs for consolidation
• As labour is in the concurrent list, there was an entire gamut of 200+ state and 40+ central
laws with often colluding jurisdictions.
• The multiplicity, rigidity, and overlapping nature of laws also makes compliance difficult
which leads to inspector raj like conditions even now. This leads to corruption, exploitation
of workers, etc
• The above situation also hampers the ease of doing business in India.
• India has a huge informal sector, with almost 90% workforce engaged in it. The labour laws
largely ignore the sector.
• The companies have an incentive in keeping their firm small as larger firms attract stricter
regulations.
• The contract employment always generates aversion from labours. There is a need to
introduce fixed-term employment.
• The female labour force participation is very low and it is mainly engaged in the informal
sector and low-paid jobs.
• The collective bargaining of the employees is weak. It needs to be strengthened.
• The codification of labour laws was recommended by the 2nd National commission on labour
(2002).
The Labour Code is the Central Government's initiative to tackle following existing lacunae:
• Almost 90% of the current workers are not covered under any social security.
• Unorganized sector workers are largely excluded.
• Prevailing schemes have very limited outreach.
• Multiplicity of applicable laws, policies, schemes and governmental instrumentalities;
• Current thresholds for wage and number of workers employed for a labour law to become
applicable creates tenacious incentives for the employers to avoid joining the system which results
in exclusions and distortions in the labour market.
The Code finds its genesis in the Report of the Second National Commission on Labour
(2002) and many other subsequent studies and reports on social security policies including
UN SDGs of the 2030 Sustainable Development Goals Agenda along with expert technical
assistance from the International Labour Organization on the policy framework.
Four new codes basic

As per the recommendations of the 2nd National Commission on Labour, Ministry has taken steps
for codification of existing Central labour laws into 4 Codes by simplifying, amalgamating and
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rationalizing the relevant provisions of the Central Labour laws. At present, the Ministry has been
working on to simplify, amalgamate & rationalize the provisions of the existing Central labour laws
into 4 Labour Codes.
The Code on Wages 2019
The laws that are codified under the code on wages are
1. Payment of Wages Act, 1936;
2. Minimum Wages Act, 1948;
3. Payment of Bonus Act, 1965;
4. Equal Remuneration Act, 1976
• Coverage: The Code will apply to all employees. The central government will make
wage-related decisions for employments such as railways, mines, and oil fields,
among others. State governments will make decisions for all other employments.
Wages include salary, allowance, or any other component expressed in monetary
terms. This does not include bonus payable to employees or any travelling
allowance, among others.
• Floor wage: The central government will fix a floor wage, taking into account living
standards of workers. Further, it may set different floor wages for different
geographical areas. Before fixing the floor wage, the central government may obtain
the advice of the Central Advisory Board and may consult with state governments.
The minimum wages decided by the central or state governments must be higher
than the floor wage. In case the existing minimum wages fixed by the central or
state governments are higher than the floor wage, they cannot reduce the
minimum wages.
• Fixing the minimum wage: The Code prohibits employers from paying wages less
than the minimum wages. Minimum wages will be notified by the central or state
governments. This will be based on time, or number of pieces produced. The
minimum wages will be revised and reviewed by the central or state governments at
an interval of not more than five years. While fixing minimum wages, the central or
state governments may take into account factors such as:
o Skill of workers,
o Difficulty of work.
• Overtime: The central or state government may fix the number of hours that
constitute a normal working day. In case employees work in excess of a normal
working day, they will be entitled to overtime wage, which must be at least twice the
normal rate of wages.
• Payment of wages: Wages will be paid in (i) coins, (ii) currency notes, (iii) by cheque,
(iv) by crediting to the bank account, or (v) through electronic mode. The wage
period will be fixed by the employer as either: (i) daily, (ii) weekly, (iii) fortnightly, or
(iv) monthly.
• Deductions: an employee’s wages may be deducted on certain grounds including:
(i) fines, (ii) absence from duty, (iii) accommodation given by the employer, or (iv)
recovery of advances given to the employee, among others. These deductions should
not exceed 50% of the employee’s total wage.

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• Determination of bonus: All employees whose wages do not exceed a specific
monthly amount, notified by the central or state government, will be entitled to an
annual bonus. The bonus will be at least: (i) 8.33% of his wages, or (ii) Rs 100,
whichever is higher. In addition, the employer will distribute a part of the gross
profits amongst the employees. This will be distributed in proportion to the annual
wages of an employee. An employee can receive a maximum bonus of 20% of his
annual wages.
• Gender discrimination: The Code prohibits gender discrimination in matters
related to wages and recruitment of employees for the same work or work of similar
nature. Work of similar nature is defined as work for which the skill, effort,
experience, and responsibility required are the same.
• Advisory boards: The central and state governments will constitute advisory
boards. The Central Advisory Board will consist of: (i) employers, (ii) employees (in
equal number as employers), (iii) independent persons, and (iv) five representatives
of state governments. State Advisory Boards will consist of employers, employees,
and independent persons. Further, one-third of the total members on both the
central and state Boards will be women. The Boards will advise the respective
governments on various issues including: (i) fixation of minimum wages, and (ii)
increasing employment opportunities for women.
• Offences: The Code specifies penalties for offences committed by an employer, such
as (i) paying less than the due wages, or (ii) for contravening any provision of the
Code. Penalties vary depending on the nature of offence, with the maximum penalty
being imprisonment for three months along with a fine of up to one lakh rupees.
Occupational Safety, Health and Working Conditions Code Bill, 2020

This is the first single legislation prescribing standards for working conditions, health, and
safety of the workers.
It will subsume the following Act
1. The Factories Act, 1948;

2. The Mines Act, 1952;
3. The Dock Workers (Safety, Health and Welfare) Act, 1986 ;
4. The Building and Other Construction Workers (Regulation of Employment and
Conditions of Service) Act, 1996 -,
5. The Plantations Labour Act, 1951;
6. The Contract Labour (Regulation and Abolition) Act, 1970;
7. The Inter-State Migrant workmen (Regulation of Employment and Conditions of
Service) Act, 1979;
8. The Working Journalist and other News Paper Employees (Conditions of Service and
Misc. Provision) Act, 1955;
9. The Working Journalist (Fixation of rates of wages) Act, 1958;
10. The Motor Transport Workers Act, 1961;
11. Sales Promotion Employees (Condition of Service) Act, 1976;
12. The Beedi and Cigar Workers (Conditions of Employment)Act,1966
13. The Cine Workers and Cinema Theatre Workers Act, 1981.
Key feature
• The Code expands the definition of a factory as a premise where at least 20 workers
work for a process with power and 40 workers for a process without power.
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• The Code removes the manpower limit on hazardous working conditions and makes
the application of the Code obligatory for contractors recruiting 50 or more workers
(earlier it was 20).
• The Code fixes the daily work hour limit to a maximum of eight hours.
• The Code empowers women to be employed in all kinds of establishments and at
night (between 7 PM and 6 AM) subject to their consent and safety.
• To encourage formalisation in employment, the employer is required to issue an
appointment letter.
• The Code defines an inter-state migrant worker as someone who has come on
his/her own from one state and received employment in another state and earns up
to Rs.18000 per month.
• Portability benefits for inter-state migrant workers: They can avail benefits in the
destination state as regards ration and benefits of building and other construction
worker cess.
• However, the Code has dropped the earlier provision for temporary accommodation
for workers near worksites.
• The Code also proposes a Journey Allowance – this is a lump sum fare amount to
be paid by the employer for the journey of the worker from his/her native state to
the place of employment
The Code on social security

It strives to amend and consolidate the laws relating to the social security of the employees and
the matters connected to social security.
It codifies 9 laws including
1. The Employees’ Compensation Act, 1923.
2. The Maternity Benefit Act, 1961.
3. The Payment of Gratuity Act, 1972.
4. The Unorganized Workers’ Social Security Act, 2008.
5. Employees’ State Insurance Act, 1948.
6. Employees ‘Provident Fund and Miscellaneous Provisions Act, 1952.
7. The Cine Workers Welfare Fund Act, 1981.
8. The Building and Other Construction Workers Cess Act, 1996.
9. The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959.
Key feature and changes
Enhanced Coverage: it has included the unorganised sector, fixed term employees and gig
workers, platform workers, inter-state migrant workers etc.
National Database and Registration: With the aim of making a national database for unorganised
sector workers, registration of all these workers would be done on an online portal and this
registration would be done on the basis of Self certification through a simple procedure.
All records and returns have to be maintained electronically.
Uniform definitions: Uniformity in determining wages for the purpose of social security benefits
is another highlight of the code given the ambiguity in the current regulations. This has provided
a wide definition for wage. Specific exclusions with ceilings have been provided for discouraging
inappropriate structuring of salaries to minimise social security benefits.
Social Security Fund:
Consultative Approach: It has brought in a facilitating approach by the authorities. Unlike the
existing role of inspectors, the Code provides for an enhanced role of inspector-cum-facilitator
whereby employers can look for support and advice to enhance compliances.
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Career Centre: To enable that demand for human resources is met and to monitor employment
information, career centres will be established.
Fixed-term employees: The code expands the scope to cover fixed-term contract workers who will
now be eligible for gratuity; whereas earlier only employees that were permanent were covered.
The events giving rise to gratuity are superannuation, retirement, resignation, death or
disablement due to accident or disease or termination of a contract under fixed-term employment
or on the happening of any event notified by the central government.
With the inclusion of ‘expiration of fixed-term employment’, fixed-term contract workers will
become eligible for gratuity and this is a welcome move.
Penalties: The strength of implementing a legislation lies in the ease of compliances as well as in
the penalties that deter non-compliance. The Code captures it all.
The Code contains penal provisions in the case of failure to pay gratuity to employees or a failure
to pay the contributions.
Industrial relation code
It attempts to offer some degree of flexibility on government permissions for retrenchment and
presents the legal framework for ushering in the concept of ‘fixed-term employment’ through
contract workers on a pan-India basis.
It has replaced the following laws
The Trade Union Act, 1926;
The Industrial Employment (Standing Orders) Act, 1946;
The Industrial Disputes Act, 1947.
Fixed term employment, permanent employment and contract labour
The Code introduces provisions on fixed term employment. Fixed term employment refers to
workers employed for a fixed duration based on a contract signed between the worker and the
employer.
Standing Orders
Applicability of standing orders: The Code provides that all industrial establishment with 300
workers or more must prepare standing orders on the listed matters.
Prior permission of the government: Under the Code, an establishment having at least 300
workers was required to seek prior permission of the government before closure, lay-off, or
retrenchment.
Powers to the central government to revise the threshold: The Code empowers the government
to increase (but not decrease) the threshold for the establishments to seek prior permission before
closure, lay-off or retrenchment.
Negotiating Union and Council
Sole Negotiating Union: If there are more than one registered trade union of workers functioning
in an establishment, the trade union having more than 51% of the workers as members would be
recognised as the sole negotiating union.
Negotiation Council: In case no trade union is eligible as sole negotiating union, a negotiating
council will be formed consisting of representatives of unions that have at least 20% of the workers
as members.

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Disputes relating to termination of individual worker: The 2020 Bill classifies any dispute in
relation to discharge, dismissal, retrenchment, or otherwise termination of the services of an
individual worker to be an industrial dispute.
The worker may apply to the Industrial Tribunal for adjudication of the dispute. The worker may
apply to the Tribunal 45 days after the application for the conciliation of the dispute was made.
Strikes and Lockouts
• The Code also introduces new conditions for conducting a legal strike.
• Employees are prohibited from going on strike without giving a 60-day notice.
Tribunals
• The Code provides for the constitution of Industrial Tribunals and a National Industrial
Tribunal to decide industrial disputes.
• The awards passed by a Tribunal will be enforceable on the expiry of 30 days.
• However, the government can defer the enforcement of the award in certain circumstances
on public grounds affecting national economy or social justice.
• The appropriate government can also make an order rejecting or modifying the award.
Re skilling of worker: The new Code also proposes the setting up of a re-skilling fund for training
retrenched workers with contribution from the employer, of an amount equal to 15 days last drawn
by the worker.
Employees’ State Insurance Scheme:

Employees’ State Insurance Scheme of India is a multi-dimensional Social Security
Scheme tailored to provide Socio-economic protection to the 'employees' in the organized
sector against the events of sickness, maternity, disablement and death due to
employment injury and to provide medical care to the insured employees and their
families.
Objective To provide protection to employees as defined in Employees' State
Insurance Act, 1948 against sickness, disablement, death due to
employment injury, maternity benefit, and to provide medical care to
insured persons and their families.
Administered The ESI Scheme is administered by a statutory corporate body called
by the Employees' State Insurance Corporation (ESIC), which has
members representing Employers, Employees, the Central
Government, State Government, Medical Profession and the Hon’ble
Members of Parliament. Director General is the Chief Executive
Officer of the Corporation and is also an ex-officio member of the
Corporation.
Funding The ESI scheme is a self-financing scheme. The ESI funds are
primarily built out of contribution from employers and employees
payable monthly at a fixed percentage of wages paid. The State
Governments also bear 1/8th share of the cost of Medical Benefit.
Applicability The ESI Act, 1948, applies to organisations with 10 or more employees,
drawing a salary of up to ₹21,000.
(Rs. 25000 per month for persons with disability)

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Not applicable It is not applicable for seasonal factories, factories engaged in the
pursuit of blending, packing or repacking tea or coffee or any other
processes as notified by the Central Government.
Contribution • The rate of contribution is fixed at 4% of the wages with employers’

share being 3.25% and employees’ share being 0.75%.
• The Government of India through Ministry of Labour and
Employment decides the rate of contribution under the ESI Act
Benefits
Medical Benefit - Full medical care to the insured person and his family members with
no ceiling on expenditure of the treatment.
Sickness Benefit - In the form of cash compensation at the rate of 70 per cent of wages.
Maternity Benefit - For confinement/pregnancy is payable for 26 weeks, which is
extendable by further one month on medical advice.
Disablement Benefit -
o Temporary disablement benefit (TDB): 90% of wage is payable so long as the
disability continues.
o Permanent disablement benefit (PDB): 90% of wage in the form of monthly
payments
Dependants Benefit - Paid in the form of monthly payment to the dependants in cases
where death is due to employment injury or occupational hazards.
Other Benefits
o Funeral Expenses
o Confinement Expenses
o Vocational Rehabilitation
o Physical Rehabilitation
o Old Age Medical Care.
THE EMPLOYEES’ PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952
• The Act is managed under the aegis of Employees’ Provident Fund Organization
(EPFO).
• The Act extends to the whole of India, including two Union Territories, Jammu &
Kashmir and Ladakh. The Act is currently applicable:
o to every establishment, which is a factory engaged in any industry specified
in Schedule-I of the Act in which twenty or more persons are employed;
and
• In case of Cine-Workers, the required employee strength for the purpose of
coverage under the Act is five.

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• However, the provisions of the 1952 Act do not apply to certain excluded
establishments, such as registered cooperative societies with less than 50 workers.
• the provisions of the 1952 Act do not apply to any other establishment belonging to
or under the control of the Central Government or a State Government whose
employees are entitled to the benefit of contributory provident fund or old age
pension.
EMPLOYEES’ PROVIDENT FUNDS SCHEME, 1952:
Launched 1st November 1952 by the EPFO

Scheme It is a statutory benefit available to the employees post retirement or
when they leave the services. In case of deceased employees, their
dependents are entitled for the benefits.
Eligibility • The Scheme mandates coverage of all establishments under its

scheduled list of establishments/ factories, employing 20 or
more persons.
• The Scheme mandates coverage of all establishments under its
scheduled list of establishments/ factories, employing 20 or
more persons, wherein, employees earning monthly wages
equal to or less than Rs. 15,000/- (Basic + Dearness
Allowances) have to be mandatorily covered.
Contribution Contribution: Member’s contribution (12% of EPF wages) and
employer’s contribution the total 12% (3.67% of EPF wages, 8.33% of
share towards EPS) goes towards the EPF account of the member.
Other points:
• When the scheme was launched in 1952, an employee earning upto ceiling of Rs.
300/- per month and who had worked for one year was eligible for membership of
the EPF. Current limit is Rs. 15000 per month and from the date of joining the
factory/ establishment.
• The contributions are payable on maximum wage ceiling of Rs. 15000.
• The employee can pay at a higher rate and in such case employer is not under any
obligation to pay at such higher rate.
• For an International Worker, wage ceiling of 15000 is not applicable.
• The rate of contribution, for both the employer and the employee is 10% of
the wages for certain categories of establishments as given below:
o Any establishment in which less than 20 employees are employed.
o Any sick industrial company and which has been declared as such by the
Board for Industrial and Financial Reconstruction
o Any establishment which has at the end of any financial year, accumulated
losses equal to or exceeding its entire net worth and
o Any establishment in following industries: (a) Jute (b) Beedi (c) Brick (d) Coir
and (e) Guar gum Factories.

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• The Act and Schemes framed there under are administered by a tri-partite Board
known as the Central Board of Trustees, Employees’ Provident Fund, consisting of
representatives of Government (Both Central and State), Employers, and
Employees
• The Board operates three schemes – EPF Scheme 1952, Pension Scheme 1995
(EPS) and Insurance Scheme 1976 (EDLI)
• The EPFO is under the administrative control of Ministry of Labour and
Employment, Government of India.
• Advances under EPF Scheme: Apart from Final Settlement/withdrawal under the
EPF schemes, 1952, the following advances are allowed to the members to meet
their various needs as per the conditions & their eligibility:
o For purchase of plot/flat, construction of House, Repair of house, etc
(Minimum 5 years of service)
o Grant of advances in special cases, like, unemployment, closure of the
establishment, nonreceipt of wages for more than 2 months, etc.
o Grant of advances in case of Illness of self/family
o Advance in case of Natural Calamities. (Covid advance was introduced in
March, 2020)
o Withdrawal within 1 year before retirement.
Recent update:
A non-refundable advance to the extent of the basic wages and dearness allowances for
three months or up to 75% of the amount standing to your credit in the EPF account,
whichever is less from their EPF account to EPF members, employed in factory or
establishment located in an area, which is declared to be affected by outbreak of epidemic
or pandemic by the Appropriate Govt.
Employees’ Pension Scheme
Launched November 19, 1995 by the EPFO

Aim The scheme entitles the employees working in the organised sector for
a pension after their retirement at the age of 58 years.
Eligibility • All employees who are eligible for the EPF scheme are be eligible
for EPS
• The benefits of the EPS can be availed only if the employee has
been in service for at least 10 years (this does not have to be
continuous service).
• The scheme’s benefits are available to both existing as well as
new EPF members.
Contribution The corpus of the Employees’ Pension Fund is made up of (i)

contribution by the employer @ 8.33 per cent of wages; and (ii)
contribution from Central Government through budgetary support @
1.16 per cent of wages, up to an amount of Rs.15,000/- per month.

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Benefits
1. Pension on retirement at the age of 58 years.
2. On cessation of employment before completing 58 years a member can opt for early
pension. Such early pension can be availed only after completing 50 years of age
3. Pension on total disablement during the service: An EPFO member who
becomes disabled permanently is entitled to a monthly pension irrespective of the
fact that he/she has not served the pensionable service period.
4. Family pension on the death of the member: A member’s family becomes
eligible for the pension benefits in the following cases:
• In case of death of the member while in service and the employer has
deposited funds in his EPS account for at least one month
• In case the member has completed 10 years of service and dies before
attaining 58 years of age )
• In case of death of the member after the commencement of the monthly
pension.
• Children Pension for 2 children at a time till the age of 25 years on death of
the member.
• Orphan Pension to 2 orphans at a time till the age of 25 years on death of a
member when there is no spouse or on death of spouse.
• Disabled Children/Orphan Pension for the entire life of the disabled
child/orphan.
• Nominee Pension on death of member and paid for life to a person duly
nominated by the member.
• Pension to dependent father/mother upon death of a member provided
there is no family or nominee of the member
Revision
The provisions of the EPS-95 are reviewed from time to time based on the
recommendations of the Expert Committee and the High Empowered Monitoring
Committee
Some of the important amendments made in EPS-95 are as under:
• Increase in wage ceiling from Rs. 6500/- to Rs.15000 per month from 01.09.2014.
• Provision of a minimum pension of Rs. 1000 per month to the pensioners under
EPS, 1995 from 01.09.2014 by providing additional budgetary support wherever the
pension was falling short of Rs.1000 as per pre-defined formula for calculation of
pension.
• Restoration of normal pension after completion of fifteen years from the date of such
commutation, in respect of those members who availed the benefit of commutation
of pension under the erstwhile paragraph 12A of the EPS, 1995, on or before
25.09.2008 vide notification G.S.R.132(E) dated 20.02.2020.
• The Code on Social Security, 2020 (36 of 2020), was notified on 29.09.2020, which
subsumes 9 Central labours laws including the EPF and MP Act, 1952.
• Section 15 of the new Code envisages to frame various schemes including pension
for the employees and their family members.
EMPLOYEES’ DEPOSIT LINKED INSURANCE SCHEME, 1976

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Launched 1st August, 1976 by the EPFO

Aim The main objective of EPFO behind this scheme was to ensure that the
family of members get financial assistance in case of death of the
member.
Eligibility Insurance Scheme is applicable to all factories/establishments to
which the EPF Act 1952 applies. All the employees who are members
of the provident fund are members of this Scheme.
EDLI contribution to be paid even if member has crossed 58 years age
and pension contribution is not payable.
Contribution This Scheme is supported by a nominal contribution (0.5% of wages
or max 75 Rupees) by the employers.
No contribution is payable by the employee for availing the insurance
cover.
Benefits The claim amount under ELDI is: 30 * Average monthly wages drawn
by the employee over the last 12 months preceding the date of death,
subject to a maximum of Rs.15,000.
Maximum assurance benefits enhanced to `7,00,000.
Minimum assurance benefits of `2,50,000.
The minimum and maximum assurance benefits will be payable to
members who were in employment for a continuous period of 12
months preceding the month in which the member died
Scheme Employee Employer
EPF 12% / 10% 3.67%

EPS nil 8.33% (Maximum Rs
1250)
EDLI nil 0.5% (Maximum Rs 75)
Important Labour Laws

S.no Act Feature
1 Maternity This Act entitles maternity leave for pregnant women employees’
Benefits Act, i.e. full payment despite absence from work. The act is applicable
1961 to all establishments employing 10 or more employees.
2 Maternity Increased Paid Maternity Leave: from the existing 12 weeks to 26
Benefit weeks. For women who are having 2 or more surviving children,
(Amendment) the duration of paid maternity leave shall be 12 weeks (i.e. 6 weeks
Act, 2017 before and 6 weeks after expected date of delivery).

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▪ Maternity leave of 12 weeks for adoptive and commissioning
mothers
▪ Work from Home option
▪ Makes creche facility mandatory for every establishment
employing >50 employees and allow four visits to the creche
by the woman daily, including the interval for rest allowed
to her;
▪ to facilitate "work from home" to a mother by inserting an
enabling provision;
▪ every establishment shall intimate in writing and
electronically to every woman at the time of her initial
appointment about the benefits available under the Act.
3 Sexual This act prohibits any kind of sexual Harassment of the women
Harassment of workers at the workplace. This Act came into force from 9 December
Women 2013
employees at It broadened the Vishaka guidelines, which were already in place
Workplace Act,
This act must be implemented by all public or private and
2013:
organised or unorganised sectors that have more than 10
employees.
Every employer is required to constitute an Internal Complaints
Committee (ICC) at each office or branch with 10 or more employees.
The complains has to be completed within 90 days by ICC
Non-compliance with the provisions of the Act shall be punishable
with a fine of up to Rs 50,000 to employer.
The State Government will notify the District Officer in every district,
who will constitute a Local Complaints Committee (LCC) so as to
enable women in the unorganised sector or small establishments to
work in an environment free of sexual harassment.
4 THE Wage ceiling for calculation of compensation under the Employees'
EMPLOYEES' Compensation Act, 1923 has been revised to Rs. 15,000/- p.m.
COMPENSATION from Rs. 8,000/- p.m. w.e.f. 03.01.2020.
ACT, 1923
8 Child Labour The act prohibits employing children below 14 years of age in any
(Prohibition) Act- jobs except where the child helps after school hours his family in
1986 non-hazardous family business.
The act prohibits employment of adolescents (14-18 years) in
hazardous occupations as specified (mines, inflammable substance
and hazardous processes)
The penalty for employing a child was increased to imprisonment
between 6 months and two years or a fine of Rs 20,000 to Rs 50,000
or both
Universal account number or UAN: The UAN is a 12-digit number allotted to each
Employee Provident Fund member by the Employee Provident Fund Organization(EPFO)
which gives him control of his EPF account and minimizes the role of employer.

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Periodic Labour Force Survey (PLFS)
Employment and Unemployment Surveys (EUS) conducted by NSSO were the primary
source of labour market data at National and State level in India. Regular EUS were
conducted quinquennially (after every five years) since 1972. Considering the importance
of availability of labour force data at more frequent intervals, the Ministry of Statistics and
Programme Implementation constituted a committee on Periodic Labour Force Survey
(PLFS).
Now, National Statistics Office (NSO) is conducting PLFS to produce annual statistics of
employment and unemployment characteristics for both rural and urban areas, along with
quarterly estimates for urban areas. The first annual report based on the data collected in
PLFS during July 2017- June 2018 was published in May 2019.
The PLFS was designed with two major objectives for measurement of employment and
unemployment.
The first was to measure the dynamics in labour force participation and employment
status in the short time interval of three months for only the urban areas.
The second was for both rural and urban areas, to measure the labour force
estimates on key parameters on an annual basis such as labour force participation rate,
worker population ratio etc.
The International Labour Organization (ILO) is a United Nations agency headquartered

at Geneva, Switzerland dealing with labour problems, particularly international labour
standards, social protection, and work opportunities for all. Total 187 members.

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Economic Reforms in India - Privatization – Role of Economic Planning
Globalization – Opening up of the Indian Economy – Balance of Payments
Q1. NITI Aayog 3-year agenda is related to which sectors?
Q2. Impact of Globalization on Family, Work and Culture etc can termed as: SOCIAL
GLOBALIZATION
Q3. School Education Quality Index was released by: NITI AYYOG
Q4. How the different dimensions of Globalisation evolved since last Global financial crisis of
2008, Analyse the Impact. (DESCRIPTIVE)
Q5. Explain economic reform & all types of economic reforms in Indian economy from 90s to till
now? (DESCRIPTIVE)

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Liberalization Privatization Globalization: LPG The economy of India had undergone

significant policy shifts in the beginning of the 1990s. This new model of economic reforms
is commonly known as the LPG or Liberalization, Privatization and Globalization model.
Reasons for implementing LPG
• Large and growing fiscal imbalances. (Gross fiscal deficit rose to 12.1% of GDP in 1991)
• Growing inefficiency in the use of resources.
• Low foreign exchange reserves.($1.2 billion in January 1991)
• High inflation rate.(13.87% in year 1990-91)
• The low annual growth rate of Indian economy stagnated around 3.5% from 1950s to
1980s.
The economic reforms of 1991 were carried out mainly in three directions: -
1. We dismantled the complex regime of licenses, permits and controls.

2. We reversed the strong bias towards state ownership of means of production and
proliferation of public sector enterprises in almost every sphere of economic activity.
3. We abandoned the inward-looking trade policy.
The salient features of new economic policy are liberlisation, privatisation and
globalisation of the economy (LPG policy):
(1) Liberalization: Simply speaking liberalization means to free to economy from the
controls imposed by the Govt. Before 1991, Govt. had put many types of controls on Indian
economy.
These were as follows:

(a) Industrial Licensing System
b) Foreign exchange control
(c) Price control on goods
(d) Import License.
Due to all these controls, the economy became defective. The entrepreneurs were unwilling
to establish new industries. Corruption, undue delays and inefficiency rose due to these
controls. Rate of economic growth of the economy came down. Economic reforms were
introduced to reduce the restrictions imposed on the economy.
Steps taken for Liberalization: The following steps have been taken for liberalization:
(i) Independent determination of interest rate: Under the policy of liberalization
interest rate of the banking system will not be determined by RBI rather all Banks are
independent to determine the rate of interest.
(ii) Increase in the investment limit of the Small Scale Industries:
Investment limit of the small scale industries has been raised to Rs. 1 crore. So that they
can modernize their industry.
(iii) Freedom to import capital goods: Indian industries will be free to buy machines
and raw materials from foreign countries to expand their business.
(iv) Freedom to import Technical know-how: Under new economic policy the
entrepreneurs are free to import technical know-how and develop modernizations. The
main aim of the policy is to develop computers and electronics.

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(v) Freedom for expansion and production to Industries: Industries are free to expand
and produce under the policy of liberalization. Previously, the govt. used to fix the
maximum limit of production capacity. No industry could produce beyond that limit. Now
the industry can produce freely. Also they can produce anything depending on the
demand.
(vi) Freedom from Monopolies Act: According to Monopolies and Restrictive Trade
Practices (MRTP) Act,1969 all those companies having assets worth Rs. 100 crore or more
were called MRTP firms and were subjected to several restrictions. Now these firms have
not to obtain prior approval of the Govt. for taking investment decision.
(vii) Removal of Industrial Licensing and Registration: Previously private sector had to
obtain license from Govt. for starting a new venture. In this policy private sector has been
freed from licensing and other restrictions.
Industries licensing is necessary for following industries:

(i) Liquor
(ii) Cigarette
(iii) Defence equipment
(iv) Industrial explosives
(v) Drugs
(vi) Hazardous chemicals.
(2) Privatisation: Simply speaking, privatisation means permitting the private sector to
set up industries which were previously reserved for the public sector. Under this policy
many PSU’s were sold to private sector. In privatisation, the Govt.’s role is only reduced it
does not disappear. Literally speaking, privatisation is the process of involving the private
sector-in the ownership of Public Sector Units (PSU’s).
The main reason for privatisation was in currency of PSU’s are running in losses due to
political interference. The managers cannot work independently. Production capacity
remained under-utilized. To increase competition and efficiency need of privatisation was
felt.
Step taken for Privatisation:

The following steps are taken for privatisation:
1. Sale of shares: Indian Govt. has been selling shares of PSU’s to public and financial
institution e.g. Govt. sold shares of Maruti Udyog Ltd.
2. Disinvestment in PSU’s:
The Govt. has started the process of disinvestment in those PSU’s which had been running
into loss. It means that Govt. has been selling out these industries to private sector. Govt.
has sold enterprises worth Rs. 30,000 crores to the private sector.
3. Minimisation of Public Sector:
Previously Public sector was given the importance with a view to help in industralisation
and removal of poverty. But these PSU’s could not able to achieve this objective and policy
of contraction of PSU’s was followed under new economic reforms. Number of industries
reserved for public sector was reduces from 17 to 4.
(a) Transport and railway
(b) Mining of atomic minerals
(c) Atomic energy
(d) Defence equipment (currently private sector permitted with certain conditions)
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(3) Globalization:
Literally speaking Globalisation means to make Global or worldwide, otherwise taking into
consideration the whole world. Broadly speaking, Globalisation means the establishment
of relations of the economy with world economy in regard to foreign investment, trade,
production and financial matters.
The concept was popularised by the Organisation of Economic Cooperation and
Development (OECD) in the mid-1980s again after the Wars. In its earlier deliberatization,
the organisation had defined globalization in a very narrow and business-like sense—‘any
cross-border investment by an OECD company outside its country of origin for its benefit
is globalisation’. After this summit of the OECD, proposals for replacing the GATT by the
WTO were pushed by the developed economies of the world, better known as the starting
of the Uruguay Round of GATT deliberations which ends in Marrakesh (1994) with the
birth of WTO.
Steps taken for Globalisation: Following steps are taken for Globalisation:
(i) Reduction in tariffs:
Custom duties and tariffs imposed on imports and exports are reduced gradually just to
make India economy internationally beneficial.
(ii) Long term Trade Policy:
Forcing trade policy was enforced for longer duration.
Main features of the policy are:
(a) Liberal policy
(b) All controls on foreign trade have been removed
(c) Open competition has been encouraged.
(iii) Partial Convertibility:
Partial convertibility can be defined as to sell foreign currency like dollar ($) or pound, for
foreign transaction at a price determined by the market. Partial convertibility of Indian
rupee was allowed to achieve the objectives of globalisation.
This convertibility stood valid for following transaction:
(a) Remittances to meet family expenses
(b) Payment of interest
(c) Import and export of goods and services.
(iv) Increase in Equity Limit of Foreign Investment:
Equity limit of foreign capital investment has been raised from 40% to 100% percent. In
47 high priority industries foreign direct investment (FDI) to the extent of 100% will be
allowed without any restriction. In this regard Foreign Exchange Management Act (FEMA)
will be enforced.
The five-year plans:

First Plan; The period for this plan was 1951–56.
It was based on Harrod-Domar Model.
Influx of refugees, severe food shortage & mounting inflation confronted the country
at the onset of the first five year Plan.
The Plan Focussed on agriculture, price stability, power and transport
It was a successful plan primarily because of good harvests in the last two years of
the plan. Objectives of rehabilitation of refugees, food self sufficiency & control of prices
were more or less achieved.

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Second Plan: The plan period was 1956–61. The strategy of growth laid emphasis on rapid
industrialisation with a focus on heavy industries and capital goods. The plan was
developed by Professor Mahalanobis.
Second plan was conceived in an atmosphere of economic stability. It was felt
agriculture could be accorded lower priority.
The Plan focussed on rapid industrialization- heavy & basic industries. Advocated
huge imports through foreign loans.
The Industrial Policy 1956 was based on establishment of a socialistic pattern of
society as the goal of economic policy.
Acute shortage of forex led to pruning of development targets, price rise was also
seen (about 30%) vis-a-vis decline in the earlier Plan & the 2nd FYP was only moderately
successful.
Third Plan: The Plan period was 1961–65.

At its conception, it was felt that Indian economy has entered a “take-off stage”.
Therefore, its aim was to make India a 'self-reliant' and 'self-generating' economy.
Based on the experience of first two plans, agriculture was given top priority to
support the exports and industry.
The Plan was thorough failure in reaching the targets due to unforeseen events -
Chinese aggression (1962), Indo-Pak war (1965), severe drought 1965-66. Due to conflicts
the approach during the later phase was shifted from development to defence &
development.
Three Annual Plans (1966-69) euphemistically described as Plan holiday.: Failure of

Third Plan that of the devaluation of rupee (to boost exports) along with inflationary
recession led to postponement of Fourth FYP. Three Annual Plans were introduced
instead. Prevailing crisis in agriculture and serious food shortage necessitated the
emphasis on agriculture during the Annual Plans.’
During these plans a whole new agricultural strategy was implemented. It involving wide-
spread distribution of high-yielding varieties of seeds, extensive use of fertilizers,
exploitation of irrigation potential and soil conservation.
Fourth Plan: The Plan period was 1969–74. The Plan was based on the Gadgil strategy
with special focus to the ideas of growth with stability and progress towards self-reliance.
Refusal of supply of essential equipments and raw materials from the allies during
Indo Pak war resulted in twin objectives of “growth with stability“ and “progressive
achievement of self reliance “ for the Fourth Plan.
Main emphasis was on growth rate of agriculture to enable other sectors to move
forward. The plan was considered as a failure
Fifth Plan: The Plan (1974–79) has its focus on poverty alleviation and self-reliance. The
plan period was badly disturbed by the draconian emergency and a change of the
government at the Centre.
The final Draft of fifth plan was prepared and launched by D.P. Dhar in the backdrop
of economic crisis arising out of run-away inflation fuelled by hike in oil prices and failure
of the Govt. takeover of the wholesale trade in wheat.
It proposed to achieve two main objectives: 'removal of poverty' (Garibi Hatao) and
'attainment of self reliance'

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Promotion of high rate of growth, better distribution of income and significant
growth in the domestic rate of savings were seen as key instruments.
Rolling Plan (1979-80): There were 2 Sixth Plans. Janta Govt. put forward a plan for
1978- 1983 emphasising on employment, in contrast to Nehru Model which the Govt
criticised for concentration of power, widening inequality & for mounting poverty.
However, the Govt. lasted only for two years. Congress Govt. returned to power in 1980
and launched a different plan.
Sixth Plan: This Plan (1980–85) was launched with the slogan of ‘Garibi Hatao’ (alleviate
poverty). Some of the major issues addressed by the Plan were—emphasis on
socioeconomic infrastructure in rural areas; eliminating rural poverty and reducing
regional disparities through the Integrated Rural Development Programme (IRDP); ‘target
group’ approach initiated; a number of national level programmes and schemes were
launched during the plan, which tried to attend to the specific areas and the specific
concerns of socio-economic development.
Seventh Plan: The Plan (1985–90) emphasised on rapid foodgrain production, increased
employment creation and productivity in general. The Jawahar Rojgar Yojana (JRY) was
launched in 1989 with the motive to create wage-employment for the rural poors.
Eighth Plan: The Eighth Plan (1992–97) was launched in a typically new economic
environment. The economic reforms were already started (in July 1991) with the initiation
of the structural adjustment and macro-stabilisation policies necessitated by the
worsening balance of payments, higher fiscal deficit and unsustainable rate of inflation.
Ninth Plan: The Plan prepared under United Front Government focussed on “Growth
with Social Justice & Equality”.
The Ninth Plan (1997–2002) was launched when there was an all-round ‘slowdown’ in the
economy led by the South East Asian Financial Crisis (1996–97). There was an emphasis
on the seven identified Basic Minimum Services (BMS) with additional Central Assistance
for these services with a view to obtaining complete coverage of the population in a time-
bound manner. The BMS included:
(i) Safe drinking water;
(ii) Primary health service;
(iii) Universalisation of primary education;
(iv) Public housing assistance to the shelter-less poor families;
(v) Nutritional support to children;
(vi) Connectivity of all villages and habitations; and
(vii) Streamlining of the public distribution system.
Ninth Plan aimed to depend predominantly on the private sector – Indian as well as foreign
(FDI) & State was envisaged to increasingly play the role of facilitator & increasingly involve
itself with social sector viz education, health etc and infrastructure where private sector
participation was likely to be limited.
Tenth Plan: The Plan (2002–07) commenced with the objectives of greater participation of
the NDC ( National Development Council) in their formulation.
Recognising that economic growth can’t be the only objective of national plan, Tenth Plan
had set ‘monitorable targets’ for few key indicators (11) of development besides 8 % growth
target. The targets included reduction in gender gaps in literacy and wage rate, reduction
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in Infant & maternal mortality rates, improvement in literacy, access to potable drinking
water cleaning of major polluted rivers, etc. Governance was considered as factor of
development & agriculture was declared as prime moving force of the economy.
Eleventh Plan: (2007-12) Eleventh Plan was aimed “Towards Faster & More Inclusive
Growth“. In the approach paper, the Planning Commission shows its concerns regarding
realising the growth targets on account of the compulsions towards the Fiscal
Responsibility and Budget Management Act. Not only the government but the
Confederation of Indian Industry (CII) as well as the World Bank expressed doubts in the
Eleventh Plan realising the ambitious 10 per cent growth.
The Planning Commission (PC) had attempted the mid-term appraisal of the Plan, which
was considered and approved by the National Development Council in July 2010.
Twelfth Plan: The ‘Draft Approach Paper’ of the Twelfth Plan (2012–17) was prepared by
the Planning Commission after widest consultation till date—recognising the fact that
citizens are now better informed and also keen to engage. Over 950 civil society
organisations across the country provided inputs; business associations, including those
representing small enterprises have been consulted; modern electronic and ‘social media’
(Google Hangout) were used to enable citizens to give suggestions. Growth rate of 9 per
cent is targeted for the Plan. It emphasizes the need to intensify efforts to have 4 per cent
average growth in the agriculture sector.
MONITORABLE TARGETS SET BY THE TWELFTH PLAN: The Twelfth Plan (2012–17)
has set twenty-five monitorable targets in seven broad areas reflecting its (India’s) ‘vision
of rapid, sustainable and more inclusive growth. A few of them were:
(i) Real GDP growth rate of 8 per cent.
(ii) Agriculture growth rate of 4.0 per cent.
(iii) Manufacturing growth rate of 10.0 per cent.
The Twenty Point Programme (TPP) is the second Central Plan which was launched in
July 1975. The programme was conceived for coordinated and intensive monitoring of a
number of schemes implemented by the Central and the state governments. The basic
objective was of improving the quality of life of the people, especially of those living below
the poverty line. Under this, a thrust was given to schemes relating to poverty alleviation,
employment generation in rural areas, housing, education, family welfare and health,
protection of environment and many other schemes having a bearing on the quality of life
in rural areas.
NITI AAYOG: The National Institution for Transforming India, also called NITI Aayog,
was formed via a resolution of the Union Cabinet on January 1, 2015. NITI Aayog is the
premier policy ‘Think Tank’ of the Government of India, providing both directional and
policy inputs. While designing strategic and long term policies and programmes for the
Government of India, NITI Aayog also provides relevant technical advice to the Centre and
States.
The Government of India, in keeping with its reform agenda, constituted the NITI Aayog to
replace the Planning Commission instituted in 1950. This was done in order to better serve

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the needs and aspirations of the people of India. An important evolutionary change from
the past, NITI Aayog acts as the quintessential platform of the Government of India to
bring States to act together in national interest, and thereby fosters Cooperative
Federalism.
At the core of NITI Aayog’s creation are two hubs – Team India Hub and the Knowledge
and Innovation Hub. The Team India Hub leads the engagement of states with the Central
government, while the Knowledge and Innovation Hub builds NITI’s think-tank
capabilities. These hubs reflect the two key tasks of the Aayog.
NITI Aayog is also developing itself as a State of the Art Resource Centre, with the
necessary resources, knowledge and skills, that will enable it to act with speed, promote
research and innovation, provide strategic policy vision for the government, and deal with
contingent issues.
Organizational structure: The NITI Aayog has a three-tier organizational structure

comprising a Governing Council, Regional Councils, and a full time organizational layer
led by the Prime Minister.
On the organizational side, Prime Minister is the Chairperson of NITI. He is assisted by a
Vice Chairperson. Beside the two, there will be four full time members, ex-officio members,
special invitees and a Chief Executive Officer.
The governing Council is the main decision-making body. Chief Ministers of the states, Lt.
Governors of UTs and special invitees of the NITI are members of the Governing Council.
Regional Councils has the responsibility to address specific issues and contingencies
concerned with more than one state or a region. These will be formed for a specified
tenure. The Regional Councils will be convened by the Prime Minister and will comprise
of the Chief Ministers of States and Lt. Governors of Union Territories in the region. These
will be chaired by the Chairperson of the NITI Aayog or his nominee.
Chairperson
Shri Narendra Modi, Hon'ble Prime Minister
Vice Chairperson
Shri Suman Bery
Full-Time Members
Shri V.K. Saraswat
Prof. Ramesh Chand
Dr. V. K. Paul
Ex-officio Members
Shri Raj Nath Singh, Minister of Defence
Shri Amit Shah, Minister of Home Affairs
Smt. Nirmala Sitharaman, Minister of Finance and Minister of Corporate Affairs
Shri Narendra Singh Tomar, Minister of Agriculture and Farmers Welfare;Minister of
Rural Development; Minister of Panchayati Raj.
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Shri Rao Inderjit Singh, Minister of State (Independent Charge) of the Ministry of
Statistics and Programme Implementation and Minister of State(Independent Charge) of
Ministry of Planning(NITI AAYOG).
Chief Executive Officer

Mr Parameswaran Iyer
Various Task forces of NITI AAYOG till date:

Task-force on Agricultural Development headed by Dr. Arvind Panagariya.
Task-Force on Use of Technologies for Agriculture Insurance: headed by Dr. P.K.Agarwal.
Task-Force on Elimination of Poverty - headed by Dr. Arvind Panagariya
Task-Force on Project/ Program Management headed by Amitabh Kant.
Atal Innovation Mission (AIM) is a flagship initiative set up by the NITI Aayog to promote
innovation and entrepreneurship across the length and breadth of the country, based on
a detailed study and deliberations on innovation and entrepreneurial needs of India in the
years ahead.
AIM is also envisaged as an umbrella innovation organization that would play an
instrumental role in alignment of innovation policies between central, state and sectoral
innovation schemes incentivizing the establishment and promotion of an ecosystem of
innovation and entrepreneurship at various levels - higher secondary schools, science,
engineering and higher academic institutions, and SME/MSME industry, corporate and
NGO levels. Long term goals of AIM include establishment and promotion of Small
Business Innovation Research and Development at a national scale (AIM SBIR) for the
SME/MSME/startups, and in rejuvenating Science and Technology innovations in major
research institutions of the country like CSIR (Council of Scientific Industrial Research),
Agri Research (ICAR) and Medical Research (ICMR) aligned to national socio-economic
needs.
Atal Incubators – promoting entrepreneurship in universities and industry
At the university, NGO, SME and Corporate industry levels, AIM is setting up world-
class Atal Incubators (AICs) that would trigger and enable successful growth of
sustainable startups in every sector /state of the country, thereby promoting
entrepreneurs and job creators in the country addressing both commercial and social
entrepreneurship opportunities in India and applicable globally. AIM is also providing
scale up support to existing incubators for scaling up their operations.
AIM is providing a grant of upto Rs 10 crores to successful applicants for setting up

greenfield incubators or scaling up existing ones. The idea is that every one of the 110
named smart cities and the top 5-10 educational / industrial institutions of every state
should aspire to have a world class incubator that will provide the youth / startup
communities in the universities / industries opportunity to create new start ups .
Atal Tinkering Labs – to promote creative, innovative mind set in schools

At the school level, AIM is setting up state of the art Atal Tinkering Labs (ATL) in
schools across all districts across the country. These ATLs are dedicated innovation
workspaces of 1200-1500 square feet where do-it-yourself (DIY) kits on latest technologies
like 3D Printers, Robotics, Internet of Things (IOT), Miniaturized electronics are installed
using a grant of Rs 20 Lakhs from the government so that students from Grade VI to Grade
XII can tinker with these technologies and learn to create innovative solutions using these

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technologies. This will enable create a problem solving, innovative mind set within millions
of students across the country.
Every school would have an ATL. AICTE (All India Council of Technical Education) is also
partnering with AIM to ensure that the closest universities to a school can also mentor
ATL students.
Atal Innovation Tinkering challenges are regularly held in the school as well as by
AIM every month to ensure students active involvement in creating innovative solutions
to solve problems in their community and in the country.
KEY PERFORMANCE INDICATORS (KPIS) IN HEALTHCARE, EDUCATION AND

WATER SECTOR:
Health Index: There is renewed commitment in India, to accelerate the pace of
achievement of the SDGs including Goal 3 related to ensuring healthy lives and promoting
well-being for all at all ages.
Major key indicators of health Index:

Indicator Definition
Neonatal Mortality Rate Number of infant deaths of less than 29 days per
(NMR) thousand live births during a specific year
Under-five Mortality Rate Number of child deaths of less than 5 years per
(U5MR) thousand live births during a specific yea
Average number of children that would be born to a
woman if she experiences the current fertility
Total Fertility Rate (TFR)
pattern throughout her reproductive span (15-49
years), during a specific year.
Proportion of Low Birth Weight Proportion of low birth weight (<=2.5 kg) newborns
among newborns out of the total number of newborns weighed during
(LBW among infants) a specific year born in a public health facility.
Sex Ratio at Birth The number of girls born for every 1,000 boys born
(SRB) during a specific year.
Proportion of infants 9-11 months old who have
received BCG, 3 doses of DPT, 3 doses of OPV and
Full immunization coverage (%)
one dose of measles against estimated number of
infants during a specific year.
Number of new and relapsed TB cases notified
Total Case Notification Rate of
(public + private) per 100,000 population during a
TB
specific year.
School Education Quality Index (SEQI): The goal of the State-level ‘School Education
Quality Index’ (SEQI) is to institutionalize a focus on improving education outcomes
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(learning, access, equity) in India. It recognizes that school education is a subject on the
Concurrent List and State-level leadership is critical for improving outcomes in cost-
effective ways.
Composition of the SEQI:

Number of Total weight
Category Domain indicators of Domain
Outcomes Learning outcomes and Quality 12 360
Access outcomes 7 140
Equity outcomes 10 150
Governance and
Management Governance processes 15 350
Total 44 1000
Water Index: The annual precipitation including snowfall, which is the main source of
water in India, is about 4000 billion cubic meters (BCM). However, the average annual
rainfall varies considerably from one region of the country to another. The North East
region receives about 1000 cm and Western Rajasthan gets less than 10 cm of annual
precipitation. Further, most of the rainfall occurs during the season of south-west
monsoon in four months i.e. from June to September.
Thus utilizable water potential of the country is estimated to be 1123 BCM consisting of
690 BCM of surface water and 433 BCM of ground water.
The Index has a set of 28 Key Performance Indicators (KPIs) covering irrigation status,
drinking water and other water-related sectors. Critical areas such as source
augmentation; major and medium irrigation; watershed development; participatory
irrigation practices; sustainable on-farm water use practices; rural drinking water; urban
water supply and sanitation; and policy & governance have been accorded high priority.
The index would serve as a useful tool to track performance in the water sector and take
corrective measures timely for achieving better outcomes thereby meeting the citizens’
expectations satisfactorily.
The India Energy Portal (IEP) presently houses NITI Aayog’s flagship initiatives, the India
Energy Security Scenarios, 2047 and Energy Dashboards, along with preliminary
analysis, data and links to other major energy sector publications for India. In the future,
the Portal will accommodate other Energy Division efforts such as Energy Modeling,
Geospatial Energy Map of India and other significant research reports.
India Energy Security Scenarios, 2047: The IESS, 2047 is an energy scenario building
tool, which aims to explore a range of potential future energy scenarios for India, for
diverse energy demand and supply sectors, leading up to 2047.
The NGO DARPAN was earlier maintained by erstwhile Planning Commission, which has
been replaced by the NITI Aayog w.e.f. 1st January, 2015. The Portal, therefore, is being
maintained at present under the aegis of NITI Aayog. NITI Aayog invites all Voluntary
Organizations (VOs)/ Non-Governmental Organizations (NGOs) to Sign Up on the Portal.

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VOs/NGOs play a major role in the development of the nation by supplementing the efforts
of the Government. This portal enables VOs/NGOs to enroll centrally and thus facilitates
creation of a repository of information about VOs/NGOs, Sector/State wise.
The Portal facilitates VOs/NGOs to obtain a system generated Unique ID, as and when
signed. The Unique ID is mandatory to apply for grants under various schemes of
Ministries/Departments/Governments Bodies.
‘Samavesh’ is a programme launched by the NITI Aayog to link together various lead
Knowledge and Research Institutions to catalyse development processes, enhance
institutional capacity development and enable a field level interface with the community
for mutual enrichment.
As part of this, NITI Aayog seeks to deepen and extend its institutional capacity through
networking and partnerships with reputed knowledge & research institutions to create an
ecosystem of evidence based policy research. This network will enable efficient knowledge
sharing and information exchange among all partners to fulfil their role in transformative
policy reform so as to achieve sustainable and more inclusive development in line with
Sustainable Development Goals as well as the 15 year Vision, 7 year strategy and 3 year
action plan being developed by the NITI Aayog.
Samavesh Advisory Group:

1. Policy Advisory Group (PAG): The Networking and Partnership initiative will receive
policy advice from a Policy Advisory Group. The Chairman of this Advisory Group is the
Vice Chairman of NITI Aayog. Members are the members of NITI Aayog, CEO, Principal
Advisor and Special Invitees as decided by the Chairman.
2. National Steering Group (NSG): This group shall be Co-chaired by CEO and Principal
Advisor of NITI Aayog to guide this Networking and Partnership initiative. The composition
of the NSG may include Heads/Directors of the selected Institutions, Secretaries of
Concerned Ministries (including MHRD)/Departments, Chief Secretaries of select state
Governments on rotation basis and Special Invitees as decided by Co-Chairs. The
functions of NSG may be
(i) to provide guidance on emerging priorities, review progress and outcomes and
enable linkages of this initiative across sectors, states and institutions. In the
initial phase, meetings may be held once a quarter or more frequently, as required
and determined by the Co-Chairs. Meetings may also be hosted by any of the lead
institutions by rotation, so that there is field based cross institution learning.
(ii) to screen and recommend the MoUs, which will include an overall road map
for 3 years, to be executed by NITI Aayog with identified institutions. Detailed
annual action plans (workplans) with monitorable parameters will also be
developed.

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(iii) to oversee the overall implementation of the partnership across themes and
regions.
3. Thematic Advisory Group (TAG): There shall be a separate Thematic Advisory Group
(TAG) to carry forward the specific activities under an identified theme/cluster group. The
concerned subject Advisers will be the focal points in NITI Aayog for coordinating, ensuring
smooth implementation of annual action plans (workplans) of specific
themes/institutions, monitoring progress and providing inputs to the NSG.
4. Secretariat: The Governance & Research vertical shall be the Secretariat and the Adviser
of this vertical shall be the overall coordinator of SAMAVESH.
Lecture series of NITI AAYOG at Vigyan Bhawan New Delhi:

Lecture 1: India and the Global Economy by the Hon’ble Deputy Prime Minister of
Singapore, Shri Tharman Shanmugaratnam in Aug. 2016
Lecture 2: Technology and Transformation delivered by Bill Gates, Co-Founder, Bill

and Melinda Gates Foundation in Nov. 2016
Lecture 3: Competitiveness Of Nations & States - New Insights delivered by renowned

American business strategist, economist and author, Dr. Michael E Porter in May 2017.
Lecture 4: AI for All: Leveraging Artificial Intelligence for Inclusive Growth by Jensen
Huang, President and Co-Founder, NVIDIA Corporation in Oct. 2018
ECONOMIC ADVISORY COUNCIL TO THE PRIME MINISTER: Cabinet Secretariat vide

Notification dated 26.9.2017 and subsequent Notification dated 1.11.2017 has notified
the constitution of the Economic Advisory Council to the Prime Minister with the following
composition:
Dr. Bibek Debroy, Member, NITI Aayog - Chairman

Dr. Rathin Roy - Part-time Member
Dr. Ashima Goyal - Part-time Member
Ms. Shamika Ravi - Part-time Member
Shri Ratan P. Watal, Principal Adviser, NITI Aayog - Member-Secretary
TERMS OF REFERENCE OF THE EAC-PM:

• Analyze any issue, economic or otherwise, referred to it by the Prime Minister and
advising him thereon.
• Addressing issues of macroeconomic importance and presenting views thereon to the
Prime Minister. This could be either suo-motu or on reference from the Prime Minister or
anyone else.
• Attending to any other task as may be desired by the Prime Minister from time to time.
Island Development Agency (IDA) The IDA was set up on June 01, 2017 under
chairmanship of Hon'ble Union Home Minister. CEO NITI Aayog is the Convener of the
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Agency. It has so far held two meetings i.e. on 24.7.20L7 and 8.11.2017, As mandated by
the IDA, NITI Aayog is in process of identification of another 10-15 Islands in Andaman
and Nicobar Islands and Lakshadweep for their development.
VISION DOCUMENT OF INDIA:
• First is a 15 year “Vision” that encompasses overall goals and objectives of the
country for next 15 years.
• Second is a 7 year “Strategy” which lays the roadmap of development for next seven
years dividing those goals and objectives into two parts.
• Third and Final is a “Three Year Action Agenda” which states the tasks and targets
to be accomplished in next three years time frame, further dividing the strategy into
two parts.
NITI Aayog was in process of working out the above plan since May, 2016. A draft was
placed in third Governing Council meeting of NITI Aayog on April 23, 2017. Governing
Council of NITI Aayog comprises of all States Chief Ministers, so the central government
including prime minister accord it much priority.
Key Features of 15 Year Vision

NITI Aayog has drawn up a list of no less than 300 specific action points covering wide
range of sectors under the 15 year vision document, though specific details of the same
are not available.
• This document had a seven-year strategy document for 2017-24 as the “National
Development Agenda” and separately is a three-year ‘Action Agenda’ from 2017-18
to 2019-20. The three-year agenda is further divided into seven parts, with a
number of specific action points for each part to boost India’s development.
• This document has a vision not only to ensure “access to two-wheelers or cars, air-
conditioning, and other white goods for nearly all” and but also includes internal
security and defence.
• In 15 years, India aims to get triple size of its economy; its GDP to grow from Rs.
137 Lakh Crore now to Rs. 469 Lakh Crore in 2032. Per capita GDP and per Capita
Income is also slated to increase by three times in this period.
• With GST in place and “one nation, one aspiration, one determination” philosophy,
the states’ role in overall development of the country is to rise exponentially.
•
By 2031, India’s urban population is expected to increase by 22 crores. Taking a
clue from China’s long-term urban development agenda, the vision documents lays
emphasis on urban development.
In May, 2017, NITI decided to combine the 15-year vision document with 7-year medium-
term strategy paper to again bring out a comprehensive roadmap to accelerate the
economic growth.
Salient Features of Three Year Action Agenda

The three year action agenda is touted to be the first step towards attaining the envisioned
outcomes by 2031-32. The document is divided into 7 parts with 24 chapters. The key
points from this document are as follows:
· Three Year Medium-Term Revenue and Expenditure Framework:

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o Proposes reduction of the fiscal deficit to 3% of the GDP by 2018-19, and the
revenue deficit to 0.9% of the GDP by 2019-20.
o Shifting additional revenues towards high priority sectors: health, education,
agriculture, rural development, defence, railways, roads and other categories
of capital expenditure.
· Agriculture: Doubling Farmers’ Incomes by 2022.
· Industry and Services: Job Creation.
· Urban Development: Need to bring down land prices to make housing affordable
through increased supply of urban land.
· Regional strategies:
o North Eastern Region.
o Coastal Areas & Islands.
o North Himalayan states and
o Desert and Drought prone states.
· Transport and Digital Connectivity.
· Energy: Adopt consumer friendly measures such as provision of electricity to all
households by 2022, LPG connection to all BPL households, elimination of black carbon
by 2022, and extension of the city gas distribution programme to 100 smart cities.
· Science & Technology.
· Governance: Re-calibrate the role of the government by shrinking its involvement in
activities that do not serve a public purpose and expanding its role in areas that
necessarily require public provision.
· Taxation and Regulation.
· The Rule of Law: Undertake significant judicial system reforms including increased
ICT use, structured performance evaluation and reduced judicial workload.
· Education and Skill Development.
· Health: Focus on public health through significantly increasing government
expenditure on it, establishing a focal point and creating a dedicated cadre.
· Building an Inclusive Society: Enhance the welfare of women, children, youth,
minorities, SC, ST, OBCs, differently abled persons and senior citizens
· Environment and Water Resources: Adopt measures to tackle city air pollution and
promote sustainable use of water resources.
Strategy for New India @ 75: The NITI Aayog recently unveiled its
comprehensive National Strategy for New India @ 75, which defines clear objectives for
2022-23. The document defines the strategy for 2022- 23 across forty-one areas.
Each chapter includes:
• Objectives for 2022
• Progress already made
• Binding constraints
• Way forward for achieving stated objectives

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Central Ministries were brought on board for inputs, suggestions and comments, with
each draft of individual chapters being circulated for consultations. The draft document
was also circulated to all the States and Union Territories from whom valuable suggestions
were received and incorporated.
Over 800 stakeholders from within the government – central, state and district levels –
and about 550 external experts were consulted during the preparation of the document.
The forty-one chapters in the document have been disaggregated under four
sections: Drivers, Infrastructure, Inclusion and Governance.
The first section on Drivers focuses on the engines of economic performance with
chapters on growth and employment, doubling of farmers’ incomes; upgrading the science,
technology and innovation eco-system; and promoting sunrise sectors like fintech and
tourism.
Some of the key recommendations in the section on drivers include:
• Steadily accelerate the economy to achieve a GDP growth rate of about 8% on

average during 2018-23. This will raise the economy’s size in real terms from USD
2.7trillion in 2017-18 to nearly USD 4 trillion by2022-23. Increase the investment
rate as measured by gross fixed capital formation (GFCF) from the present 29% to
36% of GDP by 2022.
• In agriculture, shift the emphasis to converting farmers to ‘agripreneurs’ by further
expanding e-National Agriculture Markets and replacing the Agricultural Produce
Marketing Committee Act with the Agricultural Produce and Livestock Marketing
Act.

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• Give a strong push to ‘Zero Budget Natural Farming’ techniques that reduce costs,
improve land quality and increase farmers’ incomes. This has emerged as a tested
method for putting environment carbon back into the land.
• To ensure maximum employment creation, complete codification of labor laws and
a massive effort must be made to upscale and expand apprenticeships.
• Launch a mission “Explore in India” by revamping minerals exploration and
licensing policy.
The second section on Infrastructure deals with the physical foundations of growth
which are crucial to enhancing the competitiveness of Indian business as also ensuring
the citizens’ ease of living.
Some of the key recommendations in the section on infrastructure include:
• Expedite the establishment of the Rail Development Authority (RDA), which is

already approved. RDA will advise or make informed decisions on an integrated,
transparent and dynamic pricing mechanism for the railways.
• Double the share of freight transported by coastal shipping and inland waterways.
Initially, viability gap funding will be provided until the infrastructure is fully
developed. Develop an IT-enabled platform for integrating different modes of
transport and promoting multi-modal and digitized mobility.
• With the completion of the Bharat Net programme in 2019, all 2.5 lakh gram
panchayats will be digitally connected. Aim to deliver all government services at the
state, district, and gram panchayat level digitally by2022-23.
The section on Inclusion deals with the urgent task of investing in the capabilities of all
of India’s citizens. The three themes in this section revolve around the dimensions of
health, education and mainstreaming of traditionally marginalized sections of the
population.
Some of the key recommendations in the section on inclusion include:
• Successfully implementing the Ayushman Bharat programme including the

establishment of 150,000 health and wellness centres across the country, and
rolling out the Pradhan Mantri Jan Arogya Abhiyaan (PM-JAY).
• Create a focal point for public health at the central level with state counterparts.
Promote integrative medicine curriculum.
• Upgrade the quality of the school education system and skills, including the creation
of a new innovation ecosystem at the ground level by establishing at least 10,000
Atal Tinkering Labs by 2020.
• Conceptualize an electronic national educational registry for tracking each child’s
learning outcomes.
• As already done in rural areas, give a huge push to affordable housing in urban
areas to improve workers’ living conditions and ensure equity while providing a
strong impetus to economic growth.
The final section on Governance delves deep into how the governance structures can be
streamlined and processes optimized to achieve better developmental outcomes.
Some of the key recommendations in the section on governance include:

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• Implement the recommendations of the Second Administrative Reforms Commission
as a prelude to appointing a successor for designing reforms in the changing context
of emerging technologies and growing complexity of the economy.
• Set up a new autonomous body, viz., the Arbitration Council of India to grade
arbitral institutions and accredit arbitrators to make the arbitration process cost
effective and speedy, and to preempt the need for court intervention.
• Address the backlog of pending cases - shift part of workload out of regular court
system.
• Expand the scope of Swachh Bharat Mission to cover initiatives for landfills, plastic
waste and municipal waste and generating wealth from waste.
NITI Aayog’s role in SDG goals: NITI Aayog has been entrusted with the role to co-
ordinate ‘Transforming our world: the 2030 Agenda for Sustainable Development’ (called
as SDGs). Moving ahead from the Millennium Development Goals (MDGs), SDGs have
been evolved through a long inclusive process for achievement during 2016-2030. The
SDGs cover 17 goals and 169 related targets resolved in the UN Summit meet 25-27
September 2015, in which India was represented at the level of Hon’ble Prime Minister.
These SDGs will stimulate, align and accomplish action over the 15-year period in areas
of critical importance for the humanity and the planet.
The task at hand for NITI Aayog is not merely to periodically collect data on SDGs but to
act proactively fructify the goals and targets not only quantitatively but also maintaining
high standards of quality. Ministry of Statistics and Programme Implementation (MoSPI)
has already undertaken a parallel exercise of interaction with the ministries to evolve
indicators reflecting the SDG goals and targets.

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Poverty
Q1. Proportion of people below poverty line referred as: POVERTY GAP
Q2. Poverty due to sudden Health Issue or Calamity and temporary in Nature: Situational
Poverty
Q3. Total women workforce participation rate:
Q4. First state in India to have conducted comprehensive survey to ascertain the extent of
Multidimensional Poverty in the state: Andhra Pradesh
Q5. According to Multidimensional Poverty Index, India lifted ……...people out of poverty
between 2006 and 2016: 271 million
Q6. Arvind Panagariya committee: to collect comprehensive unemployment data
Q7. Total population of youth aged between 15-30 who are not under any employment
education or training?
Q8. Who is the chief of NITI Aayog committee for Employment status?
Q9. The First P in PPP: Purchasing Power Parity
Q10. Describe various Poverty estimation method in relation of: (DESCRIPTIVE)

a. per Capital income
b. Inflation and consumption
c. Safety net program
Q11. Explain any 3-poverty alleviation and employment generation program? (DESCRIPTIVE)

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Poverty is difficult to define and measure. The concept about poverty differs from society
to society. In simple terms, poverty means the inability to meet basic needs.
Poverty is closely related to two other concepts – Inequality and Vulnerability.
• Inequality focuses on the distribution of income or consumption, across the

whole population. In the context of poverty analysis, inequality is very important
when we consider relative poverty.
• Vulnerability is defined as the risk of falling into poverty in the future, even if the
person is not necessarily poor now. Vulnerability is often associated with the
adverse effects from calamities, income fall, financial crisis etc.
The World Bank defines poverty as “the inability to attain a minimal standard of
living”.
The World Bank website on ‘Poverty Reduction and Equity’ defines poverty in
comprehensive manner, saying,
“Poverty is hunger. Poverty is lack of shelter. Poverty is being sick and not being able to see
a doctor. Poverty is not having access to school and not knowing how to read. Poverty is not
having a job, is fear for the future, living one day at a time. Poverty is losing a child to illness
brought about by unclean water. Poverty is powerlessness, lack of representation and
freedom.”
Poverty’s Many Dimensions
Poverty is multidimensional – Exhuming economic, social and psychological effects on
the deprived. This means that just lack of income is not enough to explain poverty.
Sometimes social backwardness causes difficult living conditions. Deep surveys indicate
that poor people connect ill-being to poor health, malnutrition, inadequate sanitation and
clean water, insufficient education, social exclusion, bad housing conditions, violence,
shame etc.
Amartya Sen’s Approach
Amartya Sen considers many non-economic factors like the right to live without shame,
accessibility to opportunities etc. while measuring poverty. In recent years, poverty is
looked from this multidimensional angle and not just form one dimension like income.
Absolute Poverty
It is the extreme kind of poverty involving the chronic lack of basic food, clean water,
health and housing. People in absolute poverty tend to struggle to live and experience a
lot of child deaths from preventable diseases like malaria, cholera and water-
contamination related diseases. This type is usually long-term in nature, and often handed
to them by generations before them. This kind of poverty is usually not common in the
developed world.
In India, the Rangarajan Committee (2014) has set the absolute poverty line as a
monthly per capita expenditure of Rs 972 for an individual in rural areas as the absolute
poverty line. Absolute poverty line is thus expressed as an income necessary to meet the
minimum consumption.
Absolute poverty is measured by counting the number of persons or heads living below
the specified poverty line in terms of minimum consumption expenditure or income per
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capita. Since this approach to measure absolute poverty is concerned with counting the
number of persons or heads, this is generally referred to as Head-Count Ratio approach
to measure absolute poverty.
If N stands for the number of population, H for the number of persons having consumption
expenditure or income below the absolute poverty line, then head-count ratio of absolute
poverty can be written as:
Head-Count Ratio (HCR) = H/N
The proportion of population below the poverty line is called the poverty ratio or
headcount ratio (HCR).
Relative Poverty
This kind is usually in relation to other members and families in the society. For example,
a family can be considered poor if it cannot afford vacations, or cannot buy presents for
children at Christmas, or cannot send its young to the university. Even though they have
access to government support for food, water, medicine and free housing, they are
considered poor because the rest of the community have access to superior services and
amenities.
Relative poverty reflects income inequalities in a country and like absolute poverty
negatively affects social welfare. Income inequalities in a society are generally measured
through estimating the value of Gini coefficient.
Social welfare function can be written as
W = (Y, I, F)
where W = Social welfare
Y = Per capita income
I = Inequality index
P = Absolute poverty
Situational or Transitory poverty

It is generally caused by a sudden crisis or loss and is often temporary. Events causing
situational poverty include environmental disasters, divorce, or severe health problems.
Generational or Chronic Poverty
It occurs in families where at least two generations have been born into poverty. Families
living in this type of poverty are not equipped with the tools to move out of their situations.
Poverty line
Poverty line is the level of income needed to meet the minimum living conditions.
Poverty line is the amount of money needed for a person to meet his basic needs. It is
defined as the money value of the goods and services needed to provide basic welfare to
an individual.
The conventional approach to measuring poverty is to specify a minimum expenditure (or
income) required to purchase a basket of goods and services necessary to satisfy basic
human needs. This minimum expenditure is called the poverty line.
The basket of goods and services necessary to satisfy basic human needs is the
poverty line basket or PLB.

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Poverty line differs from one country to another, depending upon the idea of poverty
Poverty line changes from one country to another. In developed countries, where there is
advanced standard of living and welfare concepts, poverty line is high as basic standard
to live include higher consumption requirements and accessibility to many goods and
services.
On the other hand, in many less developed countries, the basic requirements will be low
and contains mostly essential consumption items needed to sustain life. This means that
poverty line is set by the welfare standard in a particular economy.
Poverty line in India
In India, poverty line is defined as the income needed to obtain the set minimum standard
of living. Poverty here is absolute poverty.
For measuring poverty, a poverty line is set. The poverty line is the level of income
needed to meet the minimum standard of living. People who have an income less than
this is considered as below poverty line.
Poverty line basket or PLB: The basket of goods and services necessary to satisfy basic
human needs is the poverty line basket or PLB
The poverty rate is the ratio of the number of people (in a given age group) whose income
falls below the poverty line; taken as half the median household income of the total
population. It is also available by broad age group: child poverty (0-17 years old), working-
age poverty and elderly poverty (66-year-olds or more).
The poverty gap is the ratio by which the mean income of the poor falls below the poverty
line. The poverty line is defined as half the median household income of the total
population. The poverty gap helps refine the poverty rate by providing an indication of the
poverty level in a country. This indicator is measured for the total population, as well as
for people aged 18-65 years and people over 65.
According to the World Bank, poverty gap is the mean shortfall from the poverty line
(counting the non-poor as having zero shortfall), expressed as a percentage of the poverty
line. Poverty gap measures the intensity of poverty. It shows the extent to which
individuals on average fall below the poverty line
Global Poverty Indicator
International poverty line (IPL)
As differences in price levels across the world evolve, the global poverty line has to be
periodically updated to reflect these changes. Since 2015, the last update, we have used
$1.90 as the global line. As of fall 2022, the new global line is updated to $2.15.
The poverty line for lower middle-income countries (LMICs) has moved to US$3.65
from US$3.20, while the poverty line for upper middle-income countries (UMICs) has
moved to US$6.85 from US$5.50.
The new global poverty line is set at $2.15 using 2017 prices. This means that anyone
living on less than $2.15 a day is considered to be living in extreme poverty. Just
under 700 million people globally were in this situation in 2017.

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The rise in the International Poverty Line reflects an increase in the costs of basic food,
clothing, and shelter needs in low-income countries between 2011 and 2017, relative to
the rest of the world. In other words, the real value of $2.15 in 2017 prices is the same as
$1.90 was in 2011 prices.
The nominal value of the international poverty line has increased from $1.90 in 2011
prices to $2.15 in 2017 prices. However, the real value of the international poverty line
remains virtually unchanged. In other words, a basket of goods and services that would
cost $1.90 in 2011 in a typical low-income country would cost $2.15 in 2017 on average.
The change in the international poverty line is largely driven by changes in the purchasing
power parities of low-income countries between 2011 and 2017.
Purchasing power parity exchange rates (PPPs) are used to estimate the international
poverty line (IPL) in a common currency and account for relative price differences across
countries when measuring global poverty.
The analysis indicates that updating the $1.90 IPL in 2011 PPP dollars to 2017 PPP dollars
results in an IPL of approximately $2.15—a finding that is robust to various methods and
assumptions.
Based on an updated IPL of $2.15, the global extreme poverty rate in 2017 falls from the
previously estimated 9.3 to 9.1 percent, reducing the count of people who are poor by 15
million and bringing the total to 680 million.
In 2015, the World Bank convened a group of eminent economists led by Prof. Sir
Anthony Atkinson to advise the Bank on the best methodology to measure and monitor
global poverty until 2030, the target date of the World Bank’s first corporate goal to end
extreme poverty.
Poverty in India: Causes
The causes of poverty in Indian economy are:
1. High growth rate of population

2. Landless labour
3. Low productivity
4. Low food production
5. Illiteracy
6. Political system and corruption
7. Lack of job opportunity
8. Inequalities of income
9. Migration
10. Regional Disparities
11. Excessive population pressure on Agriculture.
12. Lack of capital
13. Lack of Vocational Education and Training.
Measurement of poverty in India

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Extending from the first attempt to set a poverty line – the Working Group of 1962 to the
Rangarajan Task Force (2014), poverty estimation methodology has undergone an
evolution in India.
For the construction of the PLB, various expert groups appointed by the Planning
Commission were depending upon the Household Consumption Expenditure data
compiled by the NSSO.
It should be noted that ‘determination of poverty line’ and ‘identifications of

poor/beneficiary’ are almost different things. Poverty line is (was) determined by Planning
Commission on the basis of data provided by ‘National Sample Statistical Organization’
(NSSO). NSSO conducts a survey at 5-year interval of a mere sample to capture
consumption patterns of various sections of society.
Subsistence Diet Poverty Line

One of the earliest estimations of poverty was done by Dadabhai Naoroji in his book,
‘Poverty and the Un-British Rule in India’. He formulated a poverty line ranging from
Rs 16 to Rs 35 per capita per year, based on 1867-68 prices. The poverty line proposed
by him was based on the cost of a ‘subsistence diet’ consisting of ‘rice or flour, dhal,
mutton, vegetables, ghee, vegetable oil and salt’.
National Planning Committee, 1938
In 1938, the National Planning Committee (NPC) estimated a poverty line ranging from Rs
15 to Rs 20 per capita per month. Like the earlier method, the NPC also formulated its
poverty line based on ‘a minimum standard of living perspective in which nutritional
requirements are implicit’. In 1944, the authors of the ‘Bombay Plan’ suggested a poverty
line of Rs 75 per capita per year.
The Working Group of 1962
The earliest poverty line figuring in the discussions on poverty in post-independence India
was Rs. 20 (rural) and Rs.25 (urban) per capita per month at 1960-61 prices. This was
first crated by planning commission to determine desirable minimum level of expenditure
required to make a living.
• Recommended ‘national minimum consumption expenditure’ for a household of
five
o Rural – Rs 100/ month (Rs 20/ Person)
o Urban – Rs 125/ month (Rs 25/ Person)
• It excluded Health and educational expenditure on assuming that it is provided
by state.
• Used recommendation on ‘Balanced diet’ by Indian council of Medical Research.
YK Alagh Task Force of 1979

Poverty line of 1962 was used during 1960’s and 1970’s at both National and state level.
But it attracted intense debate for its low figures. In response taskforce under Dr. Y.K.
Alagh was created to revisit poverty line.
A founding work for poverty estimation in the country occurred with the recommendations
of the YK Alagh Task Force appointed by the Planning Commission in July 1977 and made
recommendations in 1979. The Task Force named as “Projections of Minimum Needs

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and Effective Consumption Demand” provided a quantitative measure of poverty by
estimating a calorie-based consumption basket.
Average calorie requirements were estimated, separately for the all -India rural and
urban areas on the recommendation of Nutrition Expert Group. This resulted in different
‘Poverty line basket’ for urban and rural areas.
• Rs.49.09 per capita per month was associated with a calorie intake of 2400 per
capita per day in rural areas and
• Rs.56.64 per capita per month with a calorie intake of 2100 per day in urban
areas at 1973-74 prices.
This ‘Monthly Per Capita Expenditure’ was termed as poverty line.
This poverty line was updated by the Planning Commission till 1993 until the setting up
of a new expert group for devising a new methodology for poverty estimation.
Expert group 1993 (Lakdawala)
In its report, submitted in 1993, this committee retained the separate rural and urban
poverty lines recommended by the Alagh Committee at the national level and made the
following suggestions:
(i) consumption expenditure should be calculated based on calorie consumption as earlier;
(ii) state specific poverty lines should be constructed and these should be updated
using the Consumer Price Index of Industrial Workers (CPI-IW) in urban areas and
Consumer Price Index of Agricultural Labour (CPI-AL) in rural areas; and
(iii) discontinuation of ‘scaling’ of poverty estimates based on National Accounts
Statistics. This assumes that the basket of goods and services used to calculate CPI-IW
and CPI-AL reflect the consumption patterns of the poor.
The Lakdawala methodology and poverty lines formed the basis of poverty estimates
nationally and across states until 2004-05.
Expert Group 2005 (Tendulkar)
In 2005, another expert group to review methodology for poverty estimation, chaired by
Suresh Tendulkar, was constituted by the Planning Commission to address the following
three shortcomings of the previous methods:
(i) consumption patterns were linked to the 1973-74 poverty line baskets (PLBs) of goods
and services, whereas there were significant changes in the consumption patterns of the
poor since that time, which were not reflected in the poverty estimates;
(ii) there were issues with the adjustment of prices for inflation, both spatially (across
regions) and temporally (across time); and
(iii) earlier poverty lines assumed that health and education would be provided by the
State and formulated poverty lines accordingly.
It recommended four major changes:
(i) a shift away from calorie consumption-based poverty estimation;
(ii) a uniform poverty line basket (PLB) across rural and urban India;
(iii) a change in the price adjustment procedure to correct spatial and temporal issues with
price adjustment; and
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(iv) incorporation of private expenditure on health and education while estimating
poverty.
The Committee recommended using Mixed Reference Period (MRP) based estimates, as
opposed to Uniform Reference Period (URP) based estimates that were used in earlier
methods for estimating poverty.
During previous methodologies, a ‘uniform reference period’ was used that included 30
days just before the survey for all food and non-food items. But Tendulkar group changed
‘reference period’ to past one year for 5 non-food items viz., clothing, footwear, durable
goods, education and institutional medical expenses. For other items 30 days reference
period was retained. This is called ‘Mixed reference period’.
The Committee computed new poverty lines for rural and urban areas of each state. It
concluded that the all-India poverty line was Rs 446.68 per capita per month in rural
areas and Rs 578.80 per capita per month in urban areas in 2004-05.
National poverty lines (in Rs per capita per month) for the years 2004-05, 2009-10
and 2011-12:
Year Rural (Rs. per capita per Urban (Rs. per capita per
month) month)
2004-05 446.7 578.8
2009-10 672.8 859.6
2011-12 816.0 1000.0
It is often considered that Tendulkar Poverty line is equivalent to World Bank’s poverty
line in PPP terms. This purely incidental and poverty line calculated by Tendulkar had
nothing to do with World Bank methodologies. But government often defended poverty
line claiming that it is as per global standards.
Expert group, 2012 (Rangarajan)
Expert group submitted its report in 2014 giving ‘per capita monthly expenditure’ as Rs.
972 in rural areas and Rs. 1407 in urban areas as poverty line. It preferred to use
‘Monthly expenditure of Household of five’ for the poverty line purpose which came out to
be Rs 4860 in rural areas and Rs. 7035 in urban areas. It argued that considering
expenditure of household is more appropriate than that of individuals. Living together
brings down expenditure and as expenses such as house rent, electricity etc. gets divided
into 5 members.
For normative levels of adequate nutrition – average requirements of calories, proteins and
fats based on ICMR norms, differentiated by age, gender and activity for all-India rural
and urban regions is considered.
1. Calories requirement – 2090 kcal in urban areas and 2155 Kcal in rural areas
2. Proteins – for rural areas 48 gms/day and for urban areas 50 gms/day
3. Fat – for urban areas 28 gms/day and for rural areas 26 gms/day
This translates to a monthly per household expenditure of Rs 4860 / in Rural India and
of Rs 7035/ for urban India—assuming a family of 5-members in each case.”

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As per these estimates the 30.9% of the rural population and 26.4% of the urban
population was below the poverty line in 2011-12. The all-India ratio was 29.5%.
In rural India, 260.5 million individuals were below poverty and in urban India 102.5
million were under poverty. Totally, 363 million were below poverty in 2011-12 which is
approximately 93 mn higher than the Tendulkar estimate of 270 mn.
Committees Tendulkar C. Rangarajan
Planning Planning
Set Up By
Commission Commission
Set Up In 2005 2012
Submitted Report 2009 2014
Monthly
Per capita
Poverty Estimation Method Expenditure of
Expenditure Monthly
family of five.
Urban Poverty Line Per Day

33 47
per Person
Urban Poverty Line Per Month

1000 1407
per Person
Urban Poverty Line Per Month,

5000 7035
Family of Five Members
Rural poverty line Per Day

27 32
Per Person
Rural poverty line (Rs) per

816 972
Month Per Person
Rural poverty line (Rs) Per

4080 4860
month Family of Five Members
BPL (Below Poverty Line) In

27 crores 37 crores
crore
only calorific value in Calorie +Protein +

Calorie Expenditure
Expenditure fat
Calories In Rural Areas 2400 2155
Calories In Urban areas 2100 2090

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Committees Tendulkar C. Rangarajan
1-food
Only counts 2- non-food items
Expenditure on food, such as education,
Main Focus Areas
health, education, 3-healthcare,
clothing. 4-clothing,
5-transport 6. Rent
Official poverty line of India is as per Tendulkar committee recommendations and

21.9% of India’s population is below poverty line as per Tendulkar committee. 25.4%
rural and 13.7% urban population under poverty line.

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Unemployment
Major Indicators
Labour force, or the “economically active”, refers to the population that supplies or seeks
to supply labour for production of goods and services and therefore, includes both the
“employed” and the “unemployed.
The whole population of the country can be categorized into "labour force" and "not in
the labour force". Not in the labour force means that population who cannot do job like
children and elderly or who are keeping house or any other person who is not interested
in doing any job. Labour force means that population who is either employed or who is
unemployed i.e. not employed but actively looking for job. Unemployment is referred as
the percentage of number of unemployed people to that of the labour force.
Labour Force Participation Rate is the section of working population in the age group of
16-64 in the economy currently employed or seeking employment. People who are still
undergoing studies, housewives and persons above the age of 64 are not factored in the
labour force. [In India, the age group taken to measure LFPR – 15-64 years]
• Labour force participation rate (LFPR): LFPR is defined as the percentage of

persons in the labour force in the population.
𝑵𝒐. 𝒐𝒇 𝑬𝒎𝒑𝒍𝒐𝒚𝒆𝒅 𝑷𝒆𝒓𝒔𝒐𝒏𝒔 + 𝑵𝒐. 𝒐𝒇 𝑼𝒏𝒆𝒎𝒑𝒍𝒐𝒚𝒆𝒅 𝑷𝒆𝒓𝒔𝒐𝒏𝒔

𝑳𝑭𝑷𝑹 = ∗ 𝟏𝟎𝟎
𝑻𝒐𝒕𝒂𝒍 𝑷𝒐𝒑𝒖𝒍𝒂𝒕𝒊𝒐𝒏
• Worker Population Ratio (WPR): WPR defined as the percentage of employed

persons in the population.
𝑵𝒐. 𝒐𝒇 𝑬𝒎𝒑𝒍𝒐𝒚𝒆𝒅 𝑷𝒆𝒓𝒔𝒐𝒏𝒔

𝑾𝑷𝑹 = ∗ 𝟏𝟎𝟎
• Proportion Unemployed (PU): It is defined as the percentage of persons

unemployed in the population.
𝑵𝒐. 𝒐𝒇 𝑼𝒏𝒆𝒎𝒑𝒍𝒐𝒚𝒆𝒅 𝑷𝒆𝒓𝒔𝒐𝒏𝒔

𝑷𝑼 = ∗ 𝟏𝟎𝟎
• Unemployment Rate (UR): UR is defined as the percentage of persons unemployed

among the persons in the labour force.
𝑵𝒐. 𝒐𝒇 𝑼𝒏𝒆𝒎𝒑𝒍𝒐𝒚𝒆𝒅 𝑷𝒆𝒓𝒔𝒐𝒏𝒔

𝑼𝑹 = ∗ 𝟏𝟎𝟎
𝑵𝒐. 𝒐𝒇 𝑬𝒎𝒑𝒍𝒐𝒚𝒆𝒅 𝑷𝒆𝒓𝒔𝒐𝒏𝒔 + 𝑵𝒐. 𝒐𝒇 𝑼𝒏𝒆𝒎𝒑𝒍𝒐𝒚𝒆𝒅 𝑷𝒆𝒓𝒔𝒐𝒏𝒔

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Unemployment: Data Sources
• Reports of Census of India

• National Sample Survey Organization's (NSSO) Reports of Employment and
Unemployment situation
• Directorate General of Employment and Training Data of registration with Employment
Exchanges (under Ministry of Labour and Employment)
Periodic Labour Force Survey

Considering the importance of availability of labour force data at more frequent time
intervals, National Sample Survey Office (NSSO) [under National Statistical
Organization (NSO)] launched Periodic Labour Force Survey (PLFS) in April 2017.
The objective of PLFS is primarily twofold:
1. to estimate the key employment and unemployment indicators (viz. Worker
Population Ratio, Labour Force Participation Rate, Unemployment Rate) in the
short time interval of three months for the urban areas only in the ‘Current
Weekly Status’ (CWS).
2. to estimate employment and unemployment indicators in both ‘Usual Status’
(ps+ss) and CWS in both rural and urban areas annually.
Five Annual Reports covering both rural and urban areas giving estimates of all
important parameters of employment and unemployment in both usual status (ps+ss)
and current weekly status (CWS) have been released. These five Annual Reports are
brought out on the basis of data collected in PLFS during July 2017- June 2018, July
2018-June 2019, July 2019-June 2020, July 2020 - June 2021 and July 2021-June
2022.
Now the sixth Annual Report is being brought out by NSSO on the basis of Periodic
Labour Force Survey conducted during July 2022-June 2023.
Major Highlights of the 6th Annual Report

Increasing Trend in Labour Force Participation Rate (LFPR) for persons of age 15
years and above
• In rural areas, LFPR increased from 50.7% in 2017-18 to 60.8% in 2022-23 while
for urban areas it increased from 47.6% to 50.4%.
• LFPR for male in India increased from 75.8% in 2017-18 to 78.5% in 2022-23 and
corresponding increase in LFPR for female was from 23.3% to 37.0%.
Increasing Trend in Worker Population Ratio (WPR) for persons of age 15 years and
above
• In rural areas, WPR increased from 48.1% in 2017-18 to 59.4% in 2022-23 while
for urban areas it increased from 43.9% to 47.7%.
• WPR for male in India increased from 71.2% in 2017-18 to 76.0% in 2022-23 and
corresponding increase in WPR for female was from 22.0% to 35.9%.

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Decreasing Trend in Unemployment Rate (UR) for persons of age 15 years and
above
• In rural areas, UR decreased from 5.3% in 2017-18 to 2.4% in 2022-23 while for
urban areas it decreased from 7.7% to 5.4%.
• UR for male in India decreased from 6.1% in 2017-18 to 3.3% in 2022-23 and
corresponding decrease in UR for female was from 5.6% to 2.9%.
Principal activity status (ps) - The activity status on which a person spent relatively
long time (major time criterion) during 365 days preceding the date of survey, was
considered the usual principal activity status of the person.
Subsidiary economic activity status (ss)- The activity status in which a person in
addition to his/her usual principal status, performs some economic activity for 30
days or more for the reference period of 365 days preceding the date of survey, was
considered the subsidiary economic activity status of the person.

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Different types of Unemployment
1. Structural Unemployment
A longer lasting form of unemployment caused by fundamental shifts in the economy.
Structural unemployment occurs for a number of reasons - workers lacking the
requisite job skills, change in government policy or change in technology, or they may
live far from regions where jobs are available but are unable to move there or simply
unwilling to work because existing wage levels are too low. So, while jobs are available,
there is a serious mismatch between what companies need and what workers can offer.
Structural unemployment exists when there are jobs available and people willing to do
work, but there are not a sufficient number of people qualified to fill the vacant jobs.
In other words, employers can neither find enough workers nor can workers find jobs
for which they are qualified. Structural unemployment often occurs when the demand
for specific types of labour changes as the economy changes.
Example: Earlier people used hand looms to make textiles. Many weavers were engaged
in making cloth through the use of these hand looms. The Industrial Revolution came
along, and machines were created that could weave the cloth without the use of a
skilled weaver. All of a sudden, weavers were out of work, and their skills didn't match
the needs of the marketplace.
2. Cyclical Unemployment
This type of unemployment occurs because of the cyclical trends in the business cycle.
When business cycles are at their peak, cyclical unemployment will be low because
economic activity is high. When the economic output as measured by GDP falls the
business cycle is low and cyclical unemployment will rise. Cyclical unemployment
arises because the overall demand for labour declines due to business cycle downturns.
3. Frictional Unemployment
This kind of unemployment arises due to people moving between jobs, career or
location or people entering and exiting the labour force or workers and employers
having inconsistent or incomplete information.
Many people first leave job and then they try to find a new job according to their choice
and this process takes some time to apply for new jobs and for employers to make a
selection and hence they remain unemployed for this transition period.
That is why frictional unemployment is also called as transitional unemployment and
it is always present in the economy. Frictional unemployment can occur even when an
economy is at full employment - where anyone who wants a job at the current wage
can have one.
4. Disguised Unemployment
Disguised unemployment exists where part of the labour force is either left without
work or is working in a redundant manner. Under this kind of unemployment, the
overall productivity of labour is very less and marginal productivity of labour is zero.
Disguised/hidden unemployment exists frequently in developing countries whose large
populations create a surplus in the labour force. In India, agriculture sector is facing
this kind of unemployment.
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5. Seasonal Unemployment
Seasonal unemployment occurs when people are unemployed at certain times of the
year, because they work in industries where they are not needed all year round.
Examples of industries where demand, production and employment are seasonal
include tourism and leisure, farming, sugar factory etc.
6. Voluntary unemployment
Voluntary unemployment is defined as a situation when workers choose not to work at
the current equilibrium wage rate. For one reason or another, workers may elect not to
participate in the labour market. There are several reasons for the existence of
voluntary unemployment including excessively generous welfare benefits and high
rates of income tax. Voluntary unemployment is likely to occur when the equilibrium
wage rate is below the wage necessary to encourage individuals to supply their labour.
7. Underemployment
It is a situation in which a worker is employed, but not in the desired capacity, whether
in terms of compensation, skill level, experience, education or their availability. While
not technically unemployed, the underemployed are often competing for available jobs.
Underemployed workers can be divided into several categories. The most common types
of underemployed workers are listed below:
• Skilled workers in low-paying jobs
• Skilled workers in low-skill jobs
• Part-time workers preferring full-time hour job
Phillips Curve: An economic concept developed by A. W. Phillips in 1958, which states

that inflation and unemployment have a stable and inverse relationship. According to the
Phillips curve, the lower an economy's rate of unemployment, the more rapidly wages paid
to labour increase in that economy and hence higher the inflation in the economy.
The theory states that with economic growth comes inflation, which in turn should lead
to more jobs and less unemployment. However, the original concept has been somewhat
disproven empirically due to the occurrence of stagflation in the 1970s, when there were
high levels of both inflation and unemployment.
8%
Inflation rate
6%
4%
2%
0% 2% 4% 6% 8% 10%
Unemployment rate
Figure: Philips curve

www.crackgradeb.com +919310558455, 8708288334
AGRICULTURE
Rural Development
& CENSUS, SECC 2011
A-642, Second Floor, Sector-19, Noida-201301

Syllabus
Concept of Rural Area, Structure of the Indian Rural Economy- Importance and role of the
rural sector in India - Economic, Social and Demographic Characteristics of the Indian
rural economy, causes of Rural Backwardness.
Rural population in India; Occupational structure, Farmers, Agricultural Labourers,
Artisans, Handicrafts, Traders, Forest dwellers/tribes and others in rural India- Trends of
change in rural population and rural workforce; problems and conditions of rural labour;
Issues and challenges in Handlooms
Panchayati Raj Institutions – Functions and Working. MGNREGA, NRLM – Aajeevika,
Rural Drinking water Programmes, Swachh Bharat, Rural Housing, PURA and other rural
development programmes.
Concept of Rural Area

A rural area is an open swath of land that has few homes or other buildings, and not very
many people.
Feature of rural area
 Rural areas are areas which are not towns or cities.

 Communities are smaller in size and sparsely populated. Typical rural areas have a
low population density and small settlements. Agricultural areas and areas with
forestry typically are described as rural.
 The main occupation is agriculture.
 Their standard of living will be different. The population shows homogeneity of
language, culture, customs etc.
In rural areas, because of their unique economic and social dynamics, and relationship to
land-based industry such as agriculture, forestry and resource extraction, the economics
are very different from cities and can be subject to boom and bust cycles and vulnerability
to extreme weather or natural disasters, such as droughts.
Difference between Urban and rural area
BASIS FOR URBAN RURAL
COMPARISON
Meaning A settlement where the population An area located in the outskirts,

is very high and has the features is known as rural.
of a built environment, is known
as urban.
Includes Cities and towns Villages and hamlet
Life Fast and complicated Simple and relaxed
Environment Greater isolation from nature. Direct contact with nature.

Associated with Non-agricultural work, i.e. trade, Agriculture and livestock.
commerce or provision of services.
Population size Densely populated Sparsely populated
Development Planned settlement exists in urban Developed randomly, based on

areas that are developed according availability of natural vegetation
to the process of urbanization and and fauna in the area.
industrialization.
Social mobility Highly intensive Less intensive
Division of Always present at the time of job No such division

labour allotment.
Structure of the Indian Rural Economy

It can be divided in to three section
1. Traditional rural economy
2. Rural economy in colonial period
3. Rural economy after independence
Traditional rural economy
Ancient Period: Rural economy in India goes back to the Indus Valley Civilisation (c.
2600- 1500 B.C.). This was an urban civilisation having a wide agricultural base.
1. Pastoral Economy: In the beginning of the Rigvedic period (c. 1500-1000 BC) there
occurred a complete rupture with the earlier economy.
2. Agricultural Economy: During the later Vedic Phase (c. 1000-600 BC) agricultural
economy became predominant. Cattle remained the chief movable property of the
people.
3. Introduction of Iron: Iron-based production in agriculture and crafts became
central in the age of the Buddha (c. 600-322 BC). Now, iron ploughshare, socketed
axes, knives, razors, sickles and other tools were used for productive purposes. Rice,
wheat, barley, millets, pulses, sugarcane and cotton were grown extensively.
4. State and Agriculture: State control of agriculture became an important feature of
the Mauryan period (c. 322-200 BC). Big farms were established and managed by
the state. Slaves and hired labourers belonging to the Shudra Varna were employed
in them.
5. Feudal Relationships A feudal type of society started emerging during the Gupta
period (AD 1300- 600) which gradually got stabilised. Land grants were made by the
Gupta emperors, their feudatories and private individuals which created a class of
powerful intermediaries between the king and the masses. Grants of land and
villages were made to the Brahmans and temples.
Medieval Period: A judicious combination of agriculture and village cotton industries
based on agricultural products characterises the medieval rural economy. Production was
mainly for local consumption. But a part of the rural produce entered local trade.
Colonial rural economy: The rural economy underwent some important changes during
the colonial rule in India. De-industrialisation, new land revenue settlements, like the
zamindari, ryotwari and mahalwari systems and commercialisation of agriculture were
some of the important features of the rural economy during this period. The measures
introduced by the British also caused a considerable strain to the jajmani system.

Rural economy after independence

The policy makers were responding to the dismal agricultural situation in India at that
time. This was marked by low productivity, dependence on imported food grains, and the
intense poverty of a large section of the rural population. They felt that a major reform in
the agrarian structure, and especially in the landholding system and the distribution of
land, was necessary if agriculture were to progress.
From the 1950s to the 1970s, a series of land reform laws were passed – at the national
level as well as in the states – that were intended to bring about these changes.
Abolition of the Zamindari system

Objective: Its objective was to bring the cultivators into direct relationship with the state
through eliminating the intermediary interests of the zamindaris and the chain of
subinfeudation.
Benefits:
This measure led to eviction of tenants on a large scale by the zamindaris who claimed
major portion of their land as khudkasht.
Tenancy abolition and regulation acts

Aim: providing security of tenure, reduction of rent and facilitating acquisition of
ownership rights by tenant cultivators.
Benefits
 The tenants got the right to acquire ownership of land they cultivated by paying rent
for a limited number of years, say, eight years or ten years.
 A substantial number of tenants acquired security of tenure and ownership of land.
Land Ceiling Acts

Ceilings were imposed on present family landholdings as well as on future acquisitions.
The state had to acquire surplus land from the big landowners with due compensation
and distribute the same among the marginal peasants, small peasants and landless
agricultural labourers.
Consolidation of fragmented landholdings

Once implemented this measure would promote adequate investment of capital and inputs
in land and boost efficiency and economy in agriculture.
Transformations in rural society after independence

Several profound transformations in the nature of social relations in rural areas took place
in the post-Independence period, especially in those regions that underwent the Green
Revolution. These included:
 an increase in the use of agricultural labour as cultivation became more intensive;
 a shift from payment in kind (grain) to payment in cash;
 A loosening of traditional bonds or hereditary relationships between farmers or
landowners and agricultural workers (known as bonded labour) and the rise of a
class of ‘free’ wage labourers.
Cause of rural backwardness and its remedies

Rural development is a comprehensive term. It essentially focuses on action for the
development of areas that are lagging behind in the overall development of the village
economy.
Some of the areas which are challenging and need fresh initiatives for development in rural
India include
1. Development of human resources including – literacy, more specifically, female
literacy, education and skill development – health, addressing both sanitation and
public health
2. Land reforms.
3. Development of the productive resources of each locality
4. Infrastructure development like electricity, irrigation, credit, marketing, transport
facilities including construction of village roads and feeder roads to nearby highways,
facilities for agriculture research and extension, and information dissemination.
5. Special measures for alleviation of poverty and bringing about significant
improvement in the living conditions of the weaker sections of the population emphasising
access to productive employment opportunities All this means that people engaged in farm
and non-farm activities in rural areas have to be provided with various means that help
them increase the productivity. They also need to be given opportunities to diversify into
various non-farm productive.
Key initiative of the government for upliftment of rural area
Kindly read schemes of Ministry of rural development, Panchayati raj etc
Rural Development:
In October 1974, the Department of Rural Development came into existence as a part of
Ministry of Food and Agriculture. On 18th August 1979, the Department of Rural
Development was elevated to the status of a new Ministry of Rural Reconstruction. It was
renamed as Ministry of Rural Development on 23rd January 1982.
In March 1995, the Ministry was renamed as the Ministry of Rural Areas and Employment
with three departments namely Department of Rural Employment and Poverty Alleviation,
Rural Development and Wasteland Development. Again, in 1999 Ministry of Rural Areas
and Employment was renamed as Ministry of Rural Development.
Rural Development is a process which aims at improving the well being and self-
realisationof people living outside the urbanized areas through collective process.
Community: is a group of people who live in a geographical area and have an interest in
each other for the purpose of making a living.
Development: connotes growth or maturation. It implies gradual and sequential phases
of change. It refers to the upward or increasing differentiation.
Community Development: It is a movement designed to promote better living for the
community with the active participation and/or the initiative at the community.
Community Development Programme: One of the initial moving forces for launching the
Community Development Programme in India was First Prime Minister, Pt. Jawaharlal
Nehru.

The central objectives of India’s first planned programme of community development were
to secure the total development of the material and human resources of rural areas and
to develop local leadership and selfgoverning institutions.
The CDP was launched on 2nd October 1952 on the birth anniversary of Father of Nation,
Mahatma Gandhi in the country with active cooperation of Ford Foundation, USA. It was
intended to be the first step in a programme of intensive development which was expected
to cover the entire country over a period of time.
Land Reforms: Government of India appointed a committee named as Kumarappan
committee headed by Kumarappan in 1949 to initiate the land reforms. It was the
beginning of land reforms in India. The Kumarappan committee recommended radical
institutional reforms and recommended the abolition of Zamindari System.
Rural population in India

India is predominantly a rural country. As per the 2011 Census, 68.8% of the country’s
population and 72.4% of the workforce reside in rural areas.
Population as per Census 2011: 1.21 Billion:
 The population of India as on 1st March 2011, stood at 1.21 Billion having
registered a growth of 17.64% over Census 2001 figure.
 Population – 1210.19 million [Males – 623.7 million (51.54%) Females – 586.46
million (48.46%)].
Between 2001 and 2011

 India’s urban population increased by 31.8% as compared to 12.18% increase in
the rural population.
 Population projections indicate that India will continue to be predominantly rural
till 2050, after which, urban population is estimated to overtake rural population
Some facts of rural population in India

 Altogether, 833.5 million persons live in rural area as per Census 2011, which was
more than two-third of the total population, while 377.1 million persons live in
urban areas. Urban proportion has gone up from 17.3 per cent in 1951 to 31.2 per
cent in 2011.
 Nearly 70% of the country's population lives in rural areas where, for the first time
since Independence, the overall growth rate of population has sharply declined,
according to the latest Census.
 Of the 121 crore Indians, 83.3 crore live in rural areas while 37.7 crore stay in urban
areas, said the Census of India's 2011
 The rural–urban distribution is 68.84% and 31.16% respectively
 The level of urbanisation increased from 27.81% in the 2001 Census to 31.16% in
the 2011 Census, while the proportion of rural population declined from 72.19% to
68.84%.
 The statistics reveal that while the maximum number of people living in rural areas
in a particular state is 15.5 crore in Uttar Pradesh,
 The data also reflects that 18.62% of the country's rural population lives in Uttar
Pradesh and 13.48% urban population lives in Maharashtra.
Panchayati Raj Institutions – Functions and Working

The "Ministry of Panchayati Raj was created on 27thMay 2004.

Evolution of panchayat raj system in India

Pre British Period
 The Rig Veda, one of India's oldest sacred books and historical sources, mentions
village communities across the sub-continent that were self-governing over
millennia, serving as the main interface between the predominantly agrarian village
economies and the higher authorities.
 Arthashastra of Kautilya gives a comprehensive account of the system of village
administration prevailing in his time.
 The village was the basic unit of administration in the Vedic period.
 The Vedic polity consisted of two popular assemblies namely the ‘sabha’ and the
‘samiti.’ The Samiti enjoyed the powers of electing the King, while the Sabha
indulged in Judicial functions.
 During the period of Mughals, Akbar It was autonomous in its own sphere and
exercised powers of local taxation, administrative control, justice and punishment.
British Era
From 1870 Viceroy Lord Mayo’s resolution gave the needed impetus to the development of
local institutions.
The real benchmarking of the government policy on decentralization can, however, be
attributed to Lord Ripon who, in his famous resolution on local self-government on May
18, 1882, recognized the twin considerations of local government:
(i) Administrative efficiency
(ii) Political education.
The Royal Commission on Decentralisation (1907) under the chairmanship of C.E.H.
Hobhouse recognised the importance of panchayats at the village level.
The commission recommended that to associate rural people also to be a part of
administration it is necessary to constitute panchayats.
The Montague Chelmsford reforms brought a significant development of village
Panchayats in a number of provinces.
D.P.Misra, the then Minister under Government of India Act 1935, remarked that the
local self – Government bodies are inefficient.
Post-independence Period:
Committees to setup panchayat raj institution in India
Balwant Rai Mehta Committee

The Balwant Rai Mehta Committee was a committee appointed by the Government of India
in January 1957 to examine the working of the Community Development Programme
(1952) and the National Extension Service (1953) and to suggest measures for their better
working.
The committee suggested the following:
 An early establishment of elected local bodies and devolution to them of necessary
resources, power and authority.
 Panchayats should have special powers to levy a special tax on land revenues and
home taxes, etc.
 Its function should cover the development of agriculture in all the aspects,
promotion of cottage and local industries, etc.,
 The body must be constituted for five years by means of indirect elections from the
village panchayats.

 Governance in a way that was large enough for efficiency and economy of
administration and small enough for sustaining a sense of involvement in Citizens.
Ashok Mehta Committee

With the coming of the Janata Party into power at the Centre in 1977.It was decided to
appoint a high-level committee under the chairmanship of Ashok Mehta to examine and
suggest measures to strengthen PRIs. The Committee had to evolve an effective
decentralised system of development for PRIs.
They made the following recommendations:
 Reservation of seats for the weaker sections
 Two seats for women
 Adequate financial resources for the panchayats
 The requirement of Constitutional sanctions
 To extend people’s participation in developmental activities.
The recommendations of these committees were not implemented due to the falloff Janata
Government. During 1980’s, two important Committees were appointed to look into local
governments: GVK Rao Committee in 1985 and Dr L.M. Singhvi Committee in 1986.
G.V.K.Rao Committee
The committee suggested that the PRIs should be assigned the work of monitoring,
planning and implementation of varied rural development programmes with a Block
Development office.
L.M.Singhvi Committee
 L.M. Singhvi Committee recommended the following.
 Panchayati Raj Institutions should be constitutionally recognized and protected.
 A new chapter in the constitution should be provided to define their powers and
functions free and fair election to be conducted through the election commission.
 It also recommended for the appointment of finance commission and all the rural
development programmes are entrusted to the Panchayati Raj Institutions
by amending schedule VII of the constitution.
The L.M. Singhvi Committee recommended a constitutional status to the PRIs in 1986.
However, the Sarkaria Commission on Centre-State Relations (1988) has not forwarded
it.
Article 40: It confers the responsibility upon State to take steps to organise Village
Panchayats and endow them with such powers and authority as may be necessary to
enable them to function as units of self-government. But it does not give guidelines for
organising village panchayats.
73RD AND 74TH AMENDMENTS

In 1989, the central government introduced two constitutional amendments.
Aim: Strengthening local governments and ensuring an element of uniformity in their
structure and functioning across the country.
Passed in: in 1992,
The 73rd Amendment- It is about rural local governments (which are also known as
Panchayati Raj Institutions

74th amendment – It was made the provisions relating to urban local government
(Nagarpalikas).
These amendments added two new parts to the Constitution, namely, added Part IX
titled “The Panchayats” (added by 73rd Amendment) and Part IXA titled “The
Municipalities” (added by 74th Amendment).
The 73rd amendment made a provision for the mandatory creation of the Gram Sabha.
The Gram Sabha would comprise all the adult members registered as voters in the
Panchayat area. Its role and functions are decided by State legislation.
Basic units of democratic system-Gram Sabhas (villages) and Ward Committees
(Municipalities) comprising all the adult members registered as voters.
Three-tier system of panchayats at village, intermediate block/taluk/mandal and
district levels except in States with population is below 20 lakhs (Article 243B).
Seats at all levels to be filled by direct elections Article 243C (2).
Seats reserved for Scheduled Castes (SCs) and Scheduled Tribes (STs) and the
chairpersons of the Panchayats at all levels also shall be reserved for SCs and STs in
proportion to their population. If the States find it necessary, they can also provide for
reservations for the other backward classes (OBCs).
One-third of the total number of seats to be reserved for women.
One third of the seats reserved for SCs and STs.
One-third offices of chairpersons at all levels reserved for women (Article 243D).
Uniform five-year term and elections to constitute new bodies to be completed before
the expiry of the term.
 In the event of dissolution, elections compulsorily within six months (Article
243E).
 Independent Election Commission in each State for superintendence,
direction and control of the electoral rolls (Article 243K).
 Panchayats to prepare plans for economic development and social justice
in respect of subjects as devolved by law to the various levels of Panchayats
including the subjects as illustrated in Eleventh Schedule (Article 243G).
 74th Amendment provides for a District Planning Committee to consolidate
the plans prepared by Panchayats and Municipalities (Article 243ZD).
 Budgetary allocation from State Governments, share of revenue of certain taxes,
collection and retention of the revenue it raises, Central Government
programmes and grants, Union Finance Commission grants (Article 243H).
 Establish a Finance Commission in each State to determine the principles on
the basis of which adequate financial resources would be ensured for
panchayats and municipalities (Article 243I).
 The Eleventh Scheduled of the Constitution places as many as 29 functions
within the purview of the Panchayati Raj bodies.
 Areas where Part IX is not applicable: As per Article 243M of the Constitution,
provisions of Part IX of the Constitution are not applicable to:
(i) Scheduled Areas and Tribal Areas referred to in Article 244.
(ii) The States of Nagaland, Meghalaya and Mizoram.

(iii) The hill areas in the State of Manipur for which District Councils exist. (In
these areas, district councils and various types of village-level bodies are in
existence)
(iv) Panchayats at the district level to the hill areas of the District of Darjeeling
in the State of West Bengal.
(v) Provision of the Article 243D with respect to reservation of seats for
Scheduled Castes is not applicable to the State of Arunachal Pradesh.
Governance in Fifth Schedule Areas:

The Fifth Schedule of the Constitution deals with the administration and control of
Scheduled Areas as well as of Scheduled Tribes residing in the areas other than the
States of Assam, Meghalaya, Tripura and Mizoram. Article 244 of the Constitution makes
special provisions for the administration of certain areas called "Scheduled Areas" in
States other than Assam, Meghalaya, Tripura and Mizoram.
On the basis of report of Bhuria Committee submitted in 1995, the Parliament enacted
"The Provisions of the Panchayats (Extension to the Scheduled Areas) Act, 1996" (PESA),
for its applicability to Fifth Schedule Areas and tribal areas as per article 243M ( 4) (b) of
the Constitution.
PFSA Act, 1996 extends Part lX of the Constitution with certain modifications and
exceptions, to the Fifth Schedule Areas notified under Article 244(1) of the Constitution.
At present, Filth Schedu]e Areas exist in 10 States viz. Andhra Pradesh, Chhattisgarh,
Gujarat, Himachal Pradesh, Jhaikhand, Madhya Pradesh, Maharashtra, Odisha,
Rajasthan and Telangana.
The Sixth Schedule of the Constitution provides for creation of Autonomous Districts
to preserve tribal autonomy and protect the cultural and economic interests of the hill
tribes.
73rd Amendment & key changes

Three Tier Structure
All States now have a uniform three tier Panchayati Raj structure
.
Gram panchayat: - At the base is the ‘Gram Panchayat‘. A Gram Panchayat covers a
village or group of villages.

 The amendment also made a provision for the mandatory creation of the Gram
Sabha.
 The Gram Sabha would comprise all the adult members registered as voters in the
Panchayat area.
 Its role and functions are decided by State legislation.
Mandal or Taluka Panchayats: - The intermediary level is the Mandal (also referred to as
Block or Taluka). These bodies are called Mandal or Taluka Panchayats. The intermediary
level body need not be constituted in smaller States.
Zilla Panchayat: At the apex is the Zilla Panchayat covering the entire rural area of the
District.
Elections
All the three levels of Panchayati Raj institutions are elected directly by the people.
Term
 The term of each Panchayat body is five years.
 If the State government dissolves the Panchayat before the end of its five year term
fresh elections must be held within six months of such dissolution.
Reservation
 One third of the positions in all panchayat institutions are reserved for women.
Reservations for Scheduled Castes and Scheduled Tribes are also provided for at all
the three levels, in proportion to their population.
 If the States find it necessary, they can also provide for reservations for the other
backward classes (OBCs).
 These reservations apply not merely to ordinary members in Panchayats but also to
the positions of Chairpersons or ‘Adhyakshas‘ at all the three levels.
 Reservation of one-third of the seats for women is not merely in the general category
of seats but also within the seats reserved for Scheduled Castes, Scheduled Tribes
and backward castes.
Transfer of Subjects
 Twenty-nine subjects, which were earlier in the State list of subjects, are identified
and listed in the Eleventh Schedule of the Constitution.
 These subjects are to be transferred to the Panchayati Raj institutions.
 These subjects were mostly linked to development and welfare functions at the local
level.
 The actual transfer of these functions depends upon the State legislation.
 Each State decides how many of these twenty-nine subjects would be transferred to
the local bodies.
Powers, authority and responsibilities of Panchayats (Article 243G).
The Legislature of a State may, by law, endow the Panchayats with such powers and
authority……. …with respect to—…...the matters listed in the Eleventh Schedule.
Not applicable: The areas inhabited by the Adivasi populations in many States of India
In 1996, a separate act was passed extending the provisions of the Panchayat system to
these areas.
The idea behind this act is that local traditions of self-government should be protected
while introducing modern elected bodies. This is only consistent with the spirit of diversity
and decentralisation.

Reason: Many Adivasi communities have their traditional customs of managing common
resources such as forests and small water reservoirs, etc.
Purpose: The new act protects the rights of these communities to manage their resources
in ways acceptable to them.
Changes
For this purpose, more powers are given to the Gram Sabhas of these areas and elected
village panchayats have to get the consent of the Gram Sabha in many respects.
State Election Commissioners

The State government is required to appoint a State Election Commissioner who would be
responsible for conducting elections to the Panchayati Raj institutions.
Earlier, this task was per formed by the State administration which was under the control
of the State government.
Office of state election commission: The office of the State Election Commissioner is
autonomous like the Election Commissioner of India. However, the State Election
Commissioner is an independent officer and is not linked to nor is this officer under the
control of the Election Commission of India.
State Finance Commission
The State government is also required to appoint a State Finance Commission once in five
years.
Function of state finance commission
 This Commission would examine the financial position of the local governments in
the State.
 It would also review the distribution of revenues between the State and local
governments on the one hand and between rural and urban local governments on
the other.
 This innovation ensures that allocation of funds to the rural local governments will
not be a political matter.
SECC 2011: SECC-2011 is a study of socio economic status of rural and urban households and
allows ranking of households based on predefined parameters. SECC 2011 has three census
components which were conducted by three separate authorities but under the overall
coordination of Department of Rural Development in the Government of India. Census in Rural
Area has been conducted by the Department of Rural Development (DoRD). Census in Urban areas
is under the administrative jurisdiction of the Ministry of Housing and Urban Poverty Alleviation
(MoHUPA). Caste Census is under the administrative control of Ministry of Home Affairs: Registrar
General of India (RGI) and Census Commissioner of India.
The 1st ever post independence Socio-Economic and Caste Census (SECC) 2011 began on 29 June
2011 from the Sankhola village of Hazemara block in West Tripura District. Government released
the results of SECC-2011 in July 2015. SECC-2011 was first caste based census of Independent
India. Earlier, caste based data was collected in 1931 Census. It was also SECC-2011 was also
India’s first paperless Census conducted on handheld devices by the government in 640 districts
of the country. Government would use SECC-2011 data in all programmes such as NFSM,
MGNREGA, Deen Dayal Upadhyaya Grameen Kaushalya Yojana etc and to identify the
beneficiaries of direct benefit transfer (DBT) under the JAM (Jan Dhan-Aadhaar-Mobile) Trinity.
The methodology for conducting the Census in Rural areas is based upon suggestion of Expert
Group chaired by Dr NC Saxena and a Pilot Study carried out in 29 States/Union Territories,
thereafter.

The SECC, 2011 has the following three objectives:
 To enable households to be ranked based on their Socio- Economic status. State
Governments can then prepare a list of families living below the poverty line
 To make available authentic information that will enable caste-wise population
enumeration of the country
 To make available authentic information regarding the socio economic condition, and
education status of various castes and sections of the population
Criteria used in SECC 2011: SECC uses the parameters laid down by the S R Hashim
committee appointed by the erstwhile Planning Commission of India i.e., automatic exclusion on
the basis of 14 parameters, automatic inclusion on the basis of 5 parameters and grading of
deprivation on the basis of seven criteria.
14 parameters of Automatic Exclusion: -

 motorized 2/3/4 wheeler/fishing boat.
 Mechanized 3-4 wheeler agricultural equipment.
 Kisan credit card with credit limit of over Rs. 50,000/-.
 Household member government employee.
 Households with non-agricultural enterprises registered with government.
 Any member of household earning more than Rs. 10,000 per month.
 Paying income tax.
 Paying professional tax.
 3 or more rooms with pucca walls and roof.
 Owns a refrigerator.
 Owns landline phone.
 Owns more than 2.5 acres of irrigated land with 1 irrigation equipment.
 5acres or more of irrigated land for two or more crop season.
 Owning at least 7.5 acres of land or more with at least one irrigation equipment.
5 parameters of Automatic inclusion:
 Households without shelter.
 Destitute, living on alms.
 Manual scavenger families.
 Primitive tribal groups.
 Legally released bonded labour.
Households based on 7 markers of deprivation:
 Households with Kutchha house
 No adult member in working age
 Household headed by female and no working age male member
 Household with handicapped members and no able bodied adult
 Household with no literate over 25 years
 Landless households engaged in manual labour
 SC/ST households.
SECC 2011: Very Important for exam

Key Findings from Rural India
Total Households in the Country (Rural plus Urban) 24.49 Crore
Total Rural Households 17.97 Crore
Total Excluded Households (based on fulfilling any of the 14 parameters of 7.07

exclusion - Crore(39.35%)
i. Motorized 2/3/4 wheeler/fishing boat.
ii. Mechanized 3-4 wheeler agricultural equipment.
iii. Kisan credit card with credit limit of over Rs. 50,000/-.

iv. Household member government employee.
v. Households with non-agricultural enterprises registered with government.
vi. Any member of household earning more than Rs. 10,000 per month.
vii. Paying income tax.
viii. Paying professional tax.
ix. 3 or more rooms with pucca walls and roof.
x. Owns a refrigerator.
xi. Owns landline phone.
xii. Owns more than 2.5 acres of irrigated land with 1 irrigation equipment.
xiii. 5 acres or more of irrigated land for two or more crop season.
xiv. Owning at least 7.5 acres of land or more with at least one irrigation
equipment.
Automatically included (based on fulfilling any of the 5 parameters of inclusion 15.95 Lakh
- (0.89%)
i. Households without shelter.
ii. Destitute, living on alms.
iii. Manual scavenger families.
iv. Primitive tribal groups.
v. Legally released bonded labour.
Households considered for deprivation 10.74 Crore
Households not reporting deprivation 2.01 Crore
Households with any one of the 7 deprivation 8.73 Crore
Households with one or less room, kuccha walls and kuccha roof 2.38 Crore
(13.28%)
No adult member in household between age 18 and 59 65.33 Lakh

(3.64%)
Female headed household with no adult male member between 16 and 59 69.43 Lakh
(3.86%)
Households with differently able member with no other able bodied adult 7.20 Lakh
member (0.40%)
SC/ST Households 3.87 Crore

(21.56%)
Households with no literate adult above age 25 years 4.22 Crore

(23.52%)
Landless households deriving a major part of their income from manual labour 5.40 Crore
(30.04%)
Rural Population Cultivation 5.41 Crore

(30.10%)
Rural Population in Manual Casual labour 9.20 Crore

(51.18%)

Rural Population in Part time or full time domestic service 44.87 Lakh
(2.50%)
Rural Population in Rag picking, etc. 4.10 Lakh

(0.23%)
Rural Population in Non Agricultural own account enterprise 28.88 Lakh

(1.61%)
Rural Population in Begging/charity/alms 6.69 Lakh

(0.37%)
Rural Population in Others ( including government service, private service, 2.51 Crore
PSU employment, etc. (13.97%)
II - Deprivation Data
III - Sources of Household income
Key Findings:
 Out of the 24.4 crore households in India, 17.9 crore live in villages, which is 73.3% of all
households in India. Out of these, 10.7 Crore households are deprived.
 Close to 30% rural households are landless and do the manual causal labour for bread
winning; 13% live in one room huts (with kacha walls or roof) and 21.56% of them are from
SC/ST category. More than half (56.25 %) rural households in India are landless.
 36% rural people are illiterate in India. This figure was recorded 32% in Census 2011.
 35% of urban Indian households qualify as poor.
 In nearly 74.5 per cent of the rural households, the main earning family member makes
less than Rs 5,000 per month (or Rs 60,000 annually). In just 8% per cent of households
does the main earning member makes more than Rs 10,000 per month. 90.3 % of
housholds with out salaried jobs
 India’s 0.1% population is comprised of transgender. Highest proportion of transgenders is
in Andaman & Nicobar Islands, West Bengal, Gujarat, Odisha and Mizoram.
 The SECC-2011 was NOT conducted under the Census Act 1948, which implies that the
information collection was done on self-declaration model of the respondents.
A household is usually a group of persons who normally live together and take their meals from
a common kitchen/common cooking unless the exigencies of work prevent any of them from doing
so. The persons in a household may be related or unrelated or a mix of both. If any female member
of a normal household decides or desires to declare herself as a separate household, she is treated
as a separate household.
Information related to the following parameters will be collected at the level of the
individual and household:
 Occupation
 Education
 Disability
 Religion
 SC/ST Status
 Name of Caste/Tribe
 Income and Employment characteristics
 Main source of income

 Possession of Assets
 Housing/Dwelling Type
 Consumer Durables and Non-Durables
 Land Ownership
Literate: A person aged 7 and above who can both read and write with understanding in any
language is to be taken as literate. People who are blind and can read in Braille will be treated as
literates.
Age structure: India’s age structure is a unique one as it has high proportion of the people under
active population or under work force category. At the same time the population structure of the
country shows a developing country in transition. As per the 2011 census, 62.5% of the population
belongs to the workforce age group of 15-59 years. The dependent population (less than 15 and
above 59) is 37.5%. Most importantly, the low age population is 29.5% and this hints that the
fertility rate may go up in the coming decades as well.
Table: Age structure of India’s population as per census 2011
Per cent of total

Age category
population
0-14 29.5
15-59 62.5
60 plus 8.0
Population structure shows that India has nearly two thirds of its population in the workforce
group. In the recent future, i.e., by around 2026, the percentage of the workforce in total
population will maximize at 66%.
The schemes MGNREGA, NRLM – Aajeevika, Rural Drinking water Programmes, Swachh
Bharat, Rural Housing, PURA and other rural development programmes are seperately
covered in Minsitry wise schemes documents .

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Urbanization in India
➢ Urbanization is a form of social transformation from traditional rural societies to

modern, industrial, and urban communities. It is long term continuous process. It
is progressive concentration of population in urban unit. Urbanization is a process
of switch from spread out pattern of human settlements to one of concentration
in urban centers.
➢ The process of urbanization in India through history because what distinguished
India most, from many other countries of the world is its long tradition of
urbanization dating back as far as about five thousand years, when Indus Valley
civilization saw the birth as the earliest urban settlement in human history. In
India, the urban tradition continuous throughout these centuries and during the
ancient period of our history there were many well planned, big, and beautiful
cities in different parts of the country.
➢ The process of urbanization in developed countries is characterized by high level
of urbanization and some of them are in final stage of urbanization process.
Majority of the developing countries, the rate of urbanization is very fast, and it
is not accompanied by industrialization but rapid growth of service sector in
economies.
➢ Future growth of world’s population is supposed to take place in the urban areas
of less developed countries and the contribution of India in terms of urban
population size, is quite substantial. India is one among the country where the
process of urbanization is an integral part of the development.
➢ According to 2011 census only 31 percent of the population of India lives in urban
areas. According to UN’s the urban population of India will be less than 35
percent in 2020 and approximately 40 percent 2030. By 2030 another 225 million
people will be added to the Indian urban areas, it is more than the population of
Japan and Germany combined.
➢ This module aims to study the present and past tendency of urbanization in India
and also growth of cities, metropolitan cities, and distribution of urban
population in states and UTs of India since 1901 to 2011 Census periods.
➢ In India, urbanization has been relatively slow during the last century period as
compared with many other developing countries.
Definition of Urban Places (Indian Scenario):

In India the definition of urban remained more or less same for the period 1901-1951.
However, in 1961 census, several modifications were made the definition of town
adopted for the 1961 census was much more rigorous and further, this new definition
was followed all over the country. Indian Census definition of urban area in census of
India, 2001 two types of towns was identified.
Statutory towns: The first category of urban units is known as Statutory Towns. These
towns are notified under law by the concerned State/UT Government and have local
bodies like municipal corporations, municipalities, municipal committees, etc.,
irrespective of their demographic characteristics as reckoned on 31st December 2009.
Examples: Vadodara (M Corp.), Shimla (M Corp.) etc. All places with municipality,
corporation, cantonment board or notified town area committee declared by state law.
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Census towns: The second category of Towns (as in item 2 above) is known as Census
Town. These were identified on the basis of Census 2001 data.
City/Town: according to Census of India (2011), places which satisfy following criteria can
be defined as town
a) Any place with a Municipality, Corporation or Cantonment area, Notified
town area.
b) A minimum population of 5000.
c) At least 75% of male working population engaged in non-agricultural
activities.
d) A density of population of at least 400 persons per square kilometer.
Urban Agglomeration (UA): An urban agglomeration is a continuous urban spread
constituting a town and its adjoining outgrowths (OGs), or two or more physically
contiguous towns together with or without outgrowths of such towns. An Urban
Agglomeration must consist of at least a statutory town and its total population (i.e. all
the constituents put together) should not be less than 20,000 as per the 2001 Census. In
varying local conditions, there were similar other combinations which have been treated
as urban agglomerations satisfying the basic condition of contiguity. Examples: Greater
Mumbai UA, Delhi UA, etc.
Out Growths (OG): an outgrowth (OG) is a viable unit such as a village or a hamlet or an
enumeration block made up of such village or hamlet and clearly identifiable in terms of
its boundaries and location. Some of the examples are railway colony, university campus,
port area, military camps, etc., which have come up near a statutory town outside its
statutory limits but within the revenue limits of a village or villages contiguous to the town.
While determining the outgrowth of a town, it has been ensured that it possesses the
urban features in terms of infrastructure and amenities such as pucca roads, electricity,
taps, drainage system for disposal of wastewater etc. educational institutions, post offices,
medical facilities, banks etc. and physically contiguous with the core town of the UA.
Examples: Central Railway Colony (OG), Triveni Nagar (N.E.C.S.W.) (OG), etc. Each such
town together with its outgrowth(s) is treated as an integrated urban area and is
designated as an ‘urban agglomeration’.
In the 2011 Census, 475 places with 981 OGs have been identified as Urban
Agglomerations as against 384 UAs with 962 OGs in 2001 Census.
Number of UAs/Towns and Out Growths (OGs):
Number of towns
Type of Towns/UAs/OGs
2001 Census 2011 Census
1 Statutory Towns 3799 4041
2 Census Towns 1362 3894
3 Urban Agglomerations 384 475
4 Out Growths 962 981
Source: Data computed and compiled from 2001 & 2011 Census report
At the Census 2011 there are 7,935 towns in the country. The number of towns has
increased by 2,774 since last Census. Many of these towns are part of UAs and the rest
are independent towns. The total number of Urban Agglomerations/Towns, which
constitutes the urban frame, is 6166 in the country.
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Population of UAs/Towns:
❖ The total urban population in the country as per Census 2011 is more than 377 million
constituting 31.16% of the total population.
❖ Class I UAs/Towns: The UAs/Towns are grouped on the basis their population in
Census. The UAs/Towns which have at least 1,00,000 persons as population are
categorized as Class I UA/Town. At the Census 2011, there are 468 such UAs/Towns. The
corresponding number in Census 2001 was 394.
264.9 million persons, constituting 70% of the total urban population, live in this Class I
UAs/Towns. The proportion has increased considerable over the last Census. In the
remaining classes of towns, the growth has been nominal.
❖ Million Plus UAs/Towns: Out of 468 UAs/Towns belonging to Class I category, 53

UAs/Towns each has a population of one million or above each. Known as Million Plus
UAs/Cities, these are the major urban centers in the country. 160.7 million Persons (or
42.6% of the urban population) live in these Million Plus UAs/Cities.18 new UAs/Towns
have been added to this list since the last Census.
❖ Mega Cities: among the Million plus UAs/Cities, there are three very large UAs with
more than 10 million persons in the country, known as Mega Cities. These are Greater
Mumbai UA (18.4 million), Delhi UA (16.3 million) and Kolkata UA (14.1 million). The
largest UA in the country is Greater Mumbai UA followed by Delhi UA. Kolkata UA which
held the second rank in Census 2001 has been replaced by Delhi UA. The growth in
population in the Mega Cities has slowed down considerably during the last decade.
Greater Mumbai UA, which had witnessed 30.47% growth in population during 1991-
2001, has recorded 12.05% during 2001-2011. Similarly Delhi UA (from 52.24% to 26.69%
in 2001-2011) and Kolkata UA (from 19.60% to 6.87% in 2001-2011) have also slowed
down considerably.
Causes of Urbanization in India:
Urbanization has become a common feature of Indian society. Growth of Industries has
contributed to the growth of cities. As a result of industrialization people have started
moving towards the industrial areas in search of employment. This has resulted in the
growth of towns and cities. Various reasons have led to the growth of cities. They are as
follows:
➢ Industrialization: Industrialization is a trend representing a shift from the old
agricultural economics to novel non-agricultural economy, which creates a
modernized society. Through industrial revolution, more people have been
attracted to move from rural to urban areas on the account of improved
employment opportunities. Industrialization has increased employment
opportunities by giving people the chance to work in modern sectors in job
categories that aids to stir economic developments.
➢ Commercialization: Commerce and trade play a major role in urbanization. The
distribution of goods and services and commercial transactions in the modern era
has developed modern marketing institutions and exchange methods that have
tremendously given rise to the growth of towns and cities. Commercialization and
trade comes with the general perception that the towns and cities offer better
commercial opportunities and returns compared to the rural areas.
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➢ Social benefits and services: There are numerous social benefits attributed to life
in the cities and towns. Examples include better educational facilities, better living
standards, and better sanitation and housing, better health care, better recreation
facilities, and better social life in general. On this account, more and more people
are prompted to migrate into cities and towns to obtain the wide variety of social
benefits and services which are unavailable in the rural areas.
➢ Employment opportunities: In cities and towns, there are ample job opportunities
that continually draw people from the rural areas to seek better livelihood.
Therefore, the majority of people frequently migrate into urban areas to access
well-paying jobs as urban areas have countless employment opportunities in all
developmental sectors such as public health, education, transport, sports and
recreation, industries, and business enterprises. Services and industries generate
and increase higher value-added jobs, and this leads to more employment
opportunities.
➢ Modernization and changes in the mode of living: Modernization plays a very
important role in the process of urbanization. As urban areas become more
technology savvy together with highly sophisticated communication,
infrastructure, medical facilities, dressing code, enlightenment, liberalization, and
other social amenities availability, people believe they can lead a happy life in
cities. In urban areas, people also embrace changes in the modes of living namely
residential habits, attitudes, dressing, food, and beliefs. As a result, people migrate
to cities and the cities grow by absorbing the growing number of people day after
day.
➢ Rural urban transformation: As localities become more fruitful and prosperous
due to the discovery of minerals, resource exploitation, or agricultural activities,
cities start emerging as the rural areas transform to urbanism. The increase in
productivity leads to economic growth and higher value-added employment
opportunities. This brings about the need to develop better infrastructure, better
education institutions, better health facilities, better transportation networks,
establishment of banking institutions, better governance, and better housing. As
this takes place, rural communities start to adopt the urban culture and ultimately
become urban centers that continue to grow as more people move to such
locations in search of a better life. Urban rural transformation can be observed in
the following areas.
❖ Change in Dress habits.
❖ Adoption of modern Technology
❖ Enlightenment of women.
❖ Modern transport and communication. E.g.: Cell phones have become common
even among rural people.
❖ Active involvement in politics.
❖ Growth of infrastructure like Banks, Post office.
❖ Awareness among rural consumers.
❖ Increasing demand for sophisticated products like cosmetics etc.
Thus it can be noticed that there are significant changes in the life style of village
people. Indian villages have adopted urban culture and urban style of living.
However, all villages in India are not transformed. Only certain villages situated
close to the cities have been transformed.
➢ Spread of education: The literacy rate has increased among the rural people. They
have become more modernized.
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Salient features of Indian Urban Centers:
A sociological analysis of urban community contains several salient features. They are as
follows:
➢ Size: As a rule, in the same country and at the same period, the size of an urban
community is much larger than that of a rural community. In other words, urbanity
and size of a community are positively correlated.
➢ Marriage: In case of urban community there is a preponderance of love marriages
and inter-caste marriages. One also comes across a greater number of divorces.
Sons and daughters enjoy considerable freedom in choosing their life partners.
➢ Class extremes: In the words of Bogardus, “Class extremes characterize the city.” A
town and a city house the richest as well as the poorest of people. In a city, the
slums of the poor exist alongside the palatial bungalows of the rich, amidst the
apartments of the middle class members. The most civilized modes of behavior as
well as the worst racketeering are found in the cities.
➢ Social heterogeneity: If villages are the symbol of cultural homogeneity, the cities
symbolize cultural heterogeneity. The cities are characterized by diverse peoples,
races and cultures. There is great variety in regard to the food habits, dress habits,
living conditions, religious beliefs, cultural outlook, customs and traditions of the
urbanites.
➢ Social distance: Social distance is the result of anonymity and heterogeneity. Most
of one’s routine social contacts in a town or city are impersonal and segmentary in
character. In the urban community social responses are incomplete and
halfhearted. There is utter lack of personal involvement in the affairs of others.
➢ System of interaction: Georg Simmel held that the social structure of urban
communities is based on interest groups. The circles of social contact are wider in
the city than in the country. There is a wider area of interaction system per man and
per aggregate. This makes city life more complex and varied. The city life is
characterized by the predominance of secondary contacts, impersonal, casual and
short-lived relations. Man, at any rate, the man in the street, virtually loses his
identity being treated as a “number” having a certain “address”.
➢ Mobility: The most important feature of urban community is its social mobility. In
urban areas the social status of an individual is determined not by heredity or birth
but by his merit, intelligence and perseverance. Urbanity and mobility are
positively correlated.
➢ Materialism: In the urban community the social existence of man revolves round
wealth and material possessions. The worth of an urbanite today is being judged
not by what he is but by what he has. Status symbols in the form of financial
assets, salaries, costly home appliances count a lot for the urbanites.
➢ Individualism: The urbanites attach supreme importance to their own welfare and
happiness. They hesitate to think or act for the good of others.
➢ Rationality: In urban community there is emphasis on rationality. People are
inclined to reason and argue. Their relationship with others is governed, for the
most part, by the consideration of gain or loss. Relationship takes place on a
contractual basis. Once the contract is over, human relationship automatically
comes to a close.
➢ Anonymity: As Bogardus observes, the “Urban groups have a reputation for
namelessness.” By virtue of its size and population, the urban community cannot
be a primary group. Here nobody knows anybody, and nobody cares for anybody.
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The urbanites do not care for their neighbours and have nothing to do with their
miseries or pleasures.
➢ High Population & Density: The urban areas comprise of the cities and the towns,
and they have the higher density of population as compared to other areas. Since
urban areas are considered to be developed regarding education, medical and
health care, employment opportunities and so forth, therefore, individuals
migrate from rural areas to the urban. People belonging to rural and tribal
communities, who are residing in the conditions of poverty and backwardness,
possess this viewpoint that they will be able to enhance their living conditions by
migrating to urban areas. The primary feature of urban areas is characterized by
higher population density and vast human features in comparison to the areas
surrounding it. Urban areas are created and developed by the process of
urbanization (Indian Society and Social Change, 2011).
➢ Cultural Heterogeneity: In urban areas, cultural heterogeneity is commonly found.
This is due to the fact that individuals migrate to urban areas on a large scale. The
main aspects that lead to migration of the individuals are education, employment
opportunities and health care and medical facilities.
➢ Non-Agricultural Economy: The occupations and the employment opportunities of
the individuals in urban areas are based on the non-agricultural sector. Individuals
are professionals such as doctors, lawyers, researchers, teachers, educationists
and so forth. The other occupations include manufacturing, trade, and commerce,
professional and governance.
➢ Higher Social Mobility: In the urban areas, more social mobility is found amongst
the individuals. Individuals get easily adapted to the class structure, which can be
upper, middle, or lower class on the basis of the economic criteria. The
development of urbanization has contributed in the enhancement of skills and
capabilities of the individuals, training of the managers and the administrators,
distribution of technology and other innovative techniques and methods. With the
development of industrial economies, people have become resourceful, inventive,
and conscientious in their workings. With the advent of industrialization, there has
been expansion of employment opportunities amongst the individuals.
➢ Higher Social Communication: Communication is considered to be an imperative
area for the progress and welfare of the individuals. Individuals are required to
communicate with each other in order to implement all the activities of their daily
lives. For instance, people interact with each other at home, in the offices, on the
roads, at marketplaces and so forth. In urban areas, interaction amongst the
individuals is based on secondary contact and not primary contact. It means,
people normally communicate with each other through technology and making
use of other technical devices, such as emails, messaging, texts and so forth. Face
to face interaction and individual to individual interaction is not possible to a much
greater extent in urban areas. In other words, technology is more commonly used.
➢ Telecommunication Services: In urban areas, the role of telecommunications has
played an imperative role in the growth and advancement of the economy. There
is a broad potential for leading to an increase in the telecommunication services
within the country. Advanced communication services such as, fax, data
transmission and leased circuits are becoming increasingly common.
➢ Technological area: In urban areas, the usage of technology in the implementation
of all kinds of transactions and operations has largely led to progression of the
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individuals. In offices, individuals make use of technology to prepare reports,
documents and create communication links with the other individuals.
➢ Self-Living: In urban areas, individuals normally remain occupied with their own
lives. They normally adopt an urban way of life. Individuals, who are working and
are engaged in full time jobs, normally leave their homes in the mornings and
come back in the evenings. Full time employment opportunities are six days in a
week and individuals are required to work eight to ten hours each day. Formal
interaction, impersonal behavioral traits, non-kinship relationships, is some of the
attributes that the individuals possess. Establishment of shopping malls, parks,
playgrounds, clubs and so forth are some of the features that have occupied
individuals living in urban areas.
➢ Nuclear Families: In urban areas, individuals mostly reside in nuclear families and
family disintegration is considered to be an important feature. In the present
existence, there are number of individuals who are migrating to foreign countries.
In the local urban areas, too, individuals may live separately from their parents.
The family system within the urban areas is characterized as unstable. Individuals
normally move out of their homes to other regions with the main purposes of
education or employment opportunities. Moving away from the family is not
considered to be negative when one has the objective of looking for a better living 7
opportunity.
➢ Norm and social role conflict: The urban community is characterized by norm and
social role conflict. Factors such as the size, density, and heterogeneity of
the population, extreme occupational specialization and the class structure
prevalent in the urban context lead to such a state of affairs. In the absence of
uniform and fixed social norms, individuals or groups often seek divergent ends.
This has a considerable share in causing social disorganization.
➢ Rapid social and cultural change: Rapid social and cultural change characterizes
urban life. The importance attached to traditional or sacred elements has been
relegated to the background. The benefits of urban life have effected changes in
respect of norms, ideologies, and behavior patterns.
➢ Voluntary associations: The urban community is characterized by impersonal,
mechanical, and formal social contacts occurring among the people. Naturally they
have a strong desire for developing genuine social relationships to satisfy their
hunger for emotional warmth and sense of security. They form associations, clubs,
societies, and other secondary groups.
➢ Formal social control: Social control in urban community is essentially formal in
nature. Individual’s behavior is regulated by such agencies as police, jails, law
courts etc.
➢ Secularization of outlook: In cities ritual and kinship obligations are diluted. Caste
and community considerations yield to economic logic. This results in
secularization of outlook.
➢ Modernization: Urban areas provide impulses for modernization in society as a
whole.
Trends of Urban process in India

❖ Urbanization is an integral part of economic development, as the economy
develops; there is an increase in the per capita income and also the demand for
non- farm goods in the economy.
❖ These goods are not heavily land dependent and use more of the other factors of
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production especially labor and capital. They are cheaper if produced in the
urban sector of the economy since urban settlements enjoy economies of
agglomeration in manufacturing services and provision of infrastructure.
Economic growth influences the rate of urbanization, while urbanization in term,
affects the rate at which the economy grows. As the country urbanizes, the share
of national income that originates in the urban sector also increases.
❖ Urbanization brings in its wake a number of challenges such as rapid population
growth in urban settlements, which is cited as the biggest challenges in most
literature on this subject. This is consequences of births exceeding deaths,
migration of rural population to urban centers and also the classification of rural
settlements as towns. Apart from growing population, there are other challenges
too.
❖ The first set of challenges relates to the inadequate growth of formal
employment, resulting in the growth of the urban informal sector, open urban
unemployment and under employment. The second set of challenges arises out of
the inability of the urban physical and social infrastructure to grow in step with
population, resulting in the deterioration the quality of urban life.
Table: 1 Total population and urban population from 1901 - 2011
Census Total Urban Percentage of urban

year population population population to total
(million) (million) population
1901 238.3 25.8 10.83
1911 252.1 25.9 10.27
1921 251.3 28.1 11.18
1931 278.9 33.5 12.01
1941 318.6 44.2 13.87
1951 361.0 62.4 17.29
1961 439.2 78.9 17.96
1971 548.1 109.1 19.91
1981 683.3 159.4 23.33
1991 846.3 217.6 25.71
2001 1027.1 285.4 27.78
2011 1210.2 377.1 31.16
Source: Data computed and compiled from 1901-2011 Census report
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Total Population & Urban Population from 1901 To 2011
1400
1200
TOTAL
1000 POPULATION
(MILLION)
M
I 80 URBAN
POPULATION
L (MILLION)
L
600
I
O 400
N
200
0
1901 1911 1921 1931 1941 1951 1961 1971 1981 1991 2001
Figure: 1 Total population and urban population from 1901 to 2011
❖ Table 1 shows the total population and urban population from 1901 to 2011
census years. The population has increased from 238.3 million in 1901 to 1210.1
million in 2011.
❖ The size of the countries urban population is increased from 11 percent in 1901
to 31 percent in 2011.
❖ From this, it has been observed that there is more than tenfold increase in the
country’s urban population and the countries level of urbanization has increased
by only about 2.5 times during past 100 years.
❖ From table it is observed that during first half century 1901 to 1951, the growth
9
rate of urbanization has been very slow but after 1951 it starts increasing very
sharply.
When compared to the other means of development, the growth of urban
population in our country is almost similar to that of other modern
developments, especially after independence.
❖ It has been noticed that during the beginning of the 20th century, about ten
percent of the population are living in urban areas, especially in cities of smaller
size, with less than 20000 persons (Davis 1951) of 26 million urban population,
about 50 percent of them living in urban areas during 1901.
❖ During the 19th century the urban growth has shown increasing trend except on
account of accidental decline, especially 1901 -1911 on account of epidemics like
plague and others broke out population in many cities was temporarily evacuated
and millions of urbanites died. During later period until 1941 the growth rate of
urban population was quite slow.
❖ In between the 1901-1941, the size of urban population increases from 25.9
million to 44.1 million that is about 18 million of individuals was added in the
period of four decades.
❖ The enormous increase in the size and the proportion of urban population
accounted during the decade 1941-1951, and the proportion of urban population
increased to 18.3 percent. This increases the volume of urban population on
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account of massive displacement of population at the time of partition of the
country during 1947.
❖ Large number of displaced persons from Pakistan had settled in large cities of
India.
❖ Apart from this, generation of employment opportunities in the urban,
government and service sectors. The opening of large number of schools and
colleges and other educational institutions in cities, increased the volume of
security enhanced self-confidence and freedom to live anywhere in India.
❖ After independence had given ample opportunities to rural Indians to come and
settle in the nearby cities.
❖ In the period of 1951-1961 the growth of population bit slow, the exponential
growth rate was recorded as 2.34. Whereas the percentage gain in urban
population is only about 0.07, which was less than the gain 0.34 percent during
1941-1951 decade.
❖ This decline is on account of reorganization of state boundaries during 1956, and
also adoption of new definition of classification of rural, urban areas and towns.
❖ As a result of this about 803 smaller towns were merged with other towns or
declassified into rural areas. In spite of such decline in gain in the size of urban
population during the decade was on the increasing order as compared to earlier
decade.
❖ During decade 1961-1971 and 1971-1981 the movement of growth of urban
population had shown increasing order, growth rate exceeds 3.25 percentages
and the size of urban population had increased by 12.5 million on an average
per annum.
❖ From 1981 to 2001, census report shows the rate of growth of urban population
was found to be slow, during 1981 to 1991 and 1991 to 2001 the average annual
exponential growth rate recorded 3.9 and 2.73 per annum respectively.
❖ But the percentage increase the urban population stood at 17.97 to 27.78 during 10
1961-2001. It shows almost uniformity towards increase in urban population.
During the period between 2001 to 2011 the average growth rate of the urban
population had increased to 3.38 percent that is about 92 million of urban
population added, on account of globalization, attracted more employment
opportunities and improvement in both technical and professional education along with
more security of life and others.
Growth of Cities (%) in India

❖ Some of the towns were historically known as marketing and educational service
centers, meeting the needs and necessary service to the surrounding rural
settlement in the region.
❖ It has been greatly believed that for a quite a long period of time before the
second decade of the 20th century, both the size and number of towns remain
the same.
❖ During this period the size, growth rate urban population and transfer individuals
rural to urban area were found to be very slow.
Table: 2 Trends of urbanization in India census from 1901-2011

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Census Number of Total Urban Percentage of
year towns/UA population population urban
population
1901 1827 238396327 25851873 10.84
1911 1815 252093390 25941633 10.29
1921 1949 251321213 28086167 11.18
1931 2072 278977238 33455989 11.99
1941 2250 318660580 44153297 13.86
1951 2843 361088090 62443709 17.29
1961 2365 439234771 78936603 17.97
1971 2590 548159652 109113977 19.91
1981 3378 683329097 159462547 23.34
1991 3768 844324222 217177625 25.72
2001 5161 1027015247 285354954 27.78
2011 7935 1210193422 377105760 31.16
Source: Data computed and compiled from 1901-2011 Census report
❖ Table 2 gives the number of towns in each census periods from 1901 – 2011.
From the table it has been observed that except some negative increase during
1901-1911, there have been always positive increases of percentage of urban
population in India.
❖ During 1921-2011 the number of towns, and total urban population showing an
increasing trend. And also it has been observed that some fluctuations in number
of town 1961 census and after, it is because of some towns were declassified and
some new ones were added at each census counts.
❖ Following the changes in the definition of urban areas and city size in 1961
census. 1971 census after, the same 1961 census urban definition was adopted
with slight modification of the term “ town group” as urban agglomeration by
merging several towns. In 2011 census the number of towns UA’s increased to
7935 accounted for 31.16 percent urban population.
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Figure: 3 Levels of Urbanization in India, 2011

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Figure: 4 Levels of Urbanization in India, 2011

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Effect of Urbanization in India:
With a high rate of urbanization significant changes have taken place. The effect of
urbanization can be summed up as follows: Positive effect and Negative effect
➢ Positive effects: Urbanization yields several positive effects if it happens within the
appropriate limits. Some of the positive implications of urbanization therefore
include creation of employment opportunities, technological and infrastructural
advancements, improved transportation and communication, quality educational
and medical facilities, and improved standards of living.
I. Migration of rural people to urban areas.
ii. Employment opportunities in urban centers.
iii. Transport and communication facilities.
iv. Educational facilities.
v. Increase in the standard of living.
➢ Negative Effects:
Extensive urbanization or indiscriminate growth of cities may result in adverse
effects. They may be as follows:
Slums and associated problems: The acute shortage of housing facilities is one of the most
serious problems plaguing the Indian cities, whether it is a metropolitan city or a small town.
The reason for this is that the availability and development of housing facility has not expanded
fast enough to meet growing demand for rapid urbanization process. The acute shortage of
housing facilities compels the poor to live in slums. Slums have developed in almost all the
Indian cities. Slums are called by the names of Bustees in Calcutta, Jhuggis in Delhi, jhopar-
patti in Mumbai and Cheri in Chennai. The slums or Bustees have been defined by the
government ofIndia under Slum Area (Improvement and clearance) Act of 1954 as
predominantlya residential area, where dwellings by reason of dilapidation, overcrowding,
faulty arrangement and lack of ventilation, light or sanitary facilities or any combination of
these factors detrimental to safely, health and morals. It is estimated that 40 per cent of people
in mega-cities like Calcutta, Mumbai and Delhi live in slums. These slums have extremely
unhygienic conditions. They have impoverished lavatories made by digging a shallow pit in-
between three to four huts and with sackcloth “curtain” hanging in front. The children, of
course, are used to defecate anywhere around the huts. All such areas have several cesspools
and puddles. These are invariable dug in the middle of a state dirty pool. People wash their
clothes and utensils under the hand pumps. This causes diseases like blood dysentery, diarrhea,
malaria, typhoid, jaundice and conjunctivitis, which stalk them all the year around. Children
with bloated bellies or famished skeletons suffer from polio and common sight.
➢ Transport system: There are 300 million cars, trucks and buses all over the world.
During peak hours, there will be huge traffic jams in the main junctions. Because of
traffic jams more petroleum products are wasted which results in fuel problem.
During peak seasons the vehicles are parked and overloaded and there are more
chances of occurring accidents. It the State which provides good transport system.
The combustion of petroleum products, diesel leads to increase of carbon dioxide
which helps in increasing Global Warming, air pollution and noise pollution, besides
carbon dioxide, carbon monoxide which is released by automobile. The noise
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pollution affects both auditory and non-auditory organs. The auditory effects are
fatigue and deafness in human beings. The non-auditory effects are interference in
speed, communication, annoyance, loss of working efficiency and psycho-
physiological disorders. The transportation picture in all Indian cities is critical while
Mumbai is still having the best city transport system and Chennai, Ahmedabad and
Pune being reasonably well–served by the city buses. One reason why we are in this
mess is that, whilst planning city expansion, we are still tender to follow the
western concept of commuting time and distance being the determinants of the
location of activities. This has resulted in compartmentalized zoning of cities, which
necessitates extensive travel. At the same time, the level of incomes and
affordability being low, our citizens are unable to pay an economic fare for the use
of a public transport system. Therefore, all city bus services sustain such heavy
annual losses that they cannot really expand or maintain a fleet adequacy to meet
city needs.
➢ Problem of garbage: Urban solid waste consists of building materials, plastic
containers, hospital wastes, kitchen waste etc. The building materials and
household solid wastes are dumped on the public places. The hospital wastes do
not have covers while transporting. The stringent smell contaminates the air. The
Urban sewage does not have proper let-out facility. As Indian society prospers, it
trash mainly hazardous plastics, metals and packing is growing exponentially. In the
last decade, garbage was produced at nearly twice the rate of population growth.
Only eight out of 3,119 towns and cities in India have full wastewater collection and
treatment facilities. A third of India’s population has no access to sanitation
services. It becomes worse in smaller cities and provincial towns.
➢ Sewerage problems: The urban areas in India are plagued with inefficient and
insufficient civic amenities. Not a single city in India is fully sewerage. The reason
for this is that the unauthorized constructions in and around the city lie outside the
purview of the main systems. It has been estimated that only 38 per cent of the
urban population have a sewerage system. Mumbai’s crumbling sewer network is a
century old, put in place by the British planners when city was no more than a
series of fishing villages. Today, it breaks down frequently with waste about eight
million more people than it was designed for. The sewer lines lead to drains, which
take the sewage – 93 percent of it untreated – directly into the sea, killing virtually
all marine life along Mumbai’s coast. Delhi’s Yamuna has turned into a giant sewer,
chiefly from raw sewage, 40 per cent of Delhi’s sewage is untreated.
➢ Water supply: India has reached a stage where no city has water supply round the
clock. Intermittent supply results in a vacuum being created in empty water lines
which often suck in pollutions through leaking joints. Chennai, Hyderabad, Rajkot
gets water from municipal sources for less than half an hour every alternative day.
Many small towns have no main water supply and depend on such sources as
individual wells, household open wells or even the rivers which have some storage
water in pools during summer. Within the city, the drainage system hardly exists
and the annual flooding of large areas, even in Delhi, it is now a regular
phenomenon in many urban centers. Mumbai is located in a keel-line depression,
which also happens to be the main railway artery. With every monsoon showers, it
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gets flooded choking the communication. The problem is particularly acute in the
cities of Indo-Gangetic plain. This is the case with Varanasi and Patna. The situation
is worse in the eastern part of Patna, which remains water logged throughout the
monsoon period. The terminal case is that of Katihar (Bihar) where, because of the
peculiar bowl-like configuration of the city and the non-existence of a drainage
system. Large pools of stagnant water can be seen even in the month of May and
June. In Srinagar, whole colonies have become sewage to be forced back by
hydraulic pressure into the sub-soil, rendering the whole land unfit for human
habitation. The drains, which are open, serve as depositors for road sweepings and
also human wastes. In rainy season, water over flows and spreads into streets
presenting a dingy view, promoting unhygienic conditions and causing outbreak of
numerous diseases.
➢ Environmental problems: Environmental pollution is causing concern and affecting
human health today than yester decades. It has been reported by the World
Bankthat 40,000 persons die in India every year because of air pollution. Recent
studies also revealed that a large number of people have been suffering from
respiratory diseases, allergies, and cough. It has been doubled since 1990s. Further,
it has been noticed that 23 Indian Cities have crossed the dangerous limits because
of auto- exhausts and industrial emission. Therefore, it is not the task of Central
Pollution Control Board that has to take control, but it is the duty of the
institutions, individuals to initiate possible care and measures to prevent the
polluting works. Hence, it should initiate in the form of a social movement. This,
indeed, prevents problems arising out of pollution especially in urban areas.
➢ Degradation of environmental quality: Due to urbanization, there is environmental
degradation especially in the quality of water, air and noise. With the influx of more
people in cities, there is great demand of facilities such as housing. Some unlawful
factories and even houses which have a poor infrastructure, the waste from
buildings are directly channeled to the nearest river or water resources which
directly pollute the water. The domestic waste, industrial effluents and other
wastes that were dumped directly to the river, degrade the water quality. Another
after effects of rapid urbanization is the air pollution which has also increased due
to emanation from motor vehicles, industrial development and use of non-
environmental friendly fuel sources. The noise pollution is produced from the
various human actions which also degrade the environment and ultimately affect
the human health. The growth of population has generated a very high quantity of
solid waste and there is pressure to provide a waste disposal place in the urban
areas.
➢ Decline in quality of living for urban dwellers: Urbanization is major concern for
management researchers because it decline in quality of living for urban
inhabitants. As the metropolis becomes a developed city, the land value will also
increase. The housing provision will focus more to fulfill the needs of the high
income group. As such, there will be a problem in the provision of housing,
especially for the middle and low class people. The supply of housing for the urban
poor is still inadequate as the cost of these houses is very high to which low and
middle income group cannot afford. The lack of housing provision for the low
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income group has led to the continuation of unlawful resident settlements in the
city. These unlawful tenant settlements will certainly lack in proper infrastructure
that will bring about many hindrances to the urban environment and create social
problems such as child education, crime, drugs, delinquency and others. Besides
housing problem for low income group, the process of urbanization has also
increased the demand on infrastructure and utility which cannot be fulfilled from
the existing facilities. The maintenance of drains and debris collection is
incompetent which can raise other serious problems such as flash floods and poor
public health. The reappearance of flash floods is due to the drainage system being
unable to contain surface water run-off that has greatly increased with the higher
intensity of urban activities.
➢ Unsuccessful urban governance: The urban authority undergoes with multifaceted
challenges to manage a city. The fast speed of urbanization is major challenges
which need every party to be more focused in undertaking each and every
responsibility in urban development. However, the involvement of several agencies
and departments in urban management made it complicated to synchronize many
actions and resultant, it affects the efficiency of those actions. Besides this, the
local authority also deals with the different goals and interests of community
groups which they need to fulfill. The local authority also needs to find solution for
different social issues.
➢ Housing: It is another intense problem due to urbanization in India. Overcrowding
leads to a constant problem of scarcity of houses in urban areas. This problem is
particularly more severe in those urban areas where there is large invasion of
jobless or underemployed immigrants who could not find place to live when they
come in cities and towns from the nearby areas. The major factors for housing
problems are lack of building materials and financial resources, insufficient
expansion of public utilities into sub-urban areas, poverty and unemployment of
urban immigrants, strong caste and family ties and lack of enough transportation
to sub-urban areas where most of the available land for new construction is to be
found.
➢ Unemployment: The problem of joblessness is also serious as the problem of
housing. Urban unemployment in India is estimated at 15 to 25 per cent of the
labour force. This percentage is even higher among the educated people. It is
approximate that about half of all knowledgeable urban unemployed youth are
living in four metropolitan cities such as in Delhi, Mumbai, Kolkata, and Chennai.
Additionally, although urban incomes are higher than the rural incomes, they are
awfully low because of high cost of living in urban areas. Major causes of urban
unemployment are the huge relocation of people from rural to urban areas.
➢ Slums and Squatter Settlements: The natural development of unchecked,
unexpected and random growth of urban areas is the growth and spread of slums
and unlawful resident settlements which present a prominent feature in the
environmental structure of Indian cities, particularly of urban centers. The fast
urbanization in combination with industrialization has resulted in the enlargement
of slums. The explosion of slums occurs due to many factors, such as, the lack of
developed land for housing, the high prices of land beyond the reach of urban
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poor, a large influx of rural migrants to the cities in search of jobs.
➢ Overcrowding: Overcrowding means a huge number of people live in a small
space. This form of congestion in urban areas is consistent because of
overpopulation and it is an aspect that increases day by day as more people and
immigrants move into cities and towns in search of better life. Most people from
rural or undeveloped areas always have the urge of migrating into the city that
normally leads to congestion of people within a small area.
➢ Poor health and spread of diseases: The social, economic and living conditions in
congested urban areas affects access and utilization of public health care services.
Slum areas in particular experience poor sanitation and insufficient water supply
which generally make slum populations susceptible to communicable diseases.
The environmental problems such as urban pollution also cause many health
problems namely allergies, asthma, infertility, food poisoning, cancer and even
premature deaths.
➢ Traffic congestion: When more people move to towns and cities, one of the major
challenges posed is in the transport system. More people means increased number
of vehicles which leads to traffic congestion and vehicular pollution. Many people in
urban areas drive to work and this creates a severe traffic problem, especially
during the rush hours. Also as the cities grow in dimension, people will move to
shop and access other social needs/wants which often cause traffic congestion and
blockage.
➢ Urban crime: Issues of lack of resources, overcrowding, unemployment, poverty,
and lack of social services and education habitually leads to many social problems
including violence, drug abuse, and crime. Most of the crimes such as murder, rape,
kidnapping, riots, assault, theft, robbery, and hijacking are reported to be more
prominent in the urban vicinities. Besides, poverty related crimes are the highest in
fast-growing urban regions. These acts of urban crime normally upset the peace
and tranquility of cities/towns.
Remedial Measures of Urban Problems in India
➢ Building sustainable and environmentally friendly cities: Governments should pass

laws that plan and provide environmentally sound cities and smart growth
techniques, considering that people should not reside in unsafe and polluted areas.
The objective here is to build sustainable cities that embrace improved
environmental conditions and safe habitats for all urban populations. Governments
should also encourage sustainable use of urban resources and support an economy
based on sustainable environment such as investment in green infrastructure,
sustainable industries, recycling and environmental campaigns, pollution
management, renewable energy, green public transportation, and water
recycling and reclamation.
➢ Provision of essential services: Urban stakeholders must ensure all populations
within the urban areas have access to adequate essential social services namely
education, health, sanitation and clean water, technology, electricity, and food. The
objective here is to provide and implement employment opportunities and wealth
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creation activities so that people can earn a living to pay for the maintenance of
the services. Subsidies can also be availed by the government to lower the costs of
basic healthcare, basic education, energy, education, public transportation,
communication systems and technology.
➢ Creation of more jobs: To lessen the negative effects of rapid urbanization while at
the same time conserving natural ecosystems, private investments should be
encouraged so as to utilize natural resources and create more job opportunities.
Tourism promotion and the sustainable exploitation of natural resources can create
more jobs for the urban populations. Subsidies and grants may as well be provided
to foreign and private investment in environmentally friendly
development projects that encourage job creation.
➢ Population control: Key stakeholders in urban areas must provide campaigns and
counseling for effective medical health clinics and family planning to help reduce
the high rates of population growth. Medical health clinics oriented towards family
planning options must be made accessible across the entire urban area with the
objective of controlling diseases and population growth.

Crack Grade B: National Income Pyqs Asked From This Chapter: (Q1-3) Paragraph Based On GDP & National Income

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Crack Grade B: National Income Pyqs Asked From This Chapter: (Q1-3) Paragraph Based On GDP & National Income

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Crack Grade B 1

Q.2 Slowdown in Q4 is due to: decline in consumption part

Q.3 Earning per person: Per Capital Income

Q4. GDP-DEPRECIATION gives what? NDP

Q7. GDP measure Perspective: Consumer Perspective (GVA is Producers Perspective)

Q8. Consumer Goods are also referred as: Final Goods

Q10. GDP calculation does not include ………...

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• What generates the economic wealth of a nation?

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John works in CIL

Household Sector Government Sector

Mukes Mukesh Ambani owns RIL

Household Sector Private Sector

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Fig – Circular Flow of Income in a simple economy

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Product or Value-Added Method

• Understanding Value Added:

• Calculating GDP Using the Value-Added Method:

• Agriculture produces raw materials worth Rs 1,000.

• Agriculture: Rs 1,000 (output) - Rs 0 (intermediate inputs) = Rs 1,000

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Using the formula:

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• It includes payments made to all factors of production, including wages,

• Factor cost focuses on the income earned by factors of production during

Factor Cost = Total Payments to Factors of Production (Wages + Rents + Interest

• These prices are influenced by supply and demand dynamics, production

Market Price = Factor Cost - Product Subsidies - Production Subsidies + Product

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Nominal GDP = Current Price * Quantity Produced

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Real GDP = Base Price * Quantity Produced

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• Central Statistical Office

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This above classification is based on three parameters:

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Nominal Exchange Rate

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PYQs asked from this chapter:

Q1. Inflation target- Band of inflation? 2-6%

(Q2-4) Paragraph on IIP Revision

Q2. Why base year is revised? Adoption of international standards of practice?

Q3. Identify true statement regarding IIP revision

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Demand-Pull Inflation: It is a rise in general prices caused by increasing aggregate

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India commenced inflation targeting ‘formally’ in February 2015 when an agreement

• RBI will aim to keep inflation level in the range of 2-6%.

• Every six months, the RBI to publish a document explaining: