Professional Documents
Culture Documents
Mrunal Indian Economy Handouts PCB07 2023-23
Mrunal Indian Economy Handouts PCB07 2023-23
10.2.4 UPSC Strategy, Planner, Previous Years Papers, Graph Analysis & Cutoff
Covered in Mrunal Success Master Excel File (MSM) and Lecture
https://unacademy.com/course/strategy-to-prepare-indian-economy/3KUWU4NY
10.3 🍅🍅🍅🍅 BARTER SYSTEM & ITS DISADVANTAGES: (व�ु �व�नमय प्रणाली)
10.5.1 🥜🥜Commodity Money / व�ु मुद्रा (Intrinsic value: अंतभूर्त मू�? Yes)
⇒ Iron Nails, Bear Pelts, Cocoa Beans, Whale Teeth, Gold Nuggets
⇒ Problems? Perishable, not uniform, not pure, foreigners may not accept.
नाशवान, एकसमान नहीं, शुद्ध नहीं, अ�ीकार भी कर सकते है.
⇒ RBI issues: Currency notes other than ₹ 1 Note using the powers of RBI Act
1934.
⇒ Currency notes have Governor’s sign: “I promise to pay bearer…”
😤😤 FAQ: why is it like this!!!??? WHY CAN’T RBI ISSUE BOTH coins & currency notes!!?
Ans. Send your suggestion to PM, to merge above two laws. Until it’s implemented, remember table
for passing exam. प्रधानमं त्री को कागज �लखो- दोनों कानूनों का एक�करण करने के �लए. जब तक वह नहीं होता तो इस handout को रटो।
To become a ‘legal tender’, a given coin/currency MUST fulfil two conditions SIMULTANEOUSLY:
एक साथ दो शत� को पूरा करना होगा.
1. It must be a FIAT MONEY (जो हमने ऊपर के से�न म� पढ़ा). AND SIMULTENOUSLY और साथ ही साथ
2. It must be legally valid for all debts & transactions throughout the country. Other party can’t
refuse to accept. (लेनदार उसको अ�ीकार नहीं कर सकता)
Table 2: fiat money and legal tender in India
A) Is it in form D) At present, is it E) Is it
C) Result: Is it
of a physical B) Is it issued by legally valid for LEGAL
Fiat money?
coin OR physical Central Bank / transaction in Tender in
ITEM (YES If Both
Note OR Digital Govt / King / India as per India (Yes, IF
Cell A+B give
Coin that can Queen Coinage Act or C+D give
✅+✅)
measure ‘value’? RBI Act? ✅+✅)
₹ Indian Rupee:
Coins & Notes, CBDC ✅ ✅ ✅ ✅ ✅
Demonetized
(�वमुद्रीकृ त) ₹500,₹1000 ✅ ✅ ✅ ✋ ✋
Dollar$, Yuan, Yen,
Euro etc ✅ ✅ ✅ ✋ ✋
G-Sec, T-Bill
(what is this-Ans. ✋ ✅ ✋ ✋ ✋
explained in video)
Shares, Bonds, DD,
Cheque, ATM, Cards,
Kirana coin, Casino ✋ ✋ ✋ ✋ ✋
coin, Filmstar-Notes
Bitcoins ✅ ✋ ✋ ✋## ✋
⇒ ##
Bitcoin is not a Fiat money, yet it is legal tender in El-Salvador nation. But it is an exception.
(�बट-कोइन का अल-सा�ाडोर देश म� वेध�नक �न�वदा होना के वल एक अपवाद है, वो पूरी दू �नया के �लए �नयम/�ा�ा नहीं है।)
⇒ 😤😤 FAQ: we can use cheque / credit card to pay fees. So, why are they not fiat money/legal
tender? Ans. They’re instruments to use money. They’re not money. Primary auction on the
money is to measure value. We can say 1 tea cup = ₹15. Two tea cups = ₹30. But, We cannot SAY
“1 tea cup = 1 chequebook. 2 tea cup = 2 credit cards- they can’t be used for measuring value like
that. For more, watch lecture video peacefully.
⇒ 😤😤 FAQ: I did not understand this thing and/or I want to engage in intellectual debate why “X”
thing is legal tender? Ans. Please watch lecture’s recorded video again, more peacefully.
⇒ Commemorative Coins = Fiat money yes but not legal tender unless notified by
RBI/Government to be used as legal tenders. (�ृ�त�च� �प �स�े - सामा� भुगतान म� इ�ेमाल निह हो सकते, �सवाय
के सरकार/आरबीआई उसक� अनुम�त दे।)
10.5.6 💵💵⚖Legal Tender (वैधा�नक �न�वदा)- Limited and Unlimited
🚩🚩� FAQ# my shopkeeper doesn’t accept 50 paisa. Then how it is legal tender? मेरा दुकानदार नहीं लेता
50 पैसा का �स�ा। तो आप कै से कह सकते है वो वैधा�नक �न�वदा है?
Ans. as per RBI notification, 50 paisa is legal tender. So, accept it for MCQ & move to next topic.
Further, feel free to file policecase against shopkeeper, if you have plenty of free time/outrage for it.
🔠🔠❓MCQ: Which correctly describes the meaning of legal tender money? (Pre-2018)
(a) The money which is tendered in courts of law to defray the fee of legal cases
(b) The money which a creditor is under compulsion to accept in settlement of his claims
(c) The bank money in the form of cheques, drafts, bills of exchange, etc.
(d) The metallic money in circulation in a country
🔠🔠❓MCQ: Consider the following statements (Asked in UPSC-CDS-2011-II)
1. In India the minimum denomination coin acceptable for transaction is 50 paise.
2. Coins below 50 praise is not a legal tender for payment.
Which of the statements given above is/are correct?
(a) Only 1 (b) Only 2 (c) Both 1 and 2 (d) Neither 1 nor 2
Table 4: ✋Less important for UPSC-exams, more IMP for Non-UPSC Exams
Note What image is given in this currency note? (इस नोट के पीछे कौन सा �चत्र होता है?)
₹ 10 Sun Temple, Konark, Odisha. 13th Century Narsimhadev-I
₹ 20 Greenish Yellow, Ellora Caves in reverse.
₹ 50 Humpi Chariot from Vittala Temple, Karnataka
₹ 100 Lavender color. Rani ki Vav on Saraswati river, Patan. Rani Udaymati for King
Bhima-I of Chalukya / Solanki dynasty in 11th century, UNESCO Heritage site
₹ 200 Sanchi Stupa, Madhya Pradesh.
₹ 500 Red Fort, Delhi by Shah Jahan.
₹ 1000 (update when/if released)
Payment & Settlement System Act 2007 empowers RBI to regulate card payment, e-payment related
products and services. (भुगतान और �नपटान प्रणाली अ�ध�नयम 2007)
🚩🚩🚩🎓🎓 FAQ I didn’t understand this. Ans. Watch lecture, sufficiently explained in it.
🚩🚩🚩🎓🎓 FAQ: What is the difference between Core Banking Solution (CBS) versus Core Banking
System (CBS)? Ans. Fundamentally it is the same thing. Dictionary word difference/legal
pedantry/academic pedantry/hairsplittery= notimp4exam. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
🔠🔠❓MCQ: The term ‘Core Banking Solutions’ correct term? (Asked in UPSC Prelims-2016)
1. It is a networking of a bank’s branches which enables customers to operate their accounts
regardless of where they open their accounts.
2. It is an effort to increase RBI’s control over commercial banks through computerization.
3. It is a detailed procedure by which a bank with huge non-performing assets is taken over by
another bank.
Answer Codes: (a) 1 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3
Table 5: Digital Payment Systems- transaction limits may differ, depending on banks
RBI's centralised payment systems (CPS)## NPCi’s IMPS
⏰RBI’s NEFT:
RBI’s RTGS: Real Time Immediate
� Type National Electronic
Gross Settlement Payment Service
Funds Transfer
₹ 1 to maximum
💸💸 Transfer Min ₹2 lakh to ₹2000 ₹2 lakhs [this limit
upto ₹10 lakhs (SBI).
Amount crores (SBI). ⏫ to ₹5 lakh in
2021]
⇒ ** from 1/1/2020 no fees if doing online transactions. (but if NEFT/RTGS done by filling paper-
form at bank branch then fees may be levied.( आपके पास कं �ूटर या मोबाइल नहीं है िफर भी आप ऑनलाइन पैसा भेजना
चाहते ह� तो आपने ब�क ब्रांच म� जाकर NEFT/RTGS करवाने वा�े कागजी फॉमर् भरना पड़ता है उस व� थोड़ी ब�त फ़�स शायद लग भी
सकती है)
⇒ # Although some banks don’t charge IMPS fees for transactions upto ₹ ”X”/- (EXACT Fig
NOTIMP)
⇒ ##
FAQ: 🚩🚩🚩🎓🎓 Why doesn’t RBI Merge RTGS & NEFT? Ans. RBI may have some technical
operational reasons for it. RBI never bothered to disclose it in some big press release or
newspaper headline. So I never bothered to do Google search/PHD, because it is an inefficient
way of preparing for UPSC. Nonetheless, if u feel morally-outraged then Send suggestion to RBI
Governor. Until implemented, prepare things as given in handout. Also, Plz change your
‘approach’ towards preparation of competitive exam. PHD-walli academic curiosity is of no use.
Figure 2: in above diagram, interoperability is absent. Phonepay money can't be transferred to Amazonpay directly.
⇒ 👉👉Push = when u send money by your own discretion(मज़�) e.g. sending money to a
relative/friend based on your mood.
⇒ �Pull transaction = when you have given command that every month electricity company should
cut the money from my bank account → company will pull money without requiring u to
push/click buttons every month.
🚩🚩�FAQ: Beyond that, whether “X” thing is push/pull transaction?= Ans. not imp for exam.
So, 2022-March: RBI launched a new UPI platform named 123PAY (with help of NPCI) to give more
UPI-payment options for Featurephones/Basicphones such as-
- (Origin) E-rupi is an SMS /QR Code based Prepaid Cashless Electronic Voucher created by
National Payment Corporation of India (NPCI) using its UPI Platform. [�ूआर कोड आधा�रत प्रीपेड
नगदीरिहत इले��ॉ�नक रसीद �जसे भारतीय रा��ीय भुगतान �नगम (एनपीसीआई) ने अपने यूपीआई �ेटफॉमर् का उपयोग कर बनाया]
- It is also supported by finance ministries Department of Financial Services and Health ministry’s
National Health Authority (NHA) [�व� मं त्रालय के �व�ीय सेवा �वभाग और �ा� मं त्रालय के रा��ीय �ा� प्रा�धकरण ने भी
इसक� मदद क� है]
- Following reforms taken in E-Rupe in 2022-Feb
BEFORE After
maximum storage limit ₹10,000 per code ₹1 lakh (मह�म इतना पैसा सं ग्रिहत कर सकते ह�)
⇒ Govt (e.g. Education department) deposits money in a bank account (e.g. SBI) → NPCi
generates E-rupi code. [Thus it is “pre-paid” by Government for beneficiary]
UPI QR code Generated by UPI app of NPCi. 🤩🤩It can be scanned by all Apps which are
developed using UPI technology.
Bharat QR code Developed by NPCi with help of Visa and Mastercard. 🤩🤩It can be
scanned by all Apps which are developed using UPI technology.
⇒ RBI has ordered all the Payment System Operators (PSOs e.g. Paytm, PhonePe, MobiKwik,
Google Pay etc) to shift to UPI QR or Bharat QR by March 31, 2022.
⇒ 🤩🤩Benefit? All Payment apps will be able to scan these QR codes → 'interoperability'.
10.14.2 � Third Party Application Providers (TPAPs): Google Pay, Whatsapp Pay
- WhatsApp Pay is a feature that allows users to send/receive money via WhatsApp to their
contact list using UPI technology. UPI technology is developed by (NPCI).
⇒ Google Pay (GPay, formerly called ‘Tez’) is an App by Google for online payments.
⇒ As per rules, Payment Service Operators need to register with RBI under Payment and
Settlement Systems Act, 2007. But Google functioned without authorization. �बना आरबीआई के पं जीकरण
के चला रहा है
🚩🚩🚩FAQ: Other technical benefits / MDR challenge / BizGK / PHD-doubts / practical-real life
implications = not imp.
10.15.2 💳💳 Card Types based on Security Features: (सुर�ा प्रणाली के िहसाब से काडर् के प्रकार)
1. Magnetic Card: 1960s technology. Data on magnetic strip. But, such data can be duplicated,
cloned, skimmed while swiping the card = fraud. So, RBI stopped such cards from 1/1/2019
using powers under Payment & Settlement Act. चुंबक�य काडर् म� जालसाजी का खतरा😰😰 → इस�लए आरबीआई ने
✋प्र�तबं �धत िकया
2. EMV card: Full form: Europay+Mastercard+Visa chip infrastructure with encryption. RBI had
ordered migration in 2013- finally effective from 1/1/2019. Two sub-types
o (A) EMV-Contact: cards must remain in Point of Sale (PoS) Terminal during
transaction.
o (B) EMV-Contactless cards: simply tap the card on terminal using RFID (radio-
frequency identification) technology. (बस छू कर �नकल जाओ. काडर् को मशीन म� घुसड़े ने क� ज�रत नहीं)
HomeWork: Read about RFID & NFC from Sci-Tech book/internet.
Figure 4: NCMC card unboxing ka video bhi youtube & Instagram पे डालते है
‘One Nation One Card Model’ by Ministry of Housing & Urban Affairs (MoHUA) with the help of
NPCi, Bharat Electronics Limited (BEL Company), and some banks. It has 3 components: (तीन घटक है
इसके )
⇒ 1) NCMC Card: To be issued by banks. Nature can be Debit/Credit/Prepaid. Can be used for
metro, bus, suburban railways, toll, parking, retail shopping etc.
⇒ 2) SWEEKAR: Automatic Fare Collection System. (यात्री िकराया वसूलने क� �चा�लत प्रणाली)
⇒ 3) SWAGAT: Swachalit / Automated Gate at railway/bus station. (अपने आप खुलने-बं द होने वाले दरवाजे)
⇒ Automated Teller Machine (ATM) allow bank customer to withdraw money or check balance
without visiting any branch of a bank. (�चा�लत �प से नकदी मुद्रा देने वाला यां�त्रक िड�ा)
⇒ ATM network works on NPCi’s NFS (National Financial Switch) technology.
Bank label Bank itself owns and operates the ATM network.
Brown label Bank owns but operations outsourced (cash refilling truck, guard)
⇒ Note: Some books offer different definition, but I’ve taken above definition
from Economic Times Article 2015.(कु छ िकताबों म� �ा�ा अलग है म�ने इधर से ली है)
White label Non-Bank owns and operates. E.g. Muthoot Finance, Tata Communication,
Prism
Figure 5: Note: Above chart not 100% legally-technically correct. There may be instances where a Bank’s App may be giving both NEFT &
IMPS facility. This chart is meant for simple illustration for MCQ, and NOT for submitting as evidence in some Supreme Court PIL case.
In short, while reading this handout, “🚩🚩🚩🎓🎓” =avoid this mentality.
🚩🚩🚩🎓🎓 FAQ: "I've 500 jaat ke PHD doubts & counter arguments about this MDR subsidy" Ans.
Plz waste your precious time reading egazette.nic.in/WriteReadData/2021/231960.pdf
A. The incentive given by a bank to a merchant for accepting payments through debit cards
pertaining to that bank.
B. The amount paid back by banks to their customers when they use debit cards for financial
transactions for purchasing goods or services.
C. The charge to a merchant by a bank for accepting payments from his customers through the
bank’s cards.
D. The incentive given by the Government, to merchants for promoting digital payments by their
customers through Point of Sale (PoS) machines and debit cards.
Nilekani (Ex-chairman of UIDAI, also associated with Infosys) gave 70+ suggestions.
Notable suggestions for Mains/Essay writing are:
Suggested Reforms @Government ( नीलेक�ण ने सरकार को ये सुझाव �दए)
⇒ Government transfers welfare schemes’ money directly into bank accounts of poor people under
Direct Benefit Transfer (DBT) mechanism. But poor people withdraw cash from bank account
entirely because local merchants not accepting digital payments. So, raise awareness about
BHIM-UPI and its adoption.( सरकार गरीबों के ब�क खाते म� �व�वध योजनाओं का पैसा जमा तो करती है, िकं�ु गांव के �ापारी
िड�जटल भुगतान �ीकार नहीं करते इस�लए गरीब आदमी हमेशा ब�क से नकदी रकम �नकालनी पड़ती है और नकदी म� भुगतान करना पड़ता है)
⇒ Give companies tax incentives for using digital payments. (कर प्रो�ाहन /करों म� छू ट दी जाए)
⇒ ⏬ reduce taxes on the devices required for digital payments. (िड�जटल भुगतान क� मशीनों पर करों म� कटौती)
⇒ Govt orgs should not charge convenience fees (सु�वधा शु�) from citizens while accepting digital
payments.
⇒ Setup Computer Emergency Response Team for finance (FIN- CERT: आपातकालीन प्र�तिक्रया टीम).
�📒📒 Nilekani’s Suggested Reforms @RBI ( नीलेक�ण ने �रज़वर् ब�क को ये सुझाव �दए)
⇒ RBI should prepare area wise ‘Digital Financial Inclusion Index’ to monitor progress & take
remedial steps. Ensure no user is more than 5 kms away from a banking access point. (िड�जटल �व�ीय
समावेशन सूचकांक)
⇒ Setup a Fund to develop digital payment infrastructure in poorly served areas e.g. subsidy on PoS
devices. RBI and Banks should co-contribute ₹ ₹ in this fund. (�रज़वर् ब�क और अ� ब�क द्वारा एक �न�ध बनाई
जाए. �जसके पैसों से �पछड़े इलाकों म� िड�जटल भुगतान मशीन खरीद/इ�ेमाल के �लए �ापा�रयों को स��डी दी जाएगी)
⇒ ⏬Reduce the MDR / card payment fees. Allow customer to do “x” no. of digital payment
transactions per month with zero charges. (काडर् भुगतान पर लगने वाले �व�वध फ�स म� कटौती क� जाए)
⇒ RBI should make NEFT available 24/7 and remove its fees. (✅Done in 2019-20: RBI removed
charges on both NEFT and RTGS.)
🔠🔠❓MCQ. Who among the following was the Chairman of the Committee on Deepening Digital Payments
appointed by the RBI ? (Asked in UPSC-CDS2019-II-Q116)
(a) H.R.Khan (b) Nandan Nilekani (c) N.R.Narayana Murthy (d) Sanjay Jain
10.17.3 🕵🕵 💳💳📡📡:📵📵 Offline Retail Payments Using Cards and Mobile Devices
While mobile phones, cards, e-wallets, etc. available but, internet connectivity issues especially in
rural/remote areas😰😰😰😰(ग्रामीण और दुगर्म प्रदेशों म� इं टरनेट क� ख़राबी/सम�ाएँ )
2021: RBI allowed offline mode of payments using cards, wallets or mobile devices upto Rs.200
per transaction AND overall limit of Rs 2,000 for all transactions until balance in the account is
replenished/recharged. (overall limit is prescribed to prevent big frauds if card/mobile gets
stolen. HOW? Ans. 🚩🚩🚩🎓🎓 James-Bond-girl not important) (इं टरनेट बं द हो तब भी िड�जटल भुगतान हो
सके उस प्रणाली. शु�आत म� एक-एक ल�नदे� म� २०० �ादा का लेनदेन नहीं हो सकता। और कु ल �मलाकर 2000 �पये से �ादा
का लेन देन नहीं हो सकता जब तक िक ग्राहक अपने काडर्/ ब�क खाते इ�ािद म� पैसा वापस न भर दे।)
🤩🤩Benefit? Error-free digital transactions in areas with poor internet connectivity (दुगर्म प्रदेश जहाँ
इं टरनेट क� सतत् �प से सेवा उपल� नहीं, वहाँ पर भी िड�जटल भुगतान को प्रो�ाहन �मलेगा.)
10.17.4 �📒📒 Payment and Settlement Systems in India: Vision 2019 – 2021
RBI published this document in 2019-May. it repeated most of the points that Nilekani report said. As such
✋not much IMP unless preparing for RBI exams (�रज़वर् ब�क के द�ावेज प्रका�शत करता है हालांिक मोटी मोटी बाते हमने पढ़ ली)
10.18.2 🕵🕵(Proposed but NOT YET DONE) Payment Regulatory Board (PRB)
⇒ 1998: Narsimham-II Committee on Banking Reforms suggested regulatory framework for e-
banking, card payment etc.
⇒ 2007: Payment & Settlement Systems Act (भुगतान और �नपटान प्रणाली अ�ध�नयम) → RBI → (Statutory)
Board for Regulation and Supervision of Payment and Settlement Systems (BPSS: भुगतान और �नपटान
प्रणाली के �व�नयमन और पयर्वे�ण के �लए बोडर्).
⇒ [Definition] Cryptocurrency: is a digital / virtual currency created & stored using blockchain
technology.िक्र�ोमुद्रा एक िड�जटल मुद्रा है �जसे �ॉकचेन तकनीक का उपयोग करके बनाया और सं ग्रहीत िकया जाता है।
** 🚩🚩�FAQ: FAQ: How is Bitcoin not traceable, we can trace it using XYZ technology?
✅Ans. Using HTML, we can create Wikipedia website and using HTML we can also create gmail
website. While everyone can read Wikipedia, I can’t read your gmail page, unless I know your
username password. Blockchain is similar. It depends on designer to make database “open” or
“private/encrypted”. Beyond that, we are not here for B.Tech (Computer Science) Semester
exam/James Bond recruitment. We just have to memorize 3-4 negative points for Mains-Answer-
writing ……so #�🚫🚫🚫🚫🕰🕰
⚖ 2020-March: SC revoked the RBI ban because (सुप्रीम कोटर् ने �रजवर् ब�क के प्र�तबं ध को हटा �दया �ोंिक):
⇒ Article: 19(1)(g): All citizens have the right to practise any profession including those companies
dealing with cryptocurrency. (�वसाय का हक/मौ�लक अ�धकार सभी को है)
⇒ Same objective (financial fraud protection) could be achieved by imposing a less drastic ban.
⇒ So, RBI ban did not pass the test of proportionality (अनुपा�तकता क� परी�ा)
o Proportionality test is a legal method used by courts in matters where State’s decision
(for public safety/welfare e.g. Aadhar card or Bitcoin ban) interferes with fundamental
rights of people (right to privacy, right to business) (सरकार जो जनिहत म� �नणर्य ले रही है, वह मूलभूत
अ�धकारों का िकस अनुपात म� हनन कर रहा है- अगर ज़�रत से �ादा हनन हो रहा हो तो कोटर् रद करवाएगी।)
What next? 🐯🐯RBI may release a calibrated regulation on cryptocurrency e.g. PAN card required,
can’t invest more than ₹”x” lakh per month etc. topic is still developing.⚾📻📻⚾🎓🎓✋
10.22.1 🔗🔗🔗🔗:🍋🍋 Bitcoin Profit pe 30% Tax and transfer pe 1% TDS in 👜👜👜👜Budget-2022
Refer to Pillar2A: Budget Direct Taxes to learn this matter.
⇒ Stablecoin is a type of cryptocurrency whose price is backed by a reserve asset like gold / dollar /
fiat currency e.g. Facebook’s proposed ‘Libra’, Tether, Basecoin, and TrueUSD.
⇒ 😰😰But, stablecoins challenges: 1) money laundering (धनशोधन / काले धन को वैध बनाना) 2) terror
financing (आतं क� �व�पोषण) 3) lack of consumer protection (उपभो�ा सं र�ण क� कमी) 4) financial frauds
(�व�ीय धोखाधड़ी).
⇒ 2019: France, EU, G20 group opposed / apprehensive. (इन सबको आशं का/डर है )
🚩🚩🚩🎓🎓 FAQ/Moral Outrage: Then why would Nigerian person accept CBDC, if he’s not going
to earn interest rate? (अगर ��� को �ाज नहीं �मलने वाला �ों �ीकार करेगा?)
Ans. Perhaps he may needs to separately fill up forms to transfer the money to a specials type of
savings account / fixed deposit account. We are not here for NiAS (Nigerian IAS exam) When RBI
notifies the system for India, we’ll study. (�ाज कमाने के �लए, शायद उसने अलग से फ़ॉमर् भर के अलग िक़� के बचत खाते म�
सीबीडीसी को �ानांत�रत करना हो ऐसी �व�ा होगी.) #थोड़ा-पढ़ो-आगे-बढ़ो
🚩🚩🚩🎓🎓Marshal island launched SOV currency in 2018 then shouldn’t we call it the first country
to launch CBDC? why above table says Bahamas is 1st country to launch CBDC?
Ans. Big Newspapers using such headlines. I didn’t bother to write/ask to their chief-editors. If asked
in Exam, then tick MCQ depending on options.
🔠🔠❓MCQ. Find correct statements abt Non-Fungible Tokens (NFTs) (Asked in Prelims-2022)
1. They enable the digital representation of physical assets.
2. They are unique cryptographic tokens that exist on a blockchain.
3. They can be traded or exchanged at equivalency and therefore can be used as a medium of
commercial transactions.
Codes: (a) 1 and 2 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3
Businessman
10.27.1 ✍ Conclusion: Cashless Economy (�न�षर्)
- Digital payment is not a panacea, nor is cash all bad. For a developing country like India, “Less
cash” economy better than “Cashless” economy. (िड�जटल भुगतान को राम-बाण / सवर्रोगहर औष�ध मानना गलत.
नगदी �पया हमेशा ही खराब चीज है, ऐसा सोचना भी गलत। भारत जैसे �वकासशील देश के �लए 'नगदी-रिहत' बनना उपयु� नहीं। िकंतु, नगदी
का प्रयोग 'कम' करने क� ज�रत अव� है.)
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 51
12.14.1 (2020) 🐯🐯🐯🐯🐯🐯 Long Term Repo Operations (LTROs: दीधर् अव�ध के रेपो ऋण) ........... 68
12.14.2 🐯🐯🐯🐯 REPO → TLTRO, SLTRO, On-Tap Windows ............................................... 68
12.14.3 🚩🚩🚩RBI’s Special Windows: Useless Doubts by flag-carrying Babushonas ......... 69
12.14.4 (2020) 🐯🐯🐯🐯Reverse Repo Rate cut .............................................................................. 69
12.14.5 🐯🐯🐯🐯🐯🐯 MonPolicy → Quant Tools → Variable Rate Reverse Repo (VRRR) .. 70
12.14.6 🐯🐯🐯🐯 🎛🎛 Variable Rate Repos (VRRs) ........................................................................ 70
12.14.7 🐯🐯🐯🐯 🎛🎛 Enhanced Reverse Repo Rate for Hardworking Bankers ........................ 71
12.14.8 🐯🐯🐯🐯🐯🐯 MonPolicy → Quant Tools → Rates → MSF (2011).............................. 71
12.14.9 🐯🐯🐯🐯🐯🐯 MonPolicy → Quant Tools → Rates → Bank rate (ब�क दर): ................... 71
12.14.10 🐯🐯🐯🐯🐯🐯 Quanti. Tools → SDF (=Reverse Repo walla game Without Collaterals)
72
12.14.11 MSF Repo vs Reverse Repo vs SDF ................................................................................. 73
12.14.12 Policy Corridor / LAF Corridor....................................................................................... 74
12.14.13 �⚖� Tri-Party Repo (�त्र-प�ीय पुन: क्रय-अनुबंध): ....................................................... 75
12.14.14 🔪🔪🔪🔪 BPLR, MCLR, External Benchmarks, etc: .......................................................... 75
12.14.15 🐯🐯🐯🐯🐯🐯 Market Operations (OMO): (Inflation → Sell G-Sec, Deflation → Buy)
75
12.15 🐯🐯🐯🐯🐯🐯🐯🐯MonPolicy: Quanti Tools: OMO → Operation Twist................................ 75
12.15.1 🔪🔪🔪🔪: Security → Debt → G-Sec & Bonds (ऋण के �लए जारी क� गई प्र�तभू�तयां) ............. 75
12.15.2 🛒🛒 (🔪🔪🔪🔪: 🧔🧔🧔) Deepening of G-Sec market- Retail investors’ RDAG @RBI 76
12.15.3 🔪🔪🔪🔪:🤵🤵Corporate Bonds: factors that determine its interest rate ......................... 76
12.15.4 🔪🔪🔪🔪: 🤑🤑 Bond Yield (बांड म� �नवेश करने पर होने वाली आय या मुनाफा) .................................. 76
12.15.5 🔪🔪🔪🔪: 🤑🤑 Bond Yield ∝ 1/Price (स�े म� खरीदा= तो मुनाफा �ादा) ................................... 77
12.15.6 🔪🔪🔪🔪: 🤑🤑 Bond yield: other factors affecting it (अ� कारक) ...................................... 77
12.15.7 🐯🐯🐯🐯🐯🐯🐯🐯Operation Twist: why? ............................................................................ 77
12.15.8 🐯🐯🐯🐯🐯🐯🐯🐯RBI’s Operation Twist: methodology (2019-Dec) .............................. 78
12.15.9 ✋🎓🎓 🔪🔪🔪🔪: 🤑🤑 Bond Yield & Inverted Yield Curve: poor benefit for exam ...... 79
12.16 🐯🐯🐯🐯🐯🐯: 📅📅 MonPolicy: Quanti Tools: OMO → G-SAP ............................................. 80
12.16.1 🐯🐯🐯🐯🐯🐯:📅📅 OMO → G-SAP : Benefit? .................................................................... 80
12.17 🐯🐯🐯🐯🐯🐯 Monetary Policy: Qualitative Tools (गुणा�क साधन) ............................................. 81
12.17.1 � Moral Suasion (नै�तक दबाव / सलाह) & Publicity (प्रचार) ............................................... 82
12.17.2 �🚯🚯 Direct Action (सीधी कायर्वाही: �ोिक लातो के भुत बातो से नहीं मानते) ............................... 82
12.17.3 💍💍 Margin Requirements / Loan to Value (LTV) (सीमा अ�नवायर्ता) ................................ 82
12.17.4 Selective Credit Control (चयना�क ऋण �नयं त्रण) .................................................................. 83
12.18 🐯🐯🐯🐯🐯🐯 Priority Sector Lending (PSL: प्राथ�मकता �ेत्र के �लए ऋण मानक) ............................... 83
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 52
12.18.1 🐯🐯🐯🐯🐯🐯 PSL Reforms-2020: on RRB/SFB/UCB? ..................................................... 85
12.18.2 🐯🐯🐯🐯🐯🐯 PSL Reforms-2020: Startups, Renewable Energy and Healthcare .......... 85
12.18.3 🐯🐯🐯🐯🐯🐯 PSL Reforms-2020: Weightage to poor districts (गरीब/�पछड़े �जलों को भारांक)
85
12.18.4 🐯🐯🐯🐯🐯🐯:📜📜 Priority Sector Lending Certificates (PSLC) from 2016 onwards ... 86
12.19 📢📢 � Monetary Policy Tools: A Ready Reckoner Table ................................................... 87
12.20 📢📢 Monetary Policy in Present-Day India ............................................................................. 88
12.20.1 📢📢 Monetary Policy Making under RBI Act since 2016 ............................................. 89
12.21 📢📢 Review of Bi-Monthly Monetary Policies ........................................................................ 91
12.21.1 🚕🚕🚕🚕 Stance: Calibrated Tightening / Neutral / Accommodative ........................... 91
12.22 🐯🐯🐯🐯🐯🐯RBI’s Monetary Policies: Before 2020-Corona.................................................... 91
12.23 🐯🐯🐯🐯🐯🐯RBI’s Monetary Policies: Corona MarchToMay’20 ........................................... 92
12.23.1 👻👻ATMANIRBHAR → Gist of RBI’s March2May 2020 Announcements:........... 92
12.23.2 🐯🐯🐯🐯🐯🐯RBI’s Monetary Policies: 2020-August (Earlier meeting in May-2020) . 93
12.23.3 🐯🐯🐯🐯🐯🐯RBI’s Monetary Policies: 2020-October (दरों म� कोई बदलाव नहीं) ................... 94
12.23.4 🐯🐯🐯🐯🐯🐯Monetary Policy: 2020-December (दरों म� कोई बदलाव नहीं) ............................. 94
12.23.5 🐯🐯🐯🐯🐯🐯Monetary Policy: Feb-2021 update (दरों म� कोई बदलाव नहीं) ........................... 94
12.23.6 🐯🐯🐯🐯🐯🐯Monetary Policy: April-2021 update(दरों म� कोई बदलाव नहीं) ......................... 94
12.23.7 🐯🐯🐯🐯🐯🐯Monetary Policy: June-2021 update (दरों म� कोई बदलाव नहीं) .......................... 95
12.23.8 🐯🐯🐯🐯🐯🐯Monetary Policy: Aug-2021 update (दरों म� कोई बदलाव नहीं) .......................... 95
12.23.9 🐯🐯🐯🐯🐯🐯Monetary Policy: Oct-2021 update (दरों म� कोई बदलाव नहीं) ........................... 95
12.23.10 🐯🐯🐯🐯🐯🐯Monetary Policy: Dec-2021 update (दरों म� कोई बदलाव नहीं) ...................... 95
12.23.11 🐯🐯🐯🐯🐯🐯Monetary Policy: Feb-2022 update (दरों म� कोई बदलाव नहीं) ....................... 95
12.23.12 🐯🐯🐯🐯🐯🐯Monetary Policy: April-2022 (SDF) ............................................................. 95
12.23.13 🐯🐯🐯🐯🐯🐯Monetary Policy: May-2022 Repo⏫ ......................................................... 96
12.23.14 🐯🐯🐯🐯🐯🐯Monetary Policy: June-2022 Repo⏫ ......................................................... 96
12.23.15 🐯🐯🐯🐯🐯🐯Monetary Policy: future updates................................................................... 96
12.23.16 ✋🚫🚫 Monetary Policy bi-monthly announcements: ignored (कु छ भी काम का नहीं है)
Error! Bookmark not defined.
12.24 🔪🔪🔪🏠🏠🏠🏠 Banks’ Lending Rates % (ब�क ऋण क� �ाज दर�) ................................................... 97
12.25 🔪🔪🔪🏠🏠🏠🏠 Bank’s loan interest rate: External Benchmark (बाहरी ब�चमाकर् ) ...................... 98
12.25.1 🔪🔪🔪🏠🏠🏠🏠 External Benchmark: Formula Components: ...................................... 98
12.25.2 �🏠🏠🏠🏠External Benchmark system: Which borrowers eligible?.......................... 98
12.25.3 �🏠🏠🏠🏠:🚩🚩🚩External Benchmark system: FAQ ................................................... 98
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 53
12.25.4 Banks’ Lending Rates % → Fixed vs Floating interest loans, teaser loans, NPA etc.
99
12.25.5 😷😷Corona-2020 impact on Deposits interest rate & Loans interest rate as per ES21
99
12.26 🐯🐯🐯🐯 Limitations of Monetary Policy in India (मौिद्रक नीती क� मयार्दाए) ................................ 99
12.26.1 🐯🐯🔇🔇 Monitory policy limitations: Lazy banking in Corona Crisis ......................100
12.26.2 🐯🐯🐯🐯 Monetary policy limitations: Cheap loans causing inflation? .....................101
12.26.3 🐯🐯🐯🐯US Fed Tapering & Impact on India.................................................................101
12.26.4 🐯🐯🐯🐯 Monetary policy limitations: Black Swan Events ...........................................102
12.26.5 🐯🐯✍ Monetary Policy: Conclusion / �न�षर् ...............................................................102
12.27 �🎺🎺🎺🎺1⃣✋ Mock Questions for UPSC Mains/GSM3 (250 words)............................103
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 54
🗓🗓 Time Liabilities of a Bank (FDRD) 💪💪 Demand Liabilities of a Bank (CASA)
समय / मीयादी देयताएँ मांग देयताएं
- Bank legally not required to pay customer - Demand Draft
before maturity. But may pay after - Overdue balance in Fixed Deposits
deducting penalty/ interest. (व� से पहले पैसा - Unclaimed deposits. (What does it mean?
�नकाला तो दंड लगेगा) Ans. Explained in Video Lecture.)
Public parks more money here, because better LESS (ऐसे बचत खातों पर �ाज कम �मलता है इस�लए जनता
returns / higher interest rates. कम मात्रा म� पैसा रखती है यहाँ पर)
LESS liquid. More liquid because easily convertible into
cash on demand.
🔠🔠❓ ____ is not included in the assets of a commercial bank in India? (Prelims-2019)
(a) Advances (b) Deposits (c) Investments (d) Money at call and short notice
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 55
Table 1: *CU: Coins & Currency with Public
Commercial Banks Post Office Savings Bank
Measure Demand Time Demand Liquidity Qty
*CU Time
सं कु �चत, �ापक Deposits Deposits Deposits तरलता मात्रा
Deposits
(CASA) (FDRD) (SA)
Narrow M1 ✓ ✓ ✗ ✗ ✗ ☆☆☆☆ ☆
Money M2 ✓ ✓ ✗ ✓ ✗ ☆☆☆ ☆☆
Broad M3✓ ✓ ✓ ✗ ✗ ☆☆☆☆☆
Money M4✓ ✓ ✓ ✓ ✓ ☆ ☆☆☆☆
Apply logic to derive formula e.g. M3 = M1 + Time deposits with banks. (�यं से फामूर्ला बनाइए)
- M3 is the most commonly used measure of money supply, also known as Aggregate Monetary
Resources / Aggregate Money Supply” (सम� मौिद्रक सं साधन) because out of all the money supply
indicators (M0-M4) this is the indicator RBI will focus the most for its analysis while designing
of monetary policy. (अपनी मौिद्रक नीती बनाते व�, �व�ेषण के �लए �रज़वर् ब�क इस आंकड़े पर खास �ान रखती है)
- In above formulas for money supply, we are only counting the “NET Demand / NET Time
deposits” i.e. only public’s deposits in bank. We are not counting inter-bank deposits i.e. one
commercial bank’s deposit in other commercial banks. एक ब�क से दू सरे ब�क म� पैसा िडपॉ�जट िकया हो तो उसे
इधर नहीं �गनते.
- Corona-2020: Initial months of lockdown (May2May-2020) → deposit⏬⏬ because people
withdrew money in panic / precautionary motive. Although in the later months → Unlockdown
and normalcy → ⏫⏫ bank deposit by Dec-2020. तालाबं दी के शु�आती महीनों म� लोगों ने एह�तयाती कारणों से
ब�कों से अपनी िडपॉ�जट �नकाली हालांिक प�र���त सामा� होने पर, बाद के महीनों म� वापस बचत क� मात्रा म� बढ़ोतरी होने लगी है
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 56
🔠🔠❓ MCQ. If you withdraw Rs. 1 lakh in cash from your Demand Deposit Account at your bank,
the immediate effect on aggregate money supply in the economy will be _ _ . (UPSC-Prelims-2020)
[a) to reduce it by ₹ 1,00,000 [b) to increase it by ₹ 1,00,000
[c) to increase it by more than ₹ 1,00,000 [d) to leave it unchanged
🚩🚩🚩🚩 FAQ: I’ve 500 jaat-ke doubts in above MCQ ✅Ans. Watch entire pillars’ videos.
11.13💸💸💸💸💸💸 MONEY SUPPLY [M3]
🚩🚩🚩🚩 FAQ: I didn’t understand above chart. ✅Ans. 1st finish the entire pillar’s all video lecture.
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 57
💸💸💸💸💸💸Indicator Situation in 2021
parked large quantity of deposits with RBI
<more explanation in next section> under Reverse Repo Window.)
11.14💸💸⚡MONEY MULTIPLIER (मुद्रा गुणक)
RBI’s Cash Reserve Ratio (CRR) leads to Fractional Reserve Banking & Credit Creation by the
commercial banks, which creates money multiplier effect as following:
Table 2: this process is called 'Fractional Reserve Banking & Credit Creation'
High Powered money (M0) = 100 Asset Side (Deposits) Loaning 10% Reserve (‘R’)
Bank#1 100 90 10
Bank#2 90 81 9
Bank#3 81 72.9 8.1
Bank#.. .. .. ..
Total Money (here M3) Total sum = ₹1000**
𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 𝑜𝑜𝑜𝑜 𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇 𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀 (𝑀𝑀3) 1000
𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴 𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴 = = =10
𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 𝑜𝑜𝑜𝑜 𝐻𝐻𝐻𝐻𝐻𝐻ℎ 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚(𝑀𝑀0) 100
🚩🚩🚩🚩 FAQ: How is this possible/ I didn’t understand? ✅Ans. Watch the video.
Here, 10% reserve (R) generated 1/R =(1/(1/10)]= 10x times the high-powered money. [ब�क कजर् देने से
पहले यिद 10% रकम आर��त रखती है तो 10 गुना �ादा पैसों का �नमार्ण]
- 4% reserve ratio will generate [1/(1/25)]= 25x times (in theory). ✋however in reality the
multiplier may be lower, due to poor banking penetration. (गांव गांव तक ब�क क� सु�वधा नहीं है इस�लए
वा��वक जीवन म� इतना मुद्रा गुणक नहीं होगा)
- In a functional economy, money multiplier (MM) is always greater than 1 & CRR will always be
less than 100%. WHY? Ans. Watch video.
- MM directly improves with ⏬reduction in CRR. (सीआरआर घटेगा तो मुद्रा गुणक बढ़ेगा)
- MM indirectly improves as economy develops, consumption / loan demand increases, banking
penetration, digital economy/less-cash economy etc.
- MM improves with the ⏫in banking penetration, financial inclusion (�व�ीय समावेशन)
- Boom period, Whenever loan demand ⏫ (तेजी का माहौल → लोन �ादा �लए जा रहे हो)
- When RBI adopts Cheap / Easy / Dovish / Expansionary monetary policy to combat deflation.
(जब स�ापे/ अप���त से लड़ने के �लए �रज़वर् ब�क लोन के �ाज दर स�े कर दे)
- In 1960s = less than 2x, 90s = more than 3x, At present = more than 5x.
🚩🚩🚩FAQ: What will be the impact of SLR changes on Money Multiplier? Ans. Cann’t be written
mathematically. Reason given in Video.
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 58
11.14.1 Money Multiplier From 2019 to 2021: why fallen?
⇒ if banks kept loaning to households & business firms then (M3/M0)=Money Multiplier would
grow thru 'zigzag' lending-deposit activity from One bank account to another bank account.
⇒ But this deposit-to-lending activity seems to have slowed down in Corona & afterwards, and
banks parking more quantity of money in reverse repo in RBI. That’s why multiplier is falling.
यिद वह पैसा �रज़वर् ब�क म� �रवसर् रेपो रेट म� डालने क� वजह, ब�क वाले लोन म� घुमाते तो मुद्रा गुणक म� बढ़ोतरी दजर् होती, लेिकन कोरोना के
चलते लोगों म� लोन क� उ�ुकता कम देखी गई. ब�कर काफ� सारा पैसा �रवसर् �रपो के नाम पे �रजवर् ब�क म� वापस डाल रहे थे, इस�लए मुद्रा
गुणक म� �गरावट।
✋Note: There may be 500 other factors as well affecting these indicators but gives poor:cost benefit
learning all those things from MCQ point of view. वा��वक �जदं गी म� और भी 500 कारकों के चलते इन आंकड़ों पर
असर होता है लेिकन उन सब क� पं चात करने बैठे तो परी�ा के �लए उपयोगी नहीं #⏳📚📚थोड़ा-पढ़ो-आगे-बढ़ो
11.14.2 💸💸⚡Money Multiplier From 1981 to 2020
Figure 1: source- Economic Survey 2020, zigzag pattern means 'not increasing steadily'.
- 📘📘📘📘ES20 observed that between mid-1990’s to 2016-17: Money multiplier (measured as a ratio
of M3/M0) was mostly ⏫.
- But 2017-18 onwards: Money Multiplier is ⏬. Could be attributed to the lack of growth in
loaning activities & slowdown in economy.
🔠🔠❓ MCQ. Money Multiplier in an economy increases with _ _ _? (UPSC-Prelims-2019)
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 59
A) Increase in the cash reserve ratio B) Increase in the banking habit of the population
C) Increase in the statutory liquidity ratio D) Increase in the population of the country
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 60
⇒ However, some books interpret that since 1) RBI is circulating them 2) RBI is responsible for
getting torn ₹1 rupee notes exchanged, so it is RBI's liability.
⇒ If in Doubt for MCQ → then tick “Govt.” as Answer.
🚩🚩🚩FAQ: Can Govt borrow as much ₹₹ as they want via G-Sec? ✅Ans. No! There are legal
limits on govt borrowing under the Fiscal Responsibility And Budget Management act (FRBM).
(More in 📑📑Pillar#2D) (सरकार अंधाधुंध तरीक़े से उधारी नहीं कर सकती FRBM क़ानून के अंतगर्त उस पर कु छ सीमाएं ह�.)
🚩🚩🚩FAQ: RBI’s money supply is limited by above Asset-liability balance method. But what if govt
issues large number of coins and one rupee notes before election to keep voters happy? Will it not
create problems in the M0 & economy? ✅Ans. Too much money supply without enough goods-
supply → inflation. So, a sensible govt will not do such drama. Beyond that I’ve no interest in
engaging in further PHD-intellectual debates. Not important for exam. Move to next topic. (झं डे वाले
बाबूशोनो को ये ख़ास प्र� होता है यिद सरकार अपनी तरफ़ से अंधाधुंध तरीक़े से �स�े छाप देगी तो �ा M0 पे ख़राब असर निह होगा?
जवाब: अगर ब�त �स�े छापे लेिकन बाज़ार म� माल सामान क� िक़�त होगी तो महँ गाई बढ़ी जाएगी इस�लए एक �ज़�ेदार सरकार ऐसी
नौटंक� नहीं करेगीइससे �ादा मेरे को इसक� चचार् नहीं करनी है �ोंिक वो परी�ा के �लए काम क� निह है।)
🚩🚩🚩FAQ: How did RBI print money in British times? Ans.✅ Watch the lecture videos
🚩🚩🚩FAQ: Where is the repo, where is the RBI’s profit in above table? Ans.✅ Watch the videos
🚩🚩🚩FAQ: If RBI’s gold/G-sec gets stolen/burned/lost then will M0 decrease? ✅ Watch the videos
🚩🚩🚩FAQ: I’ve 500 jaat-ke other doubts. Ans.✅ then u keep looking for answers on Google until Taimur
grows up & gets married. I am done with this topic from Exam point of view.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 61
11.15.2 💸💸⚡: Currency in Circulation (CIC)
- What is CIC’s exact formula? Ans. Economic Survey didn’t give, so I didn’t bother to Google.
- CIC is an indicator to measure cash as a payment instrument i.e. instead of other payment
instruments such as Cheque, NEFT/RTGS, Card etc. (भुगतान के �लए नक़दी का िकतना प्रयोग हो रहा है)
- Currency in Circulation (CIC) growth (%) declined from 2021-Jan to 2022-Jan.
- Reason: Corona-led precautionary demand for cash has reduced/subsided → People are
keeping less qty of cash in hand, and depositing more qty in Banks. (लोगों म� कोरोना का ख़ौफ़ कम �आ है
इस�लए जनता अब एह�तयादी �प म� हाथ म� नक़दी कम मात्रा म� रखती है।)
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 62
- Milton Friedman: This American economist’s research on monetary policy made this subject
more popular, he also won a Nobel in Economics in this regard (1976).
- Philip Curve: Inflation ↑ = unemployment ↓ (and vice versa). मं हगाई बढ़ेगी तो बेरोजगारी घटेगी. मं हगाई कम
होगी तो बेरोजगारी बढ़ेगी. (More in Pillar#4C)
- So, stable & moderate inflation is good for the economy. (��र व म�म�र महंगाई अथर्तंत्र के �लए अ��)
So, RBI tries to keep inflation with 2-6% Consumer Price Index (CPI: All India) using its bi-monthly
monetary policy made by its 6- member statutory Monetary Policy Committee. (छ:-सद�वाली वैधा�नक
स�म�त द्वारा िद्व-मा�सक मौिद्रक नी�त �नमार्ण करके �रजवर् ब�क महंगाई दर को उपभो�ा मू� सूचकांक के िहसाब से २-६% म� �नयं �त्रत
करने क� को�शश करता है)
Figure 2: depositors waiting in a queue & demanding- हमारा पैसा वापस करो, ABHI KE ABHI!
- CRR and SLR are collectively known as “Variable Reserve Ratios” or “Statutory Reserve Ratios”
(इन दोनों को प�रवतर्नीय आर��त अनुपात / वैधा�नक आर��त अनुपात भी कहा जाता है)
CRR SLR
Full form: Cash Reserve Ratio Full form: Statutory Liquidity Ratio
(नकद कोष अनुपात) (वैधा�नक तरलता अनुपात)
Banks must keep this much deposits (or Banks must keep this much deposits in liquid
balance) with RBI. RBI doesn’t pay interest on assets such as cash, gold, G-Sec, T-Bills, State
this deposit, except in extraordinary Development Loan Bonds and other securities
circumstances like 1999’s Banking slowdown. notified by RBI. (ब�क ने जमाकतार्ओ ं से हांसील क� �ई रकम
(ब�क ने जमाकतार्ओ ं से हांसील क� �ई रकम का कु छ िह�ा �रजवर् का कु छ िह�ा, �रजवर् ब�क द्वारा मा� तरल प�रसं प�तमे �नवेश
ब�क मे जमा करना पड़ेगा।) करना होगा)
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 63
CRR SLR
Bank earns no profit / interest, as such. Some profit may be involved. (मुनाफा हो सकता है)
- CRR: first suggested by British economist Mandated under Banking Regulation Act, 1949
J.M. Keynes & first introduced in US (ब�िकंग �व�नयमन अ�ध�नयम के अनुसार इसे लागू िकया जाता है)
Federal Reserves (=Central Bank of USA).
- Mandated under RBI Act, 1934
⇒ RBI can fix any amount of CRR, legally ⇒ Presently it is 18.00% of NDTL.
there is no minimum or maximum limit. ⇒ Legally, SLR can’t be made more than 40%.
Although in real life, RBI will not keep (कानूनन �प से �रज़वर् ब�क इसे 40% से �ादा नहीं रख
CRR@100% otherwise, no bank can give सकतीं.)
loans then economy will stop functioning.
⇒ Corona-2020: it was 3% of Net Demand &
Time Liabilities of a bank (NDTL: �नवल मांग
और समय देयताएँ )
⇒ 2021: CRR be gradually increased to 4%
⇒ 2022: CRR increased to 4.50%
- All Banks must keep CRR. Similar to left cell of this table.
- However, RBI may prescribe separate % (सभी प्रकार के ब�क के �लए अ�नवायर्. हालांिक �ेत्रीय ग्रामीण ब�क
norms/slabs for Regional Rural Banks तथा सहकारी ब�को के �लए इसक� प्र�तशत मात्रा �रज़वर् ब�क, अ�
(RRBs) and Cooperative Banks. ब�को क� तुलना म� थोड़ी �भ� रख सकती है)
- More in 📑📑Pillar1B1: classification
🚩🚩🚩🚩 ✋Difference between NDTL, ODTL, Total DTL?= NOT IMP4IAS. If you want to satisfy
your curiosity, do google search yourself but I don’t t think it as best use of time.
- CRR-SLR are counted on fortnightly basis. If not maintained, bank will have to pay penalty
interest rate to RBI. This Penalty rate is linked with Bank Rate%. (हर 15 िदनों के �लए �गना जाता है. यिद
ब�कर ने निह नहीं माना तो जुमार्ना लगेगा.)
- CRR-SLR ensure monetary stability of India through two primary functions:
1) CRR assists in money multiplier effect.
2) CRR-SLR provide buffer/protection during a Bank Run (ब�कों म� से जमारा�श वापस लेने क� दौड़)
i.e. an emergency when every depositor wants to pull out money from his bank account
at once, mainly due to fake news / rumours sometimes due to war e.g. in Russia-Ukraine
- While in theory CRR/SLR can be used for inflation control but RBI primarily relies on REPO
Rate (=its Policy Rate) to combat inflation, and not CRR/SLR. (हालांिक, सीआरआर और एसएलआर महंगाई
�नयं त्रण के मु� साधन नहीं है. �रज़वर् ब�क महंगाई से लड़ने के �लए मु�ता रेपो रेट का इ�ेमाल करती है)
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 64
Ans. Wait till we reach Pillar3A: Currency Exchange Rate. Presently we are in Pillar1A2.
✋What was this? how did it work? Ans. 6 years old technical topic for NOT-IMP. Very
poor cost benefit in preparing #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो.
12.12.2 🐯🐯🐯🐯✂🗓🗓 (2020-Feb) CRR Exemption for 5 yrs, depending on loans (सीआरआर म� छू ट)
2020-Feb: RBI instructed the banks:
⇒ Whatever new (retail) loans you give for (1) automobiles (2) residential housing / home
mortgages. (3) MSMEs [After 31/Jan/2020 upto 31/Jul/2020]. Some of these deadlines later
extended but PHDNOTIMP
⇒ You can subtract that much loaned ₹₹ amount from deposits while computing cash reserve ratio
(CRR) for the next five years (from the date when the loan was given or other technical norms,
which are not important). (यिद ब�कर ने वाहन, मकान और छोटे उद्योगों को कजर् िदया, तो सीआरआर म� उस ब�क को छू ट
�मलेगी)
⇒ In other words, if a bank gives more loans to the above 3 sectors, it’ll have to keep ⏬ CRR →
⏫ loanable funds → profit to the bank. And more loans → more business activity →
economic growth for the country. (देश क� आ�थक वृ�द्ध म� मदद होगी)
Figure 3: कोरोना महामारी से जुज़ रही अथर्�व�ा पुनज��वत करने के �लए सीआरआर मे कटोती करना मं गता है।
- To revive Indian economy after Corona, RBI made certain changes in its monetary policy during
March-April-2020 period.
- Parallelly, Govt also took announced relief in tax-filling, free-food to poor etc.
- Collectively, Modi labelled these actions of [RBI + Government] = “Atmanirbhar Bharat
Economic revival package”. 📑📑More in Pillar#4C.
⇒ 2020-March: RBI announced 100 basis points (bps) (=1%) cut in CRR. so Earlier 4%-1%=. This
will ⏫ the loanable funds available with the banks. (कोरोना वषर् 2020 के दौरान �रज़वर् ब�क ने सीआरआर म�
1% क� कटौती क� तािक ब�करों के पास लोन म� घूमने के �लए �ादा रा�श उपल� हो जाए)
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 65
⇒ 2021: now India moving towards economic recovery, enough loanable funds in banks available
so, RBI ordered restoration/⏫ of CRR in two phases: 3.5% (2021: March2May ) →4% (2021-
May) (�ोंिक भारत के अथर्तंत्र वापस पटरी पर आ रहा है इस�लए �रज़वर् ब�क सीआरआर को वापस मूल ��ती यानी 4% पर ले आ
रहा है)
⇒ 2022: CRR increased to 4.50% to fight inflation. (बढ़ती महँ गाई से लड़ने वा�े CRR म� बढ़ोतरी क� है)
🔠🔠❓When RBI reduces SLR by 50 basis points which is likely to happen? (UPSC-Pre-2015)
(a) India's GDP growth rate increases drastically.
(b) Foreign Institutional Investors may bring more capital into our country.
(c) Scheduled Commercial Banks may cut their lending rates.
(d) It may drastically reduce the liquidity to the banking system.
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 66
® LAF-Repo Rate (�रपो दर/पुन: क्रय-अनुबंध) ® ® LAF-Reverse Repo Rate
(उलट �रपो/ पुन: क्रय-अनुबंध)
The Interest rate at which RBI lends short-term It’s the interest rate that clients earn when
loans to its clients, keeping their G-Sec as parking their surplus funds with the RBI for
collaterals. (�रजवर् ब�क अपने ग्राहको को लघु अव�ध के ऋण short periods, to earn interest. (ग्राहक अपना
देता है। उसपर लागू �ाज दर को �रपो दर कहेते है। ग्राहक ने अ�त�र� धन, �रजवर् ब�क मे लघु अव�ध के �लए जमा कर जो
अपनी सरकारी प्र�तभू�तयों को �रजवर् ब�क मे �गरवी रखना पड़ता �ाजदर कमाते है, उसे उलट-�रपो-दर कहेते है)
है)
⇒ Clients enter into an agreement with RBI to Mechanism similar to Repo, RBI gives its G-Sec
repurchase their G-sec at a future date at a as a collateral to client.
(higher) pre-determined price.
⇒ Banks can’t pledge their SLR-quota-G-Secs
for this borrowing.✋
⇒ Repo also called ‘Ready Forward Reverse Repo Rate = Repo% MINUS x%
Transaction’.
⇒ Repo Rate is our Policy Rate to control
inflation. (मौिद्रक नी�त दर)
⇒ Repo = RBI lends short term loans its clients, & demands G-Sec/T-bill as collateral. ✋ At every
place, I’ve not mentioned T-bill, as it just reduces the speed of revision.
⇒ Market Repo = Players other than RBI (such as bank, NBFCs) loaning short money to other
Banks/NBFCs/Corporate Companies, and demanding financial securities (G-Sec/T-
Bill/shares/bonds/commercial paper etc.) as collateral. What do those terms mean? Ans. Ref the
table given in topic Operation Twist.
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 67
12.14👻👻🐯🐯🐯🐯📈📈 REPO → SPECIAL WINDOWS UNDER ATMA NIRBHAR
12.14.1 (2020) 🐯🐯🐯🐯🐯🐯 Long Term Repo Operations (LTROs: दीधर् अव�ध के रेपो ऋण)
⇒ Usually, Repo loans are for short term borrowing from overnight to 14-days.
⇒ But, 2020-Feb: RBI announced Long Term Repo Operations (LTROs) of 1 yr & 3 years tenors.
⇒ RBI will loan > ₹ 1,00,000 crore, in various rounds through E-Kuber platform.
⇒ Interest rate: @repo rate. Interest rate will be compounded annually. (वा�षक �प से चक्रवृ�द्ध �ाज)
⇒ This will ⏫ loanable funds with banks → economic growth can be revived. (आ�थक वृ�द्ध म� मदद
होगी)
⇒ MSF and (short term) repo lending will also be continued separately as per their own existing
norms. LTRO doesn’t aim to eliminate / replace them. (बाक� जो लघु अव�ध के उपकरण है, वह भी जारी ही है)
✋Further operational guidelines, how it impacts the bond yields etc. = poor cost:benefit
Figure 4: कोरोना प�ात लोन म� �ादा पैसा घुमाके अथर्तंत्र को वापस खड़ा करने के �लए �रज़वर् ब�क ने ये नई �खड़िकयाँ खोली है
#In above chart, All Banks doesn’t include Payment Banks. PB can’t give loans (Ref:📑📑Pillar#1B1)
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 68
Tools Changes in Corona-2020 upto 2022-Feb
💊💊💊💊 On-Tap RBI loan for 3 years @Repo% to Banker → loans to Hospitals, vaccine
Liquidity Windows manufacturer, vaccine importers, medical device makers, oxygen suppliers
for Healthcare etc (अ�ताल, टीका उ�ादक, आयात करने वाले �चिक�ा साधन बनाने वाले इ�ािद)
🍸🍸⛱ On-Tap RBI loan for 3 years @Repo% to Banker → Hotels, Restaurants, Tour
Liquidity Windows Operators, Bus Operator, Car Repair Service, Beauty Parlours/Spa/Saloons,
for Contact- Event/Conference Organisers ब�कर ने ये पैसा �शर्-सं वेदनशील उद्योग �ेत्र जैसे प्रवासन
Intensive Sectors उड्डयन इ�ािद को कज़र् म� देना होगा
AIFI RBI loaned large amount of money to All India Financial Institutions
(AIFI) i.e., NABARD, NHB, SIDBI and EXIM Bank (More in
📑📑Pillar#1B1)
12.14.3 🚩🚩🚩RBI’s Special Windows: Useless Doubts by flag-carrying Babushonas
1. 🚩🚩🚩FAQ: Why would bank borrow ₹₹ in TLTRO / On-Tap windows, when many conditions
are imposed on it? Ans. maybe the bank feels it will earn profit from such loan/investment. (ब�कर
को ज�रत होगी तो ल�ग,े वरना नहीं ल�ग.े �रज़वर् ब�क के गवनर्र उसको बं दू क िदखाकर ज़बरद�ी नहीं दे रहे)
2. 🚩🚩🚩FAQ: Why would bank borrow ₹₹ in REPO rate (Short term) when LTRO offering long
term loans? Ans. 1) depends on the requirement of the bank 2) TLTRO amount is finite e.g. first
round total ₹1 lakh given. So, if a banker came late to RBI’s office & Parle-G biscuit stock was
finished , banker may have to buy Britannia biscuit.
3. 🚩🚩🚩FAQ: How does LTRO/TLTRO involve “flight of foreign investors & its impact on
exchange rate & bond yield” etc.? Ans. Such long-winded-financial-cause-effect = no
importance in UPSC, even though private mock-test-walla design useless MCQs from it. इतनी दू र
क� बीरबल क� �खचड़ी अपने को पकाने क� ज�रत नहीं है!
4. 🚩🚩🚩FAQ: I want to do PHD on this until Taimur grows up & gets married. Ans. Good luck to
you! You keep doing that, but, I’m finished teaching this topic here. शुभकामनाएँ , आप लेके बैठे रहो.
Figure 5: sir, जब तक आप loan के �लए हाँ नही कं ह�गे, हम आपको telemarketing spam-calls करते रह�गे!
Corona led Economic Slowdown → Loan demand ⏬ → banks parking their excess funds in RBI to
earn interest in the form of reverse repo rate. (कोरोना महामारी के दौरान ब�क वाले अपना अ�त�र� धन �रज़वर् ब�क म�
डाल के बैठे �बठाये �ाज कमा रहे थे. ग्राहकों म� लोन का पैसा घुमाने क� मेहनत नहीं कर रहे थे.)
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 69
⇒ 😰😰Benefit of reverse repo reduction?
IF SBI offers 5.9% Fixed deposit interest rate to depositors, and parks it in the RBI
reverse repo rate (3.35%) then SBI will actually make losses.
So, RBI hopes SBI will now be ‘forced’ to give loans in a proactive manner (through
SMS-spam, email-spam and unwanted telemarketing calls etc)
Although as per 📔📔📔📔ES21, Banks still continued to park their surplus funds in Reverse repo
because there were not enough loan takers due to Corona slowdown. (हालांिक कु छ खास फायदा नहीं �आ ऐसा
आ�थक सव��ण का कहना है)
12.14.5 🐯🐯🐯🐯🐯🐯 MonPolicy → Quant Tools → Variable Rate Reverse Repo (VRRR)
TRADITIONAL FIXED REVERSE REPO VARIABLE RATE REVERSE REPO
(FRRR) : Interest Rate fixed by RBI e.g. 3.35% Interest Rate decided by Bidding process of
(�रजवर् ब�क द्वारा �रवसर् रेपो रेट क� दर पहले से ही तय कर दी जाती clients (How? Explained in video but not
है.) important.)
Thus, RBI not fixing the percentage% in
advance. It is variable%...depending on bidding
action of clients.
RBI can reject/refuse to accept reverse repo same as the left cell.
deposits from clients without giving him any (आरबीआई �रवसर् रेपो दर मै ग्राहक क� िडपा�जट लेने से मना कर
reasons. (�रज़वर् ब�क मना कर सकता है) सकता है, �बना कोई उस ग्राहक को कारण बताए.)
-- This activity was paused during Corona 2020
but resumed in 2021-January.
Reasons for conducting VRRR (�ों यह “प�रवतर्नीय दर वाला उ�क्रय अनुबंध” खेल खेला जा रहा है?)
⇒ Because RBI wants to suck excess money supply from the market without modifying the 'fixed'
reverse repo % (�रवसर् रेपो के �न��त दरों म� छे ड़छाड़/बदलाव िकए �बना �रजवर् ब�क बाजार से अ�त�र� पैसा चूस सके .)
⇒ Clients may hope to earn more interest rate in VRRR than fixed rate reverse repo. (VRRR नीलामी म�
िकस प्रकार क� बो�लयां लगाई गई है उस िहसाब से ग्राहक को शायद थोड़ा �ादा �ाज कमाने �मले)
🚩🚩🚩FAQ:
⇒ VARIABLE RESERVE RATIO = is a collective term used for describing CRR & SLR.
⇒ VARIABLE RESERVE REPO RATE = is a separate thing under reverse repo.
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 70
12.14.7 🐯🐯🐯🐯 🎛🎛 Enhanced Reverse Repo Rate for Hardworking Bankers
⇒ If Bankers uses Sector Specific On-tap Liquidity Window (e.g. bankers taking loans from RBI to
lend to hotel, beauty parlours, vaccine manufacturer etc). यिद कोई ब�कर �रज़वर् ब�क द्वारा बनाई गई �ेत्र �वशेष
�खड़िकयों से पैसा कजर् म� लेके �व�वध �ेत्रों को देता है
⇒ If this banker achieved Rs.“XX” loan giving target → IF he parks his surplus funds under
Reverse Repo Window → RBI will pay him 3.75% Reverse Repo Rate. (instead of 3.35% FIXED
reverse repo paid to lazy bankers.) तो उस मेहनतकश ब�कर को रीवसर् रीपो रेट म� �रज़वर् ब�क �ादा प्र�तशत �ाज देगी,
अ� आलसी ब�करों क� तुलना म�.
⇒ 🤩🤩Benefit? It encourages bankers to work harder to give loans to various sectors.
🚩🚩🚩 FAQ: How / Why is this possible? How can banker borrow money and yet have surplus
funds? Ans. Banker will not instantly get all borrowers on day1. So, often he would invest his surplus
money (of depositors) temporarily in RBI (under Reverse Repo)- just to earn small amount of profit,
instead of letting the cash stay idle in his bank office. (ब�कर को यिद तुरंत कजर् लेने वाला कोई ग्राहक नहीं �मले तो
छोटी अव�ध के �लए ब�कर अपना पैसा, �रजवर् ब�क म� रखेगा �ोंिक ऐसा करके ब�कर �रज़वर् ब�क से �ाज कमा सकता है)
12.14.9 🐯🐯🐯🐯🐯🐯 MonPolicy → Quant Tools → Rates → Bank rate (ब�क दर):
Bank Rate MSF Repo Rate
Introduced in RBI Act, 1934** 2011 2000
What is the % Since 2012: Monetary Policy
MSF = Repo% + “x”%
rate? Bank Rate% = MSF% Committee decides
Who can All clients of RBI:
borrow from Only banks bank, non-bank,
the RBI? Union & State Govt
Collateral Bank can pledge securities Yes, G-Sec/T-bill. But
**Yes and No
required? from its SLR quota not from SLR
Loan duration Longer than repo Short term usually overnight to 14 days
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 71
Bank Rate MSF Repo Rate
Emergency borrowing by
Nowadays mainly
Primary bank, using their securities Short term borrowing
for deciding penalty
Utility? from SLR quota subject to by all clients of RBI.
on errant banks
certain limits.
⇒ **RBI Act, 1934: “Bank rate is the standard rate at which RBI buys or rediscounts first class
securities, bills of exchange or other commercial papers.(-NCERT)” rediscounting basically
means the “repo-walla game= RBI buys @x price, re-sells@y price where y>x”
⇒ But, since the introduction of the Repo rate in the 2000s, the Bank rate has become a dormant
tool (�न��य उपकरण) =not frequently used by RBI for lending or by banks for borrowing).
⇒ So, reference books/websites differ in its present operational status e.g. some of them would say:
o Bank rate requires no collateral and is meant for long term loans.
o Bank rate accepts collateral which can be both GSec/T-bill as well as private companies’
securities.
🚩🚩🚩🚩✋So, in the real exam, it depends on which book/web source the examiner has copied the
statement(s) and accordingly you’ve to take a judgement call in ticking the answer. �व�भ� और िकताबों
और वेब साइटों पर ब�क दर क� �ा�ा/अथर् गठन अलग अलग है इस�लए असल परी�ा म� जो पूछा जाए तो ��ती/�ववेक के िहसाब से
आपने जवाब tick करना है.
12.14.10 🐯🐯🐯🐯🐯🐯 Quanti. Tools → SDF (=Reverse Repo walla game Without Collaterals)
⇒ 2013: Urjit Patel Committee on Monetary policy proposed standing deposit facility (SDF)
⇒ SDF = Clients park/deposit their extra money in RBI. RBI pays them interest. RBI doesn’t give
any collateral (unlike in REVERSE REPO). (�ायी जमा/िडपॉ�ज़ट सु�वधा = �रज़वर् ब�क के ग्राहक अपना अ�त�र�
पैसा �रज़वर् ब�क म� जमा करेगा. �रज़वर् ब�क ग्राहकों को उस िडपॉ�ज़ट के �लए �ाज देगा. �रज़वर् ब�क ग्राहक के पास �गरवी कु छ नहीं
रखेगा.)
⇒ 🤩🤩Benefit of SDF: To combat inflation → RBI can suck extra money supply via SDF window.
RBI will not have to pledge G-Sec as collateral to clients. (महँ गाई से लड़ने वा�े बाज़ार म� से पैसों क� अ�त�र�
आपू�त को चूसने/हटाने/कम करने के �लए �रज़वर् ब�क एसडीएफ़ का इ�ेमाल कर सकता है- �बना कु छ �गरवी रखे।)
⇒ 2018: RBI act amended to add SDF facility. (�रज़वर् ब�क क़ानून म� सुधार िकया गया).
⇒ 2022-April: RBI started/launched SDF. RBI also made changes in Policy corridor. <REF: NEXT
SECTION>
> Reverse Repo rate not discontinued. Reverse Repo will remain as part of RBI’s toolkit. RBI will
continue to use it at its discretion from time to time. Presently Reverse Repo is 3.35%
🚩🚩🚩FAQ: what is the deposit time duration of SDF and Reverse Repo?
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 72
> Sufficient to know these are for short-term. Now what exactly is short-term? Is it 1 day, 7 day, 14
day? = Not important for exam. Why overburden the memory card of the brain with unnecessary
information?
🚩🚩🚩FAQ: IF SDF and Reverse Repo both present, then why would Bankers go for SDF where no
collateral given?
> The time period and interest rate offered on SDF and Reverse Repo are different. So, it depends on
bankers’ business-requirement, cash-flow management. RBI is not pointing in gun their head to use
it. (ब�कर को ज़�रत होगी तो इ�ेमाल करेगा. �रज़वर् ब�क उसक� कनपटी पर �प�ौल नहीं रखा है.)
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 73
12.14.12 🚧🚧 Policy Corridor / LAF Corridor
⇒ Policy Corridor also known as Liquidity Adjustment Facility (LAF) corridor. (नी�त ग�लयारा / तरलता
सु�वधा ग�लयारा)
⇒ BEFORE 2022-April: Policy Corridor = total width between: MSF <—> REPO <—> Reverse
Repo. (इन तीनों उपकरणों के बीच क� कु ल चौड़ाई)
⇒ After 2022-April: Policy Corridor = MSF (Repo+0.25%) <—> REPO <—> SDF (Repo-0.25%)
⇒ Thus total width is 0.25+0.25= 0.50%
Upper end of Corridor Center Lower end of Corridor Total width
/ Ceiling (छत/ऊपरी सीमा) / Floor (फ़शर्)
Tool? MSF REPO Before: Reverse Repo. (RR)
After: SDF
Before MSF= R+25 bps R% RR = Repo-25 bps 25+25=50bps
Corona
In Corona MSF= R+25 bps R% RR = Repo - 65bps 25+65=90bps
2020-21
2022-Apr MSF = Repo + 25bps R% SDF = Repo-25bps 25+25=50bps
Note: 100 base point system (BPS) = 1% So 25 bps = 0.25%. 50 bps = 0.50%
⇒ SDF has replaced the Reverse Repo Rate as the floor of the Policy corridor.
⇒ However, Reverse Repo was not discontinued.
⇒ Reverse Repo will remain as part of RBI’s toolkit
⇒ Reverse Repo will be used as per the mood/discretions of the RBI from time to time
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 74
12.14.13 �⚖� Tri-Party Repo (�त्र-प�ीय पुन: क्रय-अनुबंध):
⇒ Outdated topic. I find it not important for exam anymore. So DELETED from handout.
⇒ Sufficient to know this is not a tool of Monetary Policy. It is a method to meant to help
companies to borrow money from the market.(ये मौिद्रक नीती का िह�ा नहीं है. )
12.14.15 🐯🐯🐯🐯📁📁 Market Operations (OMO): (Inflation → Sell G-Sec, Deflation → Buy)
12.15.1 🔪🔪🔪🔪: Security → Debt → G-Sec & Bonds (ऋण के �लए जारी क� गई प्र�तभू�तयां)
A ‘Security’ means a certificate/document indicating that its holder is eligible to receive a certain
amount of money at a particular time. This could be a…
Table 3: प्र�तभू�तयों के �व�भ� प्रकार
Borrower 🦁🦁Govt 🤵🤵Corporate (�नगम)
Short term Treasury bills, Cash Bill of Exchange, Commercial Papers,
(less than 1 year) Management bills Promissory Notes.
→
Long term G-Sec, Sovereign Bonds Bonds / Debentures
(1 year/>) →
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 75
Borrower 🦁🦁Govt 🤵🤵Corporate (�नगम)
Usually lower than Corporates’ Depends on following factors →
Interest rate
because risk is low
12.15.2 🛒🛒 (🔪🔪🔪🔪: 🧔🧔🧔) Deepening of G-Sec market- Retail investors’ RDAG @RBI
- RBI launched “Retail Direct Scheme” in 2021.
- Under this scheme, RBI permits “Retail Direct Gilt (RDG) account” for retail investors on its E-
Kuber online platform. (आम �नवेशक �रज़वर् ब�क म� आरडीजी नामक खाता खोल पाएं गे)
- Both Resident Indians & non-resident Indians (NRIs) can open this account. (गैर �नवासी भारतीय भी)
- Then Retail investors can directly buy Treasury Bills (T-Bill), G-Secs (of Union Government),
State Development Loans (SDL are ‘G-secs’ of State Govts) and Sovereign Gold Bonds, from RBI
directly. (आम �नवेशक सीधा �रज़वर् ब�क से इन प्र�तभू�तयों को खरीद सकता है.)
- Application fees to open the account = ₹ ZERO
− 🤩🤩Benefit? 1) Earlier retail investors bought G-sec “indirectly” through mutual funds wherein
mutual fund manager (MF) charged commission/fees. Now retail investor can buy directly so
does not have to pay such commission/fees to MF managers. (�बचौ�लयों को दलाली/कमीशन नहीं देना होगा)
− (More in 📑📑Pillar#1C- SEBI Share market, DEMAT account etc)
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 76
⇒ But suppose, before maturity of 1 year, Bhide Master urgently needs cash. So he sells ₹ 100 face-
value bond to Mr.Jethalal at a discounted price of ₹90. पैसों क� अचानक ज�रत पड़ने पर स�े दाम म� िकसी को
बेच दे
⇒ Jethalal keeps the it till maturity → Government pays him ₹ 108. प�रप� होने तक बेचे नहीं
⇒ So, for Jethalal the profit OR current bond yield to maturity is….
108−90
Yield= �
𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑜𝑜𝑜𝑜 ₹ 90
� ∗ 100 = 20%
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 77
Figure 7: figures are only for illustration. ✋No need to memorize numbers.
12.15.8 🐯🐯🐯🐯🐯🐯🐯🐯RBI’s Operation Twist: methodology (2019-Dec)
Since RBI’s existing monetary policy tools had failed to make loans cheaper for corporates / boost the
economy. So in 2019-Dec, RBI started a “special OMO” wherein:
RBI Sold→ shorter -term G-Sec (of 1 year & higher tenor) worth ₹10,000 crore
RBI Bought → bought longer -term G-Sec (of 10-14 years tenor) worth ₹10,000 crore (i.e. equal
amount as above, so as to keep money supply unchanged.)
�रज़वर् ब�क ने �जतना बेचा, उतनी ही रकम का कु छ और खरीद �लया तािक मुद्रा आपू�त म� कोई बदलाव न हो.
⇒ Since RBI started buying long-term G-Sec, their demand will ⏫ → price will ⏫ → yield is ⏬.
The 10YearGSec’s yield lowered from 6.75% to 6.60%
⇒ And we’ve already learned, Corporate bonds are priced (benchmarked) keeping G-sec yields in
mind.
So, Op Twist → Lower G-Sec yield means →
Cheaper borrowing for Private sector Companies. Because
o They can borrow money by issuing their (long term) Corporate-Bonds at much cheaper
interest rate than before. (�नजी �ेत्र क� कं प�नयों के �लए बॉ� जारी कर- ऋण लेना �आ स�ा🤩🤩)
o When a private company meets a bank manager to borrow money, it can negotiate the
loan price, “If your bank does not lend me money at this cheaper interest% then I will
issue my own corporate bonds.” → Even the bank lending rates for corporate loans could
be reduced.
Cheaper borrowing for Government. For reasons similar to above. (How? Explained in Video)
Investor of long term G-Sec will feel discouraged to hold the G-Sec till maturity (10-14 years),
He will try to sell it to another party/RBI and pull out his money, then he may park ₹₹ it a
Corporate Bond / Bungalow / car / Goa-vacation etc. Thus, it helps boost the consumption →
economy grows.
समज म� आ गया हो तो ब�ढ़या है, नहीं तो रट्टा मारो �जंदाबाद (if not understood then memorize by Rot-learning)
1. 1961: "Operation Twist" was first used by the US Federal Reserve.
2. 2019: RBI used also done it. Officially called “Special Open Market Operation (OMO) wherein
the Central bank simultaneously buys and sells G-sec of varying maturities to adjust their yields.
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 78
Which helps reduce interest rates on corporate bonds/debentures → easier to mobilize
investment → factory expansion → jobs, GDP growth. (यह एक खास िक� क� खुले बाजार क� िक्रया है, जहाँ
अगल अलग �मयादी क� सरकारी प्र�तभू�तयाँ खरीद-व-बेच कर �रजवर् ब�क उनक� उपज को कम करता है, तािक कॉप�रेट कं प�नया
स�े �ाज मे पैसा बाजार से हा�सल कर सके , तािक रोजगार और आ�थक वृ�द्ध मे मदद �मले)
3. Objectives of Op-Twist=
a. To make borrowing cheaper for Companies and Govt. कं पनीओ/�नगमों और सरकार के �लए कजर्
स�ा करवाना (HOW? Ans. Explained in Video).
b. It was NOT MEANT For fighting inflation. महंगाई से लड़ना इसका उद्दे� नहीं है
4. It ensures better Monetary Policy transmission for economic growth. (because, earlier, simply
reducing the repo rate has not helped much in making loans cheaper, for corporates. इससे पहले रेपो
दर कम करने पर भी बाजार म� लोन स�े नहीं हो रहे थे, तो �रज़वर् ब�क ने सोचा ये ऑपरेशन �ट्व� नामक नया साधन आजमाते ह�)
5. Net liquidity remains unchanged because ₹10,000 crore goes in and the same amount comes out
of the market. (सकल तरलता म� कोई बदलाव नहीं �ोंिक ऑपरेशन �ट्व� म� �जतना खरीदा, उतना ही बेचा है)
✋🎓🎓 🚫🚫 Beyond this, further PHD on what/why/how = poor cost:benefit for MCQs.For example
“The simultaneous sale of short-term bonds, on the other hand, helps push up short-term rates
which had fallen below RBI's benchmark rate. This would not only correct the anomaly in the short-
and long-term rates ” …. All this is not important for the scope of competitive exams, even if
inexperienced private mock-test-quiz-masters ask it.
12.15.9 ✋🎓🎓 🔪🔪🔪🔪: 🤑🤑 Bond Yield & Inverted Yield Curve: poor benefit for exam
1. Inverted Yield curve = ✋🎓🎓 इस मुददे को पढने म� हम व� बबार्द नहीं कर�गे
2. Negative Bond Yield = ✋🎓🎓 इस मुददे को पढने म� हम व� बबार्द नहीं कर�गे
3. Chinese Bond Yield ki News, Italian Bond Market crisis = ✋🎓🎓NOT IMP.
🔠🔠❓ India Government Bond Yields are influenced by which of the following? (Prelims-2021)
1. Actions of the United States Federal Reserve [अमे�रक� फे डरल �रजवर् क� िक्रयाओं द्वारा]
2. Actions of the Reserve Bank of India. [�रजवर् ब�क क� िक्रयाओं द्वारा]
3. Inflation and short-term interest rates [महंगाई और लघु अव�ध के �ाज दर]
Answer Code: a) 1 and 2 Only b) 2 Only c) 3 Only d) 1, 2 and 3
🔠🔠❓ MCQ. Which would result in an increase in money supply in economy? (Prelims-2012)
1. Purchase of G-Sec from the public by the Central Bank.
2. Deposit of currency in commercial banks by the public.
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 79
3. Borrowing by the government from the Central Bank.
4. Sale of government securities to the public by the Central Bank.
Answer Codes: (a) 1 only (b) 2 and 4 only (c) 1 and 3 (d) 2, 3 and 4
😤😤FAQ/Moral Outrage: Why G-SAP? Why not achieve this via ⏬ reducing REPO ? Ans.
⇒ Every person may not be interested in taking new bank loans. Some investors may be interested
in selling their previous investments in G-Sec to unlock the money. (हर ��� ब�क से कज़र् लेगा ये ज़�री
नहीं है। कु छ �नवेशक अपना पुराना G-sec �नवेश बेचकर पैसा बटोरना चाहते हो तो जी-सेप म� आ सकते है)
⇒ if RBI ⏬decreases the repo rate too much→ it can result in A) inflation and B) ⏬decrease in
the deposit interest rates offered by the bankers on savings account → middle-class and
pensioners affected negatively. (रेपो दर म� ब�त �ादा कटौती �ई तो नई सम�ाए खड़ी होंगी)
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 80
Table 4: To Sum up, OMO, GSAP, OP-TWIST (कु ल �मलाकर बात ये है िक)
⇒ Whereas, qualitative tools (PSL,LTV etc.) control “distribution” of loans to a particular sector of
economy. गुणा�क साधन कज� के �वतरण को तय करते ह�
- e.g. how much loan to a particular sector e.g. agriculture, renewable energy.
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 81
- how much loan to a particular segment of society (e.g. farmers, women, SC/ST).
- So, qualitative tools also known as SELECTIVE (चयना�क) or DIRECT (प्र��) Tools.
12.17.1 � Moral Suasion (नै�तक दबाव / सलाह) & Publicity (प्रचार)
Figure 8: “म�ने तो अपनी repo-दर कम कर दी लेिकन ये लालची ब�क वाले अपने loan-दर कम नही कर रहे , कम से कम मेरा �लहाज/स�ान रखने के �लए भी उ�े थोड़ा तो स�ा
करना चािहए।“ - RBI Governor
- Moral suasion meaning applying “Persuasion” without applying punitive measures. RBI
governor tries this tactic via conferences, informal meetings, letters, seminars etc
- E.g. RBI-Governor asking banks to transmit repo-rate cuts, open new branches in rural areas,
spread financial literacy, give loans to farmers beyond PSL quota etc.
- E.g. RBI Governor requesting CM or Finance Minister to control fiscal deficit & subsidy leakage
to enhance the efficacy (प्रभावका�रता) of RBI’s monetary policy.
- Publicity: RBI governor could give media statement, speech during university convocation (दी�ांत
पदवीदान समारोह), memorial lectures… “Look I reduced repo rate but banks are not passing the
benefit to customers…and xyz”. By doing so, he can create an effective public opinion which also
pressurizes the banks to stop their thuggery.
12.17.2 �🚯🚯 Direct Action (सीधी कायर्वाही: �ोिक लातो के भुत बातो से नहीं मानते)
- RBI can punish banks (and even non-banks) for not complying with its directives under RBI Act,
Banking Regulation Act, Payment and Settlement Systems Act, Prevention of Money Laundering
Act (PMLA), Foreign Exchange Management Act (FEMA). �रजवर् ब�क के िदशा �नद�शों का पालन न करने पर
�व�भ� कानूनों म� सजा/दंड
- 2019: RBI ordered the banks to have a “Clawback” provision in their CEO & Top executives’
salaries. E.g. If the CEO did any scam/fraud, he’ll have to return his previously paid salary /
bonus, even if he had retired/left the job afterwards. (िकसी ब�क का सीईओ कांड म� पकड़ा गया तो उस सीईओने
पुरानी तन�ाह भी लौटानी होगी.)
12.17.3 💍💍 Margin Requirements / Loan to Value (LTV) (सीमा अ�नवायर्ता)
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 82
LTV reforms in 2020-Aug Before After
Gold Loan 75% value of gold/gold- 90%
jewellary
🤩🤩Benefit? More quantity of loan by pledging same qty of gold → 😷😷 post-corona-biz-revival.
Figure 10: थोड़ा लोन हमको भी िदलवा दो Governor-sahib, हम बहोत गरीब है!
⇒ 1968: First time RBI used the word “priority sector”: Banks must give 40% of their loans to 3
priority sectors 1) agriculture 2) small industries 3) exporters by 1985. (कृ �ष छोटे उद्योग और �नयार्तक)
⇒ Over the years, more sectors were included in it. (समय के साथ साथ और भी �ेत्रों को इसम� शा�मल िकया गया)
⇒ 2015: some reforms in PSL. → 2019: RBI's UK Sinha Committee on MSME loan reforms
suggested some more reforms in the PSL. →2020-Sept: RBI reformed PSL guidelines as
following: (�न� सुधार िकए गए)
Priority Sector Loans norms → minimum quota after 2020-Sept Reforms BEFORE AFTER
� Weaker Sections (कु ल लोन का कम से कम 12% जाना चािहए कमजोर वगर् को): 10 % ⏫12%*
⇒ SC, ST, Women, PH, Minorities, Manual scavengers, Artisans,
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 83
Priority Sector Loans norms → minimum quota after 2020-Sept Reforms BEFORE AFTER
⇒ PM-Jan DhanYojana Overdrafts upto Rs.10,000
⇒ Beneficiaries of Govt's National Rural/Urban Livelihood Mission Schemes
(NRLM/NULM: More in 📑📑Pill#6: HRD →Poverty Removal Schemes)
🌽🌽 Agriculture (कृ �ष) (all farmers: small and big) 10% 8%
🌽🌽 Agriculture: सीमांत िकसान और छोटे िकसान 8% ⏫10%*
⇒ Marginal Farmer (owns upto 1hectre land) सीमांत िकसान
⇒ Small farmer (>1 upto 2ht) छोटे िकसान
🧵🧵 Micro Enterprises (अ�त लघु उद्योग), Khadi-Village industries 7.50% 7.50%
Above categories (Weaker section, agriculture, micro-enterprise ) 4.50% 2.50%
plus, other categories such as
⇒ Small & Medium Enterprises, Affordable housing loans to beneficiaries under
Pradhan Mantri Awas Yojana
⇒ food processing companies, Vermi compost, biofertilizer, seed production,
⇒ Exporters, Student-Education loans (upto Rs.10lakh),
⇒ Social Infrastructure (schools,drinking water, sanitation facilities, health care,
COVID related hospitals/labs etc);
⇒ Renewable Energy Projects (wind mills, biomass generators, solar street light,
micro-hydel plants etc.) etc. (नवीकरणीय ऊजार् प�रयोजनाएं )
Total PSL for Indian Scheduled Commercial Banks and 40% 40%
(Foreign Banks with 20 or more branches).
* Above quota reforms to be implemented in Phase-Wise manner by 2023-24. (क्र�मक �प से नए सुधार
होंगे)
🤩🤩Benefit? It will ⏫ loan-availability for the weaker section and small farmers thus helping in the
United Nations' Sustainable Development Goals related to poverty removal. (📑📑Ref: HDT-Pillar#6)
कमजोर वगर् और छोटे िकसानों को �ादा मात्रा म� कजार् �मल पाएगा. गरीबी �नवारण, सं यु� रा�� के सतत �वकास ल�ों क� प्रा�� म� मदद
करेगा.
⇒ PSL quotas are ‘minimum (�ूनतम/कम से कम)’ & not maximum. So, if bank wishes, it can EVEN
give even 60% of its loans to weaker sections, instead of just 12% “minimum quota” meant for
weaker section.
⇒ Bank’s Loans given to Non-Banking Financial Company (NBFC) who are lending to above PSL
categories = such ‘indirect loan’ to PSL sectors will also be counted for bank’s quota. (ब�कर द्वारा
गेरब�क �व�ीय कं पनी को िदया गया कजार् यिद परो� �प से प्राथ�मक �ेत्र को जाता है तो वह रा�श भी कवोटा-सफलता म� �गन ली
जाती है। )
⇒ Bank + NBFC’s joint lending / co-lending/ co-origination loans – what does it mean? #PHD-
NOT-IMP. (ब�क और गेर-ब�क का साथ मे �मलकर पीएसएल �ेत्र को कजर् िदया, तो उसमे ब�क ने िदया कजर् इस �ोटे म� �गन �लया
जाता है, कु छ शत� के आधीन)
⇒ NOTE: PSL Norms donot apply to NBFCs. PSL Norms apply ONLY to Bankers.
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 84
12.18.1 🐯🐯🐯🐯🐯🐯 PSL Reforms-2020: on RRB/SFB/UCB?
What is the difference/meaning of SCB/RRB/SFB/UCB etc? Ans: (📑📑Ref: HDT-Pillar#1B1:
classification)
Type of Bank & PSL Reforms-2020: Before After
Indian Scheduled Commercial Banks (SCB: अनुसू�चत वा�ण��क ब�क) and 40% same 40%
Foreign Banks in India with 20 or more branches
Foreign Bank in India with <20 branches (�वदेशी ब�क) 40% same 40%
Regional Rural Banks (RRB: �ेत्रीय ग्रामीण ब�क) 75% same 75%
Small Finance Banks (SFB: लघु �व� ब�क) 75% same 75%
Urban Cooperative Banks (UCB: शहरी सहकारी ब�क)* 40% ⏫75%
Rural Cooperative Banks (ग्रामीण सहकारी ब�क) N/A N/A
⇒ These quotas implemented in a gradual/phase-wise manner. Will become effective in 2023-24.
⇒ Internal quotas may be different for these Banks e.g. RRBs: Weaker section =15%. But, poor cost-
benefit in chasing all that information. #⏳📚📚थोड़ा-पढ़ो-आगे-बढ़ो
12.18.2 🐯🐯🐯🐯🐯🐯 PSL Reforms-2020: Startups, Renewable Energy and Healthcare
PSL Loans → other category BEFORE AFTER
Startup Company is a company: only eligible categories: All types of Startups
⇒ Age: Not older than 10 years ⇒ Agro/Food processing allowed in PSL quota
AND related Startup
⇒ Annual turnover: Not more ⇒ MSME Startup For loans upto ₹50cr
than ₹100 cr AND [then What is MSME? (📑📑Ref:
⇒ Function: innovation in HDT-Pillar#1D and #4B)]
goods/services. (नवाचार)
(📑📑Ref: HDT-Pillar#4B)
🔌🔌🔌🔌 Renewable energy(अ�य ऊजार्) only loans upto 15cr eligible ⏫30cr
💊💊 Healthcare project/Hospital? 5cr ⏫10cr
12.18.3 🐯🐯🐯🐯🐯🐯 PSL Reforms-2020: Weightage to poor districts (गरीब/�पछड़े �जलों को भारांक)
RBI will classify the districts based on previous PSL loans given by all banks:
Type of district if Axis bank gives ₹100 PSL loan in this district →
RBI will count Axis’s quota-fulfillment as _ _ .
Low Credit penetration e.g. Tawang, ₹125 (आरबीआई ने एक ऐसी भारांक प्रणाली बनाइ है �जसमे ब�क
Dantewada etc. जहां भूतकाल म� ब�क-कजर् क� प�ँ च �पछड़े �जलों म� लोन देकर ब�त आसानी से अपना पीएसएल ल�ं क
कम रही है हा�सल कर सकती है।)
High Credit penetration e.g. Ahmedabad, ₹90 (तािक ब�क जो पहले से स�� �जले है, उसे �ादा स�� बनाने
Pune etc. जहाँ पहले से ही काफ� कजार् िदया जा चूका है क� जगह �पछड़े �जले पर �ान दे)
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 85
⇒ Thus, RBI’s PSL weightage system will passively discourage banks from giving more PSL-loans
to the developed districts and it will encourage banks to give PSL-loans to backward districts.
This will help in more balanced regional development. �ेत्रीय �प से सं तु�लत �वकास म� यह कदम फायदेमंद
होगा.
🔠🔠❓ MCQ. Priority Sector Lending by banks in India constitutes loans to _ _ _ _ . (Pre-2013)
a) Agriculture b) Micro and Small Enterprises c) Weaker Sections d) All of the above
12.18.4 🐯🐯🐯🐯🐯🐯:📜📜 Priority Sector Lending Certificates (PSLC) from 2016 onwards
Figure 11: भाई आ�मर/Rancho हमने अपना assignment नही िकया, तू अपना "EXTRA-walla" हमे बेच दे!
⇒ In this arrangement, the overachieving Banks can sell their excess PSL in form of ‘certificates’ to
underachieving banks without transferring the loan assets or its risk. (ल�ं कों से �ादा उपल�� हांसील
करने वाली ब�क, अ� ज�रतमं द ब�क को स�टिफके ट बेचती)
⇒ If an underachiever bank can’t fulfil its PSL-quota through PSL-certificates purchase then
ultimately,
⇒ Underachiever bank will have to deposit PSL-shortfall money to NABARD's Rural Infrastructure
Development Fund (RIDF), SIDBI, National Housing Bank (NHB), MUDRA Ltd. etc as per the
norms decided by RBI from time to time. (ल�ं कों को हा�सल नहीं कर पाने वाली ब�क ने आरबीआई द्वारा �च��त
अलग-अलग सं �ाओं म� पैसा �नवेश करना पड़ेगा)
⇒ Underachiever bank will earn interest from such deposited money, but it’ll be (usually) linked
with Bank-Rate & their money will be locked-in a long-term project. ( पैसा लं बे समय तक अटक जाएगा)
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 86
12.19📢📢 � MONETARY POLICY TOOLS: A READY RECKONER TABLE
Table 5: समज म� आ गया हो तो बिढ़या है, नहीं तो रट्टा मारो �जदं ाबाद (If understood then well & good, else memorize by Rot-Learning)
Tools & Strategy? <2%CPI= Fight deflation (अप���त) >6%CPI= Fight Inflation (मुद्रा���त)
⇒ Deflation: ↑ money Easy, Cheap, Dovish, Expansionary Tight, Dear, Hawkish,
Moral Suasion / Nudge / Force the banks to Enforce the Hawkish policy
Direct Action enforce Dovish Policy
Margin Requirement Increase e.g. Do reverse of left cell.
/ Loan to Value (LTV) Gold-LTV: 60% → 90%
Qualitative Tools
🔠🔠❓ Which of the following is not an instrument of Selective Credit Control? (Pre-1995)
a) Regulation of consumer credit b) Rationing of credit
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 87
c) Margin requirements d) Cash reserve ratio
🔠🔠❓ An increase in the Bank Rate generally indicates that _ _ _ (Pre-2013)
a) Market rate of interest is likely to fall.
b) Central Bank is no longer making loans to commercial banks.
c) Central Bank is following an easy money policy.
d) Central Bank is following a tight money policy.
🔠🔠❓ If RBI decides to adopt an expansionist monetary policy, which of the following would it not
do ? (Pre-2020)
1. Cut and optimize the Statutory Liquidity Ratio
2. Increase the Marginal Standing Facility Rate
3. Cut the Bank Rate and Repo Rate
Answer Codes: [a) 1 and 2 only [b) 2 only [c) 1 and 3 only [d) 1, 2 and 3
🔠🔠❓MCQ. Find Correct Statements: (Prelims-2022)
1. If the inflation is too high, Reserve Bank of India (RBI) is likely to buy government securities.
2. If the rupee is rapidly depreciating, RBI is likely to sell dollars in the market.
3. If interest rates in the USA or European Union were to fall, that is likely to induce RBI to buy
dollars.
Codes: (a) 1 and 2 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 88
12.20.1 📢📢 Monetary Policy Making under RBI Act since 2016
Figure 12: जाने �ा होगा रामा रे..... सोचना है �ा? जो होना है होगा, चल पड़े है िफ़क्र यारो….
Table 6: composition of the ⚖� statutory Monetary Policy Committee (MPC: वैधा�नक मौिद्रक नी�त स�म�त):
🐯🐯 RBI side (3 members) 🦁🦁 Govt. Side (3 members)
1. RBI Governor, as the Ex-officio Chairman. 1. Dr. Shashanka Bhide from National
2. Dy.Governor responsible for Monetary Council for Applied Economic Research
Policy. Michael Patra (from 2020-Jan). (NCAER, Delhi)
Earlier Viral Acharya. 2. Dr. Ashima Goyal from Indira Gandhi
3. One person nominated by RBI Central Board: Institute of Development Research
Mridul Saggar (Executive Director, RBI). (Mumbai)
3. Dr. Jayanth R Varma from IIM-A
Their tenure tied with their ex-officio job tenure Tenure: 4 years, no re-appointment. (4 साल का
(पदेन कायर्काल) E.g. Shaktikanta’s shakti (powers) कायर्काल और उसके बाद पुन:�नयु�� असं भव)
will be gone after his 3-years tenure as RBI-
Governor expires, unless he is reappointed.
(Note: Shaktikanta is reappointed till December
2024.)
RBI Governor & Dy.Gov are selected by Financial They’re selected by Search-cum-Selection
Sector Regulatory Appointment Search Committee headed by Cabinet Secretary
Committee (FSRASC) is headed by Cabinet (IAS)
Secretary (IAS)
⇒ Meeting quorum 4 persons, incl. Governor. (कायर्साधक सं �ा: कम से कम चार लोगों क� हाजरी ज�री)
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 89
⇒ Legally required to hold minimum four meetings in a year. (सालाना कम से कम 4 बार �मलना ज�री)
⇒ In practice, they meet every two months to decide bi-monthly monetary policy updates.
(Although during 😷😷Corona-lockdown met more frequently).
⇒ Repo rate=Policy rate= benchmark interest rate: decided by Majority vote. (मौिद्रक नी�त दर ब�मत से
तय)
⇒ When they vote for the first time, all members, including the Governor, will vote. If tie →
Governor can vote again for second time as casting vote (यिद मतों म� बराबरी �ई, तो गु�ी सुलझाने के �लए
�नणार्यक मत गवनर्र द�गे).
⇒ To ensure transparency / accountability (पारद�शता / जवाबदेही):
⇒ Govt can send message only in writing. (सरकार के वल �ल�खत म� सं देश भेज सकती है)
⇒ Committee must publish its minutes of the meeting on the 14th day, and “Monetary Policy
report” at every 6 months.(�नयत समय पर कु छ द�ावेज प्रका�शत करने होंगे)
⇒ 🎯🎯 Inflation target decided by Union Government, after consulting with RBI Governor. (गवनर्र से
�वमशर् करने के बाद महंगाई �नयं त्रण का ल� सरकार तय करेगी)
⇒ 🎯🎯 Present target: Keep Consumer Price Index (CPI:All India) within 2-6%.[alternate way of
saying= 4% +/- spread of 2%] (More about CPI/Inflation in 📑📑Pillar#4C)
⇒ 📅📅 Target was Valid for: Originally from 2016-2020 (ending at 31/03/2021). Now same target
extended till 31/3/2026.
⇒ 😰😰Target fail: if inflation not kept in this 2-6% zone for 3 consecutive quarters (=9 months)
then Committee must send report to Govt with reasons and remedies (यिद सतत नौ महीनों तक महंगाई
इन सीमाओं के बाहर रही तो स�म�त क� असफलता मानी जाएगी → असफलता के कारण-उपचार क� �रपोटर् �रज़वर् ब�क ने सरकार को
भेजनी होगी).
🔠🔠❓ MCQ. With reference to inflation in India, find correct statement: (Prelims-2015)
a) Controlling the inflation in India is the responsibility of the Government of India only
b) The Reserve Bank of India has no role in controlling the inflation
c) Decreased money circulation helps in controlling the inflation
d) Increased money circulation helps in controlling the inflation
🔠🔠❓ MCQ. Find correct statements about Monetary Policy Committee: (Prelims-2017)
1) It decides RBI’s benchmark interest rates.
2) It is a 12-member body including the Governor of RBI and is reconstituted every year.
3) It functions under the chairmanship of the Union Finance Minister.
Codes: (a) 1 only (b) 1 and 2 only (c) 3 only (d) 2 and 3 only
🔠🔠❓MCQ. Who is responsible for maintaining price stability by controlling inflation ?
(a) Department of Consumer Affairs (b) Expenditure Management Commission
(c) Financial Stability and Development Council (d) Reserve Bank of India
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 90
12.21📢📢 REVIEW OF BI-MONTHLY MONETARY POLICIES
Stance= what RBI will do Will they Will they Will they hold/keep
in next meeting hike/increase cut/decrease repo unchanged?
⏫repo? ⏬Repo?
Calibrated Tightening ✅ Possible ✋No they’ll not cut ✅ Possible
Neutral ✅ Possible ✅ Possible ✅ Possible
Accommodative ✋No they’ll not ✅ Possible ✅ Possible
hike
⇒ This provides guidance to the investors/borrowers/bankers about future action of RBI.
⇒ However, RBI MPC is not legally bound to follow the stance. E.g. Dec-2018 Governor Urjit-Patel
led MPC announced Calibrated Tightening, yet in next meeting Feb-2019 Governor Shaktikanta
led MPC decreased⏬ repo rate, because they felt it was necessary to combat deflation. (कानून �प
से बा� नहीं. कभी कभी स�म�त इसका उ�ं घन भी कर देती है)
⇒ 2022-May-June: Even though MPC said Accommodative Stance, still they kept increasing the
Repo Rate.
12.22🐯🐯🐯🐯🐯🐯RBI’S MONETARY POLICIES: BEFORE 2020-CORONA
📢📢 Policy Decisions & Regulatory Announcements
[We will study in appropriate pillars/sections, so DONOT LOSE SLEEP YET]
2018 -era ⇒ Inflation was high/rising ⏫ so, Governor Urjit Patel led MPC kept ⏫Repo in
pattern the range of 6-6.50% (मुद्रा���त/महंगाई बढ़ रही थी इस�लए रे पो दरों को ऊंचा रखा गया था)
- Stance: Calibrated Tightening.
2019-era ⇒ Inflation was falling below 2%⏬ so, Governor Shaktikanta Das led MPC kept
pattern decreasing Repo from 6.##% to 5.##%. (अप���त/स�ाई बढ़ रही थी इस�लए �रपो दरों म�
कटौती)
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 91
- Stance: Accommodative.
Feb-2020 - Repo: 5.15% accommodative stance
- CPI Inflation rose to 7.4% in December-2019 (which is outside the statutory limit
of 2-6%) & this inflation rate was highest since 2014-July. So, ideally, RBI should
have ⏫repo rate to combat inflation but (वैसे तो महंगाई बढ़ रही थी इस�लए रेपो दरों म� बढ़ोतरी
करनी चािहए िकं�ु)
o 1) December-2019 policy had kept Accommodative stance = repo
couldn’t be increased. It could only be kept same/reduced.
o 2) Union Budget-2020 announced various measures to boost economic
growth so Committee preferred to wait & watch how those measures
impact inflation and growth, before changing repo rate.
RBI announces Measures to promote economic growth::
1. LTRO: Long Term Repo Operations (LTROs) of 1 yr & 3 yr.
2. CRR Exemption based on (new) loans given for 1) automobiles, 2) residential
housing and 3) MSMEs
RBI announces measures to promote digital economy
1. RBI to construct a “Digital Payments Index” (DPI) to capture the growth of
digital payments across India. (📑📑Ref: 1A1).
March - Given below as a separate sub-topic for Corona
toApril
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 92
🐯🐯🐯🐯🐯🐯✋ Loan/EMI/NPA relief / Moratorium (ऋण 📑📑1B2: NPA
अदायगी पर अ�ाई �प से रोक)
🐯🐯🐯🐯🐯🐯🐯🐯 Special Refinance Facility for AIFI (All India 📑📑1B1: classification of Banks →
Financial Institutions). खास िक� क� पुन�वत योजना, अ�खल भारतीय AIFI (NABARD, SIDBI, EXIM,
�व�ीय सं �ानो के �लए NHB)
RBI defers BASEL Norms, IndAS accounting Norms, orders 📑📑1B2: BASEL norms
bank to pause/halt the Dividend Distribution (�नयमों को ��गत
िकया गया)
🐯🐯🐯🐯🐯👨👨: RBI reforms Ways and Means advances 📑📑1C: SEBI/Sharemarket: Short
(WMA) and Consolidated Sinking Fund (CSF) term Debt instruments
RBI reforms attracting foreign investment: 📑📑3A: Balance of Payment (BoP):
⇒ Voluntary Retention Route (VRR: �ै��क अवधारण मागर्) FDI, FPI
⇒ Fully Accessible Route (FAR: स�ूणर्त: सुग� मागर्)
12.23.2 🐯🐯🐯🐯🐯🐯RBI’s Monetary Policies: 2020-August (Earlier meeting in May-2020)
⇒ Repo unchanged @4% so Automatically MSF@4.25 and RR@3.35%. Stance: Accommodative
⇒ No changes in repo because (रेपो दरों म� कोई बदलाव नहीं िकया �ोंिक)
⇒ ⏫ food inflation due to i) corona-lockdown supply chain disruptions and ii) heavy rains. Repo
changes can’t help solving this. (आपू�त श्रृंखला प्रबं धन म� सम�ा और भारी बा�रश के चलते खाद्य महंगाई बढ़ी थी- तो
�रपो दरों म� बदलाव द्वारा उस महंगाई का समाधान असं भव)
⇒ Still if RBI ⏫repo then expensive loans → post-corona economic-revival will be harmed. So,
no changes in Repo. (िफर भी यिद जबरद�ी �रपो म� बढ़ोतरी क� जाए तो मं हगे लोन कोरोंना म� नई सम�ाएं कर�गे)
⇒ Announced to conduct more rounds of Op.Twist, to help Govt & Companies to borrow at a
cheaper rate.
⇒ Gold Loan LTV: Before 75% → AFTER 90%. 🤩🤩benefit? More quantity of loan can be taken by
pledging same quantity of gold → post-corona economic-revival.
⇒ Priority Sector Lending (PSL) reforms: 1) ⏫quota for weaker section, small-marginal farmers.
2) Made all types of Startups eligible for PSL loans. 3) Extra weightage to give PSL-loans in poor
districts. (प्राथ�मक �ेत्र के ऋण मानकों म� सुधार िकए गए)
⇒ RBI Committee under KV Kamath submitted report on how to restructure loans impacted by
the Covid 19 pandemic. RBI assured we’ll implement that report. (More in 📑📑Pillar#1B2: Bad
Loans) (कोरोना से जूझ रहे उद्योगों क� बकाया लोन का पुनगर्ठन िकया जाए ऐसे ही कामथ स�म�त �रपोटर् को लागू कर�गे)
⇒ RBI to loans to All India Financial Institutions (AIFIs: NABARD, SIDBI,EXIM,NHB) → post-
corona economic-revival. (📑📑Ref: HDT-Pillar#1B1- classification of Banks and NBFCs)
⇒ Less Cash Economy / Digital Payment / Fraud Prevention: (1) Scheme of Offline Retail
Payments Using Cards and Mobile Devices (2) Positive Pay Mechanism for Cheques. (📑📑Ref:
HDT-Pillar#1A1)
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 93
⇒ We'll create a Reserve Bank Innovation Hub for research in cyber security, digital payment etc.
साइबर सुर�ा, िड�जटल भुगतान इ�ािद म� सं शोधन/नवाचार के �लए �रजवर् ब�क म� एक नवाचार क� द्र बनाएं गे
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 94
⇒ Payment Bank: Before: They can’t accept more than ₹1 lakh per depositor. After: balance limit
increased to ₹2 lakh rupees/ per depositor. (More in 📑📑Pillar#1B1: Classification)
⇒ Centralized Payment Systems (CPS), viz- RTGS and NEFT – Direct Membership allowed to
Non-Bank payment system operators e.g. Phonepe, Amazonpay etc. (More in 📑📑Pillar#1A1)
- NPCi’s E-Rupi Prepaid Digital Voucher: 1) max limit ⏫from ₹10,000 to ₹1 lakh 2) Before:
Single Use → After: Multi-use (until balance exhausted) So, E-rupi vouchers can be used more
than once (until the amount of the voucher is completely redeemed). (More in 📑📑Pillar#1A1)
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 95
⇒ BEFORE 2022-April: Policy Corridor = MSF <—> REPO <—> Reverse Repo
⇒ After 2022-April: Policy Corridor = MSF (Repo+0.25%) <—> REPO <—> SDF (Repo-0.25%)
⇒ Digital Payment: proposal for cash withdrawal from ATMs in card-less manner i.e. using UPI
Based Mobile-App. If physical card not inserted in ATM machine → ⏬ dangers of card
skimming, card cloning, etc scams. (ATM मशीन म� �बना काट डाले मोबाइल ऐप के ज़�रए पैसा �नकाला जा सके ऐसी
सु�वधा करवाएं गे )
🚩🚩🚩FAQ: Isn't this repo-increase a violation of the Accommodative stance announced earlier?
Ans. MPC has no legal obligation for accommodative stance. MPC has only 1 legal obligation-
control inflation in 2-6% range. अकोमोडेिटव-रवैये के िहसाब से ही काम करना होगा ऐसा क़ानूनन �प से अ�नवायर् नहीं है।)
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 96
Monetary Policy Committee decides only Repo rate. Other decisions, such as CRR-SLR cut, PSL
norms, banning magnetic-chip cards etc are decided separately alone by RBI Governor. However,
after the meeting, he’ll make above type of announcements, in the Press conference.
🔠🔠❓ MCQ. RBI recent directives relating to ‘Storage of Payment System Data’, popularly known
as data diktat command the payment system providers that : (Prelims-2019)
1) They shall ensure entire data relating to their payment systems are stored in a system only in
India.
2) They shall ensure that the systems are owned and operated by public sector enterprises.
3) They shall submit the consolidated system audit report to the comptroller and Auditor General
of India by the end of the calendar year.
Find Correct Statement(s): codes: (a) 1 only (b)1 and 2 only (c) 3 only (d) 1,2 and 3 only
Ans. After April-2018’s monetary policy RBI governor announced certain regulatory reforms. One of
them was :- Payment System data must be stored in India within next 6 months, to ensure its safety
against misuse / Russian-Chinese-hackers. So, for Prelims-2019, this was D-1 year current affairs. Now
we are targeting 2023, so need not put so much efforts behind 2018’s current affairs.
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 97
⇒ RBI introduced formula “Marginal Cost of Funds based Lending Rate (MCLR) +
Spread” system. (how exactly it worked? Outdated info. NOT IMP)
⇒ 😰😰Limitation? From January to Oct 2019, RBI ⏬ repo rate by 1.35% but banks
2016 reduced their loan interest rates by merely 0.40%. Thus, even though RBI reduced its
repo rate, banks are not quickly reducing their loan interest rates. So MCLR system was
ineffective. (�रजवर् ब�क ने अपनी �रपो दर कम करी िकंतु ब�कोने लोन स�े नहीं िकए, इस�लए ये प्रणाली प्रभावी
नहीं)
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 98
⇒ 🚩🚩🚩FAQ: Can bank change the spread(Profit) in the formula after giving loan to a
client?Ans. Not allowed to change. (and this is not imp for exam)
⇒ 🚩🚩🚩FAQ: Can bank change the “Risk Premium” in the formula after giving loan to a
client? Ans. Yes e.g. Govt employee thrown out of job after getting loan, then banker may
⏫ the risk premium on him because now he’s jobless so the risk probability of his loan
default ⏫. (and this is not imp for exam)
12.25.4 Banks’ Lending Rates % → Fixed vs Floating interest loans, teaser loans, NPA etc.
Refer to 📑📑Pillar1B-2: burning issues → NPA
12.25.5 😷😷Corona-2020 impact on Deposits interest rate & Loans interest rate as per 📔📔📔📔ES21
Deposit ⏬⏬ The saving deposit rates = 3.25-3.5% in 2019 but 2.7-3.0% in 2021.Reason:
interest ⇒ RBI has reduced repo rate, and also provided long term loans in TLTRO so, banks
बचत �ाज are not so greatly desperate to acquire the raw material (i.e. money) from
दर म� �गरावट deposits. �रजवर् ब�क से दीघार्व�ध के �रपोटर् लोन �मलने के चलते ब�कों को िडपॉ�जट कतार्ओ ं क� �ादा ज�रत
नहीं �ई इस�लए उनको बजट का पैसा ब�कों म� जमा करने के �लए लुभाने के �लए �ादा बचत �ाज दर% जारी
करने क� भी ज�रत ब�करों को महसूस नहीं �ई
⇒ 2) ⏬Loan demand So cannot offer high level of profit to depositors. कोरोना क� मं दी
ब�कों का लोन देने का काम वैसे भी धीमा हो गया इस�लए वह िडपा�जट कतार्ओ ं को, अ�ा बचत �ाज दर% नहीं
दे पाए
Loan ⇒ ⏬ due to ⏬in repo rate in the External benchmark system (�ोंिक रेपो दर स�ा
interest िकया गया इस�लए लोन �ाज दर स�े �ए-- ऐसा आ�थक सव��ण का कहना है)
12.26🐯🐯🔇🔇 LIMITATIONS OF MONETARY POLICY IN INDIA (मौिद्रक नीती क� मयार्दाए)
Figure 14: मै काम तो कर रहा �ँ , लेिकन उसक� सकारा�क असर, अथर्�व�ा पर िदख नही रही। 😢😢
Even though monetary policy updated is every 2 months, its efficacy in controlling inflation &
boosting growth is restricted by following factors: (मौिद्रक-नी�त मं हगाई-�नयं त्रण और आ�थक वृध्धीमे असरकारकता
नही िदखा पायी �ोंिक:)
1) 😰😰Western countries’ households → consumerist lifestyle → don’t save large amount of
money in Banks. So their banks borrow more quantum of money from US Federal reserve and
European Central Bank respectively. Whereas in India, Repo is not major source of funds for
Indian banks, due to higher level of savings & deposits. (पा�ा� देशो मे उपभो�ावादी जीवनशैली. जबिक
भारतीयो मे ब�क-बचत क� भावना के चलते हमारे ब�कों के �लए आरबीआई के रेपों लोन, पैसो का मु�य �ोत नहीं है। अंत: �रपो दर
स�े होने पर भारतीय ब�को को खास फकर् नहीं पड़ता। )
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 99
2) 😰😰Before the External Benchmark System: Indian Banks did not immediately pass on the RBI
rate cuts to customers, citing NPA/Bad loans / profitability problem. According to RBI’s own
research, it took minimum 6-12 months for repo rate cut to benefit end-customers and it took
about 24 months for repo rate changes to impact inflation. (बाहरी-ब�चमाकर् से पहेले के समय मे,भारतीय ब�क
तुरंत अपने �ाजदर कम नही करते थे।)
3) 😰😰Poor management in Public Sector Banks (PSB), scams in the private sector banks, large level
of Non-Performing Assets (NPA) also stymie the impact of monetary policy. (सावर्ज�नक �ेत्र के ब�कों म�
बेअसर प्रबं धन, �नजी �ेत्र के ब�कों म� घोटाले, अनजर्क प�रसं प��या) 📑📑 More in Pill1B2
4) 😰😰Supply Side Issues: El-Nino/Poor monsoon hurting crop production → food inflation; Wars
& Geopolitical issues ⏫ global crude oil & raw material prices, protectionism by China-US
denting our exports. RBI can’t control them. (कम बा�रश + म�पूवर् क� भूराजनी�तक तनाव= भारत मे क�े माल
क� आपू�त को असर करते है, चीन-अमरीका का सं र�णवाद भारतीय �नयार्तमे बाधा डालता है। इ�े �नयं त्रण मे रखना आरबीआई के
�लए मु��ल।) 📑📑Pill3&4A
5) 😰😰While cheap loans can boost consumption, investment and growth but because of poor-
monsoon-fear and oil-price fear, RBI (during Raghuram Rajan and Urjit Patel’s governorships)
was usually apprehensive of inflation and more inclined to keep repo rate high. Then RBI was get
criticized for not facilitating cheap loans & economic growth because of its ‘Hawkish policy’.
(महंगाई-�नयं त्रण के च�र मे कभी कभी खुद �रजवर् के मं हगे �रपो-�ाजदारों ने अथर्त� को आगे बढ्ने से रोका है।)
6) 😰😰Government Side Issues: Fiscal deficit, Subsidy leakage, Populist Loan-waivers etc. (राजकोषीय
खाध, सब�सडी का �रसाव, लोकलुभावन के �लए िकसानो क� ऋण-माफ�) 📑📑 Pill#2D → FRBM Act
7) 😰😰Structural Issues in Economy: lack of Ease of Doing Biz, electricity-road infrastructure =
production /supply affecting inflation trends. (�ापारमे सुगमता क� कमी, �बजली-सड़क क� अवसं रचना आिद
बु�नयादी मसलो के चलते उ�ादन/आपू�त क� कमी। �रजवर् ब�क जादू क� छड़ी चलाकर इसे दु�� नहीं कर सकता) 📑📑More in
Pill4B&5
8) 😰😰Presence of Informal moneylenders in rural areas who circulate black money at exorbitant
interest rates. Poor penetration of banking sector, lack of financial inclusion, cash-intensive rural
economy etc. (�ाजखोर/सा�कार जो कालाधन ऊंचे �ाज पर घुमाते है, सभी गरीबो के �व�ीय समोवेशन क� कमी, नगदी मुद्रा
पर �ादा आधीन है हमारी ग्रामीण अथर्�व�ा। �रजवर् ब�क अपनी रेपो दर कम भी कर�, इधर कु छ फकर् नहीं पड़ता) 📑📑More in
Pill1D
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 100
⇒ A) banks are reluctant to give loans to people fearing ⏫ NPA/bad loans (More in Pill#1B2)
⇒ B) People themselves not coming to take loans due to uncertainty in their future income and
business.
कोरोना-आ�थक मं दी से उबरने के �लए �रजवर् ब�क ने �व�ारवादी/आसान मौिद्रक नी�त अपनाई, िकंतु ब�कों ने यह सारा पैसा क़ज़र्/लोन म�
कम घुमाया और �ादातर पैसा तो सरकारी प्र�तभू�तयों म� ही �नवेश िकया है। ऐसी "आलसी ब�िकंग" का कारण= १) क़ज़र्दारों के सं भ�वत
िदवा�लयेपन के डर से ब�कर लोन-आवेदनपत्र/अज� ज�ी से पास निह कर रहे २) नोकरी-�ापार क� आ�थक अ�न��तता के चलते लोगों म�
भी ब�क-लोन लेने का उ�ाह कम है।
− 😥😥 1) US Feds will ⬆ repo to combat American inflation. US Feds will reduce bond purchase
program (=Fed-Tapering) → ⏫loan interest rates in India → Foreign Portfolio Investors
(FPI-i.e. who invest upto 10% in a single Indian company’s shares)- those FPIs may pullout
money from India to give it as loans in American market → Indian share market ⬇. → Indian
investors also lose money → Indian investors flock towards gold, real-estate & cryptocurrency
for better returns → new set of problems related to tax evasion.
− 😥😥 2) When FPI pullout money from Indian sharemarket → Rupee weakens →⬆ imports
become more expensive (REF: Pillar#3) →⬆ inflation → RBI forced to ⬆ repo to combat
inflation = expensive loans will harm India’s post-Corona economic revival.
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 101
− 😥😥3) Imported goods / services from USA to become expensive for India=”imported inflation”.
(अमरीका म� महँ गाई/मुद्रा���त �पछले 30 वष� म� सबसे �ादा अ�धक पाई गई है इससे लड़ने के �लए अमे�रक� क� द्रीय ब�क जो क़दम
उठाएगी उसके प�रणाम��प �वदेशी पोटर्फो�लयो �नवेशक- भारतीय शेयर बाज़ार से भाग जाएं गे। �जससे भारतीय �पया कमज़ोर
होगा,भारत म� क�ा तेल और अ� आयात महँ गे होंगे, िफर भारत म� भी महँ गाई दर बढ़ेगा। उस भारतीय महँ गाई से लड़ने के �लए भारतीय
�रज़वर् ब�क लोन क� �ाज दर महँ गे करेगी तो कोरोना प�ात भारतीय अथर्�व�ा को पुनज��वत करने म� सम�ा/िद�त� आ सकती है)
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 102
economy. (अनजर्क प�रसं प�तया, बु�नयादी अवसं रचना, �ापार म� सुगमता, �व�ीय समोवेशन, कम-नगदी वाली अथर्�व�ा के
�लए �रजवर् ब�क व सरकार ने कदम उठाए है। )
⇒ In the upcoming time, these reforms will help improving the impact of Monetary policy in
India's economic growth and human development. (इन सुधार/कदमो के चलते भ�व� मे आ�थक- वृ�द्ध, मानव
�वकास मे मौिद्रक नी�त का प्रभावी और सकारा�क असर अव� बढ़ेगा)
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 103
Pillar#1B-1: Classification of Financial Intermediaries: Bank & NBFC
🚩🚩🚩FAQ: This handout is very lengthy, contains lot of Banking GK😰😰!!.
✅Ans. I’ve such Banking-GK for helping UPSC aspirants trying for Bank-exam as backup/Plan-B.
Which GK is imp/notimp for UPSC = Watch lecture, you’ll get idea.
Table of Contents
13 🏛🏛 Financial Intermediaries → Banks....................................................................................................... 105
13.11 🐯🐯🐯🐯 ₹ 🖨🖨 Banks → Reserve Bank of India (RBI): भारतीय �रजवर् ब�क............................................. 106
13.11.1 🏦🏦 ₹ 🖨🖨 RBI Governor & Dy Governor...................................................................................... 107
13.11.2 🏦🏦 ₹ 🖨🖨 RBI Offices & Departments........................................................................................... 107
13.11.3 🏦🏦 ₹ 🖨🖨 RBI: Functions of ........................................................................................................... 107
13.12 🏦🏦 � Scheduled Banks (अनुसू�चत ब�क) ............................................................................................ 108
13.13 🏦🏦 �FI⇒ Commercial Banks⇒ Pre-Independence ................................................................. 110
13.13.1 🦄🦄 → 🦁🦁 Nationalization of Banks After Independence (आजादी के बाद �नजी ब�कों का रा�ी� यकरण)
110
13.14 🤩🤩 Golden Anniversary of nationalization- ES20 ......................................................................... 112
13.14.1 🦄🦄> 🦁🦁: Private sector banks are better than PSBs .................................................................. 112
13.14.2 🦁🦁 = 🐌🐌 PSBs: reasons for inefficiency & remedies?............................................................... 113
13.15 🏦🏦 � 🔂🔂Consolidation of PSBs [एकत्रीकरण] ................................................................................ 113
13.15.1 🔂🔂Consolidation of PSBs → A) Merger (�वलीनीकरण) ................................................................ 113
13.15.2 🔂🔂Consolidation of PSBs → B) Privatization (�नजीकरण) .......................................................... 115
13.15.3 PSB Privatization: Banking Investment Company (BIC-ब�िकंग �नवेश कं पनी)............................ 116
13.15.4 🔂🔂🔂🔂Anti-Arguments against Merger and Privatization of PSBs (�वरोध म� तकर् )...................... 116
13.16 🏦🏦 �Commercial Banks ⇒ Pvt. Sector Banks (PvB) �नजी-�ेत्र के ब�क .......................................... 116
13.16.1 🏦🏦 � 🚗🚗🚗🚗 ‘On-Tap’ License to open Private Sector Banks (जब मन चाहे तब अज� डाल दो) ... 117
13.16.2 🏦🏦 �Steps or procedure to open a bank (एक ब�क �ा�पत करने के क� प्रिक्रया �ा है?) ................ 118
13.17 🚫🚫🚫🚫 � 🚗🚗🚗🚗 Allowing NBFC/Large Corporate to setup Banks ......................................... 118
13.17.1 🚫🚫🚫🚫 � 🚗🚗🚗🚗: Arguments in Favour प� म� तकर् ............................................................. 118
13.17.2 🚫🚫🚫🚫 � 🚗🚗🚗🚗: Arguments Against: �वप� म� तक.............................................................. 119
13.17.3 🚫🚫🚫🚫 � 🚗🚗🚗🚗: Conclusion about banking license to Adani/Ambani? (�न�षर्) ......... 119
13.18 🏦🏦 � 🈶🈶 Commercial Banks ⇒ Foreign Banks (�वदेशी ब�क)....................................................... 120
13.18.1 🤵🤵 Foreign Banks in India: LVB merged with DBS (�वलीनीकरण) ........................................... 120
13.19 🏦🏦 � 🌎🌎🌎🌎Commercial Banks ⇒ Differential Banks ............................................................. 120
13.19.1 🏦🏦 � 🌎🌎🌎🌎 Commercial Banks ⇒ Differential Banks⇒ RRB and LAB .......................... 121
13.19.2 🏦🏦 � 🌎🌎🌎🌎Commercial Banks ⇒ Differential Banks ⇒ SFB & PB ................................. 122
13.19.3 🏦🏦 � 🌎🌎🌎🌎🌎🌎🌎🌎 On-Tap Licenses for starting SFB (मन चाहे तब अज� डालो) ...................... 123
13.19.4 🏦🏦 � 🌎🌎🌎🌎🌎🌎🌎🌎 Unity Small Finance Bank (SFB) gets license (2021) ................... 123
13.19.5 Commercial Banks → 📬📬India Post Payment Bank (IPPB) .................................................... 124
13.19.6 📬📬Post Office Savings Bank (PoSB)?..................................................................................... 124
1) Controller of Money Supply: Issues M0 under RBI Act, Makes Monetary Policy. (मुद्रा आपू�त
�नयं त्रक)
2) Controller of Foreign Exchange: through FEMA Act. (�वदेशी मुद्रा का �नयं त्रक, 📑📑more in Pillar#3)
3) Banker to Governments & Public Debt Manager (सावर्ज�नक ऋण प्रबं धक).
4) Banker’s Bank: Lender of Last resort, Advises in monetary matters.
5) Regulator of all “BANKS”: through BR Act’49, Payment Systems’07 (�नयामक)
6) Regulator of AIFI, NBFC-D & others.
7) Promotional Roles (सं वधर्क भू�मका):
a. Customer protection through Ombudsman (�शकायत �नवारण अ�धकारी),
b. Financial Inclusion through PSL norms. Requires bank to open 25% of branches in rural
areas
8) Data Publication & awareness e.g. Annual Financial Stability Report (वा�षक �व�ीय ��रता �रपोटर्)
When RBI is satisfied with TWO conditions simultaneously (दो शत� का एक साथ पालन होना चािहए)
⇒ #1: That a public sector or pvt sector bank has (Paid Up Capital + Reserves#1) = Min ₹5 Lakhs
🚩🚩🚩FAQ: Why RBI classified IDBI as 'private sector bank'. Ans. send your suggestion to RBI.
श��कांता को ठीक लगा तो िकया. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
⇒ 💼💼Budget-2021: proposed to take up the privatization of two Public Sector Banks. Names yet to
be disclosed. (दो सरकारी ब�कों का �नजीकरण िकया जाएगा ऐसा बजट म� कहा हालांिक नाम घो�षत नहीं क�ये)
⇒ 2021: Newspapers hint 4 PSBs are shortlisted for privatisation- Bank of Maharashtra, Bank of
India, Indian Overseas Bank, Central Bank of India. (But this news not yet confirmed by Finance
While the nationalization of banks was done with the lofty objectives, but politicization in Public
Sector Banks (PSBs) created new set of problems:
- Government administered loan interest rates for populism= Low profitability for PSBs. (मुनाफा
कम)
- Political Interference= Low recovery difficult (राजनी�तक ह��ेप के चलते दबं ग त�ो से ऋण वसूली मु��ल)
- Employees Unions hampering any innovation or customer responsiveness. (नवाचार, ग्राहक सु�वधा
कम)
- 1991: Balance of Payment crisis (BoP: भुगतान सं तुलन,More in Pill#3) finally forced Govt. to set up a
committee for Banking Sector Reforms under The former RBI Governor M.Narasimham. He
suggested:
o Govt should ↓ its shareholding in Public Sector Banks. (सरकार अपनी शेयर िह�ेदारी कम करे)
o RBI should ↓ CRR and SLR (सीआरआर, एसएलआर मे कटोती करे)
o Govt should not dictate interest rates to Banks. Liberalize the branch expansion policy
(ब�कों को लोनदर, शाखा �व�ार नी�त तय करने मे सरकार दखल न करे।)
🚩🚩🚩FAQ: In early 90s- UTI Bank & IDBI Bank were not private sector banks, then why have you
kept them here in table? Ans. Because presently, they’re private sector banks. I don’t have to submit
this handout as evidence in the Supreme Court so I don’t care being so pedantic about everything.
You need to change your approach towards studies, to finish syllabus faster.
13.16.1 🏦🏦 � 🚗🚗🚗🚗 ‘On-Tap’ License to open Private Sector Banks (जब मन चाहे तब अज� डाल दो)
A private entity can open Bank only after getting license from RBI under Banking Regulation Act,
1949. Previously, one had to wait till RBI invited applications. But in the On-Tap system (WEF
2016), one can apply to RBI whenever he wishes (like a driving license), provided that:
1. It is a Resident Indian individual, NBFC, or private company
2. min. 10 years of experience in Banking-Finance Sector, (अनुभव)
3. Proposed Bank’s shareholding will be initially controlled by Indians. (शेयरमालीक� भारतीयों के हाथ म�)
4. Must be willing to open 25% branches in unbanked rural areas. (ग्रामीण इलाकों म� कु छ शाखाएं खोली होगी)
5. Min. 500 crore capital required. (�ूनतम इतनी पूंजी होनी ज�री पूंजी)
6. ✋Large industrial groups and NBFC with more than ₹5000 crore asset not allowed.
⇒ Examples of On-Tap Universal Bank Applicants in 2020-21: Chaitanya India, Pankaj Vaish etc.
⇒ RBI’s Shyamala Gopinath committee reviews/pass-rejects the applications. ( समी�ा स�म�त)
🚩🚩🚩FAQ: isn’t above definition conflicting with Scheduled Commercial Bank? Ans, given below
⇒ On-Tap guideline: Company with minimum ₹500 cr capital can apply. However, its technical
rules about assets/ownership were such that Large NBFCs and industrial houses could not apply
for it.
⇒ 2020-June: RBI’s PK Mohanty committee for Corporate Structure for Indian Private Sector
Banks.
⇒ Mohanty committee recommended allowing large NBFCs/Corporate/Industrial Houses to apply
for Bank licenses. (बड़ी गैर ब�क �व�ीय सं �ान और कॉरपोरेट समूह को ब�क बनाने क� छू ट �मले)
Consumers Micro, Small industries: िकसान, सू�, लघु Remittance of migrant labors, low income
households, unorganized sector, small business.
उद्योग
💰💰Accept Yes, without any restrictions ✋No NRI deposits, ✋No Fixed
Deposits िडपॉ�जट �ीकार करने म� कोई पाबं दी नहीं है deposit**
- Can accept only Demand Deposits
and Max. balance Rs.1 lakh per
customer. (In 2021- limit increased
to ₹2 lakhs)
Debit cards 💳💳 YES can give. 💳💳 YES can give.
🚩🚩🚩FAQ: if payment banks cannot give loans, then what do they do with deposit money? Ans. It
is answered within the above table itself. Read properly. If you’re going to glance over this handout
casually & carelessly like a WhatsApp message then handout cannot help you in the UPSC exam.
13.19.3 🏦🏦 � 🌎🌎🌎🌎🚗🚗🚗🚗 On-Tap Licenses for starting SFB (मन चाहे तब अज� डालो)
- RBI reviewed & found SFBs have achieved their priority sector targets and helped in financial
inclusion. More competition and new players will help. (अ�धक ब�कों को अनुम�त देने से �धार् म� बढ़ोतरी
�व�ीय समावेशन म� मदद)
- so 2019-June, RBI announced it’ll allow ‘On-Tap’ license for SFB soon. (i.e. no need to wait for
notification unlike IAS exam, apply whenever you wish like a driving license)
Eligibility conditions to start SFB license ‘On Tap’: (Exact norms NOT IMP for IAS Exam)
- Indian persons/Indian companies with minimum “X” years experience in banking/finance.
- Existing NBFCs, MicroFinance, local area banks, Urban cooperative banks (UCB) and Payments
Banks (with 5 years’ experience) may also apply for license.
- Examples of On-Tap SFB Applicants in 2020-21: VSoft Technologies, Akhil Kumar Gupta, and
Dvara Kshetriya Gramin Financial Services, Centrum etc.
- RBI’s Shyamala Gopinath committee reviews/pass-rejects the applications.
13.19.4 🏦🏦 � 🌎🌎🌎🌎🌎🌎🌎🌎 Unity Small Finance Bank (SFB) gets license (2021)
⇒ 2021: RBI approved Unity Small Finance Bank, under ‘On-Tap’ licensing system.
🔠🔠❓ MCQ. Find correct about India Post Payments Bank (IPPB)? [Asked in UPSC-CDS-2018-1]
1) It has been incorporated as a Public Limited Company.
2) It started its operation by establishing two pilot branches at Hyderabad and Varanasi.
Answer codes: (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2
13.19.8 💸💸💸💸: 🏦🏦 Digital Payments- (Proposed) Digital Banks by NITI Aayog (2021)
⇒ 2021: NITI Aayog proposed setting up 'full-stack digital banks’.
⇒ This will be new type of banks under the Banking Regulation Act, 1949 (BR Act).
⇒ Digital Banks will not have physical branches. They will rely on internet for delivering banking
services. 🤩🤩Benefit? financial inclusion of rural area. (नी�त आयोग ने ऐसा प्र�ा�वत िकया है िक नए िक़� के
िड�जटल ब�क बनाए जाएं जो क� भौ�तक भौगो�लक �प से ब्रांच न हो िक�ु इं टरनेट के ज़�रए ब�िकंग सु�वधा दे इसे गाँव गाँव तक
�व�ीय समावेशन म� मदद �मलेगी)
⇒ 🎓🎓✋But since it’s not yet formed, so we need not loose sleep about how exactly it’ll work.
🚩🚩🚩FAQ: How NeoBanks are similar or different than “DIGITAL BANKS”? Ans. ✋Not
important. When Startup-wallas want to attract inventors, they plant a lot of paid/PR/embellished
news items & columns with fancy terms like “NEOBANK” → it doesn’t automatically become
“exam worthy current affairs”…First of all let RBI/NITI/Finance Ministry/HC-SC etc make repeated
big headlines around this, then we’ll see. Observe previous years question papers. (�नवेशकों को आक�षत
करने के �लए �ाटर्अप क�नीओ द्वारा �चकने चुपड़े श�ों वाले समाचार �ांट िकए जाते ह�. तो वो अपने आप परी�ा के �लए काम का नहीं बन जाता.
पहले बड़े सरकारी सं �ानों द्वारा कु छ बड़ी बड़ी सु�खयां बटोरने दो िफर देख�ग.े )
13.20.1 🏦🏦 �😥😥 Cooperative Banks: Negative News (2019): PMC Bank (कांड हो गया)
⇒ The Punjab and Maharashtra Cooperative (PMC, HQ-Mumbai, setup 1984) is a Multi-State
Scheduled Urban Co-operative Bank. It functions in Maharashtra, Delhi, Karnataka, Goa,
Gujarat, Andhra and MP.
⇒ PMC bank loaned large amount to a weak company named ‘HDIL’, because of its cozy relations
with bank directors. Company who couldn’t repay it. NPA became so large, bank might collapse.
⇒ RBI imposed withdrawal limits on the depositors using the powers of Banking Regulation Act.
Because, if there was no withdrawal limit → ‘bank run’ would have been so high even CRR-SLR
can’t fulfill it.
⇒ ⚾📻📻⚾🎓🎓✋Then ball-by-ball commentary of RBI/Govt/SC/HC action = poor cost benefit.
⇒ Budget-2020: Promised to amend the Banking Regulation Act to increase RBI's powers over
cooperative banks. → done through Ordinance, which was later passed as Act ब�िकंग �व�नयमन
(सं शोधन) अ�ादेश/कानून
⇒ 2021-22: Scam-hit Punjab and Maharashtra Cooperative Bank Ltd (PMC Bank) aquired by /
merged with Unity Small Finance Bank Ltd. (USFBL). Now, PMC bank’s victim depositors will
get ₹5 lakh from DICGC (What is this org? Ans. 1B2). → if any remaining due amount beyond
₹5 lakhs → Victim depositors to get it from USFBL bank in instalments in next 10 years
🔠🔠❓MCQ. Find correct Statements about ‘Urban Cooperative Banks’ in India (Pre-21)
1. They are supervised and regulated by local boards set up by the State Governments. [रा� सरकार
उनक� �नगरानी और �नयं त्रण करता है]
2. They can issue equity shares and preference shares. [वे इ��टी शेयर और वरीयता शेयर जारी कर सकते ह�।]
3. They were brought under the purview of Banking Regulation Act, 1949 through an Amendment
in 1966. [उ�� 1966 म� एक सं शोधन के मा�म से ब�िकंग �व�नयमन अ�ध�नयम, 1949 के दायरे म� लाया गया था।]
Codes: a) 1 only b) 2 and 3 only c) 1 and 3 only d) 1, 2 and 3
Related topics: Refer to
DICGC, UCB’s Supervisory Action Framework Pillar##1B2: Bad loans & other burning issues
(SAF)→ refer to in Banking Sector
Jan Dhan Yojana, Lead Bank Scheme etc → Pillar##1D: Financial Inclusion
13.21.2 DFI → NaBFID: National Bank for Financing Infrastructure and Development
⇒ 💼💼Budget-2021: We'll set up this org with ₹20,000cr capital.
⇒ NaBFID will give loans worth ₹5 lakh crore in 3 years. Chairman: K.V. Kamath.
⇒ It'll get funding from RBI, Govt, World Bank etc & by issuing bonds in market etc
⇒ As per news reports 1) The govt may order Insurance & Pension companies to invest some ₹₹ in
NaBFID. 2) This org may replace the India Infrastructure Finance Company Limited (llFCL)
⇒ 🤩🤩Benefit? It’ll help in National Infrastructure Pipeline (NIP) project.(📑📑Ref: HDT-
Pillar#5:Infrastructure)
🔠🔠❓ MCQ. Which of the following grants direct credit assistance to rural households? (UPSC-Pre-2013)
1) Regional Rural Banks
2) National Bank for Agriculture and Rural Development
3) Land Development Banks
Answer Codes:(a) 1 and 2 only (b) 2 only (b) 1 and 3 only (d) 1, 2 and 3
🔠🔠❓Find Correct Statement(s) (Asked in UPSC-Prelims-2004)
A) NHB, the apex institution of housing finance in India, was setup as a wholly owned subsidiary of RBI
B) SIDBI was established as a wholly owned subsidiary of the Industrial development bank of India
C) Both A and B D) Neither A nor B
13.21.5 🚫🚫🚫🚫🚫FI ⇒ Non-Bank ⇒ Primary Dealers (PD)- (प्राथ�मक �वक्रेता)
⇒ They deal in "primary" market i.e. directly buy fresh G-sec from RBI’s E-Kuber platform and sell
it in the secondary market. Total 20+ PD licensed by RBI: 14 of them are Banks. E.g. Standard
Chartered Bank, HSBC (HongKong), SBI, Kotak etc. (Numbers not important)
Related Topic: Retail/Ordinary Investors also buy G-Sec directly from RBI by opening a ‘Retail
Direct Gilt Account’ (RDG Account). (More in 📑📑Pillar#1C: Deepening of Capital Market)
13.21.8 🚫🚫🚫🚫🚫Credit Information Companies (CIC) versus Credit Rating Agencies (CRA)
Credit Information Credit Rating Agencies (CRA)
Companies (CIC)
Regulator RBI SEBI
E.g. CIBIL TransUnion, CRIF Standards and Poor's, Moody’s, CRISIL,
High Mark, Equifax and CARE, ICRA, FITCH Ratings India Pvt.
Experian. Ltd, Brickwork Ratings India, SMERA.
check the credit “Individual Persons” (एकल companies, NBFCs, governments, local
worthiness/ loan ��� के कजर् वापस चुकाने क� औकात है िक bodies, non-profit organizations.
repayment capacity of नहीं उसका मू�ांकन करते ह�) They do not check it for individual
persons. ( सं �ानों क� कजार् वापस चुकाने क� औकात
का मू�ांकन करते ह�. एक एक इं सान के �लए नहीं करते)
Rating numerical scores. e.g. CIBIL alphabetical symbols e.g. AAA, AA-, D-
Score between 300-900. etc.
Utility? Better the score → similar to the left cell.
- Unlike banks/NBFCs, they provide loans without formal application procedure, etc but require
Property/Vehicle/Home/Goods/Crop/Gold etc. as collaterals/pawn. (सं प�� �गरवी रखवा के कजर्)
- They charge very high compound interest rates & use muscle power for recovery (ऊंचे �ाजदर,
वसूली के �लए धमकाना-बलप्रयोग करना.)
- For every Rs.100 borrowed by a rural household, 33% from informal money lenders, remining
from banks, friends-family etc. (2012 data)
- They don’t fall under RBI purview, but State Govts have individual laws to regulate them e.g.
Bombay Moneylenders Act 1947, Kerala (1958), Gujarat (2011). These laws require such
informal lenders to register, impose ceiling on the interest rate & prohibit strong-arm tactics.
(�रजवर् ब�क क� �नगरानी म� नहीं िकंतु रा� सरकारों ने �नयं त्रण के �लए कानून बनाएं - पं जीकरण, �ाज क� मह�म सीमा �नधार्�रत
करना, बलप्रयोग/जबरन वसूली पर रोक)
📑📑Next HDT: 🔥🔥 1B2: Burning Issues in Banking: Bad Loans, NPA, IBC, SARFAESI, BASEL etc.
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 141
14.19.2 (⚖🔪🔪🔪🔪)Economic Survey 2020 on IBC/NPA (released in 2020-Jan-31st) ................... 157
14.20 🤒🤒🤒 💊💊 📅📅: ES21: Regulatory Forbearance (�व�नयामक� �मा/सहनशीलता) ..................................... 157
14.21 👁👁👁🗨🗨🔪🔪🔪🔪 Borrowers’ Database & Surveillance (उधारकतार्ओ ं का डेटाबेज व् �नगरानी) ......................... 158
14.21.1 👁👁👁🗨🗨🗨🗨🗨🗨-📔📔📔📔ES20: Use AI-ML Technology................................................................... 158
14.21.2 👁👁👁🗨🗨🗨🗨🗨🗨-📔📔📔📔 ES20: setup PSBN Network ...................................................................... 159
14.21.3 👁👁👁🗨🗨🗨🗨🗨🗨- 🐯🐯 RBI → Public Credit Registry (ऋण क� सावर्ज�नक र�ज��ी)................................ 159
14.21.4 👁👁👁🗨🗨🗨🗨🗨🗨- 🌐🌐 Legal Entity Identifier (LEI) Number: (कानूनी इकाई पहचान सं �ांक) ............... 160
14.22 🔪🔪🔪🔪🔪🔪🔪🔪- ⚖ Fugitive Economic Offenders Act, 2018 ......................................................... 160
14.23 🕵🕵 🏦🏦 💸💸💸💸 DICGC Act: Objective & Limitations .................................................................... 161
14.23.1 🕵🕵 🏦🏦 💸💸💸💸- 👎👎 Limitation of DICGC (मयार्दाएँ ) ............................................................... 162
14.24 �(🏦🏦 🔪🔪🔪🔪) Bad Bank (NARCL, IDRCL-2021): Intro............................................................ 162
14.24.1 �(🏦🏦 🔪🔪🔪🔪): 🧬🧬 Bad Bank Structure .............................................................................. 163
14.24.2 �(🏦🏦 🔪🔪🔪🔪) Bad Bank: 🗃🗃 functioning ........................................................................... 164
14.24.3 �(🏦🏦 🔪🔪🔪🔪) Bad Bank: Benefits & Challenges? ............................................................. 164
14.24.4 �(🏦🏦 🔪🔪🔪🔪) Bad Bank: ✍Conclusion (�न�षर्) .............................................................. 165
14.25 🐯🐯🐯🐯🐯🐯🐯🐯🐯🐯� Prompt Corrective Action (PCA) Framework ............................................ 165
14.25.1 🐯🐯🐯🐯🐯🐯🐯🐯🐯🐯� RBI’s Prompt Corrective Action (PCA) for NBFCs .......................... 166
14.25.2 😼😼😼😼😼😼😼😼😼😼� Supervisory Action Framework for Urban Co-operative Banks ...... 166
14.25.3 👻👻ATMANIRBHAR → 🤧🤧🤧🤧🏎🏎� RBI orders bank to halt Dividend Distribution .. 167
14.25.4 🐯🐯: 🦋🦋Regulations Review Authority (RRA 2.0)- for Ease of implementing RBI rules .. 167
14.26 🌐🌐🌐 BASEL-III Norms (बेसल
े -3 मानदंड).......................................................................................... 167
14.26.1 🌐🌐🌐🌐 🕵🕵 BASEL-III norms: Capital Tiers........................................................................... 168
14.26.2 🔪🔪🔪🔪🔪Additional Tier 1 (AT1) Bonds ............................................................................. 169
14.26.3 🔪🔪🔪🔪🔪Zero Coupon Bonds for PSB recapitalization ...................................................... 169
14.26.4 🌐🌐🌐 D-SIB: Domestic Systematic Important Banks.......................................................... 169
14.27 🐯🐯🐯🐯: BASEL Norms deferred / Suspended in Corona............................................................... 170
14.28 🐯🐯🐯🐯🐯🐯 Banks’ Balance sheet / Audit Norms (तुलन पत्र लेखा परी�ण) ............................................ 170
14.28.1 🐯🐯🐯🐯🐯🐯 IndAS Accounting Norms deferred (लेखा मानदंड ��गत/टाल िदये) ........................... 170
14.29 🌐🌐🌐💸💸 Recapitalization of PSBs: [सावर्ज�नक �ेत्र के ब�को का पुन:पूंजीकरण] ......................................... 170
14.30 �Banking Sector: Governance / Administrative Reforms .......................................................... 171
14.30.1 �Gyan-Sangam-I, 2015, Pune .............................................................................................. 171
14.30.2 � Personnel Selection → Bank Board Bureau (BBB), 2016 .............................................. 171
14.30.3 � Personnel Selection → FSIB replaces BBB (2022).......................................................... 172
14.30.4 �PSB Banking Personnel Reforms→ ES20 suggestions .................................................... 172
14.30.5 �Enhanced Access and Service Excellence (EASE) Agenda 2018 .................................... 173
14.30.6 �Ease 3.0: Tech-Enabled Banking (2020-21) ..................................................................... 173
14.30.7 �👮👮:🛡🛡Staff Accountability Framework for PSB-NPA ..................................................... 174
14.30.8 ✍ Conclusion for Public Sector Banks? (सावर्ज�नक �ेत्र के ब�कों के बारे म� �न�षर्) ....................... 174
14.31 🧹🧹🧹🧹: 👹👹(🚫🚫🚫🚫) NEGATIVE News: ILFS & Shadow Banking ............................................. 174
14.31.1 👹👹(🚫🚫🚫🚫) NBFC: Shadow Banking (आभासी / प्र�तछाया ब�िकंग प्रणाली) ..................................... 174
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 142
14.31.2 👹👹(🚫🚫🚫🚫) Shadow Banks → IL&FS & NBFC Liquidity Crisis ........................................ 175
14.31.3 👻👻 ATMANIRBHAR → 🐯🐯: 👹👹(🚫🚫🚫🚫) RBI Helping NBFCs/ Shadow Banks .......... 175
14.31.4 👻👻 ATMANIRBHAR → 🧔🧔🧔🧔🧔🧔🧔🧔 Partial Credit Guarantee Scheme (PCGS) 2.0 .. 175
14.31.5 👻👻 ATMANIRBHAR → 🧔🧔🧔🧔🧔🧔🧔🧔 Special Liquidity Scheme for NBFC/HFC......... 176
14.31.6 👹👹(🚫🚫🚫🚫)💊💊💊💊Shadow Banking → other Remedies by Govt post-ILFS crisis .......... 176
14.31.7 👹👹(🚫🚫🚫🚫) 💊💊💊💊 Shadow Banking → Remedies by RBI ................................................ 176
14.31.8 👹👹(🚫🚫🚫🚫) 💊💊 Shadow Banking → Remedies by SEBI .................................................... 176
14.31.9 👹👹(🚫🚫🚫🚫) 💊💊 Shadow Banking → Remedies suggested by ES20 .................................. 177
14.32 🧹🧹🧹🧹🧹🧹 Negative News: PNB, LoU, SWIFT, & Nirav Modi ...................................................... 177
14.32.1 📞📞Financial Messaging Systems: SWIFT- Russia gets banned............................................ 177
14.33 �� RBI Dividend, Reserves, Economic Capital Framework ................................................... 178
14.33.1 �� RBI’s Bimal Jalan panel (2018) ................................................................................... 178
14.33.2 📆📆 RBI’s Financial / Accounting Year (�व�ीय वषर् म� बदलाव)..................................................... 179
14.33.3 🐯🐯🐯Section-7 Directive & Urjit Patel’s Resignation (इ�ीफा) ........................................... 179
14.33.4 🐯🐯🐯🧔🧔 Section-7 of RBI Act .............................................................................................. 180
14.34 ✍🏻🏻🎷🎷 Mock Question for Mains GSM3 (250 Words Each) ........................................................... 180
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 143
🧔🧔 Overleveraged Such company has borrowed too much money than its ability to pay it
Borrower back. An Overleveraged company has high ratio of Debt (Bonds/loans)
(Company) to Equity (Shares). वापस करने क� �मता से भी अ�धक कजर् ले �लया है
When a weak bank keeps giving new loans to a subprime / overleveraged
� Zombie Lending
borrower. कमजोर ब�क, कमजोर कजर्दार को लोन देता रहे है
🔠🔠❓Why is the offering of "teaser loans" by commercial banks a cause of economic concern? (Pre-2011)
1. The teaser loans are considered to be an aspect of sub-prime lending and banks may be
exposed to the risk of defaulters in future.
2. In India, the teaser loans are mostly given to inexperienced entrepreneurs to set up
manufacturing or export units. (�बनअनुभवी नौसी�खए उद्य�मयों को �व�नमार्ण और �नयार्त इकाइयों बनाने के �लए
टीजर लोन िदए जाते ह�)
Answer Codes: (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 or 2
14.13🔪🔪🔪🔪NON-PERFORMING ASSETS (अनजर्क प�रसं प��यां)
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 144
3. The higher a borrowing firm’s level of ICR, the worse is its ability to service its debt.
Answer Code: (a) 1 and 2 only (b) 2 only (c) 1 and 3 only (d) 1, 2 and 3
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 145
िहसाबी प्रिक्रया क� जाती है। हालांिक ऐसा करने के बावजूद भी ब�कर कजर्दार से पैसा वापस तो मांग ही
सकता है)
- Loan write-off⏬ reduces the NPA% of the Bank (Because amount is
written-off/cancelled from balance sheet)
- 2020-21: Indian Commercial Banks written off ₹1.85 lakh crore worth loans
Restructured When principal / interest rate / tenure of the loan is modified. Banks may do it
loan when borrower facing difficulty in repaying loans. (पुनगर्िठत कजर् / ऋण)
Stressed Asset NPA + Loans Written-Off + Restructured Loans = Stressed Assets (तनावपूणर् सं प��)
For example, If bank allows the borrower to pay 60% of dues & forgoes 40% as
OTS with
loss, then bank has offered “One time Settlement (OTS) with 40% haircut”
Haircut
कजर् का कु छ िह�ा ब�क खुद ही नुकसानी समझकर माफ कर दे।
Evergreening When a borrower taking a new loan to pay off his old loan.
of loans पुराना कजर् चुकाने के �लए नया कजर् िदया जाए।
14.14👻👻🤧🤧🤧🤧✋ ATMANIRABHAR → LOAN/EMI/NPA RELIEF / MORATORIUM
⇒ IF a loan is outstanding as of THEN 2020-March: RBI allowed (optional)
moratorium/suspension of loan repayment for 6 months for March, April, May, June, July, Aug.
⇒ So, If a borrower’s income ⏬ due to Corona, he gets relief from Equated Monthly Instalments
(EMIs) for “X” months. (ऋण अदायगी पर 6 महीने के �लए अ�ायी �प से मु��/रोक)
⇒ It WAS NOT compulsory to skip EMI. Borrower MAY repay loan regularly, if his financial
situation was strong. (इन महीनों म� िक�े भरना वैक��क होगा. वो आ�थक �प से सश� हो तो भर सकता है)
⇒ Loan was not ‘removed/waived’. It was only temporarily suspended. (ये कज़ार् माफ़� नहीं था. के वल कु छ
महीने के �लए िक�� भरने म� छु ट्टी दी गई थी- िक बाद म� धीरे धीरे पूरा भर देना। उसने �जतना उधार �लए, वो सारा अंत म� तो पूरा
चुकाना ही होगा।)
💡💡Note: In last handout, I had kept a very big short note here discussing how some banks demanded
compound interest rate for 6 months / matter went to SC / Govt gave subsidy to those banks. But for
2023 exam-cycle all that microscopic details are outdated / faded/not grabbing headlines anymore.
so I am deleting.
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 146
- 5/25 for Infrastructure loans: RBI allowed banks to extend infra-loan tenure upto 25 yrs, & even
⏬loan interest rate. But such interest rate will be reviewed each 5yrs. (e.g. airport, powerplant,
highway project etc. ke loans.)
- CDR, SDR, S4A schemes for: non-infrastructure loans. (what was their full form? how did they
work? Ans. not important / outdated current.)
Figure 1: तनावग्र� प�रस���ओं को पुनज��वत करने हेतु आरबीआई का ढांचा: 2019 से पहेले का
14.15.3 🔪🔪 Recovery (वसूली)
Bank liquidates loan-defaulter’s assets under either of the following acts: (सं प��यों क� ज�ी और नीलामी)
1) SARFAESI Act 2002 (सरफाएसी अ�ध�नयम/कानून) OR
2) Insolvency and Bankruptcy Code 2016 (शोधन-अ�मता एवं िदवा�लयापन सं िहता 2016)
🔠🔠❓ ‘Scheme for Sustainable Structuring of Stressed Assets (S4A)’ is related to: (Prelim-2017)
a) procedure for ecological costs of developmental schemes.
b) scheme of RBI for reworking the financial structure of big corporates with genuine difficulties.
c) disinvestment plan for Central Public Sector Undertakings.
d) Provision in ‘The Insolvency and Bankruptcy Code’.
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 147
14.15.6 🦁🦁 🔪🔪Resolution Framework 1.0 and 2.0 (2020-21)
Based on the recommendations of the aforementioned KV Kamath committee, RBI issued a set of
guidelines for Bank/NBFCs for dealing with the bad loans:
Resolution Framework Applicable to borrowers who are
1.0 Large companies
2.0 Individual persons and small companies
What exactly is written in above frameworks? Ans. 1) Giving extra loans to genuine cases 2)
Extending the loan tenure 3) reducing loan interest rate etc.. We’ll NOT PHD. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
14.16.2 🔨🔨⚖ SC Judgement: Yes, Cooperative banks also have SARFAESI powers (2020)
⇒ Constitution: 7th Schedule → Union List: (सं �वधान क� 7वीं अनुसूची → सं घ सूची)
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 148
o Entry 43: Incorporation, regulation and winding up of trading corporations, including
banking, insurance and financial corporations, but not including co-operative societies.
o Entry 45: Banking.
⇒ 2007: A High Court judgments said “Union’s SARFAESI Act doesn’t apply to Cooperative
banks. Because cooperative banks are outside the law-making power of the.”
⇒ 2020: Supreme court finally clarified the matter: “Entry 45: banking involves all types of banks-
both commercial and cooperative banks. Therefore, when the Union made the SARFAESI Act to
empower the banking sector, → same powers are also available to Cooperative banks.” (सहकारी
ब�क भी इस कानून का इ�ेमाल करके कजर्दार क� सं प�� ज� कर सकते ह�= एस सुप्रीम कोटर् ने फे सला िकया।)
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 149
⇒ Within that period, an Insolvency Professional (IP: शोधन-अ�मता सं बंधी पेशेवर) will make a resolution
plan e.g. ⏬ loan interest, extend loan tenure, or IP could even find another investor to finance
the pending project etc. (वो पेशेवर लोन-पुनगर्ठन क� कोशीश करे गा िक जैसे �ाज दर कमी, समयाव�ध म� बढ़ोतरी, नया
भागीदार ढूँ ढना)
⇒ IP will present the plan to Committee of Creditors (CoC: लेनदारों क� स�म�त) madeup of the Financial
Creditors (FC). In this Committee. FCs’ voting power is based on amt of loans given by lender.
⇒ If x% of the FCs agree with such resolution plan, then it will be set in motion, otherwise, IP will
liquidate the assets to recover the loan. (यिद �व�ीय कजर्दाताओं क� स�म�त ब�म�त से पुनगर्ठन प्र�ाव पा�रत न करे तो
नीलामी/ प�रसमापन)
⇒ Appeal Structure? (इस प्रिक्रया के �खलाफ़ कजर्दार अपील म� िकधर जा सकता है?)
A. If Borrower is individual / partnership firm: @DRT → DRAT of SAFAESI Act. OR
B. If Borrower is a Company: @ National Company Law Appellate Tribunal (NCLAT: रा��ीय
कं पनी कानून अपीलीय �ाया�धकरण) of the Companies Act.
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 150
🔪🔪 � Wilful Defaulter A borrower who has the capacity to repay, but he’s not repaying the
(जान-बूझकर बकाएदार) : loan. E.g. Vijay Mallya was declared wilful defaulter by SBI (2017).
Total number of wilful defaulters 2,017 (Year 2019), 2,208 (Year
2020), 2,494 (2021).
🔪🔪 � Incapable A borrower whose loan account is in NPA for more than a year, and
Defaulter (असमथर् बकाएदार): he has no capacity to repay even partial loan amount. (िजसक� औकात
ु ाने क�, उसके साथ क्या समजौता करोगे?)
ही नही लोन चक
Above two categories of borrowers are not eligible for I&B resolution process. Their assets will be
directly liquidated under SARFAESI Act. (उनक� तो बस सं प�� ज� करके नीलामी होगी, इनके साथ कोई समझौता िकया
नहीं जाएगा)
14.17.2 ⚖🔪🔪🤝🤝 Insolvency and Bankruptcy Code Amendment (2018: सं िहता सं शोधन)
- RERA registered building (home & office) buyers are classified as ‘financial creditors’. So, if
builder unable to finish project, unable to repay the loans to banks → homebuyers will have
voting power in the I&B resolution process. (More RERA in Pill#6)
- It ⏬the voting requirements for faster resolution:
Table 3: these % are for observation. ✋Exact numbers NOT important for exam.
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 151
14.17.5 ⚖🔪🔪🔪🔪:🤫🤫 IBC Pre-Packs (पद� के पीछे ज�ी से के स सुलटा लेते है!)
Figure 2: इज्ज़त क� इतनी परवाह थी, तो आप टाइम पे ही लोन चुका देते, भाई!
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 152
Corporate Insolvency Pre-packaged Insolvency Resolution Process (PIRP)
Resolution Process (CIRP)
not buy Videocon refrigerator, if - 🤩🤩Prevents the stigma/bad publicity/damage to brand
he continuously sees negative image associated with formal IBC proceedings. else in
news & starts to fear that future difficult to get investors/customers/clients. मामला
company will shut down, he’ll औपचा�रक �प से कोटर् तक नहीं प�ंचेगा= अखबारों म�/जनमानस म� कं पनी
not get warranty/repair service बदनाम/कलं िकत ना हो वरना भ�व� म� �नवेशकों/ग्राहकों को आक�षत करना
after 3-5 years) मु��ल हो जाता है.
- least disruptive to the businesses. Cost-effective. Helps in
workers’ job preservation (compared to a scenario where
company is shut down)
CIRP applicable to all small and Only available to micro, small and medium enterprises
big enterprises. (MSMEs) as per 2021’s IBC Ordinance / Amendment Bill.
(के वल चु�नंदा श्रेणी के �लए है)
14.17.6 ⚖🔪🔪🔪🔪: 🥱🥱 IBBI directive on Avoidance Transaction and 500 other technical things
✋Such technical topics not important for the scope of the exam. If any teacher teaching it / private
quizmaster is asking MCQ on it then please ask them to first go through previous years official
papers and ask him to prove where's the pattern of such questions being asked in real
exam?#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
14.17.7 👻👻� (⚖🔪🔪🔪🔪) ATMANIRBHAR → IBC Ordinance/Act 2020 to suspend new cases
⇒ 2020: Govt issues ordinance to amend IBC Code. (अ�ादेश)
⇒ Corona = business is down, difficult to work out any resolution plan. So, No fresh case will be
registered in IBC code for next “X” months Because Corona (नए के सों के दा�खले को ��गत िकया गया.)
⇒ “X” = 24 March 2021 ✋Exact dates notIMP
IBC Ordinance / Act 2020 Case can start if loan default of minimum _ _ amount
BEFORE Minimum ₹1 lakh/>.
AFTER Minimum ₹1 crore/>**
**So even after suspension is lifted, most of the small businessmen will be spared from IBC
proceedings. (रोक हटाने के बाद भी नए के स दजर् िकए जाएं गे, तो �सफर् बड़े लोन के �लए के स दजर् िकए जाएं गे)
14.17.8 🕵🕵(⚖🔪🔪🔪🔪) Insolvency and Bankruptcy Board of India (IBBI)
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 153
⇒ IBBI’s administrative control rests with Ministry of Corporate Affairs (कॉप�रेट मामलों का मं त्रालय).
⇒ It has 1 Chairman, 1 nominated member from RBI, 8 from Govt’s side = total 10 people.
⇒ 1st chairman of IBBI: M.S.Sahoo. Present Chairman: Ravi Mittal (2022). (अ��)
⇒ Chairman has 5 years / 65 age tenure. Also eligible for reappointment (पुन:�नयु�� सं भव).
⇒ IBBI selects Insolvency Professionals Agencies (IPAs). These IPAs enroll and supervise the
members practicing as Insolvency Professionals (IPs). Presently, 3 organizations given “IPA”
status viz. 1) ICAI (Chartered Accounts) 2) ICSI (Company Secretaries) and 3) Institute of Cost
Accountants.
2018-Jul: Finmin’s Project Sashakt for PSB-NPA on report by Sunil Mehta (PNB CEO).
Gave guidelines to resolve the NPA problem in a timebound manner in Public Sector Banks.
What were those guidelines? Too outdated. So, I’m removing it from latest handout.
🔠🔠❓What was the purpose of the Inter-Creditor Agreement signed by Indian banks and financial
institutions under Project Shashakt? (UPSC-Prelims-2019)
a) To lessen the Government of India’s perennial burden of fiscal deficit and current account deficit
b) To support the infrastructure projects of Central and State Governments
c) To act as independent regulator in case of applications for loans of ₹ 50 crore or more
d) ✅To aim at faster resolution of stressed assets of ₹ 50 cr or more which are under consortium
lending.
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 154
Answer to Above MCQ is Option D. but now it is outdated current affairs so we will not study the
exact matter.
- Cross-border insolvency has two facets: [1) foreign creditors should be able to recover money
lent to Indian corporates & VICE VERSA. [2) During Indian company's insolvency in India, the
Indian lenders should be able to recover money from Indian company's foreign assets easily,
AND VICE VERSA.
- IBC sections 234 & 235 have provisions for it, BUT they are not notified yet, so they are not
enforced.
- This leads to uncertainty of outcomes for creditors and debtors.
2018: Corporate Affairs Ministry's Insolvency Law (reforms) Committee under Injeti Srinivas
recommended
- We should create a separate law for Cross-border Insolvency. अलग से कानून बने
- More than 40 nations use United Nations Commission on International Trade Law
(UNCITRAL)'s Model Law of Cross Border Insolvency (1997) So, we can use it as a template
while making our own law → 📙📙📙📙ES22 also recommended the same.
- 👜👜👜👜Budget-2022: - We will amend IBC Code to facilitate cross border insolvency resolution.
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 155
14.18(⚖🔪🔪🔪🔪)👋👋👋👋 VOLUNTARY LIQUIDATION OF COMPANIES
Liquidation is the process of shutting down a company. Two type of liquidations (प�रसमापन दो िक़�) →
1) �Involuntary Liquidation: Due to loan default → it can be conducted either through I) IBC
code or II) SARFAESI Act depending on the case. (अनै��क प�रसमापन- जब कं पनी कज़र् म� िदवा�लयापन िदखा
दे)
2) �Voluntary Liquidation: when the owner has not committed any loan default but wants to
shut down the business. Voluntary liquidation can be done through A) sending application to
the registrar of companies under Companies Act, 2013 B) sending application under the
insolvency bankruptcy code. However Method-A is more popular than B at present. (�ै��क
प�रसमापन. कं पनी ने अभी तक कज़र् म� िदवा�लयापन नहीं िदखाया लेिकन उसके धं धे/�ापार म� अ�ा भ�व� निह िदख रहा इस�लए
क�नी का मा�लक ख़ुद क� कं पनी �यं बं द करना चाहता है.)
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 156
- I&B code's time-bound mechanisms have prompted 'behavioural changes' in corporate
borrowers. Now they fear losing control of the company. This has improved corporate
governance, cash and financial discipline. (कॉप�रेट देनदार के �वहार म� प�रवतर्न, कं पनी क� मा�लक क� मेरे हाथ से
चली जाएगी इस डर म� �नय�मत कजार् वापस कर रहे ह�)
- By 31/3/2018: ₹ 50,000 crores worth NPAs have been upgraded to std assets (meaning the
(arrogant) borrowers have been forced to resume paying principal & interest regularly.)
- Due to IBC Code, India's rank has improved in World Bank's Ease of Doing Biz report. (More in
Pillar#4). However, we also need to begin more reforms:
We need to increase the number of NCLT benches, number of IP Professionals, use ICT
technology for faster case proceedings. (�ायपीठ, मानव बल और टे�ोलॉजी के उपयोग म� बढ़ोतरी क� ज�रत)
We should enact separate law on cross-border insolvency. (सीमा-पार िदवा�लयापन के �लए अलग से
कानून बने)
Group Insolvency: Big Industrialists usually operate through groups of companies, each
having a separate identity e.g. Tata Sons ltd → 1) TCS 2) Tata Motors 3) Tata Steel etc. If one
of these company become insolvent, it creates negative ripples on entire group's financial
health. Certain legal-technical reforms are necessary to address such group-insolvency. (समूह
िदवा�लयापन के मामलों का �नपटान करने के �लए कानून म� कु छ तकनीक� सुधार िकए जाएं )
Certain legal-technical reforms to address insolvency cases involving individual proprietors
and partnership firms. (���गत मा�लक और साझेदारी फमर् के �लए कानून म� कु छ सुधार िकए जाएं : They’re
legally different entities than ‘Companies under companies Act. More in 1C: SEBI handout)
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 157
⇒ Zombie Lending (= weak bank keeps giving new loans to weak / subprime / Over Leveraged
borrower)
⇒ Evergreening of loans (=Companies taking new loans to repay the previous bad loans- (कज� का
�नरंतर ह�रतकरण)
⇒ 😰😰Many loan scams occurred: ICICI-Videocon loan, Yes Bank-Rana Kapoor, PNB-Nirav Modi,
Punjab and Maharashtra Co-operative Bank (PMC) etc. (ढेरों �व�ीय गबन सामने आए)
⇒ Corona-2020-onwards: RBI again relaxed many rules. So Economic Survey recommended RBI
must stop these relaxation immediately after Corona crisis is over. Else, NPA problem could
worsen. (आपातकाल ख� होने के बाद इस प्रकार क� �मा/�रयायतों को तुरंत बं द करना चािहए, वनार् नए कांड होंगे।)
⇒ Because “Those who do not learn from history are condemned to repeat it.” (- said Spanish
philosopher George Santayana) (जो इ�तहास क� गल�तयों से सीखेगा नहीं वह उन गल�तयों को दोहराएगा)
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 158
✋ Caution? borrower’s privacy and dignity should also be respected while doing such
computerized surveillance. (उ� कदम उठाते व� कजर्दार क� �नजता का भी स�ान रखना चािहए)
Figure 3: Instagram फोटो मे भले हम मोरेशीयश मे ऐ�ाशी करे, ब�क को बोल�गे लोन चुकाने का पैसा नही है।
Figure 4: �बग बॉस क� तरह सब पे नजर रखूँ गा। चुन चुन के डेटा �नकालूँगा।
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 159
So, RBI’s Yeshwant M. Deosthalee Committee (2017-18) recommended setting up a Digital Public
Credit Registry (PCR) with following features:
1) PCR will be setup under RBI, using data from SEBI, Corporate Affairs Ministry, GST authorities,
IBBI, Banks, NBFCs etc. अलग-अलग सं �ाओं से को डाटा हा�सल करेगा
2) PCR will help lenders to get complete 360-degree profile of borrower on real time basis.
3) PCR will help RBI in early detection of systematic stress, checking the efficacy of monetary
policy & other big data analytics. मौिद्रक नी�त क� अ�धका�रता को जानने म� भी मदद करेगा
🔠🔠❓MCQ. RBI constituted a high-level task force on Public Credit Registry (PCR), headed by _ _ _ (CDS-
2018-I) (a) Sekar Karnam (b) Vishakha Mulye (c) Sriram Kalyanaraman (d) Y. M. Deosthalee
🚩🚩🚩FAQ: “WHY not merge PSBN Network with RBI’s PCR registry? Ans=Send
suggestion to RBI + CEA that they shd not do duplication of work.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
14.21.4 👁👁👁🗨🗨🗨🗨🗨🗨- 🌐🌐 Legal Entity Identifier (LEI) Number: (कानूनी इकाई पहचान सं �ांक)
Figure 5: �वदेश मे नयी कं पनी बनाकर �वदेशो क� ब�कों को चुना लगाएं गे तो �ा उखाड़ लोगे?
- Objective? Even if a company is blacklisted by Indian banks, it could apply for loans overseas,
and those overseas bankers may not be aware of company’s history.
- So, there should be a global “Aadhar card” number for companies, and they must be forced to
quote that number during every financial transaction.
- After USA’s Sub-Prime Crisis and Global Financial Crisis (GFC), the G20 and its Financial
Stability Board (FSB: �व�ीय ��रता बोडर्) came up this LEI concept- a 20-digit alphanumeric code.
- LEI’s Global Boss: Global Legal Entity Identifier Foundation (GLEIF), Frankfurt, Germany. LEI’s
Indian agent: Clearing Corporation of India.
- From 1/10/2022 RBI has ordered all companies undertaking crossborder transactions of Rs 50
crore or more to quote this number in financial transaction.
- RBI has power to issue such directives under: Payment and Settlement Systems Act, 2007 &
Banking Regulation Act 1949. (�व�ीय लेन देन के दौरान कं पनी ने अ�नवायर् �प से ये नं बर �लखना होगा)
14.22🔪🔪🈶🈶🈶🈶🈶🈶- ⚖ FUGITIVE ECONOMIC OFFENDERS ACT, 2018
Figure 6: देश छोड़ के भाग जाऊंगा, 9 लाख का लेधर जेकेट पहेनके लं डन क� ग�लयो मे घूमँ गू ा, तो �ा उखाड़ लोगे मेरा?
भगोड़ा आ�थकर् अपराधी अ�ध�नयम: This act targets economic offenders accused of cheque dishonor, loan /
investment / chit-fund scam, money laundering etc. worth ₹ 100 crores /> & left India to avoid
facing prosecution / arrest.
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 160
- Special courts under the PMLA (Prevention of Money-laundering Act, 2002) will order the
villain to appear within 6 weeks, if not then he is declared “Fugitive Economic Offender”⇒ His
Indian & Overseas & Benami properties will be attached (भगोडे आ�थक अपराधी क� भारतीय तथा �वदेशी
सं प��यों को ज� िकया जाएगा).
- Once property attached- the Union Govt will oversee its administration / liquidation
(नीलामी/प�रसमापन).
- No ordinary civil court / tribunal can give stay order. Villain can make appeal only in High Court
and Supreme Court. (भगोड़ा आ�थक अपराधी के वल उ� �ायालय और सव�� �ायालय म� जाकर मदद मांग सकता है).
If Borrowers don’t repay, SARFAESI auctions give little recovery, CRR-SLR insufficient
to repay deposits then bank collapse imminent. Then, how to protect the depositors? →
- 1961: Deposit Insurance and Credit Guarantee Corporation Act - mandates that all types of
banks must buy insurance on their deposit accounts from DICGC. Banks have to pay premium
for this insurance. (�न�ेप बीमा और प्र�य गारंटी �नगम: प्र�ेक ब�क ने अ�नवायर् �प से अपनी जमाकतार्ओ क� िडपो�जत को
बीम� द्वारा सुर��त करना होगा)
- DICGC is 100% owned by RBI. RBI Dy. Governor acts as chairman of DICGC. HQ: Mumbai.
- When a bank shuts down, DICGC will pay upto ₹ 1 lakh insurance to every deposit holder for
his principal and interest. (यिद ब�क बं द हो गया तो जमाकतार् के नुकसान क� भरपाई यहां से होगी)
- 💼💼Budget-2020: announced ⏫the insurance coverage to ₹ 5 lakhs (नुकसान भरपाई क� रा�श म� बढ़ोतरी)
- 2021: Government introduces Deposit Insurance & Credit Guarantee Corporation
(Amendment) Bill →
BEFORE (सुधार/सं शोधन �वधेयक से पहले) AFTER REFORM (सुधार प�ात)
Upto ₹1 lakh deposit insured Protection increased upto Rs 5 lakh
When will depositors get back above amount? When RBI imposes (withdrawal) moratorium
No clear timelines. Often they had to wait for on a weak bank → within 90 days of that event,
many years (पैसा/मुआवजा कब आएगा उसक� समय सीमा DICGC will pay depositors. (�रज़वर् ब�क जब कमजोर
तय नहीं थी) ब�क म� से ग्राहकों के पैसे उठाने पर रोक लगाए उसके 90 िदनों के
भीतर ही मुआवजा �मल जाएगा)
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 161
Banks had to pay premium/fees to DICGC at DICGC can ⏫increase the premium fees to
the rate of ₹10 paise to insure every ₹100 worth ₹12-₹15 paise (i.e. 20%-50% more than the
of deposits. (ब�को ने हर ₹100 के िडपॉ�जट का बीमे के �लए
original fees) ✋Exact figures NOTIMP. (बीमा
10 पैसे क� बीमा िक�/फ�स देनी होती थी) िक� म� बढ़ोतरी क� गई)
All types of Banks covered Same as left cell. (सभी प्रकार के ब�क के ग्राहकों को सुर��त
But NBFCs not covered. करता है, िकंतु ग़ैर ब�क �व�ीय सं �ान के ग्राहकों को सुर��त नहीं
करता.)
- Previously, DICGC provided guarantee cover to bank on the loans granted to Priority Sector
Borrowers.
- E.g. if Micro enterprise owner did not repay PSL-loans → DICGC would cover losses of the
banks, hence its name contains the word ‘Credit Guarantee Corporation’.
- But, with formation of SIDBI (1990), National Credit Guarantee Trustee Company Ltd.
[NCGTC, 2016] etc, this credit guarantee work divided among many organizations
(REF:📑📑Pillar#1D), but we need not PHD over it.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 162
⇒ Therefore, Economic Survey 2016-17 had suggested to setup a BAD BANK named “Public
Sector Asset Rehabilitation Agency” (PARA). To buy bad loans from, try to get the maximum
value from loan-restructuring / liquidation-auction and absorb the losses. (इस�लए आ�थक सव��ण ने
सुझाव िदया एक बेड-ब�क बनाया जाए जो िक ब�कों के खराब लोन पेपर/ अनअजर्क प�रसं प��यों को खरीदेगा.)
⇒ Then, 💼💼Budget-2021 announced set up an Asset Reconstruction Company (ARC) and Asset
Management Company (AMC) to take over the bad loans from banks. (बजट 2021 ने अमल िकया).
⇒ Govt will not have any shareholding in ARC/AMC. Banks will set these organization(s) up with
their own funds. (सरकार इसम� शेयर धारक नहीं बन�गी. ब�कवाले खुद से शेयर पूंजी देकर इसको बनाएं गे)
⇒ Examples of such bad banks in other countries- Danaharta in Malaysia, UKAR in UK.
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 163
NARCL-ARC (founded in 2021) IDRCL-AMC (founded in 2021)
⇒ 51% (private sector bank,
NBFCs).#
Tenure This organization will exist for five years. Same as left cell
** NARCL Ownership 51% shareholding/ownership among 8 public sector banks (PSB) viz. SBI
(13.17%), Punjab National Bank (12%), Bank of Baroda, Canara Bank, Bank of Maharashtra, Union
Bank of India, Indian Bank, Bank of India. (Note: Future Some of these PSBs may get merged so the
% may change.)
🚩🚩🚩FAQs:
⇒ #what are their names? Ans. Not explicitly mentioned in Pressnote. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
⇒ ^^AMC got license from RBI or SEBI? Ans. Same as above
⇒ Bad Bank means “ONLY NARCL” or (NARCL+IDRCL) Ans. Same as above. But from how
📙📙📙📙ES17 had given the vision of Bad bank, it should be the combined work of
(NARCL+IDRCL)= Bad Bank.
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 164
sovereign guarantee to Security receipts). (अंत म� तो परो� �प से इस नुकसान क� भरपाई जमाकतार् �नवेशक और
करदाताओं द्वारा ही हो रही है)
Figure 8: need not loose too much sleep, unless preparing for RBI officers' exam
🚩🚩🚩FAQ: What about “XYZ” type of Bank/NBFC which is not mentioned in above Chart? Ans.
Then “XYZ” type of Bank/NBFC is not subjected to above PCA norms at present. �जनका नाम यहाँ नहीं
�लखा पर ये लागू नहीं.
🚩🚩🚩FAQ: Does it mean non-scheduled banks are not supervised by RBI!!? Ans. They are
supervised by RBI under Banking Regulation Act.
- 2002: RBI Governor Bimal Jalan designed it for all Scheduled Commercial Banks, except RRBs.
(��रत सुधारा�क कारर्वाई �परेखा)
- 2018: NABARD announced separate ‘Prompt Corrective Action (PCA) Framework’ framework
for Regional Rural Banks (RRBs �ेत्रीय ग्रामीण ब�कों के �लए नाबाडर् क� अलग से �नयमावली है).
BEFORE-2022: RBI monitored bankers on From 2022: RBI will monitor this under
following indicators PCB framework
🎯🎯 Capital Sufficiency (BASEL-III), पयार्� पूंजी है क� SAME as left cell
नही?
🎯🎯 Asset Quality (NPA or bad loans), परीस���यों same as left cell
क� गुणव�ा अ�� है क� बुरी?
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 165
🎯🎯 Profitability (Return on Assets: RoA), पयार्� Replaced with "Leverage". What it means,
मुनाफा हो रहा है क� नही? how it works. how is it different than past? =
NOTIMP.
But sufficient to know that “Bigger/Higher”
leverage is NOT a good sign.
Then RBI classifies the banks into Risk threshold #1, #2, #3. Higher the number, higher the risk.
Then, accordingly, RBI will take corrective actions such as: (जो�खम के िहसाब से ब�कों को वग�कृ त करता है)
⇒ RBI giving strict warning, conducting deeper audit & supervision. (�ादा कड़ी �नगरानी)
⇒ Restricting bank’s directors’ salaries and dividend distribution to its investors. (वेतन, लाभांश �वतरण
पर रोक)
⇒ Restricting bank’s branch expansion & lending operations. (शाखा �व�ार और ऋण देने पर रोक लगाना)
⇒ Forcing merger / shutdown (under Banking regulation Act 1949). (कमजोर ब�क को बं ध करना)
⇒ If a PCA-listed bank wants to get ‘whitelisted’, it’ll have to ⏬its NPA, obtain additional capital,
⏫its profitability. (इस सूची से बाहर �नकलना है तो अनजर्क सं प��यों को कम करना होगा, �ादा पूंजी बटोरनी होगी, �ादा
मुनाफा लाना होगा)
⇒ PCA is “Monetary Policy → Qualitative / Selective Tool → Direct Action”. (मौिद्रक नी�त →
गुणा�क → सीधी कायर्वाही का यह एक साधन है)
⇒ As of 2020-Feb: 4 PSBs in this list viz. Indian Overseas Bank (IOB), Central Bank of India, UCO
Bank and United Bank of India. ✋Dynamically changing info so we need not remember / loose
sleep for MCQs.
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 166
- �FAQ: How is SAF similar or different than PCA framework? NOT IMP for IAS.
14.25.4 🐯🐯: 🦋🦋Regulations Review Authority (RRA 2.0)- for Ease of implementing RBI rules
- RBI has setup RRA 1.0 (in 1999, for one year) and RRA 2.0 (in 2021, for one year)
- Chairman: RBI’s Dy. Governor M Rajeshwar Rao. Who are other members? NOTIMP.
- Objective: To give suggestions to RBI to simplify its rules/regulations so Bank/NBFCs have ease
of doing business. (�नयं त्रण समी�ा प्रा�धकरण जो िक �रज़वर् ब�क को सुझाव देगा िक कै से �रज़वर् ब�क के �नयमों म� सरलीकरण
िकया जाए तािक उनके अनुपालन मे ब�क और एनबीफ़सी को आसानी रहे।)
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 167
Figure 9: We need not bother with Tier-1 Tier-2 Capital etc, #थोड़ा-पढ़ो-आगे-बढ़ो
✋FAQ. How exactly do CCB, CCCB, LR, NSFR, HQLA, LCR etc work? Ans. Not
important for exam, beyond the basic ‘word-association’ that they’re related to BASEL
Norms. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
⇒ Each member country’s Central Bank can prescribe different %, ratios depending on their
country’s situation. (हर देश क� क� द्रीय ब�क अलग-अलग िदशा �नद�श जारी कर सकती है)
⇒ As Bad loans (NPA) ⏫ = bank’s asset quality degrades ⏬= its Risk-weighted assets (RWA)
⏫ → bank must arrange more capital to comply with these ratios, norms and buffers.
⇒ If a bank can’t comply with BASEL norms → RBI puts it in PCA list. In worst case, bank will
have to merge/ sell off its business to another bank or shut down. (इन मानदं डों को नहीं माना तो अंत म� ब�क
बं द हो सकता है)
⇒ BASEL Norms also apply on Differential Commercial Banks (LAB, RRB,
SFB, PyB), Cooperative Banks, AIFI (EXIM, NABARD, NHB, SIDBI) and certain category of
NBFCs, but RBI can prescribe separate norms / limits / deadlines for them. (�व�भ� प्रकार क� �व�ीय
म�� ऊपर सं �ाओं पर इन मानदंडों क� सीमा अलग-अलग ह�)
BASEL-III norms require banks to keep capital against their risk weighted asset ratio. This capital is
subdivided into:
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 168
Capital of a Bank Instruments / subtypes: List not exhaustive
Tier1 / ⇒ Common Equity Tier-1 (CET1) e.g. ordinary shares.
core capital → ⇒ Additional Tier1 (AT1) e.g. 🔪🔪🔪🔪🔪AT1 Bonds, Preferential shares
etc.
Tier2 → ⇒ Bonds/Debenture, Hybrid instruments
BASEL-III prescribed that banks must keep minimum x%, y% etc in each of these tiers, depending
on their Risk Weighted Asset (RWA).
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 169
⇒ Each year, RBI identifies banks that ‘too big to fail’ (=if they fail, it’ll severely hurt the economy)’
and labels them as Domestic Systematic Important Banks (D-SIB), & orders them keep
additional equity capital against their Risk Weight Assets (RWA) & other technical norms.
⇒ Presently, 3 D-SIBs in India: SBI, ICICI, HDFC (Latest Entry).
14.28🐯🐯🐯🐯🐯🐯 BANKS’ BALANCE SHEET / AUDIT NORMS (तुलन पत्र लेखा परी�ण)
14.28.1 🐯🐯🐯🐯🐯🐯 IndAS Accounting Norms deferred (लेखा मानदंड ��गत/टाल �दये)
⇒ Ministry of Corporate Affairs (MCA) ordered all the companies to keep their balancesheet as per
the format prescribed in the Indian Accounting Standards (IndAS).
⇒ 🤩🤩Benefit? IndAS accounting format makes it easier for the local and global investors and
regulators to compare, analyze and understand a company’s financial position from its
balancesheet. (इस �रपोटर् को देखकर �नवेशक को आसानी से कं पनी क� �व�ीय �मता का अंदाज़ा लग जाता है.)
⇒ IndAS is not part of BASEL norm. But, since commercial banks are basically ‘companies doing
banking activity’, so they also have to comply to IndAS norms. But, only RBI has the power to
notify its implementation deadline on banks. (ब�कों के ऊपर भी इ�ी �नयमों को लागू करना है.)
⇒ 2020- Critics demanded RBI should implement it. What is the deadline? NOTIMP.
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 170
- Govt instructed PSBs to mobilize equity (share) capital from private investors. However,
investors shy away from smaller banks with weak balancesheets, so BMB & 5 Associated Banks
merged with SBI (2017). Vijaya & Dena to be merged with BoB (2019, 1st April) etc. (More in
📑📑Pillar#1B1)
- 💼💼 Budget-2020: FM said we’ve given ₹3.50 lakh cr in the last years years.
- 💼💼Budget-2021: ₹20,000 crores for PSB recapitalization in Financial Year 2021-22.
- 💼💼Budget-2022: No money given for this. Govt’s rationale is that PSBs profitability improving
so PSBs can take care of their capitalization problems by themselves by issuing shares/bonds in
market. (सरकार ने नए बजट म� पुनः पं जीकरण के �लए कोई पैसा नहीं िदया. सरकारी ब�को अब तुम खुद अपना देख लो!)
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 171
(a) Banks Board Bureau (b) RBI (c) Ministry of Finance (d) Management of concerned bank
When/if company makes profit → How does employee benefit from ESOP? (�ा फायदा होगा)
1) Market price of shares⏫ He can sell his shares to a third party for a large gain.
2) the dividend to the shareholders He can keep the shares with himself, and will get large
will increase. dividend from the company (in addition of his regular
salary) तन�ाह के अलावा कं पनी के मुनाफे म� से लाभांश भी �मलेगा
- As shareholders, some of these employees may even join as board members → help designing
more realistic business policies at the apex level. Thus, ESOP changes mind-set from an
“employee” to that of an “owner”. (कमर्चारी म� कं पनी का मा�लक होने क� भावना जगाता है)
- It encourages the employee to work harder with more dedication, loyalty and passion for the
company’s profitability and brand image. (वह समपर्ण �न�ा और जुनून से ब�क के �लए काम करना शु� करता है)
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 172
14.30.5 �Enhanced Access and Service Excellence (EASE) Agenda 2018
- 2017, October: Government announced ₹2 lakh+ crore package for recapitalization of PSB. But
critiques argued such relief measures will just make the PSBs officials lazy & undisciplined
(moral hazard). So,
- 2017, November: First Public Sector Bank (PSB)-Manthan organized by Dept of Financial
Services (DFS) at Gurugram. Based on the participants’ inputs…
- 2018, January: FinMin’s Dept of Financial Services released EASE framework (बढ़ी प�ंच और सेवा
उ�ृ �ता) with 6 pillars to make PSBs more Responsive and Responsible viz.
1. Customer Responsiveness. (ग्राहको के प्र�त जवाबदेही)
2. Responsible Banking: Reduce NPA, prevent frauds. (धोखाधड़ी पर अंकुश)
3. Credit Off Take: Try to reach out to potential borrowers for home, auto, education, loans.
(�यम ब�क ही उधारकतार्ओ को खोज �नकाले)
4. Help MSME entrepreneurs via SIDBI’s Udyamimitra.com portal. Approve/reject loans in
not more than 15 days. (लघुउधोगों क� मदद)
5. Deepening Financial Inclusion & Digitalization. (�व�ीय समोवेशन)
6. Employees’ Human Resource Management (HRM: मानव सं साधन प्रबं धन): improve with training,
performance linked promotion-salaries-posting-transfers etc.
Implementation? Each whole-time director of a PSB will be entrusted with one pillar of the EASE-
framework. Their performance will be checked by the PSB’s board of directors. An independent
agency will be tasked to check public perception. Finally PSB banks will be ranked: E.g. 2018: PNB#1.
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 173
14.30.7 �👮👮:🛡🛡Staff Accountability Framework for PSB-NPA
⇒ Finance Ministry’s issued this for NPA accounts up to Rs 50 crore in PSBs from 1/4/2022.
⇒ If PSB Banker took bonafide business decisions to approve loan application but it turned NPA
then banker will be protected from undue inquiries/harassment by 3Cs — CBI (Central Bureau
of Investigation), CVC (Central Vigilance Commission) and CAG (Comptroller and Auditor
General).
⇒ Previously the fear of 3C was discouraging the public sector bank managers from sanctioning big
loans (in the aftermath of TBS, Mallya, Nirav Modi).
(सरकारी ब�क और लोन पास करने से डरते ह� �ोंिक उ�� तो CBI, CVC, CAG क� कारर् वाई का डर लगता है तो अब �वत् मं त्रालय ने
कु छ नए “सावर्ज�नक ब�क कम� जवाबदेही ढांचा” िदशा�नद�श जारी िकए ह� तािक ईमानदारी से �लए गए फै सलों म� अगर लोन का पैसा
वापस न आए तो सरकारी ब�क के ईमानदार ब�कर पर अनाव�क �प से कोई कारर्वाई न हो)
14.30.8 ✍ Conclusion for Public Sector Banks? (सावर्ज�नक �ेत्र के ब�कों के बारे म� �न�षर्)
A vibrant banking system can support India’s growth story/ PSBs are growth levers for India.
Inefficient PSBs can severely handicap the country's economic development.
35% of Indians are in the 15-29 years age group. Majority of them live in rural areas and many of
them require education loans and business loans to progress in life.
Therefore, aforementioned initiatives are imp in that regard/ need to be addressed on priority
basis to
o 1) Reap India’s demographic dividend and
o 2) To achieve $5 trillion economy status by 2025.
o 3) to achieve V-Shaped recovery Post-Corona
(भारत क� �वकासगाथा को आगे बढ़ाने, तथा जनसां��क�य लाभांश को प्रा� करने के �लए जीवं त बेिकंग प्रणाली आव�क। अत: उ�
�रजवर् ब�क|सरकार के उ� कदम सरहनीय है/ उ� सुधारो क� आव�कता है।)
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 174
LDMFs - Liquid Debt Mutual Funds invest clients money into short term debt instruments
such as T-bill (of Govt) and Commercial Papers (of companies).
- e.g. certain schemes by UTI, Kotak, L&T, Tata mutual funds
- 2019: Some of these LDMFs had invested clients money in IL&FS and DHFL, but
failed to get the money back. Nearly ₹4000 crore of investors’ money is stuck,
triggering the NBFC crisis in India.
Retail- Retail Non-Banking Financial Companies such as Gold loan companies, asset finance
NBFCs companies etc.
Shadow banking system’s assets are risky and illiquid. If there is a ‘bank run’ like situation
(depositors / investors demanding the money bank) these shadow banks can’t honour the
obligations. As seen in the ILFS crisis (2019) →
14.31.2 👹👹(🚫🚫🚫🚫) Shadow Banks → IL&FS & NBFC Liquidity Crisis
- Infrastructure Leasing & Financial Services (IL&FS) is a Systemically Important Non Deposit
Taking Non - Banking Finance Company (NBFC - ND – SI: प्रणालीगत �प से मह�पूणर्- िडपॉ�ज़ट न
लेनेवाली- गैर-ब�िकंग �व� कं पनी) Setup in 1987 HQ@Mumbai.
- Shareholders: LIC > Japan’s Orix group > Abu Dhabi’s group > Central Bank of India > SBI.
- Challenge? 1-2-3 of above diagram. + loans given to unworthy borrowers with forged
documents, bribes were paid to IL&FS board directors & auditors.
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 175
- Corona= total 20% loss cover guaranteed to PSB. (सावर्ज�नक ब�कों को आं�शक क्रेिडट गारंटी)
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 176
14.31.9 👹👹(🚫🚫🚫🚫) 💊💊📔📔📔📔 Shadow Banking → Remedies suggested by ES20
- CEA Subramanian K. has created a “Health Score for NBFCs” to monitors given NBFC
company’s Asset Liability Management (ALM) problems, balance sheet strength, etc. and gives
them a score between -100 to +100. (�ा� सूचकांक बनाया जाए).
- Higher scores indicating higher financial stability of the firm. This health score can provide early
warning signals to the Financial regulators → they can initiate appropriate measures before it's
too late. (सूचकांक के आंकड़ों म� �गरावट एक प्रकार से पूवर् चेतावनी देगी → उसे देखकर �व�ीय �नयं त्रक तुरंत
आव�क/ज�री/यो� कदम उठा सके )
🔠🔠❓In September 2019, which one of the following travel giants declared itself bankrupt? (CDS-
i-2020) (a) Expedia (b) Cox & Kings (c) SOTC (d) ANS: Thomas Cook
PNB (Mumbai Branch): Give foreign currency loan to our client Nirav Modi for purchase of goods (diamonds,
airplanes, whatever), if he doesn’t pay, we’ll pay.
- If such bank guarantee given to another bank in a foreign country, it’s called Letter of
Undertaking/ Letter of Credit/ Letter of Comfort: internal difference not important.
- Bank earns commission / fees from client for issuing such letters / guarantees.
- The foreign currency thus loaned, goes into PNB’s Nostro (Latin:Ours) account, & Nirav uses
the dollars to buy diamonds in HongKong.
- PNB Scam: PNB-Mumbai’s corrupt manager kept issuing LoUs to diamond merchants Nirav
Modi & Mehul Chowkasi without due-diligence or collaterals for 7 years, worth ~₹12,000 crores.
And 2018-January: Nirav & Mehul left India.
- PNB officials couldn’t detect scam because LoUs were generated through SWIFT platform,
which was not integrated with their Core Banking Solution (CBS) server.
14.32.1 💸💸📞📞Financial Messaging Systems: SWIFT- Russia gets banned
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 177
Globally (वै��क �र पे पैसा भेजना हो) Within India (भारत के भीतर ही पैसा भेजना हो!)
Society for Worldwide Interbank Structured Financial Messaging System (SFMS)
financial telecommunication (SWIFT)
By a Cooperative organization in designed by Tata Consultancy Services (TCS) for
Belgium’s La Hulpe city (1973). IDRBT (=Research arm of RBI)
To serve the messaging function for to serve the messaging function in NEFT, RTGS, and
Banks, NBFCs & brokers who may / may other inter-bank, intra-bank e-transactions
not have direct bank relations / platforms within India.
settlement systems with each other due to
international borders.
😥😥 Nations banned from SWIFT: 1) Iran (Capital Tehran) 2) 2022: Russia got ban, after invading
Ukraine. This will make it very difficult for the Russian banks/ NBFCs /businessmen to send and
receive money internationally (यूक्रेन-आक्रमण के �ख़लाफ़ �स को ��फ़्ट-�व�ीय सं देश प्रणाली से प्र�तबं �धत िकया गया है
�जसके चलते �सी ब�क �व�ीय सं �ान और उद्योगप�तयों को अंतररा��ीय �र पर पैसों के लेन म� िद�त� आएं गी।)
Afterwards, ⚾📻📻⚾🎓🎓✋ball by ball commentary on Nirav Modi case =NOTIMP
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 178
14.33.2 🐯🐯📆📆 RBI’s Financial / Accounting Year (�व�ीय वषर् म� बदलाव)
2019: Bimal Jalan panel recommended �reform → RBI’s central board accepted it
� Before � After
RBI’s financial year - From 1 April, 2021, RBI will switch to
st
Isn’t this topic outdated? Ans. Its points need to be understood for “GSM2-Regulatory Bodies
Problems”. (because earlier UPSC has asked why national commission for woman / Human rights
commission not unable to pay effective role et cetera?)
2018: RBI Governor Urjit Patel was unhappy with Govt interfering / criticizing his work. Such as:
- Higher Dividend: Govt. demanded higher dividend from RBI to finance the recapitalization of
PSBs for BASEL-III, and to finance its own fiscal deficit & populist welfare programs. Urjit Patel
felt RBI’s higher reserves are necessary to check any financial crisis. Excessive dividend could
increase inflation. He did not oblige. (सरकारी योजनाएं चलाने के �लए �ादा िड�वड�ड /लाभांश क� मांग)
- BASEL-III-relaxation: These norms will become fully effective on 31/3/2019 but PSBs don’t
have enough capital to comply so they requested Finance Minister to tell Urjit Patel to extend the
deadline, Urjit Patel did not oblige. (बासेल मानदंडों क� अं�तम �त�थ म� �रयायत क� मांग)
- PCA-relaxation: Urjit Patel vigorously implemented Prompt Corrective Action framework, so
Public Sector Banks’ branch expansion, lending operations were restricted, they came running to
FM. FM asked Urjit to relax PCA. He did not oblige. (पीसीए �नयमों म� �रयायत क� मांग)
- Tight Money Policy: CEA Arvind Subramanian & BJP-Ministers were criticizing RBI’s “Tight”
Monetary Policy depriving MSMEs of cheap loans and thus harming India’s growth rate.
Whereas Urjit Patel deemed tight policy necessary to keep inflation @2-6%CPI (All India) on
durable basis so he did not oblige. (महंगाई से लड़ने के �लए लोन और महंगे क�ए → �ापारी वगर् नाराज)
- PNB Scam: Jaitley expressed displeasure that RBI couldn’t detect PNB-Nirav Modi fraud,
whereas Urjit Patel defended that he lacks effective powers under Banking Regulation Act to take
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 179
punitive actions against Public Sector Banks. (पं जाब नेशनल ब�क - नीरव मोदी कांड को पकड़ने रोकने म� असमथर्
रहे ऊ�जत पटेल)
All these forced Govt. to issue Section -7 Directive to RBI.
14.33.4 🐯🐯�🧔🧔 Section-7 of RBI Act
⇒ Section 7(1) of the RBI Act empowers the Government to consult with RBI Governor in Public
Interest. (जनिहत के �लए, �रजवर् ब�क कानून क� धारा नं बर 7 के अंतगर्त सरकार गवनर्र के साथ �वमशर् कर सकती है)
⇒ In, 2018-October, for the first time in the history of Independent India, Govt began a Section-
7(1) consultation with RBI Governor Urjit Patel, on the issues of PCA norms, BASEL-III
deadline, higher dividend to Govt., Cheap Monetary Policy etc.
⇒ If RBI Governor doesn’t positively respond in such Section-7(1) consultation, then Section 7(2):
Government can issue binding direction / orders to RBI Central Board to implement its wishes.
(यिद गवनर्र, एसे �वमशर् मे, सरकार क� बात नही सुनते तो, क� द्रीय बोडर् द्वारा सरकार अपनी बात को लागू करवा सकती है)
⇒ Although, fearing backlash from media & opposition parties, Govt did not issue any specific
directions to the RBI Board. But, 2018-Dec: Urjit Patel resigned before completing 3-year term.
He is not the first RBI governor to resign & we need not prepare list all the RBI governors who
resigned before their term.
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 180
6. With respect to India’s financial stability, explain significance of (i) PCA framework (ii) BASEL-
III Norms (iii) Public Credit Registry. भारत क� �व�ीय ��रता के सं बंध म� इ�े समझाइए: (i) पीसीए ढांचा (ii)
बेसल-III मानदंड (iii) ऋण क� सावर्ज�नक र�ज��ी
7. Why are shadow banks considered to be a threat to the Indian economy? Discuss the reforms
undertaken by the authorities to address this challenge. प्र�तछाया ब�कों को भारतीय अथर्�व�ा के �लए खतरा
�ों माना जाता है? इस अनुसंधान मे �लए गए सुधारों पर चचार् कर�।
8. Justify the rationale behind Govt’s decision to setup a Bad Bank, despite the existence of IBC
Code and SARFAESI Act. How will this proposed bad bank alleviate the pain of NPA? (आईबीसी
कोड और सरफे सी अ�ध�नयम के अ��� के बावजूद, एक बैड ब�क �ा�पत करने के सरकार के �नणर्य के पीछे के तकर् का औ�च�
सा�बत कर�। यह प्र�ा�वत बैड ब�क कै से एनपीए का ददर् कम करेगा ?)
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 181
Pillar#1C: SEBI-Share Market
Table of Contents
15 🐮🐮🐮🐮🐮🐮Pillar#1C: SEBI-Share Market .......................................................................................185
15.1 🗃🗃Securities (प्र�तभू�त)................................................................................................................185
15.2 🗃🗃 🛒🛒Financial / Securities market: meaning and types ..................................................186
15.3 🔪🔪🔪🔪 Debt Instruments (ऋण उपकरण) ...................................................................................187
15.3.1 🔪🔪🔪🔪⏰Short term debt instruments (लघु अव�ध ऋण उपकरण ) .................................187
15.3.2 🔪🔪🔪🔪⏰:🧔🧔Short term debt instruments → by Government .............................187
15.3.3 🔪🔪🔪🔪⏰: 🐯🐯🐯🐯 🧔🧔🧔 Short term debt instruments → by Govt → WMA ..188
15.3.4 🐯🐯🐯🐯🐯 Consolidated Sinking Fund (CSF) for State Govts’ repayment .............188
15.3.5 🔪🔪🔪🔪⏰Short term debt instruments → by borrowers other than Govt ...........188
15.4 🔪🔪🔪🔪⏰Debt → Short Term → Factoring & TREDS .......................................................189
15.4.1 🔪🔪🔪🔪⏰Factoring Regulation (Amendment) Act, 2021.............................................189
15.4.2 🔪🔪🔪🔪⏰: 📡📡 TReDS platform to connect factoring-players. ....................................190
15.5 🔪🔪🔪🔪⏰Debt → Interest Rate Benchmarks: LIBOR, MIBOR, MIFOR ............................190
15.6 🔪🔪🔪🔪🔪🔪 Long Term Debt Instruments (दीधर्-अव�ध ऋण- उपकरण).......................................191
15.6.1 🕯🕯🕯🕯🕯🕯🕯🕯Colonial era Govt. to borrow money .....................................................191
15.6.2 💡💡💡💡💡💡💡💡Modern day Government to borrow money.........................................192
15.6.3 🥇🥇🥇🥇🥇🥇Bonds by Modern day Govt. to curb Gold Consumption .......................192
15.6.4 🔪🔪🔪🔪🔪🔪🔪 Long term debt instruments by Companies ........................................193
15.6.5 🔪🔪🔪🔪🔪🔪Long Term Debt Instruments: Other issuers .............................................194
15.6.6 🔪🔪🔪🔪🔪🔪Long Term Debt Instruments: Masala, Maharaja, Panda Bond .............194
15.6.7 🔪🔪🔪🔪🔪🔪 Long Term Debt Instruments: Special purpose: 🚦🚦🚦🚦 Surety Bonds ..195
15.6.8 🔪🔪🔪🔪🔪🔪 Long Term Debt Instruments: Special purpose Bonds- Misc. ...............195
15.6.9 🗳🗳(🔪🔪🔪🔪)⏳Electoral bonds (चुनावी बांड, 2017 ) .........................................................197
15.6.10 🔪🔪🔪🔪: 🤑🤑 Bond Yield, Yield Inversion, Negative Yield ..........................................198
15.7 ⚖🗃🗃 Equity Instruments (इ��टी) .........................................................................................198
15.8 ⚖🗃🗃 Methods of Issuing Shares .........................................................................................200
15.8.1 ⚖🗃🗃 IPOs- Big sized IPOs in recent years................................................................201
15.8.2 ⚖🗃🗃 IPOs → LIC & FDI in LIC?.....................................................................................201
15.8.3 ⚖🗃🗃 🤵🤵 IPO → Special Purpose Acquisition Company (SPAC) ..........................201
15.8.4 ⚖🗃🗃 🌐🌐 ADR/GDR: Shares in Videshi locker ........................................................202
15.8.5 👻👻⚖🗃🗃 🌐🌐 ATMANIRBHAR reforms in ADR/GDR/BharatDR ......................202
15.8.6 🔗🔗🔗🔗 Initial Coin Offering (ICO) ...................................................................................202
15.9 📈📈 Stock Exchanges / Secondary Market: meaning & examples ......................................203
Financial Market is the place where buying and selling of securities takes place. Doesn’t require
physical location. Can be done online / telephone as well.
Classifi. Market Subtypes
Tenure: 1. ⏰Money Market (<1 year maturity) मुद्रा बाजार
(अव�ध) 2. 🗓🗓Capital Market (1 year/> maturity) पूंजी बाजार
Freshness 1. Primary Market (where new securities are issued for the first time). Helps a
प्राथ�मक company /govt to connect with the investor. It has no separate physical existence
एवं but classified like this, for economic analysis. (इस बाजार का अलग से भौ�तक �ान नहीं होता
िद्वतीयक िकंतु आ�थक आकलन के �लए आंकड़ों म� अलग से िदखाया जाता है)
बाजार 2. Secondary Market (where the old securities are resold). It has physical existence
such as Bombay Stock Exchange (BSE) at Dalal Street, Mumbai.
3. It provides liquidity & confidence to investors to buy new securities in Primary
Market. (compared to a scenario if there was no market to resale used cars- तो कम
लोग नई कार खरीदने जाएं गे.)
Settlement 1. Future Market: Where parties write contract today to buy/sell something at
(�नपटान) specific price on a future date. भ�व� क� िकसी तारीख को खरीद/�बक्र� के �लए वतर्मान म�
सौदा/समझौता िकया जाए
2. Spot Market: if bought & sold for immediate delivery.
Asset - Depending on what asset is traded, market can be divided into Bond (Debt)
(प�रसं प��) market, Share (Equity) market, Gilt-Edged Securities Market, Foreign Currency
Market, Commodity Market etc.
- Tenure = less than 1 year. Usually ‘unsecured’ because not backed by any asset.
- Usually sold at discount and re-purchased at Face Value or Par Value. The difference between
these two prices is the interest earned by investor. स�े म� बेचकर मूल भाव पर खरीदा जाता है
- Another synonym for this process: “rediscount the bills.”
- They’re traded at Money Market and are (usually) ‘negotiable & transferable’ in nature i.e.
lender can sell to 3rd party → 3rd party can demand money from borrower. (परक्रा� और ह�ांतरणीय)
- They’re also called Near Money = Asset that is highly liquid = can be readily converted into cash.
15.3.4 🐯🐯🐯🐯🐯 Consolidated Sinking Fund (CSF) for State Govts’ repayment
⇒ Started in 1999. It has >₹1.25 lakh crore by 2019. (समेिकत घाटा �नपटान �न�ध)
⇒ Annually, State Govt has to contribute money equal to 1-3% of its outstanding market loans to
this fund kept with RBI. (रा� ने �जतना कजार् उठाया है उसके सामने इस �न�ध म� थोड़ा पैसा जमा करना है)
⇒ CSF is a fund outside consolidated fund of the State and public account of the State. (Ref
📑📑Pillar2)
⇒ CSF meant to be used for only 1 purpose= repayment/redemption of loans taken by the State
Government. (बकाया ऋण चुकाने के �लए ही इस �न�ध का उपयोग होगा)
⇒ 2020-May: RBI relaxed technical norms related CSF till to help the State Govts. (तकनीक� �नयमो मे
कु छ छू ट दी)
What about GST cess release and end-to-end market borrowing by Union/State?
(Ans 📑📑Pillar#2: Taxation:GST. )
⇒ Suppose an MSME seller has sold cardboard boxes for jiophones to Mukesh Ambani but Mukesh
Ambani says he will pay the bill next month. Presently this is an unpaid invoices.
⇒ MSME seller can pledge this invoice to a factor (bank/NBFC) to avail loans. (छोटी कं प�नयां बड़ी
कं प�नयों को सामान और सेवा बेचती है उसका जो बकाया पैसा है उसके �बल को �गरवी रख के लघु अव�ध का कजर् ले आये)
Bill Discounting Factoring
MSME seller collects the money from Buyer Factor (lender: bank/NBFC) directly collects
(Ambani) & delivers ₹ ₹ to the Factor the ₹₹ from unpaid invoices from Buyer
(bank/NBFC). (Ambani).
Before After
Banks and only “Factoring Companies Banks and all types of NBFCs allowed (After
(NBFC)” allowed to give loans under this registering with RBI). → So now more than
⇒ Real Interest Rate (वा��वक �ाज दर) = Nominal (ना�मत) Interest minus Inflation.
⇒ When Real Interest is negative, purchasing power ⏬ despite ⏫ in money quantity in bank
account. Then people prefer to park money in gold/real estate- which is not very beneficial to
economy. So..
⇒ Party#1 Road contractor pays fees/premium to party#2 insurance company. Insurance company
gives him a surety bond.
⇒ Road contractor gives this surety bond to party#3 Highway Ministry.
⇒ if the road contractor is not finishing project within prescribed time-limit/quality-limit →
Insurance company will pay ₹₹ to Highway Ministry.
⇒ Earlier, Insurance companies were not allowed to issue surety bonds in India. So contractors had
to submit ‘Bank Guarantees’ to Govt. But then 👜👜👜👜Budget-2022 said we’ll allow Surety Bonds.
IRDAI will regulate this.
�Sub-types of Surety Bonds: Bid Bonds, Performance Bonds, Advance Payment Bonds and
Retention Money Bonds. But we will not study them OR their internal difference.�����
15.6.8 🔪🔪🔪🔪🔪🔪 Long Term Debt Instruments: Special purpose Bonds- Misc.
Oil Bonds Explained in �Pillar#2- along with taxes on petrol and diesel.
Penny stocks 🚩🚩🚩FAQ: I’m a commerce graduate / sharemarket ka hot-shot trader and
फालतू कं पनी का I’ve 500 jaat ke Counter arguments. Ans. Good. Plz Keep it with yourself.
This course for teaching some basic one liners for seeking MCQ. बाक़� आप अपना
देख लो। UPSC not asking b.Com/M.Com PHD stuff from here. Then why
burden brain’s memory card with extra info?
Blue Chip stocks Shares of a nationally recognized, well-established and financially sound
दमदार कं पनी का company with a history of generating good dividend.
Venture Capital VCF are professional firms helping startup companies with seed capital.
Funds (could be debt / equity / hybrid) (�ाटर्अप कं प�नयों को शु�आती पूंजी िदलवाते ह�)
Rich person helping startup companies out of his hobby, passion, profit
Angel Investors motive or time pass. e.g Ratan Tata in Urban Ladder app. (could be debt /
ऐंजल �नवेशक equity / hybrid).
Related topic: 📑📑Pillar#2: Angel Tax in Budget/blackmoney
Invests in startup company with goal of acquiring the company or its
Corporate
technology at later date. �ाटर्अप कं पनी म� �नवेश करता है तािक भ�व� म� उसक� टे�ोलॉजी पर
Strategic Investor
क�ा कर सके
RGESS Rajiv Gandhi Equity Savings Scheme= Govt gives income tax benefit to
Figure 1: �बना अमरीक� SEBI मे पं जीकरण िकए, उनके शेयरबाजार से पैसा उठाऊँ , तो कै से?
- A non-American company wants to mobilize money from American share market but does not
want to go through the lengthy & complex process of registration with the American
sharemarket regulator.
- Then such non-American company gives its shares to an American bank.
- Based on those (non-American) shares, the American bank will issue American Depositary
Receipts (ADR: अमरीक� �नपे�ागार रसीद) & sell them to American investors. Denomination: USD.
- Global Depositary Receipt (GDR): Same as above, but when single bank issues receipts for
investors in multiple countries. Denomination: usually USD or Euro.
Share issuing company → Deposits his company’s shares That bank issues -- in local
in a bank of → market in – currency
Non-American company American Bank → Issues ADR (in $) in American
→ Sharemarket
Non-Indian company → Indian Bank → Issues Bharat / Indian depositary
receipt (IDR) (in ₹) in Indian
Sharemarket
15.8.5 👻👻⚖🗃🗃 🌐🌐 ATMANIRBHAR reforms in ADR/GDR/BharatDR
Too technical / getting outdated so DELETED from latest Handout.
Shares are issued through IPO @Primary market. Then, they can be resold at secondary market,
commonly known as Share market or Stock Exchange or Bourses.
⇒ World’s Oldest: Amsterdam Stock exchange, Netherlands (1602)
⇒ Asia’s Oldest: Bombay Stock Exchange (BSE: 1875)
⇒ India’s stock exchanges chronology: BSE → A’bad → Kolkata → NSE (early 90s)
⇒ Just like Banks have Core Banking Solutions for e-banking, Stock exchanges have their electronic
platforms for trading. E.g. BOLT (BSE's On-line Trading System), NEAT (National Exchange for
Automated Trading). They communicate using VSAT (Very Small Aperture Terminal) Satellite.
1. � Qualified Institutional Buyers (QIB अहर्ता प्रा� सं �ागत �नवेशक): Investors with expertise and
financial muscle to make large investments in capital markets. E.g. Mutual Funds, Insurance
Company, Foreign Venture Capital Funds etc. SEBI has separate registration norms for them.
a. Anchor investors: They’re sub-type of QIBs who are offered shares before IPO-launch.
This gives confidence to other investors to subscribe the given IPO.
2. �Retail investor: An individual investor who is not a QIB. (आम/खुदरा �नवेशक)
Underwriter will keep quota for each category of investors, as per SEBI norms.
1. Jobbers (आढ़ती): Full time engaged in buying / selling securities using money from their own
pockets. (Whereas brokers / commission agents buy/sell using money/shares of their clients).
2. STAG (Male Deer): He buys newly issued securities from primary market & sells them in
secondary market for quick profit. प्राथ�मक बाजार से खरीद के िद्वतीयक बाजार म� मोटे मुनाफे पर बेचने क� इ�ा रखता
3. 🐮🐮Bull (तेज�ड़या ): Optimistic speculator who hopes share prices will rise⏫, so purchases (to sell
them later at much higher price). Just like a bull tends to throw his victim up in the air, the bull
speculator stimulates the price to rise.
4. 🐻🐻Bear (मं द�ड़या ) – A pessimistic speculator who fears prices will fall ⏬ so, he sells. A bear
usually presses its victim down to ground. Similarly, bear speculator tends to force down the
prices of securities.
5. ⏲Day trading / Intra-day trading: Individuals buy and sell shares over the Internet over a
period of a single day's trading, with the speculative intention of profiting from small price
fluctuations.
Figure 4: Corona के चलते �बजनेस प्रोजे� पूरा नही िकया, तो �ा जेल मे भेज दोगे, या फांसी पे लटका दोगे? कु छ नहीं उखाड़ सकते मेरा!
⇒ French word for ‘superior force’. It refers to unexpected external circumstances (अप्र�ा�शत बाहरी
प�र���तयाँ) that prevent a party to a contract from meeting their obligations. e.g. Acts of God
(natural disasters, epidemics), war, terror attacks.
⇒ In such cases, courts may not punish party for dishonoring contract. (करारनामे के दाय�� को न �नभाना)
⇒ E.g. Corona (COVID-19) Virus → Singapore Govt put restrictions on entry of Chinese →
Singapore construction firms facing labour crunch (श्र�मकों क� कमी) → invoked ‘Force Majeure’ to
clients, “we can’t finish building your homes/offices in time.” Coronavirus: >55million people
infected across the world (as of 2020-Oct).
⇒ Restriction on global travel and trade. Investors fear that companies will not generate much
profit. Many contracts/ payments will be stuck by Force Majeure. So, large scale withdrawal / exit
of share investors from stock exchanges across the world. Even the BSE SENSEX fell by 1400+
points in a single day in 2020-June Month. However in later months, share market has ⏫⏫
significantly.
2020- Initial months of lockdown, ⏬⏬ due panic among investors, Force Majure but then
⏫⏫ because (शु�-शु� के महीनों म� �गरावट िकंतु बाद म� ब�त तेजी आई �ोंिक…)
1. Cheap Loans / Expansionary Monetary Policy → Some of that money may have entered the
share market through to large investors. (�व�ार वादी मौिद्रक नी�त)
2. 'work from home' + RBI loan Moratorium- may have encouraged many service sector employees
to invest ₹ in the sharemarket. (तालाबं दी के दौरान लोन क� िक� नहीं चुकानी थी तो कु छ ने वह रकम शेयर बाजार म�
�नवेश क� होगी)
3. Unprecedented demand and profit for IT and Pharma sector- Encouraged the investors to park
their money in such shares at very high price. (तालाबं दी के दौरान सूचना प्रौद्यो�गक� और औषधीय कं प�नयों म�
अप्र�ा�शत तेजी)
15.11.1 🐮🐮📈📈🐻🐻Sharemarket- 2022: IPO Bubble Burst: Case of Paytm (फू ट गया ग़ु�ारा)
⇒ 📙📙📙📙ES22- 2021: more than 70 IPOs issued worth nearly ₹90,000 crores - this is higher than in
any year in last decade. More than 2 crore retail investors have open demat account in 2021.
⇒ 2021-Oct: Sensex and Nifty crossed 61,000 and 18,400 respectively on October 18, 2021.
⇒ However by 2022-March these stock indices have started to fall because of FPI-pullout-by-Fed
Tapering & Russia war.
⇒ 2021-Nov: Paytm collected ₹18,300 crore from IPO. (Company’s name is One 97
Communications, CEO Vijay Shekhar Sharma. Other partners-China’s Alibaba-Ant group (6%),
Japan's SoftBank and Warren Buffett's Berkshire Hathaway).
⇒ Stag (Male Deer) Investor - buys shares in IPO (initial public offering in the primary market)
with hopes of selling it at a very high price on LISTING in Secondary market. Often they get
lucky with almost 80-100% profit but their gameplan failed in Paytm. (नर-िहरन �नवेशक जो प्राथ�मक
बाज़ार म� IPO ख़रीदते और तुरंत उसे िद्वतीयक बाज़ार म� मुनाफ़े म� बेचने क� िफ़राक़ म� होते ह�)
⇒ 2021-Nov: Paytm Primary market Price Rs.2150 but but on day1 of listing (in the secondary
market), Paytm fell by almost 25%. → by 2022-March fallen to ₹750 (that is >60% loss to
investor!). CarTrade, Zomato etc also trading @loss. Reason?
⇒ 😥😥 General slowdown in the share market by fed tapering / FPI pullout (Ref:1a2), Russia-
Ukraine War.
⇒ 😥😥 high valuation of Paytm IPO (₹2150 per share) but institutional investors (Mutual Fund,
Pension Fund etc) not very confident of the growth prospects of Paytm. Once upon a time,
Paytm had superiority but faces stiff competition from NPCi’s UPI-Bhim, Mobikwick, PayU,
PhonePe etc. (ऑनलाइन भुगतान म� ब�त सारी कं प�नयों के साथ �धार्. पेटीएम का एका�धकार नहीं है.)
⇒ 😥😥startup bubble, no free lunches in economy- said Raghuram Rajan. Cashback discount is
given to build subscriber base to create hype- ultimately startup founders recovered all the
cashback money from Paytm retail investors (who lost 25% on listing day). → this could also
negatively affect the future IPOs of Startup Companies (अथर्तंत्र म� कोई मु� म� भोजन नहीं देता इन सब
Ease of doing business & Ease of doing investment (�ापार और �नवेश म� सुगमता होगी)
More clarity over rights and responsibilities financial market participants [Individual Investor,
Share Broker, Stock Exchange, Depository, Underwriter, Companies etc] अ�धकार और �ज�ेदा�रयों म�
��ता होगी
Deepening of the financial market, Mobilisation of savings to the productive channels of
economy. पूंजी बाज़ार क� जड़ों को गहरा करने म� मदद �मलेगी.
Figure 5: पूंजी बाजार क� जड़ो को गहरा करना है तो �सफर् अमीरों का नही, गरीबो क� बचत का पैसा भी जाना चािहए!
⇒ Share market scams erode publics’ hard-earned savings → alcoholism, depression, suicide and
other social ills. (जनता क� बचत का पैसा घपले म� बबार्द तो जनता म� शराब, अवसाद, आ�ह�ा और अ� सामा�जक बुराई)
⇒ Duped investors will shy away from share market & they may invest in gold / real estate = not
very beneficial to economy as it our import-bill, creates black money opportunities.
⇒ If households don’t participate in capital market → companies will have to approach the banks
to get more loans. But banks’ lending capacity is limited by CRR, SLR, PSL, NPA, PCA.(REF in
📑📑Pillar#1B2)
⇒ If more retail investors participate in capital market = “Deepening of the capital market” →
factory expansion, job creation, and economic growth. (खुदरा �नवेशक क� मदद से पूंजी बाजार क� जड़ों क� ओर
गहरा करना- तािक रोजगार सृजन और आ�थक वृ�द्ध म� मदद �मले)
15.13.6 💼💼💼💼: measures to ⏫ retail investors participation- 25% public holding in Govt
Companies
⇒ Budget 2019: For all the listed government companies, we will strive for minimum 25% public
shareholding. (आम जनता को भी सरकारी कं प�नयों के शेयर खरीदने का मौका �मले)
⇒ SEBI to raise minimum public shareholding in listed private sector companies to 35%.
⇒ 👻👻ATMANIRBHAR: minimum shareholding related norms deferred under Corona crisis.
⇒ Harshad Mehta (1992), Ketan Parekh (2001) arranged money from banks, used it for rigging the
share prices to make windfall gains during Bull-runs by other investors. Once the prices crashed,
small investors suffered. ब�कों से गबन बं द करके पैसा लाए �जससे कं प�नयों के शेयर जमकर खरीद के उसक� मांग और दामों
को बढ़ाया तािक लालच म� अ� �नवेशक भी उन कं प�नयों के शेयर ऊँ ची क�मतों म� खरीदने लगे अंत म� यह लोग अपने शेयर बेच कर
भाग गए
⇒ To prevent such scams, SEBI introduced Circuit Breaker System, wherein if fluctuation in the
share prices is more than “x%” than previous day, then stock exchange must stop trading for “y”
minutes.
⇒ Badla System/Carry forward system: Buying of shares using borrowed money & making
promises to carry forward the settlement for upto 72 days. scamsters misused (इसक� टोपी उसके सर पे:
सौदा आज करते लेिकन पैसों का भुगतान/शेयर क� िडलीवरी ७२ िदनो बाद होती- और इस समय के दौरान वही घपलेबाज उ�ी शेयर
बेचने क� टोपी दू सरों को पहेनाते रहेता)
⇒ so SEBI discontinued Badla System (in 2001) & introduced (T+2) rolling settlement system i.e.
after trade is conducted, the parties must settle it within two working days (= buyer pays money,
seller deliver shares/bonds/securities).
⇒ Settlement cycle represents the time period within which the stock exchanges have to settle
security transactions. Until now we had T+2 days but from 2022: T+1 started.
⇒ T+1 means settlements will have to be cleared within one day of the actual transactions taking
place. (सौदा होने के एक िदन के भीतर ही पाट�ने पैसा चुकाना है और सामने वाली पाट� ने उसको शेयर क� िडलीवरी देनी है)
⇒ 🤩🤩Benefits? ⏬ Volatility, Speculation, Faster Release of shares/funds. HOW?NOTIMP.
(अ��रता,सट्टेबाज़ी)
⇒ 😰😰Foreign investors unhappy due to Time zone difference creating operational challenges for
them. (�वदेशी �नवेशक नाराज़ �ोंिक भारत म� जब सुबह होती है तो अमे�रका म� रात इस�लए एक िदन के भीतर सौदा समेटना उनके
�लए मु��ल!)
15.14.2 🐯🐯🛒🛒 (🔪🔪🔪🔪: 🧔🧔🧔) G-Sec Trading- Retail investors’ RDG @RBI
- RBI launched “Retail Direct Scheme” in 2021.
- Under this scheme, RBI permits “Retail Direct Gilt (RDG) account” for retail investors on its E-
Kuber online platform. (आम �नवेशक �रज़वर् ब�क म� आरडीजी नामक खाता खोल पाएं गे)
- Both Resident Indians & non-resident Indians (NRIs) can open this account. (गैर �नवासी भारतीय भी)
- Then Retail investors can directly buy Treasury Bills (T-Bill), G-Secs (of Union Government),
State Development Loans (SDL are ‘G-secs’ of State Govts) and Sovereign Gold Bonds, from RBI
directly. (आम �नवेशक सीधा �रज़वर् ब�क से इन प्र�तभू�तयों को खरीद सकता है.)
- Application fees to open the account = ₹ ZERO
− 🤩🤩Benefit? 1) Earlier retail investors bought G-sec “indirectly” through mutual funds wherein
mutual fund manager (MF) charged commission/fees. Now retail investor can buy directly so
does not have to pay such commission/fees to MF managers. (�बचौ�लयों को दलाली/कमीशन नहीं देना होगा)
− 🤩🤩2) Deepening of G-Sec market through ⏫retail participation (बाजार क� जड़ों को गहरा करेगा)
⇒ Ans. E-Kuber is the core banking solution (CBS: REF Pillar1A1) platform of RBI to digitally
handle all operations of RBI e.g. NEFT-RTGS, Repo, MSF, CRR, PSLC certificate trading, G-Sec,
Sovereign Gold Bond, Retail Direct Scheme (RDG) etc.
⇒ You may think of E-kuber as a Windows Operating system, & NDS as a sub-component/excel-
software inside of it that handles G-Sec buying-selling database management/account keeping.
- Stage1: Gold companies deposit their gold in the warehouses authorized by Warehousing
Development and Regulatory Authority (WDRA, it is a statutory body under Ministry of
Consumer Affairs, Food & Public Distribution.)
- Stage2: Warehouse manager generates Electronic Gold Receipts (EGRs).
- Stage3: EGR are listed on the SEBI regulated electronic gold exchanges. → Buyer can buy the
gold electronically and be assured of the quality. Later he may even sell this EGR to another
Figure 6: अभी भी इतने सारे "कांड" �ो हो रहे है, गवनर्र साहब?- �व�मं त्री @FSDC meeting.
- Financial Stability & Development Council: Chairman – Finance Minister. Other
FSDC members – 1. RBI Governor 2. SEBI chief 3. IRDAI chief 4. PFRDA chief 5. IBBI
(2010) chief & govt officials
�व�ीय - Functions? Supervision of the economy & large financial conglomerates,
��रता coordination among the financial regulators, financial literacy and financial
और �वकास inclusion.
प�रषद - Secretariat assistance by: FinMin → Dept. of Economic Affairs (आ�थक मामलों का
�वभाग)
FSB - Financial Stability Board is a brainchild of G20. (�व�ीय ��रता बोडर्)
(2009) - Functions? Financial monitoring at global level, Coordination between national
HQ: financial regulators bodies. (अलग-अलग देशों के �व�ीय �नयं त्रक के बीच तालमेल)
BASEL - India has 3 seats in FSB: 1) Secretary of Department of Economic Affairs (IAS) 2)
Dy. Governor of RBI 3) SEBI chairman
FATF - Financial Action Task Force (�व�ीय कारर्वाई कायर्दल) is a brainchild of G7.
(1989) - India member in 2010. Function? Combating Money laundering and terror
HQ: Paris finance. (More 📑📑Pill#2) (धन शोधन और आतं क� �व�पोषण से लड़ना)
- International Organization of Securities Commissions (IOSCO) is the
IOSCO international body of world's securities regulators. SEBI is a member.
- Famous for its IOSCO Guidelines for Investors Protection & risk prevention
🔠🔠❓ 'Financial Stability and Development Council': find correct statement(s): (Pre-2016)
1. It is an organ of NITI Aayog.
2. It is headed by the Union Finance Minister
3. It monitors macro-prudential supervision of the economy.
Answer Codes: (a) 1 and 2 only (b) 3 only (c) 2 and 3 only (d) 1, 2 and 3
Figure 7: swag से कर�गे 'middle-class' का '�ागत'। Observe colors in logo, meant for attracting ordinary crowd
Figure 8: Swag से नही कर�गे 'middle-class' का '�ागत'। Observe ‘premium’ logo-designs to attract rich people
⇒ Special type of Mutual Fund meant for HNI (High Net Worth Individual) who wants high risk
high return. SEBI norms: Minimum investment per person is ₹1 crore. (�सफर् अमीरों के �लए है)
⇒ Hedge Fund manager will invest their money in Junk Bonds, Risky assets; he’ll do risky trading
activities such as Arbitrage, Leverage, Short Selling, Future&Options(F&O) trading, Derivatives
Trading etc. to generate maximum return. (how is that done in real life, what do these words
mean? = UPSC-CSE not for recruitment of HF managers.)
Figure 10: भ�व� मे खरीदने का सोदा तो िकया, लेिकन दाम �गर जाए, तो खुद को बचाऊँ तो कै से?
- A Forward / Future contract is a customized contract between two parties where settlement takes
on a future date at a price/quantity agreed upon today. E.g. on 1/5/2021 I shall sell you 100 nos. of
Infosys shares at ₹1000 each.
- In such contracts, there is a risk of other party not honoring commitment if he’s getting better
deal elsewhere in the future. So, for protecting (=hedging) themselves, they (=buyer or seller)
may buy “Option” from a third party by paying fees. नुकसानी से बचने के �लए बीमा �लया जाए
- Option is a type of insurance for executing the forward/future contract in a manner beneficial to
them e.g. I’ll sell you for ₹1000 on X date, & you must buy, but if I’m getting another buyer who
is willing to pay ₹1500 then I may not sell you & you can’t compel me. Such ‘insurance options’
are further subdivided into Call Option and Put Option, their internal difference & real-life
mechanism not imp. for UPSC.
🔠🔠❓Which one of the following terms is used in Economics to denote a technique for avoiding a
risk by making a counteracting transaction? [UPSC-CDS-2016-I]
(a) Dumping (b) Hedging (c) Discounting (d) Deflating
⇒
⇒ Figure 11: �बना SEBI पं जीकरण के भारतीय पूंजी बाजार मे �नवेश क�, तो कै से?
😱😱P-Notes are harmful for Indian economy because:
⇒ P-note investors are not directly registered with SEBI. Identity of the actual investor, source of
funds remain disguised= chances of Tax evasion, money laundering, terror finance (इसके �नवेशक ने
�यं सेबी म� पं जीकरण नहीं करवाया वह पैसा िकधर से लेकर आया यह सब जानकारी नहीं �मल पाती, कर चोरी, काले धन को वैध
बनाना,आतं क� �व�पोषण)
⇒ If P-Note owner sells his P-Notes to another foreign investor, Government of India may be
deprived of taxes. (Compared to a scenario where Indian share owner is selling his shares to
another Indian investor at profit, then government gets securities transaction tax and capital
Table 4: Sad that even for such simple things I’ve to create such spoonfeeding-tables just to prevent FAQs from weak students
P-Notes Foreign investor wants to invest in Indian share/bond market without
registering with SEBI. He wants to buy Indian companies’ shares/bonds in
India. �फरंगी आदमी भारत क� कं पनी म� �नवेश करना चाहता है लेिकन सेबी से पं जीकरण नहीं
करवाना चाहता
Bharat-DR Foreign Company wants to Indian to invest in its foreign/firangi-shares,
without registering with SEBI. �फरंगी कं पनी अपनी कं पनी के शेयसर् भारतीयों को बेचना
चाहती है लेिकन सेबी से पं जीकरण नहीं करवाना चाहती
ADR/GDR Non-American Company wants to American people to invest in its shares
without registering with American SEBI. गैर-अमे�रक� कं पनी अपनी कं पनी के शेयर
अमरीक� जनता को बेचना चाहती है लेिकन अमे�रका के शेयरबाजार �नयं त्रक से पं जीकरण नहीं
करवाना चाहती.
GDR- similar concept, refer to respective segment.
Masala/Panda/ Foreign company/org wants to borrow money, in a particular currency from
Kangaroo Bonds a particular country. Refer to respective segment
etc
🔠🔠❓Which of the following is issued by registered foreign portfolio investors to overseas
investors who want to be part of the Indian stock market without registering themselves directly?
(Pre19-SetA Q67) (a) Certificate of Deposit (b) Commercial Paper
(c) Promissory Note (d) Participatory Note
रा�ी� य क�नी �व�ध रा�ी� य �व�ीय प्र�तवेदन �नवेशक एवं �श�ा र�ण गं भीर धोखाधडी अ�ेषण
अ�धकरण प्रा�धकरण कोष कायार्लय
Members Judicial + technical. Chairman + Boss: Corp. Affairs Civil servants &
They’ve benches members Secretary (IAS). financial experts
@Delhi, Kolkata, Plus, members
Jaipur etc. from RBI, SEBI,
financial experts
Appeal NCLAT (Appellate NFRAA (Appellate Regular Courts Regular Courts
tribunal) Authority)
Cases Hear the cases Sets standards for They use Investigate white-
related to Companies Auditors & (CA), in unclaimed money collar (financial)
Act, Board room listed companies from shares/bonds frauds. Powers to
battles, Merger- and large unlisted for financial search, seize,
Acquisition, companies. If literacy and arrest.
Corporate malpractices-> awareness Once SFIO gets
investigate and case, other
16.11.1 Insurance Principles (�सद्धा�: hindi not required but understand gist for case studies)
⇒ Uberrima fides- Good faith, hide nothing. (HIV+ve in Health Insurance)
⇒ Indemnity- Only “REAL” loss, not imaginary. (couldn’t give CAT exam due to fire)
⇒ Subrogation- Insurer can recover from negligent 3rd party.
⇒ Causa Proxima - Direct loss link. Bollywood fan can’t buy policy for Bachchan.
⇒ Insurable interest- If “risk-x” not happen, client remains in same position, “risk-x” happens
client in bad position. (I didn’t win lottery, I lost in horse race betting)
- Initially started as postal life insurance for postal employees (1884), later extended to rural
people as well.
- Presently, 6 schemes for govt employees and 6 schemes for rural areas (usually with prefix of
“GRAM” e.g. gram Suvidha / Suraksha / Santosh….)
- They’ve developed “DARPAN” PLI (Postal Life Insurance) App for this.
16.13.2 ⚰💀💀💀💀 🦁🦁 Life Insurance Corporation of India (1956)
⇒ To take over/nationalize the private life insurance companies → LIC Act, 1956. So, LIC is a
statutory corporation/statutory company. (वैधा�नक �नगम)
⇒ Rigveda: “योग�ेम” (Yogakshema: well being) = name of LIC HQ@Mumbai & its corporate
magazine.
⇒ Gita: “योग�ेमं वहा�हम्” (Yogakshemam Vahamyaham:- I ensure safety and well being (of my
devotees) = LIC motto.
⇒ 2018: LIC became majority shareholder in IDBI bank. (More in 📑📑Pillar#1B1- Classification)
⇒ 2021: 1) Govt ⏫retirement age of LIC chairman from 60 to 62 years. 2) LIC launched ‘Ananda’
App for insurance agents.
16.13.5 ⚰💀💀💀💀💀 LIC- Aam Admi Bima Yojana (AABY), Janshree Bima Yojana:
✋OLD SCHEMEs of Congress Raj. Discontinued / phased-out in Modi Raj. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
16.14.1 ⚰🚕🚕🚕🚕 🦁🦁 Public Sector General Insurance Entities: Timeline (समय रेखा)
⇒ 1948: Employees' State Insurance Corporation (ESIC) under Labour Ministry – through an act of
Parliament to protect selected category of workers. मजदू रों का �ा� बीमा
⇒ 1957: Export Credit Guarantee Corporation of India (ECGC: �नयार्त ऋण गारंटी �नगम) under
Commerce Ministry. Gives insurance cover to exporters, and credit guarantee to Bank/NBFC
who loan to exporters.
16.14.2 ⚰🚕🚕🚕🚕 🦁🦁: (🤵🤵) General Insurance Business (Nationalisation) Amendment Bill, 2021
General Insurance Nationalisation Act 1972 General Insurance Business (Nationalisation)
(सामा� बीमा रा��ीयकरण कानून) Amendment Bill, 2021
Five General Insurance (GI) Companies To facilitate privatization of these public
brought under Govt control sector/Government owned GIs. सामा� बीमा �ेत्र क�
1) General Insurance Corp of India (GIC) सरकारी कं प�नयों के �नजीकरण का रा�ा आसान बनाने के �लए
2) National Insurance, �वधेयक
3) New India Assurance,
4) Oriental Insurance
5) United India Insurance.
Majority shareholding (minimum 51%) must Removed this rule. So, in future, govt may sell
remain under Government control (ब�मत its majority shareholding to private party (e.g.
शेयरहो��ंग सरकार के हाथ म� अ�नवायर् �प से होनी चािहए) Adani/Ambani etc) [इन पांच कं प�नयों म� ब�मत
शेयरहो��ंग सरकार के पास होना अ�नवायर् नहीं यानी िक �नजी
�ेत्र का आदमी भी मा�लक बन सकता है]
These companies’ employees’ service by the board of directors (and not by
conditions (salary, tenure, promotion, transfer, Government)- so in future if a particular
discipline rules etc) will be decided Govt. [इन government insurance company is privatised
सरकारी बीमा कं प�नयों के कमर्चारीओ क� then the private companies new bosses (e.g.
- 1948: Employees' State Insurance Act → 1952: ESIC corporation (ESIC) setup under Labour
Ministry. (कमर्चारी रा� बीमा �नगम, श्रम मं त्रालय)
ESIC applicability? BEFORE 👻👻ATMA-NIRBHAR (2020)
any establishment with 10/> Compulsory Compulsory (अ�नवायर्)
employees
If establishment less than 10 workers Voluntary Compulsory (खतरनाक उधोगों के मजदू रो
→ but it’s a hazardous industry e.g. (�ै��क/वैक��क) का क-रा-बी-�न मे पं जीकरण अ�नवायर्)
(firecrackers, toxic chemicals, acid)
If establishment less than 10 workers Voluntary Voluntary
→ Non-hazardous industries (�ै��क/वैक��क) (�ै��क/वैक��क)
- 👷👷 Who are ESIC subscribers? Employee in above establishment, with monthly salary less than
₹21,000/-
- 👷👷 � Who pays ESIC premium? “x%” of employee’s wages+ “y%” from employer’s side.
- What is X and Y? notimp unless preparing for ESIC/Insurance Exams. Furthermore, Factoids
like ESIC vision-2022 to enrol 100 million workers. notIMP4UPSC
- ESIC covers both permanent employees & casual/temporary employees (= employed only for a
few days/weeks/months.) �ायी-कम� और अ�ायी/अयाथव�ध-कम� दोनो को लाभ �मलता है।
Figure 2: पोलीसी खरीदु तो कौन सी, Features क� तुलना करना है ब�त मु��ल! िदमाग चक्रम हो गया मेरा 😵😵
😰😰Too many types of health insurance policies with various features and premiums = a common
man gets confused which health policy is best for him. (आम आदमी भ्र�मत हो जाता है िक कौन सी �ा� �बमा
पॉ�लसी उसके �लए सव��म)
So, IRDAI ordered health insurance companies to launch a Standard Health Insurance Product
(SHIP: आदशर् �ा� बीमा उ�ाद) to cover the basic health insurance requirements of every person. With
following Features:
Table 2: you don't have to remember all features.✋✋
Name must be “Arogya Sanjeevani Policy -<name of the company>”. Any other name
NOT allowed.
Type Indemnity based Health insurance policy. (��तपू�त आधा�रत �ा� बीमा)
Premium Decided by individual insurance company. (बीमा िक�)
Benefit? Minimum ₹50k to maximum any amount in multiple of 50k e.g. e.g.1l,1.5l…
However higher cover = higher premium/subscription fees
What costs will be covered? hospitalization cost, pre and post hospitalization cost, Ayush
treatment (=Ayurveda, homeopathy etc).
Figure 3: है कोई �ा� बीमा पॉ�लसी जो कोरोना के भारी हॉ��टल �बल से 'र�ा' करवा दे मेरी?!
2020: IRDAI issued guidelines for the general insurance & health insurance companies to launch
standard health policies against Covid-19, with following standard names:
🤧🤧🛡🛡😵😵Corona Kavach 🤧🤧�🤑🤑 Corona Rakshak
Compulsion Gen. insurance & health insurance optional for company to launch this
companies have to compulsorily launch policy (अ�नवायर् नहीं है वैक��क)
this
Type "Indemnity" = upto actual cost in ⇒ Fixed Benefit Plan
treatment, subject to max limit. so, if ₹5 ⇒ Fixed amount of money if
lakh ki policy= subscribers gets Corona.
⇒ Actual treatment cost 2 lakh → Irrespective of actual treatment
company pays only 2 lakh cost.
⇒ Actual treatment cost 7 lakh→
company pays max 5 lakh
Coverage ₹50,000 to ₹5 lakh ₹50k to 2.5 lakh
Premium Decided by an individual company. same as left column
🎓🎓✋further the technical details / differences = poor cost:benefit for UPSC.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
16.15.4 💊💊♿ Niramya Health Insurance for PH. ✋OLD SCHEME DONOT-LOOSE-SLEEP
⇒ Boss? By Dept. of Empowerment of Person with disabilities (िद�ांगजन सश��करण �वभाग)→
Oriental Insurance Company. 🤩🤩Benefit? upto ₹1 lakh health insurance for handicapped
⇒ Premium? Orphan Minor PH= ZERO; Other PH: ₹250-500, depending on poverty level
⇒ ₹ 30k for medical treatment [smartcard, cashless: even existing ailment, even private hospital.]
⇒ ₹ 25k for accidental death. And if breadwinner dies: ₹ 50 x 15 days.
⇒ ++Senior Citizen Health Insurance Scheme (SCHIS) –if 60/> they get additional ₹ 30k for
treatment. (व�र� नाग�रक �ा� बीमा योजना)
16.15.6 💊💊💊💊: 🧔🧔Why public health insurance for poor? (गरीबों को सरकारी �ा� बीमा �ों �दया जाए)
⇒ Public goods = water, sanitation, transport, medical care, schools (सावर्ज�नक व�ुएं-पानी ��ता प�रवहन
�ू ल �चिक�ा). Rich people can seek private alternatives/Even migrate to better countries. But Poor
cannot do it → Govt support necessary. अमीर लोग अ�� सेवाएं �बजी बाजार से खरीद सकते ह�, लेिकन गरीब को
सरकारी मदद क� ज�रत
⇒ “Time Horizon Problem” in a democracy: Frequent election cycles = Govts focus more on short
term gain but Healthcare, nutrition, schools: Long gestation period so govts may neglect it. लोकतं त्र
म� समय ���तज सम�ा: चुनाव के च�र म� सरकार दीघर् अव�ध के सुधारों क� जगह लघु अव�ध के लोकलुभावन पर �ान देती है,
�ा� पोषण �श�ा नजरअंदाज.
A) 1.5 lakh Primary Health Care Centers (PHC) to be transformed into Health & Wellness Centres
with Free drugs, checkup, mother-child care etc. (�ा� और क�ाण क� द्र)
B) National Health Protection Scheme (AB-NHPS) → Later renamed ‘PM Jan Arogya Yojana
(PMJAY)’ and launched with Motto “Swasthya Aapka, Saath Hamara” from Ranchi, Jharkhand
(2018, Sept). It has subsumed Rashtriya Swasthya Bima Yojana (RSBY) & Senior Citizen Health
Insurance Scheme (SCHIS).
16.15.9.5 📔📔📔📔ES21 on PM-JAY (कु ल �मलाकर घी-दू ध क� न�दयां बह रही है-आ�थक सव��ण)
⇒ 📔📔📔📔ES21 analysed the health outcomes of West Bengal (Which did not implement PM-JAY
scheme) and its neighbouring States - Bihar, Assam and Sikkim (Who have implemented the
PM-JAY scheme) between 2015-2019. And found out W.Bengal has lagged behind them on
various health indicators, including Family planning and HIV/AIDS.. प��म बं गाल क� तृणमूल सरकार ने
प्रधानमं त्री जन आरो� योजना नहीं लागू क� इस�लए वह �ा� म� �पछड़ी रह गई और �बहार आसाम और �स��म आगे बढ़ गए
�ोंिक उन पड़ोसी रा�ों म� इस योजना का अमल �आ है
⇒ PMJAY also helped increasing awareness regarding Family planning and HIV/AIDS. (अ�ताल यात्रा
के चलते प�रवार �नयोजन और एचआईवी क� जागृ�त भी बढ़ी है)
⇒ During the Corona lockdown → Many of the surgical procedures were postponed due to
infection fear, Transportation lockdown, Financial hardships= so PM-JAY claims ⏬reduced.
हालांिक कोरोना के चलते ब�त सारी सजर्री/श� िक्रया को ��गत िकया गया था
⇒ Still Poor people continued to avail dialysis in PM-JAY. = Proves success and reliance of the
scheme. लेिकन गरीब लोग िफर भी डाय�ल�सस करवाने आते ही रहे �जससे सा�बत होता है िक गरीब इस योजना म� �व�ास रखते ह�
🔠🔠❓ MCQ. Which is not a feature of the Ayushman Bharat Scheme? (CDS-i-2020)
(a) There is no cap on family size and age. (प�रवार क� सद�ों क� सं �ा और आयु पर कोई सीमा नहीं)
(b) The scheme includes pre- and post-hospitalization expenses.
(c) A defined transport allowance per hospitalization will also be paid to the beneficiary.
(d) The scheme provides a benefit cover of Rs. 10 lakh per family.
🔠🔠❓ MCQ. Ayushman Bharat is a national health insurance system for: (UPSC-Geologist-2020)
a) women b) every citizen c) old age people d) poor and vulnerable.
- Against natural calamities, pests, diseases; (प्राकृ �तक आपदाएँ , क�ट, बीमा�रयाँ;)
- Protects before, during and after harvest (फसल क� कटाई).
- Premium (बीमा-िक�) paid by farmers against the total insured amount: Rabi winter crops (1.5%)
– Kharif summer monsoon crops (2%) –Horticulture & Commercial crops other than oilseed &
pulses (5%). Remainder premium is paid by Union: State Gov. It’s optional for States to join.
- Nodal Ministry: Agri Min → Public sector general insurance companies, and empanelled private
sector insurance companies. सरकारी सामा� बीमा कं प�नयां तथा �नजी �ेत्र क� ऐसी सामा� बीमा कं प�नयां �जनको कृ �ष
मं त्रालय ने इस योजना लागू करने के �लए सूचीबद्ध िकया है
- 😰😰Challenges? (इस योजना म� �ा चुनौ�तयां ह�)
o States not paying their portion- they feel premium amount very high, so, Pvt insurance
companies not settling claims quickly. रा� सरकार बीमा कं प�नयों क� िक� का िह�ा नहीं चुका पा रहे,
बीमा कं पनी वाले िकसानों को मुआवजा नहीं दे रहे, गुजरात, प��म बं गाल सिहत कई रा�ों ने इस योजना का अमल बं द
कर िदया है.
o W.Bengal stopped it, & launched its own Bangla Fasal Bima Yojana (2019). Gujarat
stopped it & launched ‘Mukhya Mantri Kisan Sahay Yojana (2020)’ so cooperative
federalism missing.
o Union upgraded technical guidelines to fix the delays, but response not good. (भुगतान म�
देरी क� सम�ा को दु�� करने के �लए क� द्र सरकार ने िदशा�नद�शों म� बदलाव तो िकए लेिकन कु छ ख़ास सुधार नहीं आया)
16.16.3 🧔🧔⚰🌽🌽 Other Agriculture Insurance Schemes? (अ� कु छ फ़सल बीमा योजना)
- Apart from PM Fasal Bima, there is Restructured Weather Based Crop Insurance Scheme
(RWBCIS, 2016)- protects against weather only. (so not pests/diseases).
- There was a National Agricultural Insurance Scheme and Modified (NAIS), but PM Fasal Bima
subsumed it. लेिकन वो सब याद रखने से परी�ा म� बहोत लाभ नहीं.
16.16.4 ⛴🔪🔪(�🏦🏦) Insurance to Banks on Exporters’NPA → NIRVIC Scheme (2019)
Figure 5: �नयार्तक ब�क का कजार् नहीं चुकाएगा तो नुकसान क� भरपाई कौन करेगा
16.16.5 🚕🚕🚕🚕 Third Party Motor Insurance (थडर् पाट� मोटर इं�ोर�स)
- Motor Vehicles Act (1988) requires all motor vehicle owners to purchase it. (कानूनी �प से अ�नवायर्)
- Third party (TP) insurance: When your vehicle hits another vehicle, person or property → that
victim (third party) registers a case, gets compensation. IRDAI regulates premium rates & other
norms.
- SC judgement (2019): TP insurance validity should be 3-5 years, so even if owner forgets to
renew annually, the third party is protected. (अवधी �ादा होनी चािहए)
16.16.6 🚕🚕🚕🚕 Own Damage Insurance (OD: मोटर सं बं �धत �यं के नुकसान का बीमा )
- It protects owner of vehicle against theft, vandalism, accident, fire.
Figure 6: जमीन मकान �ववादों के कानूनी लफड़ो म� नुकसान से बचने का �बमा #गुलाबो-�सताबो
- 'Title' (अ�धकार-�वलेख) means a legal document showing ownership of a property. 'Title dispute':
usually happens when multiple persons are claiming ownership of the same land / building.
- 'Title Insurance' protects the new buyer in case of such legal disputes (by refunding the money he
had spent in buying land, construction, legal expenses etc).
- Real Estate Regulation and Development Act 2016 (RERA) requires the builders to buy this type
of insurance. More on RERA in 📑📑pillar#5: urban infrastructure.
🔠🔠❓In India, under cyber insurance for individuals, which of the following benefits are generally covered,
in addition to payment for the loss of funds and other benefits? (UPSC-Prelims-2020 SetB.Q90)
1. Cost of restoration of the computer system in case of malware disrupting access to one’s
computer
2. Cost of a new computer if some miscreant wilfully damages it, if proved so
3. Cost of hiring a specialized consultant to minimize the loss in case of cyber extortion
4. Cost of defence in the Court of Law if any third party files a suit
Answer Codes: [a) 1, 2 and 4 only [b) 1, 3 and 4 only [c) 2 and 3 only [d) 1, 2, 3 and 4
16.17⚰↗⚰RE-INSURANCE (पुनब�मा)
- DICGCI Act (1961) requires banks to take deposit insurance from DICGCI.
- Similarly, Insurance Act (1938) requires insurance companies take ‘re-insurance’ on their biz.
बीमा कं पनी ने �यं का "धं धा चौपट बचाओ" बीमा लेना होगा
- Previously, only GIC was the sole-reinsurer, but then norms liberalized (2015). New re-
insurance cos allowed. e.g. India’s ITI Reinsurance Ltd. Even foreign re-insurers such as Swiss
Re, Munich Re, General Reinsurance (Warren Buffet) are permitted. (पहले के वल जीआईसी, लेिकन अब
अनेक कं प�नयों को अनुम�त दी गई)
- 🤩🤩Benefits of multiple re-insurance cos? GIC’s monopoly in dictating re-insurance premium
rates is gone. So, insurance cos’ cost of operations to decline → biz. expansion, launch
innovative products etc.
16.18.1 ⚰�Domestic Systemically Important Insurers (D-SIIs, (घरेलु प्रणालीबद्ध मह�पूणर् बीमाकतार्)
- IRDAI prepares a list of big insurance companies that are “too big to fail” i.e. they feel it will
create very great economic distress for India. (यिद ये बीमा कं प�नयां �गर गयी तो अथर्तंत्र म� भारी तबाही होगी)
- IRDAI labels them as D-SIIs & imposes additional rules/monitoring/supervision on them.
- Latest List: 1) Life Insurance Corporation of India (LIC), 2) General Insurance Corporation of
India (GIC), 3) The New India Assurance Co. Ltd. (NIACL) (उनपर �ादा स� �नयम/�नगरानी रख�गे)
16.19⚰😿😿 CHALLENGES TO INSURANCE INDUSTRY (चुनौ�तयां)
1) 😰😰Capital intensive industry (पूंजी प्रधान उद्योग): Private players not generating enough profits due
to poor returns in sharemarket. Heavy costs in paying agent commission rates and marketing
advertisements.
2) 😰😰Corona= many people died/sick = insurance companies required to pay large sum of
compensation. This is putting lot of Business stress/losses on insurance and reinsurance
companies. (महामारी म� काफ� लोग बीमार �ए/मर गए. बीमा कं प�नयों ने मुआवजा देना पड़ा, मुनाफ़े पर गहरा तनाव)
3) 😰😰Premiums expensive. Will become more expensive to cover Corona losses. (फ़�स महंगे हो रही है)
4) 😰😰Insurance agents need more skill, network than banker. For bankers- loan recovery easier
(SARFAESI, I&B) compared to an insurance company that invested into equities/shares of a
weak company. (बीमा एज�ट भी एक ब�कर के मुक़ाबले �ादा कौशल चािहए)
5) 😰😰Rural people: either disinterested / un-served despite IRDAI norms. (ग्रामीण लोग नीरसता िदखाते ह�)
6) 😰😰People hesitate in buying House / Factory / Fire / Theft insurance due to fear of discovery of
‘asset value’- IT/GST raids & ransom demands. → India’s “insurance gap” is high i.e. all the
16.19.2 🇺🇺🇸🇸💸💸FDI limits in Insurance sector? (बीमा �ेत्र मे प्र�� �वदेशी �नवेश क� सीमा)
⇒ Foreign Direct Investment (FDI) is the (more than 10% equity / share) investment made by a
foreign entity into an Indian company, with the objective to get involved in the management /
production of that Indian company. (िकसी �वदेशी इकाई द्वारा एक भारतीय कं पनी म� 10% से �ादा शेयर �नवेश
करना उसे कहते ह� प्र�� �वदेशी �नवेश) (More on FDI 📑📑Pillar#3A)
⇒ e.g. 2018: Walmart-USA bought 77% shares in Flipkart-India @$16 billion.
⇒ the Majority of Directors on the Board and key management persons must be Resident Indians.
बोडर् ऑफ डायरे�र तथा कं पनी प्रबं धन के व�र� पदा�धका�रयों म� ब�म�त भारतीय �नवासी होने चािहए
⇒ At least 50% of Directors must be Independent directors. (�तं त्र डायरे�र) (Ref#1C)
⇒ Certain % of profits must be retained as general reserve. मुनाफे का कु छ प्र�तशत सामा� आर��त �न�ध के �प
म� अलग से रखना होगा, ताक� अगर कोई कांड हो जाए तो इन पैसों से ��तपू�त हो सके .
16.19.3 Should we ⏫ FDI beyond 49% in insurance companies? (�ा सीमा बढ़ाए?)
🤗🤗 � yes we should raise FDI limits (हां बढ़ाई जाए) 😣😣 � No, we shouldn’t raise FDI
Indian insurance companies will get additional capital Foreign investors will put pressure on
from Foreign investors = this can help mitigating above Indian insurance companies to
challenges.(�वदेशी �नवेशकों से अ�त�र� पूंजी �मलेगी तो फ़ायदा है) generate more profit. So
- They can expand overseas, mobilize money from - investment in junk bonds that offer
Bangladesh/Kenya’s market etc. & invest it in higher return → Collapse. (तुरंत
Indian economy. (�वदेशो का पैसा भारतीय अथर्त� मे लाना) मुनाफा कमाने क� चाह म� �ादा जो�खम वाले
- IRDAI prescribes “Investment pattern”, there is बॉ� म� �नवेश)
ombudsman for customer complaints. - Insurance company may reject
- Further, Companies Act has norms for independent insurance claims for frivolous
directors, auditing, whistleblower protection, CSR. reasons to increase its profitability
So, apprehension that foreign investors will cause to keep foreign investors happy.
mischief = unlikely. (�नगरानी/�नयं त्रण के पयार्� प्रावधान है, (मुनाफाखोरी के �लए ग्राहकों के बीमादावों को
कं प�नयो के �लए बदमाशी करना मु��ल) अ�ीकार करना)
- 💼💼Budget-2021 too has mentioned safeguards.
- China, Thailand, Indonesia et al ⏫ FDI limits in
insurance sector. We should also follow their path.
17.11.2 🧔🧔🧔� (2016) Pradhan Mantri Rojgar Protsahan Yojana (Labour Min)
- Private sector employers hire workers informally, but don’t report them in official formal
records lest they’ve to contribute to EPFO-funds under statutory norms, face harassment of
EPFO officials. (उधोगप�त मजदू र को औपचा�रक �प से नोकरी देने का रेकडर् नही रखते, तािक EPFO क� वैधा�नक
�ज�ेदा�रयो से �छप सके .)
- So, worker is hired informally, denied job-security & social security. Economic Survey 2015-16
diagnosed it as “EPFO Regulatory Cholesterol preventing formal-job creation. (मजदू रों को नौकरी पर
अनौपचा�रक �प से रखा जाता था. औपचा�रक नौकरीओ का सृजन नही हो रहा था)
So, to encourage pvt companies to hire new workers ‘formally’ → Govt announced to pay
employer (Factory owners) portion (12%) for the first 3 years under following schemes: →
Pradhan Mantri Paridhan Rojgar Protsahan Textile ministry scheme for textile factories.
Yojana →
Pradhan Mantri Rojgar Protsahan Yojana → Labour ministry scheme for non-textile factories
💡💡Note: Above schemes expired/discontinued by 2019. Then 2020: Corona → new schemes- given
below.
17.11.4 👻👻Atmanirbhar Bharat Rozgar Yojana= Subsidy from Central Govt in EPFO contribution
It was launched during the Atmanirbhar Bharat 3.0 package (November 2020)
Beneficiary eligibility: Worker's Monthly wages upto ₹15,000 AND
A) Fresh EPFO-Worker got new job in an EPFO registered firm OR
17.12.2 ✋Old Pension Scheme (OPS) will not be re-introduced says Govt in Lok Sabha
- Before-2004: Government was entirely responsible for arranging the pension money for its
Government employees. (सरकारी कमर्चारी का प�शन सरकार स्�म क� जेब से देती)
- But after 2004’s NPS: Govt Employee’s salary is partially deducted and invested in financial
securities, his pension is thus “NOT FIXED nor fully paid by Government” but it’s dynamically
linked with dividend & interest generated by those financial securities. (प�शन क� रकम �न��त नहीं है.
शेयर/बोंड बाज़ार पर �नभर्र करती है)
- Thus, in NPS, Govt employee himself is ‘contributing money’ towards his pension.
⇒ Post-demonetisation, banks were flush with deposits, so deposit interest rates were likely to fall
→ so to protect the senior citizens’ income government launched this.
⇒ A 60 years/> senior citizen can join. (व�र� / बुजुगर् नाग�रक के �लए ह�)
🔠🔠❓ [Asked in UPSC-CDS-2019-1] Consider the following passage about a scheme : It was
launched to provide social security during old age and to protect elderly persons aged 60 years and
above against a future fall in their interest income due to uncertain market conditions. The scheme
enables old age income security for senior citizens through provision of assured pension / return
linked to the subscription amount based on government guarantee to Life Insurance Corporation of
India (LIC). Identify the scheme. Answer Choices:
a) Pradhan Mantri Swasthya Suraksha Yojana b) Pradhan Mantri Vaya Vandana Yojana
c) Liveability Index Programme d) Rashtriya Vayoshri Yojana
ग़रीब आदमी जो ख़ुद क� जेब से थोड़ा पैसा �नवेश कर सके - उनके �लए प�शन योजना
🔠🔠❓ [Asked in Prelim 2016] Find correct statement(s) regarding ‘Atal Pension Yojana’:
1. It is a minimum guaranteed pension scheme mainly targeted at unorganized sector workers.
2. Only one member of a family can join the scheme.
3. Same amount of pension is guaranteed for the spouse for life after subscriber's death.
Codes: (a) 1 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3
17.14.1 � → 👴👴👴👴👴👴: 🧔🧔 Pension: Three Maan Dhan Yojanas
- For Below Poverty Line (BPL) people, Rural Development Ministry’s National Social Assistance
Programme (NSoAP: रा��ीय सामा�जक सहायता कायर्क्रम) in 1995, where direct money is given without
asking for any premium from the beneficiary (लाभाथ�).
- It’s a core of the core scheme (अ�त-मह�पूणर् योजना) with 100% cost is paid by Union. It’s optional
for state govt. to contribute money- They may contribute, if they want to enhance the scheme’s
features. For example: (इस योजना म� रा� सरकार ने पैसा देना वैक��क है) (More in 📑📑Pillar#2D- Schemes
types)
⇒ Financial Inclusion: providing access to banking, investment, pension, insurance and credit
(loan) facilities to each citizen. This ensures social, economic and transaction security (लेनदेन म�
सुर�ा) (S-E-T), improves social harmony, women empowerment, helps reaping the benefit of
“LESS CASH Economy” (📑📑Ref: Handout#1A1) सभी नाग�रकों को ब�िकंग, �नवेश, प�शन, बीमा और ऋण क� सेवा
प्रदान करना= उसे �व�ीय समोवेशन कहेते है
⇒ Social Security (सामा�जक सुर�ा): a system of payments / assistance by the government to citizens
who are ill, handicapped, poor, aged or unemployed. (बीमार, �वकलांग, गरीब, वृद्ध या बेरोजगार को आ�थक
मदद करना)
o The foundation of SS in our constitution @DPSP Article 41- State to provide public
assistance to its citizens in case of unemployment, old age, sickness and disablement; and
o DPSP Article 42- The State shall make provision for securing just and humane
conditions of work and for maternity relief. (राजनी�तक पथदशर्क �सद्धांतों म� �जक्र)
⇒ Social Justice (सामा�जक �ाय): distribution of wealth, opportunities, and privileges within a
society- through reservation in jobs, admissions and election and through legal safeguards for
🔠🔠❓ MCQ. Service Area Approach was implemented under the purview of (UPSC Prelims-2019)
(a) Integrated Rural Development Programme (b) Lead Bank Scheme
(c) Mahatma Gandhi National Rural Employment Guarantee Scheme
(d) National Skill Development Mission
18.11.1 🧔🧔(��:💰💰)→💳💳 Pradhan Mantri Jan Dhan Yojana (प्रधान मं त्री जन धन योजना)
🔠🔠❓ [Asked in Pre-2015] Pradhan Mantri Jan-Dhan Yojana’ has been launched for:
(a) providing housing loan to poor people at cheaper interest rates
(b) promoting women’s Self-Help Groups in backward areas
(c) promoting financial inclusion in the country
(d) providing financial help to the marginalized communities
Dept of Post → Post Office Savings India Post Payments Bank (IPPB)
Bank (PoSB)
foundation Govt Savings Bank Act Companies act 2013 → Public ltd
1873 company registered in 2016
Accept demand Savings account only 1. Current account
deposits? 2. Savings account
Accept time deposits? YES No, bcoz it is a payment bank
Can keep more than ₹2 YES No, bcoz payment bank. But u can link IPPB
lakh balance? account with PoSB account to auto-transfer
(=SWEEP) excess balance to PoSB.
E-Banking and online Not directly but you yes , UPI, BHIM, NEFT, IMPS and BBPS
bill payment can do it by linking (Bharat Bill pay) available.
PoSB account with
IPPB account
Sukanya Smriddhi Can be opened Not possible. Because time deposits are not
(daughter’s fixed allowed in Payment Banks.
deposit account)
loans to individual? No. ₹₹ goes to NSSF Not until it becomes Small Finance Bank
Objective? Promote savings habits Remittance & digital payments
among poor
- 👜👜Budget-2022: Post Office Savings Bank (POSB) will be connected with Core Banking System
(CBS). So, their depositors too can use E-banking/net-banking, mobile banking, ATMs etc.
- Benefits? 🤩🤩1) Convenience for POSB depositors esp. villagers, farmers and senior citizens.
🤩🤩2) interoperability= (ability to use POSB deposit money in above NEFT/ATM etc facilities)
- Interoperability is the ability of customers to transact across commercially and technically
independent payment platforms. �ावसा�यक और तकनीक� �प से �तं त्र �ेटफाम� के बीच लेन-देन करने क� सु�वधा
- Parents open a (fixed deposit type) bank account in the name of a 0-10 years girl child, and
deposit annually ₹ 250 to ₹ 1.5 lakhs till she reaches age of 14.
- FinMin’s Dept of Economic Affairs announces interest rate (originally 9.1%, presently ~8.5%)
18.12.4 ⭐📫📫 ���� �� � Five Star Village scheme by Dept of Post (2020)
गाँव वालों को �व�वध लघु बचत योजना और बीमा योजनाओं से जोड़ने क� डाक �वभाग क� को�शश
18.12.6 ⚰💀💀🌽🌽 ���� �� � Model Insurance Villages (MIV) proposal by IRDAI (2021)
- Insurance Regulatory and Development Authority of India (IRDAI) proposed this
- To give complete insurance coverage to a village for its people’s life insurance, health insurance,
farm/crop insurance, animal (livestock) insurance, tractor/vehicle insurance etc.
- Funding/Subsidy by Union, State, Companies CSR Funds, NABARD & other AIFIs.
- (गाँववालों के �लए म� सभी प्रकार के जीवन बीमा, सामा� बीमा पॉ�लसी उपल� हो, तािक वह एक आदशर् बीमा ग्राम बन जाए। ऐसी
बीमा पॉ�लसी खरीदने के �लए सरकार तथा अ� सं �ानों द्वारा गांव वालों को स��डी/�रयायत दी जाए)
- When an AIFI (or MUDRA) gives new finance to Banks/NBFCs based on the quantum of
finance they (Bank/NBFC) have already given to end-borrowers.
- Usually works via the process of securitization of the previous loan papers. How it happens in
real life? Ans. NOT IMP.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
💡💡 Note: This handout only deals with ‘loan’ component of MSME. For other MSME
issues/challenges, refer (More in 📑📑Pillar#4B → MSME)
⇒ Corona Lockdown → MSME business hurt → need loans to restart business → Emergency
Credit Line Guarantee Scheme (ECLGS: आपातकालीन क्रेिडट लाइन गारंटी योजना).
⇒ �Eligibility?
o MSME Previous outstanding loan account can’t be more than ₹25 crores, and can’t be
not an NPA.
⇒ New/ Extra Loan Amount? 20% of the outstanding loan.
⇒ Loan Tenure? 4 Years (�मयादी/समयकाल)
⇒ Loan Interest? 9.25% (Bank), 14% (NBFC).
⇒ Collateral? Not required. (�गरवी कु छ भी नही रखना होगा)
18.13.5 👻👻👻👻 �🏭🏭 MSME Non-NPA borrower → ECLGS 2.0 (Atma-Nirbhar 3.0)
It was launched during the Atmanirbhar Bharat 3.0 package(November 2020)
�Eligibility? (Two conditions must be fulfilled simultaneously)
1) MSME as well as Non-MSME(large) firms operating in
(a) Healthcare sector (�ा� �ेत्र) OR
(b) 26 stressed sectors Identified by RBI is KV Kamath committee (e.g automobiles,
tourism, cement, gems and jewellery etc तनावग्र� �ेत्र) AND
2) Its outstanding loans are > ₹50 crore - upto ₹ 500 Crore (as on 29.2.2020)
🤩🤩Benefit?
Extra 20% loans against outstanding loans. (कजार् बकाया है उसके सामने 20% अ�त�र� कजर् िदया जाएगा)
Interest Rate not explicitly mentioned in Press-Statement. (योजना क� प्रेस �व��� म� �� �प से खुलकर
नहीं बताया, तो हमने खुद से गूगल सचर् मारने क� कोई ज�रत नहीं है#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो )
Repayment tenure of above loan: 5 years including 1 year moratorium on principal
repayment. (5 साल म� कजर् चुकाना होगा और उसम� भी 1 साल तक मूलधन चुकाने पर रोक)
👜👜👜👜Budget-2022: This scheme is continued, with more funds.
18.13.7 👻👻🗃🗃🗃🏭🏭 MSME → Equity infusion via Fund of Funds (�न�धयो क� �न�ध)
⇒ Govt will set up a Fund of Funds with ₹10,000 crore.
⇒ This FoF will invest in daughter funds (who’ll supply ₹40k cr from their funds). So, total
10k+40k=50k equity funding/infusion to MSME. (इ��टी के �प म� कं पनी म� जान फूं कना)
- Micro Units Development & Refinance Agency. (सू� इकाई �वकास एवं पून: �व�पोषण एज�सी)
- Objective? provides indirect lending via SCB, RRB, Cooperative Banks, MicroFinance Inst &
other NBFCs. (अनुसू�चत वा�ण� ब�क �ेत्रीय ग्रामीण ब�क सहकारी ब�क गैर ब�क �व�ीय कं प�नयों द्वारा परो� �प से कजर् देता है)
- Ownership? It’s wholly owned by SIDBI, and also receives the funding from PSL-shortfalls via
RBI, and budgetary support via Department of Financial Services.
- Beneficiary? Micro Enterprises from Agri-allied sectors, mfg & service sector who are not
registered under the companies act = Non-corporate type. (�ज�ोंने कं पनी कानून म� पं जीकरण नहीं करवाया)
Table 5: Mudra-Products:
Pradhan Mantri MUDRA Yojana MUDRA Rupay Card
1) Shishu : loans upto 50,000/- - ATM cum Debit Card issued against MUDRA loan
2) Kishor : >50,000/- upto 5 lakh account.
3) Tarun : > 5 lakh and upto 10 - For working capital component.
lakhs - Can be accessed in all modes like a routine debit card
(ATM, MicroATM, PoS, Online)
- Mudra loans are collateral-free (जमानत से मु�). If borrower defaults on loan, then lender’s losses
are covered through Credit Guarantee Fund for Micro Units [CGFMU] which is operated by
National Credit Guarantee Trustee Company Ltd. [NCGTC, 2016]- which is a private ltd
company by Dept of Financial Services in Finance Ministry.
- 😰😰MUDRA Challenges? (1) Loan Interests are high (2) Rising NPA/Bad loans.
- is an informal group of 10-20 local people to combine their savings/ resources, engage in biz
activity like weaving, agarbatti etc अपनी बचत और सं साधनों क� मदद से कु छ छोटा उ�ादन करने वाला गरीब लोगों का
एक अनौपचा�रक समूह
- and not registered in as a firm / company under partnership act or companies act etc.
- Self-Help Groups are formed under the government schemes like National rural livelihood
mission (NRLM). More in 📑📑Pillar#6]
- Budget-2019:
o 1 woman in each self-help group (SHG) will be made eligible for ₹ 1 lakh loan under
Mudra scheme.
o Every verified woman SHG member with a PM Jan Dhan account eligible for
overdraft of ₹5,000.
- 👻👻ATMANIRBHAR → PM GaribKalyan → Women Self Help Groups (SHGs) to be given ₹20
lakh collateral free loans. Further,
⇒ Boss? Ministry of Housing and Urban Affairs (MoHUA)- आवास और शहरी मामलों का मं त्रालय
⇒ Pradhan Mantri Street Vendor’s AtmaNirbhar Nidhi Scheme (PM SVANidhi)
⇒ Street Vendors will be given ₹10,000 loan via banks and NBFCs (e.g. Micro Finance
institutions). (सड़क �वक्रेता/फे रीवाला को ब�क तथा गैर-ब�क �व�ीय सं �ान जेसे क� सू� �व� सं �ान से कजार् �मलेगा)
⇒ Loan Tenure: 1 year. Repayment to be done on a monthly basis.
⇒ Loan Interest? approx @7.25% & if vendor repays in timely fashion → govt will give 7% interest
subsidy in his bank account. (फे रीवाला ने �ण अदायगी �नय�मत �प से क� तो �ाज म� सरकार राहत/स��डी देगी)
⇒ Scheme Valid till: 2022-March.
1998: Launched by RBI +NABARD. Farmer gets credit card from PSB, RRB, State Coop Banks for:
- Can swipe it to buy farm inputs (seeds, fertilizers, pesticides etc.)
- Investment credit requirement for agriculture
- Working capital for maintenance of farm assets
- Post-harvest expenses, (फसल काटने के बाद होने वाले खचर्)
- Consumption requirements of farmer household; (घर म� उपभोग हेतु खच�)
- Can withdraw cash (as loan).
- Money to be repaid with interest. Accidental insurance also given.
- Budget-2018: Kisan Credit Card (KCC) extended to Animal Husbandry and Fisheries farmers.
Interim-Budget-2019: they (animal/fisheries-walla) too will get the interest subvention
- Interim-Budget-2019: comprehensive drive with a simplified application form to get all farmers
under KCC cards.
🔠🔠🔠 MCQ. Under the Kisan Credit Card scheme, short-term credit support is given to farmers
for which of the following purposes ? (UPSC-Prelims-2020)
1. Working capital for maintenance of farm assets
2. Purchase of combine harvesters, tractors and mini trucks
3. Consumption requirements of farm households
4. Post-harvest expenses
5. Construction of family house and setting up of village cold storage facility
Codes: [a) 1, 2 and 5 only [b) 1, 3 and 4 only [c) 2, 3, 4 and 5 only [d) 1, 2, 3, 4 and 5
Govt pays part of the interest rate for borrower. (farmer, MSME, affordable housing etc) such as:
- Farm loans upto 3 lakhs→ 9% MINUS 2% (to all farmers) MINUS 3% (regular paying farmers)=
only 4% loan interest farmer has to pay.
- Interim-Budget-2019:
o KCC-card-walla Animal Husbandry and Fisheries farmers also eligible.
o If natural disaster- then crop loans are rescheduled, we’ll streamline the subvention
norms there.
o MSME: incremental loans upto ₹1 crore to GST registered MSME industry= 2%
subvention. (As such already announced by Modi in 2018)
18.15.2 🏍🏍🏍🏍🏍🏍 Gig Workers’ social security code (�गग कम� क� सामा�जक सुर�ा सं िहता)
⇒ Informal workers (अयथा�व�ध कम�)= doesn’t have formal job contracts with employers. E.g.
Domestic Maids, Brick Kiln Workers, Construction Labourers, Chowkidar, Dhaabaa
cooks/waiters etc.
⇒ Gig workers (�गग कम�)= Uber Taxi Drivers, Amazon/Zomato Delivery boys, Urbanclap’s
beauticians/ plumbers/ AC repairman, Unacademy Educators etc. They are freelancers /
independent contractors (�तं त्र ठे केदारों) hired by startup or digital companies for short-term
engagements. While they may have some written contract to deliver services to the company, but
the contract is worded in such manner they are not “regular employees” of a company = not
eligible for EPFO, ESIC etc.
⇒ 2019-Sept: Labour Ministry drafting a “social security code for all informal & gig workers”. It
aims to provide ‘insurance on death/disability/sickness’, maternity benefit, pension, scholarship
for their children etc. (मृ�ु / �वकलांगता / बीमारी पर बीमा, मातृ� लाभ, प�शन, �गग कम� के ब�ों को छात्रवृ��)
18.17.3 📈📈📈📈 Mercer CFA Institute Global Pension Index for 2021:
Rank#1- Iceland. India #40 among 47 nations. (⚾📻📻⚾🎓🎓✋ low profile report not greatly
important. )
18.17.5 📈📈🐯🐯 (India’s own) RBI’s National Strategy for Financial Inclusion (NSFI)
⇒ 2020-Jan: RBI released this report covering the timeframe “2019-2024.”
⇒ Exact points / salient features = poor cost benefit for UPSC. We already have sufficient points for
a 250 words answer. (अपने पास पयार्� मुद्दे है, इसको असल म� पढ़ने क� ज�रत नहीं)
18.17.6 📈📈🐯🐯 (India’s own) RBI’s Financial Inclusion Index (�व�ीय समावेशन सूचकांक)
⇒ 2021: RBI Governor announced to publish Financial Inclusion Index to capture the extent of
financial inclusion across the country in Banking, Investments, Insurance, Pension Sector.
⇒ (More in 📑📑Pillar#1A1)
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 293
21.3.2 🍋🍋🍋🍋: 🏦🏦🏦🏦 Corporation Tax: announcements in budgets ................................................ 314
21.3.3 🍋🍋🍋🍋: 🏦🏦🏦🏦: 🤓🤓 Corporation Tax: Exemption from audit for small companies............. 314
21.3.4 🍋🍋🍋🍋: 🏦🏦🏦🏦 Corporation Tax on Startups ............................................................................ 315
21.4 🍋🍋🍋🍋: 🏦🏦 Equalisation Levy / Google Tax (समकारी लेवी/ गूगल टै�)................................................... 315
21.5 🍋🍋🍋🍋: 🏦🏦🏦🏦 Minimum Alternate Tax (MAT: �ूनतम वैक��क कर) .................................................. 316
21.6 🍋🍋🍋🍋: 🏦🏦🏦🏦 Cooperative Societies: Alternative Minimum Tax (AMT) .................................... 317
21.7 🍋🍋🍋🍋: 🗃🗃 Dividend Distribution Tax (DDT: लाभांश �वतरण कर) ........................................................ 317
21.8 🍋🍋🍋🍋: 🗃🗃🗃🗃 Buyback Tax (शेयर क� वापसी-खरीद पर कर) ....................................................................... 318
21.9 🍋🍋🍋🍋 : 🏠🏠🏠🏠🏠🏠Capital Gains Tax (CGT: पूंजीगत लाभ कर)................................................................ 319
21.10 🍋🍋🍋🍋: 👪👪 Income Tax on Individuals (���क आयकर) ................................................................ 322
21.10.1 ��Income Tax Slabs before Budget-2020 ........................................................................ 323
21.10.2 (Optional) New slabs for Income Tax in Budget-2020 ......................................................... 324
21.10.3 🍋🍋🍋🌱🌱Income Tax in Budget-2021, Compliance relief to Senior Citizen👴👴............... 325
21.10.4 🍋🍋🍋🌱🌱Income Tax in Budget-2022................................................................................... 325
21.11 🍋🍋🍋🌱🌱Direct Tax Code (DTC) Task Force (2017-2019) ......................................................... 325
21.12 🍋🍋🍋🍋Direct Taxes: Misc. Concepts (इधर उधर के �छटपुट मुददे) .......................................................... 326
21.12.1 🍋🍋🍋🍋Hindu Undivided Family (HUF) (िहंदू अ�वभा�जत प�रवार): ............................................. 326
21.12.2 🍋🍋🍋Presumptive Taxation (प्रक��त कराधान) ......................................................................... 326
21.12.3 🍋🍋⏰Advance Tax ? (अ�ग्रम कर).............................................................................................. 326
21.12.4 👻👻 ATMA NIRBHAR BHARAT → Tax Ordinance 2020 [कर अ�ादेश] ............................ 327
21.13 🍋🍋🍋✂TDS & TCS ....................................................................................................................... 327
21.14 🍋🍋🍋✂Tax Deducted at Source (TDS): (स्रोत पर कर कटौती) .......................................................... 328
21.14.1 👻👻 (🍋🍋🍋✂) TDS → ATMA NIRBHAR BHARAT REFORMS .................................. 329
21.14.2 🍋🍋🍋🍋✂Tax Collected at Source (TCS): (�ोत पर सं गृहीत कर) ............................................... 329
21.14.3 🍋🍋🍋🍋Tax refund? (कर वापसी) .................................................................................................. 329
21.15 🍋🍋Misc. Direct Taxes - Financial Transaction Taxes (�व�ीय लेनदेन कर).......................................... 330
21.15.1 🍋🍋🍋🍋 (Concept) Tobin Tax / Robinhood Tax ..................................................................... 330
21.15.2 🍋🍋🍋🍋STT & CTT (प्र�तभू�त लेनदेन कर और व�ु लेनदेन कर) ............................................................ 330
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 294
20.1 💼💼 FISCAL POLICY (राजकोषीय नी�त): MEANING & SIGNIFICANCE
- ‘Fiscal’ is a word derived from Greek. Means ‘basket’ and symbolizes the public purse.
- Fiscal Policy is the set of Govt. decisions regarding taxation, expenditure, subsidies and other
financial operations. (कराधान, �य, स��डी और अ� �व�ीय सं चालन हेतु सरकार द्वारा �लए गए �नणर्य)
- Using fiscal policy, Govt influences the savings, investment and consumption in an economy, to
accomplish certain national goals such as income redistribution, socio-economic welfare,
economic development and inclusive growth. (बचत, �नवेश और खपत को सरकार को प्रभा�वत करती→ आय का
पुन�वतरण, सामा�जक-आ�थक क�ाण, समावेशी �वकास हो सकता है)
A well planned Fiscal Policy can help in following arenas:
Full Employment: through welfare schemes/ rural employment programmes like MGNREGA
(📑📑More in pillar6) (लोक क�ाणकारी योजनाओं द्वारा पूणर् रोजगार)
🍊🍊To Fight Inflation (मुद्रा���त): Higher Income tax → ⏬disposable income (�य यो� आय) →
demand curbed, To fight deflation= ⏬direct and indirect taxes to boost demand. (📑📑More in
pillar4: Inflation) (अप���त से लड़ने के �लए करों म� कटौती करे माँग को बढ़ाएँ )
📈📈 To Boost Economic Growth: Provide income tax benefits on household savings in
LIC/Mutual Fund etc. → industries get new capital investment → factory expansion, jobs, GDP
growth. (📑📑More in pillar4: GDP) (करों म� �रयायत� दे कर �नवेश को बढ़ोतरी, आ�थक वृ�द्ध को बढ़ोतरी देना)
�To Boost Inclusive Growth (समावेशी �वकास): Higher taxes on rich → use money for health,
education, women, poverty removal programs. (📑📑More in pillar6: Human Dev)
🧭🧭 To Boost Regionally Balanced Growth: Give tax benefits to industrialists for setting up
factories in North East, Naxal/Left-wing Extremism (LWE) & other backward areas. (उद्योगप�तयों को
उ�र पूव� रा� तथा न�ल प्रभा�वत रा�ों म� फै �री लगाने पर करो म� �रयायते देकर सभी प्रदेशो का सं तु�लत �वकास)
💱💱Exchange Rate Stability (�व�नमय दर ��रता): Give tax benefits to exporters to boost exports;
while impose higher taxes on imported items to reduce imports → Current Account Deficit
(CAD: चालू खाता घाटा) controlled → ₹ :$ Exchange rate volatility controlled. (📑📑 pillar3:BoP)
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 295
🔠🔠❓ MCQ. “Fiscal policy” means (UPSC-Indian-Engg-Service-2018)
a) Balancing the revenue collection and expenditure
b) Establishing equilibrium between demand and supply of goods and services
c) Use of taxation, public borrowing and public expenditure by Government for purposes of
stabilisation or development. d) Deficiency as an instrument of growth
20.2 💼💼 BUDGET (बजट): MEANING
Budget is an annual financial statement containing estimated revenues and expenditures for the next
financial year. Budget is the primary tool used by Govt to implement its fiscal policy. (अनुमा�नत राज�
और �य का वा�षक �व�ीय �ववरण, �जसक� मदद से सरकार राजकोषीय नी�त को लागू िक्रया��त है).
20.2.1 🔐🔐Three Funds related to Budget (Self-Study= Laxmikanth chapter on Parliament)
Art. 🔐🔐Consolidated Fund Incoming taxes, loans raised, loans recovered. Withdrawal
266 Of India (CFI) (सं �चत �न�ध) need Parliament Permission (- except for Charged
Expenditure like Judges’ salaries).
Art. 🔐🔐Public Account Incoming ₹ ₹ from provident fund, small savings, postal
266 of India (लोक लेखा) deposit etc. Govt acts similar to a banker transferring fund
�सफर् पहली बार बनाते व� सरकार from here to there so parliament permission ✋not necessary.
ने सं सद क� अनुम�त लेनी है. िफर हर IF separate fund is to be created for the first time, for a specific
बार इसम� से पैसा खचर् करते व� expenditure, then needs parliament permission to “create” it
सं सद क� अनुम�त नहीं लेनी है. e.g. Central Road Fund Act 2000, where Road Cess on Petrol,
Diesel would be deposited.
Art. 🔐🔐Contingency Fund ⇒ Unforeseen events. Held by Finance Secretary (IAS) in
267 of India (आक��कता �न�ध) Dept of Economic Affairs, on behalf of President.
⇒ Parliament approval is “subsequently” obtained, after
expenditure. Money refilled from CFI.
👜👜👜👜Budget-2021 reforms
1. Amount ⏫ from Rs 500 crore to Rs 30,000 crore
2. 40% of this amount will be kept with Dept of Expenditure
& 60% by Dept of Economic Affairs (DEA).
🔠🔠❓ Authorization for the withdrawal of funds from the Consolidated Fund of India must come from: (Pre-2011)
(a) President of India (b) Parliament of India (c) The PM of India (d) The Union Finance Minister
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 296
🚩🚩🚩FAQ: What is Cess? Ans. Finish entire Handout first.
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 297
👴👴PMNRF by Nehru 1948 🧔🧔PM CARES Fund by Modi 2020
⇒ Originally for helping Pak-refugees. For dealing with any kind of emergency or
Nowadays for floods, cyclones, earthquakes, distress situation, e.g. COVID-19 pandemic
accidents, heart/kidney transplant, cancer, िकसी भी िक� क� आपातकालीन प�र���तयों से लड़ने के �लए
acid attack, riots etc.
⇒ Not setup by Parliament. ⇒ Same। इसे सं सद द्वारा नहीं बनाया गया, बजट म� से इसे
⇒ No support given from the budget. पैसा नहीं िदया जाता, सामा� लोगों के और �व�वध
⇒ Only runs from donations of ordinary people सं �ानों के दान से ये चलता है,
and institutions & foreigners donations.
⇒ Donors get Income tax exemption. ⇒ Same. दान देने पर आयकर म� छू ट मीलती है .यिद
⇒ If company donates ₹₹=counted in Corporate कं पनी दान देगी तो उसे कॉप�रेट सामा�जक दा�य� म�
Social Responsibility (CSR, Ref#1C ). �गना जाएगा
⇒ Prime Minister’s Office (PMO) operates ⇒ same.प्रधानमं त्री कायार्लय सं चा�लत करता है
⇒ PM is the ex-officio chairman. He’s assisted ⇒ Prime Minister is the ex-officio
by officers. (पदेन अ��) Chairman. (पदेन अ��)
⇒ Ex-officio Trustees (पदेन ट��ी): Ministers of
Defence, Home Affairs, Finance
⇒ 3 Nominated Trustees (मनोनीत): experts
from health, science, social work, law etc.
PM selects �ा�, �व�ान, सामा�जक कायर्, कानून
Sidenotes:
⇒ 1962: A separate ‘National Defence Fund’ under PM to help military & paramilitary forces’
families. Other features mostly similar to above funds. (ऊपर के टेबल म� हमने पढ़े वो दो फ� के अलावा एक
तीसरा रा�ी� य र�ा कोष/ �न�ध भी है)
⇒ Usually, such Govt donation funds are registered under Indian Trust Act, 1882. But, some legal
experts / critics suggest these donations should be brought under Public Account / Consolidated
Fund to bring accountability & transparency. (पारद�शता और जवाबदेही क� कमी)
⇒ 😰😰Controversy? PM CARES Fund officials refused to give information to a person under Right
to information Act (RTI), so now court case about applicability of RTI on this. (सरकार इस फं ड का
िहसाब िकताब “सूचना अ�धकार कानून म�” देने से इं कार कर रही थी तो कोटर् म� के स चला)
20.2.3 💼💼📃📃 Three Documents related to Budget (बजट के साथ प्र�ुत तीन द�ावेज)
- Budget comes from a French word 'bougette' meaning a leather bag / suitcase.
- Finance Minister (FM: �व� मं त्री) would keep documents in it → present in parliament.
- 2019: FM Nirmala Sitharaman ended this colonial practice by presenting the budget in a
traditional four-fold red cloth called “Bahi-Khata”. (लाल रंग के कपड़े म� लपेट के पेश िकया)
- While the term ‘budget’ not given in our constitution, but for each financial year, the Govt is
required to present following: (सं �वधान म� इस श� का �जक्र नहीं हालाँिक हर साल तीन द�ावेज सं सद म� रखे जाते ह�। )
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 298
📃📃Art. 112 📊📊Annual Financial Statement (AFS: वा�षक �व�ीय �ववरण) containing receipt and
expenditure of last year (and projections for the next year).
1) The revenue expenditure data must be shown separately from other
expenditures data (e.g. capital expenditure)
🚩🚩🚩FAQ: What does this mean? Ans. Finish pillar2D: to learn about capital
expenditure. Presently we are at pillar#2A.
2) No compulsion to show railway budget separately from general budget.
3) No compulsion to show plan expenditure separately from non-plan.
📃📃Art. 265 Taxes can’t be imposed without law so Finance Bill to obtain Parliament's
📃📃Art.117 permission to collect taxes. (�व� �वधेयक कराधान के �लए।)
Further, Parliament can reduce or abolish a tax proposed by the Govt. but
�Read
Parliament cannot increase tax beyond what Govt has proposed in the Finance
more about
them in bill. E.g. If Modi Govt’s Finance bill proposes “we want to ⏫tax on imported
Laxmikanth shoes from 25% → 35%”. Then
⇒ Members of parliament can vote to allow tax@35%/reduce/remove it.
⇒ ✋Members of parliament CANNOT vote “let’s ⏫tax to 45%”.
📃📃Art. 114 🛒🛒Appropriation Bill (�व�नयोग �वधेयक) to obtain Parliament's permission to spend
money from Consolidated Fund of India(CFI: Art 266). Such expenditure can be
�Read of two types :
more about 1) The expenditures ‘charged’ upon the Consolidated Fund of India e.g. Judges
them in salaries. They can be discussed but they are non-votable & automatically
Laxmikanth approved. (भारत क� सं �चत �न�ध पर भा�रत �य. सं सद म� उसक� चचार् हो सकती है, िक�ु मतदान नहीं।
वरना यिद सांसद मतदान से, जज क� तन�ाह ⏬कर द�गे तो जज �न�� �प से काम नहीं कर पाएं गे)
2) The expenditure ‘made’ from CFI. E.g. ₹ ₹ for a scheme. They’re discussed
and voted. (भारत क� सं �चत �न�ध से िकये गए �य. सं सद म� इसपर चचार् भी होगी और वोिटंग भी)
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 299
⇒ The finance bill and appropriation bill are considered money bills (धन �वधेयक) under article 110.
Therefore Rajya Sabha (RS) approval is not necessary. (रा� सभा क� अनुम�त अ�नवायर् नहीं)
⇒ At maximum Rajya Sabha can discuss it for 14 days and give suggestions to Lok Sabha for
amendments, but it’s not binding on the Lok Sabha to accept Rajya Sabha’s suggestions. (धन
�वधेयक के मामले म� रा�सभा द्वारा िदए गए सुजाव मानना लोकसभा के �लए बा�कारी नहीं है)
⇒ Sometimes, the ruling party does not have majority in Rajya Sabha to pass other type of ordinary
bills (e.g. a bill to transfer National Housing Bank (NHB)’s ownership from RBI to Govt. or
abolishing some low-profile statutory body or enacting a law to make Aadhar card compulsory)…
⇒ Then, ruling party packs those ordinary bills’ proposals inside Finance Bill to get it approved
without Rajya Sabha’s obstruction. (कु छ बार सामा� �वधेयक के मामले भी �व� �वधेयक म� डालकर, �बना रा� सभा
क� अनुम�त के पास करवाने क� हरकते स�ाप� द्वारा क� जाती है, जो नै�तक नहीं)
⇒ In such scenarios, whether a given bill is money bill or not?= Ans: Lok Sabha Speaker’s decision
is final [Art.110(3)]. Speaker’s decision cannot be enquired by any Court [Art.122].
🔠🔠❓ MCQ. What will follow if a Money Bill is substantially amended by Rajya Sabha? (Pre’13)
a. Lok Sabha may still proceed with the Bill, accepting or not accepting recommendations of Rajya Sabha.
b. The Lok Sabha cannot consider the Bill further.
c. The Lok Sabha may send the Bill to the Rajya Sabha for reconsideration.
d. The President may call a joint sitting for passing the Bill.
🔠🔠❓ MCQ. Find correct statement(s): (UPSC Pre’15)
1. The Rajya Sabha has no power either to reject or to amend a Money Bill.
2. The Rajya Sabha cannot vote on the Demands for Grants.
3. The Rajya Sabha cannot discuss the Annual Financial Statement.
Codes: (a) 1 only (b) 1 and 2 only (c) 2 and 3 only (d) 1, 2 and 3
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 300
⇒ 2016-17: Finmin setup Shankar Acharya Committee: Whether we shd change FY (like Jan-Dec
or Rabi-Kharif Cropping seasons) for better estimation of tax collection and expenditure?
⇒ ✋2017: All states not in favor because accounting practices /softwares need to be changed. Its
challenges outweighed the benefits. So, Modi Govt not implementing. इसको लागू नहीं कर रहे
⇒ 🤧🤧2020: some fake news that FY changed due to Corona, but it was FAKE-NEWs (झूठा समाचार)
20.4 📃📃🛒🛒🛒🛒📆📆⏳VOTE ON ACCOUNT- (लेखा अनुदान)
The Constitution does not mandate any specific date for presentation of the Budget, but it is
presented to the Lok Sabha on such day as the President directs.
⇒ Before 2017: Presented in the last working day of February. Then it’ll pass through
aforementioned six stages- consuming all the time upto May month.
⇒ But while those six stages were going on, the financial year will be over (on 31st March) so
previous year’s Appropriation Act’s validity will be over.
⇒ Then govt cannot withdraw money from the Consolidated Fund of India even for the routine
expenditure like staff salary, electricity bills.
⇒ So, to avoid such crisis, government will put a motion for vote on account.
⇒ Here, parliament (= practically Lok Sabha) will allow the govt to spend some money from the
CFI, till the (next) Appropriation Act for next financial year is passed.
⇒ Vote on Account is generally granted for two months for an amount equivalent to one-sixth of
the total budget estimation.
✋Vote on Account is no longer necessary because (अब इसक� ज�रत नहीं)
⇒ Constitution has no compulsion to put budget on a specific date. So, 2017 onwards, Modi Govt.
began tabling the budget on the first working day of February.
⇒ All the six stages are completed by the last week of March.
⇒ Appropriation bill gets passed and signed by President before completion of 31st March. So they
did not require vote on account in 2017, 2018.
⇒ (###) However, in 2019’s Interim Budget, Modi Govt demanded “vote on account” because they
planned to place full-budget after general elections and perhaps they wanted to keep the ‘option’
open for tabling a big-sized appropriation bill after winning the election. (2019 के अंत�रम बजट म�
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 301
हालांिक मोदी सरकार ने लेखानुदान क� मांग क� थी �ोंिक चुनाव के बाद बड़ा सामा� बजट प्र�ुत कर उसम� मोटी रकम का
“�व�नयोग �वधेयक” डालने का �वक�/ऐसी �खड़क�/रा�ा वे खुला रखना चाहते थे)
🚩🚩🚩FAQ: (###) I’ve 500 types of counter arguments / doubts on this (###) bullet point. Ans. Govt
did not bother to give long reasoning behind their decision. Nobody filed a PIL SC. Economic
survey, NITI Aayog and columnist did not bother to comment much on it. So, I did not bother to
think/reflect more on it, Because it is NOT an efficient way to complete syllabus. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
⇒ Our constitution does not define or require interim budget. (अंत�रम बजट का सं �वधान म� �जक्र नहीं है)
⇒ But, during election year or extreme situation (E.g. when coalition government may collapse
before its term) then it’s considered unethical for such Govt. to make drastic/populist changes in
budget like “2gm gold for the marriage of every BPL-girl.”
⇒ So, while they’ll present a budget in the regular fashion i.e. 3 documents (AFS, FinBill,
Appro.Bill) & 6 Stages of Passing. But it (should) not have grand populist announcements. (ऐसी
प�र���तमे लोक-लुभावन क� योजनाओ के साथ बजट प्र�ुत करना नै�तक नहीं होगा, वरना �वप�ी नेता जीत नहीं पाएं गे चुनाव)
⇒ Such budgets are called Interim Budgets, and were presented in 2004 (Yashwant S.), 2009
(Pranab M.), 2014 (Chidambaram P.) and 2019 (Piyush G.)
⇒ Just like a Regular General Budget, an Interim budget is valid for the whole financial year,
however in between if new government is formed, they may present another budget to change
the provisions. (वैसे तो पूरे वषर् के �लए वैध होता है)
⇒ E.g. 2014-Feb: FM Chidambaram presented (interim) budget in 15th Lok Sabha, but then
UPA/Congress defeated in general election→ 2014-July: BJP’s FM Arun Jaitley presented (Full)
General Budget in 16th Lok Sabha.
⇒ 2019-Feb: FM Piyush G. presented Interim budget in 16th Lok Sabha → 2019-May: Modi won
General Election → 2019-July: FM Nirmala S. presented (Full) Gen Budget in 17th Lok Sabha.
✋Note: throughout the handout, I’ve used the term “Full” budget to
differentiate it from “Interim” Budget for easier revision & visualization. But in
Mains, you should use the word ‘General Budget’(सामा� बजट)
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 302
20.5.1 👜👜👜👜Budget’s THEME (बजट क� �वषयव�ु)
Constitution doesn’t require, but sometimes FM will do it to create media-hype:
Budget Year Did FM Speech mention a specific theme (�वषयव�ु)?
2018 and 2019 No specific theme mentioned in speech
Had three themes: (1) Aspirational India: मह�ाकांशी भारत (2)Economic
2020 (Full)
Development for all: सबके �लए आ�थक �वकास(3) Caring India: दयभावना
• No specific theme mentioned in speech but focus on AtmaNirbhar Bharat
2021 (Full) • Paperless/Digital Budget in a Samsung tablet made in India, covered in
Red-colored cover.
⇒ Azadi ka Amrit Kaal, the 25-year-long leadup to India@100.
⇒ Four priorities: 1) PM GatiShakti, 2) Inclusive Development 3)
Productivity Enhancement & Investment, Sunrise Opportunities, Energy
Transition, and Climate Action 5) Financing of Investments
2022 (Full)
⇒ Paperless/Digital Budget in a tablet, covered in Red-colored cover.
20.6 📘📘📘📘 ECONOMIC SURVEY (आ�थक सव��ण)
- A document prepared by (usually) by the Chief Economic Adviser (CEA) in FinMin.
- ✋No constitutional obligation to prepare or present it but usually it’s tabled in the parliament a
day before the Union Budget. (सं �वधा�नक �प से ऐसा करना अ�नवायर् नहीं)
- 2019-Feb: No economic survey was presented before the interim budget.
- 2019-July: Economic Survey presented before the (Full) General Budget.
- While Budget is labelled after next financial year (e.g. 2019-20), the Economic survey is labelled
after previous Financial Year. e.g. The survey tabled on Jan-2018 labelled as “Economic Survey
2017-18”, the Survey tabled in July-2019 is labelled “Economic Survey 2018-19”.
- For faster revision/easy visualisation, throughout my handout, I’ve used following labels:
- “📙📙📙📙ES22” means Economic Survey 2021-22 presented on 31/1/2022
- “📙📙📙📙ES21” means Economic Survey 2020-21 presented on 31/1/2021. & so forth.
Table 1: Theme / Format of Economic Survey?
Till 2013-14 ⇒ Single Volume survey. (�सफ़र् एक अंक म� प्रका�शत िकया जाता था)
⇒ Adopted Two Volume Systems like “IMF’s World Economic Outlook”. (दो-अंक)
2014-15 ⇒ Vol1= future suggestions | Vol2= Past data.
2 volumes ⇒ Explicitly mentioned Theme in preface (प्रा�थन): “Creating opportunity and
reducing vulnerability” (through JanDhan-Aadhar-Mobile = JAM trinity)
2017-18 ⇒ No theme in preface. PINK Cover for -Ending Gender Violence.
2 volumes ⇒ (गुलाबी रंग का पृ�: ल��गक िहसं ा को समा� करना)
2018-19 No theme. But Sky Blue Cover for -Blueprint for making India a $5 trillion
2 volumes economy” (नीले गगन का रंग: भारतीय अथर्�व�ा को $5 िट��लयन तक ले जाना )
2019-20 No theme but Lavender Purple color cover to show the synthesis of old and new ideas
2 volumes for wealth creation & economic freedom (to do business). Just like ₹100 currency
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 303
note which comes in both “old” series as well as “new” Mahatma Gandhi series with
lavender/purple color- जामुनी: धनसृजन और आ�थक �तं त्रता के �लए नये तथा पुराने �वचारो का स��लन
Paperless / Digital Survey. Green&Red/Brownish cover with photo of healthworkers
2020-21 & Corona Virus. No theme explicitly mentioned in preface. but focus areas / major
2 volumes talking points were 1) #SavingLives&Livelihoods 2) V-shaped Recovery 3)
Countercyclical fiscal policy 4) Bare Necessities Index
⇒ Released both in digital and paper (hardcopy)
2021-22 ⇒ THEME in Preface: Art and science of policy-making under conditions of
1 Volume extreme uncertainty using “Agile” approach. ("फु त�ली" ���कोण का उपयोग करते �ए
अ��धक अ�न��तता क� ���तयों म� नी�त-�नमार्ण क� कला और �व�ान)
2022-23 To be released in 2023-January. Stay tuned for Mrunal’s Win23 Series update pack!
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 304
- 2018-2021: Krishnamurthy Subramanian served as the CEA.
- 2022-Jan: Dr V. Anantha Nageswaran as its Chief Economic Advisor (CEA). Nageswaran MBA
from IIM-A. His famous books: 1) Can India grow? 2) The Rise of Finance: Causes,
Consequences and Cures
20.7 �FINANCE MINISTRY AND ITS DEPARTMENTS: (�व� मं त्रालय और उसके �वभाग)
20.7.1 �💼💼Department of Economic Affairs (DEA: आ�थक कायर्/ आ�थक मामलो का �वभाग)
Functions of DEA:
⇒ Fiscal policy, Preparation and presentation of Union budget including the Railway component of
budget. Budget for union territories without legislature, budget for States under president rule.
⇒ DEA announces the Interest rates of small saving schemes. (Ref:1D, लघु बचत योजनाओं क� �ाज दर)
⇒ DEA maintains a website www.pppinindia.gov.in, to provide information related to Public Pvt
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 305
⇒ Web Portals of Expenditure Department:
Public Financial Management System (PFMS): for disbursing money to various
Ministries and departments at Union and State level
Bharatkosh- Non Tax Receipts Portal (NTRP): For selling India yearbook Yojana
Kurukshetra mags etc products and services by the government of India
🔠🔠❓ MCQ. Public Financial Management System (PFMS) is a web-based online software application
designed, developed , owned and implemented by the (UPSC-CDS2019-II)
A) Department of Financial Services B) Institute of Government Accounts and Finance
C) Controller General of Accounts D) National Institute of Financial Management
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 306
https://unacademy.com/lesson/mrunals-yearbook-ministries-and-departments-forms-of-
government-organisations-in-hindi/7KCEZHT4
20.7.6 �🏭🏭FinMin#5: DIPAM (�नवेश एवं लोक प�रसं प�� प्रबं धन �वभाग)
Department of Investment and Public Asset Management (DIPAM) looks after Disinvestment /
privatization of Govt Companies / Central Public Sector Enterprises (CPSE- सावर्ज�नक �ेत्र के क� द्रीय
उद्यम) (Ref 📑📑#2D: Disinvestment)
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 307
Public Sector Banks/NBFCs/AIFI e.g. SBI, Bank Board Bureau (More in
PNB, LIC, NABARD, NHB etc (What are 📑📑Pillar#1B2) (सरकारी ब�कों/सरकारी �व�ीय
they? Ref: 1B1: Classification) → → सं �ान म� उ� अ�धका�रयों के चयन के �लए अलग
सं �ा BBB है)
Government companies Other than Public Enterprises Selection Board
[Public Sector Bank/NBFC/AIFI] e.g. (PESB) under the Ministry of personnel
ONGC, Coal India, Hindustan Copper, (सरकारी ब�क/ सरकारी �व�ीय सं �ान के अलावा
Hindustan Aeronautics Limited (HAL) etc वाली सरकारी क��नयों म� उ� अ�धका�रयों के चयन
के �लए अलग सं �ा PESB है)
RBI Governor, SEBI Chief etc regulators Separate Committee headed by Cabinet
→. →. → Secretary (IAS)
The highest official in each of above 6 depts is called ‘Secretary’ (usually an IAS)
→ senior-most among them is designated as Finance Secretary=signs ₹ 1 note.
Finance Secretary usually heads the Dept of Economic Affairs (DEA)
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 308
(a) Department of Revenue (b) Department of Economic Affairs
(c) Department of Financial Services (d) Department of Expenditure
🔠🔠❓ MCQ. Fiscal Policy in India is formulated by: (MCQ-CDS-2012)
(a) the Reserve Bank of India (b) the Planning Commission (c) the Finance Ministry (d)SEBI
😰😰Impact of Tax: point where the burden Income Tax Assessee Customer/buyer (ग्राहक )
of tax is ultimately felt and can’t be (प्र�� करदाता खुद)
transferred elsewhere. (कराघात/कर का प्रभाव)
The incidence and impact of tax is…. On the same person Not on the same person.
🎓🎓Note: Above table’s deeper interpretation also involves how ‘burden’ is shifted from seller to
buyer, But we’ll not waste time learning its GRAPH/PHD. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 309
20.8.3💣💣 Adam Smith’s 4 canons of taxation (कराधान के चार �सद्धांत)
1. Canon of Equality (समानता का �सद्धांत): Tax should be equal /proportionate to income. Rich people
should pay more taxes than poors.
2. Canon of Certainty (�न��तता का �सद्धांत): dates, slabs, % should be definite & told in advance.
Randomly govt should not demand “x%” tax to build statue, temple or mosque.
3. Canon of Convenience (सु�वधा का �सद्धांत): tax payer shouldn’t be made wait for a kilometre long
queue & fillup 50 pages worth tax forms.
4. Canon of Economy (�मत��ता का �सद्धांत): to collect ₹ 100 crore tax, govt shouldn’t be spending ₹ 99
crores in salaries of tax officials.
🔠🔠❓ MCQ. Which of the following was not advocated by Adam Smith? (UPSC-CDS-2019-1)
a) Canon of equality b) Canon of certainty c) Canon of convenience d) Canon of fiscal adequacy
🔠🔠❓ MCQ. Find Correct Statements (UPSC-CDS-2016-1)
1. Ability to pay principle of taxation holds that taxes people pay should relate to their income or wealth
2. The Benefit Principle of taxation states that individuals should be taxed in proportion to the benefit they
receive from Government programmes
3. A progressive tax takes a larger share of tax from poor families than it does from rich families
4. Indirect taxes have the advantage of being cheaper and easier to collect
Answer Codes: (a) 1 and 3 only (b) 2 and 4 only (c) 1, 2 and 4 only (d) 1, 2, 3 and 4
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 310
🔠🔠❓MCQ. Corporation tax is imposed by _ _ _ [UPSC-CDS-2013-II]
(a) State Government(b) Central Govt (c) Local Government(d) State as well as Central Govt
21.1 🍋🍋🍋🍋DIRECT TAXES: MERITS AND DEMERITS (प्र�� करों के लाभ व् नुकसान)
😀😀Merits of Direct Taxes 😓😓Demerits (नुकसान)
1. Progressive (प्रगामी: richer the person higher
the tax): income inequality ⬇
2. Promotes civic consciousness (नाग�रक चेतना)
since citizen directly feels the ‘pinch of tax’
(चुभन महसूस करना).
3. To ⬆ savings & investment: Income tax
deduction/exemptions on NPS/ LIC etc. 1. Externality (बाह्यता) not counted: Academic
4. Elasticity (लचीलापन): As public’s income level Books Author vs Film star promoting cigars
⬆ then tax revenue ⬆ [30% Income Tax on both].
5. Certainty (when and how to pay IT, �न��तता) 2. Hardship not counted: Working Carpenter
6. Can ⬇ volatility in International currency [5%] vs sleeping landlord [5%] (किठन प�रश्रम के
exchange rates by imposing Tobin Tax �लए कोई �रयायत नहीं )
(📑📑More in Pillar#3) (मुद्रा �व�नमय दर क� अ��रता 3. High level of direct tax= laziness, less foreign
को कम िकया जा सकता है ) investment. (उची दरे लोगों को आलसी बनाती है)
4. Narrow base: poor people not covered. If we
try then very large Income tax staff will
required to supervise over poor people. (सं क�णर्
आधार)
5. Prone to litigation & loopholes, tax evasion,
avoidance. (📑📑More in #2B: Blackmoney)
(मुकदमेबाजी, कर-चोरी, कर-प�रहार)
21.2 🍋🍋🍋🍋UNION TAX, CESS AND SURCHARGE (क� द्रीय कर, उपकर और अ�धभार)
Any Union - Computed on taxable income, profit, transaction. Goes to Consolidated Fund of
Tax India → Later divided between Union and states as per the Finance Commission
(सं घ कर) formula. (except if IGST: divided on GST Council’s formula.)
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 311
Surcharge - Computed on Tax amount. So, it is a ‘tax on tax’. This ₹₹ will also goto CFI.
- Surcharge is not shared with States using Finance Commission Formula.
(अ�धभार) - Usually, surcharge doesn’t have any clear objective in ‘prefix’, so it may be used for
any purpose. Exception is 10% Social Welfare Surcharge (समाज क�ाण अ�धभार) on the
customs duty on imported goods. → ₹₹ specifically used for social welfare schemes
of the Union. (सामा� �प से इन पैसों का उपयोग िकस खास काम म� होता है उसे �� बताया नहीं जाता)
Cess - Computed on [(Tax) + (Surcharge, if any)]
(उपकर) - Clear objective is mentioned. E.g. Road & infrastructure cess, Health & Education,
GST compensation cess etc.
- By default, cess goes to CFI→ from there, cess goes to Public Accounts. Sometimes
there may be separate fund inside public account for it, e.g. Central Road Safety
Fund, Prarambhik Shiksha Kosh etc.
- Finance Commission can’t prescribe formula to share cess with States. (Although
some of the cess money will invisibly goto states as a part of scheme implementation
e.g. Pradhan Mantri Fasal Bima Premium share, etc. but that depends on discretion
of Union) (इस रकम को �व� आयोग रा�ों के साथ नहीं बाँट सकता. क� द्र सरकार अपने �ववेक से अलग अलग
योजनाओं म� शायद इस उपकर का कु छ पैसा रा�ों को दे सकती है )
- GST Compensation Cess is shared with States, as per GST Council formula.
<explained in the GST segment of next handout>
🚩🚩🚩FAQ: IS it compulsory that every tax MUST have Cess and Surcharge on it?
Not compulsory. Depends on Govt’s mood / discretion. (सरकार क� मज़� पर �नभर्र)
🚩🚩🚩FAQ: Is “Health Cess” and “Health & Education Cess” same or different?
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 312
Ans. Different. Observe table given above.
🚩🚩🚩FAQ: I’ve 500 other doubts. Ans. Not important for UPSC exam.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
21.2.2 🍋🍋🍋🍋: 🏦🏦 Direct Tax → Cess: 🍋🍋Pradhan Mantri Swasthya Suraksha Nidhi (PMSSN)
प्र�� करों पर लगाए गए उपकर का पैसा इस फं ड म� डाल�गे और �व�वध �ा� योजनाएं चलाएं गे
⇒ Govt levies 4% Health & Education Cess on direct taxes such as income tax & corporation tax.
(प्र�� करों पर �ा� व �श�ा उपकर)
⇒ 2021-March: govt created a new “Non-Lapsable” fund under Public Account. (What is “Non-
Lapsable fund? Ref: Pillar#2D). लोक लेखा म� एक ग़ैर-��गत �न�ध बनायी जाएगी
⇒ This fund will receive ₹ ₹ from above cess.
⇒ Health ministry will use this money for (More in 📑📑Pillar#6)
o 1) Ayushmann Bharat & its sub schemes like PM-JAY (5L-Health insurance),
o 2) Pradhan Mantri Swasthya Suraksha Yojana (setting up AIIMS-like institutions in
every state & upgrading government medical colleges).
o 3) National Health Mission (NHM) रा��ीय �ा� �मशन
o 4) Health emergencies like Corona �ा� आपदाएँ
21.3 🍋🍋🍋🍋: 🏦🏦 DIRECT TAX → CORPORATION TAX (�नगम कर)
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 313
Corporation Tax 😰😰Before 🤩🤩After
+ 0-12% surcharge +4% cess (on tax +
depending on profit surcharge)
+ 4% health edu cess = 25.17%
🌱🌱 New INDIAN MFG company -- 15 %
registered from 1/10/2019 onwards. (but +surcharge & cess as
they must start manufacturing by given above
31/3/2024) = 17.01%
🐼🐼 Foreign Company’s profit from India 40%+surcharge+cess no change
🐷🐷 Zero TAX companies 18.5% MAT 15% MAT
Related Topics: Laffer Curve, Tax elasticity etc in 📑📑2B: black money handout.
21.3.3 🍋🍋🍋🍋: 🏦🏦🏦🏦: 🤓🤓✋ Corporation Tax: Exemption from audit for small companies
⇒ Audit (लेखा परी�ण) is a systematic and scientific examination of the Balance Sheet/Accounts
Books/Financial Transactions. Audit is done by an independent person known as 🤓🤓 Auditor.
⇒ By default, companies with turnover above ₹1cr, need to present their audited accounts to the
Govt. (1 करोड़ से �ादा क� कमाई करने वाली कं प�नयों ने अपना लेखा-परी�ण सरकार म� जमा करना होता है)
⇒ 💼💼Budget-2021: if the company carries out 95% of their transactions digitally, they'll be
exempted from the audit requirement, if their turnover upto ₹10cr. (अपना �ादातर लेनदेन िड�जटल
मा�म से करने वाली कं प�नयों को लेखा परी�ण से मु��- भले ही उनक� कमाई 10 करोड़ तक हो।)
⇒ 🤩🤩Benefit? 1) No need to hire auditors → ⏬Tax Compliance Burden for the company (कर
अनुपालन के खच� कम होंगे कं पनी के �लए) 2) ⏫digital Transaction → ⏬ scope for Tax Evasion & Black
Money (िड�जटल भुगतान म� बढ़ोतरी से काले धन और कर चोरी के अवसरों म� कमी)
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 314
21.3.4 🍋🍋🍋🍋: 🏦🏦🏦🏦 Corporation Tax on Startups
Figure 2: “अभी अभी धं धा शु� िकया है, थोड़ा ब� दो, मा�लक!” IT Dept: “ठीक है, �सफर् थोड़े वष� के �लए ही!”
Startup is a company not older than 10 years and not having turnover more than 100 cr. & is doing
innovation in goods/services. Govt helps them through Startup India Scheme (📑📑more in Pillar4B).
Startup can claim 100% deduction (=Tax Holiday) on its profits, for 3 years out of the first 10
years of registration incorporation.
Related concepts: Angel Tax (More in 📑📑Pillar#2B: Black Money)
21.4 🍋🍋🍋🍋: 🏦🏦 EQUALISATION LEVY / GOOGLE TAX (समकारी लेवी/ गूगल टै�)
Figure 3: “हमारा server तो भारत म� है ही नहीं तो हमे ब� दो!” IT Dept: “तुमको तो �ब�ु ल ही नहीं ब��गे!! 👺👺🤬🤬
⇒ If a foreign company makes profit in India, they have to pay 40% Corporation Tax.
⇒ If an Indian businessman purchases digital advertisement slots in google-adsense / facebook =
those (foreign) digital-ads companies are making profit.
⇒ But earlier, google/facebook did not pay tax on that profit, claiming their business activity (of
displaying digital-ads) is done outside India on global servers.
⇒ So, Budget-2016 imposed tax on such income/fees of foreign digital advertisement companies.
⇒ Officially called “Equalisation Levy” (EQL), unofficially nicknamed “Google Tax” / “Digital
Service Tax (DST).
⇒ It’s not part of “Income Tax” or “Corporation Tax” under the Income Tax Act 1961, but a
separately imposed by the Finance Bill/Act 2016.
⇒ Foreign Company can’t escape it saying we’re protected under Double Taxation Avoidance
Agreement (DTAA) in our home country. (More in 📑📑Pill#2B: blackmoney)
Table 3:✋ further operational guidelines NOTIMP. Not-here4C.A. Exam
💼💼Budget- • 6% Equalisation Levy on foreign digital advertisement companies e.g. Google’s
2016 adsense, facebook digital ads (�वदेशी िड�जटल �व�ापन कं प�नयाँ)
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 315
⇒ 🤧🤧 Corona crisis: foreign companies kept requesting Indian govt to defer tax-filling dates &
reduce tax%. But Indian Govt not giving them relief. (कोई �रयायत नहीं �मलेगी)
⇒ 2021: India & USA working on a deal to ‘phase-out’ equalization levy under ‘Global Minimum
Tax’ regime. (More in 📑📑Pillar#2B: Black Money) (इसे धीरे धीरे ख़� कर िदया जाए एसा समझौता होने वाला है.)
Related terms:
1. Significant Economic Presence (SEP: उ�ेखनीय आ�थक उप��ती): Concepts basically means if a
foreign company is making money from Indians through digital ads / streaming services (e.g.
NETFLIX videos from overseas servers) then the company has ‘SEP’ in India, therefore, Indian
govt has powers to tax it. 💼💼Budget-2020 made some technical changes into it. But, poor
cost:benefit chasing it for MCQs.
2. OECD used a phrase ‘Tax challenges of digitization’ to denote above problems where digital
services type Multinational Corporation (MNC) are avoiding taxes. (ब�रा��ीय �नगमो द्वारा कर को टालना)
3. France has implemented tax on large technology companies called GAFA Tax (Google Apple
Facebook Amazon) from 1st Jan 2019. Other nations also doing similar.
4. 🚩🚩🚩FAQ: What is the difference between tax, duty, levy?= if you get selected in IRS (Indian
revenue service) they’ll teach you in training. 🎓🎓✋Not-imp here. #थोड़ा-पढ़ो-आगे-बढ़ो.
5. 🚩🚩🚩FAQ: What is onshore/offshore safe harbor regime? 🎓🎓✋Not-important
Related terms: Global Minimum Tax, DTAA, GAAR, PoEM etc in 📑📑Pillar#2B:
🔠🔠❓ MCQ. With reference to India’s decision to levy an equalization tax of 6% on online
advertisement services offered by non-resident entities, Find correct statements? (Pre-2018)
1. It is introduced as a part of the Income Tax Act.
2. Non-resident entities that offer advertisement services in India can claim a tax credit in their
home country under the “Double Taxation Avoidance Agreements”.
Answer Codes: a) 1 only b) 2 only c) Both 1 and 2 d) Neither 1 nor 2
21.5 🍋🍋🍋🍋: 🏦🏦🐷🐷 MINIMUM ALTERNATE TAX (MAT: �ूनतम वैक��क कर)
- Some industrialists make profit but use tax-deduction, exemptions, depreciations and
accounting tricks to show ₹0 taxable income to escape paying Corporation Tax. So,
- Budget-1996 (Chidambaram) introduced 18.5% MAT on book profit of such ‘ZERO TAX
Companies’, using a different type of formula. (What was the formula, not important).
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 316
- Modi govt ⏬ reduced MAT from 18.5% → 15%
🚩🚩�FAQ: if it is showing zero taxable income, then how can we complete the tax on it?
Ans. I am done teaching the one-liner-GK for Exam. Beyond that you may feel free to do PhD &
Chartered accountant-giri from https://www.incometaxindia.gov.in/tutorials/10.mat-and-amt.pdf
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 317
21.8 🍋🍋🍋🍋: 🗃🗃🗃🗃 BUYBACK TAX (शेयर क� वापसी-खरीद पर कर)
Profit making companies sometimes repurchase their own shares back from shareholders
⇒ Impact? These many shares are extinguished from company’s liability side.
⇒ Benefit to company? No need to pay dividend on these shares in future + other benefits that are
imp for chartered accountant exam but not for IAS exam so we will not waste time.
⇒ Companies need to pay “20% Buyback tax” to Govt, WHEN company buys back its own shares
from the shareholders.
🚩🚩🚩FAQ: is it compulsory for shareholder to give his shares back in such buyback?
Ans. No, it is not compulsory. It depends on shareholder’s wish. E.g. 2022-March: Tata consultancy
services (TCS) share was trading at ₹3700 in secondary market. Company made offer to shareholders
that “We’ll buy back every 13 shares out of 50 shares at ₹4500.” So if any shareholder wanted to
make profit, he could accept this buyback offer.
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 318
21.9 🍋🍋🍋🍋 : 🏠🏠🏠🏠🏠🏠CAPITAL GAINS TAX (CGT: पूंजीगत लाभ कर)
- When an owner makes profit by selling his capital assets such as non-agro-land, property,
jewellery, paintings, vehicles, machinery, patents, trademarks, shares, bonds & other securities-
then he has to pay CAPITAL GAINS TAX (CGT).
- Depending on how long did the owner keep that asset before selling it, he will pay:
- EITHER Long Term Capital Gains tax (LCGT: x% दीघार्व�ध) OR
- OR Short Term Capital Gains tax (SCGT: y% अ�ाव�ध)
- In practice, the buyer will deduct that much ₹ ₹ portion from the payment to seller, and deposit
to the government. (वा��वक जीवन म� खरीदार ये रकम बेचने वाले के भुगतान म� से काट के सरकार को जमा करता है )
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 319
- However, some people form shell companies abroad & do transactions from there to avoid
paying taxes to India. (More in 📑📑Pillar#2B: Black Money. For Shell companies, DTAA, GAAR,
Round Tripping, Angel Tax etc)
21.9.1 🔗🔗🔗🔗:🍋🍋 Bitcoin Profit pe 30% Tax and transfer pe 1% TDS in 👜👜👜👜Budget-2022
- 👜👜👜👜Budget-2022 announced 30% capital gain tax (CGT) on income from virtual digital assets
such as cryptocurrency, bitcoin, Non-Fungible tokens (NFT) etc. (वचुर्अल िड�जटल प�रसं प��यों से �ई
आमदनी पर 30% पूंजीगत लाभ कर/टे� लगेगा.) (More in 📑📑Pillar#2A: Budget Taxation)
- Thus, while crypto trading is not illegal at present, but, the Indian govt does not want to
encourage it- that's why such a high level of taxation- similar to 30% tax on winnings casino-
gambling, lottery or horse-race-betting. (सरकार इतना �ादा टै� लगा रही है �ोंिक वह �नवेशको को िक्र�ॉमुद्रा म�
�नवेश करने के �लए प्रो�ाहन नहीं देना चाहती.)
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 320
🚩🚩🚩🎓🎓 FAQ: I’ve 500 types of doubts about “loss-offsetting” provision in 👜👜👜👜Budget-2022.
Ans. Not important for exam. Plz consult your Chartered Account if facing real-life tax problems.
- 👜👜👜👜Budget-2022: 1% Tax Deducted at Source (TDS) on buying of Virtual Digital Asset (VDA
– such as bitcoin, NFT etc)- to trace the money trail / tax evasion. (More in 📑📑Pillar#2A)
- 😰😰Challenge/Criticism? Difficult to trace if buyer/seller doing transactions using crypto-wallets
that are not linked with PAN-Bank Accounts. (पैसों के लेन देन पर �नगरानी रखने के �लए TDS भी काटा जाएगा.
हालाँिक वा��वक �ज़दं गी म� इसम� TDS काटना काफ़� मु��ल होगा ऐसा �वशेष�ों को डर है।)
🚩🚩🚩🎓🎓 FAQ: I’ve 500 types of doubts about “TDS for transaction above ₹10,000 from 1st july”
provision in 👜👜👜👜Budget-2022. Ans. Not important for exam. Plz consult your Chartered Account
if facing real-life tax problems.
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 321
🔠🔠❓MCQ: In which of the following circumstances may ‘capital gains’ arise? (Prelims-2012)
1. When there is an increase in the sales of a product.
2. When there is a natural increase in the value of the property owned.
3. When you purchase a painting & there is a growth in its value due to increase in its popularity.
Answer Codes: (a) 1 only (b) 2 and 3 only (c) 2 only (d) 1, 2 and 3
James Wilson (financial member of the Council of India, founder of the Economist magazine and
Standard Chartered Bank) introduced income tax in India on 24 July 1860 to compensate the British
losses during 1857’s Sepoy mutiny. So, 24th July is celebrated as Income Tax Day (Aaykar Diwas).
Suppose the gross income of an Indian Resident (age less than 60) is ₹9 lakhs.
- Out of this gross income, first we have to subtract the tax-deductions and tax-exemptions (कर-
कटौती और कर-छू ट) like income from agriculture, investments made in Provident Fund, NPS, LIC,
Medical Insurance etc (upto a certain limit), house rent allowance (HRA), repayment of
home/education loan, money donated in eligible charitable funds etc
- 💼💼Budget-2019: additional tax deduction (कर कटौती) given
- if took loans to buy electric vehicle �� �
- if a taking home loan for the first time. 💼💼Budget-2021 → extended this scheme till
31/3/2022 (छोटे मकान खरीदने के �लए म�म वग�य प�रवार ने जो कजर् �लया होता है उस कजर् पर जो �ाज चुकाना
होता है उस िहसाब से आयकर म� उ�� �रयायत दी जाएगी.)
- 👻👻Atma-Nirbhar 2020: �First time home buyers of home upto Rs. 2 cr will get income tax
relief. How exactly? Associated concepts of circle rate of stamp duty etc. = beyond the scope of
UPSC MCQs. We'll not waste time. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
- 👻👻Atma-Nirbhar 2020: If Employers (boss) and wellwishers gave upto ₹10 lakh financial help
to a person for Corona illness/death → such income will not be counted in his taxable income
- 👜👜👜👜Budget-2022: Some tax deduction benefit to PH on buying insurance policy, State Govt
Employees on investment in NPS but NOT IMP.
- After subtracting such all things, suppose taxable Income is: ₹5,50,000/-
- From this amount, Salaried individuals get standard deduction of ₹50000.
- (Previously, it was ₹40k but Interim-Budget-2019 raised it to 50k).
- So, ₹5,50,000 - 50000 = ₹5 lakh is the taxable income, THEN…
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 322
Total Taxable Income: ₹5 lakh Income Tax Amount
Out of that upto 2.5 lakhs 0% 0%
From 2,50,001 to 5 lakhs = ₹2.5 lakhs 5% of 2.5 lakhs* 12500
left
From 5,00,001 to 10 lakhs = ₹5 lakhs 20% of of that 5 lakhs N/A
From 10,00,001 & above 30% of that amount N/A
Total Income Tax ₹12,500
Minus Tax Rebate of ₹12,500 (if taxable income is upto ₹5l)** -(MINUS) ₹12,500
0
Total Income Tax to be paid
Surcharge (अ�धभार): 10%-37% surcharge on Tax amount, IF 0% of 0% = 0
taxable-income is above ₹50 lakhs
Cess (उपकर): 4% Health and education cess on (Tax + Surcharge). 4% x (0+0) = 0
(Before Budget-2018, there was only 3% Education Cess).
Total payment to IT Dept: Income Tax + Surcharge + Cess 0
- **Previously, rebate was ₹2500 if taxable income upto ₹3.5 lakhs but Interim-Budget-2019
raised it to keep middle-class voters happy before General Elections.
- Full-Budget-2019: no changes in income tax %rates or slabs, but Nirmala S. justified that ‘rich
people need to contribute more for national development, so I’m raising the surcharges on them.’
Surcharge if taxable income is Before Full-Budget-2019 After full-Budget-2019
More than ₹50 lakh upto 1 cr. 10% Unchanged
More than ₹1 cr upto 2 cr. 15% Unchanged
More than ₹ 2 cr upto 5 cr. 15% 25%
More than ₹5 cr 15% 37%
2019-Sept: Facing protests from the Foreign Portfolio Investors (FPI), Nirmala.S clarified above
enhanced surcharges will not be applicable on the profits made from selling listed companies’ shares.
But, poor cost:benefit chasing all such technical things.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 323
21.10.2 (Optional) New slabs for Income Tax in 💼💼Budget-2020
IF you give up exemptions and deductions (छू ट और कटौती) such as
- Salaried employees’ standard deduction, HRA, Leave Travel Concession (LTA)
- Section 80C-walle deduction (e.g. investments made in LIC/NPS etc upto ₹1.5 lakh per year) Etc.
- Then you can opt to pay with new (reduced) income tax slabs viz.
(new slab, if you give up deduction & (old slabs, if u don’t give
TAXABLE Income (per annum)
exemptions) up)
Upto ₹2.5 lakh Nil / 0% Nil / 0%
>₹2.5 lakh-₹5 lakh 5% (But 12500 rebate so
5% (But 12500 rebate so in reality ₹0)
(meaning from 2,50,001 to 5,00,000) in reality ₹0)
>₹5 lakh to ₹7.5 lakh 10%
20%
>₹7.5 lakh to ₹10 lakh 15%
>₹10 lakh to ₹12.5 lakh 20%
>₹12.5 lakh to ₹15 lakh 25% 30%
>₹15 lakh 30%
Surcharge & cess applicable? Yes Yes
E.g. An employee with annual salary
₹1.95 lakh** ₹2.73 lakh
₹15lakhs will pay total INCOME TAX
**It is left to individual’s discretion whether he wants to stay in old / new system. (जबरजसती निह है।)
But if all people opted for the new slabs then Govt will hypothetically get ₹40,000 crore less
(compared to old system). Technically, called “Revenue forgone or Tax Expenditure” (अगर सब
आयकर-दाता नयी प्रणाली/�स�म म� आ जाएँ गे तो सरकार का जो नुक़सान होगा-वो “प�र�� राज�/राज� खचर्” है).
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 324
⇒ But, ⬇Income tax paid = ⬆disposable income with people → ⏫shopping/ demand →
production, economic growth etc. (खचर् करने के �लए उपल� आय बढ़ेगी �जससे माँग और उ�ादन म� वृ�द्ध)→
⇒ And shopping spree = ⬆Indirect tax collection e.g Mobiles = 18% GST.
⇒ Currently the Income Tax Act is riddled with various exemptions and deductions. Ordinary
people can’t understand and have to consult Chartered Accountants (CA) & investment advisors
before filing taxes. Now process is easier. (सी.ए. क� सहायता नहीं लेनी होगी. कराधान का सरलीकरण होगा)
⇒ 2017: Finance Ministry setup this taskforce under CBDT member Arbind Modi. Later, he retired
so another CBDT member Akhilesh Ranjan was made Chairman.
⇒ Taskforce had noted IRS officer, Chartered Accountant, Tax Lawyer, Corporate Consultant etc.
⇒ While Government did not disclose full report in public domain, but according to journalists, it
contains following suggestions:
1. Replace the Income Tax Act 1961 with a simpler Direct Tax Code (प्र�� कर सं िहता).
2. Reduce the corporation tax further. �नगम करों म� और कटौती क� जाए
3. Tax rates for domestic and foreign companies should be same. This will encourage ease of doing
business in India. (भारतीय और �वदेशी कं प�नयों पे एक समान �नगम कर लगे तािक �ापार म� सुगमता)
4. Give additional tax relief for the startup companies. (More in Pillar4B)
5. Increase the number of tax slabs from present three (5%,20%,30%) to four (10%, 20%, 30% and
lastly 35% for super-rich earning ₹ 2 crore />).
6. Abolish Dividend Distribution Tax (DDT). [which is actually done in 💼💼Budget-2020]
7. Setup Litigation Management Unit to look after the tax related court cases in an efficient
manner. (मुकदमों क� प्रबं धन इकाई बनाई जाए तािक कराधान के के सों का प्रभावी �प से �नपटारा हो सके )
++ many other reforms, but poor cost:benefit chasing them. #थोड़ा-पढ़ो-आगे-बढ़ो
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 325
21.12🍋🍋🍋🍋DIRECT TAXES: MISC. CONCEPTS (इधर उधर के �छटपुट मुददे)
21.12.1 🍋🍋👪👪Hindu Undivided Family (HUF) (िहंदू अ�वभा�जत प�रवार):
- A Hindu, Buddhists, Jains, or Sikhs family members can come together, pool their assets and
form an HUF under the Income Tax Act. (उनको आयकर बचाने म� कु छ फ़ायदे होते ह�)
- HUF is taxed separately from its members, & helps saving taxes due to certain
provisions/loopholes of Income Tax Act. How exactly? Ans. not here for CA exam.
21.12.2 🍋🍋�Presumptive Taxation (प्रक��त कराधान)
- Salaried employees can easily compute their taxable income from their annual salary, & pay
income tax. (तन�ाह-शुदा/ वेतन-भोगी कमर्चारी के �लए आयकर �गनना ब�त आसान होता है)
- Companies hire full time Chartered Accountants to computer their taxable income and pay
Corporation tax. (और कं पनी के मा�लक तो िहसाब िकताब रखने के �लए CA को नौकरी पे रख�गे)
- But self-employed freelance consultants / professionals such as lawyers, doctors, fashion
designers, DJ-walle-babu etc. face difficulty in keeping such account books. (लेिकन �रोजगा�रयों के
�लए िहसाब िकताब रखना थोड़ा मु��ल होता है )
- So, for above persons, Income Tax Act has Presumptive Taxation System i.e. their
‘income/profit’ is computed as “x%” of their gross receipts, and on that amount they’ve to pay
income tax (depending on slabs) + applicable cess and surcharges. (प्रक��त कराधान प्रणाली: ��� क�
सकल आय म� से कु छ प्र�तशत उसका मुनाफा मान �लया जाएगा, उस मुनाफ़े पर उसने आयकर भरना होगा)
- To encourage less-cash-economy, Budget-2017 had given benefits in this presumptive taxation
calculation formula, If the entrepreneur received payments in cashless format -NEFT, RTGS,
Cheque, Card etc. (यिद िड�जटल भुगतान से लेन देन कर�गे तो इस प्रणाली म� भी और �रयायत� दी जाएं गी.)
Table 4: ✋don't confuse the terms and at the same time no need for CA-giri
Income Tax on income ⇒ A direct tax levied by Union.
other than agri → ⇒ Every resident has to pay it on his taxable income.
(आयकर ) ⇒ Within that income tax: lawyers, doctors, fashion designers etc.
self-employed/freelance professionals do calculation of income
tax using Presumptive Taxation
Professional tax ⇒ It is a separate direct tax Levied by State Govt on the
(�वसाय कर) →[गैर-िकसान professionals (who are not farmers).
पेशेवर पर रा� सरकार का कर] ⇒ Constitution says it can’t be more than ₹2,500 per yr per person.
21.12.3 🍋🍋⏰Advance Tax ? (अ�ग्रम कर)
- New financial year starts from 1st April 2019 and ends on 31st March 2020.
- If everyone paid all of their direct taxes at 11:59PM on 31st March 2020, then govt. will face
money-shortage for the whole year till 31st March midnight comes.
- So, Advance Tax mechanism requires people to pay their Income tax and Corporation tax in
advance-instalments on quarterly basis (every 3-3 months), If their annual tax liability is ₹10,000
or more. (बड़े आयकरदाता और कं प�नयों ने हर तीन तीन महीने पर िक�ों म� कर जमा करना होगा)
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 326
21.12.4 👻👻 ATMA NIRBHAR BHARAT → Tax Ordinance 2020 [कर अ�ादेश]
- Traditionally financial year ends @31st March 2020. So, accordingly, people/companies deposit
the taxes, fillup the tax return-forms, buy LIC/PPF/NPS policies (for tax deduction) etc.
- But, corona lockdown → Ordinance extended deadlines to file Income tax, TDS, TCS and GST
etc. to June 2020. (कोरोना ताला-बं धी मे कराधान क� आ�खरी तारीख/अं�तम �त�थयों म� कु छ �रयायत�/ छू ट दी गई )
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 327
21.14🍋🍋�✂TAX DEDUCTED AT SOURCE (TDS): (स्रोत पर कर कटौती)
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 328
21.14.1 👻👻 (🍋🍋🍋✂) TDS → ATMA NIRBHAR BHARAT REFORMS
⇒ Whenever salary, contract, professional fees, interest, rent, dividend, commission, brokerage, etc.
are paid, the payment giver is required to cut a certain % of the amount as TDS and deposit to
the Income Tax Department. It helps in tracking tax evasion & tax avoidance.
⇒ These TDS rate% vary as per nature of payment. (It could be 0.5% on some payment, it could be
10% on some payment etc.)
⇒ FinMin had ⏬ TDS% by 25% compared to their original rates so as to unlock ₹50,000 cr in the
hands of people. = ⏫shopping → economic revival. (कोरोना के दौरान TDS दरों म� कटौती क� गई)
- If a rockstar buys an SUV car worth ₹25 lakhs, then it means he must be a rich man. How to
ensure he is paying Income Tax regularly (apart from TDS mechanism)?
- So, the car showroom owner (seller) is required to collect extra 1% from Rockstar (Buyer) and
deposit to IT-dept. Rockstar will have to file tax-return to unlock this amount.
- Does this apply on used cars? Ans. we are not here for CA exam.
- Indian residents can convert their ₹₹ into foreign currency with the help of RBI-authorized
forex dealers under, RBI’s Liberalised Remittance Scheme (LRS: More in 📑📑Pillar3).
- 💼💼Budget-2020: Authorized Forex dealers will have to cut 5% TCS while converting Indian ₹₹
into foreign currency. Similar norms on foreign tour operators.
- A person is eligible to receive income tax refund from IT-dept IF he has paid more tax to the govt
than his actual tax liability. e.g. If college deducted 10% TDS from freelance visiting faculty
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 329
payment, but what if he was in 0% or 5% Income Tax slab? Then, Income Tax Department will
refund his money with interest.
- Similarly, GST refund can be claimed by an entrepreneur from GSTN webportal.
- 👻👻ATMA NIRBHAR BHARAT FM announced, “we’ll issue tax refunds more quickly.” So more
shopping demand ⏫→ economic revival. (�रफं ड का पैसा ज� से ज� आपके खाते म� जमा करवा द�गे)
21.15🍋🍋MISC. DIRECT TAXES - FINANCIAL TRANSACTION TAXES (�व�ीय लेनदेन कर)
21.15.1 🍋🍋🍋🍋 (Concept) Tobin Tax / Robinhood Tax
- 1970s: Nobel recipient American economist James Tobin proposed a small tax everytime
currency is converted into another currency (e.g. $ to ₹).
- Such tax will discourage short term speculative investment and flight of capital from one country
to another = stabilizing the global economy and currency exchange rates and share market.
- In India, foreign currency conversions subjected to GST (which is in indirect tax). However,
some other nations collect it as direct tax. (More in 📑📑Pillar#3A)
21.15.2 🍋🍋🍋🍋STT & CTT (प्र�तभू�त लेनदेन कर और व�ु लेनदेन कर)
- Securities Transaction Tax (STT: प्र�तभू�त लेनदेन कर) is levied on the sale and purchase of shares,
ETF-units, derivatives and other securities at stock-exchanges.
- Its rate (0.001%-2%) varies as per the nature of the securities.
- Commodities Transaction Tax (CTT: व�ु लेनदेन कर) is levied on non-agricultural commodities
traded at Commodities-Exchanges. Rate ~0.01%.
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 330
Table 5: Not here for C.A. Exam, #थोड़ा-पढ़ो-आगे-बढ़ो
Direct Tax By Description
Capital Gains Union Applicable when any capital asset e.g. home/share/bond/bitcoin is “sold
Tax Govt at profit” by its previous owner.
Securities Union ⇒ Applicable on the selling price of share, bond and other securities.
Transaction Govt ⇒ Irrespective of whether seller is making profit or loss.
Tax
Dividend Union ⇒ Applicable on the dividend paid by by company to a shareholder.
Distribution Govt ⇒ 💼💼Budget-2020 abolished this tax. (ये टे� तो रद्द/बं ध हो गया है)
Tax
State ⇒ Applies on value of share/bond/securities, immovable properties
Govt (e.g. building) and certain types of legal agreements e.g. rent
agreement etc.
⇒ Irrespective of whether seller is making profit or loss.
⇒ 2020: Union govt amended the Indian Stamp Act, 1899 so that the
Stamp Duty
Stamp duty rates on share/bonds/securities become uniform across
(�ा� शु�)
the states. (प्र�तभू�तयों पर �े� शु� के दरों को सभी रा�ोमे एकसमान िकया).
Union collects → distributes it to State Govt of domicile of the
buyer. (प्र�तभू�त खरीदार �जस रा� का है, उधर क� रा�सरकार को �मलेगा)
⇒ Corona crisis → Union Govt postponed implementation date.
⇒ 🎓🎓✋Further operational mechanism/rules= poor cost:benefit.
Upcoming Handouts in Pillar#2
2A1) ✅ Direct Taxes
2A2) Indirect Taxes & GST
2B) Black Money, 15th Finance Commission
2C) Subsidies, Salaries, Revenue Expenditure, Revenue Deficit
2D) Disinvestment, Deficit, FRBM Act, Fiscal Council, Budgeting-Railway budget, plan-non plan budget,
& scheme types etc.
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 331
PILLAR #2A2: BUDGET: TAXATION: Indirect Taxes & GST
Table of Contents
22 💼💼BUDGET→ ⏳REVENUE PART→ 📥📥RECEIPTS→ 🍋🍋TAX →🛒🛒 Indirect Taxes ......333
22.1 🍋🍋🍋🍋 Indirect Taxes: types (अप्र�� करों के प्रकार) .......................................................................334
22.2 🍋🍋🍋🍋 Indirect Taxes: merits and demerits (लाभ व् नुकसान ) ....................................................334
22.3 🍋🍋🍋🍋🍋🍋🍋🍋 (Concept) Pigouvian Tax (�पगो�वयन कर) ............................................................335
22.3.1 🍋🍋🍋🍋🍋Cess and Surcharges on Excise & Customs....................................................335
22.3.2 🍋🍋🍋🍋⛽Indirect Tax → ⛽Petrol & Diesel price high because ................................335
22.3.3 🍋🍋🍋🍋⛽Indirect Tax → additional differential excise duty on Unblended Petrol .336
22.3.4 ⛽🛳🛳Windfall Tax on export of petrol/diesel/fuel (2022) ..............................................336
22.3.5 🍋🍋🍋🍋⛽: GST on Petrol Diesel Electricity: NITI Aayog 6 year roadmap .................337
22.3.6 ⛽Petrol-Diesel: Dynamic Fuel Pricing System & oil bond repayment .......................337
22.4 🍋🍋🍋🍋🍋↗�Cascading Effect of Indirect Taxes..............................................................339
22.5 🍋🍋🍋🍋🍋🍋🍋🍋: Indirect Taxes: A Timeline of Reforms ...........................................................340
22.6 🍋🍋🍋🍋🍋🍋 Indirect Taxes → GST: Timeline (समयरेखा) ............................................................342
22.7 🍋🍋🍋🍋:📙📙📙📙 GST: 101st Constitutional Amendment Act, 2016 ........................................342
22.8 🍋🍋🍋🍋: 🧔🧔🧔🕉🕉 GST Council: Composition? जीएसटी प�रषद ................................................343
22.8.1 🧔🧔🧔🕉🕉 GST Council: Functions? They’ll decide following- ....................................343
22.8.2 �GST Council Decision not binding on States .................................................................345
22.9 🍋🍋🍋🍋🍋🍋 GST Input Tax Credit (ITC: इनपुट कर प्र�य) ............................................................345
22.9.1 🍋🍋🍋🍋↩ Inverted Duty Structure Problem in GST on Textile ..................................348
22.9.2 💿💿GST: Exempt vs ZERO RATED ....................................................................................348
22.9.3 💉💉Vaccine GST can’t be 0% ZERO RATED or “EXEMPTED” because....................349
22.10 🍋🍋🍋🍋🍋🍋🍋🍋 Centre’s Indirect Taxes subsumed in CGST ...............................................350
22.10.1 📈📈 GST Revenue Collection Figures: जीएसटी राज� प्रा�� के आंकड़े....................................352
22.11 🍋🍋🍋🍋(�🕉🕉)🌬🌬 States’ Indirect Taxes subsumed in SGST ..........................................353
22.12 🍋🍋🍋🍋🍋 GST Rates on Services =0%: सेवाओं पर जीएसटी क� दर ............................................354
22.12.1 🍋🍋🍋🍋🍋🍋 GST Rates on Goods : 0% removed............................................................356
22.13 🍋🍋🍋🍋🍋🍋 GST Rates on Goods : 0%: सामान पर जीएसटी क� 0% दर� ........................................356
22.13.1 🍋🍋🍋🍋Indirect Tax → 💊💊GST Rate ⏬ on Corona Related Items (2021-Jun) .......359
22.14 🍋🍋🍋🍋⏰🗓🗓 GST Composition Scheme (जीएसटी सं रचना योजना) ..........................................360
22.14.1 🍋🍋🍋🍋⏰🗓🗓 GST Mechanism: Quarterly Returns and Monthly Payment of Tax
(QRMP) 360
22.14.2 🍋🍋🍋🍋: 💸💸💸💸(😈😈) 1% GST deposit in cash for controlling fake ITC claims ..........360
22.15 🍋🍋🍋🍋↩ Reverse Charge Mechanism (�वपरीत प्रभार क� �व�ा) ...........................................361
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 332
22.16 🚛🚛🚛🚛 E-way Bill System (ई-वे �बल प्रणाली) from 2018 onwards ...........................................361
22.17 🧔🧔 → 🤑🤑(��) Compensation to States: WHY?..........................................................362
22.17.1 🧔🧔 → 🤑🤑(��) Compensation to States: HOW? .....................................................362
22.18 🤧🤧🤧🤧:🧔🧔 → 🤑🤑(��) GST Compensation & Back2Back Loans .............................363
22.18.1 🤧🤧🤧🤧🤧🤧[🧔🧔 → 🔪🔪(�� GST compensation: "back to back" loans ₹1.10 lcr....364
22.18.2 🤧🤧🤧🤧🤧🤧[🧔🧔 → 🔪🔪(�� Back to Back loans: Beneficiary States .........................365
22.18.3 🤧🤧🤧🤧🤧🤧:⚖ GST Back to Back Loans & Fiscal Deficit / FRBM for States ..............365
22.18.4 ✍Conclusion : GST compensation (�न�षर्: जीएसटी मुआवजे के बारे म�) ...............................365
22.19 🍋🍋🍋🍋🕵🕵 GST Related Organizations (सं �ाए) .....................................................................365
22.19.1 🕵🕵�� Group of Ministers (GoM: मं �त्रयों का समूह) ........................................................365
22.19.2 Distribution of Admin. Responsibilities प्रशास�नक �ज�ेदा�रयों का �वभाजन ...........................366
22.19.3 ⚖🕵🕵🍕🍕 National Anti-Profiteering Authority (NAA/NAPA) ..................................366
22.19.4 🕵🕵🍼🍼 Authority for Advance Ruling (AAR-अ�ग्रम फै सलों के �लए प्रा�धकरण) .........................366
22.19.5 🕵🕵💻💻GSTN Network (Not for Profit Company- मुनाफ़ा रिहत कं पनी ) ..............................367
22.19.6 📲📲 💻💻 Project Saksham: Digital/ICT integration (2016) ..............................................367
22.19.7 🔢🔢🔢🔢 HSN and SAC Codes ..............................................................................................368
22.20 🔢🔢🔢🔢🔢🔢 PAN vs GSTIN vs Aadhar ...................................................................................368
22.20.1 🔢🔢🔢🔢🔢🔢 PAN/GSTIN vs UID (=Aadhar Card) ...........................................................369
22.21 🍋🍋🍋🍋🍋🍋 GST: Benefits (लाभ) ...............................................................................................370
22.21.1 🍋🍋🍋🍋🍋🍋: ⚓ GST Benefit: Zero Rated Exports (शू� रेटेड �नयार्त ) ................................372
22.22 🍋🍋🍋🍋🍋🍋 GST: Challenges for Mains & Interview (चुनौ�तयां).............................................372
22.22.1 🔢🔢🔢🔢High Rates and Multiple Slabs (उ� दर और कई �ैब) ..............................................372
22.22.2 🤹🤹😢😢Frequent changes harming long term business planning ..................................373
22.22.3 📉📉📉📉 Fall in collection (आमद म� कमी) .................................................................................373
22.22.4 🤯🤯Inconvenience to Small Traders (छोटे �ापा�रयों के �लए असु�वधा) ....................................373
22.23 ✍ GST: Conclusion Template (सार/�न�षर्) ...........................................................................374
22.24 ✍🎺🎺Mock Q for Mains GSM2/GSM3 (250 words each)................................................374
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 333
- In the indirect taxes, tax incidence and tax impact does not fall on the same person. E.g. Customs
Duty on import and export, Excise duty on manufacturing of goods, Service tax on services, Sales
Tax, Value Added Tax (VAT), and Goods and Services tax (GST).
- Indirect taxes fall under the Ambit of FinMin→ Department of Revenue (राज� �वभाग)→ Central
Board of Excise and Customs (CBEC): (क� द्रीय उ�ाद एवं सीमा शु� बोडर्) → Budget-2018 renamed it as
Central Board of Indirect Taxes and Customs (CBIC): (क� द्रीय अप्र�� कर और सीमा शु� बोडर्)
22.1 🍋🍋🍋🍋 INDIRECT TAXES: TYPES (अप्र�� करों के प्रकार)
🥤🥤 Ad- Valorem tax (यथामू� कर) 🚭🚭 Specific Tax per unit (�व�श� कर प्र�त यू�नट)
Taxes based on the value of something. E.g. Tax based on quantity of items. E.g. ₹ 260 Excise duty
35% Customs Duty on import of orange on production of every 1000 cigarettes of 65-70mm
juice. So, if juice priced at ₹1000 imported, length. Here we’re taxing them irrespective of their
then ₹350 as tax. manufacturing price or selling price.
Easier to administer. Difficult to administer, leads to inspector-raj &
[इसे िक्रया��त करना �ादा आसान है] litigation. But, if slight increase in this tax, then greater
burden passed on to the consumer so it helps reducing
harmful consumption. (How exactly? Ans.
microeconomics graph is not imp)
22.2 🍋🍋🍋🍋 INDIRECT TAXES: MERITS AND DEMERITS (लाभ व् नुकसान )
😀😀 Merits लाभ 😥😥 Demerits नुकसान
➔ Convenient (सुगम) to collect because the ➔ Regressive (प्र�तगामी) in nature, both poor and
traders act as honorary (=unpaid) tax rich taxed equally for the same item then
collectors. Wider base because everyone poor people end up paying more portion of
covered e.g. 18% GST on Biscuit. their income in indirect taxes.
➔ Elastic (लचीला): small ⬆brings large revenue, ➔ This tax is hidden in the price. Customers do
because everyone is affected. Although they’re not always feel the pinch of paying indirect
“relatively” less elastic than Direct taxes. tax so it promotes less civic consciousness
(Poor cost benefit interpreting its than direct taxes.[नाग�रक चेतना नहीं जगाता]
Microeconomics graph) ➔ Indirect taxes ⬆→ product becomes
➔ 🚭🚭 Can ⬇harmful consumption by expensive → demand ⬇ so uncertainty
imposing higher taxes on cigar, alcohol, soft involved in how much ₹ ₹ will Govt actually
drinks & fast food. (हा�नकारक पदाथ� का उपभोग कम earn?[वा�व म� िकतनी आमदनी होगी �न��तता नहीं]
करवा सकते ह�) ➔ High level of corruption, evasion, cascading
effect if input credit is not given e.g. erstwhile
sales tax system.[भ्र�ाचार, कर चोरी के अवसर]
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 334
22.3 🍋🍋🍋🍋🥂🥂🚭🚭 (CONCEPT) PIGOUVIAN TAX (�पगो�वयन कर)
- An externality (बाह्यता) is a positive or negative consequence of an economic activity experienced
by unrelated third parties. E.g. Cement company (related parties: labourers & consumers
benefit); whereas unrelated third parties (local community, flora and fauna) are harmed by
cement company’s air-pollution. [ग़ैरसं बं�धत तीसरे प� पर सकारा�क या नकारा�क असर]
- English economist Arthur C. Pigou proposed taxing the companies that create such negative
externalities: e.g. polluting industries, cigarettes (passive smoking), alcohol (social disharmony).
- We HAVE high level of indirect taxes on petroleum, tobacco and alcoholic products.
- We HAD “Clean environment cess” on Rs 400 per tonne of coal (but abolished in GST)
- Sin tax? Similar concept- imposing tax on immoral things like alcohol, tobacco. Difference
between Sin Tax vs Pigouvian tax = that pedantism/hairsplittery NOT IMP🎓🎓✋
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 335
B) �State State VAT ₹20 per litre. State VAT ₹15 per litre.
Tax
Total in India 135% taxes on base price 116% taxes on base price
=A+B
elsewhere Taxes on fuel: EU (45-60%), Canada 15-30%, USA (15%)
⇒ If above fuels are replaced with highest GST slab (28%) → hardly ₹5-6 per litre each for Union
and State = Loss of over 4 lakh cr on petrol and diesel taxes in GST system compared to present
(Excise VAT) regime.
⇒ So, cheap petrol-diesel is not possible, unless Union and State govts are willing to take deep cuts
in their revenue. Corona= direct tax collection ⏬, so govt can’t afford to reduce tax% on fuel.
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 336
🚩🚩🚩FAQ: can windfall tax be imposed only on indirect taxes / petrol diesel?
Ans. If government is imposing any direct or indirect tax because of some unforeseen profits to a
party, then journalist may label as Windfall Tax.
🚩🚩🚩FAQ: then can’t we say bitcoin profit pe Capital Gains Tax is also windfall tax?
Ans. Journalists/Newspaper/Govt/Chief Economic Advisor/NITI etc have not used this word yet. So
I would not use it.
22.3.5 🍋🍋🍋🍋⛽: 🗓🗓GST on Petrol Diesel Electricity: NITI Aayog 6 year roadmap
2021-Aug: NITI Aayog proposed following formula:
⇒ 28% GST on petrol and Diesel. + Compensation Cess for States (this compensation will be
given to states for a period of six years)
⇒ 18% GST on Electricity.
✋However this is a proposal stage. Separately a case is going on at Kerala High Court. We’ll update
when/if something big happens. (अभी यह सब प्र�ा�वत है.असल म� लागू होना बाक� है. जब कु छ बड़ा होगा, तो देख�गे)
Related topic: OPEC Cartel, crude prices? Ans. (📑📑Ref: HDT-Pillar#3A: BoP)
22.3.6 ⛽Petrol-Diesel: Dynamic Fuel Pricing System & oil bond repayment
⇒ 1970s to 2002: Administered Price Mechanism (APM: प्रशा�सत/�नयं �त्रत मू� तं त्र): Wherein the
government fixed the prices of petroleum fuels and paid subsidy to the oil marketing companies
(OMC: तेल �वपणन कं प�नयां) for their losses by issuing Oil Bonds to them.
⇒ 2002-2014: Govt gradually began decontrolling fuel prices, ⏬its own subsidy burden.
⇒ Present system= Dynamic Fuel Pricing System (�धन क� ग�तशील �प से बदलने वाली मू� प्रणाली): wherein
OMCs decide the prices of petrol and diesel on DAILY basis, based on the movement in
international prices. Associated keyword/formula/methodology is “Trade parity price (TPP)”.
⚾📻📻⚾🎓🎓✋What is means, how it works? = Poor cost benefit chasing that.
⇒ 😍😍 Benefit of dynamic pricing? In theory, If the oil prices lowered in the international
market, petrol diesel should become cheaper in India. �व� बाजार म� दाम �गरने पर इं जन के दाम भारत म� भी
कम होने चािहए. But, Union and State govt keep ⏫⏫ taxes on it so it remains expensive for
common people.
⇒ 🤧🤧🤧🤧Corona crisis = ⏬ transport → ⏬ demand of crude oil → prices fallen or remained
moderate in 2020-21. (�व� बाजार म� क�े तेल क� क�मत� या तो कम �ई है या म�म �र पर रही है)
⇒ But, Corona crisis → direct tax and GST collection ⏬. Government required more ₹₹ to run
the schemes. So, ⏫ excise & VAT. (उ�ाद शु� और वैट क� दरों म� बढ़ोतरी क� गई)
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 337
- 2021-Aug: FM Sitharaman says we cannot reduce excise duty on petrol and diesel, because we
have to repay principal + interest on the oil bonds issued by the previous UPA-II government to
subsidise fuel prices in 2012-13.(मोदी सरकार ने कहा पेट�ोल डीज़ल पे उ�ाद शु� नहीं काट सकते �ोंिक कांग्रसे सरकार
ने जो पेट�ोल डीज़ल पर स��डी देने के �लए ऑयल माक� िटंग कं प�नयों को ओईल-बॉ� जारी िकए थे उसका बकाया पैसा चुकाना है)
- 2021-Nov: First time in last 3 years, Modi govt ⏬ cuts Petrol excise duty down by Rs 5/litre,
diesel by Rs 10/litre. Reason? 1) GST collection improved so Excise could be ⬇ without hurting
poverty welfare schemes 2) UP Election 3) farmers require diesel for irrigation pumpsets in
Rabi/winter season. (उ�र प्रदेश चुनाव से पहले क� द्र सरकार ने पेट�ोल डीज़ल के उ�ाद शु� म� क� कटौती)
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 338
22.4 🍋🍋🍋🍋🍋↗�CASCADING EFFECT OF INDIRECT TAXES
If a government levies 10% indirect tax every time an item is sold, then buyer will have to to pay tax
on tax. This ‘cascading effect’ of indirect taxes (अप्र�� करों का सोपानी प्रभाव) raises the price of final
product. Observe:
Table 1:✋ <NOTIMP For UPSC. Prepare only for State Tax officers’ Jobs’ Interview>
Suppose, Price 10% Tax on price Total
Retailer bought from wholesaler ₹100 ₹10 ₹110
Retailer sold to customer with ₹10 profit ₹120 ₹12 ₹132
Breakdown the ₹132 paid by the final customer: 132=100+10+10+11+1
- 132= 100 (price of original product)+10 (tax paid by retailer to wholesaler)+10 (as retailer’s
profit margin)+11 (tax paid by customer to buy from retailer) + 1**.
- 1** this one rupee is 10% of 10(tax paid by retailer to wholesaler). So, it’s “TAX on TAX paid at
previous stage” / cascading effect of tax on the end-customer.
- Then, both buyer and seller will prefer to do transaction without bills, to entirely avoid tax
liability and its cascading effect → Govt.’s revenue collection ↓, Fiscal deficit ↑, black money ↑
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 339
- This problem can be solved, if govt gives some type of cashback, reward points or input tax credit
(ITC: इनपुट कर प्र�य) to the sellers, on the indirect taxes they’ve already paid in previous stage.
- To claim such input tax credit, the sellers will have to show the bills/ invoices for each stage =
self-policing = black money ↓.
22.5 🍋🍋🍋🍋🍋🍋🍋🍋: INDIRECT TAXES: A TIMELINE OF REFORMS
Year Who? Reform in Indirect taxation [परो� कराधान प्रणाली म� �ा सुधार िकए गए?]
1944 Union Central Excise Act (क� द्रीय उ�ाद शु� अ�ध�नयम) to levy Excise duty on goods
🧔🧔 produced/manufactured in India. Abolished on most items after GST.
1956 Union Central Sales Tax Act (क� द्रीय �बक्र� कर अ�ध�नयम) to levy tax on inter-state commerce.
🧔🧔 In practice, CST was given to the source/exporting state from where goods went to
the destination/importing state. Abolished after GST.
1962 Union Customs Act (सीमा शु� अ�ध�नयम) to levy Customs Duty on import and exports
🧔🧔 - 💼💼Budget 2018: Raised customs duty on a range of imported products—from
fruit juice, perfumes, TVs, mobile phones etc. to encourage Make in India
programme.
💼💼Interim-Budget-2019 & full Budget 2019:
- ⬆Customs duty on gold & other precious metals to control current account
deficit (more in Pill3) [�णर् तथा अ� क़�मती धातुओ ं पर सीमा शु� बढाया तािक चालू खाता घाटा
कम हो सके ]
- ⬆Customs duty on imported items like Cashew & other food items, PVC,
tiles, autoparts, CCTV camera, video recorders, electronics, imported books
etc. to encourage #MAKE-IN-INDIA [�वदेश से आया�तत चीज़ों पर बढ़ाया तािक लोग �ानीय
चीज़� �ादा ख़रीद� और �देशी उद्योग को प्रो�ाहन �मले]
- ⬇Customs duty on import of raw material / intermediate goods required for
Make in India e.g. parts of electric-vehicles, chemicals etc. [�वदेश से आया�तत क�े
माल पर सीमा शु� कम िकया था िक �ानीय उ�ादन म� मदद �मले]
💼💼Budget-2020
- ⬆On imported footwear, furniture, Wallfans, food grinder, oven, tricycle,
scooter, earphones, etc to protect Indian companies
- ⬇ Imported raw material / inputs used in manufacturing vehicles, mobiles,
sports accessories, newspaper etc. in India #MAKE-IN-INDIA
- 0% Customs Duty on import of defense equipment that are not being
manufactured in India.
💼💼Budget-2021
- ⏫Increased On imported raw silk ethanol leather auto parts, Mobile phone
parts, Solar lamps, etc. To help domestic farmers & manufacturers
- ⏬Decreased On imported Naptha Nylon Iron Steel Copper Platinum etc to
help Local manufacturers Who use it as raw material.
- ⏬Decreased Customs Duty on the items which are subjected to Agriculture
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 340
Year Who? Reform in Indirect taxation [परो� कराधान प्रणाली म� �ा सुधार िकए गए?]
Infrastructure and Development Cess (AIDC)- To prevent additional burden
on the customers.
👜👜👜👜Budget-2022
- ⏬customs duty on imported raw material e.g. rough unpolished diamonds
- ⏫customs duty on finished imported items e.g. Imported umbrellas pe 20%,
headphones, earphones, loudspeakers, and imitation jewelry.
Related concepts: Inverted Duty Structure, Countervailing Duty, Anti-Dumping
Duty, RoDTEP/MEIS etc. (More in 📑📑Pillar#3A: Import Export).
1986 Union - Modified Value Added Tax system (MODVAT:क� द्रीय �बक्र� कर सं शो�धत मू� व�धत कर
🧔🧔 प्रणाली) based on LK Jha Committee recommendations.
- Entrepreneur gets Input credit for Excise duty he already paid in previous
stage E.g. Ratan Tata getting input credit for rubber, tires and steel he bought
to make Nano car. [�पछले चरण म� जो उ�ाद शु� बढ़ा था उसक� माफ़� �मले]
- Limitation: he’ll NOT get input credit (इनपुट प्र�य) for the States’ Indirect taxes
like Sale Tax. [हालाँिक ये वाली छू ट रा� सरकार के करों म� नहीं �मलती थी]
1994 Union - FM Manmohan Singh introduces 5% Service Tax (सेवा कर) on telephone bills,
🧔🧔 non-life insurance and stock-brokers [शेयर बाज़ार के दलाल].
- Over the years, more services were subjected to Service Tax. This service tax
was NOT applicable on some services e.g. Postal service, School fees etc.
- Successive govts. also increased tax amount (14% )and added Swachh Bharat
Cess & Krishi Kalyan Cess on it. [डाक सेवा इ�ािद कु छ चु�नंदा सेवाओं को छोड़कर बाक़� सब
सेवाओं पर सेवा कर लगाए जाने लगा]
- Ultimately, Service Tax+Cess = total 15%. Abolished after GST.
2004 Union - Central Value Added Tax system (CENVAT: क� द्रीय मू� व�धत कर) Entrepreneur
🧔🧔 gets Input credit for Excise Duty and Service Tax he already paid in previous
stage. [उद्योगप�त ने �पछले चरण म� जो उ�ाद शु� और सेवा कर िदया है उसक� माफ़� �मले]
- But he’d NOT get input credit for the state taxes like Sale Tax/ VAT.
2005 States - Previously, State governments levied Sales Tax on sale of goods however these
�🕉🕉 rates varied from state to state, no input credit & therefore problem of
cascading effects & tax evasion. [रा� सरकारों के �बक्र�कर म� �पछले चरण वाली माफ़� नहीं]
- From 2005 onwards, State governments begin replacing Sales Tax system with
Value Added Tax (VAT: मू� व�धत कर). Uttar Pradesh was the last state to
implement it from 2008.[िफर रा� सरकार वैट �व�ा लेकर आए जहाँ �पछले चरण पर चुकाए
गए वैट पर उद्योगप�त/�ापारी को माफ़�/ टै� क्रेिडट �मले]
- In VAT regime, a dealer gets input credit for the VAT he already paid in the
previous stage.
- But he’d not get input credit for Union’s Indirect Taxes like Customs Duty,
Excise Duty or Service tax. He’ll not even get input credit for various other
indirect taxes of the state like Luxury Tax, Entertainment Tax, etc. which were
not subsumed in VAT. So cascading continued.[हालाँिक वेट पर �मले इस प्रकार के टै�
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 341
Year Who? Reform in Indirect taxation [परो� कराधान प्रणाली म� �ा सुधार िकए गए?]
क्रेिडट का उपयोग अ� करों क� देयता चुकाने म� नहीं इ�ेमाल कर सकते थे इस�लए GST लाना पड़ा]
2017 Both From 1st July, 2017: Goods and Services Tax (GST: व�ु एवं सेवा कर) became
🧔🧔🧔 effective. Here, supplier gets input tax credit for indirect taxes of Union & States
(CGST,SGST) that he paid in the previous stage. [GST प्रणाली म� �पछले चरण म� चुकाए गए
परो� करों के ऊपर माफ़�/टै� क्रेिडट �मलता है]
🔠🔠❓MCQ-UPSC-Pre-2014. The sales tax you pay while purchasing a toothpaste is a:
(a) tax imposed by the Central Government
(b) tax imposed by the Central Government but collected by the State Government
(c) tax imposed by the State Government but collected by the Central Government
(d) tax imposed and collected by the State Government
🔠🔠❓MCQ-UPSC-CDS-2013-I. Which of the following are direct tax in India?
1. Corporation tax 2. Tax on income 3. Wealth tax 4. Customs duty 5. Excise duty
Ans. Codes: (a) 1, 2 and 3 (b) 1, 2, 4 and 5 (c) 2 and 3 (d) 1, 3, 4 and 5
22.6 🍋🍋🍋🍋🍋🍋 INDIRECT TAXES → GST: TIMELINE (समयरेखा)
2004 Vijay Kelkar Task Force on Fiscal Responsibility and Budget Management (FRBM)
recommends GST. [�वजय के लकर स�म�त ने GST लागू करने क� �सफ़ा�रश क�]
2006 In Budget speech, P.Chidambaram announces the launch of GST from 2010
2011 UPA government introduces 115th Amendment Bill 2011 to implement GST lapsed with
the dissolution of 15th Lok Sabha. (लोकसभा �वघटन चलते ये �वधेयक पास नहीं हो पाया)
2014-16 Modi govt. introduces 122nd Constitutional Amendment Bill 2014 in 16th Lok Sabha.
Since GST aimed to change federal financial relations, so under Art.368, this
constitutional bill required:
- @Union Parliament Lok Sabha and Rajya Sabha each:_50% majority of the total
membership, and 2/3rd majority of all members present and voting.
- @State Vidhan Sabha: approval by majority of state assemblies (i.e. 15 Vidhan-
sabhas of India at that time)
Ultimately, it passed & became
- 101st Constitutional Amendment Act, 2016 (सं वैधा�नक सं शोधन अ�ध�नयम/ क़ानून)
SIDE NOTE: other imp amendments Acts
- 102nd , 2018: Constitutional status to National Commission for Backward Classes
(NCTC को सं वैधा�नक दजार् िदया जाए)
- 103rd , 2019: 10% EWS reservation (आ�थक �प से �पछड़े वगर् के �लए आर�ण)
- 104th , 2020: Anglo Indian reservation removed in LS & Vidhan shaba but SC/ST
continued till January 25, 2030. (एं �ो भारतीय समुदाय का आर�ण हटाया)
- 105th, 2021: To restore states' power to make their own OBC lists- After SC
judgement (रा� सरकार अपनी OBC सूची बना सके )
22.7 🍋🍋🍋🍋:📙📙📙📙 GST: 101ST CONSTITUTIONAL AMENDMENT ACT, 2016
101 वां सं वैधा�नक सं शोधन अ�ध�नयम, 2016 amended following articles in our Constitution.
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 342
246-A - States given power to tax goods and services. (previously, they couldn’t tax services.)
- But only UNION will have the power to tax inter-state supply of goods and services
in the form of “IGST” (एक रा� से दू सरे रा� म� व�ु और सेवा क� आपू�त पर के वल क� द्र सरकार टै�
माँग सकता है �जसे IGST कहा जाएगा)
268-A Previously, this article empowered Union to levy Service Tax. But, since tax on services
has been brought under GST, this article was deleted. (सेवा कर को हटाया गया)
269-A IGST (on inter-state trade) will be distributed between Union and states, as per the
formula by the GST Council (जीएसटी प�रषद)
270 CGST (=new indirect tax of Union, which replaced Excise Duty & Service Tax)..this
CGST will be distributed between union and states as per the formula by the Finance
Commission (�व� आयोग �सफ़ा�रशों के अनुसार CGST को क� द्र और रा�ों म� बाँटा जाएगा)
279-A President of India to appoint a constitutional body, “GST Council headed by Finance
Minister. ” (जीएसटी प�रषद िक �नयु�� रा��प�त कर�गे, और �वत् मं त्री इस प�रषद का अ�� होगा)
366 🥂🥂 Alcoholic liquor for human consumption (मिदरा) is kept out of GST. (i.e. State govt
continue to levy State Excise on its production and State VAT on its sale.)
22.8 🍋🍋🍋🍋: 🧔🧔🧔🕉🕉 GST COUNCIL: COMPOSITION? जीएसटी प�रषद
🧔🧔Union representatives (2 प्र�त�न�ध) �🕉🕉 States’ representatives (31)
1. Finance Minister as the Chairman - Each state government (including UT with
2. Union Minister of State for finance or legislature: J&K, Delhi & Puducherry) can
revenue. (�व� या राज� के क� द्रीय रा� मं त्री) nominate 1minister to GST council- it may
be their minister of finance or Dy.CM or any
other minister as per their wish.
- One of them will be selected as the Vice-
Chairman of GST council.
🗳🗳 Voting power: 1/3rd (एक �तहाई) 🗳🗳 Voting power: 2/3rd
✓ If all members don’t no unanimously agree over a proposal (यिद िकसी प्र�ाव पर सवर्स��त नहीं, तो वोिटंग
होगा) → it’ll be put for voting → then minimum 3/4th votes required to pass the proposal.
✓ Council Meetings to proceed only with quorum of 50% of total membership.(अ�नवायर् �ूनतम हा�ज़री)
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 343
4. Decide Special rates (�व�श� दर) for GST, during natural disaster / calamity if required.
a. E.g. 2019-Jan, GST-Council also allowed Kerala to levy a 1% calamity cess (आपदा उपकर)
on intra-state trade for next two years, for the rehabilitation of 2018’s flood-victims.
5. Integrated GST (IGST) system during interstate commerce, and its tax-sharing.[]
6. Norms related to GST registration of businessmen. If a goods selling Bizman has turnover above
“x” lakhs, he must register @GSTN online portal, he must collect GST from consumers and
deposit it there. Originally the “x” was ₹20 lakhs for ordinary states; ₹10 lakhs for Sp.cat states &
Telengana. However, in 2019-Jan the GST council doubled this limit to ₹40l & ₹20l respectively.
Within this, some technical relaxation given to merchants selling products on E-commerce
website. (Turnover limits for service seller bizmen in Manipur, Mizoram etc separate but
hairsplittery not REQ, not here for C.A. Exam).[�ापारी/उद्योगप�त/आपू�तकतार् के पं जीकरण के �लए �नयम
बनाएगा]
7. Protecting the interests of the special category states (खास श्रेणी के रा�) i.e. 8 North Eastern states
and Himalayan states (Himachal and Uttarakhand.) e.g. 2021-Sikkim proposed to levy Covid
Cess on pharmaceutical companies and electricity companies to collect money for Corona wave
2.0. But, GST Council’s group of ministers (GoM) committee rejected Covid Cess proposal.
However GoM committee recommended Union Govt to give ₹250 crore grant/compensation to
Sikkim for fighting Covid Wave 2.0. (कोरोना क� दू सरी लहर से लड़ने के �लए �स��म को मुआवज़ा/अनुदान)
8. Compensation to the states for their revenue loss in switching from VAT to GST regime
(through Cess mechanism: रा�ो को उपकर द्वारा मुआवजा)
9. Dispute settlement between Union vs state(s), state(s) vs state(s). (�ववाद �नपटान)
So, Constitutional Amendment→ set up GST council → GST council’s meeting→ laws passed by
Parliament and Vidhan Sabhas, to implement the GST related mechanisms.
1. 🧔🧔 Parliament has passed:
✓ Central Goods & Services Tax Act (CGST: क� द्रीय व�ु एवं सेवा कर अ�ध�नयम)
✓ Integrated Goods & Services Tax Act (IGST: एक�कृ त माल और सेवा कर अ�ध�नयम)
✓ Union Territory Goods & Services Tax Act (UTGST: क� द्र शा�सत प्रदेश माल और सेवा कर
अ�ध�नयम): Finance Act 2020 → amends UTGST Act to update list of UTs:
i. (new) Ladakh without legislature.
ii. (merged) 1) Dadra and Nagar Haveli + 2) Daman and Diu = treated as single UT
(because Govt merged them in 2019).
✓ Goods and Services Tax (Compensation to States) Amendment Act. माल और सेवा कर (रा�ों
को मुआवजा) सं शोधन अ�ध�नयम
✓ Parliament originally passed them 2017, later amended in 2018 As per the
recommendations of the GST Council.
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 344
2. �🕉🕉 State Legislatures have passed State Goods and Services Tax Acts. (SGST)
3. �☪Jammu & Kashmir passed SGST Act on 8th July, 2017→ then GST system became
effective there as well. JAMMU AND KASHMIR REORGANISATION ACT, 2019 has not
abolished this SGST act. Present status is:
✓ SGST applicable on J&K (UT with Legislature:�वधा�यका यु� क� द्रशा�सत प्रदेश)
✓ UTGST on Ladakh (UT without Legi: �वधा�यका-हीन क� द्रशा�सत प्रदेश)
• GST is a ‘destination based’ indirect tax on consumption of goods & services.(GST उपभोग पर लगने
वाला ‘�ान-आधा�रत’ अप्र�� कर है)
• GST is applicable on supply of goods or services. (व�ुओ ं और सेवाओं क� आपू�त पर लगता है)
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 345
Table 2: When Goods / Services (produced &) supplied →
in same the State (or UT without legislature) = in another State (or UT w/o LSR)
Intra-state supply (अंत:रा�) = Inter-state supply (अंतररा�ीय)
🧔🧔(�🕉🕉 → �🕉🕉) 🧔🧔(�🕉🕉 → �☪)
Table 3: Suppose in Jan-2021: a Gujarat based Calendar printing company is doing following
Bought (Input) in 2021-January Price ₹ CGST SGST IGST, if inter-state
(Guj) supply
Printer from Mumbai @18% GST 1 lakh N/A N/A 18k
Ink from a factory in Guj @18% GST 10k 900 900 N/A
Paper from Himachal @12% GST 20k N/A N/A 2400
Total 1.30 lac 900 900 20,400
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 346
Table 4: Suppose company manufactures (prints) and sells calendars @₹100 each, @12% GST
Sold (Output) in 2021-January Price CGST SGST Guj) IGST, if inter-state supply
500 Calendars within Gujarat 50k 3000 3000 N/A
500 Calendars to Rajasthan 50k N/A N/A 6000
Total 100k 3000 3000 6000
So, how much tax will the Calendar company have to deposit online at the GSTN webportal?
GST liability in 2021-January CGST SGST (Guj) IGST
GST Taxes collected on Output (from wholesalers, 3000 3000 6000
retailers or customers)
MINUS GST Taxes paid on Input (in previous stage -900 -900 -20,400
for raw material, intermediate goods)
=Company must deposit how much tax @GSTN 2100 2100 -14400**
webportal?
** this is the input tax credit (ITC) company can use for offsetting its tax-liability in future.
- Suppose in Feb-2021, company did not purchase any inputs and sold 1,500 calendars in
Tamilnadu @₹100 each = ₹ 1,50,000 + 18,000 (IGST) it must have collected from the
Wholesalers/ retailers/ end-customers of Tamilnadu.
- But in Feb-2019, Company need not deposit ₹18000 @GSTN webportal, because already it
has ₹14400 IGST credit🤑🤑 so Company only needs to deposit 18000 MINUS 14400= ₹3600.
- Cross-utilization of ITC🤑🤑:
- IGST credit can be used for payment of all GST taxes.
- CGST credit can be used only for paying CGST or IGST.
- SGST credit can be used only for paying SGST or IGST.
If the goods or services are sold in union territory without legislature, then instead of SGST, they
(practically the Union Govt) will levy UTGST but the funda will remain similar as above.
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 347
22.9.1 🍋🍋🍋🍋↩👚👚 Inverted Duty Structure Problem in GST on Textile
An inverted duty structure in GST arises when the taxes on output or final product is lower than the
taxes on inputs, creating an inverse accumulation of input tax credit- then government has to refund
the GST to the business man. = administrative & accounting inconvenience for the govt.
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 348
💿💿GST ZERO RATED (0%) GST EXEMPT/NIL RATED 🥂🥂NON-GST Supply
IF Govt levies 0% GST on IF Govt levies 0% GST, & These goods/services are NOT
the Goods/Services & ✋DOESNOT allow Bizman to subjected to GST. They are
✅ALLOWS bizman to claim ITC. E.g. Jaggery (ग�े का subjected to other taxes. E.g.
claim ITC. For example: गुड़). ⇒ Petrol, Diesel etc 5
⇒ 18% GST on laptop ⇒ So if Bizman bought a hydrocarbon products=
bought by Infosys machine for crushing Excise & VAT.
Company (Input) sugarcane → he’ll not get ⇒ 🥂🥂Alcohol for human
⇒ 0% GST on EXPORT of ITC consumption = State
Software Services ⇒ So, then. to recover the Excise & VAT
(Output). cost+tax on input, Bizman
⇒ Here, Indian software may charge more selling
company will price of jaggery on
accumulate / gain 18% customer.
GST. ##
GST-ITC Given = YES🤩🤩 GST-ITC Given = NO✋ GST-ITC Given = NO✋
- In Software EXPORT case, Infosys Company gained ITC. So, A) Govt will REFUND and/or B)
Infosys can use this ITC for adjusting/offsetting future sales within India.
- In both case A and B case, ultimately govt will not be able to earn GST from Infosys, however
government benefits from the increased exports→ jobs, GDP. Besides, more profit for Infosys in
export = more Corporation Tax for Govt.🤩🤩
😤😤MORAL Outrage: Isn’t there an inconsistency in logic/will there not be inverted duty structure
problem in Vaccine mfg similar to Textile? Ans. GST council decides rates based on variety of
factors like what are the tax rates on the inputs and how much GST-losses for the government versus
the benefit to the ordinary patients etc. If you get selected in IRS they will teach it to you there. सरकार
अपना िदमाग़ लगाकर रेट �नधार्�रत करती हे, अपने को झं डा लेके पीएचडी करने क� ज़�रत निह।
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 349
22.10 🍋🍋🍋🍋🍋🍋🍋🍋 CENTRE’S INDIRECT TAXES SUBSUMED IN CGST
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 350
Indirect Tax of Union Whether replaced by CGST?
बेचने पर ये कर लगता था हालांिक उद्गम रा� को क� द्र सरकार यह रकम देता था
�On providing services: Service Yes, completely replaced by CGST. These previous cess /
tax (सेवा कर) and Krishi Kalyan Cess surcharge are deleted. [GST आने पर ये सारी चीज़ ख़� हो चुक� है]
and Swatchh bharat Cess
�On manufacturing/production - Yes, completely replaced by CGST (except 5
of goods: Excise duty and various hydrocarbon fuels: petrol, diesel etc.)
Cess / surcharges on it.(उ�ाद शु� और - Excise on manufacturing medicinal & toiletry
�व�भ� उपकर / अ�धभार) preparations containing alcohol (e.g. Cough syrups,
deodorants and perfumes) also replaced by CGST.
- Alcoholic Liquor for human consumption- falls in States’
purview so Union Excise / CGST not applicable on it.
🚭🚭Excise duty on Tobacco products - It’s replaced with 14% CGST. Further, Union also levies
[तं बाकू उ�ादों पर उ�ाद शु�] + GST Compensation Cess + National Calamity
Contingency Duty** (NCCD:-रा��ीय आपदा आक��कता ड्यूटी)
on them.
- **because 101st Constitutional Amendment allows
Union to tax tobacco products separately.
- NCCD money goes to Public Account → National
Disaster Response Fund set up under Disaster
Management Act, 2005.
⛽Excise duty on - Once GST council decides the date they’ll be brought
production/refining of Crude oil, under GST-regime. अभी जीएसटी नहीं लगता. भ�व� म� जीएसटी
Petrol (Motor Spirit), Diesel, प�रषद तय करेगी उसके बाद लगेगा.
Aviation Turbine Fuel and natural - Until then refineries / oil-drilling companies have to pay
gas: क�े तेल, पेट�ोल (मोटर ���रट), डीजल, excise duty+cess/surcharges to Union for production /
�वमानन टरबाइन �धन और प्राकृ �तक गेस पर manufacturing of these items. (and petrol pump owner,
उ�ाद शु� etc will have to pay VAT to states on their sale.)
- Presently, Petrol & Diesel are also subjected to Union’s
Road and Infrastructure Cess (सड़क और बु�नयादी ढांचा उपकर)
its ₹₹ goes into Public Account→ Central Road &
Infrastructure Fund under Central Road Fund Act 2000.
🍋🍋🍋🍋Corporation Tax, Income ⇒ 👿👿Arre Bhai, they’re 🍋🍋🍋🍋DIRECT Taxes of Union, so
Tax, Capital Gains Tax etc [�नगम कर, they are not replaced by GST. ये सब प्र�� कर है.
आयकर और पूंजीगत लाभ कर] ⇒ The GST is meant to replace 🍋🍋🍋🍋🍋🍋 INDIRECT
Taxes only. जीएसटी के वल परो� करों के साथ जुडा है
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 351
22.10.1 📈📈 GST Revenue Collection Figures: जीएसटी राज� प्रा�� के आंकड़े
GST registered suppliers have to deposit the GST at the GSTN portal on monthly basis ( except those
who opted for the GST composition scheme). In monthly collection of GST, there are ups and downs
based on seasonality.
Year/Month 2017 monthly avg. 2018 monthly avg. 2021 monthly avg.
GST collection 89700 cr 98114 cr More than 1 lakh cr.
Table 7: कौनसे करो म� सबसे �ादा आमदनी होगी सबसे �ादा आमदनी होगी
Upto 💼💼Budget 🏢🏢 Corporation> 🛒🛒GST>�IT >⛽Excise> ⚓ Customs >🗃🗃STT
Estimate-2019 (Securities Transaction Tax)
Revised Est 2019 🛒🛒GST>🏢🏢 Corporation >�IT >⛽Excise> ⚓ Customs >🗃🗃STT
💼💼Budget-2020 🛒🛒GST>�IT >🏢🏢 Corporation >⛽Excise> ⚓ Customs >🗃🗃STT
(RE: revised Estimates on 1/2/2021) सं शो�धत अनुमान
💼💼Budget-2021 (BE) 🛒🛒GST>�IT >🏢🏢 Corporation >⛽Excise> ⚓ Customs >🗃🗃STT
(Budget Estimates: BE- on 1/2/2021) बजट अनुमान
💼💼Budget-2021 (RE) 🛒🛒GST> 🏢🏢 Corporation>�IT >⛽Excise> ⚓ Customs >🗃🗃STT
(Revised Estimates: RE- on 1/2/2022) सं शो�धत अनुमान
👜👜👜👜Budget-2022 (BE) 🛒🛒GST> 🏢🏢 Corporation>�IT >⛽Excise> ⚓ Customs >🗃🗃STT
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 352
22.11 🍋🍋🍋🍋(�🕉🕉)🌬🌬 STATES’ INDIRECT TAXES SUBSUMED IN SGST
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 353
⚡Electricity Duty �बजली शु� ✋No, it’s not replaced by SGST
🚗🚗Road Tax on vehicles. ✋No, it’s not replaced by SGST. Its status as
direct/indirect tax is vague because in some states/
vehicle categories: buyer himself deposits while in
some cases, seller required to collect & deposit.
🚗🚗Purchase tax on vehicle, boats, and ✅Yes replaced by SGST
animals-खरीद कर
🏗🏗Advertisement tax on hoarding, banners ✅Yes replaced by SGST
etc.- �व�ापन कर
⛱Luxury tax at Hotels, Spas, Resorts etc.- ✅Yes replaced by SGST
अ�ाशी �वला�सता कर
🚛🚛Entry tax/Octroi for entry of goods in an ✅Yes replaced by SGST
area -प्रवेश के �लए कर , ऑ��ोई
🐎🐎Taxes on Lottery, horse race betting, ✅Yes replaced by SGST. Since they’re
gambling etc. लॉटरी, घोड़े क� दौड़ सट्टेबाजी, जुआ ‘sinful/demerit goods’, they’re subjected to highest
slab : 14% SGST + 14% CGST = 28%
📽📽Entertainment Tax on Cinema, Live ✅Yes, replaced by SGST unless levied by a local
Performance shows etc.- मनोरंजन कर body. e.g. Kerala local bodies 10% on movie tickets.
🍋🍋🍋🍋Income tax on Agriculture, 👿👿Arre Bhai, they’re 🍋🍋🍋🍋DIRECT Taxes of State
Professional tax, Property tax, Stamp Duty, so not replaced by GST. The GST is meant to replace
Land revenue [कृ �ष आय कर, �ावसा�यक कर इ�ािद] 🍋🍋🍋🍋🍋🍋 INDIRECT Taxes only.
22.12 🍋🍋🍋🍋🍋 GST RATES ON SERVICES =0%: सेवाओं पर जीएसटी क� दर
Which of following is ZERO Rated & which one is NIL Rated/EXEMPT? Ans. Poor cost:benefit.
1. Services provided by union government, state government, local bodies, constitutional bodies,
department of post (except premium services like speed post), Railways (except premium
services like first class AC ticket)
2. Services by Reserve Bank of India and other financial regulators.
3. Services by Banks/NBFCs in connection with Government sponsored banking, insurance and
pension schemes. (Refer to financial inclusion handout)
4. ESIC, EPFO services to the subscribers, Group insurance schemes for paramilitary forces
5. Religious, charitable activities, cooperative societies, Public libraries, Public toilets,
Crematorium, Burial grounds.
6. Rent on residential accommodation
7. Aviation Services in North-eastern States
8. Transport services to milk, (physical/paperbased) newspaper, defence equipment, relief material
during disasters etc.
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 354
9. Doctors, para-medics, Ambulance, Blood bank.
10. Agriculture warehouse, cold storage, renting of Agro machinery, Contractor who is supplying
farm labourers, APMC (Agricultural produce market committee)
11. Agriculture pre-processing of food e.g. ripening, waxing, retail packing, labelling of fruits and
vegetables which do not change essential characteristics of the said fruits or vegetables.
12. Veterinary doctor, Animal husbandry related services except racehorses
13. � Educational services by Educational Institutes (like schools colleges universities Vocational
institutes. NOT COACHING Institutes)
14. Entrance Exam fee collected by Union or state government orgs.
15. Private training partners in government skill development schemes
16. Sports training and events by recognised sports body
17. Sports, Art, Culture etc. clubs with member-fees less than “X” rupees.
18. Circus, dance, drama or ballet, award function, concert, pageant, musical performance or any
sporting event where admission fees is less than “X” rupees.
19. Admission to a museum, national park, wildlife sanctuary, tiger reserve, zoo, ASI-recognized
Heritage sites.
20. 2020-Oct decision: satellite launch services supplied by ISRO, Antrix Corporation Ltd. and NSIL
would be exempted. (More about these organizations in (More in 📑📑Pillar#5: communication
infrastructure)
21. Any service EXPORTED outside India (THEY ARE “ZERO RATED Export”)
In the Pre-GST era, most of above services were having 0% Service Tax. वतर्मान म� उ� पर 0% जीएसटी
लगता, उसी प्रकार भूतकाल म� जब ‘सेवा-कर’ था तो वो भी इनम� से �ादातर सेवाओं पर 0% था.
If a given service is not in the above list, then it will be subjected to GST: <see next table>
Example of services (कु छ उदाहरण सेवाओं If supplied in the same If supplied to another State or
के �जन पर GST लगता है) State or UT w/o LSR then UT w/o LSR (: IGST)
(�🚛🚛🚛) (�🚛🚛🚛🚛)
Plumbing, carpentering, Ads in print - 🧔🧔Union gets 2.5% IGST 5% (its bifurcation is same
media, Ebooks CGST like left cell. Union gets half in
- �State/UT gets 2.5% CGST, and other half goes to
SGST or UTGST “DESTINATION” State/UT as
SGST/UTGST amount.
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 355
- � Coaching Services, Similar as above but 9+9 IGST 18%
- Online Information Database
Access and Retrieval such as e-
book, e-newspaper, e-music,
WebSeries/OTT platforms-
AmazonPrime, Hotstar etc.
- Ads in digital media,
- Legal and accounting services
- DTH/TV channels, Movie tickets
above Rs.“x”
- - Hotel rooms ₹ >7500 per day
🏇🏇Gambling, Horse Race club, Similar as above but 14+14 IGST 28%
Casino
For more, you may refer to: https://cbec-gst.gov.in/gst-goods-services-rates.html
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 356
9. Human blood, contraceptives, sanitary napkins, tampoons, hearing aid
10. Tocilizumab (Corona Drug), Amphotericin B (Black Fungus Drug) (From 2021-Jun)
11. Electricity, Firewood (�बजली और जलाने क� लकड़ी)
12. Judicial / Non-judicial stamp papers, Court fee stamps, ordinary post cards etc.
13. Printed Books; physical edition of Newspapers, journals, periodicals irrespective of whether they
have advertisement or not.
14. Khadi sold by Khadi and Village Industries Commission(KVIC) certified outlets
15. Gandhi topi, Charkha, national flag, Earthen pot, clay idols
16. Agricultural hand tools like spade, axes, sickle.
17. When a constitutional / public authority auctions the gifts received by him.
18. Spacecraft, satellites and their launch vehicles.
19. Import of specified defense goods not manufactured in India
20. Free sample or gift given. E.g. “Offer: Toothpaste pe toothbrush FREE” then only Toothpaste
subjected to GST. No gst on that free-toothbrush. (ग्राहक को लुभाने के �लए मु� म� िदया जाने वाला स�पल)
21. Any Goods EXPORTED outside India (technically called “ZERO RATED Export”)
If a given goods is not in the above 0% list (and not kept out the GST-regime like Petrol-Diesel-
Daaru), then it will be subjected to GST: such as:
Example of Goods (list not If supplied in the same If supplied to another State or
exhaustive) State or UT w/o LSR UT w/o LSR (: IGST)
Semi-precious stones like agate, Union gets 0.125% CGST IGST 0.25% (its bifurcation is
amber, topaz, lapis lazuli etc. same as left cell. But
State/UT gets 0.125% “DESTINATION” state/UT gets
SGST or UTGST the SGST/UTGST portion)
Jewellery, Pearls, Gold, platinum, Similar as above IGST 3% (funda same as above)
silver etc. 1.5%+1.5%
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 357
Example of Goods (list not If supplied in the same If supplied to another State or
exhaustive) State or UT w/o LSR UT w/o LSR (: IGST)
with petrol
🍸🍸Alcohol for human consumption Outside GST-regime. Subjected to State Excise + VAT
⛽Crude oil, Petrol (Motor Spirit), Until GST council announces: Union Excise + State VAT +
Diesel, Aviation Turbine Fuel and various cess/surcharges.
Natural Gas
As of 2018-December, very few items left in the 28% slab. PM Modi has announced to bring 99% of
the items in 18% or lower slab.
✋Notes: <DONOT LOOSE SLEEP IN FOLLOWING>
- ** Originally, state Government run lottery = 12% GST & other (private) lotteries= 28% GST.
But from 2020 all types of lotteries = 28%. While Kerala Govt opposed to this move fearing less
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 358
sales of State lottery so GST council had to go for voting → majority voted in favour of 28%.
This is the first matter since inception of GST council, wherein voting had to be done. All
previous decisions were taken unanimously without voting.
- As the elections come near, GST Council will bring down more items in lower GST-slabs to keep
the voters (or bizmen) happy, so above tables/lists are “not static”. E.g. from 1/4/2019: norms
will be changed for real estate property: affordable houses 1% GST without input tax credit
(ITC), non-affordable housing: 5% without ITC and Commercial properties: 12% WITH ITC.
- 2019: To boost electric vehicle, GST council ⏬ GST on e-vehicle & its chargers to 5%
- For more, you may refer to: https://cbec-gst.gov.in/gst-goods-services-rates.html
⇒ reduced the penalties on merchants for late-filing of GST documents/data.(GST के द�ावेज़ देरी से
जमा करने पर लगने वाले जुमार्ने म� कमी क� गई)
⇒ Formed a Group of Minister (GoM) headed by Meghalaya CM Conrad Sangma to examine GST
rates of Covid vaccine, drugs and related items. (मं �त्रयों का एक समूह बनाया है जो वै�ीन इ�ािद चीज़ों पर GST
दर� िकतनी लगायी जाए समी�ा करेगा)
⇒ 2021-Jun: GST Council decided following:
Table 9: These GST rates valid upto 30/9/2021, unless renewed further
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 359
22.14 🍋🍋🍋🍋⏰🗓🗓 GST COMPOSITION SCHEME (जीएसटी सं रचना योजना)
🤩🤩Good: He will get input tax credit, 😰😰Bad: He’ll NOT GET Input Tax Credit.
😰😰Bad: He’ll have to deposit tax & forms on 🤩🤩Good: He’ll not have to deposit tax/forms on
monthly basis @GSTN webportal monthly basis to GSTN webportal. He’ll have to
do it on Quarterly basis (3-3-3-3 months)
Compulsory if turnover is above “x” lakhs / Optional scheme, NOT compulsory. NOT every
crores. [बड़े उद्योप�तयों के �लए अ�नवायर् है] supplier is eligible. Only if turnover is below “y”
lakhs / crores, and doing “z” type of biz, then
you’ll be eligible.
Approx 1.12 crore taxpayers registered here Hardly 17 lakh taxpayers registered here
22.14.1 🍋🍋🍋🍋⏰🗓🗓 GST Mechanism: Quarterly Returns and Monthly Payment of Tax (QRMP)
जीएसटी का पैसा हर महीने सरकार म� जमा करो लेिकन खरीदी और �बक्र� के िहसाब िकताब के फॉमर् आराम से तीन-तीन महीने म� जमा करो
⇒ Bizman will have to deposit the GST Tax ₹₹ to Government on a monthly basis (1-1 month), but
he may submit the GST forms on quarterly basis (3-3 months) [Forms showing summary of
Incoming and outgoing supplies]
⇒ 🤩🤩Benefit? ⏬Compliance burden. Bizman will have to spend less time filling monthly forms /
have to pay less fees to the chartered accountant.
⇒ Scheme applicable to? Small traders/taxpayers having turnover Not more than ₹"X" cr.
(Presently, X = ₹5cr), But the exact figure is not important. Sufficient to know that it is not
available for everyone. छोटे �ापा�रयों पर कर-अनुपालन का बोझ कम होगा
⇒ The scheme is not compulsory. It is optional / Voluntary. अ�नवायर् नहीं है. वैक��क है
22.14.2 🍋🍋🍋🍋: 💸💸💸💸(✋😈😈) 1% GST deposit in cash for controlling fake ITC claims
फज� टै� क्रेिडट को रोकने के �लए अ�नवायर् �प से 1% जीएसटी नगदी म� जमा करना होगा
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 360
⇒ Scamsters acquire Aadhaar card/pan card xerox of innocent victims → Register multiple
fake/dummy companies in their name → Generate fake invoices to show they purchased
good/services (input) price+GST → Then they show (output) fake exports bills (Because exports
are subjected to 0% GST) thus they accumulate GST input tax credit (ITC) from govt, thus gain
money. Then they pull out this accumulated ITC money through other fake bills & refund forms.
धोखेबाज फज�-कं प�नयां बनाकर, उसम� खरीदी �बक्र� के फज�-�बल बनाकर सरकार से जीएसटी-क्रेिडट का गबन करते ह�.
⇒ To control this nuisance, the govt ordered Bizmen to compulsorily deposit at least 1% of their
GST liability in Cash to the Govt. (if businessman’s monthly sales is ₹50 lakh/or more)
⇒ 🤩🤩Benefit? Fraudster will have to make a trip to the bank branch /GST office To deposit the
cash. It will generate CCTV footage, paper-evidences, etc which will help nabbing them. धोखेबाज ने
नगदी रकम जमा करने के �लए ब�क शाखा और सरकारी द�रों के च�र काटने होंगे वहां सीसीटीवी और कागजी सबूत द्वारा उ�� ढू ंढना
आसान होगा।
✋How/why/what/JamesBond-giri= They will teach you In the IRS training academy. We are not
here to Learn exact modus operandi.#⏳📚📚थोड़ा-पढ़ो-आगे-बढ़ो
कु छ ख़ास मामले जहाँ �वक्रेता नहीं ब�� ग्राहक ने खुद सरकार को GST जमा करना पड़ेगा
- Normally, a seller must collect the GST tax from buyer & deposit to the govt.
- However, in selected cases when seller is not registered with GST number, while buyer is
registered with GST number, then buyer will have to deposit the tax to government.
- How / when / why = NOT IMP, EXCEPT the MCQ word Association that ‘Reverse Charge
Mechanism’ is associated with GST, just like ‘E-way bill’ mechanism is associated with GST.
22.16🚛🚛🚛🚛 E-WAY BILL SYSTEM (ई-वे �बल प्रणाली) FROM 2018 ONWARDS
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 361
- Related: GST council announced the E-invoice (=bill generation through govt’s online portal)
from January-2020 on pilot basis, then E-way bill will not have to be generated separately.
- This will provide relief to businessman, will improve the tax-surveillance and fight against false
ITC-credit claims through fake invoices.
- As such E-invoice was to become compulsory from 1/April/2020. However, because of Corona,
deadlines have been deferred. Deadlines keep changing, notIMP. (��गत िकया, बाद म� लागू कर�गे)
Parliament enacted GST Compensation to States Act 2017 (रा�ों को मुआवजा अ�ध�नयम)
✓ Under its provisions, GST council recommended Union Govt to impose “GST Compensation
Cess” (जीएसटी ��तपू�त उपकर ) on specified luxury & demerit goods, like
○ pan masala (60%), tobacco products (cess varies as per product),
○ aerated water & Caffeinated Beverages (12%), coal / lignite (₹400 per tonne),
○ motor vehicles-aircraft-yacht (3-22% depending on type of vehicle).
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 362
○ [These rates may change/update, but don’t worry about figures. For example, E.g.
Passenger vehicles originally 15% cess, but due to slowdown in automobile sector, GST
council reduced it to 1-3% depending on type of vehicle.]
✓ The cess thus collected is used for compensating States for their revenue losses during the first
five years since inception of GST. i.e. 1st July 2017 to 30th June 2022
Table 10: GST Compensation to States Act 2017 (रा�ों को मुआवजा अ�ध�नयम)
Section- ⇒ It contains formula for compensation: State's Projected Revenue = 14% annual
7 compound growth rate than its 2015's VAT collection (base year). If current year
SGST collection is less than Projected Revenue → Union to pay compensation
⇒ (रा� का " अनुमा�नत राज�" उसके 2015 के वेट अनुपात क� 14% वा�षक वृ�द्ध के साथ क� �गना गया। यिद
रा� को एसजीएसटी मे उससे कम आमदनी �ई तो उस रा� को, पहले 5 वष� के �लए, क� द्र मुआवजा देगा- जनता
पर जीएसटी ��तपू�त उपकर लागू करके । )
Section- ⇒ GST Council can recommend extending GST compensation cess beyond the
8 period of five years. (5 साल से के प�ात भी उपकर जारी रखने क� �सफा�रश कर सकता है. )
✓ Compensation available only for SGST. It is not given to The Union Territory Without
Legislature (because they've UTGST e.g. Ladakh)
✓ State Liquor Taxes are outside GST, so Bihar / Gujarat / Nagaland / Lakshadweep / Parts of
Manipur can’t ask more ₹ for compensation from GST for having liquor prohibition (मद्य-�नषेध).
Year → 2018-19 2019-20 2020-21 2021-22 2022-23
GST 95k cr 98k cr 1.10 Lakh Cr 1.05 Lakh cr. 1.20 lakh cr
Compensation expected but in
Cess प्र�तपू�त उपकर reality hardly
85,000cr earned
😰😰Controversy?
- Before Corona: since 2019-August onwards payment pending. Also known as “GST Arrears
problems” (मुआवजे क� रकम बकाया है) . 2019-Dec: only partial compensation released. FM Nirmala. S
says, “Sales are ⬇, so we have not collected enough ₹₹ to release the cess.” Non-BJP states first
complained to GST council, but it did not help much. So some State Govts even threatened of
going to Supreme Court, which hints cooperative federalism is in danger. (सहकारी सं घवाद खतरे म�)
- During Corona: given below →
22.18🤧🤧🤧🤧:🧔🧔 → 🤑🤑(��) GST COMPENSATION & BACK2BACK LOANS
⇒ Feb 2020: when state govts had presented their budgets in their Vidhan Sabha, for next financial
year → they could only estimate the amount of SGST they'll earn between 1/4/2020 to
31/3/2021. फरवरी म� तो के वल अनुमान ही लगा सकते थे िक अगले �व�ीय वषर् म� िकतनी आमदनी होगी!
⇒ So, States had estimated a large/decent collection in SGST for the 2020-21. because, in Feb'2020,
Corona yet to fully develop, so States were optimistic. [फरवरी मे कोरोनावायरस क� गं भीर हानी भारत म� आई
नहीं, इस�लए रा� आशावादी थे िक अ�� आमदनी होगी]
⇒ Consequently, ₹97,000 cr SGST compensation estimated for 2020-21, before corona impact.
⇒ However, by August-2020, started to become more and more clear that the state is unlikely to
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 363
earn good amount in SGST. → States lowered their estimates for SGST for 2020-21. (बाद म� रा�ों
को एहसास �आ िक कोरोना के चलते तो ब�त �ादा आमदनी नहीं होगी 😰😰→ तो हम� ब�त �ादा बड़ा मुआवजा चािहए)
⇒ So then States started demanding ₹2.35 lakh crore in GST compensation.
⇒ Union govt's initial reaction was, "Under the GST compensation Act, we are not legally obliged
to pay this large amount (₹2.35lcr) because of unexpected circumstances / 'Act of God' / 'Force
Majure' like Corona. We can only pay the originally estimated amount (₹97kcr)."
⇒ However the Attorney General opined that GST Compensation Act does not provide such
exceptions; Union ought to pay the entire loss amount ₹2.35lcr. (अटॉन�-जनरल का मानना है िक क� द्र ने पूरी
रकम देनी चािहए �ोंिक जीएसटी मुआवजे के कानून म� कोरोनावायरस जेसी आपातकालीन चीजों मे क� द्र कोई माफ� /अपवाद नहीं)
⇒ But, corona → sales⏬ → GST compensation cess collection ⏬. So, the union offered two
options to borrow money for the compensation (�ोंिक जीएसटी म� आमदनी वैसे भी कम है, इस�लए क� द्र ने
रा�ों को पैसा उधार लेकर मुआवजा चुकाने के �वक� िदए….. )
⇒ We will NOT study the difference between those TWO options because it is technical/outdated.
Just memorize that States accepted ‘modified’ version of Option#1. (उन दो �वक�ों म� �ा मुद्दे/�भ�ताए
थे वो हम पढ़ने नहीं बैठ�गे। बस रट्टा मार लो िक रा�ों ने मुआवज़े के �लए �वक�#1 का एक सं शो�धत ��प पसं द िकया था। )
22.18.1 🤧🤧🤧🤧🤧🤧[🧔🧔 → 🔪🔪(�� GST compensation: "back to back" loans ₹1.10 lcr
2020 October: Union Finance ministry agreed to borrow ₹1.10 lakh from market.
⇒ States are not borrowing from market. Union is borrowing from market to help the States.
⇒ Union will give this borrowed ₹₹ as "back to back loans" to state governments. (बैक टू बैक ��प म�)
⇒ In other words whatever ₹₹ union government has borrowed at 5.19% from market → union
will loan it to States at 5.19% (क� द्र ने बाजार से एक हाथ लोन �लया और दू सरे हाथ वही लोन उसी �ाज दर पर रा�
सरकारों को दे िदया..)
⇒ Interest rate: 5.19% Bcoz union govt's G-Sec has less risk of default than State govts' G-Sec, so
Union can get the loans relatively cheaper from investors. क� द्र सरकार के िदवा�लयापन क� जो�खम कम होती है
इस�लए क� द्र को लोन स�े म� �मल गया। अगर रा� सरकार �यं उधार लेने जाती- चाहे �रजवर् ब�क से- चाहे बाजार से, िफरभी रा�
को 5.19% से तो �ादा ही �ाज चुकाना पड़ता)
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 364
⇒ ⏰ Loan Tenure: 3-5 years (ऋण अव�ध)
⇒ Repayment: This principal + Interest will be paid from GST Compensation Cess.
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 365
22.19.2 Distribution of Admin. Responsibilities प्रशास�नक �ज�ेदा�रयों का �वभाजन
Table 11: ✋don't loose sleep over it unless preparing for State Tax officers' exams
In Excise-VAT regime→ In GST-regime
Union Central Board of Excise and - Budget-2018: CBEC renamed into Central Board
Customs (CBEC:क� द्रीय उ�ाद एवं सीमा of Indirect Taxes and Customs (CBIC:क� द्रीय अप्र��
शु� बोडर् ) officials looked after the कर और सीमा शु� बोडर् )
indirect taxes of the union, - For tax-payers with turnover below ₹1.5 crores:
[They’re recruited by UPSC and their supervision / administrative workload
SSC]. divided between union and state officials in 10:90
State State department officials would ratio.
look after the indirect taxes of the - If turnover ₹1.5 cr/> then 50:50.
state, recruited by the respective
(corrupt/non-corrupt) State PSC.
22.19.3 ⚖🕵🕵🍕🍕 National Anti-Profiteering Authority (NAA/NAPA)
रा�ी� य मुनाफाखोरी �नरोधक प्रा�धकरण
⇒ GST provides input credit for most of the indirect taxes of the Union and State Govt. So,
entrepreneur’s cost of production should ⬇, then he should also ⬇ prices for consumers, yet
many companies had not reduced their prices e.g. Dominos Pizza, Nestle, Hindustan Unilever
toothpaste & detergents etc. [टै� क्रेिडट �मलने पर उ�ादन क� लागत कम होती है तो व�ु स�ी होनी चािहए. हालाँिक
कु छ मुनाफ़ाख़ोर कं प�नयां चीज़ों के दाम स�े नहीं कर रही थी तो िफर उ�� सबक़ �सखाने के �लए ये सं �ा बनायी गई]
⇒ So, Union govt set up NAA under Central Goods & Services Tax Act, 2017.
⇒ Depending on the case, NAA can order the culprit company to 1) reduce prices 2) refund money
with interest to consumers 3) deposit money to Consumer Welfare Funds at union & state level
4) Impose penalty upto 10% of profiteered amt 5) cancel registration. Appeal→ High Court.
⇒ This Authority shall cease to exist after two years from its inception (2017), unless GST council
renews it.(हालाँिक ज� के दो साल म� ही इस सं �ा को अपने आप बं द हो जाना था, �सवाय िक GST प�रषद आयु बढ़ा द�)
⇒ 2019-Jun: GST council extended it for another 2 years, which means all crooked companies have
not yet stopped profiteering. (कायर्काल बढ़ाया, �ोंिक बदमाश कं प�नयों क� मुनाफ़ाख़ोरी अभी भी जारी है।)
22.19.4 🕵🕵🍼🍼 Authority for Advance Ruling (AAR-अ�ग्रम फै सलों के �लए प्रा�धकरण)
⇒ Diabetic foods supplements are subjected to 12% GST whereas pasteurized milk is subject to 0%
GST. If Amul plans to launch ‘Amul Camel Milk' with bottle label: "Camel milk is easy to digest,
high in an insulin-like protein, hence beneficial for diabetic person."
⇒ So, whether Amul’s product be subjected to 0% GST or 12% GST? An entrepreneur would like
to such have clarification from Tax authorities before starting the production, lest he gets
tangled in raids and litigations afterwards. (छापेमारी और मुकदमेबाजी द्वारा उ�ीड़न िकया जाना)
⇒ So, CGST Act, 2017 provides for a statutory body called Authority for Advance Ruling (AAR),
where entrepreneur can seek such advance clarification.
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 366
⇒ Higher appeal? Appellate Authority for Advance Ruling (AAAR: अ�ग्रम फै सलों के �लए अपील प्रा�धकरण).
⇒ 🤩🤩Benefit? Reduces scope/opportunity for litigation/harassment/bribe demand → Ease of
doing business (�ापार करने म� आसानी) → helps attract Foreign Direct Investment (FDI: प्र�� �वदेशी
�नवेश).
22.19.5 🕵🕵💻💻GSTN Network (Not for Profit Company- मुनाफ़ा रिहत कं पनी )
2013: Goods and Services Tax Network (GSTN) “Not for Profit” Private ltd. company was set up
under the Companies Act.
Original Partners Ownership from Ownership in
2013-18 future**
Union govt 24.5% 50%
All states of India (incl. Delhi & Puducherry) 24.5% 50%
Non-Government Financial Institutions such as 51% 0%
HDFC Bank (20%), ICICI Bank (10%), NSE (10%),
LIC Housing Finance (10%)
**2018-May: GST Council approved acquisition of entire 51% equity held by non-Governmental
institutions & distribute it equally between Centre and the State Governments.
⇒ This company runs the GSTN online portal, where the suppliers register themselves, pay their
GST, claim input tax credits, generate e-way bills etc. [Infosys ltd. helped develop the webportal.]
⇒ GSTN Network ltd. also provides the IT infrastructure and software services to GST officials for
monitoring the tax compliance, issuing notices, data mining etc.
⇒ In future, such data could also be shared with the RBI’s Public Credit Registry (PCR: ऋण क�
सावर्ज�नक र�ज��ी) so the lenders can have a complete picture of the borrower’s business.
⇒ GST Suvidha Providers (GSPs): These are selected private IT/Fintech companies that develop
apps / software to help the taxpayers interact with GSTN portal. E.g. Zoho Accounting Software
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 367
- CBIC has Antarang portal for internal communication among CBIC officers.
- CBIC also launched portals such as i) ECTS (Electronic Cargo Tracking System), ii) Risk
Management System (RMS), iii) Indian Customs Compliance Information Portal (CIP) etc.
What is their objective? how do they work? Ans. not important.
Table 12: ✋don't lose too much sleep over it unless preparing for State Tax Dept Exams
Difference PAN: �ायी लेखा सं �ाक GSTIN: व�ु एवं सेवा कर पहचान सं �ाक
Full form Permanent Account Number Goods and Services Tax Identification Number
issued by the Income Tax issued by the Central Board of Indirect Taxes &
Department Customs (CBIC)
example Suzlon Energy ltd: Suzlon Energy ltd:
AADCS0472N 24AADCS0472N1Z8
Format 10 digit alphanumeric number 2 digit state code+ 10 digits PAN number + 3
(=containing both alphabets and characters = total 15 characters (=containing
numbers) both alphabets and numbers)
Who has to Every income tax assessee- - IF Individuals / firms registered under the
get it? individual, HUF, firm, company, Pre-GST law (i.e., Excise, VAT, Service Tax
trust (internal different not imp.) etc.) OR
- IF your biz. turnover is above a threshold
limit of “x” lakhs for ordinary states or “y”
lakhs in Sp.cat. States. OR
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 368
Difference PAN: �ायी लेखा सं �ाक GSTIN: व�ु एवं सेवा कर पहचान सं �ाक
- Merchants who sell through e-commerce
aggregators like Amazon.
Do all Every PAN card holder is not Every GSTIN holder is required to have PAN
taxpayers REQUIRED to have GSTIN. (e.g. a card number. (Because its format is like that,
have it? salaried employee) observe “format” row above).
How many - Only 1 PAN number allowed - If firm operates from more than one state,
numbers / per individual. then a separate GST registration is required
cards can - Only 1 PAN number allowed for each state.
one have? per company. - If a firm has multiple subsidiaries, they have
- Subsidiary firms will have to to get GST number for each e.g. “Faith
get separate PAN numbers. Hospitality Chain ltd→ Sam’s Pizza
restaurant, Sankalp Dosa restaurant, Saffron
Punjabi restaurant”
Objective Prevent evasion of direct taxes. Prevent evasion of GST, and help the
entrepreneurs claim their input credits.
- PAN number is required for various activities like opening of bank account, opening of demat
accounts (for trading in securities), obtaining registration for GST, VAT-Excise registration (for
Petrol-Liquor dealers) etc.
- So, PAN is slowly becoming a Common Business Identification Number (CBIN) or simply
Business Identification Number (BIN: सामा� �वसाय पहचान सं �ाक)- because if a Department
knows your PAN number they can dig all information about you, know whether you’re eligible
to fill up a particular tender or contract or a scheme application form or not?
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 369
🔢🔢🔢🔢PAN and GSTIN 🔢🔢UID (=Aadhar Card)
🔢🔢🔢🔢Their format contains both numbers and 🔢🔢Unique Identification number (UID) or
alphabets. Aadhaar is a 12 digit number. No alphabets.
Issued for individual humans, Only for living resident HUMANS of India. Not
HUF/firms/companies/trusts**. given for companies. Resident is defined as
person who lived in India for 182 days/> in last
12 months.
💼💼Full-Budget-2019: we’ll consider giving
immediate Aadhar card to NRIs with Indian
Passport so they don’t have to wait till ~180 days.
It’ll help them get through KYC bank/share
market transaction.
One HUMAN → one PAN number only. No age same (एक इं सान का �सफ़र् एक आधार काडर् �नकल सकता है)
limit. Minors can also join.
- ~₹110 Fees to get PAN card. No fees to get Aadhar. मु� म� �मलता है.
- No fees to get GSTIN
Compulsory to enroll (अ�नवायर् है), if your income Voluntary to enroll. आधार काडर् बनवाना �ै��क है.
or turnover is beyond “x” rupees**. अ�नवायर् / बा�कर नहीं है.**
They contain Demographic info:
- Name - Name, Date of Birth, Gender, Address.
- Photograph & Date of Birth (in case of - Mobile & Email (optional)
“Human”) Biometric info:
- Address. - Ten Fingerprints, Two Iris Scans, and Facial
Photograph.
- **💼💼Budget-2019: > 120 crore Indians have Aadhaarcard but all Indian don’t have PAN card.
Earlier, it was compulsory to give PAN No when filling income tax. But if you don’t have PAN
you can simply quote your Aadhaar number to file Income Tax returns. (�जन लोगों को आयकर भरना है
लेिकन पान-काडर् नं बर नहीं है तो उ�ोंने फ़ोमर् म� अपना आधार काडर् नं बर �लखकर आयकर का पैसा जमा करना होगा।)
- Later IT-department clarified that whoever quotes Aadhar number because he doesn’t have PAN
card → we’ll issue him PAN card on suo-moto basis later on. 💼💼Budget-2020 added technical
reforms in this process. (उसके बाद ऐसे लोगों का पान-काडर् नं बर आयकर �वभाग ख़ुद बनाकर दे देगा।)
22.21🍋🍋🍋🍋🍋🍋 GST: BENEFITS (लाभ)
✓ GST covers both goods and services, with standard rates, minimal number of cess/surcharges.
सामा� दर, ब�त कम चीजों पर उपकर/अ�धभार लगता है।
✓ GST online portal and e-way bill system reduces the interface between tax-officials and the
assesses, thereby reducing the scope of harassment, bribery and Inspector Raj. (=Ease of doing
business) (उ�ीड़न, �र�तखोरी म� कमी → �ापार म� सुगमता बढ़ी).
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 370
✓ GST provides input credits to suppliers thereby incentivizing them to sell with invoice at every
stage. Thus, GST will expand our tax collection, and deter tax evasion. (इनपुट क्रेिडट के �लए �बल बनाना
ज�री, इस�लए करचोरी मु��ल)
✓ GST Input credit system ⬇ the cascading effect of taxes, ↓ cost of manufacturing & selling,
while its anti profiteering authority ensures that such benefits are passed on to the customers in
the form of reduced MRP. (मुनाफाखोरी पर लगाम)
✓ Federal nations such as Canada and Australia shifted from VAT to GST regime. It helped
boosting their revenue, GDP and exports. (कर राज�, जीडीपी, �नयार्त म� बढ़ोतरी)
✓ Thus, GST will help to create a unified common national market for India, & catalyse “Make in
India”, and Assemble in India(More in 📑📑Pillar#4B)
😥😥 Before GST (GST आने से पहले) 🍋🍋🍋🍋🍋🍋 After GST (आने के बाद)
A car company would aim for “in-house GST provides input credits in more efficient and
production” of all necessary intermediate-goods comprehensive manner therefore, instead of
and accessories (e.g. tires, windshield, car-stereo trying to become Jack of all trades, company will
player) because if they buy those raw / pursue Ancillarisation, Subcontracting and
intermediate goods from outside, they’ll have to Outsourcing to procure from MSME industry
pay variety of taxes / cess / surcharges on which and freelance professionals.= More
Input credit may not be available. jobs.(अनुषंगीकरण, उपठे का और आउटसो�सग)
State government charged VAT on sale of goods, SGST/UTGST rates are uniform throughout
but VAT rates were not uniform throughout India, so there is no scope of rate arbitrage.
India. A laptop bag might attract 12%VAT in one Whether you buy a laptop from Chennai or
state and 18%VAT in another. This provided Mumbai the GST% tax rate will be same. (और रा�
scope for ‘rate arbitrage’ (दर अपवं चन) i.e. buying म� एक समान दर� लगती है तो दर अपवं चन म� कमी आएगी)
from another state for profiteering, even if same
item available in home state. Then State govt will
have to deploy more officials at the check posts,
leading to bribery, harassment, inspector-raj.
Suppose, a mobile is manufactured at ₹10,000/- & Both CGST and SGST are computed on the same
is subject to 9% Excise duty and 9% VAT. Then base (₹10,000), therefore tax burden on final
- 9% Union Excise duty = 900. (calculated on consumer is less in GST regime, than in Excise-
base of 10,000) VAT regime. (एक आधार पर क� द्र और रा� के जीएसटी क�
- 9% State-VAT = 981 (calculated on base of �गनती से उपभो�ा पर बोज कम होता है)
10,900 after including excise duty). Thus, GST will reduce impact of tax on end-
customer, so his purchasing power will improve,
leading to more demand, more sales, more
business expansion and GDP growth & jobs.
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 371
22.21.1 🍋🍋🍋🍋🍋🍋: ⚓ GST Benefit: Zero Rated Exports (शू� रेटेड �नयार्त )
- When company buys raw material or intermediate goods it will have to pay GST but if final
product is exported outside India (or sent to Special Economic Zone/SEZ in India: more in
📑📑Pill#3), it'll be subjected to 0% IGST.
- So, whatever GST the company had paid on the inputs, all of that will become its “Input Tax
Credit” (and company can use this ITC to pay for the taxes on the purchase of raw material and
intermediate goods in the next time), thus reducing its cost of production.
- This will improve price competitiveness of Indian products in foreign markets. (�वदेशी बाजार म�
भारत का सामान िकफायती बनता है)
- Australia and other GST countries also follow similar “zero rated export” regime.
🔠🔠❓MCQ. What are the most likely advantages of implementing GST? (Asked in UPSC-Pre-2017)
1. It will replace multiple taxes collected by multiple authorities thus create a single market in India.
2. It will drastically reduce ‘Current Account Deficit’ of India and will enable it to increase its foreign
exchange reserves.
3. It will enormously increase the growth and size of Indian economy of India & will enable it to overtake
China in the near future.
Codes: (a) 1 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 372
22.22.2 🤹🤹😢😢Frequent changes harming long term business planning
Frequent changes in GST rates makes it difficult for the companies to plan long term business
strategies. (जीएसटी क� दरों म� बार बार बदलाव के चलते, उधयोगप�त लं बी समयाव�ध के �लए रणनी�त नहीं बना पाते।)
E.g. In 2019-Sept, GST on Caffeinated beverages ⬆ from 18% → 28%. This will ⬇ sales. If
any soft-drinks company had invested in factory expansion it would suffer. 😰😰
15th Finance Commission Chairman NK Singh criticized frequent changes in GST rates.
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 373
○ 😾😾 (Counter: Malaysia had subjected all the goods and services to a flat rate of 6% and
the opposition parties were blaming it for the inflation, and there were many political
dimensions to the entire controversy. Whereas in India, we have kept many daily
necessity goods at 0% to 5% GST. RBI has been successful in keeping the inflation within
2-6% CPI limit. GST is implemented through Constitutional Amendment so even if
Rahul Gandhi promises to “UNDO” this Gabbar Singh Tax, he’ll have to go for another
Constitutional Amendment to scrap the GST which is not so easy.)
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 374
कर�। इस म� क� द्र सरकार द्वारा �ा उपाय िकए गए ह�?)
6. “Is GST a boon or a bane?” examine critically from State governments’ perspective. "�ा जीएसटी एक वरदान या
अ�भशाप है?" रा� सरकारों के ���कोण से गं भीर �प से जांच कर�।
7. “Is GST a boon or a bane?” examine critically from the small traders’ perspective. छोटे �ापारी
8. With respect to ease of doing business in India, discuss the importance of following (1) E-Way Bill
System (2) Authority for Advance Ruling. भारत म� �ापार करने म� आसानी के सं बं ध म�, �न��ल�खत के मह� पर चचार् कर� (1)
ई-वे �बल प्रणाली (2) अ�ग्रम फै सलों के �लए प्रा�धकरण
Handout: [2A)✅Direct & Indirect Taxes [2B) Black Money, 15th Finance Commission
[2C) Subsidies to Disinvestment [2D) Fiscal Deficit, FRBM, Budgeting & scheme types
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 375
2B: Finance Commission, Black Money & 2C: subsidies, revenue expenditure
Table of Contents
23 🍋🍋 (🧔🧔⚖���) Taxation → Finance Commission........................................................................ 378
23.1 Introduction to Finance Commission (�व� आयोग) ............................................................................... 378
23.2 🕵🕵(🍋🍋 🧔🧔⚖�) Fifteenth FC Composition (setup in 2017-Nov) .............................................. 379
23.2.1 📑📑15th FC Terms of Reference (TOR: �वचाराथर् �वषय)? ................................................................ 379
23.2.2 �15th FC TOR: Conclusion (�न�षर्) ......................................................................................... 380
23.3 🍋🍋 [🧔🧔⚖(���)] FC: Vertical Tax Devolution from Union to States ................................ 380
23.4 🍋🍋 [�⚖�⚖�] Horizontal Tax Devolution among States .................................................. 381
23.4.1 🍋🍋 [�⚖�⚖�]15th FC: Horizontal devolution: States’ share ................................... 382
23.4.2 🧕🧕Finance Commissions & the fate of UTs of J&K & Ladakh ................................................. 382
23.4.3 🧔🧔 → 💸💸💸 (��) Grants from Union to States : 14th FC ............................................... 383
23.4.4 🧔🧔 → 💸💸💸 (��) Grants from Union to States : 15th FC ............................................... 383
23.4.5 💸💸💸🏕🏕15th FC: Local Bodies Grants (�ानीय �नकाय अनुदान).................................................... 386
23.4.6 💸💸💸�Post-Devolution Revenue Deficit Grants (अंतरण-प� राज� घाटा अनुदान).................... 385
23.4.7 💸💸💸�15th FC: Special Grants: (�वशेष अनुदान)........................................................................ 385
23.4.8 💸💸💸🌬🌬🌬🌬15th FC: Disaster Management Grants (आपदा प्रबं धन अनुदान:).............................. 386
23.4.9 💸💸💸🍽🍽15th FC: Sector Specific Grants (�ेत्र-�व�श� अनुदान)-Malnutrition ............................. 387
23.4.10 💸💸💸🍽🍽15th FC: Sector Specific Grants (�ेत्र-�व�श� अनुदान)-Health ....................................... 387
23.4.11 💸💸💸🍽🍽15th FC: Sector Specific Grants (�ेत्र-�व�श� अनुदान)- Others(अ�) ............................. 388
23.4.12 💸💸💸💸💸💸Defence and Internal Security Fund for Union ........................................................ 388
23.4.13 🤏🤏 15th FC: Other recommendations to Govt (सरकार के �लए अ� �सफा�रश�) ................................ 389
23.4.14 ✍ 15th FC Report: conclusion (�न�षर्- उनके �रपोटर् क� सराहना-क� ब� बिढ़या �रपोटर् बनाया है) ................. 389
23.5 🕵🕵(🍋🍋🍋🍋⚖�)⏰ FC: Giving Permanent Status (�ायी दजार् देना)................................................. 390
23.5.1 �👎👎Arguments against giving permanent status to FC (�वरोध म� तकर् ) .................................... 390
23.5.2 �👌👌Argument in favour of giving permanent status to FC (प� म� तक) .................................. 390
23.5.3 � Conclusion: give permanent status to FC or not? (�न�षर्) ................................................. 391
23.6 � FC vs PC vs NITI: What’s the Difference? .................................................................................... 391
23.7 🍋🍋(🧔🧔⚖�🙏🙏) Special Category States? �वशेष श्रेणी के रा�? .......................................................... 392
23.7.1 🍋🍋(🧔🧔⚖�🙏🙏) Sp.Cat States → Economic Surveys criticised .......................................... 393
23.8 � Mock Questions for UPSC Mains (250 words each).................................................................... 394
24 🍋🍋🍋🍋🍋 Taxation → Black Money & Allied Issues .................................................................................. 394
24.1 (🍋🍋🍋🍋)�Black Money → Notable Organisations.......................................................................... 396
24.2 🍋🍋🍋🍋 Tax Evasion (Hiding Income / Transaction) ......................................................................... 397
24.2.1 🍋🍋🍋🍋⚖ Prevention of Money Laundering Act (PMLA-2002) ............................................ 397
24.2.2 🍋🍋🍋🍋⚖ Undisclosed Foreign Income & Assets Act (UFIA-2015) ...................................... 397
24.2.3 🍋🍋🍋🍋⚖ Benami Transactions Prohibition Act (BTPA- 1988, 2016) .................................. 397
24.3 (🍋🍋🍋🍋)💼💼 Tax Evasion → Govt Announcements ......................................................................... 398
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 376
24.3.1 🍋🍋🍋🍋🍋🍋 Tax (Evasion) “Surrender” schemes ........................................................................ 398
24.3.2 🍋🍋🍋🍋🍋🍋 Vivad se Vishwas Scheme for Direct Taxes (Budget-2020) ................................... 399
24.3.3 🍋🍋🍋🍋🍋🍋 Dispute Resolution Committee (DRC) in Budget-2021 ....................................... 399
24.3.4 🍋🍋🍋🍋 Tax Evasion → Other Initiatives (अ� कदम)................................................................... 400
24.4 (🍋🍋🍋🍋🍋🍋)Tax avoidance (कर प�रहार / कर टालना) .................................................................................. 400
24.4.1 🍋🍋🍋🍋🍋🍋 Double Taxation Avoidance Agreement (DTAA) & Round Tripping ................. 401
24.4.2 🍋🍋🍋🍋🍋🍋 Tax Avoidance through Non-Resident Status .......................................................... 401
24.4.3 🍋🍋🍋🍋🍋🍋 Place of Effective Management (POEM: पीओईएम) .................................................... 402
24.4.4 🍋🍋🍋🍋🍋🍋 Base Erosion and Profit Shifting (BEPS: बीईपीएस) ..................................................... 402
24.4.5 🍋🍋🍋🍋🍋🍋 Transfer Pricing & Authority for Advance Rulings (AAR) (ह�ांतरण मू�) ............. 403
24.4.6 (🍋🍋🍋🍋🍋🍋) � General Anti-Avoidance Rules (GAAR) ......................................................... 404
24.4.7 🍋🍋🍋🍋🍋🍋 Angel Tax on Startup Investments (2012) ................................................................ 404
24.5 (🍋🍋🍋🍋🍋🍋:⌛) � Retrospective Tax: Vodafone .............................................................................. 404
24.5.1 (🍋🍋🍋🍋🍋🍋:⌛) � Retrospective Tax: Cairn Energy ............................................................... 406
24.5.2 (🍋🍋🍋🍋🍋🍋:⌛) � Retrospective Tax: Conclusion .................................................................. 406
24.6 🍋🍋🍋🍋🌐🌐:🤵🤵 Global Minimum Tax (वै��क �ूनतम कर) ........................................................................ 407
24.6.1 🍋🍋🍋🍋🌐🌐:🤵🤵 Global Minimum Tax: G7 Framework............................................................... 408
24.6.2 🍋🍋🍋🍋🌐🌐:🤵🤵 G7-OECD “Two” Pillar Solution for Global Minimum Tax ........................... 408
24.6.3 🍋🍋🍋🍋🌐🌐:🤵🤵 Conclusion- Global Minimum Tax: �न�षर्......................................................... 408
24.7 🍋🍋🍋🍋🍋🍋🍋: � Reforms to reduce Tax Terrorism / Harassment ................................................ 409
24.7.1 🍋🍋🍋🍋🍋🍋🍋: �: � Cash Transaction Limit Relaxed for Corona ....................................... 409
24.7.2 🍋🍋🍋🍋🍋🍋🍋:🧾🧾 Pre-filled online forms for Tax Payers ......................................................... 409
24.7.3 🍋🍋🍋🍋🍋🍋🍋:🧾🧾Updated Return Form to correct errors- in 👜👜👜👜Budget-2022: ............... 409
24.7.4 🍋🍋🍋🍋🍋🍋🍋:🧾🧾 Faceless interaction between Tax payers and Tax official .......................... 410
24.7.5 🍋🍋🍋🍋🍋🍋🍋:🧾🧾⏰ Time limit on opening of past cases ....................................................... 410
24.7.6 🍋🍋🍋🍋🍋🍋🍋:🧾🧾 Document Identification Number (DIN: द�ावेज़ पहचान सं �ाक) .................. 410
24.7.7 🍋🍋🍋🍋🍋🍋🍋:🧾🧾⏰ Reducing Tax Terrorism: Misc. Committees ........................................ 411
24.8 📯📯🍋🍋📜📜 Taxpayers’ Charter in 💼💼 Budget-2020 (करदाताओ का अ�धकारपत्र) ..................................... 411
24.8.1 📯📯🍋🍋📜📜 (Indian) Tax Payers' Charter released in 2020-Aug................................................ 412
24.8.2 ✍ 📯📯🍋🍋📜📜 Conclusion: Tax Payers' Charter ....................................................................... 412
24.9 🍋🍋🍋: �� Tax Ombudsman in Economic Survey 2021 ............................................................ 412
24.9.1 🍋🍋🍋: ��Tax ombudsman: Indian experience .................................................................. 413
24.9.2 😰😰problems in previous Ombudsman system (2003-19)? ...................................................... 413
24.9.3 🍋🍋🍋: ��Tax Ombudsman: Global experience ................................................................. 413
24.9.4 🍋🍋🍋: �� Tax Ombudsman: Conclusion / way forward (�न�षर्/आगे का रा�ा) ................. 413
24.9.5 🍋🍋🍋: Reducing Tax Terrorism / Harassment: online portals/Apps .................................... 414
24.10 🍋🍋🍋🍋🍋🍋Taxation → Global Treaties, Agreements & Indexes ................................................... 414
24.10.1 🍋🍋🍋🍋🍋🍋 Tax Information Exchange Agreement (TIEA: कर सूचना �व�नमय समझौता) ................. 414
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 377
24.10.2 🍋🍋🍋🍋🍋🍋 USA’s Foreign Account Tax Compliance Act (FATCA-2010).............................. 415
24.10.3 🍋🍋🍋🍋🍋🍋 Global Financial Secrecy Index (वै��क �व�ीय गोपनीयता सूचकांक) .................................. 415
24.11 💸💸Black Money → Demonetisation (�वमुद्रीकरण) ............................................................................. 415
24.11.1 💸💸Why Demonetise ₹ 500 & 1000? ............................................................................................ 416
24.11.2 💸💸How did 99.30% SBN returned into banking system? ......................................................... 416
24.11.3 💸💸99.30% SBN returned, but Demonetization not failed experiment because: ..................... 417
24.11.4 💸💸Demonetization: Impact as per Economic survey 2016-17 ................................................. 417
24.12 📘📘📘📘Economic Survey on taxation and fiscal capacity (�व�ीय �मता) ............................................ 417
24.12.1 🍋🍋🍋🍋 Tax: GDP – why low in India (भारत का कर:जीडीपी अनुपात खराब �ों है?) ............................... 418
24.12.2 🍋🍋🍋🍋 Tax: GDP 📘📘📘📘 ES19: “Use Behavioural Economics to improve Tax Compliance”. 418
24.12.3 🍋🍋🍋🍋 Tax: GDP: 15th Finance Commission on how to improve it? ...................................... 420
24.13 🍋🍋Taxation: Misc. Terms ................................................................................................................. 421
24.13.1 🍋🍋 Net Tax Revenue of the Govt (शुद्ध कर राज�) ......................................................................... 421
24.13.2 🍋🍋 Revenue Shortfall (राज� म� कमी) .............................................................................................. 422
24.13.3 � Mock Questions for UPSC Mains (250 words each) .......................................................... 422
24.14 📥📥📥📥📥📥 Budget → Revenue Part → Receipts → Non-Tax Receipts .................................... 423
25 📤📤⏰ Budget → Revenue Expenditure (राज� खचर्/ �य) ........................................................................... 424
25.1 📤📤⏰(🌽🌽⛽) Revenue Expenditure → Subsidies .......................................................................... 425
25.1.1 📤📤⏰(🌽🌽⛽) Types of subsidies with selected examples ...................................................... 426
25.1.2 � � Impact of Subsidies (स��डी का प्रभाव: सकारा�क एवं नकारा�क) ............................................. 426
25.1.3 📘📘📘📘 Past Economic Surveys on subsidy delivery (आ�थक सव��णों के उपाय)................................ 427
25.1.4 📘📘📘📘 ES19: Use ‘Behavioural economics (�वहार अथर्शा�)’ to ↓ subsidy bill ........................... 427
25.1.5 ��🕵🕵National Recruitment Agency (NRA: रा��ीय भत� एज�सी) ............................................... 428
25.2 📤📤⏰🥳🥳 Revenue xpdr → Salaries→ 7th Pay Commission (वेतन आयोग) ..................................... 428
25.2.1 🥳🥳 Pay Commission: Dearness Allowance (DA: महंगाई भ�ा) .................................................... 429
25.2.2 🥳🥳 Pay Commission: Misc. terms ............................................................................................... 429
25.3 👻👻📤📤⏰�🥳🥳 SALARY Reforms in Atmanirbharat 2.0 (Oct 2020) ........................................... 429
25.3.1 👻👻⏰�🥳🥳 Atma-Nirbhar 2.0: Festival Advance Scheme (�ोहारों म� एडवांस रकम) ................. 429
25.3.2 👻👻⏰�🥳🥳 Atma-Nirbhar 2.0: LTC Cash Voucher Scheme ................................................ 429
25.4 (📥📥<📤📤)⏰⚠ Revenue Deficit (राज� घाटा) .................................................................................... 430
25.5 (📥📥<📤📤)⏰⚠ Effective Revenue Deficit (प्रभावी राज� घाटा) ........................................................... 430
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 378
between the different levels of the government. राजकोषीय सं घवाद: क� द्र और रा�ों के बीच कराधान और खचर् क�
�ज�ेदा�रयों का आवं टन/बटवारा/�वभाजन
- While the 7th schedule assigns many responsibilities to the States but their taxation power is
relatively lower than Union’s. So, Finance Commission plays a key role in transferring union’s
revenue resources to the state.. रा� क� कराधान श��यां कम है इस�लए �व� आयोग क� द्र के करो से िह�ा िदलाता है
- Article 280: President of India forms a Finance Commission (a quasi-judicial body) every 5th
Year or earlier, with 1 chairman and 4 members. Eligible for re-appointment. Recommendations
are not binding on the government but usually not rejected.
📔📔Further self-study & HINDI TERMS@ M.Laxmikanth’s Indian Polity ch.45.
14th FC: YV Reddy Recommendation Period: 1st April, 2015 to 31st March, 2020
15th FC: NK Singh Originally, it was meant to cover: 1st April, 2020 to 31st March, 2025
But later, Modi Govt ordered it to submit two reports:
1) Report#1: for 1/Apr/2020 to 31/March/2021 → submitted to President
in 2019-Nov, and accepted in 2020-Jan
2) Report#2: for 1/Apr/2021 to 31/March/2026. Title of report is "“Finance
Commission in Covid Times”. Published in 2021-February.
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 379
✓ 😰😰however, Southern States were apprehensive that they’d get less ₹ compared to
Northern States because Southern states controlled their population.
⇒ While allotting money, FC should keep in mind Union’s responsibilities for New India 2022
vision e.g. Swatchh Bharat, Digital India, PM-Jan Arogya etc. so FC should give more money for
that purpose.😰😰Non-BJP states didn’t like this.
6. Recommend measures for Fiscal Discipline/Consolidation for the Union and State governments.
(राजकोषीय अनुशासन/समेकन) e.g. asking State governments to stop populist schemes like Free
TV/Mixer Grinder etc.
7. Shd union continue to provide revenue deficit grants to States? (राज� घाटे क� भरपाई के �लए अनुदान)
8. How to finance the disaster management initiatives? (आपदा प्रबं धन)
9. Performance based incentives to the state governments. (प्रदशर्न आधा�रत प्रो�ाहन) e.g. reducing
population, stopping electricity theft, stopping populist schemes like free mixer-grinders etc.
10. (2019-Jul) suggest ways for allocation of non-lapsable funds for defence and internal security.
(र�ा और आंत�रक सुर�ा �बन�पगत �न�ध)
11. (2019-Oct) Award for the UT of J&K. (This terms of reference required under Jammu and
Kashmir Reorganisation Act, 2019. ज�ू क�ीर पुनगर्ठन अ�ध�नयम)
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 380
Ladakh’s security & other needs.
Sometimes finance minister says “States, along with Ladakh, J&K be given 42% share from Union
tax for 2021-2025” Although UT of J&K & Ladakh= to get 1%, so in reality other states getting
42-1=41%.”
23.4 🍋🍋 [�⚖�⚖�] HORIZONTAL TAX DEVOLUTION AMONG STATES
रा�ों के बीच सम�रीय/�ै�तज करअंतरण
Finance Commission also gives formula for How to distribute that share horizontally with
individual States (Guj | Bihar | MH | TN...). 14th FC (YV Reddy)’s formula was…
14th FC horizontal distribution formula components Weight %
👪👪 आबादी Population: as per Census 1971 17%
👪👪 जनसां��क�य Demographic Change as per Census 2011 (To consider the
10%
बदलाव migration angle.)
Income-Distance: Based on per capita income of a state (GSDP ÷
👜👜 आय-दू री 50%
its population). Accordingly, poorer states get more weight
📏📏 �ेत्र Area: more area more weight 15%
Forest-Cover: more forest cover more weight because of
🌳🌳 वन-आवरण Opportunity cost (State can’t allow industries there, else it could 8%
have obtained some taxes)
Based on above formula, Highest to Lowest: Uttar Pradesh > Bihar > MP > WB > MH > Raj> ….. >
Mizoram > Goa > Sikkim.
15th FC horizontal distribution formula components (घटक) → (भारांक%)
Weight%
(both in Report#1 and Report#2)
Income Distance (आय म� अंतर):
⇒ State GSDP divided by its Population = per capita GSDP.
45%
⇒ For most states, Haryana’s per capita GSDP is taken as benchmark. How poorer is
your state compared to Haryana= more ₹₹ you’ll get.**
📏📏 Area (�ेत्रफल) More area = more ₹₹ 15%
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 381
curiosity about how above indicators are calculated in real life, you may spend waste time in PHD-reading of the original report@
https://fincomindia.nic.in/
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 382
िकतने पैसा देना है= क� द्र सरकार अपने �ववेक से तय करता है. �व� आयोग इस म� ‘चूं’ नहीं कर सकता).
Finance Commission no longer prescribed formula in this regard. But,
31st October 2019: The state of Jammu Kashmir was officially split into the union territories of
Jammu Kashmir and union territory of Ladakh.
Jammu and Kashmir Reorganization Act, 2019 mandates that:
o Whatever amount the former state of J&K was supposed to receive between 31/10/2019
to 31/3/2020 (as per 14th FC formula) …It will be distributed between these two new
union territories on the basis of population ratio and other parameters.
o President of India shall require 15th FC to make award for UT of J&K.
o But, 15th FC report, no separate share is given in verticle / horizontal tax devolutions.
Simply 1% extra kept with Union to look after J&K & Ladakh, compared to 14th FC.
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 383
Type Report#2 (2021-26)
1) 💸💸💸🏕🏕Local Bodies Grants (�ानीय �नकाय अनुदान A)2.##Lcr Rural
B)1.##Lcr Urban
=total 4.36Lcr
2) 💸💸💸�Post-Devolution Revenue Deficit Grants 2.94 Lcr
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 384
Type Report#2 (2021-26)
3) 💸💸💸🌬🌬🌬🌬Disaster Management Grants (आपदा A) 68 kcr in Union ke Disaster
प्रबं धन अनुदान) funds
B) 1.22 Lcr in State ke Disaster
funds
4) 💸💸💸🍽🍽Sector Specific Grants: (�ेत्र-�व�श� अनुदान) with >1 lakh crore for (Sectoral grants
💸💸💸� Performance-based incentives (�न�ादन- Health, Education, agricultural
आधा�रत प्रो�ाहन) reforms, rural roads, Judiciary,
Statistics, Aspirational districts)
6) 💸💸💸🏰🏰State specific grants for tourism, historical 49599 cr.
monuments, infrastructure, water etc.
7) 💸💸💸�Special Grants: (�वशेष अनुदान) N/A
8) Union Govt ke liye Defense and Internal Security Fund 2.38 Lcr
Total >10 lakh Cr
23.4.5 💸💸💸�Post-Devolution Revenue Deficit Grants (अंतरण-प� राज� घाटा अनुदान)
🚩🚩🚩FAQ: On above logic/formula, wouldn’t a careless state govt spend truckload of money by
borrowing from market? Ans. REF: Pillar2D: FRBM Act.
⇒ If a state receives less ₹₹ in (15th FC’s devolution + post revenue deficit grants) in 2020-21
compared to 2019-20 (when 14th FC Rangarajan’s formula was in effect),
⇒ Then such State will get Special Grants just to prevent any ‘feeling of injustice / bias’ (अगर 14व� �व�
आयोग क� अपे�ा 15म� कम �मल रहा हो तो अ�ाय / प�पात के आरोप से बचने के �लए उन रा�ों को �वशेष अनुदान)
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 385
⇒ Only 3 states eligible: Karnataka, Telangana and Mizoram. Total ₹6,764 cr for 2020-21
Report#2 (2021-26)
No such grant announced. (ऐसा कोई �वशेष अनुदान नहीं िदया गया)
23.4.7 💸💸💸🏕🏕15th FC: Local Bodies Grants (�ानीय �नकाय अनुदान)
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 386
15th FC: recommend 🧔🧔National Disaster Risk Management Fund �State Disaster
�सफ़ा�रशे (NDRMF: एनडीआरएमएफ/रा��ीय आपदा जो�खम प्रबं धन कोष) Risk Management
Fund (SDRMF)
Internal distribution ⇒ 80% amt for National Disaster Response Fund Same pattern, change
आंत�रक �वतरण (NDRF:एनडीआरएफ/रा��ीय आपदा सहायता कोष) word from National
⇒ 20% amt for National Disaster Mitigation to ‘State’
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 387
Additional Recommendations by 15th FC on Healthcare
⇒ Union and State Government together should spend 2.5% of GDP on Healthcare sector by 2025.
(क� द्र और रा� सरकार ने �मलकर �ा� �ेत्र म� सावर्ज�नक खचर् को बढ़ाकर जीडीपी के ढाई प्र�तशत तक करना चािहए)
⇒ All-India Services Act, 1951: (presently we've IAS,IPS,Indian Forest Service) → make 4th All
India service: "All India Medical and Health Service" → UPSC to conduct recruitment. This will
help addressing the shortage of doctor in backward states. आईएएस/आईपीएस क� तजर् पर एक और अ�खल
भारतीय सेवा बनाई जाए "अ�खल भारतीय �चिक�ा एवं �ा� सेवा" तािक �पछड़े रा�ों म� डॉ�रों क� कमी को पूरा िकया जा सके
⇒ Most of the medical colleges and super-speciality hospitals (e.g. Cancer) are concentrated in the
Western and Southern parts of India. Union and State government should make efforts to
address this.(प��मी/द��णी रा�ों के अलावा वाले �व�ार म� भी अ�� मेिडकल कॉलेज| अ�ताल बनाने पर जोर िदया जाए)
23.4.11 💸💸💸🍽🍽15th FC: Sector Specific Grants (�ेत्र-�व�श� अनुदान)- Others(अ�)
Report#2: (2021-26) Amount
कृ �ष �ेत्र म� सुधारों के �लए -नी�त आयोग द्वारा Implementation of agricultural reforms e.g.
प्र�ा�वत कानूनों को पा�रत करना, भूजल Passing the agricultural formula suggested by
सं वधर्न, �तलहन दाल लकड़ी उ�ादों को Niti Aayog, Groundwater conservation,
प्रो�ाहन, कृ �ष �नयार्त को बढ़ोतरी Improving Oilseed pulses wood products, 45kcr
agricultural export, (📑📑Ref: HDT-Pillar#4A)
ग्रामीण सड़कों क� मर�त Maintenance of PMGSY roads (Pradhanmantri 27 kcr
Gram Sadak Yojana) (📑📑Ref: HDT-Pillar#5-
Transport Infrastructure)
�ा�यक सुधार -अ�त�र� �ायालय और Judiciary: ₹₹ for Setting of extra courts and
जजों क� �नयु�� के �लए पैसा- �जसे 5 साल judges to finish the the property cases which are 10 kcr
या उससे अ�धक �वलं �बत सं प��यों के मामलों pending for 5 years or older, Civil cases of
का �नपटारा, ब�ों के यौन शोषण,गं भीर marginalized people, POSCO cases (child sex
अपराध के मामलों का ज�ी �नपटारा abuse) & heinous crimes
उ� �श�ा म� ऑनलाइन पढ़ाई क� �व�ा Higher Education-For 1) developing online 6 kcr
तथा �चिक�ा और इं जी�नय�रंग के कोसर् को learning 2) translating medical engineering
प्रादे�शक भाषा म� अनुवािदत करने के �लए courses in regional languages
�ू ली �श�ा School Education 4.8 kcr
सां��क�/डेटा सं ग्रह Statistics/Data collection >1000 cr
These grants also include internal quota for performance based incentives i.e. Better performing
States will be given additional money. (इन सभी अनुदान म� कु छ अंद�नी/आंत�रक कोटा होता है, �जसम� अ�धक अ�ा
प्रदशर्न करने वाले रा�ों को अ�धक रकम �मल सके )
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 388
Where? Public Account of India → Modernisation Fund for Defence and Internal Security
(MFDIS: लोक लेखा �न�ध के अंतगर्त र�ा तथा आंत�रक सुर�ा के नवीनीकरण/आधु�नक�करण के �लए कोष या
�न�ध).
Type Non-lapsable Fund (The money in such fund will not lapse on 31st March, so it can
be used in future without getting another approval from parliament.) �बन�पगत �नधी
Amount ₹ 2.38 Lcr (total for 2021-26)
😰😰Controversy on MFDIS Fund? (�ववाद/आलोचना)
⇒ Some State governments are unhappy that the 15th finance commission should stick to its
Constitutional mandate of giving ₹₹ to States & not allot to Union. ESLE less money available for
State Governments' development works. �व� आयोग क� सं वैधा�नक �ज�ेदारी है िक रा�ों क� तरफ पैसा दे, ना िक
क� द्र के िह�े म� पैसा बढ़ाते रहे अ�था रा�ों के पास कम पैसा आएगा
⇒ Since the fund is marked as a non-lapsable fund → Defence ministry may be very involved in
utilising it and the amount will remain on spent. A similar problem is present in "Nirbhaya fund
for women safety". (📑📑Ref: HDT-Pillar# 2D for more) �बन�पगत �नधी म� पैसा खचर् करने म� मं त्रालय सु�ी
�ादा िदखाते ह� इस�लए असल म� लाभ होता नहीं. भूतकाल म� मिहला सुर�ा के �लए बनाए गए �नभर्या फं ड म� ऐसा ही अनुभव रहा है.
23.4.14 ✍ 15th FC Report: conclusion (�न�षर्- उनके �रपोटर् क� सराहना-क� ब� ब�ढ़या �रपोटर् बनाया है)
✓ Sustainable Development Goal#10: ⏬ inequality within the country. SDG-Goal#16 requires
nations to build effective, accountable and inclusive institutions at all levels. (सतत �वकास ल�:
असमानता को कम करो | लोक प्रशासनके सभी �रो मे सं �ानो को प्रभावी, जवाबदेह और समावेशी बनाओ)
✓ In this regard, 15th FC has tried to provide a framework for
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 389
○ 1) equitable distribution of revenue 2) incentives tied with performance. ऐसा ढांचा जहा 1)
कर-�वतरण समानता के साथ और 2) प्रो�ाहन प्रदशर्न के िहसाब से �मलेगा
✓ It’ll greatly help to improve India’s human dev+ eco dev. मानव �वकास और आ�थक �वकास मे मदद
Figure 2: CAG-UPSC जेसी कायम चालू रहेने वाली सं �ा बनाओ FC को- तभी ठीक से काम होगा- श��कांता
(Introduction: Origin) Shaktikanta Das, the Governor of RBI and a member of the 15th Finance
Commission (FC), has recommended giving a permanent status to the FC, wherein the old
commission continues to implement & monitor the recommendations till the next commission
starts functioning. (जब तक नया �व� आयोग नहीं बनता पुराने �व� आयोग क� ऑिफस खुली रखनी चािहए)
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 390
the demands by the States, still, the FC-formula/recommendations cannot be modified/finetuned
in-between the five years. So, even if Union/states are feeling any injustice in the FC-formula,
they have to wait for five years to make pleas to the next Finance Commission.
If FC has a permanent secretariat/office = staff will keep all the records/ Knowledge bank for
future reference, and a few officers will act as ‘Resource Persons’ to assist the new panel. Then,
there will be more consistency in the FC recommendations. (जानकार �ाफ का तबादला हो जाता है)
Such permanent body can keep a constant vigil (अ�वरत सतकर् ता) on the Union and State finances &
revenue collections and hold them accountable for any transgressions or lethargy (उ�ं घन / सु�ी).
[Present approach of the union governments is if they are not getting enough taxes, they will simply
borrow more money and changing the FRBM targets/goalposts as per their convenience. More
under 📑📑 Pillar2D:FRBM handout]
Previously, Union and States designed their five-year plans, and so it made sense to have a ‘five-
year formula for tax distribution’. But now the five-year planning system has been discontinued.
पं चवष�य योजनाओं का दौर ख� हो चुका है, इसी हमने 5-5 वषर् के मान�सकता से �नकलकर �नरंतर �नगरानी रखनी चािहए
Figure 3: हमारा रा� गरीब है, इस�लए हमे �वकास के �लए क� द्र सरकार ने अलग से ढेर सारा पैसा देना चािहए.
- 1952: The National Development Council (NDC: रा�ी� य �वकास प�रषद) was set up, with PM, CMs and
other representatives to approve FYP prepared by the Planning Commission.
- Although NDC became obsolete with establishment of NITI Aayog.(फू टा �आ कारतूस बन चुका है)
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 392
- 1969: 5th FC recommended giving extra ₹₹+ tax-relief to certain disadvantaged states. Over the
years, NDC added more states into the Special Category List based on
✓ (i) hilly and difficult terrain (पहाड़ी और किठन भूभाग)
✓ (ii) low population density and / or sizeable share of tribal population (कम जनसं �ा
घन� और / या जनजातीय जनसं �ा का बड़ा िह�ा)
✓ (iii) strategic location along borders with neighbouring countries (पड़ोसी देशों के साथ
सीमाओं के साथ रणनी�तक �ान)
✓ (iv) economic/infrastructural backwardness (आ�थक/अवसं रचना�क �पछड़ेपन)
✓ (v) non-viable nature of state finances. (रा� �व� क� गैर-�निहत प्रकृ �त।)
- Examples: 8 North Eastern states and 3 Himalayan States (JK, Uttarakhand, HP). Although,
Post-370 removal, J&K is no longer in this list.
- 🤩🤩🤩🤩Benefits of Sp.Cat. States? (�वशेष श्रेणी के रा�ों को �ा �रयायते / लाभ �मलते है?)
✓ Industrialists will be given benefits in Union-taxes for setting up factories in these states.
(उद्योगप�त को फै ��ी लगाने पर कर म� छू ट/ �रयायत- तािक वह �पछड़े रा� म� जाने के �लए आक�षत हो )
✓ Union bears higher burden in Centrally Sponsored Schemes (CSS) e.g 90:10 ratio: (क� द्र
प्रायो�जत योजनाएं म� क� द्र सरकार अपनी जेब से �ादा अनुपात म� पैसा देता)
✓ FC & PC would assign more weightage in their formulas to give them more funds.
- 14th FC: Previous FC assigned extra weightage & funds to Sp.Cat states, but 14th FC stopped
- But, whenever elections are near, W.Bengal, Bihar and Andhra CMs would demand Sp.Cat.
status & blame Union for ‘injustice’. (चुनाव करीब हो- उस व� कु छ रा� नाइं साफ� क� बात करते ह�)
- 15th FC: Some States have requested special category status. But it’s not part of our
mandate/Terms of Reference. (�वत् आयोग के �वचाराथर् �वषयो मे ये है ही नही!)
- So, at present, Sp.Cat states don’t get additional revenue/grants in FC’s formula. Although,
Union upon its own discretion continues to give them certain benefits in CSS. (वतर्मान �व� आयोग,
इन रा�ों को अलग से कोई पैसा नहीं देते। िकंतु क� द्र सरकार �यं के �ववेक से योजनाओं म� �ादा पैसा दे सकती है।)
23.7.1 🍋🍋(🧔🧔⚖�🙏🙏) Sp.Cat States → Economic Surveys criticised
Figure 4: इतने सालों तक ढेर सारा अनुदान िदया िफर भी �वकास �ों नहीं? - "दान एक श्राप है"- Former CEA
- 📔📔📔📔Economic survey 2016-17: Noted that Sp.Cat states have received lot of funds & grant
from previous FCs and PCs, and yet they have not made any tangible progress in improving
public administration or removing poverty (=” Aid Curse”: सहायता का अ�भशाप). Similar problem
with the States having abundant mineral resources (=“Resource Curse”: ख�नज सं साधनों का अ�भशाप).
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 393
- ES 2017-18: Noted that compared to Brazil, Germany and other countries with federal polity,
India’s State Governments and Local Bodies are collecting less amount of tax for two reasons :
- 1) Constitution has not given them sufficient taxation powers. (सं �वधा�नक श��यां कम)
- 2) Even where constitution gave them powers like collection of Agricultural Income Tax,
Land Revenue, Property Tax: The States/Local Bodies are shy of collecting taxes due to
electoral politics. (चुनावी लोकलुभावन के चलते सही मात्रा म� टै� नहीं वसूला)
😰😰Result? Poor quality of Public Schools, Public Transport, Police, Drinking Water and Sanitation.
सावर्ज�नक �ू लों, प�रवहन, पु�लस, पेयजल और ��ता क� खराब गुणव�ा
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 394
Tax Planning / Tax When person invests money in LIC/PPF/Pension funds etc.in such manner
Mitigation that he can claim various deductions legally available in the Income Tax Act.
(कर-�नयोजन) It’s neither illegal nor unethical. (न ही अवैध और न ही अनै�तक)
Black Money It is an income or transaction that is taxable yet NOT reported to the tax
(काला धन) authorities concealed from the tax authority.
कालाधन ऐसी आय/लेनदेन है जो क� कर-पात्र है, िक�ु कर-अ�धका�रयों से �छपाई गई.
Parallel Economy The economy that runs on black money. (समानांतर अथर्�व�ा जो काले धन पर चलती है)
👺👺Tax Evasion When person hides income or transaction from tax authorities, and thereby
(कर अपवं चन evades paying taxes. It’s illegal. (कराधान यो� आय या लेन देन को सरकार से �छपाना और
कर-चोरी) करचोरी करना)
🤵🤵🤵🤵Tax When person discloses his income and transactions to tax authorities but uses
Avoidance legal loopholes to avoid paying taxes. E.g. Bollywood stars who register digital
(कर प�रहार media companies in Tax Havens. It may not be illegal in every case, but still
unethical. (कराधान यो� आमदनी या लेनदेन को सरकार से �छपाना निह, लेिकन क़ानून मे �छद्रों के
कर-टालना)
इ�ेमाल द्वारा कर को टालना जाना। )
🍸🍸Tax Haven Is a country that demands little taxes from foreigners and offers legal
(कर �गर्) loopholes for Tax Avoidance & opportunities for Tax Evasion. E.g.
एसा देश जहां कर टालने / Liechtenstein, Mauritius, Marshall Islands, Cayman Islands, Panama, Nauru,
Vanuatu etc. These countries are geographically small, & without viable
�छपाने के �लए ब�त अवसर
economy. So they offer such mechanism to attract foreign investors and
�मलते ह�
foreign tourists.
👺👺→🤵🤵Money ⇒ When drug trafficking, ransom, corruption and other criminal activity
laundering generates substantial profits, the criminal tries to spend / invest / hide the
(गैरकानूनी तरीके से प्रा� money without attracting attention.
धन को वैध बनाना) ⇒ Money laundering (धनशोधन) is the process of disguising the source of
money, as if it came from a legitimate activity, & then channelize it into
banks, share market and other financial intermediaries.
Hawala ⇒ Hawala is an illegal money transfer / remittance system. Money is paid to
गैर कानूनी �प से एक जगह an agent who instructs an associate in the relevant country or area to pay
से दू सरी जगह पैसा भेजना the final recipient.
Although used by Indian workers in middle east because lower commission
than post-office/bank transfers, + better network in remote villages
Shell firms, They do not have any active business operations. Created with sole objective
Post-box/ of money laundering/tax evasion/avoidance E.g. Mishail Packers and Printers
Letter-box Pvt Ltd. allegedly setup by Misa Bharti Yadav to launder ₹1.2 crores (as per
companies Enforcement Directorate). मात्र कर चोरी के �लए बनाई गई कं प�नयां
Panama Papers International Consortium of Investigative Journalists is a USA based
(2016) nonprofit organization: released these incriminating documents from certain
Paradise Papers law firms in tax havens & showed how big politicians, businessmen,
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 395
(2017) sportsmen, filmstars have setup shell companies for tax evasion/avoidance
Mauritius papers across the world.
(2018) Putin, Sachin, Ambani, Amitabh Bachchan & Aishwarya Rai also named in
Pandora Papers these papers. (पत्रकारों का एक वै��क सं गठन �ज�ोंने अलग अलग द�ावेज़ जारी कर सा�बत िकया-
(2021) कै से दु�नया के रसूखदार लोग फ़ज़� कं प�नयां बनाकर कर चोरी करते ह�)
Tax Terrorism Happens when tax authorities put undue pressure on an honest taxpayer
(कर आतं कवाद) to pay more taxes. (ईमानदार करदाता पर टै� अ�धकारी अनाव�क दबाव / उ�ीड़न करे)
🍋🍋🍋🍋🍋🍋🍋: � Critiques have used this word in context of Vodafone & Cairn cases.
TDS/TCS Tax Deduction at Source (TDS) �ोत पर कर कटौती
Tax Collection at Source (TCS) �ोत पर कर सं ग्रह
These are the mechanism to discourage tax evasion. 📑📑Ref:2A: IT Handout
PAN Card 10 letters alphanumeric numbered assigned to all taxpayers in India by
�ाई खाता सं �ाक Income Tax Dept. 📑📑Ref: 2A: GST Handout for more.
24.1 (🍋🍋🍋🍋)�BLACK MONEY → NOTABLE ORGANISATIONS
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 396
24.2 🍋🍋🍋🍋 TAX EVASION (HIDING INCOME / TRANSACTION)
24.2.1 🍋🍋🍋🍋⚖ Prevention of Money Laundering Act (PMLA-2002)
1988’s original act did not achieve much results → amended in 2016. Main Agency? Income
Tax Department. (बेनामी लेनदेन (�नषेध) अ�ध�नयम:)
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 397
Benami refers to properties that buyer registers in the name of his relative, personal staff (Driver,
Gardner) or a non-existent/ fictitious persons (का��नक ���) to avoid tax authorities’ attention.
E.g. 2018: Misa Bharti Yadav (allegedly) bought farmhouse in the name of her brother-in-law
Nilesh Kumar.
Cases heard @ PMLA-walli bodies. Violation = Confiscation of property + penalty + Jail
गुनाह कबूल करो / आ�-समपर्ण करो तो कम जुमार्ना भरना होगा / जेल नहीं जाना होगा
Under such schemes, a tax-evader can declare his undisclosed income, pay the taxes and penalty.
Then, Income Tax Department will not pursue case against him. (Although Police may still pursue
case if income is from narcotics, kidnapping, extortion etc.)
Income Declaration Offer? 45% of the undisclosed income shall be taken away by govt as (tax
Scheme (IDS) 30%+ surcharge + penalty).
Validity? 2016 June to Sept. ~67,000 cr black money was declared.
Pradhan Mantri - ~50% of the undisclosed income shall be taken away by Govt. as Tax +
Garib Kalyan Penalty + Pradhan Mantri Garib Kalyan Cess.
Yojana (PMGKY) - Further, 25% of the undisclosed income shall be deposited in RBI’s
Launched after
‘Pradhan Mantri Garib Kalyan Deposit Scheme, 2016’. It’ll be a fixed
Demonetization
deposit for 4 years @ ZERO % Interest rate.
Validity?
2016-Dec: - The PM Garib Kalyan cess, and deposit will be used for schemes related to
To 2017-April irrigation,housing,toilets,infrastructure, edu, health etc.
- The scheme was not very successful, hardly ~ ₹ 5000 cr. declared.
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 398
🍋🍋🍋🍋🍋🍋🍋🍋 - > ₹ 3.75 lakh crore tax revenue is locked in the indirect taxes (service tax
Sabka Vishwas L.D.S and excise duty) related cases. These taxes are discontinued in GST but old
Scheme 2019 tax-evasion cases are still in the court.
In budget-2019
- Budget-2019: Launched Sabka Vishwas (Legacy Dispute Resolution)
Scheme, 2019 (�ववाद समाधान योजना).
For
Service Tax - Businessman accepts his fault, Tax officials gives a ‘discount/relief/waiver’
& Excise Duty in the penalty/late-fees, and the matter is settled, instead of litigating in
courts for years & years.
Presently, >₹9 lakh cr worth direct tax cases pending before Appellate Forums (अपीलीय मं चों के सम�
लं �बत मामले) viz. IT Commissioner (Appeals) → Income Tax Appellate Tribunals (ITAT: आयकर अपीलीय
�ाया�धकरण ) → HC → SC. So, 💼💼Budget-2020 → “Direct Tax Vivad se Vishwas Bill/Act, 2020”.
⇒ Scope: Appeal related to Income tax or Corporation Tax, pending before a forum as of
31/Jan/2020. Then,
⇒ Taxpayers can settle with IT dept in following manner
o A) If IT dept filled appeal → he has to pay 50% of disputed tax amt
o B) If Taxpayer filled appeal → he has to pay 100% of the disputed tax amt
⇒ In both situations, he'll get a complete waiver/relief from interest+penalty (�ाज और जुमार्ना से माफ�).
⇒ Above scheme is valid upto 31/March/2020, then Atma-Nirbhar Bharat extended it further.
⇒ This scheme is not applicable if:
o person is under prosecution for criminal activities. (अपरा�धक मामले चल रहे हो)
o If black money is hidden in foreign countries. (�वदेश म� काला धन �छपाया हो)
😰😰Controversies? 1) Southern India’s Members of Parliament angry that Hindi scheme name is
used. (2) both honest and dishonest tax payers are treated equally. Even dishonest tax payer can now
settle without paying interest/penalty.(3) Income Tax officials’ job-transfer etc will be linked to how
many cases they solve in this scheme. They’re also asked to work on weekends to fulfill these targets.
= resentment among staff (आयकर कमर्चारीओमे आक्रोश िक उनके तबादले और पदो��त के �लए इसम� सफलता को �गन�गे).
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 400
24.4.1 🍋🍋🍋🍋🤵🤵 Double Taxation Avoidance Agreement (DTAA) & Round Tripping
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 401
If a person is 🦁🦁Has to pay his IT on 🐼🐼Has to pay IT on global income e.g.
income coming from India? income coming from the USA/China?
Ordinarily Yes Yes
resident of India
Non-residents Yes No
If India has a double taxation avoidance agreement (DTAA) with other nation, then above things
may differ (e.g. recall erstwhile Mauritius CGT-roundtripping-walla example)
Table 2: 💼💼Budget-2020 changed these definitions
Definition in Indian Tax laws Before Budget-2020 → 💼💼Budget-2020
Ordinarily Indian Resident (साधारणतया भारतीय �नवासी) 182 days/> in a year 120 days/>
= person who stays in India for →
Non resident (गैर �नवासी)= person who stays outside 182 days/> in a year 246 days/>
India for →
⇒ Implications? Person will have to stay out of India for a longer period if he want to be treated as
“Non-Resident” to avoid taxes on his global income.
⇒ 😷😷Corona lockdown / Travel restrictions so non-residents couldn’t leave India even if they
wanted to. So, Finance ministry allowed some temporary relief regarding "Resident" definition &
submission of documents. How exactly? = NOT-HERE-for-CA-Exam
24.4.3 🍋🍋🍋🍋🍋🍋 Place of Effective Management (POEM: पीओईएम)
(�वदेश म� बनी फज� कं पनी के प्रबं धन का वा��वक �ान भारत म� ��त है तो भारत सरकार उसके मुनाफे पे टे� मांगेगी।)
24.4.4 🍋🍋🍋🍋🍋🍋 Base Erosion and Profit Shifting (BEPS: बीईपीएस)
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 402
When MNCs shift profit from its source country to a tax-haven to avoid / reduce paying taxes, its
known as “BEPS”. (ब�रा��ीय �नगम द्वारा मुनाफे को �ानांत�रत करना तािक भारत म� उसे टे� कम भरना पड़े )
India signed the OECD’s joint Multilateral Convention to Implement Tax Treaty Related
Measures to Prevent Base Erosion and Profit Shifting (commonly referred to as MLI) ओईसीडी के
ब�प�ीय समझौते पर ह�ा�र िकए ह�
24.4.5 🍋🍋🍋🍋🍋🍋 Transfer Pricing & Authority for Advance Rulings (AAR) (ह�ांतरण मू�)
✋Not really important। What above thing means ? = explained in video lecture.
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 403
24.4.6 (🍋🍋🍋🍋🍋🍋) � General Anti-Avoidance Rules (GAAR)
Till now we learned how Indians and foreigners avoid tax payment in India through loopholes like
DTAA, POEM, BEPS, Transfer Pricing etc.
So, UPA/Congress Govt setup economist Parthasarathi Shome panel who suggested General
Anti Avoidance Rules (GAAR: कर प�रवजर्न रोधी �ापक �नयम) → they were added Income Tax Act
GAAR empowers Income Tax officials to send notices to both Indians and foreigners for
suspected Tax Avoidance. (For Tax evasion, we’ve separate laws- PMLA, UFIA, BTPA)
But critics alleged GAAR will result in tax terrorism, harassment, no ease of doing biz. So
successive Budgets kept delaying the GAAR- implementation. Finally done on 1/4/2017.
⇒ 2012: UPA/Congress Govt ordered the suspicious startup Companies to pay 30% Tax + Penalty
on the investment which they received from Angel investor. (सं िद� �ाटर्अप कं प�नयों को आदेश िदया िक
आपको जो �नवेश म� पैसा �मला है उस पर 30 प्र�तशत एं जल टै� और जुमार्ना भरना होगा)
⇒ This was called ‘Angel Tax’. But then controversy that Angel Tax will discourage the growth of
startup companies so norms relaxed. (आलोचकों ने बोला ऐसी स�ी के चलते �ाटर्अप के �वकास को अवरोध होगा)
⇒ Budget-2019: IF Start-ups and their investors provide the required declarations and information,
then IT dept will settle the matter. (तो सरकार ने नरमी िदखायी क� हम� जो चािहए वो जानकारी दो तो इस के स का
समाधान कर द�ग।े )
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 404
⇒ Income tax dept demanded capital gains tax → Vodafone went to Supreme Court.
⇒ 2012: Vodafone won the case. Indian Supreme Court ruled that presently Indian tax laws do not
allow taxation on non-Indian assets traded outside India. (सव�� �ायालय ने पाया िक इन ���तयों म� कर
माँगना भारतीय कराधान कानूनों के अ�धकार �ेत्र से बाहर ह�।)
⇒ 2012-May: UPA/Congress government amended the Income Tax Act 1962 with retrospective /
Ex post facto effect that “even if non-Indian assets (e.g. Shares of Cayman Company) traded
among Non-Indians (Netherland and Hongkong walli companies), but IF the underlying value is
derived from Indian asset (Hutch) then then we can tax it.” (2012 म� सरकार ने क़ानून म� सं शोधन िकया है
तािक 2007 क� लेनदेन पर पूवर् प्रभावी/भूतल�� �प से कर/टे� माँग सके )
⇒ (Definition) Respective taxation= It is an act of demanding tax on a transaction that occurred in
the past, when such transaction was not taxable. e.g. in 2012- demanding tax on 2007’s event,
even though in 2007 it was not taxable as per law in 2007. (पूवर्प्रभावी/भूतल�ी कराधान यानी क� कोई ऐसी
भूतकाल क� लेनदेन पर कर माँगना, �जसपर उस भूतकाल म� क़ानून �पसे कर नहीं लगता था)
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 405
⇒ Then Govt issued fresh notices against Vodafone “now any transactions that occurred after 1962
are also taxable. So you pay tax + penalties“
⇒ Separately, India had signed an investment treaty with Netherlands. Such investment treaties
allow the aggrieved investor to complain in the specialised international tribunals at Singapore,
Netherland, etc So, Vodafone (its Netherlands subsidiary company) filed case against Indian
Government in Netherlands. (िद्वप�ीय �नवेश समझौतों के अंतगर्त यिद �वदेशी �नवेशक भारत ने नाराज़ है तो वो �नवेशक
�वदेश म� उसके बारे म� के स कर सकता है. वोडाफ़ोन कं पनी ने भारत के �ख़लाफ़ नीदरल�ड म� के स दायर िकया.)
⇒ The then Gujarat chief Minister had Modi called it “Congress/UPA’s Tax Terrorism on
Companies” (उस समय के गुजरात मु�मं त्री मोदी ने इसे कांग्रेस सरकार का कर-आतं कवाद बताया था)
⇒ 2020-21: Netherland Arbitration Court had ordered Indian govt to pay $1.2 billion to Cairn
Energy for tax harassment. (नीदरल�ड क� कोटर् ने भारत सरकार पर एक �ब�लयन डॉलर से �ादा का जुमार्ना डाला)
⇒ To recover this $1.2 billion compensation, Cairn company was trying to seize Indian Govt's
assets in foreign countries e.g. Air India planes parked on USA Airport, Indian Govt’s embassy
office/properties in Paris etc. (कं पनी मुआवज़े क� वसूली के �लए भारत सरकार क� �वदेशों म� ��त सं प��यों पर
क़�ा/नीलामी चाहती है)
⇒ 2021-Aug: FinMin introduced a Taxation Laws (Amendment) Bill, 2021 to end retrospective tax
rule-( �वत् मं त्रालय का कराधान क़ानून सं शोधन अ�ध�नयम २०२१- �जसम� पूवर्प्रभावी/भूतल�ी कराधान को रद्द िकया)
⇒ “If indirect transfer of Indian assets occurred before May 28, 2012, then Indian government will
not demand taxes on it. (2012 से पहले �ए इस प्रकार के लेन देन पर कोई भूतल�ी कराधान नहीं माँगा जाएगा।)
⇒ If income tax authorities had collected any taxes from such companies, then Indian government
will be refund the money to the victim-company (with 0% interest). (यिद आयकर �वभाग ऐसा भूतल�ी
कर/टे� ले चुका है तो उस पीिड़त क�नी को वो रक़म वापस करेगी। िक�ु उस रक़म पर सरकार उ�� �ाज नहीं देगी।)
⇒ however it requires that company need to drop the cases against Indian tax authorities, filed in
the Indian and foreign courts. (हालाँिक इस �रयायत म� शतर् ये है, िक कं पनी ने भारतीय सरकार के �ख़लाफ़ जो जो मुक़दमे
भारतीय और �वदेशी अदालतों म� दायर िकए ह�, उ�� वापस लेना होगा।)
⇒ 2021-Sept: Cairn agrees to drop cases filed against India in France, Netherland, USA etc. And
government of India agreed to drop the (retrospective) tax demand against Cairn. Vodafone also
planning to do similar. (उन �वदेशी कं पनीयो ने भारत सरकार के �ख़लाफ़ �वदेशी अदालतो म� दजर् िकए के सों को वापस �लया)
�❓Which one of the following situations best reflects “Indirect Transfers” often talked about in
media recently with reference to India ? (Prelims-2022)
(a) An Indian company investing in a foreign enterprise and paying taxes to the foreign country on
the profits arising out of its investment
(b) A foreign company investing in India and paying taxes to the country of its base on the profits
arising out of its investment
(c) An Indian company purchases tangible assets in a foreign country and sells such assets after their
value increases and transfers the proceeds to India
(d) A foreign company transfers shares and such shares derive their substantial value from assets
located in India
⇒ (Introduction: Origin) Tax Haven/Low Tax nations such as Luxembourg (Corporation Tax:
1.39%), British Virgin Island 0.07%, Cayman Islands 0.2 %. These countries are geographically
small, & without a viable economy. So they offer such a mechanism to attract foreign investors
and foreign tourists. (कर �गर् ऐसे देश ह� जहां पर प्र�� करों क� दर ब�त कम होती है तािक �वदेशी �नवेश और �वदेशी
पयर्टकों को आक�षत िकया जा सके )
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 407
⇒ Multinational corporations register their company here to transfer their profits/avoid paying
taxes to normal countries where they are operating. India is losing annually $100 cr, while USA
is loosing annually $500 cr by this. (ब�रा�ी� य कं प�नयां ऐसे कर �गर् क� मदद से कर-प�रहार/करो को टालती है.)
⇒ USA: Former President Donald Trump ⏬decreased corporation tax from 35% to 21%. New
President Joe Biden aims to ⏫taxes for Corona-welfare schemes for Americans. Biden also
urged G20 group of countries to keep minimum level of Corporation taxes. (Given in next topic)
24.6.2 🍋🍋🍋🍋🌐🌐:🤵🤵 G7-OECD “Two” Pillar Solution for Global Minimum Tax
For implementation of above G7 15% Global Minimum Tax Framework → OECD has given “Two-
Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy.“
- Pillar1- Applies to ~100 biggest and most profitable multinational enterprises (MNEs).
o They need to re-allocates “X%” of their profit to the countries where they sell their
goods/services. (So, such govt can count that profit & demand Corporation Tax on it.)
o All member-nations to remove all Digital Services Taxes. (e.g. India will have to remove
equalisation levy/google tax. REF: Handout Pillar#2A1- Direct Taxes.)
- Pillar2: Applies to any company with over 750 million EURO annual revenue. They would be
subject to an minimum 15% tax (on their profit).
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 408
- India along with 130+ countries have supported/joined the OECD/G-20 statement.
- This will help channelising the profits and taxes from the multinational corporations for the
development/welfare of poor living in the developing nations. (वाक़ई एक प्रसं श�नय कदम, ब�रा��ीय
कं पनीयो के कर प�रहार को रोकने, उनके मुनाफ़े मे से टे� द्वारा �वक�सत देशों मे गरीब क�ाण योजनाएँ चलानेम� मदद होगी)
24.7 🍋🍋🍋🍋🍋🍋🍋: � REFORMS TO REDUCE TAX TERRORISM / HARASSMENT
We learned about the reforms to fight “Tax evasion” → ban on cash transaction of ₹ 2 lakh / >, -
Operation Clean Money etc. So, on one hand, Income Tax Department has to become 😡😡😡😡strict /
coercive to fight against Tax evasion. At the same time, IT dept. also needs to become more
🤝🤝🤝🤝friendly towards honest taxpayers, So, following measures taken→ (कर आतं कवाद उ�ीड़न)
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 409
24.7.4 🍋🍋🍋🍋🍋🍋🍋:🧾🧾 Faceless interaction between Tax payers and Tax official
Personal interaction between the assessee and Income Tax official = more chances of harassment /
bribery. So, Government launched following reforms:
1) Cases will be allotted in random computerized lottery basis to IT officials without disclosing the
name, designation or location of the Officer.
Table 3: कर अ�धकारी और करदाता के �ब� मुलाकात/सं पकर् �बना आकलन और अपील कारर्वाई
Whenever Tax official sends letters to taxpayers regarding search authorisation, summons, arrest
memo, inspection notices etc. All such documents will have computer generated ‘Document
Identification Number’ (DIN).
2019: Both Central Board of Direct Taxes (CBDT) and Central Board of Indirect Taxes and
Custom (CBIC) started this practice.
DIN system benefits?
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 410
It’ll create a digital directory of communication between tax authorities and taxpayers.
Transparency, accountability, efficient and faster clearance of cases, because all the information
available at the click of a mouse. (पारद�शता, जवाब देही, कायर् द�ता, के सों का ��रत �नपटान)
If a document doesn’t have DIN number, it’ll be treated invalid. Thus, DIN system will prevent
the corrupt tax officials from sending fake notices to harass/blackmail taxpayers for bribes.
Sidenote: Director Identification Number (DIN): Director of every company is required to obtain
this number from the Ministry of Corporate Affairs under the provisions of Companies Act. It helps
monitoring the company act provisions related to “1 person can’t be director in more than ‘x’ number
of companies” etc.
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 411
1986 UK charters for taxpayers (करदाताओं का अ�धकार पत्र) → more updated 2009
1991 1991: citizen charter system started in UK by PM John Major
1997: citizen charter introduced in Indian union ministries/departments.
(नाग�रकों का अ�धकार पत्र)
1988 USA Taxpayers’ Bill of Rights (करदाताओं के अ�धकारों का �वधेयक/कानून)
2007 Canadian taxpayers’ Bill of Rights
2020 💼💼 Indian Budget-2020: CBDT will declare a Taxpayers’ Charter. So, Tax payer
will easily know what services / complaint redressal mechanisms (�शकायत �नवारणतं त्र)
are available to him= ⬇taxpayer’s harassment (करदाता का उ�ीड़न)
24.8.1 📯📯🍋🍋📜📜 (Indian) Tax Payers' Charter released in 2020-Aug
It promises following things to taxpayers: करदाताओं को वादा करता है
1. You'll be treated in an impartial,courteous, professional manner. �न��, �वनम्र और पेशेवर तरीके से �वहार
2. You'll be treated/ presumed to be honest, unless there is a reason to believe otherwise. आपको
ईमानदार माना जाएगा।
3. We will provide complete and accurate information about rules & complaint mechanism etc a
timely fashion.�नयम/�शकायत दजर् कराने स��ी जानकारी
4. We will collect only correct amount of tax. (के वल सही रा�श ली जाएगी। ज़बरन �ादा रा�श नहीं ली जाएगी।)
5. We will respect your privacy and confidentiality �नजता व् गोपनीयता का स�ान
6. We will hold our officers accountable for their wrongful actions. अ�धका�रओ को गलत काय� क� सजा द�गे
7. You can appoint a representative / tax lawyer to file replies/complaints//cases on your behalf.
मामले दजर् करने के �लए एक प्र�त�न�ध / कर वक�ल �नयु� कर सकते ह�।
8. We'll reduce cost of compliance (e.g. number of forms to be filled, photocopies to be submitted
etc) अनुपालन क� लागत कम कर�गे- फ़ालतू म� द�ावेज़ो क� दजर्नों कॉपी �नकालके फ़ॉमर् के साथ जोड़ने पड़े- एसे तमाशे बं द कर�गे.
9. +many other points but we have sufficient content for 250 words
It expects following things from taxpayers: Be honest, Pay taxes in time, Keep accurate records, be
informed, respond to notices in time when notices are given. (करदाताओं से �न� अपे�ा करता है क� वे ईमानदार
रह�, समय म� करों का भुगतान कर�, सटीक �रकॉडर् रख�, सू�चत रह�, समयसर नोिटस का जवाब द�)
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 412
✅Homework: READ about Lokpal and Lokayukta
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 414
➢ From Indian side- CBDT is the the nodal agency for such agreements.
24.10.3 🍋🍋🍋🍋🍋🍋 Global Financial Secrecy Index (वै��क �व�ीय गोपनीयता सूचकांक)
➢ Prepared by London based Think Tank ‘Tax Justice Network (TJN)’.
➢ It uses 20 indicators to measure the countries on their financial secrecy, opportunities for Tax
Avoidance, BEPS etc. 2020 Ranking: 1st rank Cayman Islands>USA> Switzerland,….India (47).
➢ Its report says India is losing over $10 billion in taxes each year due to MNC’s tax abuse.
Definition? Demonetization is the wholesale withdrawal of currency notes from circulation. (मुद्रा-
चलन म� से कु छ खास िक� क� नोटों को हटा देना)
RBI Act 1934: Every banknote is a legal tender. However, RBI Central Board can recommend
the Government of India to notify specific currency note(s) should no longer be treated as legal
tenders. Then FinMin → Department of Economic Affairs makes official gazette notification.
1946: ₹ 500 Notes demonetized; 1978: ₹ 1000, ₹ 5000, ₹10000 Notes demonetized.
2016-Nov-8th: Public was ordered to deposit the (old) Mahatma Gandhi series currency notes ₹
500 and ₹ 1,000 (henceforth called “Specified Bank Notes: SBN”) into Banks and post-offices
latest by 30th December 2016. And all the banks and post offices where ordered to deposit such
SBN into RBI.
Specified Bank Notes (Cessation of Liabilities) Ordinance:
- From 31st December 2016, RBI Governor not required to honour “I promise to pay…”
or exchange the SBN. Except for NRIs: deadline little bit relaxed, with certain caveats.
- Public prohibited from keeping SBN, except for research or numismatics or museum-
and that too in limited amount. This ordinance became Act in 2017.
India is not the only country in the world to do demonetisation. Sweden ( 2013), European
Union ( 2016) and even Pakistan (2015) has done it for their currency notes.
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 415
24.11.1 💸💸Why Demonetise ₹ 500 & 1000?
Demonetization is usually done in the aftermath of hyperinflation, war & regime-change.
India did it to combat Corruption, Black money, Counterfeiting and Terror finance .
भ्र�ाचार, काला धन, जाली नॉट,आतं क का �व�पोषण
We had 12.04% Cash to GDP ratio, one of the highest in the world. Currency printing &
transportation cost alone was 1.7% of GDP.
“Soil rate” is the rate at which notes are considered to be too damaged to use and returned to the
RBI. (�बगड़े/फटे �ए नोटों को �रजवर् ब�क म� बदलवाना)
For ₹ 500 & 1000 SBN-notes, soil rate was much lower than the currency notes of ₹ 10 to 100.
(implying that 500-1000 SBN were used for ‘storing black money’, rather than in transactions.)
So, experts made mathematical comparison of the foreign countries’ economic development,
soil rates of their foreign currency notes etc. and arrived at a figure ₹ 3 lakh crores of Indian
black money is stored in SBN (=2% of GDP).
So if SBN were demonetised, the black money holders will not return their currency notes into
banks (fearing IT-RAIDS) and thus black money will be destroyed. (काला धन �यं तबाह हो जाएगा)
But in reality, ~99.30% of the SBN were returned back into the banking system, so hardly ₹
10,720 crore of black money was destroyed by the demonetisation of 2016.
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 416
24.11.3 💸💸99.30% SBN returned, but Demonetization not failed experiment because:
✓ Those who could not return their SBN, have lost their black money (₹ 10,720 crore)
✓ Those who used poor people are money mules- must have paid some commission to them. So
even if government did not get tax from black money, atleast poor people benefited. Thus,
indirectly demonetization helped in redistribution of wealth.
✓ Further, Operation Clean money, IT-dept issued notices to the suspicious bank accounts where
large amount of money was deposited. Such shell firms & their benami properties are seized.
✓ With Project Insight & Op. Clean Money: IT dept fetched ₹ 1.30 lakh crore in taxes and penalty,
attached ₹ 7000 crore worth Benami properties, ₹ 1600 crore worth foreign assets & de-
registered ~3.40 lakh shell firms. (says the Int-Budget-2019).
✓ The number of PAN card registration, IT returns, registrations under excise / VAT / GST have
greatly ⏫⏫ in the aftermath of demonetisation which proves that crooked people have
learned lesson. More than 1 cr. new IT assesses added in 2017.
✓ Tax collection ⏫⏫ from ~₹ 6 lakh crores (2013) to ~₹ 12 lakh crores (2018).
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 417
- Result? hardly 4% of Indian voters are taxpayers (23% is desirable, as per our level of
development against BRICS nations. भारत के के वल 4% मतदाता करदाता है)
- Govt gets less taxes → poor fiscal capacity → poor services → vicious cycle continues and
results in ⏬ of govt’s accountability towards citizens. (सरकार क� जवाबदेही कम होती है)
24.12.1 🍋🍋🍋🍋 Tax: GDP – why low in India (भारत का कर:जीडीपी अनुपात खराब �ों है?)
1) Lack of civic sense among people that paying taxes is a basic duty. (देश के प्र�त कतर्� क� भावना नहीं)
2) Presence of informal sector, parallel economy, cash based economy provides ample
opportunities of hiding income. (नगदी आधा�रत अनौपचा�रक अथर्तंत्र)
3) Low per capita income, high level of poverty. Concentration of income in the hands of few
people- who are greedy to engage in tax evasion & avoidance. (देश क� �ादातर सं प�� चु�नदं ा लोगों के हाथों
म� क� िद्रत, जो �यं क� लालच म� कर जमा नहीं करते)
4) Election funding → source of corruption → black money. Politician-Builders-Mafia nexus.
5) Due to political considerations, state govts and local bodies do not levy all the taxes authorised
by the constitution e.g. tax on agricultural income. So our (direct) tax base is narrow. [Tax base:
कराधार means the total value of all the persons/income/property, etc. on which tax is charged.]
6) Loopholes in the tax laws encourage tax avoidance (कर कानूनों म� खा�मयां)
7) Direct taxes like wealth tax, gift tax and estate duty suffered from loopholes, lax monitoring and
evasion. They didn’t yield much revenue. Hence even referred as ‘paper taxes’, and had to be
abolished ultimately. (कागजी कर �जनसे वा�व म� नाम मात्र क� आमदनी होती थी)
24.12.2 🍋🍋🍋🍋 Tax: GDP 📘📘📘📘 ES19: “Use Behavioural Economics to improve Tax Compliance”
Plato said, “What is honoured in a country, is cultivated there.” Indians join military because 1)
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 418
salary 2) because serving in the armed forces is considered ‘honourable’. (स�ाननीय)
So, we should use the principles of Behavioral Economics to enhance tax compliance We’ve to
modify the social norm from “evading taxes is acceptable” to “paying taxes honestly is
honorable.” ((�ावहा�रक अथर्शा� के �सद्धांतों द्वारा कर अनुपालन म� बढ़ोतरी कराएं . कर भरना एक स�ाननीय कतर्� बने)
Tax Morale: it is the motivation of taxpayers to pay taxes. (कर सं बं धी नै�तक मनोबल)
When tax morale is ⏬ → motivation for tax evasion ⏫.
Table 4: Tax Morale is affected by two types of fairness
Fairness Vertical Fairness Horizontal Fairness
�न��ता (उ�ार्धार �न��ता �ै�तज) (�ै�तज �न��ता)
Tax Payer’s What I pay in taxes is commensurate There should not be a great difference
thought to the benefits I receive as services in the taxes paid by the ‘similar’
process → from the Government. sections of society.
His Tax He sees taxpayers' money wasted in If a salaried employee and a
morale is public expenditure (like Mayawati’s shopkeeper are earning ₹8 lakhs per
lowered when elephant statutes) instead of better annum, still the salaried employee is
→ quality of water, road, education or forced to pay more taxes than this
electricity. shopkeeper, because
- TDS on salary whereas shopkeeper
underreports his sales in cash
payment.
- Shopkeeper shows less profit
through fictitious business
expenditures.
Solution(s) under-constructions projects SMS, billboards highlighting self-
should show signboards “Your tax employed individuals who pay
money at work” good amount of tax.
Reminding tax payers that public Public shaming of individuals who
goods can only be provided in don’t pay taxes. It’ll scare other
return for tax compliance. Most tax-evaders that the probability of
people in your local community their detection has increased.
pay their taxes on time. Avoid Tax Amnesties. Give
stringent punishment to tax
evaders.
Further, CEA Subramanian K. suggested:
Top 10 highest taxpayers within a district → They should be given VIP-treatment such as faster
boarding privileges at airports, special “diplomatic” type lanes at immigration counters, fast-lane
on roads and toll booths, etc.
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 419
Highest taxpayers over a decade → Important places should be named after them e.g. roads,
trains, schools, universities, hospitals and airports.
In Hinduism, Islam and Christianity - unpaid debt is considered a sin. So, advertisements should
highlight how tax evasion is a violation of such “spiritual/religious norms”.
Ease in Paying Taxes: Pre-populated Income Tax forms with easy to understand terms. Even if a
person’s tax liability is ZERO, he should be required to fill Income Tax form.
Automated TDS as and where possible and timely release of Tax refunds.
@Hindi-Medium-Mains candidates: refer ES2018-19 Vol1 Ch.2 page52’s bullet
2.33 upto page 55’s box 5 to get the clean & formal vocabulary
24.12.3 🍋🍋🍋🍋 Tax: GDP: 15th Finance Commission on how to improve it?
⇒ Expand the scope of TDS/TCS to cover more number of transactions and find the tax
evaders. (�व�वध प्रकार के लेनदेन को टीडीएस/टीसीएस के दायरे म� लाया जाए तािक कर चोरी पर �नगरानी रखी जा सके )
⇒ 40% of the people who filed Income Tax forms in 2019-20 did not pay any income tax. Because
either: आयकर का फॉमर् भरने वाले 40% लोग असल म� आयकर नहीं जमा करते �ोंिक.
o the taxable income was very low (आयकर यो� आय ब�त कम है)
o they are hiding / underreporting income (आयकर फॉमर् म� कु छ आमदनी को छु पाया जा रहा है)
o because of tax-deduction & tax rebates. (वह �व�वध प्रकार के टै� िडड�न, टै� �रबेट का लाभ लेकर
अपने आयकर दा�य� 0 कर देते ह�)
o So, Government needs to address this. इस�लए �व�ा म� सुधार ज�री
Income Tax Rate Minimum Maximum Income Tax Rate Minimum Maximum
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 420
�नभर्रता को थोड़ा कम करना चािहए, प्र�� करो का �ाप बढ़ाना चािहए)
🔠🔠❓MCQ. Which of the following effects of creation of black money in India has been the main
cause of worry to the Govt of India? [काला धन भारत सरकार के �लए �चंता का �वषय �ों है] (Prelims-2021)
A. Diversion of resources to the purchase of real estate and investment in luxury housing [सं साधनों को
आलीशान बं गले खरीदने के �लए मोड़ िदया जाता है]
B. Investment in unproductive activities and purchase of precious stones, jewellery, gold, etc.[क�मती
जवाहरात सोने और गैरउ�ादक प्रवृ��यों म� �नवेश होता है]
C. Large donations to political parties and growth of regionalism [राजनी�तक प�ों को बड़ा चं दा िदया जाता है
और प्रांतवाद क� वृ�द्ध होती है]
D. Loss of revenue to the State Exchequer due to tax evasion [कर चोरी के चलते राज� आमदनी कम होती है]
24.13 🍋🍋TAXATION: MISC. TERMS
Laffer Curve - American economist Arthur Laffer: if (direct) tax rates are ⏫ above a
(लफ़र वक्र): certain level, then tax revenue collection will ⏬ because higher tax rates
discourage people from working and/or encourage them to evade tax.
- So, tax-cuts could lead to ⏫tax revenue collections.
- 💼💼Modi Budgets from 2017 onwards: The lowest Income Tax slab was cut
from 10% to 5%; The corporation tax on small sized companies was also
brought down from 30 % to 25% in a phased manner.
- 💼💼Budget-2020: new optional Income tax slabs.
- 💼💼USA Budget-2017: Corporation tax cut down from 35 % to 15%
Tax buoyancy - If GDP grew by x%, then how much % Income tax collection will grow?
(कर उ�ावकता): - E.g. if income tax collection growth rate is 11% when GDP growth rate is
10%, then Income Tax’s tax buoyancy is 1.1
Tax elasticity If first income tax slab increased from say 5% to 15%, then in absolute terms how
(कर ल�चलाता): much more IT-revenue will be generated?
24.13.1 🍋🍋 Net Tax Revenue of the Govt (शुद्ध कर राज�)
Sr. Budget → Revenue Receipts → Tax Receipts 💼💼Budget 2022-23
(Approx.)
A Union’s Direct taxes, incl. cess and surcharge 14.20 Lakh Cr
B Union’s Indirect taxes incl. cess and surcharge. 13.## Lakh Cr
(i.e. GST, Customs, Excise)
C Union territories without legislature: their direct and 7800 cr
indirect taxes: �वधानमं डल रिहत सं घ रा� �ेत्र
D Gross Tax Revenue (=A+B+C) सकल कर राज� 27 Lcr
E Minus the Tax devolution to States (कर ह�ांतरण) as (-) 8 Lakh Cr
per the Finance Commission
F Minus Contributions to National Disaster Response (-) 6400 cr
Fund in Home ministry**
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 421
D-E-F Net Tax Revenue of Union (शुद्ध कर राज�) +D-E-F= 19 Lakh Cr
**Public Account → National Disaster Response Fund (रा��ीय आपदा प्र�तिक्रया कोष) is a statutory fund under
Disaster Management Act, 2005. Previously, called National Calamity Contingency Fund (NCCF).
24.13.2 🍋🍋 Revenue Shortfall (राज� म� कमी)
Budget Estimates: बजट अनुमान BE-2020-21 Presented RE-2020-21 Shortfall: BE Minus RE
Revised Estimates सं शो�धत अनुमान on 1/2/2020 Presented on 1/2/2021 Amount in Crores
Total = Gross Tax Revenue 24,23,020 lakh cr 20,27,104 lakh cr. 😰😰3.95 lakh cr
इतना कमाने क� उ�ीद थी वा�व म� इसके आसपास इतना �आ राज� घाटा
⇒ Budget 2020 is presented on 1/2/2020 for the next financial year starting from 1st April 2020 to
31st March 2021. So, FinMin could have only made projections /estimations about how much
taxes will be collected during 1/4/20 to 31/3/21.
⇒ But throughout the year, based on the advance tax-collection figures & monthly GST collection
figures, FinMin will have to re-adjust the estimates.
⇒ 1/2/2021: Budget 2021 is presented for next FY-2021-22. Along with that, Govt will present
revised estimates for previous Financial Year (2020-21).
⇒ From the table we can see 2020-21: Gross Tax collection is less than expected (24 MINUS 20) =
~3.95 lakh crore is ‘Revenue Shortfall’, mainly because GST & Corporation Tax collection are
much less than expected due to slowdown in economy.
⇒ In 2021-22: There was no revenue shortfall. Government earned more tax revenue compared to
its budget estimates.
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 422
4. Despite being a trillion dollar economy, India's tax to GDP is quite low. Suggest ways to remedy
this contrast. (िट��लयन डॉलर क� अथर्�व�ा होने के बावजूद, भारत का कर:जीडीपी अनुपात काफ� कम। इस �वषमता को हल
करने के उपाय सुझाए).
5. Discuss the significance of taxpayers charter & tax ombudsman in the tax administration of
India. (भारत के कर-प्रबं धन म� करदाताओं के अ�धकार पत्र और कर-लोकप्रहरी/�शकायत �नवारण अ�धकारी के मह� क� चचार्)
6. Discuss the rationale behind introduction of a global minimum tax. How will it help countries
like India? (वै��क �ूनतम कर क� शु�आत के पीछे तकर् पर चचार् कर� । यह भारत जैसे देशों क� कै से मदद करेगा?)
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 423
Grant in Aid (अनुदान)/ Donations received by Union. 1345 629
[If Union had received ‘loan’, it’ll be ‘Capital Receipt’.] cr.
Similar Non-tax revenue earned by UT without Legislature ~ 2500 2800
cr.
Sum of Above= Total Non-Tax Revenue Receipts कर-�भ� प्रा��यां 3 Lakh 2.7
cr
✋Figures are not important, but the fact is important that revenue budget: tax receipts >> non-tax
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 424
3. ⛽Fuel (LPG, Kerosene)
4. Interest Subsidies on loans: Farmers (highest), MSME, Affordable
Housing, LIC Vay Vandana Yojana etc.:
5. Other (Price stabilization fund, Cotton & Jute etc.):
�Pension to retired employees ( 2.10 Lcr 2.07
➢ Economic services related revenue expenditure (Agriculture, energy, --some --some
transport, communication, Science technology) figures figures
Not imp Not imp
➢ Social services’ revenue expenditure ( health, education, social
security):
➢ Expenditure on Administrative machinery (Police, Jail, External
Affairs etc.), Elections, Parliament, Judiciary:
➢ �Defence revenue expenditure (e.g. soldier salaries, fuel for tanks)
➢ Revenue expenditures of UT without Legislature:
Total Revenue Expenditure कु ल राज� �य (approx.) 31.67Lcr 31.94
Total Revenue Receipts (Tax + Non Tax Receipts) कु ल राज� प्रा��यां 20.##Lcr 22
⚠ Revenue Deficit = Revenue Receipt MINUS Expenditure 10.08Lcr 9.90Lcr
Estimated nominal GDP for 2022-23 is ₹ 258 lakh crores. So Revenue 4.7% 3.8%
Deficit as a percentage of GDP = (9.90 divided by 258) x 100=
🔠🔠❓ As per the Budget 2019-20, the maximum subsidy expenditure was likely to be on _ _ _ (UPSC-CDS-
2020-ii) (a) urea subsidy (b) petroleum subsidy (c) food subsidy (d) fertilizer subsidy
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 425
25.1.1 📤📤⏰(🌽🌽⛽) Types of subsidies with selected examples
1. Given in direct cash (or bank transfer): PM KISSAN 6k for farmers, LPG Pahal ~200 per
cylinder. नगद म�.
2. Given in kind: free school bags, uniform and books to the poor children, free medicines in
public hospitals, free insurance. मु� व�ु या सेवा के �प म�
3. Indirect subsidies (परो�): cheap fees in government colleges, cheap kerosene, cheap urea, cheap
crop insurance premium etc. Here govt. is paying some money to an organization so they may
provide goods/services @cheap rate to the beneficiary.
4. Implicit Subsidies (अंत�निहत): Govt supresses the supply so to ⏫ the prices to help a sector. E.g.
Indian govt banned import of American chicken/poultry/eggs. So, shortage of chicken helps
local Indian poultry industry to demand high prices from public. Here Indian poultry receiving
‘implicit subsidy’ (from public), even though Govt is not paying them money. (More in
📑📑Pillar#3B -> WTO)
5. Cross-Subsidization (क्रॉस सहा�यक�करण): To keep rail travel cheap for the poor people, Railways
keeps the passenger tickets lower than its input cost. To compensate this loss, Railways keeps
freight (goods transport) prices higher. This is called “Cross subsidization” (More in 📑📑Pillar#5
Infra → Railways)
6. Regulatory (�नयामक) subsidies: e.g. if State Electricity Regulatory Commission directs companies-
that electricity to farmers must NOT to be beyond ₹ “x” per unit.
7. Procurement (खरीद) subsidies: e.g. FCI purchasing at food grains from farmers at minimum
support price (MSP). (More in 📑📑Pillar#4A -> AGRO)
8. Interest (�ाज) subsidies / subvention: govt pays “x%” interest on agriculture, MSME, affordable
housing loans.
25.1.2 � � Impact of Subsidies (स��डी का प्रभाव: सकारा�क एवं नकारा�क)
� Merit Goods (लाभदायक व�ुऐ)ं : Healthcare, education, scientific research, LPG, solar panels,
wind mills etc. Here subsidies can increase the positive externalities. (Cheap LPG → poors don’t
use firewood → more trees & less indoor pollution.)
� But subsidies on diesel, kerosene =negative externalities (नकारा�क बाह्यता) on environment.
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 426
� Urea subsidies to industries → cheap urea to farmers → excessive consumption → soil &
water pollution, algae-blooms. (यू�रया उवर्रक का अ�ा�धक उपयोग जमीन पानी म� प्रदू षण)
� Subsidy leakage: When ghost beneficiaries (non-existent persons propped up by corrupt
officials), and ineligible (rich) people are receiving subsidy. (स��डी �रसाव, धांधली और गबन)
25.1.3 📘📘📘📘 Past Economic Surveys on subsidy delivery (आ�थक सव��णों के उपाय)
📘📘📘📘 Economic survey 2014-15:
✓ We should use Jandhan Aadhar Mobile (JAM) trinity to reduce the subsidy leakage.
📘📘📘📘 Economic survey 2015-16:
✓ Direct benefit transfer (DBT: प्र�� लाभ ह�ांतरण) can’t be a panacea in every case, because
males of the house may waste DBT-money on liquor & tobacco. So, in some cases,
Biometrically Authenticated Physical Uptake (BAPU) mechanism will be better i.e.
beneficiary goes to a grain / fertilizer shop and uses his Aadhaar & fingerprint to purchase
subsidized goods. (बॉयोमीिट�क �प से प्रमा�णत करके लाभाथ� को व�ु देना)
📘📘📘📘 Economic survey 2016-17:
➢ The present subsidy delivery mechanism suffers from two errors:
○ Inclusion Error (समावेश त्रुिट): Non-poor (=affluent) are receiving ~40% of subsidies.
○ Exclusion Error (बिह�रण त्रुिट): real poor are not getting subsidies due to corruption
✓ So better to abolish all type of subsidies and directly deposit a specific sum of money into
beneficiary’s bank account to help him buy goods/services from open market = Universal
Basic Income (सावर्�त्रक बु�नयादी आय) (UBI): 📑📑More in Pillar#6.
25.1.4 📘📘📘📘 ES19: Use ‘Behavioural economics (�वहार अथर्शा�)’ to ↓ subsidy bill
To ⏬Govt’s subsidy burden: Above Poverty Line (APL: गरीबी रेखा से ऊपर) households shd be
encouraged to voluntarily surrender LPG subsidies using following tools of Behavioral economics:
People have a strong tendency to go with the status quo. So, ‘Default ticked option’ in LPG
registration forms should be ‘I wish to give up the subsidy’, so a person will be ‘forced’ to untick
the option to avail the subsidy benefit.
Similarly, income tax forms should contain extra-fields with pre-ticked options like ‘I want to
give up LPG subsidy’.
The online /SMS-based ‘subsidy giving up process’ should be quick and hassle-free. It should
not take more than a few minutes. Because every additional minute required to complete the
formalities= increases the chances that person will drop out in the middle of the process.
People act positively when they see others act positively, and particularly when they can relate to
such individuals. So, online “scroll of honour” should show name/photos/social media-profiles
of others in their area who gave up subsidies.
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 427
Advertisements to highlight that “Rich people are helping in poverty removal by giving up
subsidies.“
When people are watching a movie with social message (such as Padman, Toilet Ek Premkatha
etc), it should contain ad asking people to give up full / partial subsidy.
Once a person gives up subsidy, he should be shown the photos of poor people benefitting from
his act / or a video with a beneficiary saying ‘thank you’.
25.2 📤📤⏰🥳🥳 REVENUE XPDR → SALARIES→ 7TH PAY COMMISSION (वेतन आयोग)
Setup by Finmin → Dept of Expenditure. 1st: Srinivasa Varadachariar (1946). 7th: (Retd) Justice
AK Mathur (2014). Its recommendations became effective from 1/1/2016. Major highlights were:
✓ New system of “Pay Matrix” instead of previous system of pay band and grade pay.
✓ Regulatory bodies salaries increased: Chairman ₹ 4.50 lakh / month, members ₹ 4l.
✓ Minimum pay in Central service increased to ₹ 18k / per month (Group-D).
✓ Maximum pay: ₹ 2.25 lakh per month for Apex scale (e.g. Secretary of a Dept.), and ₹ 2.50l (for
Cabinet Secretary)
✓ It adopted Dr. Aykroyd formula to compute wages at periodic interval (formula tracks the
changes prices of the commodities used by a common man).
✓ So, critiques believe there will not be an 8th Pay Commission because salaries will be updated
automatically at regular interval, using this formula.
✓ It abolished various type of ‘interest free allowances’ e.g. Purchase of bicycle etc.
✓ It continued ‘interest-bearing advances’ for purchase of computer, house building (upto ₹ 25
lakhs). [= employee can borrow money from dept but he will have to return it with interest.]
✓ Various reforms for defence and CAPF services. (सश� सेना /क� द्रीय पु�लस बल के �लए सुधार)
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 428
✓ stronger rules in Modified Assured Career Progression (MACP) system so lazy officials don’t
get promoted. (आलसी और �नक�े अफसरों क� पदो��त को रोका जाए)
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 429
25.4 (📥📥<📤📤)⏰⚠ REVENUE DEFICIT (राज� घाटा)
⇒ When govt spends more than its income in revenue account, it incurs …
⇒ Revenue deficit = Revenue expenditure – Revenue receipts. (�य �ादा आमदनी कम)
⇒ Since most of revenue expenditure is ‘committed’ (like Interest repayment on previous loans,
staff-salaries & pensions which Govt can’t ‘avoid’), so difficult to ⬇ the revenue deficit.
⇒ So, when revenue deficit ⬆, govt forced to borrow more money or ⏬ expenditure in the
capital part (= less new schools, bridges and hospitals) → ⏬ human dev, and lower economic
growth (less new bridges → ⬇ demand of steel/cements → ⬇ growth in those sectors).
2A) ✅ Direct Taxes [✅2A2-Indirect Taxes & GST 2B) ✅ Black Money, 15th FC
2C) ✅ Subsidies, Salaries, Revenue Expenditure 2D) Disinvestment, Deficit, FRBM Act,
Fiscal Council, Budgeting-Railway budget, plan-non plan budget, & scheme types etc.
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 430
Pillar#2D: Disinvestment to Deficit to Budget & Scheme Types
Table of Contents
26 📥📥📥📥 Budget → Capital → Receipts ...............................................................................................433
26.1.1 💼💼💼💼💼💼 Foreign Borrowing in Foreign Currency ......................................................434
26.1.2 💼💼💼💼💼💼Budget-2022: Foreign Borrowing ...................................................................435
26.2 🧔🧔🗃🗃 ♐ 🤵🤵 Budget → Capital Receipts → Disinvestment: �व�नवेश.................................435
26.2.1 CPSE vs PSU vs PSB .............................................................................................................437
26.2.2 🥉🥉Ratna Companies = freedom to govt companies based on performing.................437
26.2.3 🧔🧔🧔🧔 ♐ 🤵🤵 Government policy towards disinvestment before 2021.....................438
26.2.4 🧔🧔🧔🧔 ♐ 🤵🤵 Disinvestment & Privatization in the Modi Raj (2014-19) .................441
26.2.5 🧔🧔🧔🧔🧔🧔 ♐ 🤵🤵 Strategic Disinvestment in Modi Raj ...............................................441
26.3 👻👻👻👻👻👻 → � New Public Sector Enterprise (PSE) Policy (2021) ..................................442
26.3.1 🚿🚿🚿🚿National Monetisation Pipeline (NMP 2021) ......................................................442
26.3.2 🚿🚿🚿🚿National Land Monetization Corporation (NLMC-2022) .................................442
26.3.3 📞📞 ☎: BSNL MTNL Merger & VRS (�वलीनीकरण) ...........................................................443
26.4 📔📔📔📔ES20 Vol1 Ch9 Privatization and Wealth Creation ......................................................443
26.4.1 📔📔📔📔 Strategic Disinvestment (=privatisation) → ⏫profitability ...........................443
26.4.2 📔📔📔📔Strategic Disinvestment (=Privatisation) → Adopt Singapore Model .............443
26.5 🗓🗓🗓🗓Budget → Capital Part → Expenditure (पूंजीगत �य) ..................................................444
26.5.1 👻👻👻👻👻👻👻🏗🏗Atmanirbharar 2.0 (2020-Oct) → State CAPEX Loans ..................444
27 💼💼💼Types of deficits: घाटे के प्रकार ......................................................................................................445
27.1 💼💼💼Fiscal Deficit: राजकोषीय घाटा ..............................................................................................446
27.2 💼💼💼Primary Deficit: प्राथ�मक घाटा .............................................................................................446
27.3 💼💼💼Debt Composition: Amount-wise ..................................................................................447
27.3.1 💼💼💼Debt Composition: Type-wise ...............................................................................448
27.4 💼💼💼👜👜👜 Extra-Budgetary Resources (बजटेतर सं साधन) .....................................................449
27.5 💼💼💼 Financing the deficit: its negative consequences on economy: ................................450
27.5.1 💼💼💼 ⏫:🛒🛒⏬ Financing the Deficit: Ricardian Equivalence ...............................451
27.5.2 💼💼💼 ⏫:🛒🛒⏬Ricardian Equivalence invalid for India says ES21 .......................451
27.5.3 💼💼💼 Financing the deficit: “Crowding Out” of private borrowers ..........................452
27.5.4 💼💼💼 Crowding out of private investment? 📔📔📔📔ES21 Observations.....................452
27.5.5 💼💼💼 Financing the deficit: Printing More Money ......................................................453
27.5.6 💼💼💼 Fiscal Deficit ⏫= India sovereign rating ⭐⭐⏬ ......................................454
27.5.7 ⭐⭐Rating downgrade⏬: Don’t worry says ES21 ...................................................454
27.5.8 ⭐⭐Rating downgrade: conclusion or way forward...................................................456
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 431
27.6 💼💼💼💼💼💼💼💼Countercyclical policy (प्र�तचक्र�य राजकोषीय नी�त) ..................................................456
27.6.1 💼💼💼💼💼💼💼💼Countercyclical: IRGD & Debt Sustainability..........................................458
27.6.2 💼💼💼💼💼💼💼💼 Countercyclical: Domar Condition of Debt Sustainability ...................458
27.6.3 💼💼💼💼💼💼💼💼Countercyclical: Conclusion/Way forward? (�न�षर्) ..............................458
27.7 🔀🔀🔀🔀Side Note: Automatic Stabilizers (�चा�लत-��रीकारी) .....................................................459
27.8 💼💼💼 Misc Terms related to Deficit Financing ......................................................................460
27.9 💼💼💼💼💼💼 Fiscal Consolidation / Prudence: राजकोषीय एकत्रीकरण / �ववेक ..................................461
27.10 💼💼💼💼 Fiscal stimulus (राज� प्रो�ाहन पेकेज) ............................................................................462
27.10.1 💼💼💼💼 👳👳 Manmohan’s Fiscal Stimulus (2008-) ..........................................................462
27.10.2 💼💼💼💼 🧔🧔 Modi’s Fiscal Stimulus (2019) .......................................................................462
27.10.3 👻👻💼💼💼💼 🧔🧔 Modi’s Atma-Nirbhar Bharat Economic Stimulus Package (2020) ..463
27.11 💼💼💼🔨🔨 Fiscal Responsibility & Budget Management Act, 2003 .................................464
27.12 🙌🙌 FRBM: Trigger Mechanism (to) Escape (Deficit control) Clause ..............................465
27.12.1 💼💼💼🔨🔨 FRBM: Misc. Concepts ....................................................................................466
27.12.2 💼💼�🔨🔨 🗂🗂 FRBM Act: Documents (द�ावेज़) ............................................................466
27.13 👻👻👻👻👻👻👻Fiscal Federalism: Helping the States in ATMANIRBHAR ......................467
27.13.1 🧔🧔🧔🧔🧔Helping States → Tax devolution and grants ...............................................467
27.13.2 🧔🧔🧔🧔🧔Helping States → States’ Fiscal deficit limits ⏫ ........................................467
27.14 🧔🧔🧔🧔🧔Fiscal Deficit target for States by 15th FC & Budget-2021 ...............................468
27.15 💼💼💼🔨🔨🔨 Fiscal Responsibility: NK Singh FRBM Review Panel..............................469
27.15.1 💼💼💼🔨🔨 FRBM Panel’s Notable recommendations: उ�ेखनीय �सफा�रश�? ....................469
27.16 💼💼💼🔨🔨🔨 Fiscal Responsibility: NK Singh’s 15th Finance Commission ..................470
27.16.1 💼💼💼🔨🔨🔨 :🎯🎯 Budget marksmanship is Poor, says 15th FC.................................471
27.17 💼💼💼🔨🔨🔨 Fiscal Responsibility: Freebies / Revdi Culture ..........................................472
27.18 💼💼💼🔨🔨🔨 Fiscal Responsibility: Fiscal Federalism Challenges ..................................472
27.19 💼💼💼🔨🔨🔨 Fiscal Responsibility: Misc Bodies ................................................................472
27.19.1 💼💼💼🔨🔨 Expenditure Management Commission (2014) ..........................................472
27.19.2 💼💼💼🔨🔨🔨 Public Debt Management Agency (PDMA): सावर्ज�नक ऋण प्रबं धन एज�सी..472
27.19.3 💼💼💼🔨🔨🔨 Fiscal Council (राजकोषीय प�रषद) ..................................................................473
27.20 🎺🎺 (MAINS) Public Expenditure Management: Challenges.............................................474
27.20.1 ⚰ 😰😰Public finance challenges: Corona ex-gratia Yojana ..........................................476
28 💼💼 Types of budget: बजट के प्रकार ..........................................................................................................476
28.1 Revenue versus Capital budget: राज� बनाम पूंजीगत बजट ..............................................................476
28.2 💼💼💼💼General budget versus Railway budget (आम बजट बनाम रेलवे बजट) ................................477
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 432
28.3 💼💼💼💼 Plan vs non plan expenditure budget: ...........................................................................477
28.4 💼💼💼💼Budgeting (बजट �नमार्ण क� प्रिक्रया/ रणनी�त) ...........................................................................478
28.5 💼💼💼💼💼💼Tribal sub plan & SCSP..............................................................................................479
28.6 💼💼💼💼💼💼Output Outcome Framework for Schemes:............................................................479
28.7 💼💼💼💼Cash vs Accrual Budgeting: नगदी बनाम उपचय बजट ...........................................................480
28.8 💼💼💼💼💼💼Lapsable Funds & March Rush: �पगत �न�ध और माचर् ��ता .....................................480
28.9 💼💼💼💼💼💼 Non lapsable funds & No Rush: �बन�पगत �नधी .......................................................480
28.10 📯📯📯📯Types of schemes (योजनाओं के प्रकार) .............................................................................481
28.10.1 👜👜👜👜Budget-2022: CSS rationalisation........................................................................482
28.10.2 📯📯📯📯Ministry-wise Highest Allocation ..........................................................................482
28.11 �Mock Questions for UPSC Mains GSM3 (250 words each) ........................................483
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 433
(a) Market borrowings including special bonds
(b) External loans raised by the Central Government from abroad
(c) Receipts from taxes on property and capital transactions
(d) Provident Funds (State Provident Funds and Public Provident Fund)
26.1.1 💼💼💼💼💼💼 Foreign Borrowing in Foreign Currency
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 434
🙂🙂Arguments in favor (समथर्न) 😥😥Against (प्र�ाव के �व�द्ध)
सा ऋण अगर �वदेशों से �वदेशी मुद्रा म� ले �लया India, rather than we going 'abroad' to get their
तो कु छ जो�खम नहीं money in $ currency.
Conclusion: whether we should borrow in foreign currency or not?
⇒ � (Against) From the aforementioned analysis, it's evident that challenges outweigh the
potential benefits. Noted economists such as Dr. Raghuram Rajan are apprehensive about
sovereign borrowing from external markets in foreign currency. Therefore, this idea, though
well-intended, requires more deliberation. (इस प्र�ाव म� फायदे कम नुकसान �ादा िदख रहे ह� इस�लए इरादा नेक
है लेिकन इस पर �ादा �वमशर् क� आव�कता है)
⇒ ���=�� (In favor) Considering above points, sovereign borrowing from external
markets in foreign currency may not be a bad idea, provided that it's done in a judicious and
prudential manner. (यह प्र�ाव बुरा नहीं है, �ववेक पूणर् �प से लागू करना चािहए)
26.1.2 💼💼💼💼💼💼💼💼Budget-2022: Foreign Borrowing
⇒ In 2020: Govt borrowed large amount borrowed (₹70,000+ cr) World Bank, Asian Development
Bank etc from abroad due to Corona. But most of our foreign debt denominated in ₹₹ Currency.
So need not worry much.
26.2 🧔🧔🧔🧔 ♐ 🤵🤵 BUDGET → CAPITAL RECEIPTS → DISINVESTMENT: �व�नवेश
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 435
There are THREE types of Commercial or industrial undertaking owned by the govt:
🚝🚝 ✉ Departmental 🐯🐯Statutory Corporations ⛽Govt. Companies
Undertakings �वभागीय उपक्रम वैधा�नक �नगम सरकारी कं प�नया
Directly part of a ministry e.g. Created by an act of Parliament Registered under the
Postal, Railways, or state legislature. E.g. RBI Act, Companies Act, Govt’s
They can be created easily SBI Act, LIC Act, FCI Act, shareholding is 51% or
because, no laws required, no EPFO Act. etc, SIDBI, more.Coal India ltd, GAIL,
Companies Act registration NABARD, NHB, EXIM etc. SAIL, NTPC, IOCL, BHEL &
required various Public Sector Banks and
NBFCs which are not statutory
corporations.
👺👺 High level of ministerial 🤘🤘 Middle of both sides More operational flexibility, less
interference (मं त्री क� दख़ल �ादा) interference by Ministers
CAG will audit directly [भारत के Some of these Acts provide for Companies Act requires them
�नयं त्रक और महालेखा परी�क �यं internal audit & exclude CAG to produce audited reports.
�वभागीय उपक्रम के िहसाब िकताब का लेखा from auditing the Corporation. CAG will empanel the (private)
परी�ण कर�ग]े E.g. RBI, LIC. auditors for them.
Their earning will go directly in Their earning → profit → dividend goes to shareholders.
Public Account / CFI
All three types of org are Answerable under the Right to Information Act, 2005
सूचना अ�धकार कानून/ अ�ध�नयम के अंतगर्त इन सभी सं �ानों ने जानकारी देनी होगी
Their employees are considered Not considered govt employees. Their service / discipline
government employee- conditions are governed by the respective organizations’ internal
subjected to service and manuals. सरकारी क�मयों वाले सेवा और अनुशासन/�श� के �नयम इनके कम�यो को
discipline rules framed by the लागू नहीं होते.
government.
⇒ Objective: Public interest & welfare through affordable services, Development of infrastructure,
regional balance, prevent concentration of economic power in the hands of Corporates /MNCs.
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 436
(उदे�: जन िहत म� स�ी सेवाएं , बु�नयादी ढांचा, �वकास म� �ेत्रीय सं तुलन, ब�रा��ीय कं प�नयों के हाथों म� आ�थक श�� क�
के �ीकरण रोकना)
⇒ 😭😭Challenges? Political interference, lack of innovation & consumer responsiveness, employee
unions, loss making business. (राजनी�तक ह��ेप, नवाचार क� कमी, उपभो�ा के प्र�त जवाबदेही कम, कमर्चारीओ को
काम से �ादा यू�नयनों-बाजी और हड़ताल म� �ल� रहेना, घाटे म� चलना)
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 437
Category Condition and examples
🥇🥇 ✓ Already a Navratna Company+ fulfilling “z” conditions such as min. ₹ 5000 crore
Maharatna profit per year in last 3 yrs, listed at a Stock exchange, significant global presence
✓ Very few here: 1)Bharat Heavy Electricals, 2)Bharat Petroleum Corporation,
3)Coal India , 4)GAIL (India) , 5)Hindustan Petroleum , 6)Indian Oil
Corporation, 7)NTPC , 8)Oil & Natural Gas Corporation (ONGC), 9)Power Grid
Corporation, 10) Steel Authority of India (SAIL)
✋ Above Ratna examples are taken on 1/1/2020. List may change afterwards. Some companies
get privatized. We need not lose sleep over it too much, unless preparing for their specific
recruitment exam.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
��FAQ. Are Public Sector Banks (PSB) given Ratna Status? Ans. No. While PSBS are a sub-
set of Government companies but Ratna status is for CPSEs who are NOT PSBs.
��FAQ. Are Statutory Corporation like LIC, EPFO etc given Ratna Status? Ans. No. It’s for
Central Govt’s companies only. It is not for statutory corporation.
��FAQ. Are State Govt’s Govt Companies given Ratna Status? Ans. No. It is for Central
Govt owned companies only. ये �सफर् क� द्र सरकार क� सरकारी क��नयो के �लए है
��FAQ. Are Private sector Companies like Tata/Reliance given Ratna Status? Ans. No. It is
for Central Govt owned companies only. भाई ये �सफर् क� द्र सरकार क� सरकारी क��नयो के �लए है. इतनी आसान
और सीधी सी बात को आप �ों जिटल कर रहे है!?
🔠🔠❓MCQ. Which among the following is designated with ‘Navratna’ status? (CDS-2021-i)
(a) Indian Oil Corporation Limited (b) Gas Authority of India Limited
(c) Bharat Petroleum Corporation Limited (d) Bharat Electronics Limited
26.2.3 🧔🧔🧔🧔 ♐ 🤵🤵 Government policy towards disinvestment before 2021
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 438
⇒ Disinvestment: ⏬ govt shareholding in a Government company but govt keeps atleast 51%
shareholding with itself.
⇒ Privatization / Divestment / Strategic Disinvestment (�नजीकरण/रणनी�तक �व�नवेश): Reducing the
government shareholding below 50%
⇒ ✅Arguments in favour: ⏬govt shareholding → Private investors will enter in the board of
directors → ⏫ efficiency, innovation and autonomy. द�ता, नवाचार �ाय�ता
⇒ Disinvestment proceeds can be used for welfare schemes, and ⏬ fiscal deficit.
⇒ ✋ Argument Against: MNC monopolies, exploitation of worker, job loss.
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 439
Year Nationalization and Disinvestment related developments
1951 First Constitution Amendment Act: While 19(1)(g) gives citizen's right to
practise any profession. But Government can impose reasonable
restrictions on it for interests of general public → this allowed for
nationalization of pvt industries. (सरकार जन िहत म� �नजी कं पनीयो का रा��ीयकरण कर
सकती है)
(�NOTE: first amendment act also contain some other provisions for
SEBC, 9th Schedule etc, but we are only focusing on the parts that are
related with nationalization/disinvestment)
1953 ⇒ 1953: Air Corporations Act: Govt nationalised nine airlines—Air India,
Air Services of India, Airways (India), Bharat Airways, Deccan Airways,
Himalayan Aviation, Indian National Airways, Kalinga Airlines, and Air
India International
⇒ Above private sector companies were nationalised into two Public sector
Enterprises I) Indian Airlines II) Air India International.
1991’s Industrial The term 'disinvestment' was used first time in Interim Budget 1991. “We
Policy will reduce shareholding in all Govt Companies”- said PM Narasimha Rao.
1998’s Vajpayee - In strategic sector (Railways, Defense, Atomic Energy)- ✋we’ll not do
disinvestment
- In Non-strategic sector = ✅we’ll do disinvestment in a phased manner
(गैर-रणनी�तक �ेत्र म� चरणबद्ध तरीके से �व�नवेश कर�गे ).
- 1999: PM Vajpayee set up Department of Disinvestment → privatisation
of Maruti Udyog, Hindustan Zinc, Bharat Aluminum and Videsh Sanchar
Nigam Limited (VSNL) etc. 12 govt companies.
UPA-1 (2004-09) Due to pressure from Leftist/Marxist coalition parties = No Disinvestment
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 440
from any government companies. If a government company is sick, we will
try to revive it. वामपं थी / मा�र्वादी गठबं धन दल के चलते �व�नवेश नहीं
UPA-2 (2009-14) All Govt Companies can be disinvested upto 49% = Govt will keep 51%
minimum and sell remaining shares.
₹₹ will goto National Investment Fund (NIF, in Public Account) → used
for Bank recapitalization, metro rail, nuke energy, EXIM-NABARD-RRB
etc. रा��ीय �नवेश कोष
Also launched CPSE-Exchange Traded funds (ETF): 📑📑Ref Pill#1C:SEBI
26.2.4 🧔🧔🧔🧔 ♐ 🤵🤵 Disinvestment & Privatization in the Modi Raj (2014-19)
✓ Various methods of Disinvestment, depending on the Company
1. Converting Private Limited Company to public limited company and issuing Initial
Public Offers (IPOs) e.g. Indian Railway Catering and Tourism Corporation (IRCTC)
and Rail Vikas Nigam Ltd (RVNL)
2. Exchange Traded Funds (ETFs): CPSE-ETF, Bharat-22-ETF (Ref: Pillar#1C)
3. Institutional placement Programme (IPP): offer shares only to non-retail investors.
4. Offer for sale (OFS): Govt sells its existing shares to both retail and non-retail investors
5. Share Buyback i.e. Govt company itself buys the shares owned by Govt, thereby
decreasing Government's shareholding portion viz a viz private sector's shareholding.
✓ Modi govt shut down many sick Govt companies such as HMT watches, Hindustan Photo Film
etc. (�जसे कोई �नजी �ेत्र का उद्योगप�त खरीद कर चलाना नहीं चाहता था उन बीमार सरकारी कं प�नयों को बं द कर िदया.)
✓ Budget-2016 renamed FinMin’s Dept of Disinvestment into Dept. of Investment & Public Asset
Management (DIPAM: �नवेश और सावर्ज�नक सं प�� प्रबं धन �वभाग).
*💼💼Budget-2019: Govt planned to earn ₹1.05 lakh cr from disinvestment but hardy 65,000 cr
earned, because investors’ response lukewarm, due to slowdown in economy. (�नवेशको ने सरकारी कं प�नयों
के शेयर ऊंची दामों पर खरीदने म� उदासीनता िदखाई)
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 441
⇒ ��Budget-2022: NINL (Neelanchal Ispat Nigam Limited) will be privatised
26.3 👻👻👻👻👻👻 → � NEW PUBLIC SECTOR ENTERPRISE (PSE) POLICY (2021)
Strategic sectors (मह�पूणर् �ेत्रो) Non strategic sectors
Example 1) Atomic energy, Space, Defence (परमाणु ऊजार्, All the other sectors. (बाक�
अवकाश,र�ा,) तमाम �ेत्रों= गैर-मह�पूणर् �ेत्रो= म�
2) Transport, Telecom (प�रवहन, दू रसं चार) �जतने भी सरकारी कं प�नयां है उन सब
3) Power, Petroleum, Coal, other minerals को या तो �नजीकरण कर द�गे या बं द कर
(ऊजार्, पेट�ो�लयम, कोयला, ख�नज,) द�गे)
4) Banking, Insurance and financial services
( ब�िकंग बीमा �व�ीय सेवाएं )
Will there be a Minimum one government company will be No government company will
government kept. Remaining will be merged/ be kept. All the Existing
company privatized/shutdown (मह�पूणर् �ेत्रो म� �सफर् एक government companies will
here? सरकारी कं पनी को रखा जाएगा, बाक� सभी अ� सरकारी कं प�नयों be privatized/shutdown.
को उस म� �वलीन/�नजीकरण/बं द कर िदया जाए)
✓ Disinvestment targets previous budgets:
Budget 2017 2018 2019 2020 2021 2022
Target (Lakh cr) 1Lcr 80,000 cr 1.05 lakh crore 2.10 lcr 1.75 lcr 65,000 cr
Target Achieved? ✅ ✅ 😰😰65,000 cr* 😷😷37000 Cr 😰😰78,000 cr We’ll see
🔠🔠❓MCQ. Why is Govt disinvesting its equity in the Central Public Sector Enterprises (Pre’11)
1. The Government intends to use the revenue earned from the disinvestment mainly to pay
back the external debt.
2. The Government no longer intends to retain the management control of the CPSEs.
Ans Codes: (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 442
26.3.3 📞📞 ☎: BSNL MTNL Merger & VRS (�वलीनीकरण)
Outdated/Faded. Removing from handout.
⇒ In 1980s, UK PM Mrs. Margaret Thatcher started privatization of the Govt companies such as
British Telecom, British Airways, water and electricity companies etc. → ⏫ profitability &
wealth creation for those companies. (�नजी करण द्वारा धन सृजन)
⇒ ��ES20 analysed 11 Indian Govt companies that were privatized during BJP/NDA PM Atal
Bihari Vajpayee tenure (1998-2004) such as Hindustan Zinc, Bharat Aluminium Company Ltd.
(BALCO), Maruti Suzuki, Indian Petrochemicals Corporation Ltd. (IPCL), Modern Food India
Ltd. (MFIL) etc. (वाजपेयी के ज़माने म� कु छ सरकारी कं प�नयों का �नजीकरण �आ था)
⇒ After strategic disinvestment (=privatization) these Indian companies’ sales, profitability etc.
greatly ⏫ because of: (�ब्रक� व मुनाफे मे अप्र�तम बढ़ोतरी)
o Technology Up-gradation (प्रौद्यो�गक� उ�यन)
o Efficient management practices by Private professionals. (कु शल प्रबं धन)
✅Thus, privatized PSUs help in economic growth & employment generation. (सरकारी कं प�नयों का
�नजीकरण करने से आ�थक वृ�द्ध और रोजगार �नमार्ण)
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 443
1974: Singapore Govt set up a holding company “Temasek Holdings Company” (THC). Then the
Govt transferred its shares of PSUs to THC → THC sold them in market → privatization complete.
⇒ Government of India has 264 CPSEs under 38 different Ministries/Departments.
⇒ ��ES20 suggested, we should also create a Holding Company (�नयं त्रक कं पनी) just like
Singapore, for our / strategic disinvestment (=privatization) drive.
⇒ Benefits of Singapore Model? Professionalism and autonomy (पेशेवर कु शलता और �ाय�ा) to the
disinvestment programme. Because If an individual ministry tried individual company’s
privatization then
o Ministry's (IAS) officers may not have network/experience for selling the shares
@highest price. (सरकारी कं पनी के शेयसर् को सरकारी अफसर ऊँ चे दाम पर को बेचने के �लए �नवेशकों के पास गए
तो असफल हो सकते ह� �ोंिक नेटवकर् और अनुभव क� कमी)
o Internal resistance by employee unions. (कमर्चारी यू�नयन का आंत�रक प्र�तरोध)
⇒ So, better let a separate holding-company look after this process.
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 444
27 💼💼💼TYPES OF DEFICITS: घाटे के प्रकार
- If government’s income >> its expenditure it will have a surplus budget/ अ�धशेष बजट
- If government’s expenditure == its income, it will be a balanced budget/ सं तु�लत बजट
- If government’s expenditure >> its income, it’ll be a deficit budget/ घाटे का बजट
Deficit Formula (amt in approx. ₹ lakh cr)
Revenue Deficit राज� घाटा Revenue expenditure – Revenue receipts जब राज� खचर् राज� आय से �ादा
Effective Revenue Deficit Revenue Deficit minus Grants for creation of capital assets
प्रभावी राज� घाटा
Budget Deficit बजट घाटा Budget expenditure minus Budget receipt
Fiscal Deficit Budget Deficit plus Borrowing बजट घाटे क� भरपाई के �लए �लया गया ऋण
राजकोषीय घाटा
Primary Deficit Fiscal Deficit minus interest to be paid on previous loans राजकोषीय
प्राथ�मक घाटा घाटे म� से पुराने ऋण/कजर् पर जो �ाज चुकाना है उसे हटा दी�जए
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 445
🔠🔠❓MCQ. Find Correct Statement(s) (Asked in UPSC-Pre-2017)
1. Tax revenue as a percent of GDP of India has steadily increased in the last decade.
2. Fiscal deficit as a percent of GDP of India has steadily increased in the last decade.
Codes: (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2
🔠🔠❓MCQ. The excess of total expenditure of Govt over its total receipts, excluding borrowings, is known
as _ _ _ (CDS-2021-i) (a) Primary deficit(b) Fiscal deficit (c) Current deficit (d) Capital deficit
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 446
27.3 💼💼💼DEBT COMPOSITION: AMOUNT-WISE
� FAQ: Why are above numbers not matching fiscal deficit numbers!!?? Ans. Fiscal deficit
number only shows loan taken in a single financial year. Above is the cumulative (total)
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 447
outstanding/unpaid loans of successive Govt (Vajpayee, Manmohan, Modi…..etc) (ये कु ल बकाया कजर्
िदखा रहा है)
� FAQ: Is EPFO/NPS amount included in above? Ans. EPFO/NPS invests money in 1) Pvt sector
company Shares, 2) private sector company Bonds and 3) G-Sec (=Loans to Govt). The G-Sec
components is included.
Out of loans majority (अ�धकतर कज़र् इस प्रकार के ह�) minority(ब�त ही कम कज़र् इस प्रकार के ह�)
Total Public Debt State Govt (70%) Union (30%)
Union Debt → Internal (94%) external/foreign (6%)
(Source)
Repayment Rupee Foreign Currency (जो कजर् �वदेशी मुद्रा म�
Currency वापस करने ह�)
Union Debt → 🔨🔨Fixed Interest (�न��त �ाज दर) 🎈🎈Hardly 5% of Govt loans are 'floating
(Type of Interest interest rate' (e.g. may be tied with
Rate) LIBOR etc REF#1C). (चलायमान �ाज दर
वाले लोन ब�त कम है)
Tenure (अव�ध के 📆📆Long Term (दीघर् अव�ध) ⏰Short Term (लघु अव�ध)
िहसाब से)
⇒ Ratio of (External debt: GDP) = <3% (less than three percent)
⇒ India's "debt to GDP" ratio is lowest among following group of countries: 1) G20 2) OECD 3)
BRICS(�Ref: HDT-Pillar#3B: International Organisations)
⇒ Moreover, public debt for India has declined since 2003 and has been stable since 2011.
‘Extra Budgetary Resources’ (EBR) or ‘Off-budget resources’ are loans taken by public sector
undertakings and Government organizations. (सरकारी �नगम सं �ानों द्वारा कजर् �लया जाना)For example,
Govt not releasing food subsidy to Food Corporation of India (FCI) & (thereby forcing) FCI to
borrow money from National Small Savings Fund (NSSF) for its food schemes. [Although
💼💼Budget-2021 announced to stop this practice].
⇒ Here repayment of the entire principal and interest is done from the Central Government Budget
eventually, behind the curtains. (पद� के पीछे सरकार देरी से पैसा देगी)
EBR measures are announced after passing of budget so, they may escape the same general level
of media-reporting, parliament debate or audit = bad for financial transparency &
accountability. मीिडया-�रपो�टग, सं सद बहस या ऑिडट से �छपना = �व�ीय पारद�शता और जवाबदेही के �लए बुरा।
15th FC has termed “EBR” as ‘off-budget borrowings through para-statal entities’ and asked
Government to avoid it. (15व� �व� आयोग ने भी इन हरकतों को बं द करने क� सलाह दी है)
📔📔📔📔ES20 also criticised this practice (आ�थक सव��ण ने इन हरकतों क� आलोचना/�नंदा क� है)
⇒ These EBRs are not taken into account while calculating the Fiscal Deficit but they’re counted
while calculating Government debt or public debt.
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 449
27.5 💼💼💼 FINANCING THE DEFICIT: ITS NEGATIVE CONSEQUENCES ON ECONOMY:
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 450
27.5.1 💼💼💼 ⏫:🛒🛒⏬ Financing the Deficit: Ricardian Equivalence
Ricardian Equivalence Proposition (REP) Assumes Why invalid for India? भारत म� यह �सद्धांत गलत
that (�न� धारणाएं आव�क है) �ों सा�बत �आ?
Citizens are perfectly rational and perfectly capable Shopping decisions also depend on
to think about Future income, future tax liability, emotional urges and psychological whims
fiscal deficit when making their consumption e.g. Marriage-DJ/iPhone/Foreign vacation.
decisions.डे�वड �रकाड� क� तु�ता �सद्धांत सही सा�बत होने के �लए ग्राहक सभी �नणर्य तकर् सं गत बनकर नहीं लेते. भावना�क
सभी नाग�रकों का तकर् सं गत और बु�द्धम�ा से सोच �वचार के �लए स�म आग्रह और मनोवै�ा�नक सनक भी आप को खरीदारी के
होना ज�री- िक भ�व� म� उनक� आमदनी, कर-दा�य�, राजकोषीय �लए उ�े�जत करती है
खाध, उपभो�ा मांग िकतनी होगी.
All citizens are paying taxes. डे�वड �रकाड� क� तु�ता �सद्धांत Tax Evasion, Black money, parallel
सही सा�बत होने के �लए सभी नाग�रकों का करदाता होना ज�री economy. भरपूर मात्रा म� कर चोरी, काला धन
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 451
27.5.3 💼💼💼 Financing the deficit: “Crowding Out” of private borrowers
If govt borrows ⏫ money from households & financial intermediaries (LIC, EPFO, Banks via
SLR), then that much less money will be available for loans to private corporate borrowers. = “
Crowding Out Effect” on the private borrowers= harms factory expansion and job creation.
(कॉरपोरेट उधारकतार्ओ को ऋण बाजार से बाहर धके ल देना)
If Govt forces SBI, LIC, EPFO to buy its G-sec using public deposits → depriving households of
the optimal return (Had the same money been invested in the corporate sector) = “ Financial
Repression of the households.” (घरों/ कु टु�ों का �व�ीय दमन”.)
Govt (forced) NABARD to buy its ₹ 15,000 crore Swachh Bharat Mission (Gramin) Bonds with
maturity period of 10 years. Govt (forcing) RBI and others to pay higher dividend. →
operational freedom of those organization is affected.
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 452
⇒ [1) CRR and SLR were very high therefore PSB banks loanable funds supply was very limited
& due to politicized boards, they may have channeled most of the savings towards the govt.
(िडपॉ�जट म� से सीआरआर एसएलआर को हटाने के बाद कजर् म� देने यो� रकम वैसे भी ब�त कम रहती थी)
⇒ [2) Absence of large private sector banks (�नजी �ेत्र के बड़े ब�कों का आगमन अभी बाक� था)
⇒ [3) Publics' earnings and savings were low. (लोगों के पास भी आमदनी और बचत कम ही थी)
⇒ [4) Capital market / share-bond Market was underdeveloped. (पूंजी बाजार, शेयर/बांड बाजार �वक�सत
नहीं �आ था → �नजी कं प�नयों के �लए पूंजी हा�सल करना मु��ल)
📔📔📔📔ES21 find no evidence of crowding out in India from 1990-2019. Because
1. the above factors have gradually faded. (90 के दशक म� उ� बाधाएं कमजोर हो गई थी)
2. if Govt borrows money for Infra-development (Health, Education, Transport, electricity,
Irrigation etc) → jobs & GDP ⏫ → citizens' income ⏫ → savings ⏫ → more ₹₹ in banks,
NBFC, mutual fund, shares/bonds etc. So, "crowding out" may not happen because 'size of dish'
will become larger. (�श�ा �ा� प�रवहन �बजली �संचाई जैसी बु�नयादी अवसं रचना के �लए अगर सरकार कजार् लेती है →
रोजगार और आ�थक वृ�द्ध म� बढ़ोतरी → नाग�रक क� आमदनी बढ़ेगी → उसक� बचत बढ़ेगी → अपने आप ही ब�क-बचत शेयर
बांड द्वारा कं प�नयों को ढेर सारा �नवेश �मल जाएगा. अतः �ण बाजार से कं प�नयों को बाहर नहीं धके ला जाएगा)
3. 1990-2019: ⏫in the population of youth / working age people ( demographic dividend)→
income & savings & banking habits ⏫ → Loanable funds ⏫ so "Crowding out" chances ⏬
(आबादी म� नौजवानों क� मात्रा बढ़ी → आमदनी और बचत क� भावना भी बढ़ी → कजर् म� देने के �लए रकम भी बढ़ी है)
"Crowding out" assumes that the supply of savings is fixed. But in reality, economic growth⏫ →
the size/quantity of savings⏫ (धारणा से �वपरीत वा��वकता म� बचत क� रकम का ज�ा ��र नहीं होता. आ�थक वृ�द्ध के
साथ-साथ बचत-ज�े म� भी बढ़ोतरी होती है)
High level of fiscal deficit → International Credit Rating Agencies will ⏬ the sovereign rating
for India → investors will demand ⏫ interest from government for buying new G-Sec→ G-sec
remains unsold → RBI forced to buy it (and print more money to give to Govt)
it’s called “Monetizing the Deficit”. It can result in hyperinflation and ⏬ the purchasing power
of currency (if there is not sufficient increase in the supply of onion, tomatoes & goods in the
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 453
market. e.g. Germany, after Treaty of Versailles in 1919. (मुद्रीकृ त घाटा: सरकारी कजर् के �लए �रजवर् ब�क द्वारा
दे दना दन नोट छापे जाने पर महंगाई दर/मुद्रा���त को अप्र�ा�शत �प से बढ़ जाएगी)
⇒ Sovereign credit rating is a quantitative measure to identify the govt's ability/risk to repay its
loans. (सं प्रभु ऋण रेिटगं = सरकार के अपने ऋणों को चुकाने क� �मता / जो�खम क� पहचान करने के �लए मात्रा�क माप)
⇒ How good rating help? Attracts foreign investment. Reduces the future cost of borrowing
(Interest rate), Makes it easier to obtain loans from the World Bank, IMF and other International
organisations. (अ�� रेिटगं हम� �वदेशी �नवेश आक�षत करने म� तथा वै��क �व�ीय सं गठनों से स�े �ाज दर पर कजार् लेने म�
मदद करती है)
⇒ India is stable on GDP growth rate, inflation, Public Debt to GDP, Current account Deficit,
Foreign Exchange Reserves, Political stability, rule of law, control of corruption, investor
protection, ease of doing business. (भारत सभी म� ��रता है- आ�थक वृ�द्ध दर, महंगाई दर, सावर्ज�नक �ण का जीडीपी
से अनुपात, चालू खाता घाटा, �वदेशी मुद्रा क� आर��त �न�ध, राजनी�तक ��रता, कानून का शासन, भ्र�ाचार �नयम, �नवेशक क�
सुर�ा, �ापार म� सुगमता)
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 454
⇒ Indian Govt's external debt is also very low. Zero history of sovereign default. (भारत सरकार का �वदेशी
�ण ब�त ही कम है, इ�तहास म� कभी िदवा�लयापन नहीं िदखाया है.)
⇒ Yet, Poor ratings given by Credit rating agencies Standard and Poor's, Fitch Moody. They are
biased against India (& China) -says ��ES21 (हालांिक इन सब के बावजूद भी प��मी देशों क� क्रेिडट रेिटंग
एज�सी भारत चीन के प्र�त भेदभाव करती है)
⇒ 1998: after Pokhran nuclear test → India faced international sanctions → Credit rating was
downgraded. But at a later stage it was upgraded again. (पोखरण परमाणु परी�ण के बाद भारत पर अंतररा�ी� य
प्र�तबं ध, �जसके चलते रेिटगं म� �गरावट)
⇒ Economic survey has observed following impact of the rating downgrade
Whenever India's rating ⏳Short Term (रे�टंग म� 📆📆Long Term from
degraded (1998) �गरावट का अ�का�लक असर) 1998-2018 (दीघर्का�लक)
No strong relation (कोई
Sensex (शेयर बाजार सूचकांक) No strong relation
मजबूत �र�ा नहीं िदखा)
Rupee dollar currency exchange
No strong relation No strong relation
rate (मुद्रा �व�नमय दर)
G-Sec Yield No strong relation No strong relation
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 455
Whenever India's rating ⏳Short Term (रे�टंग म� 📆📆Long Term from
degraded (1998) �गरावट का अ�का�लक असर) 1998-2018 (दीघर्का�लक)
GDP growth rate No strong relation No strong relation
Foreign Portfolio Investors in (Shares
⏬fallen😰😰 (�गरावट देखी गई) ⏬fallen 😰😰
and Bonds)�वदेशी पोटर्फो�लयो �नवेशक
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 456
Counter ⇒ During economic slowdown → ⏫ Increase Fiscal expenditure to boost
cyclical Fiscal employment & GDP.
policy
⇒ It helps in “Crowding-in” i.e. When govt spending ⏫ increased → private
प्र�तचक्र�य
investment ⏫ e.g. Govt building highway in Arunachal → Private
राजकोषीय नी�त
entrepreneurs building petrol pumps & hotels → jobs GDP. आ�थक मं दी के दौरान
सरकारी खचर् को बढ़ाया जाए-तािक �नजी �ेत्र �नवेश रोजगार आ�थक वृ�द्ध म� मदद.
⇒ During economic boost: ⏬Decrease govt spending (So as to build reserves
for future emergency/future slowdown) आ�थक तेजी म� सरकारी खचर् को कम िकया जाए
तािक सरकार भ�व� क� मं दी के दौरान इ�ेमाल करने यो� रकम को आर��त रख सके /जमा कर सक� .
⇒ USA, UK, Chile have done this in the past, but India has not done it.
��ES21 Suggested India to pursue this.
Pro-Cyclical ⇒ During economic Boom, ⏫Fiscal expenditure
fiscal policy
⇒ चक्र�य-समथर्क राजकोषीय नी�त ⏫ आ�थक तेजी के दौरान सरकार �ादा पैसा खचर् कर�
🔠🔠❓MCQ. The increase in private investment spending induced by the increase in Government
spending is known as (CDS-2021-i)
(a) Crowding in (b) Deficit financing (c) Crowding out (d) Pumping out
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 457
27.6.1 💼💼💼💼💼💼💼💼Countercyclical: IRGD & Debt Sustainability
⇒ Interest Rate Growth Rate Differential (IRGD: �ण-�ाज-दर वृ�द्ध-दर के बीच अंतर): It is the difference
between (loan) interest rate (paid by Govt to investors) and GDP growth rate in an economy.
⇒ so if loan interest 6% - minus growth rate 9% = (-3)% negative IRGD figure basically hints that if
GDP Growth rate is higher than the loan interest rate paid by the govt, then Govt need not worry
much, because GDP⏫ → Tax collection ⏫ → Enough ₹₹ to repay those loans. यिद सरकार ने �जस
�ाज दर पर कजार् �लया है उसे आ�थक वृ�द्ध दर �ादा हो तब तक सरकार ने �चंता करने क� ज�रत नहीं �ोंिक आ�थक वृ�द्ध के
चलते कर-आमदनी म� बढ़ोतरी होगी → कजार् चुकाने के �लए सरकार के पास रकम आती रहेगी.
⇒ Meaning, GDP growth → leads to Debt sustainability/debt affordability. For India, above
situation is valid in past & will remain valid for the next 10 years, even in the worst case scenario.
(आ�थक वृ�द्ध कज� को वह�नय बनाती है खराब से खराब कम प�र���त म� भी अगले 10 साल तक हमारे पास यह अवसर मौजूद है ,
यानी िक दे-धनाधन कजार् लेकर सरकार ने अथर्तंत्र को पुनज��वत करना चािहए)
⇒ ��ES22: tax collection has improved, Government received large dividend from RBI. There
for financial situation of the government is very stable. We’ll be able to repay loans.
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 458
करने के �लए प्र�त चक्र�य राजकोषीय-नी�त आव�क, �वशेष �प से बु�नयादी अवसं रचना �वकास हेतु भारत सरकार बे�झझक बड़ी
मात्रा म� �ण लेना चािहए.)
Once GDP growth ⏫ → govt should pursue fiscal consolidation. (आ�थक वृ�द्ध दर म� बढ़ोतरी होने पर,
राजकोषीय एकत्रीकरण शु� िकया जाए)
Simultaneously, the Govt should also reform education, skill development. minimum-wages
Then income & savings⏫, Negative effects associated with Fiscal deficits will ⏬(More in
Pillar4C & #6) (साथ ही साथ �श�ा, कौशल �वकास, �ूनतम वेतन, इ�ािद म� सुधार द्वारा आमदनी और बचत को बढ़ाया जाए तो
अपने आप राजकोषीय खाध के नकारा�क पहलुओ ं को हम कम कर पाएं गे)
⇒ For example: if Mr. Jetha-lal with taxable income of Rs.3 lakhs = He needs to pay income tax in
5% slab. [ignoring tax rebate, deduction etc. for this example]
⇒ During a slowdown in economy → his electronics shop will not make good profit → taxable
income ⏬decreases to ₹2.5 lakh → Jetha-lal now in automatically in 0% income tax slab.
[आ�थक मं दी के दोरान जेठालाल �चा�लत आयकर देयता से मु� हो जाएगा]
⇒ Now, he may even become eligible for some govt schemes meant for poor/lower-middleclass
persons. (e.g. Recall PM Shram Yogi Maan-Dhan Yojana ₹3000 pension from pillar1D:- income
Tax payers were not eligible for that scheme. But now Jethalal will be able to join)
⇒ Thus, during recession/slowdown in Economy: Income tax works as “automatic stabilizer”.
Because it can automatically ⏬reduce a family’s financial stress by [आ�थक मं दी के दौरान प�रवार का
�व�ीय तनाव अपने आप थोड़ा कम करता है]
⇒ A] making the family eligible for government welfare schemes. [प�रवार अपने आप सरकारी योजना के पात्र
बन जाता है]
⇒ B] Automatically decreasing family tax liability [no new voting or law passing required in
Parliament at the stage.]
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 459
⇒ This is not possible in GST. Because whether rich or poor person= all have to pay same 18% GST
on a mobile phone. It doesn't matter whether customer’s income has ⏫increased or
⏬decreased during that Financial year.- He’ll have to pay 18% GST, until GST council takes a
vote & decides to reduce the GST tax on mobile.
⇒ Automatic stabilizers are mechanisms built into govt budget to address economic slowdown
automatically- by automatically increasing govt’s spending and/or decrease public’s tax liability.
[“�चा�लत-��रीकारी’ - आ�थक मं दी के दौरान अपने आप सरकारी ख़चर् को बढ़ाता है या जनता क� कर-देयता को कम करता है]
⇒ Automatic stabilizer does not require any change in the existing tax law or voting in the
Parliament- because it starts working automatically during slowdown. [उ�� िक्रया��त करने के �लए
अलग से नया क़ानून/ सं सद क� अनुम�त लेने क� ज़�रत नहीं होती. वो अपने आप ही िक्रया��त हो जाता है]
⇒ Examples of Automatic Stabilisers: Income tax, Corporation tax, unemployment allowance,
food subsidy and other Government schemes that are meant only for poor /lower middle class
people. [आयकर, �नगम कर, गरीब के �लए ल��त खाद्य स��डी और दू सरी क�ाणकारी योजनाएं - “�चा�लत-��रीकारी’ है]
Note: Countercyclical fiscal policy / fiscal stimulus = it requires the government to pass a new
budget / new law / permission of Parliament for some new initiatives. So, they are not automatic
stabilisers. They are discretionary stabilisers. [प्र�त चक्र�य राजकोषीय नी�त तथा राजकोषीय प्रो�ाहन पैकेज के �लए
सरकार ने अलग से �वशेष �प से नए बजट म� �ज़क्र करना होगा कोई क़ानून पास करवाना होगा इस�लए वे �ववेकाधीन ��रीकारी है।]
🔠🔠❓MCQ. Which one of the following functions as an automatic stabilizer in the context of fiscal and
monetary policies of an economy? (UPSC-CAPF-2021)
(a) Personal income tax (b) Reverse repo rate of bank (c) Open market operation (d) Bond price
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 460
Methods for repaying debt (ऋण चुकाने के अलग अलग तरीके )
Repudiation Govt does not recognize its obligation to repay the loan. E.g. After Russian
(प�र�ाग / बिह�ार) Revolution (1917) Lenin’s Government refused to pay the loans taken by the
कजर् चुकाने से previous Czar regime from Britain & France. Although, in modern times not a
मना कर देना sound strategy because next time, no one will give you loans.
27.9 💼💼💼💼💼💼 FISCAL CONSOLIDATION / PRUDENCE: राजकोषीय एकत्रीकरण / �ववेक
🔠🔠❓MCQ. There has been a persistent deficit budget year after year. What can be done by by the
government to reduce the deficit? (Asked in UPSC-Pre-2015)
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 461
1) Reducing revenue expenditure 2) Introducing new welfare schemes
3) Rationalizing subsidies 4) Expanding industries
Answer Codes: (a) 1 and 3 only (b) 2 and 3 only (c) 1 only (d) 1, 2, 3 and 4
🔠🔠❓MCQ. In India, the price of petroleum products has been deregulated to _ _. (CDS-2013-II)
(a) reduce the burden of subsidies given to the oil companies
(b) discourage the exploration of oil reserves in the country
(c) discourage the demand for private vehicles
(d) curb the use of black money in the economy
27.10💼💼💼💼 FISCAL STIMULUS (राज� प्रो�ाहन पेकेज)
When govt ⏬taxes and/or ⏫ public procurement (सरकारी खरीद) to ⏫ demand & growth in
economy, it’s called “Fiscal Stimulus” (राज� प्रो�ाहन पेकेज).
27.10.1 💼💼💼💼 👳👳 Manmohan’s Fiscal Stimulus (2008-)
⇒ Post-subprime crisis in USA, PM Manmohan announced Fiscal Stimulus (2008) such as
- (1) ⏬ in the Excise duty & Custom Duty on exports
- (2) Businessman were given additional benefits in Income Tax & Corporation Tax, if
they purchased new commercial vehicles.
- (3) Hiked the Minimum Support Prices (MSP) for farmers. �More in Pillar#4A
⇒ However, the economic surveys observed that such Fiscal Stimulus create new set of problems by
⏫ fiscal deficit in the subsequent years.
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 462
⇒ Violation of Corporate Social Responsibility (CSR) will be treated as a civil offense and
not a criminal offense.
⇒ (Full) Budget-2019 had hiked surcharge on the income tax paid by Super-rich. As a
result, Foreign investors were exiting from India, fearing extra tax burden. So, we’ll
‘undo’ that budget announcement.
3) �We’ll fix the PSBs (सावर्ज�नक �ेत्र के ब�क को दु�� कर�गे/ पुनपू�जीकरण कर�गे )
⇒ Government will infuse more capital in public sector banks, order them to link loan
interest rates with repo rate or other external benchmarks so, loans may become cheaper
especially for home, auto sector. This will boost sales, revive economy
4) �We’ll encourage car sales & other consumption
⇒ Vehicle Depreciation ⏫ from 15% to 30% (meaning Bizman will get more tax benefits
in Income Tax and Corporation Tax). → businessman encouraged to buy new vehicles.
⇒ Govt departments will buy new petrol/ diesel vehicles.
⇒ GST council ⏬ GST rates on 5 star hotels, outdoor catering, GST compensation cess on
passenger vehicles etc.
Plus many other fragmented reforms to ⏬ taxes, or to ⏫ Government spending on highway
projects etc. are done every now and then. BallbyballNOTIMP.
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 463
Amt in lakh cr As per
DATE 👻👻 Components of Atma Nirbhar Bharat
(Originally) 📔📔📔📔ES21
= ₹20 lcr approx. ₹30 Lcr = 15%
ATMANI = 1+2+3=Total कु ल �मलाकर जोड़ी गयी रकम
(10% of GDP) of GDP
Note: Salient features of Atma-Nirbhar is spread across 6 pillars of Handout. Its criticism, how useful
in reviving economy & GDP growth, Nehru vs Modi’s ideas of self-reliance etc. = Ref: 📑📑Pillar#4C
🔠🔠❓MCQ. Which one of the following describes the “fiscal stimulus”? (UPSC-Pre-2011)
1) It is a massive investment by the Government in manufacturing sector to ensure the supply of
goods to meet the demand surge caused by rapid economic growth
2) It is an intense affirmative action of the Government to boost economic activity in the country
3) It is Government’s intensive action on financial institutions to ensure disbursement of loans to
agriculture and allied sectors to promote greater food production and contain food inflation
4) It is an extreme affirmative action by the Government to pursue its policy of financial inclusion
While some of the state govts achieved them, but successive union govts struggled to meet these
targets so they kept amending the act to extend the deadlines and targets. (ल�ों क� समयसीमा को पीछे
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 464
धके लते रहे). E.g. Amendment 2012: No need to have 0% Revenue deficit. Instead it required 0%
Effective Revenue Deficit by 2015. These deadlines were extended even further in subsequent
Finance Bills.
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 465
- To revive growth in the Indian economy, the Government should relax fiscal deficit
targets → in other words, give fiscal stimulus → economic growth. (घाटा �नयं त्रण ल�यांक मे
ढील देदो, राज� प्रो�ाहन पेकेज दे दो)
- 2020-Corona crisis: Govt’s income ⏬ and expenses ⏫ so deficit rose to unprecedented level.
�Budget-2021: FRBM amended to provide fiscal deficit 6.8% (2021-22) and 4.5% (2025-26)-
because 4.5% target is recommended by 15th FC.
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 466
Note: above DATA Table from 💼💼Budget-2020. Later in 💼💼Budget-2021 and 💼💼Budget 2022, govt
not given such table because Nirmala.S said “fiscal projections for the years 2022-23 and 2023-24 will
NOT be presented. We will amend the FRBM Act to allow this exemption.”
🔠🔠❓MCQ. According FRBM Act, the Govt is under obligation to present three statements before the
parliament along with the Annual Budget. Which one of the following is not one of them? [CDS-2008-I]
(a) Macroeconomic Framework Statement (b) Fiscal Policy Strategy Statement
(c) Medium-term Fiscal Policy Statement (d) Statement showing Short term Fiscal Policy
🔠🔠❓MCQ. Along with the Budget, the Finance Minister also places ‘The Macro Economic Framework
Statement’. The aforesaid document is presented because this is mandated by (UPSC-Prelims-2020)
[a) Long standing parliamentary convention
[b) Article 112 and Article 110(1) of the Constitution of India
[c) Article 113 of the Constitution of India
[d) Provisions of the Fiscal Responsibility and Budget Management Act, 2003
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 467
⇒ Before: Union had kept states net borrowing ceiling @3% of Gross State Domestic Product
(GSDP) (रा�ों के सकल घरेलू उ�ाद के 3% से �ादा कजर् रा� सरकार नहीं ले सकती)
⇒ �After ATMANI: 3% → ⏫to 5% for 2020-21. रा� सरकार क� राजकोषीय घाटे क� मयार्दा को बढ़ाया गया।
State can borrow extra ₹₹
Sr if State Government does following reform
upto _ _ % of GSDP
1 No conditions /un-tied (�बना शत� के ) 0.50%
a) One Nation One Ration Card System(📑📑Ref: HDT- 0.25%
2
Pillar#)
3 b) Ease of doing business reform; (📑📑Ref: HDT-Pillar#) 0.25%
c) Urban Local body/ utility reforms; (शहरी �ानीय �नकायों गटर 0.25%
4
पानी �व�ा इ�ािद म� सुधार)
5 d) Power Sector reforms(📑📑Ref: HDT-Pillar#5) 0.25%
6 if any 3 of the above (a-b-c-d) reforms done *** 0.50%
Total extra borrowing limit (sum of above six rows) 2% of GSDP. Total for all
States=₹4.27 Lcr
*** However, States who opt for GST compensation Option#1 Back2Backloans, will get
unconditional relaxation. (गैर शत� छू ट) (Ref: More in 📑📑Pillar#2A: GST compensation)
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 468
27.15💼💼💼🔨🔨🔨 FISCAL RESPONSIBILITY: NK SINGH FRBM REVIEW PANEL
⇒ Budget-2016: Finance Minister Jaitley felt FRBM Act targets were too rigid and did not allow any
room for the government to address any crisis. (ल� ब�त ही स� थे, उ�� लचीला बनाने क� ज�रत)
⇒ e.g. farm loan waivers during drought period or unemployment allowance during global
financial crisis are not possible if government strictly wants to control fiscal deficit at 3% of GDP.
(अकाल म� िकसानों को ऋण-माफ�, या नौजवानों को बेरोजगारी भ�ा देना असं भव)
⇒ So, FM constituted a panel under NK Singh (ex-IAS, 15th FC chairman) to review the FRBM act.
⇒ If the state government is undertaking reforms in the power sector (e.g. stopping power theft)
→ Union should allow it to borrow extra money. (�बज�लया/ऊजार् �ेत्र म� सुधार करने वाली रा� सरकारों को क� द्र
सरकार अ�त�र� पैसा कजर् लेने क� अनुम�त द�)
⇒ Evaluation of government schemes → Focus on outcome of the scheme → Department should
be asked to justify why the scheme should be continued if annually it is unable to deliver "X"
outcomes. (सरकारी योजनाओं क� समी�ा करवाई जाए, यिद �नधार्�रत ल� हा�सल नहीं हो रहे तो �वभागों से जवाब तलब िकया
जाए िक �ों इस योजना को रद्द ना िकया जाए?)
⇒ Union Government should set up a High-powered Inter-governmental Group/committee
(उ��रीय अंतर-सरकारी समूह / स�म�त को बनाया जाए)
o to recommend reforms in FRBM Acts of Union and State governments.कानून म� सुधार के �लए
o to Monitor the implementation of Reform the FRBM Act. कानून के अनुपालन क� �नगरानी के �लए
o to Monitor the implementation of 15 finance commission recommendations. 15 वे �व�
आयोग क� �सफा�रशों के अमल क� �नगरानी के �लए
⇒ State Govts should form Public Debt Management Cells to plan their borrowing programme
efficiently. (रा� सरकार अपने कज़� का प्रभावी �प से आयोजन करने के �लए एक सावर्ज�नक ऋण प्रबं धन सेल नामक इकाइयों
को �ा�पत कर�)
⇒ If a state govt does not set up a State Finance Commission by March 2024 then the union
government should stop giving it grants afterwards. (रा� �व� आयोग क� �ापना न करने वाले रा� सरकारों
का अनुदान बं द िकया जाए)
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 470
⇒ Union and State governments should avoid any extra budgetary resources/off-budget borrowing.
(क� द्र और रा� सरकार बजेतेटर सं साधनों के उपयोग से बच�)
⇒ Cess and surcharge amount to nearly 18% of the gross tax revenue of the union government. FC
can't allot cess-surcharge amount to State governments. Need to rationalize this. (क� द्र सरकार को
�व�भ� करो से जो कु ल/सकल आमदनी होती है उसका 18% तो उपकर और अ�धभार से ही आता है �जसम� रा� सरकारों को �व�
आयोग िह�ा नहीं दे सकता, इस पर थोड़ा �नयं त्रण िकया जाए.)
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 471
तदथर्/अ�ाई �प से िकया जाता है, प�रणाम ��प योजनाओं के खचर् म� कटौती कर दी जाती है, ठे केदारों को पैसा व� पर नहीं
चुकाया जाता → वे कमजोर गुणव�ा क� सड़क मकानों का �नमार्ण करते ह� इ�ािद)
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 472
⇒ But later plan was put on a back burner due to RBI’s objections.
⇒ 2019: NITI Aayog Vice Chairman Rajiv Kumar again reiterated the need to setup PDMA. But,
afterwards, not much in news limelight. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 473
😰😰Existing Mechanism (वतर्मान ���त /�व�ा /प्रणाली) 🤩🤩Whereas Fiscal Council
Finance commission: Constituted every 5 yrs, stops functioning will function continuously
after submitting report. Until new body setup. round the year.
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 475
Sector Pre-LPG Post-LPG-1991 (More in Pillar4: LPG)
�सफा�रशों के िहसाब से - �Challenge? ‘Contracting out of the jobs’ to
मोटी मोटी तन�ाह keep revenue deficit minimal. NPS where
Employee himself is largely responsible for his
pension etc. ⏬vacancies in UPSC/SSC
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 476
3. Loans and advances granted to the States and Union Territories
Ans Codes: (a) 1 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3
28.2 💼💼💼💼GENERAL BUDGET VERSUS RAILWAY BUDGET (आम बजट बनाम रेलवे बजट)
- 1920-21: Acworth Committee recommends separate Railway Budget. This practice continued
even after Independence, first the railway minister would present the Railway budget in
parliament, and after a few days finance minister will present General Budget.
- NITI Aayog’s Bibek Debroy committee recommends its abolition because
- 1) No constitutional requirement (सं वैधा�नक �प से यह अ�नवायर् नहीं है)
- 2) During Coalition Governments, Rail budget was used for populism, cheap fares which eroded
the profitability of Railways. (गठबं धन सरकारों म� लोकलुभावन, भारी घाटा)
- 3) during the British time, railway revenue used to be quite large compared to other sources of
revenue, but after independence, Railway revenue is quite small compared to overall General
budget- So it does not deserve a special presentation.
Therefore, Modi govt merged Railway budget with General budget from 2017 (�वलीनीकरण).
28.3 💼💼💼💼 PLAN VS NON PLAN EXPENDITURE BUDGET:
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 477
योजना बनाम गैर योजना �य बजट: is a method of classifying the expenditure side
Plan (expenditure) budget: योजना Non-Plan (Expenditure) Budget: गैर योजना
⇒ Central Plans (the Five-Year Plans) - Expenditure related to general, economic and
⇒ Central assistance for State Five Year Plans. social services of the government; Interest
⇒ It is further subdivided into payments, defence services, subsidies, salaries
1) revenue expenditure (e.g. teachers and pensions.
salary under Sarva Shiksha Abhiyan) - It is also further subdivided into revenue
2) capital expenditure (e.g. new school expenditure (e.g. soldier salaries) and capital
buildings to be constructed under expenditure (e.g. Building new aircraft
Sarva Shiksha Abhiyan) carrier).
Since Budget-2017, Modi govt stopped the practice of displaying the plan and non plan expenditure
separately because (1) No such constitutional requirement (2) Government had dissolved the
planning commission in 2014-15 (3) 12th Five Year Plan (FYP:2012-17) was ending in 2017 anyways.
(More about PC & FYP in 📑📑Pillar#4C)
28.4 💼💼💼💼BUDGETING (बजट �नमार्ण क� प्रिक्रया/ रणनी�त)
It is the process / strategy with which the budget is created.
🖋🖋Traditional / पारंप�रक / लाइन-आइटम बजट: Simply calculating the income and expenditure without
Line-item measuring the underlying benefit or performance
Budgeting - Allot ₹ 10,000/- to buy a new bed in government hospital
- Allot ₹ 50,000 to buy a new computer in government department
⏱Performance calculating income and expenditure tied with underlying benefit or performance
budgeting प्रदशर्न - Allot ₹ 50,000 to buy a new computer with target that it should result in 30%
बजट the faster clearance of RTI-applications compared to pen and paper
- Such budgeting helps measuring cost:benefit and efficiency.
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 478
⭕Zero based - In a traditional budgeting, the approach is “automatic and incremental e.g.
budgeting “Last year we allotted ₹ 50,000 crore to educational schemes, so this year we
शू� आधा�रत बजट should allot 55,000 crores, lest the opposition parties create controversy.”
- Whereas in Zero Based Budgeting the budget is viewed as a fresh exercise
from zero base. So, each department has to justify its budget demands to
finance ministry. E.g. if last year ₹ 50,000 crores given to education schemes
but still 60% of class 5 kids cannot read class 2 books, then we’ll delete /
modify that scheme.
🌞🌞 Sunset - In a traditional budgeting, once a scheme is launched it runs perpetually, even
Budgeting after regime change e.g. MNREGA, Mid-day Meal.
सूयार्�/ समयसीमा - In a Zero Based Budgeting, schemes are reviewed every year and then they
may get discontinued or continued (with or without modifications).
का बजट
- In Sunset Budgeting, scheme are announced with deadline. e.g. MEITY to give
MDR subsidy for a period of two years starting from 1/1/2018. Thus, this
scheme will self-destruct after deadline just like the sun will set after the sunset.
👜👜 Gender This system was started from Budget-2005.
budgeting It is not a separate budget but rather within the general budget, FinMin will put a
ल��गक बजट separate expenditure docs showing women specific Schemes, Targets,
Commitments- in two parts:
✓ 👩👩Part A = Women Specific Schemes, i.e. which have 100% allocation meant
for women. E.g. Minority Affairs Ministry’s “Nai Roshni” scheme for
Leadership Dev. in Minority Women.
✓ 👩👩👩👩Part B = Pro Women Schemes, i.e. atleast 30% allocation meant for
women. E.g. HRD Ministry → Samagra Shiksha for pre-nursey to Class12
both boys & girls covered.
28.8 💼💼💼💼💼💼LAPSABLE FUNDS & MARCH RUSH: �पगत �न�ध और माचर् ��ता
Appropriation act allows the government to spend funds from consolidated fund of India for a
period of one year (ending in 31st March).
- If any allotted funds remain unutilised, then by the ‘ rule of lapse ’, they must be returned (&
govt will have to again seek Parliament approval for the next financial year using next
appropriation bill). So, in March, there is a rush among the Govt orgs to spend money (in a
haphazard / reckless manner) lest they’ve to return it back.
- 2017-18: Finance ministry issued directive that in “In the fourth quarter (Jan to March) and in
the March-Month, Govt organizations shall not spend more than “x%” & “y%” of funds”. This
helps controlling the March Rush.
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 480
28.10📯📯📯📯TYPES OF SCHEMES (योजनाओं के प्रकार)
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 481
⇒ Then Modi-Raj: 2015-16, NITI Aayog forms Shivraj Singh Chouhan Panel for rationalization of
CSS (योजनाओ का सु�व�ीकरण) → Ultimate outcome given in above table.
⇒ In 2016, 3rd category of Centrally Sponsored Schemes was “Optional Schemes” viz. 1) Border
Area Development Programme 2) Shyama Prasad Mukherjee Rurban Mission with funding
pattern (50:50 | 80:20), But over the years they shifted in the Core schemes. So IGNORE
⇒ For any Union Territory without Legislature: 100% funding by Union for any scheme in any
category. ✋We will look at the schemes’ features in the respective pillars.
⇒ To disburse scheme ₹ & monitor it effectively, FinMin →Dept of Expenditure Controller
General of Accounts (CGA) → Public Financial Management System (PFMS) webportal.
Some schemes are Stopped e.g. Dairying Through Cooperatives, National Dairy Plan-II and
National Dairy Plan. (बं द कर िदया)
some schemes are merged: e.g. (एक�करण)
I] previously Woman Child development Ministry was running 19 scheme is now they are
compressed into just 3 viz A) Mission Shakti B) Mission Vatsalya C) Saksham Anganwadi and
POSHAN 2.0. (More in �Pillar#6)
ii] Ministry of Agriculture running 20 CSSs have been rationalised into three schemes: A)
Krishionati Yojana B) Integrated Scheme on Agricultural Cooperative C) Rashtriya Krishi
Vikash Yojana. (More in �Pillar#4A)
😍😍effective monitoring, duplication of efforts⏬ → subsidy bill & deficit ⏬ (प्रभावी �प से �नगरानी,
योजनाओं म� प्रय�ों का �थर् दोहराव न हों, तािक स��डी और सरकारी घाटे का बोझ कम हो जाए.)
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 482
- ��Budget-2022: 1) Communications < 2) Chemicals and Fertilisers < 3) Agriculture and
Farmers' Welfare < 4) Rural Development < 5) Railways < 6) Home Affairs < 7) Road Transport
and Highways < 8) Consumer Affairs, Food and Public Distribution < 9) Defence (Highest)
28.11�MOCK QUESTIONS FOR UPSC MAINS GSM3 (250 WORDS EACH)
1) (GSM3-2021) Distinguish between capital budget and revenue budget. Explain the components
of both these Budgets. (पूँजी बजट तथा राज� बजट के म� अ�र �� क��जए। इनके सं घटकों को समझाइए।) Ans.
Solved in Free Sp. Class
2) (Asked in GSM3-2013) What are the reasons for introduction of Fiscal responsibility and Budget
Management (FRBM) act, 2003? Discuss critically its salient features and their effectiveness.
राजकोषीय उ�रदा�य� और बजट प्रबं धन (FRBM) अ�ध�नयम, 2003 को लागु करने का �ा कारण है? इसक� प्रमुख �वशेषताओं
और उनक� प्रभावशीलता पर गं भीर �प से चचार् कर�.
3) (Asked in GSM3-2016) Discuss the requirements and status of gender budgeting in the Indian
context? भारतीय सं दभर् म� �लगं बजट क� आव�कताएं और ���त चचार् क��जए.
4) (Asked in GSM3-2019) public expenditure management is a challenge to the govt of India in the
context of budget-making during the post-liberalization period. Clarify it. (उ�र-उदारीकरण अव�ध के
दौरान, बजट �नमार्ण के सं दभर् म�, लोक �य प्रबं धन भारत सरकार के सम� एक चुनौती है | इसको �� क��जए)
5) Examine critically the apprehensions surrounding the issue of Union Government’s external
borrowing in external currency. क� द्र सरकार के �वदेशी ऋण को �वदेशी मुद्रा म� जुटाने के मसले के साथ जुडी आशं काओं
क� समी�ा क��जए.
6) Discuss the need of setting up an independent fiscal council in India. (एक �तं त्र राजकोषीय प�रषद
�ा�पत करने क� आव�कता पर चचार् कर�)
7) Discuss the need and significance of Countercyclical Fiscal Policy for reviving India's growth in
the aftermath of coronavirus, And examine critically the potential apprehensions about the
same. (कोरोनावायरस के प�ात भारतीय अथर्तंत्र को पुनज��वत करने के �लए प्र�त चक्र�य राजकोषीय नी�त क� ज�रत और मह�
क� चचार् क��जए और उसी के बारे म� सं भा�वत आशं काओं/�चतं ा/ भय�ानो क� गं भीरता से समी�ा क��जए)
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 483
PILLAR#3A: Balance of Payment, International Trade, Currency Exchange
Table of Contents
30 ⛽🎖🎖Pillar#3A: Balance of Payment (भुगतान सं तुलन) .......................................................................487
30.1 🐯🐯 RBI’s (Actual) method of classifying BoP ..........................................................................488
30.1.1 Notes about the Data Tables in this Handout Pillar#3A .................................................488
30.2 ⛽🎖🎖 Balance of payment → Current Account → ..................................................................489
30.2.1 ⛽🎖🎖 Balance of Trade (BoT �ापार का सं तुलन) .....................................................................489
30.2.2 ⛽🎖🎖 Net Terms of Trade (NTT) or Commodity terms of trade ..................................490
30.2.3 ⛽🎖🎖 Gross (Barter) Terms of Trade (GTT, �सफर् �प्र�लम के �लए, अत: िहदं ी अनाव�क)..........490
30.2.4 ⛽🎖🎖 Income terms of trade (ITT) ....................................................................................490
30.3 ⛽🎖🎖 Top Import and Exports of GOODS for India: ..............................................................490
30.3.1 ⛽🎖🎖 Goods Export Before & AFTER Corona: Notable items ......................................491
30.3.2 India’s TOP Agriculture Exports .......................................................................................491
30.3.3 ⛽🎖🎖 Goods Import Before & AFTER Corona ................................................................491
30.3.4 ⛽🎖🎖 SERVICES Export Before & AFTER Corona (i.e. 2018, 2019) ...........................491
30.3.5 ⛽🎖🎖 SERVICES Import Before & AFTER Corona (i.e. 2020, 2021) ...........................492
30.3.6 🛒🛒🛒🛒India’s trade partners: Import / Export ................................................................492
30.3.7 India’s trade partners: Trade Surplus / Deficit With Notable Countries .....................493
30.3.8 Largest importer and exporter in world (before Corona 2020) ....................................493
30.4 💌💌💌💌 Reports / Indices related to Export & Remittance ......................................................494
30.4.1 💌💌💌💌Export Preparedness Index by NITI ( �नयार्त तैयारी सूचकांक)....................................494
30.4.2 💌💌💌💌Global Survey on Digital and Sustainable Trade Facilitation by UNESCAP ..494
30.4.3 💌💌💌💌Report: Goods Trade Barometer Index .................................................................494
30.4.4 💌💌💌💌 Remittance: World Bank’s Remittance Report (�व� ब�क क� धनप्रेषण �रपोटर्)..........495
30.4.5 💌💌💌💌Report: Misc. .............................................................................................................495
30.4.6 💌💌 Remittance: Sidetopic → Pravasi Bharatiya Diwas (PBD).....................................495
30.5 ⛽Balance of payment → Current Account → Import of Oil ...............................................495
30.5.1 ⛽� Domestic Oil Exploration Policies? .......................................................................496
30.5.2 ⛽�: �♂NELP’s primary limitations were → ..........................................................496
30.5.3 ⛽📯📯📯📯HELP Policy (हाइड�ोकाबर्न अ�ेषण और अनु���/लाइस��सगं नी�त) .................................496
30.5.4 ⛽India’s Strategic Oil Reserves (भारत के साम�रक तेल भ�ार)...............................................497
30.5.5 ⛽📈📈📈📈 Crude Oil prices & OPEC (क�ा तेल) .................................................................497
30.5.6 ⛽📈📈📈📈 Crude Oil: Russia-Ukraine War (2022) ..........................................................498
30.5.7 ⛽📈📈📈📈 Crude Oil: related concepts?.............................................................................499
30.5.8 ⛽💰💰BoP: Current → Fall of Crude oil prices in negative figure .................................499
30.5.9 ⛽💰💰 Petrol & Diesel Prices & Taxes in India ................................................................499
30.5.10 ⛽ Electric Vehicles, Ethanol Blending etc...................................................................499
30.6 🎖🎖Balance of payment → Current Account → Import of Gold ............................................499
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 484
30.6.1 🎖🎖🐯🐯RBI’s 80:20 Scheme (2013-14) .................................................................................500
30.6.2 🎖🎖🎖🎖🐯🐯 Sovereign Gold Bond Scheme (2015: �णर् बांड योजना) .......................................500
30.6.3 🎖🎖🎖🎖🐯🐯 Gold Monetization Scheme (2015: �णर् मुद्रीकरण योजना) ...................................500
30.6.4 🎖🎖🎖🎖🦁🦁 Indian (Sovereign) Gold Coins (2015: भारतीय �णर् �स�े ) ...................................501
30.6.5 🎖🎖🎖🎖: Gold price in Corona (कोरोना महामारी के दौरान �णर् क़�मत�) ...........................................501
30.6.6 Gold import: ⬆ customs duty (2022).............................................................................501
30.6.7 ☕BoP → Current → Export → GI Tag ........................................................................502
30.6.8 ☕🔖🔖 GI Logo .....................................................................................................................502
30.7 🍋🍋🍋🍋BoP → Current → Exports → SEZ ...............................................................................503
30.7.1 🍋🍋🍋🍋🕵🕵Baba Kalyani report on SEZ..............................................................................504
30.7.2 🍋🍋🍋🍋🕵🕵SEZ → DESH Hubs ...........................................................................................504
30.7.3 👜👜👜👜Budget-2022 Announcements to ⏬CAD ............................................................505
30.7.4 💎💎💎💎💎💎BoP → Current → Exports → Foreign Trade Policy (2015-2020) ..........505
30.7.5 🥵🥵 Foreign Trade Policy: Challenge / Updates? .............................................................506
30.7.6 🍋🍋🍋🍋Tax Credit for Exporters: MEIS/SEIS ....................................................................506
30.7.7 🍋🍋🍋🍋Tax Credit for Exporters: RoDTEP? .....................................................................506
30.7.8 ⚓Port Logistics: Authorised Economic Operator (AEO)............................................507
30.7.9 📲📲📲📲📲📲 “Assemble in India” | Production Linked Incentive Scheme (PLI) ...........507
30.8 ⛽🎖🎖: 🗃🗃🤲🤲 BoP → Capital Account→ Investment→ FDI / FPI .......................................508
30.8.1 🗃🗃🗃🗃 Foreign Portfolio Investors (FPI: �वदेशी पोटर्फो�लयो �नवेशक) .......................................508
30.8.2 🗃🗃🗃🗃🗃🗃🗃🗃 Foreign Direct Investment (FDI: प्र�� �वदेशी �नवेश) .......................................508
30.8.3 🗃🗃🗃🗃🗃🗃🗃🗃 FDI in India → Source Nation and sector-wise Top-5 ...............................509
30.8.4 🗃🗃🗃🗃🗃🗃🗃🗃 Foreign Investment → 100% Automatic permitted in ...............................510
30.8.5 🗃🗃🗃🗃🗃🗃🗃🗃 Foreign Investment → Others ........................................................................510
30.8.6 🗃🗃🗃🗃🗃🗃🗃🗃:🖱🖱🖱🖱 India’s FDI rules for E-Commerce ......................................................511
30.8.7 🗃🗃🗃🗃🗃🗃🗃🗃: 🔥🔥🔥🔥 Hotmoney Effect by FPIs ....................................................................511
30.8.8 🗃🗃🗃🗃🗃🗃🗃🗃Investment: Misc Terms & Reports.................................................................512
30.9 � Yearbook: Ministry of Commerce and Industry (वा�ण� और उद्योग मं त्रालय): ......................513
30.9.1 💼💼Budget-2020 : Medieval dictionary GK about Foreign Trade .................................514
30.9.2 🕵🕵 (2019) DIPP becomes DPIIT (�वभाग का नाम बदला गया) .................................................514
30.9.3 � (2017) FIPB Abolished (�वदेशी �नवेश अनुम�त क� सं �ा को हटाया गया) ................................515
30.9.4 🗃🗃🗃🗃🗃🗃 BoP: Capital → Chinese FDI need Govt approval............................................515
30.9.5 � Related Topic: Cabinet Committees ...........................................................................516
30.9.6 🐯🐯🐯🦁🦁 International Financial Services Centre (IFSC) .........................................516
30.9.7 🐯🐯🐯🦁🦁: � IFSC Authority Act, 2019 ........................................................................517
30.9.8 🐯🐯🐯🦁🦁: � IFSC → Variable Capital Companies (VCC).......................................517
30.9.9 � 🔪🔪 BoP → Capital Account → Debt (Loans & Non Resident Bank deposits) ...518
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 485
30.9.10 � 🔪🔪 BoP → Capital Account → Misc. Concept: NIIP .........................................518
30.9.11 � 🔪🔪 BoP → Capital Account → Misc. Concept: VOSTRO, NOSTRO, FCNR,
NRE, NRO 518
30.9.12 � 🔪🔪 BoP: External Debt overhang Problem (ऋण क� अ�धकता) ...............................519
30.10 ⛽🎖🎖: 🗃🗃🤲🤲 BoP → summing up .........................................................................................520
30.10.1 💱💱💱💱💱💱 Sterilization (��रीकरण)?...............................................................................521
30.10.2 💱💱💱💱💱💱: 🧅🧅 🧅🧅 Mundell-Fleming Trilemma (मं डल �े�मगं क� �त्र-आयामी दू �वधा) ...522
30.11 (⛽🎖🎖>🗃🗃🤲🤲)⚠ India’s Balance of Payment crisis (1991).............................................524
30.11.1 (⛽🎖🎖>🗃🗃🤲🤲)⚠ Disequilibrium in BoP: Factors responsible (असं तुलन के कारण) ..524
30.11.2 🐯🐯🐯🐯 RBI’s Forex Reserve: �वदेशी मुद्रा �रजवर् ....................................................................525
31 💱💱 Currency Exchange Rate: मुद्रा �व�नमय दर .....................................................................................526
31.1 💱💱 Exchange Rate Regime: Theory ............................................................................................527
31.1.1 💱💱💱💱 Managed Float / Dirty Float; प्रबं �धत चल/ म�लन चल .................................................528
31.2 💱💱💱 Exchange Rate Regime: Historic ....................................................................................529
31.2.1 💱💱💱💱💱 Fixed exchange rate system → Gold Standard; सोने के मानक/ �णर्मान (1870-
1914) 529
31.2.2 💱💱 🔨🔨🔨 Fixed exchange rate system → Bretton Woods System (1946-1971) ......530
31.2.3 💱💱💱💱Currency Exchange in India ...................................................................................531
31.3 💱💱💱IMF Special Drawing Rights (SDR: �वशेष आहरण अ�धकार).............................................531
31.3.1 💱💱💱IMF SDR Formula weightage reforms 2022 .........................................................533
31.3.2 💱💱💱IMF Quota Reform ...................................................................................................533
31.3.3 💱💱💱IMF Governors .........................................................................................................534
31.3.4 💱💱💱 Dollar- the Global Currency & ”DE-Dollarization”? (वै��क-आर��त-मुद्रा) ........534
31.3.5 💱💱⚔🐼🐼🐼 Yuan as global currency? ..........................................................................535
31.4 💱💱⛽🤲🤲 Currency Convertibility (मुद्रा प�रवतर्नीयता) ..................................................................536
31.5 💱💱✋🐯🐯RBI restriction on convertibility of rupee: �पये क� प�रवतर्नीयता..................................536
31.5.1 💱💱💱💱 Full convertibility of Rupee :�पये क� पूणर् प�रवतर्नीयता? ............................................538
31.5.2 💱💱💱💱 ₹ 🕵🕵 Convertibility → S.S. Tarapore Committee (1997) ...............................538
31.5.3 💱💱💱💱 🐯🐯 ₹ Convertibility → RBI reforms (2004-2019) ............................................539
31.5.4 💱💱💱💱 🐯🐯 FEMA Rules for Indian resident’s overseas investment (2022-Aug) ......539
31.5.5 💸💸💸💸Currency Exchange Rate → Attracting Dollars: VRR and FAR .......................539
31.6 ⚖ FCRA Act .................................................................................................................................540
31.6.1 FCRA on donations ..............................................................................................................540
31.6.2 FCRA on remittance .............................................................................................................540
31.7 💱💱⚔ Currency War 2018 (मुद्रा युद्ध) ...........................................................................................541
31.7.1 💱💱⚔Reverse Currency war? ............................................................................................541
31.7.2 💱💱⚔Currency War → Fall of Indian ₹ & RBI’s Response .........................................541
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 486
31.7.3 RBI-Govt’s measures to prevent fall of Rupee (2022-Jul-Aug) .....................................544
31.7.4 Rupee Rouble Agreement ....................................................................................................545
31.7.5 💱💱⚔ Misc. Concepts: Quantitative Easing and Federal Tapering .............................546
31.7.6 💱💱⚔ Misc. Concepts: Helicopter Money & Zero interest rate regimes ....................547
31.8 💱💱 Exchange Rate → Miscellaneous Terminologies ..............................................................549
31.8.1 💱💱 NEER and REER? (Hindi not imp because only prelim relevant) .........................549
31.8.2 💱💱 Purchasing Power Parity: क्रय श�� समता (PPP) ...........................................................551
31.8.3 ✍🏻🏻🎺🎺 Mock Questions for Mains: ......................................................................................551
- BoP is a systematic record of all economic transactions made between the residents and non-
residents of a country for a specific time period, usually a year. िकसी देश के �नवा�सयों और गैर-�नवा�सयों के
बीच िकए गए सभी आ�थक लेनदेन का एक �रकॉडर् है।
- Central Banks of each country prepare BoP records as per the format given in IMF’s BPM-6
manual, all the figures are expressed in Dollar$.
- Since any country’s debit (outgoing money) is a credit (incoming money) for another country
→ World’s NET Balance of Payment is ZERO.
- BoP is further sub classified into two parts → Current Account (चालू खाता) and Capital Account
(पूंजी खाता), based on the nature of transactions.
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 487
30.1 🐯🐯 RBI’S (ACTUAL) METHOD OF CLASSIFYING BOP
⛽🎖🎖🎖🎖 Current Account 🗃🗃 🤲🤲 Capital & Financial Account
Goods and services 1. Direct Investment (FDI)
Primary Income: wages, dividend, interest 2. Portfolio Investment (FPI)
Secondary income: remittance, gift, donation 3. Loans / External Commercial Borrowing
(ECB)
4. Non-resident’s investment in Bank,
Insurance, Pension schemes.
5. RBI’s foreign exchange reserve
However, for the purpose of learning, we’ll continue with the traditional classification given in the
textbooks (and in below image)
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 488
Win23 series.
30.2 ⛽🎖🎖 BALANCE OF PAYMENT → CURRENT ACCOUNT →
Component NET Amount in billion dollars 2018-19 2019-20 2020-21
Visible Trade in Goods -180 -157 -102
दशर्नीय
Invisible Trade in Services +82 +85 +88
अ��
Primary Income: Wages, Profit, Interest, -28 -27 -36
Dividend.
Secondary Income/Transfer: Remittance, +70 +75 +73
Gift, Grants, Donations.
Net Current Account Balance (if negative: “Deficit”) 😰😰-57 Bn 😰😰-24 Bn 🤩🤩+24 Bn
(Deficit) (Deficit) (+0.9% GDP)
⇒ From 2001-04: We had Current Account Surplus (चालू खाता अ�धशेष) because, it was a time before
the USA’s subprime crisis when global economy boom had ⏫ our exports). But then we started
to have deficit. India’s current account deficit averaged -2.2% GDP in the last 10 years.
⇒ 2020-21: Corona- imports⏬ compared to export (and we managed to export decently in the
Pharmaceutical and IT sector). So, India witnessed a Current Account surplus for the first time
(2020-21) after last 17 years! कोरोना महामारी व तालाबं दी के चलते आयात म� भारी �गरावट के चलते �पछले 17 सालों म�
पहली बार चालू खाता घाटा नहीं, चालू खाता अ�धशेष �आ!
Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020-21 2021-22 2022-23
CAD as - - - - - - - - - +0.9% CAD CAD
% of 4.3% 4.8% 1.7% 1.3% 1.1% 0.6% 1.8% 2.1% 0.9% (Reality) DEFICIT DEFICIT
GDP possible. possible.
1._% # 2._%#
#
Final data yet to release, but these are projection (2021-22 & 2022-23) from theHindu columnists.
30.2.1 ⛽🎖🎖 Balance of Trade (BoT �ापार का सं तुलन)
(Definition) Balance of Trade is the difference between the value of import and export of _ _ _ .
- ✅Of Goods (as per NCERT.)
- ✅Of Goods and Services (as per IMF balance of payment manual)
🚩🚩🚩FAQ: So what to tick in MCQ? Ans. well depends on the context of the MCQ.
Balance of Trade Amount in Billion $ for Year 2018-19
Export Goods +330
Import Goods -510
Export Services +208
Import Services -126
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 489
Balance of Trade (Goods & +330 Goods + 208 Services-510 Goods – 126 Services= (-
Services Combined) 98) =😰😰TRADE DEFICIT
30.2.3 ⛽🎖🎖 Gross (Barter) Terms of Trade (GTT, �सफर् �प्र�लम के �लए, अत: िहदं ी अनाव�क)
𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞 (𝑜𝑜𝑜𝑜 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣) 𝑜𝑜𝑜𝑜 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 ⚖
𝐺𝐺𝐺𝐺𝐺𝐺 = ∗ 100 = 𝑓𝑓𝑓𝑓𝑓𝑓 𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼 𝑖𝑖𝑡𝑡 ′ 𝑠𝑠 < 100 (𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈).
𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞 (𝑜𝑜𝑜𝑜 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣) 𝑜𝑜𝑜𝑜 𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒 ⚖
So, in physical quantity (kg, litres) we are exporting more than importing. This is possible because
exported Indian rice’s quantity (kg) could be large even though its value ($) will not be very large.
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 490
30.3.1 📤📤⛽🎖🎖 Goods Export Before & AFTER Corona: Notable items
Before Corona (i.e. 2018, 2019) 😷😷AFTER Corona (i.e. 2020, 2021)
1) 💅💅Petroleum Products (e.g. paint, polish, ⇒ 💅💅Petroleum Products
asphalt) ⇒ 💊💊Drug & Biologicals
2) Pearl & Precious Stones ⇒ Pearl & Precious Stones
3) 💊💊Drug & Biologicals ⇒ Iron and Steel Metal
4) 💍💍Gold Silver jewellery ⇒ Electric Machinery
5) Iron and Steel Metal ⇒ Chemicals
6) Electric Machinery
⇒ 💍💍Gold Silver jewellery
7) Chemicals
⇒ Products of Iron and Steel
8) Products of Iron and Steel
⇒ 🐠🐠Marine Products
9) 🐠🐠Marine Products
⇒ Aluminium
10) Aluminium
30.3.4 📤📤⛽🎖🎖 SERVICES Export Before & AFTER Corona (i.e. 2018, 2019)
Export Before Corona (i.e. 2018, 2019) 😷😷AFTER Corona (i.e. 2020, 2021)
1. 📡📡Telecom, computer, and information ⇒ 📡📡Telecom, computer, and information
services services
2. business services -research development, ⇒ business services -research development,
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 491
consultancy services etc.) consultancy services etc.)
3. 🏖🏖Travel of persons ⇒ 🚛🚛Transport of goods
4. 🚛🚛Transport of goods ⇒ 🏖🏖Travel of persons (Passengers coming
5. Financial services to India.)
6. Construction Services ⇒ Financial services
⇒ Construction Services
30.3.5 📥📥⛽🎖🎖 SERVICES Import Before & AFTER Corona (i.e. 2020, 2021)
Import Before Corona (i.e. 2018, 2019) 😷😷AFTER Corona (i.e. 2020, 2021)
1. business services -research development, ⇒ business services -research development,
consultancy services etc.) consultancy services etc.)
2. 🏖🏖Travel of persons (Indians going to ⇒ 🚛🚛Transport of goods(e.g. Indian using
foreign trip using foreign airline) American Cargo Shipping company’s
3. 🚛🚛Transport of goods (e.g. Indian using service to deliver goods)
American Cargo Shipping company’s ⇒ 📡📡Telecom, computer, information
service to deliver goods) services
4. intellectual property (Patent, Trademark) ⇒ 🏖🏖Travel of persons (e.g. Indians going to
5. 📡📡Telecom, computer, information foreign trip using foreign airline)
services ⇒ intellectual property (Patent,
6. Financial services Trademark)
⇒ Financial services
🚩🚩🚩FAQ: Why not given Top-10, why gave only Top-6 services? Ans. Feel free to sort data from
Statistical Appendix of ES21: https://www.indiabudget.gov.in/economicsurvey/doc/Statistical-
Appendix-in-English.pdf
🚩🚩🚩FAQ: Why “X” item’s rank ⏫/⏬ before and after Corona? Ans. May be due to Corona /
May be some factor happened in our competitor nations. Economic Survey did not bother to
comment, I did not bother to google.
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 492
7. Netherland ⇒ Hong Kong (Diamonds)
8. Britain ⇒ Indonesia (due to Palm Oil)
9. Belgium ⇒ Singapore
10. Germany
⇒ South Korea
30.3.7 India’s trade partners: Trade Surplus / Deficit With Notable Countries
Trade Deficit (i.e. India imports more but exports Trade Surplus (i.e. India imports LESS but
less to these nations) exports MORE to these nations)
We’ve large Trade Deficit: �ापार घाटा with We’ve Trade Surplus: �ापार अ�धशेष with
⇒ China (cheap electronics, toys etc.) over 50 - USA (Chemicals, textile, services etc.),
billion$ - Britain, Netherlands, Turkey (Tea,
⇒ Middle Eastern nations (Oil import esp Iraq, Spices, textile etc.),
Saudi, Qatar). - Bangladesh, Nepal (Food, medicine,
⇒ Switzerland (Gold, Luxury items), vehicles etc)
🔠🔠❓MCQ. Which of the following does not form part of current account of BoP? [UPSC-CDS-2014-II]
(a) Export and import of goods (b) Export and import of services
(c) Income receipts and payments (d) Capital receipts and payments
🔠🔠❓MCQ. With reference to Balance of Payments, which of the following constitutes/ constitute the
Current Account? (Asked in UPSC-Pre-2014)
1. Balance of trade. 2. Foreign assets. 3. Balance of invisibles. 4. Special Drawing Rights.
Answer codes: (a) 1 only (b) 2 and 3 (c) 1 and 3 (d) 1, 2 and 4
🔠🔠❓MCQ. Among the following, which one of the following is the largest exporter of rice in the world in
the last five years? (Pre-2019) (a) China (b) India (c) Myanmar (d) Vietnam
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 493
🔠🔠❓MCQ. Among the agricultural commodities imported by India, which one of the following accounts
for the highest imports in terms of value in the last five years? (Pre-2019)
(a) Spices (b) Fresh fruits (c) Pulses (d) Vegetable oils
🔠🔠❓MCQ. Since 2014-15, India has consistently run trade surplus with which one among the following
countries? (UPSC-CDS-2020-ii) (a) China (b) Saudi Arabia (c) USA (d) Germany
🔠🔠❓MCQ. Find correct statement(s) about international trade of India at present? (Prelims-2020)
1. India’s merchandise exports are less than its merchandise imports.
2. India’s imports of iron steel, chemicals, fertilisers and machinery have decreased in recent years.
3. India’s exports of services are more than its imports of services.
4. India suffers from an overall trade/current account deficit.
Ans Codes: [a) 1 and 2 only [b) 2 and 4 only [c) 3 only [d) 1, 3 and 4 only
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 494
⇒ This index signals changes in world goods trade growth.
⇒ If Index value > 100: 😍😍. But less than 100 = 😥😥. Current value is 99.5% (as of 2021-Sept)
30.4.4 💌💌📊📊 Remittance: World Bank’s Remittance Report (�व� ब�क क� धनप्रेषण �रपोटर्)
- Since 2008: largest amount of remittance received by 1) India 2) China 3) Mexico.
- World Bank also noted: remittances have a direct impact in poverty removal for many
households, (धन प्रेषण से गरीबी उ�ूलन म� मदद �मलती है)
- but Post Offices charge very high fees in remitting the money to household. So Financial
inclusion, UPI/BHIM/IMPS blockchain Technology led money transfer mechanism are
important in that context as well.(📑📑Ref Pillar#1A)
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 495
30.5.1 ⛽� Domestic Oil Exploration Policies?
⇒ Nodal? Directorate General of Hydrocarbons: हाइड�ोकाबर्न महा�नदेशक (DGH) Ministry of Petroleum
& Natural Gas.पेट�ो�लयम और प्राकृ �तक गैस मं त्रालय
⇒ Before the 1991’s LPG reforms, only ONGC and other Public sector companies were allowed to
explore the oil, gas and hydrocarbon reserves in India. But under 1991’s Liberalization norms,
this sector was opened for the private sector players as well. (पहले के वल सरकारी क��नयां कर सकती थी.
हालाँिक बाद म� �नजी �ेत्र क� क��नयों को भी उदारीकरण नी�त के अंतगर्त अनुम�त दी गई है)
⇒ 1997: New Exploration Licensing Policy (NELP: नयी अ�ेषण अनु��� नी�त) to award contract to
public and private sector companies using bidding / auction system.
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 496
Govt to receive a share from gross revenue from sale of oil / gas etc, irrespective of company’s
profit. (�बक्र� से िह�ा देना होगा, सरकार को आपके मुनाफे से कोई लेनादेना नही)
Government not to interfere in the marketing and pricing of the oil and gas.
Relaxed norms for exploration in offshore areas, because they have higher risk and higher cost
of production. (समुद्र म� तट से दू र �ेत्रों म� खोज के �लए सुगम मानदं ड)
Open Acreage Licensing Policy (OLAP) → company can pick and choose the blocks from the
designated area, even if no specific bids are invited by Govt before. Then Govt will invite other
companies for auction.
2019-July: Govt finished auctioning process of HELP-OLAP round 2 and 3.
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 497
Crude Oil Supply Side Factors (आपू�त) Demand Side (मांग)
reduce global prices to harm Iranian ⇒ Chinese imposing more Taxes on
Oil export business. imported American/Japanese cars →
⇒ When USA pressurizes Nigeria, Iraq ⏬ car sales → ⏬ oil demand in
etc to produce more oil China
⇒ When USA also increases its own
domestic oil and Shale Gas
Production
⇒ 2021-Feb: India's biggest oil suppliers: 1) Iraq 2) USA 3) Saudi. Saudi Arabia ranked shifted from
#2 to #3 because Saudi has been ⏬cutting down its production to raise prices.
⇒ 2021-Saudi minister (rudely) tells India, “if you do not like our expensive oil, then use oil from
your own strategic reserves.” Indian Petroleum Minister calls it an ‘undiplomatic’ comment.
⇒ 2021-Mar: Indian Oil Companies decided to ⏬ import from Saudi Arabia -to teach Saudi a
lesson (सऊदी अरब का घमं ड तोड़ने के �लए वहाँ से हमने क�ा तेल आयात करना थोड़ा कम िकया है).
⇒ 2021-April onwards: OPEC+ Group decided to gradually ⏫the production. Thus daily news
keeps going on....If any MCQs asked, solve through 50:50 from above Table. #⏳📚📚थोड़ा-पढ़ो-आगे-
बढ़ो
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 498
30.5.7 ⛽📈📈📈📈 Crude Oil: related concepts?
Cartel is an association of manufacturers who collude to keep prices high, and keep
the competitors away. (More in 📑📑Pillar#4Z-Microeconomics)
Sweet Crude Oil Low Sulphur content. Sour crude = High Sulphur content.
BRENT Index is an index to measures crude oil price, mainly in North West Europe.
🔠🔠❓MCQ. Term ‘West Texas Intermediate’, sometimes found in news, refers to a grade of_ _ (Prelims-2020)
[a) Crude oil [b) Bullion [c) Rare earth elements [d) Uranium
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 499
30.6.1 🎖🎖🐯🐯RBI’s 80:20 Scheme (2013-14)
- RBI mandated that minimum 20% of the imported gold must be exported back. Until then the
Jeweller/ bullion dealers will not get permission to (convert their rupees into dollars / foreign
currency) to import next consignment of gold.
- RBI gets this power under Foreign Exchange Management Act (FEMA: �वदेशी मुद्रा प्रबं धन अ�ध�नयम).
Although, 2014: Scheme was stopped as the gold craze had declined.
30.6.2 🎖🎖🎖🎖🐯🐯 Sovereign Gold Bond Scheme (2015: �णर् बांड योजना)
(Covered in 📑📑Pillar#1C: Share Market)
30.6.3 🎖🎖🎖🎖🐯🐯 Gold Monetization Scheme (2015: �णर् मुद्रीकरण योजना)
- Under this scheme, RBI allows commercial banks accept customers’ idle gold / jewellery for 1
year to 15 years tenure. (2019- RBI also allowed Charitable Institutions and Central Govt to
deposit their gold in the commercial banks)
- Commercial Banks pay the depositor ~2% interest.
- Min. 30gm to maximum any amount of gold can be deposited.
- Gold goes to → Metals and Minerals Trading Corporation of India →
- Gold sold to jewellers, electronic circuits companies and
- Some of the gold used for Minting “Indian Gold Coin.”
- Upon maturity you can redeem deposit in the form of gold coin/bars or cash equivalent. The
profit exempted from Capital Gains Tax. (इस स��� �नवेश के मुनाफ़े पर ��� पर पूंजीगत लाभ कर नहीं लगता)
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 500
🔠🔠❓MCQ. What is/are the purpose/purposes of Government's 'Sovereign Gold Bond Scheme' and
'Gold Monetization Scheme’? (Asked in UPSC-Pre-2016)
1.To bring the idle gold lying with Indian households into the economy.
2. To promote FDI in the gold and jewellery sector.
3. To reduce India's dependence on gold imports.
Answer codes: (a) 1 only (b) 2 and 3 (c) 1 and 3 (d) 1, 2 and 3
30.6.4 🎖🎖🎖🎖🦁🦁 Indian (Sovereign) Gold Coins (2015: भारतीय �णर् �स�े )
Issued by a Govt company “Metals and Minerals Trading Corporation of India”.
- Available in denominations of 5, 10, 20 grams.
- These gold coins are not fiat money because not issued under the powers of Coinage act, they
don’t bear any markings indicating rupee denominations. Their markings only indicate gold
grams. And since they’re not ‘fiat money’ → so, not ‘legal tenders’. (More in 📑📑Pillar#1a1)
- Benefit? Trusted Purity → Easily resold → Easy liquidity, and Profit (if) gold price⏫.
30.6.5 🎖🎖🎖🎖: Gold price in Corona (कोरोना महामारी के दौरान �णर् क़�मत�)
As such, Govt’s economic surveys don’t talk much about daily ups/downs of gold price movement.
UPSC also never asked anything like that. So, we need not PHD. ⚾
⇒ Indian banks ⏬ fixed deposit interest rates. People shifting towards gold investment for a better
"positive real" interest rate. (Recall Pillar1)
⇒ Mutual funds = not good profit after ILFS crisis (Ref: Pill1B2) → some investors prefer gold
⇒ Geopolitical tensions like Iran-US, China-US, India-China, Russia – Ukraine have negative
impact on sharemarket → some investors prefer gold
⇒ 2020 Corona-Crisis: Shares and bonds have become risky due to heavy losses faced by
companies. Investors prefer a 'safe assets' = ⏫demand of gold → ⏫prices.
⇒ Corona→ workers @gold mines / refineries ⏬ → gold production ⏬ → price⏫
⇒ However, vaccination = investors expect business revival so they’ll sell gold to invest in shares so
again gold prices fallen from ₹56000 per 10gm in (2020-Aug) to ₹45000 (2021-March) =
₹11,000⏬. … ✋+ other 500 angles on Dollar currency exchange rate, Bond yields, some
investors shifting to Bitcoin etc=poor cost-benefit. Apply logic/50:50.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 501
country/manage CAD.
30.6.7 ☕BoP → Current → Export → GI Tag
⇒ A Geographical Indication (GI: भौगो�लक सं केतक) is a sign used on products with specific
geographical origin and unique qualities due to that origin. E.g. Darjeeling tea from W.Bengal- It
was the first to obtain GI tag from India.
⇒ 🤩🤩Benefit? GI tag adds premium-ness to a product, helps fetching higher prices in the
international market → better income for farmers and artisans. �वदेशी ग्राहक उसे उ�ा िक� क� समझ के
और �ादा पैसा देने के �लए राजी हो सकता है
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 502
30.7 🍋🍋🍋🍋BOP → CURRENT → EXPORTS → SEZ
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 503
shutdown operation and move to another SEZ with new name/registration. Agricultural and
forest lands diverted to build SEZs → future challenges in food security, pollution control and
climate change.(कर प�रहार, मज़दू रों का शोषण, कृ �ष ज़मीन कम होना भ�व� म� खाद्य सुर�ा, प्रदू षण के जो�खम)
Solution? 2018: Commerce Ministry had setup Baba Kalyani committee to look into SEZ issues.
Baba is the Chairman of Bharat Forge ltd.
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 504
✍Conclusion in SEZ related Mains Qs? Government of India has set a target of creating 100
million jobs and achieving 25% of GDP from the manufacturing sector by 2022, as part of its flagship
‘Make in India’, so above reforms / recommendations will help achieving these targets.
🔠🔠❓ Which Asian country established the first Export Processing Zone (EPZ) in 1965? (UPSC-
Geologist-2020) a. China b. India c. South Korea d. Japan
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 505
⇒ Advance Authorization Scheme (अ�ग्रम प्रा�धकरण योजना) allows duty free import of inputs, along
with fuel, oil, catalyst, etc., required for manufacturing export product.
⇒ Niryat Bandhu Scheme: Govt mentors the new and potential exporters and mentor them
through training, counselling, orientation programmes
⇒ Towns of Export Excellence (TEE: �नयार्त उ�ृ �ता के शहर) and Trade Infrastructure for Export
Scheme (TIES: �नयार्त योजना के �लए �ापार आधा�रक सं रचना): where Union gives ₹ for infra development
for export (warehouses, transportation, packaging facilities etc.)
⇒ District Export Promotion Committees (DEPCs) have been setup in 739 districts to focus on
agriculture, GI-products, Toys, handicrafts etc. (�ज़ला �नयार्त प्रो�ाहन स�म�तयाँ)
⇒ Govt. gave extra ₹ ₹ to Export-Import Bank of India (EXIM Bank) and Export Credit Guarantee
Corporation of India Ltd. (ECGC). (More in 📑📑Pillar#1B1: Classification of Banks)
⇒ E-governance initiatives →
○ CBIC → Single Window Interface for Facilitating Trade (SWIFT) for importers and
exporters through icegate.gov.in. Within that, e-governance modules like E-Sanchit,
Turant etc for document approval etc.
○ Commerce Ministry & FIEO (Federation of Indian Export Organisations) launched
India Trade webportal and Niryat Mitra App.
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 506
MEIS RoDTEP
(ITC) for 2. Transport fuel (petrol diesel) Excise and VAT
3. Agriculture raw material pe State Mandi tax
(it’s not a ‘tax’ but rather a FEES charged by
APMC Mandi.)
4. Stamp duty on Commodity trade (Ref:2A)
5. Electricity pe electricity duty (Ref: 2A)
WTO allowed it? No, so WTO ordered Yes (or atleast PM Modi claims so.)
to stop it. RoDTEP will replace MEIS scheme.
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 507
30.8 ⛽🎖🎖: 🗃🗃🤲🤲 BOP → CAPITAL ACCOUNT→ INVESTMENT→ FDI / FPI
30.8.1 🗃🗃🗃🗃 Foreign Portfolio Investors (FPI: �वदेशी पोटर्फो�लयो �नवेशक)
⇒ It is a foreign entity registered @SEBI, and who buys upto 10% in equity / shares of an Indian
Company. [For Corporate Bonds and G-Sec these % are different.]
⇒ Originally, these were called Foreign Institutional Investor (FII: �वदेशी सं �ागत �नवेशक) and
Qualified Foreign Investors (QFIs), but in 2013 SEBI merged them all into a single category- FPI,
based on the recommendations of K.M. Chandrasekhar committee.
⇒ FPI’s primary objective is make money from buying and selling of shares through the capital
market / share market. They even help the SEBI-non-registered foreign investors by issuing them
Participatory notes (P-Notes) [📑📑Ref: 1C: SEBI handout].
⇒ FPIs are not involved in the actual operations / production / management / business policy
making of a company (unlike Walmart is for Flipkart). कं पनी का �यं सं चालन म� ��च नहीं
⇒ If FPI investor is hopeful to get better returns in the other countries’ share/bond market, he may
quickly sell his Indian securities and run away. The flight of such money is called ‘hot money
(चलायमान मुद्रा)', It results into weakening of Indian Rupee and falling of Sensex.
⇒ FDI is the (more than 10% equity / share) investment made by a foreign entity into an Indian
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 508
company, with the objective to get involved in the management / production of that Indian
company. भारतीय कं पनी के सं चालन/ उ�ादन म� शा�मल होने के उद्दे� से 10% या उससे �ादा शेयर खरीदना
⇒ (e.g. 2018: Walmart-USA bought 77% stakes in Flipkart @$16 billion.)
⇒ ✋Foreign Investment is prohibited in atomic energy, railway operations (except Metro & infra
dev.); Tobacco Products, Real Estate Business, Farm Houses, Chit Funds, Nidhi Companies,
Betting Gambling Casino & Lottery.
⇒ For the remaining sectors, Foreign Investment is permitted either through:
A. � Automatic Route: �चा�लत मागर् i.e. Foreign entity doesn’t require Indian Govt’s
approval.
B. 🧔🧔 Government Route: सरकारी मागर् i.e. prior to investment, they’ve to get approval from
the Govt of India’s respective Administrative Ministry/ Department (+ Commerce
Ministry).
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 509
Sector wise Nation Wise
4. Automobile Industry 4. Netherlands
5. ☎Telecommunications 5. Japan
Note: above is the data for 2020-21. Then, what is the latest data for 2021-22 (ended on 31/3/2022)
Ans. Let the next economic survey come on 31/1/2023, then we will see in win 23 series.
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 510
Sector → Foreign Investment limits Automatic 🧔🧔✋With Govt
कु छ िक�ों म� �चा�लत मागर् से. कु छ िक�ों म� क� द्र सरकार क� अनुम�त लेनी ज�री upto? approval?
Multi Brand Retail Trading N/A 51%
REITs / InvITs Infrastructure Companies N/A 49%
Banking (Private Sector) Upto 49% >49 upto 74%
Telecom Services, Private Security Agencies, Upto 49% ABOVE 49%
Air Transport Services
Insurance Company (earlier 49% then 💼💼Budget-2021 ⏫to → ) Upto 74% Not Required.
[Pension sector % = Insurance sector so it shd be 74% as well]
Note: this limit is not applicable on LIC.
1) Defense (2020-Sept: FDI in Defense limit ⏫from 49% to 74%) Upto 74% ABOVE 74%
2) Brownfield projects in Pharma, Biotech, Healthcare
Satellite operation N/A 100%
For future updates, refer to https://www.investindia.gov.in/foreign-direct-investment
Definition? E-commerce means buying and selling of goods and services over digital & electronic
network. Two subtypes
1. Inventory based (इ��टरी आधा�रत) model of e-commerce: Company sells the inventory of goods
and services, which is owned by them to consumers directly. E.g. primeabgb.com (A computer
hardware site). FDI is not permitted here.
2. Marketplace based (बाजार आधा�रत) model of e-commerce: Company merely provides a
webportal/app to act as a facilitator between buyer and sellers. E.g. Amazon, Flipkart. 100% FDI
allowed here.
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 511
Indian market so in “NET” terms its lower than FDI. (�वदेशी पोटर्फो�लयो �नवेशक सट्टेबाज उद्दे� से ��र �प से
पैसा भारतीय बाजार म� �नवेश करते ह� और �नकाल कर ले जाते ह� इस�लए ऐसा पैसा लं बी अव�ध के �लए भारत म� िटकता नहीं उसे हम
हॉट मनी/ गरम मुद्रा कहते है)
⇒ 2018-19: there was net ‘outflow’ of FPIs (i.e. more FPI money left India than the amount of FPI
money that came into India) which shows the Hot Money effect.
⇒ 2020 onwards: FPI situation given in following chart:
30.8.8.1 �✈ Golden Visa (�नवेशकों और प्र�तभावान लोगों को आक�षत करने के �लए �णर् वीज़ा)
⇒ It is a special type of visa given for a investor/ property-buyer/celebrity / sportsman / scientist /
very bright student. System prevalent in Spain, UAE (Sanjay Dutt-2021) etc.
⇒ 🤩🤩Benefit? Helps the nation to attract investors and talented persons.
🔠🔠❓MCQ. Both Foreign Direct Investment (FDI) and Foreign Institutional Investor (FII) are related to
investment in a country. Which one of the following statements best represents an important difference
between the two?(Asked in UPSC-Pre-2011)
A. FII helps bring better management skills and technology, while FDI only brings in capital.
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 512
B. FII helps in increasing capital availability in general, while FDI only targets specific sectors.
C. FDI flows only into the secondary market, while FII targets primary market.
D. FII is considered to be more stable than FDI
🔠🔠❓MCQ. Find correct major characteristics with reference to FDI in India (Prelims-2020)
[a) It is the investment through capital instruments essentially in a listed company.
[b) It is largely non-debt creating capital flow.
[c) It is the investment which involves debt-servicing.
[d) It is the investment made by foreign institutional investors in the Government securities.
🔠🔠❓ Which of the following can be included in Foreign Direct Investments in India [Pre-2021]
1) Foreign Currency Convertible Bonds
2) Foreign Institutional investment with certain conditions
3) Global depository receipts (GDR)
4) Non-resident external deposits
Codes: a) 1, 2 and 3 b) 3 Only c) 2 and 4 d) 1 and 4
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 513
�नकाय/ 3. Statutory Commodity Boards → Tea Board, Spices Board, Tobacco Board, Coffee
सं �ाए Board, Rubber Board. Controversy? Some newspapers suggesting these boards may
be closed / merged. So farmers are opposing.
4. Export Inspection Council (EIC): Under 1963’s law to ensures quality and safety of
products exported from India. EIC’s certificate is compulsory/mandatory for
exporting fish, dairy, meat related products from India.
Autonomo Indian Institute of Foreign Trade (IIFT)- a “Deemed University” that offers MBA, PHD
us & other programs.
🚩🚩🚩FAQ: What is attached office / autonomous body? Ans. Self-Study through
https://unacademy.com/lesson/mrunals-yearbook-ministries-and-departments-forms-of-
government-organisations-in-hindi/7KCEZHT4/
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 514
30.9.3 � (2017) FIPB Abolished (�वदेशी �नवेश अनुम�त क� सं �ा को हटाया गया)
- Foreign Investment Promotion Board (FIPB: �वदेशी �नवेश सं वधर्न बोडर्) was a non-statutory body in
the Department of Economic Affairs in the finance ministry.
- FIPB processed the FDI applications where government approval was required. If investment
amount exceeded ₹ 5,000 crore → application forwarded to Cabinet Committee on Economic
Affairs (CCEA: आ�थक मामलों क� मं �त्रमं डलीय स�म�त).
- 2017: Govt announced FIPB’s abolition. Now, individual ministries/departments are empowered
to clear FDI proposals in consultation with Commerce Ministry. e.g. FDI in Pendrive factory →
MEITY + Commerce Ministry. (if proposal above ₹5kcr →CCEA)
- FIPB’s webportal was renamed into “Foreign Investment Facilitation Portal” and transferred to
Commerce ministry.
However, Only Home Ministry will clear FDI proposals coming from Pakistan and Bangladesh; and
FDI proposals related to private security agencies, small arms manufacturing.
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 515
reasons (More on WTO in 📑📑Pillar#3B)
30.9.5 � Related Topic: Cabinet Committees
Table 1: For more PHD you may refer- https://cabsec.gov.in/writereaddata/cabinetcommittees/english/1_Upload_3017.pdf
A nation will not apply its local taxation and investment norms in its IFSCs (अंतरार्�ी� य �व�ीय सेवा
क� द्र:) E.g. UAE → Dubai’s IFSC centre: 100% FDI allowed in any sector. 100% Capital Account
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 516
Convertibility (i.e.Invest & pullout money as & when you please in any currency of your
choice!), 0% income tax for 50 years. DTAA with most countries. Independent judiciary not
bound with local laws. Quick Visa etc. (करो म� भारी छू ट, �ा�नक कानूनों से मु��)
🤩🤩Result? Such place becomes a hub / base of operation for international financial companies
and investment bankers. It also creates trickle down benefits for local people e.g. Chartered
Accountants, Hoteliers, Golf club owners, Taxi operators etc.
London, New York, Hong Kong and Singapore to have also grown by setting up such centres.
Taking their example, India too has set up Gujarat International Finance Tec (GIFT) city
international financial services centre (IFSC) near Ahmedabad. (2015)
Although GIFT city not yet attracted good number of international financial companies because
the tax benefits are not as great as Singapore, Hong Kong etc.
This ‘greenfield’ GIFT city was developed by 50:50 Joint venture of (the infamous) IL&FS +
Gujarat Urban Development Company Limited (GUDCL). Together they were responsible for
the construction, electricity, water, sanitation and other responsibilities of running this city. But
post IL&FS crisis, Govt of Gujarat has bought IL&FS’s 50% shareholding.
⇒ 💼💼Budget-2019: Companies operating from GIFT-city-IFSC given 100% exemption from
Corporation Tax for 10 years
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 517
⇒ VCC has greater operational flexibility than traditional Mutual Fund, Hedge Funds, REITS,
Limited Liability Partnerships (LLPs), Private limited companies etc (REF Pillar1C).
⇒ VCCs are prevalent in Singapore, UK, Luxembourg and other global financial centres.
⇒ 2021: International Financial Services Centres Authority had constituted a Committee under
K.P. Krishnan to see the feasibility of allowing VCCs in IFSC. Krishnan Committee
recommended allowing them in India.
✋Beyond this, VCC pe PHD NOT REQUIRED, irrespective of how many Faaltu-MCQs set by
inexperienced private quizmasters.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
🔠🔠❓MCQ. Who among the following was the Head of the Expert Committee on Variable Capital
Company in India which has submitted its report recently? (UPSC CAPF-2021)
(a) K. P. Krishnan (b) Ketan Dalal (c) J. Ranganayakulu (d) Bobby Parikh
30.9.9 � 🔪🔪 BoP → Capital Account → Debt (Loans & Non Resident Bank deposits)
NET inflow in (Bn. USD) →�नवल आमद 2018-19 😷😷2020-21
Foreign Investment (FPI & FDI) +30 +80
External borrowing: Pvt. Sector borrowing >Govt. +16 +7
Further, majority of India’s external debt is in U$D currency >
Indian Rupee > IMF’s SDR > (Yen, Euro, Pound Sterling, etc)
Non-Residents’ Deposits in Indian Banks [Foreign Currency Non- +7 -21
Resident FCNR accounts] & other misc. components of Capital
Account
NET balance in Capital Account (approx.) + 54 +64
30.9.10 � 🔪🔪 BoP → Capital Account → Misc. Concept: NIIP
Net International Investment Position (NIIP)= value of overseas assets owned by a nation minus
the value of domestic assets owned by foreigners.
⇒ 🧐🧐 Positive NIIP value = creditor nation (लेनदार रा�)�
⇒ 😭😭 Negative value = debtor nation (कजर्दार देश). USA highest, India at 8th place (in 2018)
30.9.11 � 🔪🔪 BoP → Capital Account → Misc. Concept: VOSTRO, NOSTRO, FCNR, NRE, NRO
⇒ VOSTRO, NOSTRO, FCNR, NRO, NRE etc are different-different types of bank accounts
associated with foreign currency transactions
⇒ What are their features, how they are similar or different from each other?
⇒ Such banking general knowledge will give poor cost benefit for exam. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 518
30.9.12 � 🔪🔪 BoP: External Debt overhang Problem (ऋण क� अ�धकता)
📔📔📔📔ES21: There is a “Laffer Curve” like relationship between foreign debt and GDP growth:
⇒ Up to a certain level, more External borrowing → ⏫economic growth (Because that foreign
money can be used for expanding the local factories, jobs, production).
⇒ But beyond a certain level it will become unsustainable. (Just like in Original Laffer Curve:
⏫direct tax% → ⏫tax collection but then it'll reduce tax collection Because high level of
direct taxes will encourage laziness and tax evasion/blackmoney. Recall Pillar#2B) (एक हद तक
�वदेशी कज� से भारतीय का अथर्तंत्र म� वृ�द्ध क� जा सकती है लेिकन एक हद के बाद वह अ��रता पैदा करता है)
⇒ Because too much debt = then all of your new (monthly/yearly) income will be gone in repaying
the previous loan installments. This phenomena is known as debt overhang. (यिद आपक� सारी कमाई
लोन क� िक� चुकाने म� चली जाए तो काम करने का उ�ाह भी चला जाता है)
o Debt overhang destroys enthusiasm and motivation to work harder.
o Debt overhang increases the chances of loan default e.g. Argentina, Ecuador, Belize,
Lebanon, Suriname and Zambia – have defaulted on their sovereign debt in Corona.
⇒ 📔📔📔📔ES21 and 📙📙📙📙ES22 observed that Presently India's external debt to GDP is at the
optimal level. (In other words we should not let this ratio increase anymore.)
⇒ Corona: business ⏬: now If Indian companies borrow too much money from abroad to revive
their business → It may create the debt overhang problem in the future.
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 519
30.10⛽🎖🎖: 🗃🗃🤲🤲 BOP → SUMMING UP
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 520
30.10.1 💱💱💱💱💱💱 Sterilization (��रीकरण)?
If there is a BoP situation, wherein RBI has to sell ₹ to buy $ to get the NET answer ZERO then…
Such RBI action would result in ⏫supply of rupee currency in the Indian market → it can cause
inflation if there is not sufficient supply of goods for purchase.
So, RBI must ‘absorb’ that excess rupee currency back. RBI will do it through Open Market
Operation (OMO: REF-1A2) → sell govt securities to buyback Indian rupees. This process is called
Sterilization. �रजवर् ब�क ने यिद डॉलर खरीदने के �लए बाजार म� �पए िदए तो उ�ीं �पयों को वापस से भी चूस लेना चािहए, वरना
महंगाई हो सकती है → इस�लए �रजवर् ब�क, सरकारी प्र�तभू�तयां भेजकर बाजार ₹ चूस लेता है इसे ��रीकरण कहते ह�
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 521
30.10.2 💱💱💱💱💱💱: 🧅🧅 🧅🧅 Mundell-Fleming Trilemma (मं डल �े�मंग क� �त्र-आयामी दू �वधा)
Theory by economists Robert Mundell and Marcus Fleming (1960s). It argues that three things can't
be accomplished together: �रजवर् ब�क तीन चीज� एक साथ नहीं कर सकते
Trilemma (�त्र-आयामी दू �वधा) Example situation in Corona
1) Keep capital account open / relax Corona:- large foreign FPI,FDI inflow towards India’s
capital account convertibility to boost pharma-IT/Tech sectors. कोरोना के दौरान भारत के औष�ध तथा
economy. पूंजी खाते म� छू ट: भारत म� �वदेशी �पया सूचना प्रौद्यो�गक� �ेत्र म� ढेर सारी �वदेशी पूंजी आई
लाने- ले जाने पर ब�त �ादा पाबं दी ना हो, तािक
अथर्तंत्र को बढ़ोतरी �मल सके
2) Keep exchange rate stable �वदेशी मुद्रा FPI,FDI ⏫ → so, inflow of Dollar$⏫⏫ → then
�व�नमय दर को ��र रखा जाए rupee will become stronger → exchange rate will not
remain stable & exporters will suffer due to stronger
rupee. �वदेशी मुद्रा के भारत म� अ�धक मात्रा म� आने से �पया मजबूत होता
है जो �नयार्तकों के �लए अ�� बात नहीं
3) Keep monetary policy independent ⇒ Stronger rupee will be bad for exporters → RBI
(from what is happening elsewhere in should purchase dollars & sell rupees →
the world / solely focusing on Inflation
⏫Rupees supply → Inflation if there are not
- target) मौिद्रक नीती �तं त्र �प से चलाई जा
sufficient goods in the market. �रज़वर् ब�क �पया बेचकर
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 522
Trilemma (�त्र-आयामी दू �वधा) Example situation in Corona
सके -�बना परवाह िकए िक �व�नमय दर म� �वदेशी डॉलर खरीदना शु� कर� तो बाजार म� �पये क� मात्रा बढ़ जाएगी जो
ताकतों/कारको के चलते �ा अ��रताएँ हो रही है. महंगाई उ�� कर सकती है
⇒ So if RBI try to control the exchange rate volatility,
then RBI will end up creating inflation! यानी क�
�व�नमय दर क� अ��रता रोकने के च�र म� महंगाई उ�� हो गई
⇒ Corona-2020: amount of $$ inflow so high,
sterilization game (Ref: previous section) was
difficult. So, inflation inevitable. ��रीकरण वाला खेला
ब�त मु��ल �ोंिक डॉलर/�पये मात्रा ब�त �ादा थी.
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 523
30.11 (⛽🎖🎖>🗃🗃🤲🤲)⚠ INDIA’S BALANCE OF PAYMENT CRISIS (1991)
Nowadays India usually has “DEFICIT” in current account (due to crude oil imports), but there is
usually sufficient “SURPLUS” in capital account (thanks to FDI & FPI) to counter/offset that
Current Account DEFICIT. (सामा� �प से चालू खाते म� घाटा, और पूंजी खाते म� अ�धशेष होता है)
- But in the pre-1991’s Nehruvian Socialist Economy, many sectors were nationalised (banking
insurance) and / or reserved for the public sector companies only = mismanaged & inefficiency.
Private sector industrialists were allowed only in selected sectors, and were subjected to Licence-
Quota-Inspector Raj → ⏬competition,⏬ innovation = low exports.(Ref: 📑📑Pillar#4B)
- And our policy makers restricted foreign investments (FDI /FPI) fearing that
- It’ll bring USA-CIA’s invisible hand in Indian Affairs,
- Our Swadeshi industries & our ‘Non-Alignment Movement (NAM)’ will be harmed.
- 😰😰End result? High level of “DEFICIT” in Current Account and not enough surplus in Capital
account to counter/offset that DEFICIT. The situation could be like this:
1991 → imaginary figures for illustration only (�सफ़र् उदाहरण के �लए का��नक आंकड़े) (Bn. USD)
Current Account (Deficit) [चालू खाते म� बोहोत बड़ा घाटा] - 100
Capital Account (Surplus, but it’s insufficient surplus) [पूंजी खाते म� अपयार्� अ�धशेष] + 50
Errors & Omissions 0
Overall Balance - 50
Monetary Movements in RBI's Foreign Exchange Reserves** + 50
NET Balance of Payment for India 0
**Here plus (+) indicates RBI must sell dollars from its forex reserve to keep India’s BoP at ZERO
level. If they can’t do it then shortage of dollars in Indian market to pay for our import bills →
results in heavy weakening of Indian rupee (e.g. $1 =₹ 60 → $1= ₹ 6000) then it becomes even more
expensive to import oil. �पया ब�त कमजोर �आ तो क�ा तेल आयात करना और महंगा होगा
- In 1991, RBI didn’t have enough forex reserves to get India’s BoP zero → we had to pledge our
gold to IMF to borrow dollars. सोना �गरवी रखकर डॉलर के लोन �लए
- IMF also imposed certain conditions which required India to open up its economy through LPG
reforms (Liberalisation, Privatisation, Globalisation: उदारीकरण, �नजीकरण, वै�ीकरण). 🎓🎓Self-study
from (new) NCERT Class11:Indian economic development → Ch3.
- 2022: SriLanka facing similar problems but we’re not preparing for SrilankiPSC so boycott-PHD.
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 524
backward so imports >> Export. E.g. Nehru’s India until it matured in the 90s.
⇒ Consumerism and Demonstration Effect: Rich Indians try to copy westernized lifestyles. So,
⬆import of Switzerland wristwatches+Sports Cars = adverse BoP. (उपभो�ावाद, िदखावा करने क� चाह
→ �ादा आयात के चलते भुगतान सं तुलन खराब होता है)
⇒ Structural Disequilibrium =if transport, electricity infrastructure is poor or Technological
Backwardness = exports can’t improve. (सं रचना�क और तकनीक�)
⇒ Cyclical Disequilibrium (चक्र�य असं तुलन): When two countries may be passing through different
phases of business cycle (Boom, slowdown...तेजी और मं दी का चक्र) , so there will be mismatch in
imports, exports, FDI etc.
Largest forex reserves: 1) China ($3 Trillion)> 2) Japan > 3) Switzerland > 4) India (As of 2021)
USA is not in the top-10 list, it barely keeps ~$250 billions in reserve.
2021: RBI forex Reserves crossed $600+ billions. because of following reasons:
⇒ Corona: imports ⏬⏬ → Capital Account surplus. आयात म� �गरावट के चलते चालू खाता अ�धशेष
⇒ Corona: USA/EU ke Central banks cheap/dovish/expansionary monetary policy → Flow of
dollars in euros increased towards Indian share market (Particularly In the pharma/IT-Tech
companies). FPI/FDI ⏫ → so, inflow of Dollar$/Euro etc⏫⏫ कोरोना के दौरान अमे�रक� यूरोपीय
क� द्रीय ब�कों द्वारा �व�ार वादी मौिद्रक नी�त के चलते ढेर सारा �वदेशी पैसा भारतीय बाजार म� आया है.
⇒ then rupee will become stronger → exchange rate will not remain stable & exporters will suffer
due to stronger rupee. �पया �वदेशी मुद्राओं के सामने मजबूत होगा जो िक भारत के �नयार्तकों के �लए अ�� बात नहीं होगी
⇒ So RBI bought dollars/Euro etc foreign currencies & sold rupees → $$/Euro etc accumulation in
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 525
the RBI forex reserve. इस�लए भारतीय �पया को मजबूत होने से रोकने के �लए, �रजवर् ब�क ने �पया देकर बाजार से �वदेशी
मुद्रा को खरीदना शु� िकया. और ऐसी �जतनी �वदेशी मुद्रा �रजवर् ब�क ने खरीदी → उससे फॉरे� �रजवर् तो बढ़ना �ाभा�वक है.
🔠🔠❓MCQ. Which one of the following is included in India's foreign-exchange reserves? (UPSC-Pre-2013)
A. Foreign-currency assets, Special Drawing Rights (SDRs) and loans from foreign countries.
B. Foreign-currency assets, gold holdings of the RBI and SDRs.
C. Foreign-currency assets, loans from the World Bank and SDRs.
D. Foreign-currency assets, gold holdings of the RBI and loans from the World Bank.
🔠🔠❓MCQ. “Gold Tranche” (Reserve Tranche) refers to _ _ (UPSC-Pre-2020)
[a) A loan system of the World bank [b) One of the operations of a central bank
[c) A credit system granted by WTO to its members [d) A credit system granted by IMF to its members
Currency Exchange Rate Indian Exporter of Tea Indian Importer of Dell Laptops
Weaker ₹ = Stronger $ . मेरे को आयात करते वकत �ादा
($1=60 → 600) ज�े म� पैसा देना होगा!
Stronger ₹ = Weaker $ मेरे को �नयार्त करते व�
($1=80 → 40) कम ज�े म� पैसा �मलेगा।
(Definition) The price of one currency in terms of the other currency is called exchange rate. E.g. $1
= ₹ 70. Meaning, it costs ₹ 70 to buy one dollar (or $0.014 to buy ₹ 1).
- This is also called Nominal Exchange Rate because it does not take into consideration inflation
or purchasing power in the respective countries. (औपचा�रक �व�नमय दर, महंगाई को नजरअंदाज िकया)
- The place where currencies are exchanged is called Foreign Exchange Market (�वदेश �व�नमय बाज़ार).
Their dealers are called Authorized (Forex) Dealers (AD). They can be banks or non-banks.
They have to get registered with RBI under the Foreign Exchange Management Act (FEMA:
�वदेशी मुद्रा प्रबं धन अ�ध�नयम के अंतगर्त �वदेशी मुद्रा के दलालों को �रजवर् ब�क से अनुम�त लेनी होती है).
- These dealers keep separate prices for buying and selling, to make profit in between e.g. ICICI:
$1 Dollar buying price ₹ 67.95 and $1 selling price is ₹ 72.76. (इन दलालों का डॉलर खरीदने का दाम अलग
और बेचने का दाम अलग होता है तािक बीच म� उनका मुनाफा रहे)
- Such currency transaction service is also subjected to GST, however the tax depends on the
amount of currency exchanged. (e.g. upto ₹ 10 lakh exchanged in foreign currency then only ~₹
3000 of that 10 lakh will be taxable in GST → 18% of 3000 → ₹ 540 GST Tax. GST will not be
levied on the entire 10 lakh rupees)
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 526
- American Economist James Tobin had suggested 0.1% to 0.5% Tobin Tax on currency exchange
transactions to discourage the speculative trading and volatility in the International Financial
Market
31.1 💱💱 EXCHANGE RATE REGIME: THEORY
It is the set of rules governing the exchange of domestic currency with foreign currencies.
🐍🐍 Floating or Flexible (अ�ाई �व�नमय दर) 🔨🔨 Fixed or Pegged (�नयत �व�नमय दर)
Here the exchange rate is determined by the When the central bank of a country itself decides
market forces of demand and supply. the exchange rate of local currency to foreign
- So if there are more number of Indian people currency e.g. People’s Bank of China (PBC) $1 =
wanting to import crude oil, gold, iphones;/ 6 Yuan.
going to USA for higher studies,... Compared - If excess dollars are entering in their market,
to the number of Americans interested to buy the central bank will print more Yuan to buy
Indian goods, services; / coming to vacation and absorb the excess dollars, to ensure Yuan
in Kerala doesn’t strengthen against Dollar ($1=6 → 5
- Then, demand for dollars will be more than Yuan). As a result their forex reserve will get
that of rupees. So, $1 = 50 → $1=70 large build up of dollars, due to central bank’s
purchase.
- In future, if less dollars are entering in their
market, the central bank will sell the
(previously acquired) dollars from its forex
reserve to ensure Yuan doesn’t weaken (₹ 1=
6 → 7 Yuan)
In this system, In this system,
- 😰😰 if rupees weakens, it’s called - 😰😰 if Yuan is weakened by Central Bank’s
‘Depreciation (मू�ह्रास e.g 50 → 70); Makes official notification, it’s called ‘devaluation’
the export look cheaper to the foreign buyer (अवमू�न e.g $1=6 → 7); usually done when it
- 💪💪 if ₹ strengthens it’s called ‘Appreciation doesn’t have enough dollars in reserve to play
(अ�भमु�न e.g. 70 → 50) the game and / or when it wants to
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 527
🐍🐍 Floating or Flexible (अ�ाई �व�नमय दर) 🔨🔨 Fixed or Pegged (�नयत �व�नमय दर)
deliberately weaken Yuan to encourage
exports.
- 💪💪 if Yuan is strengthened by Central Bank’s
official notification, it’s called ‘Revaluation’
(पुनमू�न e.g. $1=7 → 6)
😢😢 Challenge? चुनौती 😢😢 Challenge? चुनौती
- Currency Speculation: When a person buys $ - If trade deficit widens / speculators are
and other foreign currency with the hopes hoarding dollars / FPIs are pulling their
they become more expensive in future so he money back to USA due to higher interest
can sell@ profit to others. (so he’d be hoping rates → shortage of $ in local forex market→
for ₹ to depreciate / $ to appreciate). Such PBC will have to sell $ from its forex reserve
elements distort the exchange rate by hording to keep the exchange rate stable.
foreign currencies. सट्टेबाजी - but since PBC will not have infinite amount
- Interest Rates: If US repo rate / Treasury of dollars in its reserve ultimately it will be
Bonds are going @2% whereas in Greece’s forced to be devalue the local currency →
bonds going@4% Then American investors imports will become more expensive.
will convert Dollars to invest in Greece. Later, - Therefore, most of the countries have
when US fed ⏫ their repo rate from 2% to abandoned this system after 70s. China too
4% American investors might pull back from abandoned it in eventually, and shifted to
Greece. (Because America commercial bank Managed Floating Exchange Rate.
loans will become more expensive ~5%, then
there will be American companies willing to
borrow by issuing Bond/debentures at 4.5%.)
🔠🔠❓MCQ. Under flexible exchange rate system, the exchange rate is determined by [UPSC-CDS-2015-II]
(a) predominantly by market mechanism (b) by the Central Bank
(c) as a weighted index of a group of currencies (d) by the World Trade Organization
31.1.1 💱💱💱💱 Managed Float / Dirty Float; प्रबं �धत चल/ म�लन चल
- It is the middle path between the two extremes (floating and fixed).
- RBI will not decide the exchange rate (unlike the fixed system). In the ordinary days, RBI will let
the market forces of supply and demand decide the exchange rate.
- But if there is too much volatility, then RBI will intervene to buy / sell $ to keep the volatility
controlled. (सामा� िदनों म� �रजवर्ब�क दखल नहीं, लेिकन �व�नमय दर म� यिद भारी अ��रता होगी तो बाजार म� दखल देगी)
- Similarly, People Bank of China will not intervene in ordinary circumstances. They’ll intervene
during volatility i.e. if $ to Yuan value changes more than “x%” up or down compared to
previous day’s exchange rate.
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 528
31.1.1.1 💱💱💱💱 😰😰Challenges in Managed Float System?
1. Currency speculation and interest rates (e.g USA Fed Tapering – refer to Pillar: 1A2.)
2. Currency Manipulation/ मुद्रा जोड़-तोड़: usually occurs when a central bank keeps buying dollars to
create artificial scarcity of $ in the forex markets → dollar becomes expensive → local currency
becomes weak → boost to exports.
US Department of the Treasury publishes a semi-annual report to track such nations. China,
S.Korea, India etc have been kept in (‘Watch list’) citing the (alleged) lack of transparency and
consistency in their respective Central banks operations. (इन देशों क� क� द्रीय ब�क, मुद्रा �व�नमय दर को �नयं �त्रत रखने
के �लए जो िक्रयाएं करती है, उस म� पारद�शता नहीं, इस�लए अमे�रका उन पर मुद्रा जोड़-तोड़ का इ�ाम लगाता है)
- USA would issue $1 note, if only it has 14 grams of gold in reserve, whereas England would issue
one pound note if only it has 73 grams of gold in its reserve. Accordingly, their exchange rate will
be 1 Pound =73/14 = ~5 USD.
- And, each Central Bank Governor has promised to convert their currency into gold at a fixed
amount. So, a person could walk with paper currency & demand gold coins/biscuits in return.
- When the gold mining production declined, nations gradually shifted to ‘bimetallism’ e.g. $1
promised with 14 gm gold or 210 gm of silver whichever available with their Central Bank.
This system collapsed during the First World War (WW1) because the nation’s currency printing
capacity was limited by their gold reserve, but their governments where more eager to print more
money to finance the war (soldiers’ salaries, rifles’ ammunition etc.)
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 529
31.2.2 💱💱 🔨🔨🔨 Fixed exchange rate system → Bretton Woods System (1946-1971)
Here, USA agreed to fix price of its $1 = (1/35) ounces of gold. [1 ounce = 28 grams]. USA allowed
free convertibility of Dollar to Gold. So if a person walked into the US Federal Reserve with $35, their
chairman (Governor) will give him one ounce of gold.
⇒ Then IMF fixed the exchange rate of every country's currency against USA. e.g.₹ 1= $0.30 =
~0.24 grams of Gold. So, that implied India can’t issue more currency If Indian RBI does not
have proportionately sufficient gold reserve of its own. Still if RBI issues more ₹ currency,
International Monetary Fund (IMF: अंतररा��ीय मुद्रा कोष) will order India to devalue its rupee
exchange rate against dollar.
⇒ American Economist Robert Triffin claimed this system will collapse eventually because gold is
a finite commodity and its price will continue to rise (from 1 ounce of gold = $35 to $40). So
there is always danger of people converting the local currency into dollars and then converting
dollars into gold @$35, then selling it in open market @profit, then US Feds Chairman can’t
continue honouring his promise. It was called “Triffin Dilemma: �त्र�फ़न दु�वधा”. He therefore
suggested an alternative SDR (Paper gold) system for IMF. (�णर् का ज�ा अमयार्िदत नहीं है इस�लए यह
�व�ा एक िदन तबाह हो जाएगी)
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 530
⇒ 1971: USA President Robert Nixon pulled out of Bretton Woods gold convertibility system,
mainly because he wanted freedom to print more dollars to finance the Cold War (शीत युद्ध) and
arms race against the USSR. You may read more about the Cold War in NCERT PolSci-I
Class12ch1: http://ncert.nic.in/ncerts/l/leps101.pdf
⇒ Thus, USA shifted to “Floating Exchange System”. Eventually most of the nations also shifted in
that either floating / managed-floating system. (अमे�रका ने डॉलर का �व�नमय दर बाजार पर छोड़ िदया है)
⇒ 2000: Ecuador adopted Dollarization i.e. it abandoned the domestic currency and adopted the
US dollar as their official currency. (कु छ देशोने अमे�रक� डॉलर को ही अपनी वैधा�नक मुद्रा मान ली है)
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 531
After the collapse of Bretton Woods Exchange Rate System, IMF was converted into a type of
‘deposit bank’, where the members would deposit currencies in the proportion of quotas allotted to
them (depending on size of their economy, openness etc).
- IMF will pay them a small interest rate for their deposits. And IMF would lend this money to a
member facing balance of payment crisis. To operationalize this mechanism, IMF would allot an
artificial currency / accounting unit called SDR to the members based on their deposits. स� देश
द्वारा जमा क� गयी रा�श के सामने उसे एक कृ �त्रम मुद्रा / लेखा इकाई दी जाती है, �जसे एसडीआर कहते है
- Initially the price of SDR was fixed against the amount of gold but present mechanism:
Currency Basket Weight Exchange rate against $?
U.S. Dollar 43.38% $1=$1
Euro 29.31% 1.13
Chinese Yuan (Renminbi *added in 2015) 12.28% 6.7
Japanese Yen 7.59% And so on
Pound Sterling 8.09 And so on
- By applying a formula involving (weight * exchange rate), IMF will obtain value of 1 SDR = how
many dollars? Presently, 1 SDR = $1.40 = ₹ 98 (assuming $1 is trading @₹ 70).
- SDR is called ‘Paper Gold’ because it’s merely an accounting entry or artificial currency, without
any gold involved. (इसक� पीछे कोई �णर् नहीं है , के वल एक िहसाब िकताब क� एक प्रिक्रया है)
- SDR can be traded among the members, it can be converted into members’ currencies as per
above method & be used to settle their Balance of Payment Transactions / Crisis.
- If the BoP crisis is so big, that a country’s entire SDR quota exhausts, then member country may
borrow more SDR from IMF (and then convert it into dollar etc to pay off the import bill), but
eventually member will have to repay this loan to IMF with interest.
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 532
- Individual nations’ central Banks keep some of the SDR as Reserve Tranche Position (RTP):
What that means and how does that work is not important. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 533
- 2021: IMF members approved adding extra $650 billion dollars worth of SDR to IMF. India’s
likely to get 2.76% of 650 billion = Approx. 17to18 billion dollars worth of SDR.
🔠🔠❓MCQ. Recently, which one of the following currencies has been proposed to be added to the basket of
IMF's SDR? (UPSC-Pre-2016) (A) Russian Rouble (B) South African Rand (C) Rupee(D) Renminbi
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 534
31.3.5 💱💱⚔🐼🐼🐼 Yuan as global currency?
⇒ 2015: Yuan added in SDR basket of currency. → It ⏫acceptance of Yuan in global economy.
⇒ China is also loaning Yuan to other nations for infra. development in One Belt One Road
Initiative (OBOR: एक �ेत्र एक मागर् पहल), via AIIB and BRICS bank, and even via Panda Bonds.
⇒ In future, China may have to be less dependent on dollar$ while importing oil, missiles, metal
and food commodities- as other nations begin to happily accept Yuan.
⇒ Such Yuan dominance may pose strategic challenges to USA and India.
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 535
31.4 💱💱⛽🤲🤲 CURRENCY CONVERTIBILITY (मुद्रा प�रवतर्नीयता)
Presently, India has managed floating exchange rate system wherein, currency exchange rate is
determined by the market forces of supply and demand, however, during high level of volatility RBI
will intervene to buy / sell ₹ or $ to stabilize the exchange rate.
- But if people are allowed to convert the local and foreign currency in an unrestricted manner →
so much volatility that RBI will not be able to manage. (अमयार्िदत �प से लोगों को मुद्रा प�रव�तत करने दी तो
�व�नमय दर म� इतनी भारी अ��रता होगी �जसे �रजवर् ब�क काबू नहीं कर पाएगा😰😰)
- So, RBI puts certain restrictions on the convertibility of Indian rupee to foreign currency using
the powers conferred under
- Foreign Exchange Regulation Act, 1973 (FERA: �वदेशी मुद्रा �व�नयमन अ�ध�नयम)
- FERA was later replaced by Foreign Exchange Management Act, 1999 (FEMA: पुराने कानून
म� मज़ा नहीं आ रहा था तो सरकार ने नया कानून बनाया- �वदेशी मुद्रा प्रबं धन अ�ध�नयम)
31.5 💱💱✋🐯🐯RBI RESTRICTION ON CONVERTIBILITY OF RUPEE: �पये क� प�रवतर्नीयता
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 536
💱💱💱💱 BoP → Capital Account → Investment → FPI
- An FPI can’t invest in more than 5% of available G-sec in the Indian market and more than 20%
of the available corporate bonds in the Indian market.
- So, even if Morgan Stanley or Franklin Templeton investment fund has billions of dollars they
can’t bring them all to India because of above restrictions.
- Similar restrictions on FDI as well. Govt decides FDI policy → RBI mandates the forex dealers
accordingly to convert or not convert foreign currency into Indian currency. E.g. Las Vegas’s
Flamingo Casino company can’t convert $ into ₹ to invest in Goa’s Casino (Because FDI
prohibited in Casino). If they manage to ‘smuggle’ rupees through Hawala / Mafia-don-walla
boats then again ED will take action for FEMA violation.
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 537
Thus, Indian rupee is not fully convertible on capital account transactions.
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 538
⇒ Banks’ NPA must not be more than 5% of their total assets. And so forth. So, time is not yet ripe
for allowing full CAC.
31.5.4 💱💱💱💱 🐯🐯 FEMA Rules for Indian resident’s overseas investment (2022-Aug)
⇒ No Indian resident can invest in foreign companies who are doing gambling biz or real estate biz.
⇒ Wilful defaulters need to get a No Objection Certificate (NOC) from Indian authorities (RBI, ED
etc) before making any ‘financial commitment’ abroad (e.g. taking new loan from USA)
⇒ plus many other technical things but not very IMP for Exam.
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 539
Indian Govt’s G-Sec. how exactly they work? Ans. Technical stuff, NOT IMP for Exam. Just accept
and move to next topic.
🤩🤩Benefit? Investors will convert $ & other foreign currency into ₹ currency to buy Bonds and G-
Sec= more $$ coming towards India = helps keeping BoP and currency exchange rate stable during
crisis.
Side note: RBI frequently ⏫ / ⏬ in FPI investment quota/limits in G-sec, depending on how RBI
wants to shape bond-yield, flow of dollars & available quota of G-sec for local investors to play its
repo & OMO games. But that ball by ball chase is NOTIMP. वो सब पं चात हमारे काम क� नहीं.
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 540
31.7 💱💱⚔ CURRENCY WAR 2018 (मुद्रा युद्ध)
2015: Chinese authorities announced they don’t manipulate/control Yuan exchange rate. They only
intervene if Yuan’s exchange rate varies more than +/- 4% from previous day.
- During 2018, People’s Bank of China pursued ‘Easy/Cheap/Dovish Money Policy’ (Ref: Pillar#1
Monetary policy) → injected more Yuan (renminbi) in the system to makes loans cheaper in
domestic market and boost the consumption, demand, growth.
- But, on the other side,US Feds pursued Tight/Dear/Hawkish Money Policy, so dollar supply is
shrinking, so dollar is becoming more expensive against other currencies.
- So, ⏫ supply of Yuan vs. reduced supply of $: resulted in $1=6.20 Yuan weakening to almost
$1= 7 Yuan.
- Trump alleges Yuan was deliberately weakened (due to PCB increasing Yuan supply) to make
Chinese product more cheaper in global trade. He even accused Russia and Japan of playing
similar ‘Currency War’ against him.(चीन पर अपनी मुद्रा जानबूझकर कमज़ोर रखने का आरोप)
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 541
Turkish companies (who had previously borrowed lot of money from American financial
market) will not be able to repay their loans in dollar currency.
- So foreign investors began selling their shares and bonds from Turkey’s market → got Lira
currency → exchanged it to dollars and ran away from Turkey. (A similar nightmare also
repeated in 2021.)
- Because of this mad rush, demand of dollars strengthened even further → other currencies
became even weaker. Including India: $1=₹ 63 in January → $1= ₹ 74 in Oct’18.
- In 2019-20 also, India rupee continued to weaken towards $1=75₹ because Corona Force Majure
(Ref:1C) → SENSEX⏬ → foreign investors pulling out money from India.
- While such depreciation is good for our exporters but bad for our importers.
To reduce the fall of Rupee, Govt and RBI initiated following steps:
1. FPI’s investment limits in Bond market was relaxed. (So they feel encouraged to convert their
Dollars into Rupees and invest in Indian bond market)
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 542
2. External commercial borrowing (ECB) norms were also relaxed.
3. RBI sold dollars from its forex reserve to calm down the demand of dollars.
4. Further, to attract NRI’s dollar savings into India:
a. RBI could announce more interest rates on Foreign Currency (Non-Resident) Account
(Banks) [FCNR (B) Account] & then pay interest subsidy to Indian Banks. This was
done by Governor Raghuram Rajan in 2013.
b. Govt could also tell RBI to issue NRI bonds to attract their $ savings to India.
5. 2018: The central banks of India and Japan signed Currency Swap Agreement (मुद्रा �ैप समझौता) of
$75 billions i.e. either party can use that much dollar currency from other party’s forex reserve
during the crisis. Even in 2008 and 2013 too they had signed similar agreement but lower
amount was involved.
6. 2019: RBI’s $5 bn Currency Swap with Indian banks →RBI gains dollar reserve to fight future
volatility in currency exchange rate, whereas Indian banks got extra rupee liquidity
→(Hopefully) cheaper interest rates to combat deflation.
7. 2020-Feb: CoronaVirus Force Majeure = SENSEX⬇ so FPIs Selling shares from Indian
companies= they got ₹₹ → converting them into $ → running back to USA to invest in (AAA
rated) US treasury bonds which is safest investment. So there is a great shortage of dollars in the
Indian market. If RBI does not supply dollars → further weakening of rupee ($1=₹75 → ₹80).
Therefore...
8. 2020-March: RBI starts Dollars Swap with Indian banks. i.e. A bank shall buy US Dollars from
the Reserve Bank and simultaneously agree to sell the same amount of US Dollars at the end of
the swap period (“X” Months/Years). It is done through auctioning, so, RBI to earn some % of
profit. How it works NOT IMP.
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 543
9. 2020-later months: Current account surplus, FPI,FDI ⏫ → so, inflow of Dollar$⏫⏫ →
then rupee will become stronger → exchange rate will not remain stable & exporters will suffer
due to stronger rupee. Stronger rupee will be bad for exporters → RBI purchased dollars & sell
rupees �वदेशी मुद्रा के भारत म� अ�धक मात्रा म� आने से �पया मजबूत होता है जो �नयार्तकों के �लए अ�� बात नहीं. इस�लए �पया
बेचकर डॉलर खरीद�
10. 2022-March: RBI done $5 bn dollar-swap with Indian Bank/NBFCs to ⏫dollar supply in
Indian market, to prevent weakening of Rupee.
11. 📙📙📙📙ES22 has identified following challenges: 1) Fed Tapering: risks of global liquidity
tightening 2) Inflation in global commodity prices 3) high freight costs 4) Geo-political crisis in
Ukraine 5) New variants of COVID-19 with new variants
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 544
Indians to receive upto 10 lakh a year from their relatives abroad without informing the
authorities. (The previous limit was 1 lakh) (�बना सरकार को सू�चत िकए सालाना 10 लाख �पये तक क� रक़म
�वदेश म� रहते अपने �र�ेदारों से आप मँ गवा सकते ह�)
⇒ 🦁🦁Govt: Customs duty on gold hiked to 12.5 per cent from 7.5 per cent to discourage imports.
(�वदेशों से आयात होने वाले सोने पर लगने वाली सीमा शु� म� बढ़ोतरी क� गई है।)
⇒ 2018-Dec: India signed pact with Iran to pay crude oil bill in rupee currency. National Iranian
Oil Co (NIOC) will open a bank account in India’s UCO Bank (a PSB). Indian oil companies will
make payments there in ₹ currency. Then Iran used this ₹ income to pay for Indian Tea & Rice
purchase → helps ⏬ the demand of dollars. (😰😰However later, due to American pressure,
govt of India stopped this arrangement).
⇒ 2022: Russian banks banned from the SWIFT messaging system that enables international
financial transactions. (Ref: Pillar1B2)
⇒ So, Russia proposed “Rupee-rouble trade agreement”. (‘Rouble’ sometimes also spelled as
‘Ruble’. 1 Ruble = 100 kopeks. Just like ₹1= 100 paisa)
⇒ In such agreement, India pays for Russian imports in rupee currency and then Russian
companies will use that money to import goods from India.
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 545
(भारत �स से क�ा तेल आयात करेगा तब भुगतान �पया मुद्रा म� कर� → उन �पयों से �सी सरकारी क��नयां- भारत से अनाज-
दवाइयां इ�ािद ख़रीदे. �स पर ��फ़्ट �व�ीय सं देश प्रणाली क� पाबं िदयों के चलते वो एसा समझौता करने को बेताब है। एक ज़माने म�
भारत ने ईरान के साथ भी कु छ ऐसा ही समझौता िकया था।)
31.7.5 💱💱⚔ Misc. Concepts: Quantitative Easing and Federal Tapering
⇒ 2007-08: Subprime crisis in USA → Borrowers unable to repay home loans → American Banks
NBFCs’ bad loans / NPA / toxic assets increased → to help them, US Federal Reserve printed
new dollars & used $ to buy those toxic assets/bonds (also known as mortgage-backed securities
(MBS) → ⏫ dollar supply in the system. Known as “Quantitative Easing (मात्रा�क आसानी)”.
⇒ 2013: American Central Bank (US Federal Reserve) gradually cut down its toxic asset purchasing
program → less quantity of dollars issued → called “Fed Tapering (सं घीय टे�पंग)”.
⇒ Result?= (perceived) shortage of dollars in USA → Loans% become more expensive in USA→
American investors began selling shares/bonds in other countries, and took their dollars back to
USA (to lend to local businessmen). This phenomenon was called “Taper Tantrum”. It resulted
into weakening of other currencies against USD. [गैर अमे�रक� देशों क� मुद्राएं ब�त कमजोर हो गई थी]
⇒ 2020: During Corona, American Central Bank again started purchase of Bonds to increase
money supply in market. (कोरोना म� अथर्तंत्र को पुनज��वत करने के �लए वापस ये तमाशा शु� िकया था)
⇒ 2021-22: With Corona unlockdown/Economic-recovery, American Central Bank may gradually
cut down this program so again columnists worried about repeat of 2013’s Taper-Tantrum
episode. However 📙📙📙📙ES22 has noted that India need not worry from taper-tantrum (2022),
because foundations of Indian economy are stronger, and RBI has enough forex reserve to
handle any crisis arising from it. (कोरोना महामारी काबू म� आने पर जब अथर्तंत्र वापस पटरी पर आ जाएगा तो अमे�रक�
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 546
क� द्रीय ब�क वापस से अपना बॉ� खरीद कायर्क्रम थोड़ा कम कर देगा, तो वापस से 2013 के घटनाओं का पुनरावतर्न होने का डर,
हालाँिक आ�थक सव��ण का मानना है िक हम� �सफ़र् �ादा डरने क� ज़�रत नहीं. हमारी अथर्तंत्र क� बु�नयादी पहले से ब�त �ादा
मज़बूत है और �रज़वर् ब�क के पास पहले से ब�त �ादा �वदेशी मुद्रा आर��त भं डार है।)
31.7.6 💱💱⚔ Misc. Concepts: Helicopter Money & Zero interest rate regimes
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 547
🔠🔠❓MCQ. In the context of India, which of the following factors are contributors to reducing the risk of a
currency crisis? ( Prelims-2019)
1. The foreign currency earnings of India’s IT sector.
2. Increasing the government expenditure.
3. Remittances from Indians abroad.
Answer Codes: (a) 1 only (b) 1 and 3 only (c) 2 only (d) 1,2 and 3 only
🔠🔠❓MCQ. Which one of the following is not the most likely measure the Government/RBI takes to stop
the slide of Indian rupee? (Prelims-2019)
(a) Curbing imports of non-essential goods and promoting exports
(b) Encouraging Indian borrowers to issue rupee denominated Masala bonds
(c) Easing conditions relating to external commercial borrowing
(d) Following an expansionary monetary policy
🔠🔠❓MCQ. The price of any currency in international market is decided by: (Pre-2012)
1. The World Bank.
2. Demand for goods/services provided by the country concerned.
3. Stability of the government of the concerned country. [उस देश म� सरकार क� ��रता]
4. Economic potential of the country in question. [उस देश क� आ�थक �मता]
Answer codes: (a) 1, 2, 3 and 4 (b) 2 and 3 (c) 3 and 4 (d) 1 and 4
🔠🔠❓MCQ. If another global financial crisis happens in the near future, which of the following
actions/policies are most likely to give some immunity to India? (Prelims-2020)
1. Not depending on short-term foreign borrowings [लघु अव�ध के �वदेशी कजर् पर �नभर्र न रहा जाए]
2. Opening up to more foreign banks [अ�धक �वदेशी ब�को को शाखाएँ खुलने दी जाए]
3. Maintaining full capital account convertibility [पूंजी खाते पर पूणर् �प से प�रवतर्नशीलता]
Codes: [a) 1 only [b) 1 and 2 only [c) 3 only [d) 1, 2 and 3
🔠🔠❓MCQ. Consider the following actions which the Government can take: (Prelims-2011)
1. Devaluing the domestic currency. [देसी मुद्रा को कमजोर कर�]
2. Reduction in the export subsidy. [�नयार्त-स��डी कम कर�]
3. Adopting suitable policies to attract greater FDI and Flls. [�वदेशी �नवेश को बढ़ोतरी द�]
Which of the above can help in reducing the current account deficit?
Codes: A) 1 and 2 B) 2 and 3 C) 3 only D) 1 and 3
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 548
31.8 💱💱 EXCHANGE RATE → MISCELLANEOUS TERMINOLOGIES
31.8.1 💱💱 NEER and REER? (Hindi not imp because only prelim relevant)
In real life we are not just trading with USA but other countries, using foreign currencies other than
US dollars (Euro, Pound, Yen, Yuan etc).
⇒ Therefore, only tracking $1=60, $1=70 will not give a full picture. So, RBI also calculates
geometric average of rupee’s exchange rate against upto 36 types of foreign currencies. The
formula will give weightage to each of those 36 foreign currencies depending on their trade-
volume with India.
⇒ The result is called “Nominal effective exchange rate (NEER)”.
⇒ When NEER is mathematically adjusted as per the CPI-inflation levels in India and those foreign
countries, it’s called “Real effective exchange rate (REER)”.
⇒ REER interpreted as the quantity of domestic goods required to purchase one unit of a given
basket of foreign goods, says NCERT.
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 549
⇒ NEER vs REER values help finding whether a currency is really weakening (depreciating) against
foreign currencies or not, thus helps to know our international competitiveness in exports.
⇒ For example: REER⏬ = foreigners will find our export prices attractive. REER⏫ = foreigners
will find our export prices less attractive. Says 📔📔📔📔ES20. How?NotIMP
⇒ 2018’s analysis reveals that though Indian rupee weakened against dollar $1=₹ 63 → ₹ 74, but
rupee has not so greatly weakened against other foreign currencies.
⇒ 2020: RBI report says rupee remained overall stable on these indicators.
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 550
31.8.2 💱💱 Purchasing Power Parity: क्रय श�� समता (PPP)
⇒ Hypothetical concept that tries to compare two currencies’ exchange rate through their
purchasing power in respective countries. (एक समान व�ुएँ ख़रीदने के ख़चर् के अनुपात म� �व�नमय दर)
⇒ So, If 1 cup of coffee in India = ₹ 20 whereas 1 cup of coffee costs $2 in USA then Dollar to Rupee
exchange rate (PPP) should be $1 = ₹ 10. (According to OECD: exact figure is $1=₹ 17@PPP).
⇒ This (hypothetical) exchange rate can happen in real life, if both the countries have Floating
Exchange Rate without any intervention of the respective Central banks; and if the bilateral
trade is free of protectionism (= without tariff or non-tariff barriers).
⇒ GDP is the total market value of all goods and services produced in a country within a year.
When we convert these GDP values from local currencies into PPP $ exchange rates, the largest
economies of the world (GDP, PPP wise) are 1) USA 2) China 3) India 4) Japan 5) Germany
Big Mac Index ⇒ The Economist magazine’s informal index to measure PPP exchange rate using
the price of one McDonald burger in USA vs the respective country.
Twin Deficit ⇒ It’s the term used when both Current Account Deficit and Fiscal Deficit are
दोहरा घाटा high : चालू खाता घाटा और राजकोषीय घाटा
🔠🔠❓MCQ. Find correct statement(s) (UPSC-Prelims-2020)
1. Purchasing Power Parity (PPP) exchange rates are calculated by the prices of the same basket of
goods and services in different countries.
2. In terms of PPP dollars, India is the sixth largest economy in the world.
Codes: (a) 1 only (b) 2 only (c) Both 1 and 2(d) Neither 1 nor 2
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 551
with respect to taxation, governing laws and administration. �वशेष आ�थक �ेत्र के �वकास म� कराधान, शासी
कानूनों और प्रशासन के सं बं धीत मुद्दों क� चचार् करे।
3. GSM3-2016: Justify the need for FDI for the development of the Indian economy. Why there is
gap between Memorandum of Understanding (MOU) signed and actual FDIs? Suggest remedial
steps to be taken for increasing actual FDIs in India. एमओयू / पर ह�ा�र िकए गए और वा��वक एफडीआई
के बीच अंतर �ों है? भारत म� वा��वक एफडीआई बढ़ाने के �लए सुधारा�क कदम उठाए जाने का सुझाव िदया।
4. GSM3-2014: Foreign direct investment in the defence sector is now said to be liberalised. What
influence this is expected to have on Indian defence and economy in the short and long run?
भारतीय र�ा �ेत्र म� �वदेशी प्र�� �नवेश उदारीकरण से भारतीय अथर्�व�ा पर लघु और दीघार्व�ध म� �ा प्रभाव होंने क� उ�ीद है?
5. GSM3-13: Discuss the impact of FDI entry into multi-trade retail sector on supply chain
management in commodity trade pattern of the economy. ब�-�ापार खुदरा �ेत्र म� एफडीआई प्रवेश से
कमोिडटी �ापार क� आपू�त श्रृंखला प्रबं धन पर �ा असर होगी?
6. GSM3-2013: Though India allowed Foreign Direct Investment (FDI) in what is called Multi
Brand Retail through joint venture route in September 2012, the FDI even after a year, has not
picked up. Discuss the reasons. म�ी ब्रांड �रटेल म� �वदेशी प्र�� �नवेश को अनुम�त �मलने के बाद भी वा��वक �प से
�नवेश �ों नहीं आ रहा है?
7. GSM2-2014: Though 100% FDI already allowed in non-news media like a trade publication and
general entertainment channel, the Government is mulling over the proposal for increased FDI
in news media for quite some time. What difference would an increase in FDI make? Critically
evaluate the pros and cons. समाचार मीिडया म� �वदेशी प्र�� �नवेश बढ़ाने के फायदे और नुकसान क� समी�ा।
📑📑Next HDT: Pillar3B: WTO & other International Economic Orgs, Trade
Agreements, Protectionism and burning issues.
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 552
PILLAR #3B: INTERNATIONAL ORGANIZATIONS & AGREEMENTS RELATED TO ECONOMY
T ABLE OF C ONTENTS
32 🌐🌐🌐🌐🌐Pillar #3B: Bretton Woods Organizations ...................................................................556
32.1 🌐🌐🌐🌐🌐 Bretton Woods → 1) World Bank, Washington, 1945, Jul................................557
32.1.1 🌐🌐🌐🌐🌐World Bank President? .....................................................................................558
32.1.2 🌐🌐🌐🌐🌐 World Bank: Controversy?..............................................................................558
32.2 🌐🌐🌐🌐🌐 (Non-Bretton Woods) → Multilateral Development Banks .............................558
32.2.1 BRICS Bank and AIIB...........................................................................................................558
32.2.2 🌐🌐🌐🌐🌐Multilateral Development Banks → Others ..................................................560
32.3 🌐🌐🗡🗡🗡Bretton Woods → 2) IMF, Washington, 1945, Dec ............................................560
32.3.1 🌐🌐🌐🌐🌐🛐🛐IMF bailout loans to Pakistan (2019) and SriLanka (2022) .................561
32.4 🌐🌐🌐🌐 Theories of International Trade .....................................................................................562
32.4.1 Mercantilist Theory: �ापारी �सद्धांत .........................................................................................562
32.4.2 Adam Smith’s Theory of Absolute Cost Advantage (1776) ...........................................563
32.4.3 David Ricardo’s Theory of Comparative/Relative Cost Advantage (1817) .................563
32.4.4 Heckscher and Ohlin’s Factor - Proporations Theory (1919) ......................................563
32.5 🌐🌐🌐🌐🌐Bretton Woods → 3) GATT → WTO (Geneva).................................................564
33 🌐🌐🌐🌐🌐 World Trade Organization: �व� �ापार सं गठन ....................................................................564
33.1 🌐🌐🌐🌐🌐 WTO → functions (�ज�ेदा�रयां या कायर्) .....................................................................565
33.1.1 🌐🌐🌐🌐🌐🌐: Tariff Barriers against international trade....................................................565
33.1.2 🌐🌐🌐🌐🌐🌐 Non-Tariff Barriers against international trade ...........................................566
33.2 🌐🌐🌐🌐🌐: 📝📝 WTO → Notable Agreements .......................................................................566
33.3 🌐🌐🌐🌐⚔🧔🧔 WTO Disputes involving India .........................................................................568
33.3.1 🌐🌐🌐🌐⚔ 🌞🌞🌞🌞 India’s Solar procurement preference..............................................568
33.3.2 🌐🌐🌐🌐⚔ 🐥🐥🐥🐥 Ban on American Poultry ..................................................................568
33.3.3 🌐🌐🌐🌐⚔📯📯📯📯 India’s export incentive schemes .......................................................569
33.3.4 🌐🌐🌐🌐⚔📯📯📯📯 WTO’s Appellate Body (AB) Crisis ..................................................569
33.3.5 🌐🌐🌐🌐⚔📯📯📯📯 WTO Multiparty Interim Arbitration (MPIA) mechanism ..........569
33.4 🌐🌐🌐🌐🌐: 🤝🤝 WTO negotiations / summits / packages ......................................................570
33.4.1 🤝🤝 � Most Favoured Nation (MFN)- अ�ा�धक वरीयता वाले देश ......................................570
33.4.2 🤝🤝 � Least Developed Countries (LDC: सबसे से कम �वक�सत देश) ..................................571
33.4.3 🤝🤝 � Doha Development Round (Qatar 2001) ...........................................................571
33.4.4 🤝🤝🤝 � Food subsidies & peace clause: खाद्य �रयायत� और शा�� अनु�ेद/उपधारा ..............572
33.4.5 🤝🤝🤝 � Food subsidies: Cairns Group .......................................................................573
33.4.6 🤝🤝 � Bali Package & Trade Facilitation Agreement / TFA (2013) ...........................574
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 553
33.4.7 🤝🤝 � Nairobi Package & SSM (2015) ............................................................................574
33.4.8 🤝🤝 � Buenos Aires Summit #flop (2017) .....................................................................575
33.4.9 🤝🤝 � Kazakhstan Summit #cancelled (2020-June) .....................................................575
33.5 WTO Summit 2022 @Geneva→ Notable Outcomes...............................................................576
33.6 WTO Fish Subsidies (म� स��डी पर समझौता) ...............................................................................576
33.7 🤝🤝Trade Agreements Types: �ापार समझौते के प्रकार .....................................................................577
33.7.1 FTA: India Mauritius FTA/CECPA, 2021 (मॉ�रशस के साथ मु� �ापार समझौता) ..................579
33.7.2 🤝🤝FTA: India UAE CEPA, 2022 .......................................................................................579
33.7.3 🤝🤝FTA: India Australia ECTA (आ�थक सहकार और �ापार समझौता) .....................................579
33.7.4 Interim (early harvest) trade agreement (शादी से पहेले सगाई) ..............................................580
33.8 🛒🛒⛷📝📝Free Trade agreements → TPP, TPP11, TATIP, IPEF, RCEP ............................581
33.8.1 🛒🛒⛷📝📝 Trans Pacific Partnership (TPP: ट�ांस पै�सिफक साझेदारी) #FAIL .......................581
33.8.2 🛒🛒⛷📝📝 TPP-11 or CPTPP .............................................................................................581
33.8.3 🛒🛒⛷📝📝 Transatlantic Trade and Investment Pact (TTIP) .......................................581
33.9 🌐🌐🌐🌐🌐🌐Indo-Pacific Economic Framework (IPEF) .............................................................582
33.10 🛒🛒⛷📝📝 Regional Comprehensive Economic Partnership (RCEP) .............................583
33.10.1 � Introduction to RCEP ...................................................................................................583
33.10.2 🧔🧔🧔🧔✍ RCEP: Why didn't India join in 2019-Nov? (भारत म� �ों ह�ा�र/द�ख़त नहीं िकए)
583
33.10.3 � RCEP: Counterview: India made a mistake by not joining (भारत से गलती �ई है)......584
33.10.4 � RCEP: Conclusion? (�न�षर्) .........................................................................................585
33.10.5 📘📘 📘📘 Economic survey 2015-16: Observations abt India’s Trade Agreements .......585
33.10.6 ES20: Observations abt India’s Trade Agreements (आ�थक सव��ण) ................................585
33.10.7 Budget-2020: FTA ‘rules of origin’ (उ��� के �नयम) ............................................................586
33.10.8 📝📝 Commerce Ministry: Certificate of Origin (उदगम प्रमाण पत्र) .................................586
33.10.9 🛒🛒⛷📝📝 Trade agreements losing shine → NAFTA & SAFTA ................................586
33.11 🛒🛒⛷📝📝India’s trade agreements .......................................................................................587
33.12 🌐🌐🌐🌐🌐 Burning issues in International trade .................................................................587
33.12.1 🌐🌐🌐🌐🌐Protectionism, Trade war: सं र�णवाद, �ापार युद्ध ................................................587
33.12.2 👻👻👻👻👻👻👻: 🔫🔫🔫🔫Protectionism → Medicine and Defence ................................588
33.12.3 👻👻👻👻👻👻👻: 🛒🛒🛒🛒 Protectionism → Indian Govt procurement (सरकारी खरीद) ..588
33.12.4 🌐🌐🌐🌐🌐🎃🎃USA’s Special 301 report ............................................................................588
33.12.5 🌐🌐🌐🌐🌐🎃🎃USA’s Generalized System of Preferences (GSP) list.............................589
33.12.6 🌐🌐🌐🌐🌐🎃🎃Global System of Trade Preferences.....................................................589
33.12.7 🧔🧔🧔🧔🧔🧔 India-USA limited trade deal (सी�मत �ापार सौदा) ............................................589
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 554
33.12.8 🌐🌐🌐🌐🌐How does US/EU/China trade war impact India? .......................................589
33.12.9 ��BREXIT = BRITAIN EXIT.......................................................................................590
33.12.10 🌐🌐🌐🌐 India UK Roadmap 2030 (Held in 2021-May) ...............................................592
34 🌐🌐🌐🌐Other Notable Groupings related to economy ......................................................................592
34.1 🌐🌐🌐🌐🌐🌐🌐🌐Groupings: Indian subcontinent .......................................................................592
34.1.1 🌐🌐🌐🌐🌐🌐🌐🌐Mekong- Ganga Cooperation (2000) .......................................................593
34.2 🌐🌐🌐🌐🌐🌐 Groupings: ASEAN vs SCO .....................................................................................593
34.2.1 ☪🤝🤝Afghanistan 6+2+1 group for redevelopment of Afghanistan ..........................594
34.3 🌐🌐🌐🌐🌐🌐 Groupings: Ocean-rim walla....................................................................................594
34.4 🌐🌐🌐🌐Groupings: BRICS, OECD, OPEC, G20 & JAI .............................................................595
34.5 📝📝📝📝⛷ G20: Osaka Declaration ............................................................................................597
34.5.1 📝📝📝📝⛷🚫🚫🚫🚫Osaka declaration: why India refused to sign ...................................597
34.5.2 ✍Conclusion (�न�षर्)..........................................................................................................597
34.6 🌐🌐🌐🌐🌐🌐Groupings led by Gora (Whites) → G7 and D10 ..................................................598
34.6.1 🌐🌐🌐🌐G7 - Group of Seven (1975) ....................................................................................598
34.6.2 🌐🌐🌐🌐🌐🌐 D10: 5G club proposed by UK (2020) ............................................................598
34.6.3 🌐🌐🌐🌐🌐🌐Minerals Security Partnership (MSP: अ�त मह�पूणर् ख�नजों के �लए भागीदारी/सहयोग)
598
34.7 🌐🌐🌐🌐☪Groupings: Middle East: GCC vs OIC.....................................................................599
34.7.1 ☪🤝🤝🤝🤝Abraham Accords (2020-Sept) .......................................................................599
34.7.2 🌐🌐🌐🌐🌐🌐I2U2: Middle Eastern / West Asian QUAD (2021-22) .................................599
34.8 🌐🌐🌐🌐 Misc groupings / org → World Economic Forum (1971)........................................599
34.9 🌐🌐🌐🌐 Misc groupings / organizations Others ........................................................................600
34.10 🌐🌐🌐🌐🌐🌐 Export control / Non-Proliferation regimes .....................................................600
34.10.1 🔫🔫🔫🔫🔫🔫USA Exit from Arms Treaties ..........................................................................601
34.10.2 🎺🎺✍ Mock Questions for Mains GSM2 (Intl. Org Related to Economy)................601
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 555
32 🌐🌐🌐🌐🌐PILLAR #3B: BRETTON WOODS ORGANIZATIONS
⇒ Conference was held in Bretton Woods town, New Hampshire in USA after the WW2 (1939-45)
to restore the global economy. (स�ेलन से तीन अंतररा��ीय सं �ानों का ज�)
⇒ Total 44 nations participated, incl. India. It proposed 3 international institutions:
Outcome Relationship with United Nations (UN)
1) International Bank for Reconstruction and These two are considered “Specialized Agencies
Development (IBRD), commonly known as of UN (सं यु� रा�� क� �व�श� एज��सयां)”
World Bank.
2) International Monetary Fund (IMF).
3) (Proposed) International Trade WTO is considered “Related organization of
Organization (ITO). But could not UN (सं बं�धत सं गठन)” because it doesn’t fulfil all
materialize due to American opposition. requirements of UN charter on specialized
Instead, nations later setup GATT → WTO agencies
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 556
32.1 🌐🌐🌐🌐🌐 BRETTON WOODS → 1) WORLD BANK, WASHINGTON, 1945, JUL
⇒ �व� ब�क originally focused on reconstructing war-torn European countries. After 1950s focusing
on poor countries of Asia and Africa.
⇒ World Bank = IBRD + IDA.
⇒ World Bank Group = comprises of 5 institutions, namely
1) International Bank for Reconstruction and
Development (IBRD) Gives development loans with interest.
अंतररा��ीय पुन�नमार्ण और �वकास ब�क
Assists the poorest countries via interest-free
2) International Development Association (IDA)
loans (= “Concessional Loans: �रयायती ऋण” or
अंतररा��ीय �वकास सं घ
“soft loans”).
3) International Finance Corporation (IFC) supports enterprise of developing countries.
अंतरार्ष्ट�ीय �वत्त �नगम Known for its Masala Bonds. (Ref Pillar1C)
offers (foreign) investors insurance against non-
4) Multilateral Investment Guarantee Agency
commercial risk (such as political instability,
(MIGA)
regime change etc.). This helps 3rd world
ब�प�ीय �नवेश प्रत्याभू�त एज�सी
nations attract foreign investment.
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 557
Helps in dispute resolution related to foreign
5) International Centre for the Settlement of
investment / foreign companies in 3rd world
Investment Disputes (ICSID)
countries. India is not a member of this
�नवेश सं बं धी �ववादों के �नपटान का अंतरार्ष्ट�ीय के न्द्र
organization.
🗳🗳Voting power?
⇒ In the first four organizations, voting power depends on the share capital provided by a country.
USA highest, followed by various European giants.
⇒ 5th is “dispute settlement” body, so concept of ‘each country’s voting power’ does not apply
32.1.1 🌐🌐🌐🌐🌐World Bank President?
⇒ Since USA and European powers collectively command large shareholding in World Bank &
IMF, so their informal arrangement is- USA’s favorite will be picked as World Bank chief, while
European countries’ favorite will be picked as IMF Chief.
⇒ New Chief : David Malpass (USA). | | 2019: SBI Managing Director Anshula Kant has been
appointed as the Managing Director and Chief Financial Officer of the World bank
⇒ �World Bank is known for Reports? World Development Report, Ease of doing business
Index (More in Pillar4B), Remittance & Migration Report, Global Economic Prospects report
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 558
BRICS Bank: New Development AIIB: Asian Infrastructure Investment
Bank (NDB) नई �वकास ब�क Bank ए�शयाई अवसं रचना �नवेश ब�क
originally each of above founding
members had 20% shareholding,
later diluted to 19.42% after
addition of some new members.
Voting power 30 March 2022: new shareholding Based on share capital contributed:
Shareholding pattern to be- ⇒ China largest shareholding ~27%,
pattern - Brazil Russia India China South
⇒ India second largest shareholding~7%.
Africa (19.42% each)
- + Bangladesh (1.83%) ⇒ Asian countries control about 75%
- + UAE (1.08%) shareholding
- + Uruguay and Egypt: added as ⇒ 25% with non-Asian nations.
prospective members but not
yet have shareholding.
All member countries of the United
Nations can become members of
the bank, but BRICS founding
nations' voting power can never be
less than 55%.
HQ Shanghai, China Beijing, China
🔪🔪🔪🔪 Corona $1 billion. (2020-Apr) $750 million (2020-June)
loan2India
- BRICS member have also setup $100 billion BRICS Contingent Reserve Arrangement: (आक��क
�रजवर् �व�ा) to help members during BoP crisis- similar to IMF.
- BRICS nations also planning to setup their BRICS payment system parallel to SWIFT (ref: Pill1:
NPA handout), and BRICS rating agency (ref: 1C: SEBI-Share Market)
🔠🔠❓MCQ. Which one of the following countries is not a founding member of the New
Development Bank? (CDS2019-II) (a) Brazil (b) Canada (c) Russia (d) India
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 559
32.2.2 🌐🌐🌐🌐🌐Multilateral Development Banks → Others
BIS: Bank for ⇒ 1930: setup in BASEL, Switzerland.
International ⇒ Made up of 60 countries’ Central Banks. Its committee on banking
Settlements supervision set norms in 1988 (I), 2004 (II), 2011(III) to ensure
अंतररा��ीय �नपटान के �लए ब�क
global financial stability.(Ref: Pill1:NPA handout).
African Development ⇒ 1964: setup in Abidjan in Ivory Coast
Bank ⇒ India is a member, also gets loans.
Asian Development ⇒ 1966: setup in Manila, Philippines
Bank (ADB) ⇒ India is a member, also gets loans.
ए�शयन �वकास ब�क
⇒ �� Corona loan2India $1.5 billion (2020-Apr) then more
loans for various projects but �����
European Bank for ⇒ 1991: setup at London.
Reconstruction & ⇒ India became member (shareholder) in 2018. India will not be
Development (EBRD)
eligible for loans from EBRD but India can initiate joint loan
पुन�नमार्ण और �वकास के �लए
proposals for Asian, African, European nations for its soft-
यूरोपीय ब�क
diplomacy. (usually India does it for winning poor nations
friendship. so they vote in favour of India during Kashmir-
Arunanchal etc resolutions in UN General Assembly)
IDEAS ⇒ 2005: Indian Development and Economic Assistance Scheme
भारत द्वारा �वकासशील देशों को (IDEAS) to give loans to Developing countries. Ministry of
�वकास और आ�थक सहायता के
External Affairs selects the loan-projects → FinMin's Dept of
�लए कजर् म� पैसा देना।
Economic Affairs will release the loan ₹₹ to the recipient country.
आ��नभर्र भारत म� नई शतर् क�
लाभाथ� देश ने कजर् क� रकम के ⇒ �Atma-Nirbhar 3.0= EXIM Bank to give loans to [Lines of
तीन चौथाई िह�े म� से भारत से Credit (LOC)] to developing nations under IDEAS scheme.
ही व�ु और सेवा खरीदनी होगी ⇒ These loans will be given Road-Railways, power, auto
components, sugar projects. WITH the condition that the
borrower nation must use a minimum 75% of the loan amount for
importing goods and services from India.
32.3 🌐🌐🌐🌐🌐BRETTON WOODS → 2) IMF, WASHINGTON, 1945, DEC
⇒ International Monetary Fund (IMF) helps in global currency exchange stability, helps against
balance of payment crisis. (अंतरार्���य मुद्रा कोष: मुद्रा �व�नमय दर ��रता भुगतान सं तुलन सं कट म� मदद )
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 560
⇒ Acts as a reservoir of the currencies of all the member countries, from which a borrower nation
can borrow the currency of other nations- using the Special Drawing Rights (SDR) mechanism.
(Ref: Previous Handout on Currency Exchange.)
⇒ IMF important decisions need to be passed with 85% majority. USA has 16.52% voting power so
it can effectively block/veto it. (अमे�रका हर सुधार प्र�ाव को रोक सकता है)
⇒ What is SDR? (More in �Pillar#3A)
⇒ IMF Chief?
o 2019: Christine Lagarde (France) resigned to become chief of European Central Bank
(ECB, HQ Frankfurt, Germany). Then,
o Kristalina Georgieva (Bulgarian economist, previously CEO of the World Bank)
becomes the second woman IMF Chief after Christine Lagarde, for five years tenure.
⇒ IMF’ Chief Economist (CE)? Gita Gopinath, an Indian-American economist, she became the
first woman to be the Chief Economist of IMF (2019 to 2022-Jan). Previously Raghuram Rajan
has also served in this position. (मु� अथर्शा�ी)
⇒ 2022: Gita Gopinath promoted to the post of First Deputy Managing Director (FDMD).
⇒ 📚📚Notable reports? Global Financial Stability Report, World Economic Outlook
⇒ United Nations (UN) has 195 members, whereas IMF has 189 members. But pursuing this type
of KBC GK = poor cost:benefit for UPSC #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
⇒ IMF given them loans. Associated tools/loan-types/keywords are: Rapid Financing Instrument
(RFI) , rapid financial assistance, Extended Fund Facility (EFF) etc. What do they mean? How
are they different from each other?= NOT IMP. Enough to know that these are loans by IMF.
⇒ Usually, such IMF-loans given with following conditions: (शत� के अधीन कजर् िदया जाता है)
⇒ Nation required to reduce the fiscal deficit → � have to cut down food-fuel subsidies given to
Poor. Freeze on govt recruitment, freeze on military spending → negative implications on the
welfare and national security. (राजकोषीय घाटे को कम करने क� शतर् �जसके चलते गरीबों क� स��डी म� कटौती, सरकारी
नौक�रयों म� कटौती, सै�/र�ा बजट म� कटौती)
⇒ Nation required to privatise the loss-making public sector enterprises → � poor may be
deprived of cheap goods and services (e.g. BSNL prepaid plan vs Airtel prepaid plan) (घाटे म� चल
रही सरकारी कं प�नयों का �नजीकरण करने क� शतर् �जसके चलते गरीबों को स�ी चीज़� �मलना बं ध।)
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 561
⇒ nation required to “open up” the economy e.g. relaxed FPI/FDI, Capital account convertibility
etc → � may have negative implications as we learned in Pillar3A (अथर्तंत्र को खुला करने क� शतर्-
बेरोकटोक �वदेशी �नवेश और मुद्रा प�रवतर्नशीलता क� शतर्- हालाँिक इससे कु छ चुनौ�तयां भी पैदा हो सकती है।)
�Points to Reflect: while Economic Survey kept justifying higher level of fiscal deficit for counter-
cyclic fiscal policy (Ref: Pillar#2D), but looking at the example of Pakistan, we must control our fiscal
deficit and improve our balance of payment, lest we get into similar problems. (यध�प/हालांिक आ�थक
सव��ण तकर् देता है क� दे-धनाधन कजार् लो, लेिकन पािक�ान क� हालत देखते �ए, हम� अपने राजकोषीय घाटे को कम करना चािहए और
भुगतान सं तुलन को मजबूत- तािक पािक�ान श्रीलं का जैसी दयनीय/ ग़ुलाम ���त न हो.)
🔠🔠❓MCQ. Rapid Financing Instrument” & “Rapid Credit Facility” are given by _ _ . (Pre-2022)
(a) Asian Development Bank (b) International Monetary Fund
(c) United Nations Environment Programme Finance Initiative (d) World Bank
🔠🔠❓MCQ. Who publishes 'Global Financial Stability Report'? (Asked in UPSC-Pre-2016)
a) European Central Bank
b) International Monetary Fund
c) International Bank for Reconstruction and Development
d) Organization for Economic Cooperation and Development
🔠🔠❓MCQ. Who publishes 'World Economic Outlook'? (Asked in UPSC-Pre-2014)
(a) IMF (b) UN Development Programme (c) World Economic Forum (d) World Bank
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 562
- Therefore, any import was seen as loss of nation’s wealth in gold payment.
- So, colonial powers tried to flood their colonies with readymade goods but always prevented
entry of goods in their home country. (औप�नवे�शक श��याँ भारत को गुलाम बनाने लगी)
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 563
⇒ Labour-Abundant Country will export labour-intensive goods. E.g. India exporting cotton (and
imports jet planes from USA). �ोंिक कपास के उ�ादन म� पूंजी कम और मजदू र �ादा चािहए, भारत के पास मजदू र
�वपुल मात्रा म� है.
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 564
33.1 🌐🌐🌐🌐🌐 WTO → FUNCTIONS (�ज�ेदा�रयां या कायर्)
Today all countries try to protect domestic industries against foreign imports by creating two types
of barriers against the international trade:
33.1.1 🌐🌐🌐🌐🌐🌐: Tariff Barriers against international trade
Tariff Barriers: शु� बाधाएं : Increasing the taxes, duties, cess, surcharge, on imported goods and
services e.g. Trump imposed 25% custom duty on imported steel.
CVD Anti-Dumping Duty: प्र�तपाटन शु�
two scenarios when foreign goods will appear - If China exports goods to India at a price below
cheaper to Indians than domestic goods: their normal price in domestic Chinese market
- If foreign country is giving subsidies to their or at a price below their cost of production-
exporters AND / OR then it is termed as “Dumping”
- If Indian government imposes higher - Then, India's commerce ministry →
amount of taxes, cess or surcharge on the Directorate General of Trade Remedies : �ापार
locally manufactured products उपचार महा�नद�शालय (DGTR) investigates →
recommends Finance ministry to impose
THEN Indian Govt tries to protect local “Anti-Dumping Duty” on such imported
(domestic) industry by imposing items.
Countervailing Duty (CVD: प्र�तकारी शु�), - E.g. $185 on every one tonne of imported
Special Countervailing Duty, Additional Chinese Steel, Then its prices will become
Customs Duty on imported items on imported equivalent to India Steel, thus Indian steel
items. Internal difference NOTIMP industry will be protected.
⇒ Commerce Ministry → DG foreign trade (DGFT) launched ‘ARTIS’ portal (Application for
Remedies in Trade for Indian industry and other Stakeholders). Applicants can file complaints
against dumping.
⇒ �Budget-2020: Purified Terephthalic Acid (PTA) is used in manufacturing (synthetic) textile
fibres and yarns. Cheap PTA = boost to Indian textile sector, so we’ll no longer charge Anti-
dumping duty on it.
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 565
33.1.2 🌐🌐🌐🌐🌐🌐 Non-Tariff Barriers against international trade
गैर शु� बाधाएं : if USA does not increase import taxes but plays other tricks like:
1. Subsidies to domestic industries: Giving free electricity to Detroit car manufacturers. OR USA
govt. giving tax benefits & free car-insurance to USA residents for buying American made cars.
2. Public Procurement: सावर्ज�नक खरीद/प्रा�� : Making rule that only American companies can fill up
tender for supplying stationery, school bags etc. in government schemes.
3. Technical Barriers to Trade: �ापार के �लए तकनीक� बाधाएं : e.g. imported mango must have 0%
pesticides residue, imported cars must have airbags for each passenger.
4. Quota system: e.g. not >50 metric tonnes of steel can be imported from a single foreign country.
WTO aims to reduce such tariff and non-tariff barriers to encourage international trade through its
agreements and dispute settlement body.
33.2 🌐🌐🌐🌐🌐: 📝📝 WTO → NOTABLE AGREEMENTS
Objective 📝📝Agreement(s)
⏬ tariff barriers 1. 🚗🚗 General Agreement on Tariffs and Trade (GATT) for goods- शु� और
�ापार पर सामा� समझौता
शु� बाधाएं
2. 📡📡 General Agreement on Trade in Services (GATS): सेवाओं के �ापार पर
सामा� समझौता
⏬ non tariff 1. 🚗🚗 For non-food: Agreement on Technical Barriers to Trade (TBT: �ापार
barriers म� तकनीक� बाधाय�) e.g. talcum powder should not have more than x% of
asbestos.
गैर शु� बाधाएं 2. 🌽🌽 For food: Agreement on Sanitary and Phytosanitary Measures (SPS:
��ता और पादप उपाय) e.g. ‘x’ food item must not have more than y%
pesticides residue.
⏬ non tariff 1. 🚗🚗 For non-food: Subsidies and Countervailing Measures (SCM:स��डी और
barriers → काउं टरवे�लंग उपाय)
Subsidies
2. 🌽🌽 For food: Agreement on Agriculture (AoA: कृ �ष पर समझौता)- which
aims to regulate the subsidies on agriculture through its ‘box’ mechanism.
a. 📦📦 Subsidies that are classified in Green & Blue box category- are
allowed (e.g. Research, Cattle-Vaccination).
b. 📦📦 Amber (ए�र) box category subsidies will be subjected to
quantitative limits (e.g. Fertilizer, Electricity, Diesel, MSP.)
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 566
Misc. measures to 1. Trade-Related Aspects of Intellectual Property Rights (TRIPS: बौ�द्धक सं पदा
encourage global अ�धकारों के �ापार-सं बं�धत पहलू) → related topics: Compulsory licensing,
trade, protect
pharma-patents. 📑📑More in Pillar4B: IPR
environment
2. Trade-Related Investment Measures on Foreigners. (TRIMs: �वदे�शयों पर
�ापार से सं बं �धत �नवेश के उपाय)- it applies to foreign investment norms related
to goods only. Doesn’t apply on foreign investment norms on services.
3. WTO's Agreement on Fisheries Subsidies (AFS-2022): to curb 'harmful'
subsidies that promote overfishing.
4. Plurilateral agreements (ब�प�ीय समझौते): They are not signed by all the
members of WTO e.g. Agreements on aircrafts, dairy product, bovine
meat, Information Technology Agreement (ITA) सभी सद� रा��ो ं ने इस पर
ह�ा�र नहीं िकए
🔠🔠❓ With reference to Trade-Related Investment Measures (TRIMS), which of the following
statements is/are correct? (UPSC-Prelims-2020)
1. Quantitative restrictions on imports by foreign investors are prohibited.
2. They apply to investment measures related to trade in both goods and services.
3. They are not concerned with the regulation of foreign investment.
Ans Codes: [a) 1 and 2 only [b) 2 only [c) 1 and 3 only [d) 1, 2 and 3
🔠🔠❓MCQ. In the context of which of the following do you sometimes find the terms 'amber box,
blue box and green box' in the news? (Asked in UPSC-Pre-2016)
(a) WTO affairs (b) SAARC affairs (c) UNFCCC (d) India-EU negotiations
🔠🔠❓MCQ. The terms 'Agreement on Agriculture', 'SPS Agreement and 'Peace Clause' are in the
context of affairs of the _ _ _ (Asked in UPSC-Pre-2015)
(a) Food and Agriculture Organization (b) UN Framework Conference on Climate Change
(c) World Trade Organization (d) United Nations Environment Programme
🔠🔠❓MCQ. TRIPS Agreement pertains to (Asked in UPSC-CDS-2017-I)
(a) international tariff regime (b) intellectual property protection
(c) international practices on trade facilitation (d) international taxation of property
🔠🔠❓MCQ. Which of the following are the main functions of WTO? (UPSC-IES-2020)
1. To organize meetings of members to arrive at trade agreements covering international trade.
2. To ensure member countries conduct trade practices as per agreements signed by the members.
3. To provide a platform to negotiate and settle disputes of international trade between members.
codes: (a) 1 and 2 only (b) 1 and 3 only (c) 2 and 3 only (d) 1, 2 and 3
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 567
33.3 🌐🌐🌐🌐⚔🧔🧔 WTO DISPUTES INVOLVING INDIA
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 568
33.3.3 🌐🌐🌐🌐⚔📯📯📯📯 India’s export incentive schemes
⇒ 2018: USA complained to the WTO's Dispute Settlement Body (DSB: �ववाद �नपटान �नकाय) that
India is running various export incentive schemes such as:
⇒ Merchandise Export from India Scheme (MEIS: भारत से �ापा�रक �नयार्त के �लए योजना),
⇒ Export Oriented Units (EOU: �नयार्तो�ुख इकाइयाँ),
⇒ Electronics Hardware Technology Parks (EHTP),
⇒ Special Economic Zone (SEZ: �वशेष आ�थक �ेत्र)
⇒ Export Promotion Capital Goods (EPCG: �नयार्त सं वधर्न के �लए पूंजीगत माल).
⇒ Under above schemes India gives tax reliefs / subsidies to its exporters. So, it is creating tariffs
and non-tariff barriers against American companies, & thus India is violating the WTO
Agreement on Subsidies and Countervailing Measures (SCM: स��डी और प्र�तकार उपायों पर समझौता).
⇒ India’s position is “We’ll phase out these schemes after 8 years from 2017 (=2025). Since we are
a developing country, we should be given such relaxed deadline under SCM agreement.”
⇒ 2019-Oct: WTO’s Dispute Settlement Body (DSB) ordered in favour of USA and ordered India
to stop such schemes within the next 90-180 days.
⇒ 2019-Nov: India goes to WTO Appellate Body (अपीलीय �नकाय) to undo DSB’s order.
⇒ 2020-Mar: Indian Commerce Minister says, “we will not implement WTO's DSB’s orders,
because the appellate body (AB) is not functioning, so our appeal is pending.”
⇒ 2021-Dec: WTO ordered India to stop sugar subsidies (More in Pillar4A: Agriculture)
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 569
33.4 🌐🌐🌐🌐🌐: 🤝🤝 WTO NEGOTIATIONS / SUMMITS / PACKAGES
33.4.1 🤝🤝 � Most Favoured Nation (MFN)- अ�ा�धक वरीयता वाले देश
(कु ल �मलाकर प्र�ेक देश ने बाक� देशो के साथ वही �वहार करना चािहए जो वो अपने अ�त �प्रय �मत्र देश के साथ कर रहा है)
⇒ Suppose India levies 0% customs duty/import tax on imported coal from Australia & Australia
levies 0% import tax on Indian shoes.
⇒ Then implies Australia has become the Most Favoured Nation for India (as far as the coal trade is
concerned).
⇒ WTO agreements require that whatever treatment is being given to the Most Favoured Nation,
must also be extended to all other member countries. A member should not discriminate
between its trading partners- provided there is mutual-reciprocity.
⇒ So even imported Chinese coal should be subjected to 0% import tax in India- but ONLY IF
there is reciprocity ke Indian shoes will be subjected to 0% import tax in China. (But, China may
not allow it, so India not bound to ⏬taxes on Chinese coal)
⇒ But in practice, MFN is not implemented in letter and spirit by the members.
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 570
⇒ 1996: India granted MFN status to Pakistan but Pakistan didn’t reciprocate (mainly) due to their
local textile industrialists’ lobby who feared competition from Indian textile imports.
⇒ 2019-Feb: India withdrew MFN status for Pakistan, following Pulwama attack on CRPF
personnel. India also ⏫customs duty by 200% on goods originating from Pakistan.
⇒ Since Pak not giving India MFN treatment. So, there is no ‘legal-compulsion’ on India to give
them MFN status. even if Pak complained to WTO’s dispute redressal panel, it’ll lose the case.
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 571
✓ 1st world should liberalize their trade regulation further so that 3rd world’s goods and services
can enter more easily in the first world’s domestic markets. अमरीक� बाजार म� हमारे उ�ादों पे कम टे� लगे
✓ 3rd world should be allowed to keep various barriers to slow down the entry of 1st worlds
agriculture, manufactured goods and service exports in their domestic market. �ानीय उद्योगों को
बचाने के �लए हम अमरीका के �खलाफ �ापार-बाधाओं को कायम रख�गे।
✓ 1st world shd give financial + technical assistance to 3rd world. आ�थक व तकनीक� सहायता �मले
Obviously, USA and European countries would not like this. So, Doha round of negotiation
continues without conclusion. And in future summits the USA/EU would want WTO officials to
begin negotiations on the new matters lucrative to their MNCs (like ICT, E-Commerce) whereas 3rd
world nations will continue to insist that Doha round negotiations must be concluded first.
33.4.4 🤝🤝🤝 � Food subsidies & peace clause: खाद्य �रयायत� और शा�� अनु�ेद/उपधारा
Under WTO’s Agreement on Agriculture (AoA), 1st world and 3rd world countries are required to
limit their food-subsidies to 5% and 10% respectively to the value of their agriculture production.
⇒ But, in absolute quantitative terms USA’s 5% will be much bigger than India’s 10% → 1st world
countries are able to give larger amount of food subsidies to their farmers → export them to 3rd
world countries @cheap price, and ruining local farmers.
⇒ Further, India has a large population of poor farmers who require Govt support in the form of
subsidies & procurement at Minimum support prices (MSP: �ूनतम समथर्न मू�) More in Pill#4A.
⇒ India also has a large number of malnourished poor families who need subsidized food grains
under National Food Security Act (NFSA खाद्य सुर�ा अ�ध�नयम/कानून) More in Pill#6.
⇒ 2013: WTO ministerial conference at Bali (Indonesia) → India refused to sign any new
agreements until this food subsidy issue was resolved.
⇒ So, WTO Peace Clause → it gave temporary immunity to India and other developing countries.
(अ�ायी- बचाव/ अ�का�लक- प्र�तर�ा)
⇒ Basically, 3rd world nations can give any amt of subsidy for their food programs:
- (1) USA/Other countries cannot impose countervailing duty. प्र�तकारी शु� पर रोक
- (2) USA/Other countries cannot complaint to WTO about it. �शकायत पर गौर नहीं िकया जाएगा
⇒ 2020: India informed WTO that in rice production, we've crossed the 10% subsidy limit (in
2018-19). But as per Peace clause, we’ve immunity! हम को खुली छू ट �मली है.
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 572
33.4.5 🤝🤝🤝 � Food subsidies: Cairns Group
Agricultural exporting countries' group. Members: Argentina, Australia, Bolivia, Brazil, Canada etc.
20 nations. They want WTO members to ⏬/stop agri subsidies. India is not a member.
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 573
33.4.6 🤝🤝 � Bali Package & Trade Facilitation Agreement / TFA (2013)
Bali Package is the trade agreement / outcome resulting from the WTO ministerial conference (मं त्री
स�ेलन) 2013 @Bali, Indonesia. Its two significant components are :
1. Trade Facilitation Agreement (TFA: �ापार सु�वधा समझौता):
a. requires member countries to ⏬their bureaucratic delays, red tapes, inspector raj in
import-export of goods. (नौकरशाही, लाल फ़�ताशाही)
b. They’ve setup online portals where traders can seek permissions, pay fees, custom duties,
self declaration forms (like e-way bill) etc.
c. India & others ratified in 2016 → TFA became effective from 2017.
d. India set up a National Committee on Trade Facilitation (NCTF) under Cabinet
Secretary (IAS). Below him → a steering committee jointed headed by Revenue secretary
(IAS) and Commerce secretary (IAS). (�ापार सु�वधा पर रा��ीय स�म�त → सं चालन स�म�त)
2. Peace Clause on subsidies → explained in previous section.
Nairobi Package resulted from the WTO ministerial conference 2015 @Nairobi, Kenya →
1. We’ll extend the Peace Clause for another “x” years.
2. Members must stop the subsidy on Agriculture Exports: 1st world countries must comply
immediately while 3rd world countries given a relaxed deadline.
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 574
3. If there is a surge of cheap agro exports from 1st world to 3rd world, then 3rd world countries
will have the right to temporarily increase tariff / taxes on them, to protect their local farmers.
It’s called “ Special Safeguard Mechanism: �वशेष सुर�ा तं त्र (SSM).”
4. 1996 → Information Technology Agreement (ITA) plurilateral agreement (i.e. not signed by all
member nations) → It aims to abolish import export taxes on ~200 IT products. WTO
discussions to try to get more members sign this, so global IT-trade can increase. India signed in
1997 but could not benefit due to low capacity of local manufacturing. (हालांिक भारत म� ह�ा�र तो िकए
थे लेिकन हम� ब�त �ादा फायदा नहीं �आ �ोंिक हमारी कम्�ूटर हाडर्वेयर उ�ादन �मता ही कमजोर है)
5. Technical reforms to help the exports from Least Developed Countries (LDC).
🚩🚩🚩FAQ: why are you teaching a summit of 2017 when we are targeting 2023/2024/2025?
Ans. Because the tone of UPSC questions is usually, “What are the problem areas between
WTO/members.?” So you need to be aware what are the problem areas / unresolved matters.
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 575
33.5 🐠🐠WTO SUMMIT 2022 @GENEVA→ NOTABLE OUTCOMES
⇒ 1998: WTO members had agreed not to impose customs duties on electronic transmissions
(=also known as moratorium on e-commerce of data). Recent years, an exponential rise global
trade of electronic transmissions such as movies (NETFLIX), music (SPOTIFY), video games
(PUBG) and Ebooks (KINDLE) etc. So India and Africa wanted stopping this moratorium to
increase tax collection. But WTO continued it until March 31, 2024. (िड�जटल सं चार के आयात �नयार्त पर
सीमा शु� नहीं लगेगा 2024 तक। हालाँिक भारत और द��ण अफ़्रीका को एतराज़ है िक हमारी कर-आमदनी म� नुक़सान हो रहा है)
⇒ Corona vaccines/medicines ke IPR/Patent pe temporary waiver without the consent of the patent
holder for 5 years. So that 3rd world nations can more easily manufacture Corona
vaccines/medicines domestically. (कोरोना के िटके / दवाइयों का पेट�ट/बौ�द्धक सं पदा अ�धकार �जस कं पनी के पास है,
उस कं पनी क� अनुम�त �लए �बना भी, अ� कं प�नयां उसका उ�ादन कर पाएं गी। तािक स�े दामों पर ये दवाइयां उपल� हो।)
⇒ We’ll resolve the deadlock of Judges vacancies / appointment. We’ll setup a well-functioning
dispute settlement system by 2024. (�ायाधीशों के �र�/ख़ाली पदो को भर�गे। �ववाद �नपटान प्रणाली दु�� कर�गे.)
⇒ Fish Subsidies: WTO’s Agreement on Fisheries Subsidies (AFS): to curb ‘harmful’ subsidies that
promote overfishing. This will help ⬆ Blue economy — sustainable use of ocean resources for
economic growth. 😥😥 but some apprehensions/ discontent among members (REF Next section).
(म� उद्योग से पयार्वरण/ जैव-�व�वधता को हा�न करने वाली स��डी पर कटौती पाबं दी क� बात�)
Above is around 200 words note. Elaborate, give background, add linkages with taxation, food
security, SDG goals to drag it till 250 words. Further PHD NOT required.
🚩🚩🚩FAQ: What do above things mean, how are they different from each others? ANS. NOTIMP.
Sufficient to know ke WTO wants to stop over-fishing.
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 576
⇒ So, India wants them to stop first. (अ� देश जो भारत से �ादा म� स��डी दे रहे ह� उन पर �ादा स�ी से कारर्वाई
हो। भारत को अलग और �भ� िक� से देखा जाए। भारत पर ड�ूटीओ स�ी न िदखाएं )
�Conclusion: SDG Goal 14.6 requires countries to stop overfishing. WTO taken an appreciable
step with this new agreement but - 🤔🤔India has set a target of exporting marine products worth $14
billion by 2025. This fisheries subsidies restrictions could create obstacles. Third world country
should be given differential treatment. First action must be taken on the countries that have already
contributed a lot in overfishing. (सतत �वकास ल�ों म� बेरोकटोक मछली-पकड़ने के �ख़लाफ़ का पाबं दी का ल� भी है। इस
िदशा म� ड�ूटीओ ने एक प्रशं सनीय कदम उठाया है हालांिक भारत को कु छ प्रावधानो से ऐतराज है।)
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 577
iii. PHD over CEPA vs CECA = NOT IMPORTANT. Sufficient to know- CEPA
covers more areas than CECA. E.g. IPR, visa, investment, taxation etc.
⇒ Sometimes they come up with even more fancy names like i) CECPA = Comprehensive
Economic Cooperation and Partnership Agreement ii) ECTA (Economic Cooperation and
Trade Agreement). But pedantry over all such terms = NOT IMP for Exam.
3. 📝📝Customs Union (CU: सीमा शु� सं घ ): FTA in which members apply a common external tariff
(CET) for non- members. E.g. East African Community (EAC). Caribbean Community
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 578
(CARICOM, although according to some sources now it evolved into Common Union but that is
not imp. Location is imp.)
4. 📝📝Common Market (CM: सामा� बाजार): Customs union where factors of production
(capital/FDI, labour) can move freely amongst members e.g. MERCOSUR- S.America.
5. 📝📝Economic Union (EU: आ�थक सं घ): common market where member countries keep common
currency & tariff. Allow entry of goods, services, capital and labour among themselves with
minimum restrictions. They decide their fiscal policies and diplomatic policies through a
common parliament ‘European Parliament’, and their monetary policies through a common
central bank – ‘European Central Bank’.
33.7.1 FTA: India Mauritius FTA/CECPA, 2021 (मॉ�रशस के साथ मु� �ापार समझौता)
⇒ India Mauritius Free trade agreement: Comprehensive Economic Cooperation and Partnership
Agreement (CECPA) came into effect from 1st April 2021.
⇒ More than 300 Indian goods from agriculture textile electronics will get concessional customs
duties in Mauritius (300 से अ�धक भारतीय �नयार्त पर मॉ�रशस द्वारा सीमा शु� म� �रयायत)
⇒ More than 600 Mauritius goods will get Similar treatment in Indian market
�Aussie to⏬ taxes on ��India to⏬ taxes on Aussie �India kept these sensitive
Indian products products items OUT
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 579
Engineering goods, gems 0% customs duty on Coal, sheep Australian Dairy products,
and jewellery, leather, meat, wool, LNG, alumina, wheat, rice, sugar,
textiles, apparel, footwear- metallic ores,Avocados, onions, chickpeas, beef, apples, toys,
total 96% of India’s exports pistachios, blackberries, cashews, iron ore .
to Australia. blueberries, raspberries. Indian govt will not⏬
⏬Customs duty on – wine, taxes on above Aussie items.
almond, cotton, orange, lenthil etc
�This create 1 million+ �This will help Indian for energy �This will protect the
jobs in India security, cheap raw material local Indian industry
(रोज़गार सृजन /नौकरी �नमार्ण) (ऊजार् सुर�ा और स�ा क�ा माल भारत को (भारत सरकार ने ऑ��े�लया से आने
�मले) वाले कु छ ऐसे सं वेदनशील चीज़� जैसे िक
दू ध गे�ँ चावल चीनी इ�ािद को इससे
बाहर रखा है तािक भारत के िकसानों का
नुक़सान न हो)
⇒ �� Australian govt relaxed Work-visa norms for Indian graduates from STEM (Science,
Technology, Engineering and Mathematics).
⇒ �� faster approval to Indian medicines in Australian market (if such medicine is already
approved in Canada / European Union) (यिद भारत क� दवाई को कै नेडा/ यूरोपीय सं घ ने अनुम�त �मल चुक� है तो
ऑ��े�लया म� उसे ज�ी से अनुम�त दी जाएगी।)
⇒ � � double taxation avoidance agreement for specific category of IT companies. (More in
�Pillar#2B: Tax Avoidance) (सूचना प्रौद्यो�गक� से जुड़ी कं प�नयों पर दोहरे कराधान से मु�� इ�ािद)
⇒ � bilateral trade will ⏫ to $50 billion within 5 years and generate 1 million+ jobs in India.
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 580
33.8 🛒🛒⛷📝📝FREE TRADE AGREEMENTS → TPP, TPP11, TATIP, IPEF, RCEP
33.8.1 🛒🛒⛷📝📝 Trans Pacific Partnership (TPP: ट�ांस पै�स�फक साझेदारी) #FAIL
USA proposed free trade agreement among 12 countries: US, Japan, Malaysia, Vietnam, Singapore,
Brunei, Australia, New Zealand, Canada, Mexico, Chile and Peru.
– Aimed to have lower tariffs for participant countries, easier norms for labour, environment and
investment. भागीदार देशों के �लए टे�/करो म� कमी, श्रम, पयार्वरण और �नवेश के �लए आसान मानदंड।
– 2016: President Trump withdrew from the negotiation claiming, “TPP will take away jobs from
USA because companies will setup factories in Mexico where labour is cheaper, and then such
cheap products will be dumped in USA, yet we’ll not be able to impose heavy taxes on them.” So
TPP has become defunct.
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 581
pvt.MNCs are providing such essential services it’ll become unaffordable for many poor citizens.
सावर्ज�नक �ेत्र के उपक्रमों का �नजीकरण → बेरोजगारी
USA had been lobbying for TPP and TTIP because USA is disillusioned (मोहभं ग) with the WTO-
wherein India, China and other emerging economies have equal voting rights and have become more
assertive, so USA and its MNCs are not gaining much benefit out of WTO led agreements.
But, If TPP/TTIP materialized, it’d harm Asian economies exports towards US/EU so to compensate
that loss, Asian economies came up with their own idea RCEP….
India signed IPEF (Except Trade pillar), but problems: (भारत को ही चुनौती आ सकती है)
⇒ 😥😥1) Child Labour, environment standards, India’s hesitancy over Genetically Modified
crops. (बाल मज़दू री, पयार्वरण सुर�ा, GM-फ़सलो म� अमरीका अपनी सोच भारत पर थोप सकता है)
⇒ 😥😥2) Myanmar not allowed to join due to its military regime. Later on USA could make some
rules imposing their vision of democracy / Myanmar-relationship on the member
countries. (�ांमार जैसे तानाशाह देशों के साथ भारत के �र�ों पर अमरीका अपनी सोच थोप सकता है)
⇒ 😥😥3) Anti-corruption / transparency / religious freedoms : USA government reports tend to
project India in a poor light. (अमरीक� सरकारी �रपोटर् म� भ्र�ाचार, धा�मक �तं त्रता के बारे म� भारत को नकारा�क �प से
तोला जाता है। तो अब इस नए ढांचे के नाम पर अमरीका हमको और खरी खोटी सुना सकता है।)
⇒ 😥😥4) India has not joined the trade pillar. (Perhaps fearing that American solar panel, poultry
etc industry may harm local Indian industry. REF: WTO Disputes)
Conclusion: IPEF can prove to be a catalyst for furthering India's economic interests in the Indo
Pacific region. provided that aforementioned challenges are nipped in the bud. (हाँ िह�-प्रशांत �व�ार म�
भारत के आ�थक िहतों को बढ़ाने म� मदद तो कर सकता है, िक�ु उ� चुनौ�तयों को ज� के समय ही दबा देना ज़�री।)
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 582
33.10 🛒🛒⛷📝📝 REGIONAL COMPREHENSIVE ECONOMIC PARTNERSHIP (RCEP)
33.10.2 🧔🧔🧔🧔✍ RCEP: Why didn't India join in 2019-Nov? (भारत म� �ों ह�ा�र/द�ख़त नहीं िकए)
India has >$100 billion trade deficit (�ापार घाटा) with RCEP countries. Out of this, China alone
accounts for $54 billion trade deficit. So India had following apprehensions about this agreement.
1) �� China: RCEP will result in increased flow of (Cheap) Chinese manufactured & electronic
goods → Indian MSME, automobile, steel industries harmed → So, India wanted separate levels
of customs duty against Chinese imports. चीनी सामान से भारत के उद्योग न� हो जाएं गे.
2) �� Dairy: India is among largest producers of milk but our specialty is mostly in the liquid
products whereas New Zealand is renowned for its solid products (milk powder, butter, cheese
etc.) These solid dairy products have a longer shelf-life & easier to transport over long-distance.
So if trade-barriers removed, India will be flooded with cheap dairy products → Indian farmers
& dairy entrepreneurs will suffer. भारतीय िकसान, डेरी उद्योग को �वदेशी आयत से खतरा.
3) ��Agriculture: Southern India’s plantation farmers afraid of cheaper Tea, Coffee, Rubber,
Cardamom and pepper from Malaysia, Indonesia & other RCEP nations.
4) �� So, India wanted an Automatic Trigger Safeguard Mechanism (ATSM: �चा�लत �ट�गर का सुर�ा
तं त्र) to protect itself from surge in imports. (e.g. � customs duty by “X%” on imported products
from “y” country if “z” situation occurs).
5) �� Ratchet Obligation (रैचेट दा�य�): It means a nation can not go back/undo its
commitments under the RCEP agreement. India wants certain exemptions here.
6) � Data localisation (डेटा �ानीयकरण): India wants all RCEP countries to have the rights to protect
data & prohibit cross-border data flow (सीमापार डेटा प्रवाह पर रोक) in the national interest. For this
reason, India even refused to sign G20 Osaka declaration on cross-border data flow.
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 583
2019-Nov: RCEP summit at Bangkok, Thailand. Here, Indian demands were not agreeable to the
majority of other members. So, India announced not to join the RCEP Agreement.
2020-Nov: 15 members signed it. India not yet signed. 2021: Singapore becomes 1st to sign.
India also had 500 जात के other objections but the maximum utility of RCEP topic is 250 words in the mains exam. For
that, we have gathered sufficient points. Further PHD useless.
33.10.3 � RCEP: Counterview: India made a mistake by not joining (भारत से गलती �ई है)
1) Competition brings excellence. Unless the Indian industrialists are subjected to the competition
from Asian giants, they will not invest further in the R&D, product upgradation, customer
service & customer satisfaction. ( श्रे�ता के �लए �धार् ज�री, हम� द�ख़त कर लेने चािहए थे)
2) If India doesn’t join RCEP, our products will not be able to compete in those nations because of
the higher taxes on Indian exports viz a viz other RCEP exports. (हम शा�मल नहीं होंगे तो बाक़� देश तो
शा�मल हो रहे ह�, तो उनका फ़ायदा हो जाएगा और हम रह जाएं गे।)
3) Indian manufacturers could import intermediate goods from RCEP countries at cheaper price
→ process them further → re-export towards Middle East, Africa and European. Thus, RCEP
could have provided the perfect opportunity for India to become integrated with the global value
chain (वै��क मू�वधर्न श्रृंखला म� िह�ा बन सकता है).
4) World Bank’s “A Glass Half Full: The Promise of Regional Trade in South Asia” report (2019)
estimates India’s potential trade in goods with South Asia at more than 60 billion, but at present
the actual trade is less than $20 billion- due to tariff barriers and connectivity issues. Hence,
RCEP is necessary for boosting India’s exports. (�नयार्त म� बढ़ोतरी म� मदद �मलेगी)
5) RCEP was still ‘less strict’ in comparison of India’s ongoing FTA negotiations with the USA or
EU. It was a low-hanging fruit, we should have signed it. (अमे�रका यूरोप के साथ प्र�ा�वत �ापार समझौते तो
इससे भी �ादा स� है, उनके मुक़ाबले आरसीईपी तो इतना ख़राब नहीं था। भारत ने द�ख़त/ह�ा�र करने चािहए थे।)
6) Economic Survey observed- India will have to eventually shed-off its ‘big but poor’ mentality.
International agreements always require some sort of bargaining / give and take. ('बड़े लेिकन गरीब'
मान�सकता से �नकलना होगा। अंतररा�ी� य समज़ौतो म� ताली दो हाथ से बजती है।)
7) 2022: Commerce Minister Piyush Goyal has chastised Indian industries: 1) FTAs are two-way
traffic. It cannot be one-sided access for Indian goods and services alone. Otherwise other
nations will not sign it, if we don’t allow their products in India. 2) Local Indian industry needs
to get more innovative and competitive. 3) Indian consumers should not be forced to buy
expensive / poor quality domestic products in areas where other countries’ are offering better
cheaper products. (वा�ण� मं त्री पीयूष गोयल ने भारतीय उधोयपतीयो को फटकार लगायी है िक अगर भारत सरकार �वदेशी
सामान पर टै� कम नहीं करेगी, तो �वदेश क� सरकार भारतीय सामान पर टै� कम नहीं कर�गी। इस�लए भारतीय कं पनीयो ने
�वदेशीयो से प्र�त�धार् के �लए तैयार रहेना होगा। भारत के ग्राहकों �ों भारतीय क�नी का महँ गा और घिटया �ा�लटी का सामान
ख़रीदेगे यिद उ�� �वदेशी माल िकफ़ायती दाम और अ�� �ा�लटी का �मल रहा हो।?)
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 584
33.10.4 � RCEP: Conclusion? (�न�षर्)
⇒ While it is true that India could have gained in certain export-sectors by signing RCEP
Agreement, but its present format did not fully address India's issues and concerns regarding the
protection of the domestic industry. हालांिक भारत को कु छ �नयार्त �ेत्रों म� फायदा हो सकता था, लेिकन वतर्मान प्रा�प
ने घरेलू उद्योग क� सुर�ा के सं बंध म� भारत के मुद्दों और �चंताओं को पूरी तरह से सं बो�धत नहीं िकया
⇒ So we’ve opted not to sign it. The remaining member-nations have planned to sign the RCEP
agreement in 2020 and they are trying to convince India to get onboard.
⇒ India has not permanently shut the doors for negotiation. In future we may sign it, if our
concerns are addressed. �ायी �प से दरवाजे बं द नहीं िकए ह�। यिद हमारी �चतं ाओं पर �ान िदया जाए तो भ�व� म� हम इस
पर ह�ा�र कर सकते ह�।
⇒ Meanwhile, 2022: ASEAN-India Trade in Goods Agreement (AITIGA) negotiations going on.
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 585
- � Electricity, transport, infrastructure problems (�बजली प�रवहन बु�नयादी सु�वधाओं क� कमी)
- � loan interest rate high for small businessmen (छोटे उद्योगप�तयों के �लए कज़र् लेना महँ गा)
⇒ However, the ES20 concluded overall India benefitted by signing FTAs.
(जापान, को�रया, श्रीलं का के साथ मु� �ापार समझौतों के बाद भारत के आयात क� प्र�तशत-वृ�द्ध, उसक� �नयार्त क� प्र�तशत-वृ�द्ध से
अ�धक है. इस�लए ये समझौते भारत के �लए लाभकारी नहीं है, ऐसा आलोचकों का मं त�. हालाँिक आ�थक सव��ण का मानना है क� कु ल
�मलाकर ऐसे सभी समज़ौतो से भारत को फ़ायदा �आ है।)
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 586
⇒ However, Trump felt NAFTA harms the American interests → 2018: He made a deal
with Mexico and Canada to replace NAFTA with a new agreement called United
States-Mexico-Canada-Agreement (USMCA).
SAFTA ⇒ South Asian Free Trade Area (द��ण ए�शयाई मु� �ापार �ेत्र) is a trade agreement of
SAARC nations- Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan
2004
and Sri Lanka.
⇒ 2016: India refused to attend SAARC Annual summit @Pakistan, after Uri-Attack. In
2019 India raised duties on Pakistani goods so SAFTA’s is losing its shine.
AFCFTA ⇒ African Union (AU) members have signed the African Continental Free Trade
2019 Agreement (AfCFTA) covering 54 nations.
33.11🛒🛒⛷📝📝INDIA’S TRADE AGREEMENTS
Homework: Refer Economic Survey 2019-20 Vol2 ch.3: Annexure-II= table is given, focus on
participants, & whether trade agreement ‘concluded’ or at ‘negotiation stage’.
33.12🌐🌐🌐🌐🌐 BURNING ISSUES IN INTERNATIONAL TRADE
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 587
⇒ 2017: USA had $375 billion trade deficit with China. Cheap import from China → domestic
American mfg suffer. US cos outsourcing to China → unemployment of American workers.
⇒ 2018: Trump announced 25% tariff on Imported Steel, Semiconductors, Chemicals, Plastics,
Motorbikes and Electric Scooters etc. from China.
⇒ So, China retaliated by hiking tariff on imported American soybean & other food products,
chemicals, medical equipment & vehicles. Both also filled complaints against each other at WTO.
⇒ EU also making similar protectionist moves against China and India.
Annual report that lists the countries who are harming the Intellectual Property Rights: (IPR: बौ�द्धक
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 588
सं पदा अ�धकार)- copyrights, patents and trademarks of American companies.
- These countries are classified into categories such as “Priority Foreign Country” (Most
dangerous)> "Priority Watch List" > "Watch List" etc.
- Depending on classification, USA will complaint to WTO and / or spend money on those
countries to ⏬ piracy (e.g. training and capacity building of Russian police officers & China’s
cybercrime courts etc.).
- 2018: India, Russia, China etc. are in priority watchlist. Mainly because of their hackers, movie
piracy, counterfeit products; India because of its drug patent norms & NPPA which reduce the
profitability of US pharma companies’ patented drugs.
⇒ 2020-Jul: India USA are negotiating for a 'limited trade deal' i.e. only for selected commodities
taxes may be ⏬. Basically, they're looking for following
⇒ India should ⏬ taxes on American farm & dairy products, pharmaceuticals, electronics etc
⇒ USA should ⏬ taxes on Indian steel & Aluminium etc, and USA should restore India's name in
the Generalized System of Preferences (GSP).
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 589
⇒ US’s protectionism is targeted more towards Chinese goods than towards Indian services
(IT/BPO) because of their local political / vote bank perception that Chinese manufacturing
industries are more responsible for the loss of American jobs than Indian call-centres. So, India
need not worry excessively.
⇒ Besides, Chinese tariffs on USA → opportunities for India to export its soyabean, cars, medical
equipment to China. Commerce Ministry has recorded growth in over 300+ Indian exports
including vulcanized rubber, paper, copper wires, electrodes, natural honey and pipes to China.
⇒ Similarly, USA’s 25% import duty on Chinese seafood has made American consumers shift to
Indian frozen shrimps which don’t attract such large duties in USA. This has positively boosted
India’s seafood exports. (भारत के म� उद्योग को फ़ायदा)
⇒ However, with the rise of nationalistic political groups (रा��वादी प�) in the 1st world nations, India
will face following challenges →
⇒ 1st world nations’ local industrial groups keep pressuring their governments to impose more
tariffs on Indian fisheries, textile and pharma sectors.
⇒ 1st world nations tighten their visa / immigration policies = NRIs suffer. (Although positive in
the sense it’ll result into ‘brain gain’ for India, instead of ‘brain drain’- says Mukesh Ambani!)
⇒ 1993: Maastricht Treaty formed European Union, a political and economic union to allow easy
movement of goods, services, citizens among themselves.
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 590
⇒ 2002: EU introduced its common currency, Euro. Although Britain was an EU member, it
continued with its own currency ‘Pound Sterling’.
⇒ Later, Britain’s political parties campaigned that 1) migrant workers from other EU countries=
job loss for local Britishers. 2) EU framework is harming our economic and foreign diplomacy
interests. (यूरोप के प्रवासी मजदू रों के आगमन से �ब्रिटशरो क� नौकरी को खतरा, आ�थक और �वदेशी कू टनी�त)
⇒ 2016: Britain held a referendum (जनमतसं ग्रह) & asked its citizens “whether the Britain should EXIT
or remain in the European Union?” 52% voted yes, 48% voted no.
⇒ 2017: Britain invokes Article 50 of Lisbon Treaty, which gives them 2 yrs timeframe to workout a
deal for exit / divorce. e.g. What happens to UK citizens living elsewhere in the EU and EU
citizens living in the UK etc. How much money Britain must pay to EU for leaving?
⇒ 2020-Jan-31st: United Kingdom has officially left the European Union. However, in reality, till
31st Dec 2020, UK is under "Transition Period / Implementation Period (कायार्�यन अव�ध)" During
this transition time, most of the things will remain the same as before e.g. visa-travel/driving
license etc. But, gradually 'divorce' will be implemented in phasewise manner. (धीरे-धीरे
चरणबद्ध/क्र�मक �प से �र�ा ख� िकया जाएगा)
⇒ 🤧🤧🤧🤧2020-May: EU announced 750 billion euro (=826 billion$) economic stimulus package.
Basically, the EU will borrow money from the market → give it to Member states in the form of
loans and grants for reviving their economy. How?NOTIMP.
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 591
पर अपनी कू टनी�त चलाएगा तो उसे भारत क� ज़�रत होगी. तब भारत अपने सहयोग के बदले �ब्रटेन से कु छ चीज़� माँग सकता है-
जैसा िक हम� स�ा लोन दे दो, हमारे माल पर टै� कम लगाओ, अ�णाचल और क�ीर के मामले पर हमारी तरफ़ बोलो इ�ािद। )
🔠🔠❓MCQ. The term ‘Digital Single Market Strategy’ seen in the news refers to(Asked in UPSC-Pre-2017)
(a) ASEAN (b) BRICS (c) EU (d) G20
🔠🔠❓MCQ. ‘Broad-based Trade and Investment Agreement (BTIA)’ is in the context of negotiations between
India and_ _ _ _(Asked in UPSC-Pre-2017) (a) European Union (b) GCC (c) OECD (d) SCO
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 592
- India has setup South Asian University (SAU-2010) @ Delhi (2010) for SAARC students.
- India launched South Asia Communication Satellite (GSAT-9) in 2017 to provide tele-
medicine, tele-education, banking, television broadcasting facilities to SAARC nations.
- 🤧🤧🤧🤧 2020-March: SAARC leaders organized video conference to fight Corona.
- India proposed creation of a COVID-19 emergency (आपातकालीन �न�ध) fund & contributed
$10 million in it.
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 593
ASEAN SCO
10 Members: Brunei, Cambodia, Indonesia, Laos, - 6 founding members: Russia, China,
Malaysia, Myanmar, Philippines, Singapore, Kazakhstan, Kyrgyzstan, Tajikistan and
Thailand and Vietnam. Uzbekistan.
- +2 new members: India & Pak.
- 2018: marked the 25th Anniversary of ✓ 2017: SCO summit at Astana, Kazakhstan →
ASEAN-India Dialogue Relation, their India, Pak formally given membership.
leaders were invited to India → Delhi ✓ 2018: SCO summit at Qingdao, China
declaration with the theme “Shared Values, resulted Qingdao declaration- a 3-year plan
Common Destiny” to combat terrorism. India refused to endorse
- Their 10 leaders also graced our 26th January China’s One belt one road (OBOR) policy in
2018 Republic Day parade as chief guests.
this summit. (More in Pillar5: Transport)
- 2019: Summit at Thailand‘s capital Bangkok.
Theme: Advancing partnership for ✓ 2019-June: SCO summit at Kyrgyzstan’s
sustainability. Result? Bangkok declaration capital Bishkek. Bishkek declaration major
against Marine Debris (समुद्रम� कचरा) points: 1) condemn terrorism, 2) Settle Syrian
- 2020: Vietnam’s Hanoi. Theme: “Cohesive issue with political dialogue, 3) roadmap to
and Responsive ASEAN” peace in Afghanistan through dialogues, 4)
- 2021: Brunei’s Bandar Seri Begawan. Theme:
appreciated WTO
We Care, We Prepare, We Prosper”
- 2022: @Cambodia. ✓ 2020: Russia virtually hosted summit of
“Head of State(e.g. India’s president)”.
Separately 2020: India virtually hosted
summits of ‘Heads of Govt’ (HoG) e.g.
India’s PM). PM Modi did not attend, VP
Naidu played the host.
✓ 2021@Tajikistan,
✓ 2022: Samarkand @Uzbekistan.
34.2.1 ☪🤝🤝Afghanistan 6+2+1 group for redevelopment of Afghanistan
6: neighbouring countries: China, Iran, Pakistan, Tajikistan, Turkmenistan and Uzbekistan;
+ 2 global players the United States and Russia, and +1: Afghanistan itself.
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 594
- 2018 council of ministers’ meeting - 2018 summit @Port Moresby, Papua New
@S.Africa’s Durban- established Mandela Guinea. India is keen to become member but
Scholarship, added Maldives as a member but not yet added.
blocked membership of Myanmar due to - 2019 summit @Chile cancelled due to civilian
S.Africa’s opposition. unrest in the country.
2020 summit held virtually due to Corona. - 2020-Virtual summit adopted “Putrajya
Nothing much exam-worthy. Vision 2040” for economic cooperation and
development partnership.
- 2021: @Newzeland. @022@Thailand.
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 595
against COVID-19”. Chairman/Host: Azerbaijan.
- 2023: @Uganda.
2+2 e.g. India Japan 2+2 = meeting of foreign minister & defense minister from each side.
JAI Prime Minister Narendra Modi, US President Donald Trump and Japan Prime Minister
trilater Shinzo Abe met in a trilateral format in the sidelines of G-20 Summit in Buenos Aires,
al Argentina. It was called the first-ever ‘JAI’ meeting. Objective? Economic growth,
2018 common prosperity & harassment of UPSC aspirants.
QUAD Quadrilateral Security Dialogue is a strategic dialogue / group of political democracies,
market economies and pluralistic societies. between the United States, Japan, Australia
and India. (चतुभुर्ज सुर�ा सं वाद : रणनी�तक सं वाद, लोकतं त्र बाजार आधा�रत अथर्तंत्र और एका�धकत�वादी
समाजों का एक समूह)
AUKU 2021: This trilateral security pact between Australia, the United Kingdom. Under the
S pact, the US and the UK will help Australia to acquire nuclear-powered submarines.
France doesn’t like this, because earlier they were going to sell submarine to Australia.
Paris - Paris Club: Informal group of nations that help a debtor nation when debtor nation
Club facing loan repayment problems. Members include Australia, Canada, France,
(1956) Germany et cetera.
- India is an observer state (meaning not full member yet)
G-20, - International forum for the governments and central bank governors from 19
1999 countries and the 1 European Union namely,
- Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia,
Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey,
UK, USA, EU
- Annual summits: 2018@Buenos Aires-Argentina, 2019@Osaka-Japan, 2020-
Nov@Saudi Arabia’s Riyadh, 2021@Italy’s Rome, 2022@Indoensia, 2023@Delhi.
- G20 Common Framework: G20 + Paris Club together devised a framework to help
the low-income countries in its loan repayment problems (2020)
🔠🔠❓ BRICS Summit, 2020 will be hosted by (UPSC-CDS-i-2020)
(a) India (b) China (c) Russia (d) Brazil
🔠🔠❓ In which groups are all the four countries members of G20? (UPSC-Prelims-2020)
[a) Argentina, Mexico, South Africa and Turkey [b) Australia, Canada, Malaysia and New Zealand
[c) Brazil, Saudi Arabia and Vietnam [d) Indonesia, Japan, Singapore and South Korea
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 596
34.5 📝📝📝📝⛷ G20: OSAKA DECLARATION
2019-June: G20 summit @Osaka, Japan. Its declaration announced following points:
− Cross-border flow of data, information, ideas and knowledge generates higher productivity,
greater innovation, and improved sustainable development.
− So, we’ll encourage free flow of data to harness the opportunities of the digital economy.
− There should not be any restriction on companies from storing personal information, in foreign
servers. Japanese PM Shinzo Abe called this initiative ‘Data Free Flow with Trust’ (DFFT: �व�ास
के साथ डाटा का सीमापार मु� प्रवाह).
− ++ lot bol-bachchan service on senior citizen welfare, Corruption, Labour, Women’s
Empowerment, Tourism, Agriculture, Global Health & Environmental Issues (भ्र�ाचार, श्रम, मिहला
सश��करण, पयर्टन, कृ �ष, वै��क �ा� और पयार्वरण इ�ािद के मुद्दे)
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 597
34.6 🌐🌐🌐🌐🌐🌐GROUPINGS LED BY GORA (WHITES) → G7 AND D10
34.6.3 🌐🌐🌐🌐🌐🌐Minerals Security Partnership (MSP: अ�त मह�पूणर् ख�नजों के �लए भागीदारी/सहयोग)
⇒ US-led partnership to secure critical minerals and reducing dependency on China.
⇒ �MSP includes Australia, Canada, Finland, France, Germany, Japan, the Republic of Korea,
Sweden, United Kingdom, and the European Commission.
⇒ � Cobalt, Nickel, Lithium etc. Required for batteries used in electric vehicles, semiconductors
and high-end electronics manufacturing.
⇒ � Rare Earth Minerals available in India — such as lanthanum, cerium, neodymium,
praseodymium, samarium, etc.
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 598
⇒ � Rare Earth Minerals NOT available in India- dysprosium, terbium, and europium. Hence,
there is a dependence on countries such as China.
⇒ � India not invited to MSP grouping yet. (हालाँिक भारत को सद� बनने का �ोता अभी तक नहीं �मला)
�Conclusion: both for improving usage of clean energy and for decreasing current account deficit
we need to be part of some arrangement for rare earth minerals. MSP membership could greatly help
in this regard. (�� ऊजार् तथा चालू खाता घाटे के सं दभर् म� हम� अ�त मह�पूणर् ख�नजो के �लए भागीदारी/सहयोग करनी होगी.)
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 599
⇒ Known for its annual summit at Davos resort in Switzerland where they invite selected world
leaders, thinkers, NGOs and industrialists.
⇒ 2021: Davos Summit 2021- cancelled by Corona’s Omicron variant.
⇒ 2022:Online Davos Agenda 2022 summit, held in virtual mode.
�Annual reports: Global Competitiveness Report, Global Information Technology Report, Global
Gender Gap Report, Global Risks Report, Global Travel and Tourism Report, Financial Development
Report, Global Enabling Trade Report.etc.
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 600
- Nuclear Suppliers Group (NSG: परमाणु आपू�तकतार् समूह) is a group of countries that
NSG control the export of nuke materials, equipment and technology & aim to prevent
1974 its use in making nuclear bombs.
- China is a member, India not a member yet due to China’s objection.
Australia - Informal group that encourages members not to export chemical or biological
Group weapons or technology.
1984 - China not a member, India became member (2018).
- Missile Technology Control Regime (�मसाइल प्रौद्यो�गक� �नयं त्रण �व�ा) is an informal
MTCR group that encourages members not to export missiles equipment, software,
1987 technology.
- China not a member, India became member (2016)
- Wassenaar is an area in Netherland. This arrangement (1996) requires members to
Wassenaar
be strict and transparent in the export of conventional arms and dual-use goods
Arrangeme
and technologies (e.g. Night Vision Googles). So they don’t fall in the hands of
nt
terrorists and rogue states like N.Korea.
1996
- China not a member, India became member (2017)
MCQ. India is member of _ _ _ (Prelims-2022)
1. Asian Infrastructure Investment Bank 2. Missile Technology Control Regime
3. Shanghai Cooperation Organisation.
Codes: (a) 1 and 2 only (b) 3 only (c) 2 and 3 only (d) 1, 2 and 3
34.10.2 🎺🎺✍ Mock Questions for Mains GSM2 (Intl. Org Related to Economy)
Syllabus Topic: Important International institutions, agencies, for a (structure, mandate); Bilateral,
Regional, Global groupings & Agreements (involving and/or affecting India)
1) “WTO’s Geneva Conference 2022 has focused not only on global trade but also on global
cooperation for healthcare and environmental sustainability.” Comment. (�व� �ापार सं गठन के �जनेवा
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 601
�शखर प�रषद 2022 म� न के वल वै��क �ापार पर ब�� �ा� देखभाल और पयार्वरणीय ��रता के �लए वै��क सहयोग पर भी
�ान क� िद्रत िकया गया है)
2) Discuss the significance of IPEF and Minerals Security Partnership groupings for Indian
economy. (भारतीय अथर्�व�ा के �लए आईपीईएफ और ख�नज सुर�ा भागीदारी समूहों के मह� पर चचार् कर�)
3) Discuss the importance of membership to Shanghai Cooperation Organisation (शं घाई सहयोग सं गठन)
in furthering India's interests in the Central Asian region.
4) Why has India refused to sign the Osaka declaration-2019 on cross-border data flow? (भारत ने
सीमा पार डेटा प्रवाह पर ओसाका घोषणा-2019 पर ह�ा�र करने से इनकार �ों कर िदया है?)
5) “Concerns for the domestic industry has prevented India from joining RCEP agreement.”
Comment. "घरेलू उद्योगो क� �चतं ा ने भारत को आरसीईपी समझौते म� शा�मल होने से रोक िदया है।" िट�णी करे.
6) Is India’s decision to stay out of the RCEP agreement appropriate? Examine critically. �ा
आरसीईपी समझौते से बाहर रहने का भारत का �नणर्य उ�चत है? गं भीर�प से समी�ा क��जए.
7) In 2018, the 25th Anniversary of ASEAN-India Dialogue Relations was commemorated under
the theme of "Shared Values, Common Destiny ”. In what areas do India and ASEAN nations
share common values and common destiny? साझा मू�, समान भा� िकन �ेत्रों म�?
8) "The USA-China and USA-EU trade wars present new sets of threats and opportunities for
India." Examine. �ापार युद्ध ने भारत के �लए नए खतरे और नए अवसर पैदा क�ए है
9) (GSM3-2018) How would the recent phenomenon of protectionism and currency manipulations
in world trade affect macroeconomic stability of India? �व� �ापार म� सं र�णवाद और मुद्रा जोड़तोड़ क�
हा�लया घटना भारत क� �ापक आ�थक ��रता को कै से प्रभा�वत करेगी?
10) (GSM2-2018) What are the key areas of reform if the WTO has to survive in the present context
of ‘Trade War’, especially keeping in mind the interest of India? यिद �व� �ापार सं गठन को '�ापार युद्ध' म�
बचकर रहना है तो �ा प्रमुख सुधार करने होंगे? �वशेष �प से भारत के िहत को �ान म� रखते चचार् क��जए।
11) (GSM2-2014) The aim of Information Technology Agreements (ITAs) is to lower all taxes and
tariffs on information technology products by signatories to zero. What impact should such
agreements have on India’s interests? सूचना प्रौद्यो�गक� समझौतों से भारत के िहतों पर �ा प्रभाव होना चािहए?
12) (GSM2-2014) WTO is an important international institution where decisions taken affect
countries in profound manner. What is the mandate of WTO and how binding are their
decisions? Critically analyse India’s stand on the latest round of talks on Food security. �व� �ापार
सं गठन का जनादेश �ा है और उनके फै सले िकतने बा�कारी ह�? खाद्य सुर�ा पर नवीनतम दौर क� वातार् म� भारत के �ख का गं भीर
�प से �व�ेषण कर�।
13) (GSM2-2014) India has recently signed to become founding a New Development Bank (NDB)
and also the Asian Infrastructure Investment Bank (AIIB). How will the role of the two Banks be
different? Discuss the significance of these two Banks for India. दोनों ब�कों क� भू�मका अलग कै से होगी?
भारत के �लए इन दोनों ब�कों के मह� पर चचार् कर�।
14) (GSM2-2013) The World Bank and the IMF, collectively known as the Bretton Woods
Institutions, are the two inter-governmental pillars supporting the structure of the world’s
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 602
economic and financial order. Superficially, the World Bank and the IMF exhibit many common
characteristics, yet their role, functions and mandate are distinctly different. Elucidate. सतही तौर
पर, �व� ब�क और आईएमएफ़ कई सामा� �वशेषताओं को प्रद�शत करते ह�, िफर भी उनक� भू�मका, कायर् और जनादेश अलग-
अलग ह�। �� क��जए
15) (GSM2-2020) ‘Quadrilateral Security Dialogue (Quad)’ is transforming itself into a trade bloc
from a military alliance, in present times - Discuss. ('चतुभुर्जीय सुर�ा सं वाद (�ाड)' वतर्मान समय म� �यं को
सै�नक गठबं धन से एक �ापा�रक गुट म� �पा��रत कर रहा है - �ववेचना क��जए) – Solved in free Sp. class
16) (GSM2-2021) Critically examine the aims and objectives of SCO. What importance does it hold
for India? [एस. सी. ओ. के ल�ों और उद्दे�ों का �व�ेषणा�क प�र�ण क��जए। भारत के �लए इसका �ा मह� है ?]
17) (GSM2-2021) The newly tri-nation partnership AUKUS is aimed at countering China’s
ambitions in the Indo-Pacific region. Is it going to supersede the existing partnerships in the
region? Discuss the strength and impact of AUKUS in the present scenario. [भारत-प्रशांत महासागर �ेत्र
म� चीन क� मह�ाकां�ाओं का मुकाबला करना नई �त्र-रा�� AUKUS का उद्दे� है। �ा यह इस �ेत्र म� मौजूदा साझेदारी का �ान
लेने जा रहा है ? वतर्मान प�र�� म�, AUKUS क� श�� और प्रभाव क� �ववेचना क��जए।]
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 603
PILLAR4A: SECTORS OF ECONOMY → AGRICULTURE
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 604
40.5.12 ☔Agri-Input → Water (irrigation) → suggestions by Economic Surveys ....................... 623
40.5.13 ✍ ⛈ Conclusion? (पेयजल और �सचं ाई के बारे म� �न�षर्) .............................................................. 623
40.6 🌽🌽🌽Agri-Input → Fertilizer (उवर्रक / खाद) .................................................................................... 624
40.6.1 �📯📯📯📯Prevent urea misuse→ Nutrient Based Subsidy (2010) ...................................... 624
40.6.2 �📯📯📯📯Prevent urea misuse→ Soil Health Card (2015) ................................................. 625
40.6.3 �📯📯📯📯Prevent urea misuse→ Neem Coating of Urea (2015)........................................ 625
40.6.4 �📯📯📯📯📯📯 Prevent urea misuse→ DBT of fertilizer (2018) ........................................... 626
40.6.5 � Prevent urea overuse→ Nano-Urea- suggested by📙📙📙📙ES22 ..................................... 626
40.6.6 �📯📯📯📯 Prevent fertilizer misuse→ PM-BJP/One Nation One Fertiliser........................... 626
40.6.7 �📯📯📯📯 Reduce Fertilizer use : PM PRANAM scheme ......................................................... 627
40.7 🌽🌽🌽🌽Agri-Input → Pesticides & weedicides................................................................................ 627
40.8 🌽🌽🚫🚫☣ Agri Inputs → Don’t use chemicals → PKVY (2015) ............................................... 628
40.9 🌽🌽🌽🌽☣ Agri Inputs → PKVY (2015) → (BPKP-2021)................................................................ 629
40.9.1 🚫🚫🚫🚫🚫🚫☣Zero Budget Natural Farming (ZBNF: शू� बजट प्राकृ �तक खेती) ........................ 629
40.9.2 🚫🚫☣😢😢 Organic farming & ZBNF → Limitations? (मयार्दा/चुनौ�तया) ................................ 630
40.9.3 🚫🚫☣✍ Conclusion: Organic farming / ZBNF................................................................. 630
40.10 🌽🌽🌽🌽Agri Inputs → Farm Mechanization (मशीनीकरण) ................................................................ 630
40.10.1 🌽🌽🌽🌽🌽🌽 Agri Inputs → Farm Mechanization: Challenges? ............................................ 631
40.11 🌽🌽🌽🌽🌽🌽 Agri Inputs → Finance / Credit: ऋण .............................................................................. 632
40.11.1 💰💰💰💰Agri-Finance → Negotiable Warehouse Receipts (NWR) ....................................... 632
40.11.2 🌽🌽🌽🌽🌽🌽🌽🌽Agri-Finance → Loan waivers for the farmers (िकसान को कजर्माफ�).................. 633
40.12 🌽🌽⚰ Agri-Input → Risk reduction → Insurance....................................................................... 633
40.13 🌽🌽🌽🌽 Agri-Output → don’t burn the crop residue (फ़सल-अवशेष/ पराली) ...................................... 634
40.14 🌽🌽🌽🌽Agri-Selling → APMC (कृ �षगत उ�ाद �वपणन स�म�त) ................................................................ 634
40.14.1 ⚠APMC Problems? सम�ाएं / चुनौ�तयां ..................................................................................... 635
40.14.2 🔨🔨Model APMC Act? (आदशर् कानून) ........................................................................................ 635
40.15 👻👻⚖�🛒🛒 Agro Ordinance/Act#1 → APMC Ordinance/Act 2020 ...................................... 635
40.15.1 ⚖�🛒🛒:👎👎👎👎 Criticism for Agro-Act#1: आलोचना/ �नदं ा .................................................. 637
40.15.2 ⚖�🛒🛒: Farm Laws Repealed (िकसान क़ानूनों को वापस �लया)................................................... 637
40.15.3 ⚖�🛒🛒: Farm Laws Repeal ka Criticism ........................................................................... 638
40.15.4 ⚖�🛒🛒: Conclusion : Agro-Act#1: (�न�षर्) ....................................................................... 638
40.16 👻👻⚖🥭🥭🥭🤝🤝🤝🤝🤝🤝 Agro Act#2 → Contract farming 2020 .................................................. 639
40.16.1 👻👻 ⚖🥭🥭🥭🤝🤝🤝🤝🤝🤝:Repeal, Criticism & Conclusion Act#2: ....................................... 640
40.17 🌽🌽🌽🌽🌽🌽Agri-Selling Online → e-national agriculture market (E-NAM)................................. 640
40.17.1 🌽🌽🌽🌽🌽🌽🌽🌽E-NAM: Criticism? (आलोचना) ........................................................................... 640
40.17.2 🌽🌽🌽🌽Agri-Selling → Gramin Agricultural Markets (GrAMs).......................................... 641
40.17.3 🌽🌽🌽🌽🌽🌽Agri-Selling→Outside India →Agri Export Policy, 2018 ................................. 641
40.18 🌽🌽🌽🌽🌽🌽🌽Agri-Selling → Farmer’s income: SAS Survey DATA .......................................... 642
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 605
40.19 🌽🌽🌽🌽🌽🌽🌽Agri-Selling → Income support for farmers .......................................................... 642
40.20 🌽🌽🌽🌽🌽🌽🌽 Agri-Selling → Minimum Support Prices (MSP) ................................................. 643
40.20.1 🌽🌽🌽🌽🌽🌽🌽 MSP covers which crops?............................................................................... 644
40.20.2 🌽🌽🌽🌽🌽🌽🌽 MSP computation, Swaminathan Committee?............................................ 644
40.20.3 📙📙📙📙ES22: Crop Diversification: by higher MSP (फ़सल �व�वधीकरण- उ� �ूनतम समथर्न मू� द्वारा)
645
40.20.4 Crop Diversification: CDP program (2013) ........................................................................... 645
40.20.5 🌽🌽🌽🌽🌽🌽🌽 Agri-Selling → MSP → Procurement (अ�धप्रापण / खरीद)? ............................ 646
40.20.6 🌽🌽🌽🌽🌽🌽🌽= 👌👌 MSP Benefits? ......................................................................................... 646
40.20.7 🌽🌽🌽🌽🌽🌽🌽= 👎👎 MSP Limitations? (मयार्दा)....................................................................... 647
40.21 🌽🌽🌽🌽🌽🌽🌽: 🧔🧔 Agri-Selling: PM-AASHA: fix MSP limitations............................................. 647
40.22 🌽🌽🌽📦📦📦📦📦�: FCI’s Buffer Stock Problem (बफर भं डार) ...................................................... 648
40.22.1 🌽🌽🌽📦📦📦📦📦: 😥😥 FCI → Problems (सम�ाएं )................................................................. 648
40.22.2 🌽🌽🌽📦📦📦📦📦 FCI → Solutions by ES20 ......................................................................... 649
40.23 🌽🌽🌽📦📦📦📦: 🧔🧔 Agri-Selling: Storage and Transport ............................................................... 649
40.24 💰💰💰💰💰: 🧔🧔 Agri-Selling: Direct income w/o selling → PM-KISAN@6k/pa ......................... 650
40.24.1 💰💰💰💰💰: 🧔🧔= 👎👎 PM-KISAN: Criticism / Challenges? ................................................... 651
40.24.2 � → 👴👴👴👴👴👴: 🧔🧔 Pension: PM Kisan Maan Dhan Yojana........................................... 651
40.24.3 ✍ Income Support: Conclusion template? (आमदनी म� सहयोग -�न�षर्)................................... 651
40.25 🍅🍅🍅🍅🍅🍅Agri-Selling: food inflation for consumers.................................................................... 652
40.25.1 🍅🍅🍅🍅🍅🍅Food Inflation due to shortage of Pulses supply (दालों का उ�ादन) ........................ 652
40.25.2 🍅🍅🍅🍅🍅🍅Food Inflation due to shortage of Vegetable supply............................................ 653
40.25.3 🍅🍅🍅🍅🍅🍅Seasonality in Onion-Tomatoes............................................................................ 654
40.26 🍅🍅🍅🍅🍅🍅: Food INFLATION → Onions ...................................................................................... 655
40.26.1 🍅🍅🍅🍅🍅🍅: 🧔🧔 Govt initiatives → Onion Inflation (2019-Sept to Dec) ............................ 655
40.26.2 🍅🍅🍅🍅🍅🍅: 🧔🧔: 📔📔📔📔ES21 how to control onion inflation? .............................................. 655
40.27 🍅🍅🍅🍅🍅🍅: 🧔🧔Agri-selling: Food-Inflation: Govt initiatives?...................................................... 656
40.27.1 🍅🍅🍅🍅🍅🍅: 🧔🧔 Food Inflation → Govt initiatives → MEP................................................. 656
40.27.2 🍅🍅🍅🍅🍅🍅: 🧔🧔 Food Inflation → Govt initiatives → OMSS .............................................. 656
40.27.3 🍅🍅🍅🍅🍅🍅: 🧔🧔 Govt initiatives → Price Stabilization Fund (2014) .................................. 657
40.27.4 🍅🍅🍅🍅🍅🍅: 🧔🧔 Govt initiatives → Operation Greens for T-O-P (2018) ........................... 657
40.28 🏝🏝🏝🏝🏝🏝 🤯🤯 Food Inflation → Edible Oil (खाद्य तेल) ................................................................... 657
40.28.1 🏝🏝🏝🏝🏝🏝 🤯🤯: 🧔🧔 Govt initiatives → Edible oil ki New Scheme (NMEO-OP: 2021-Aug)
658
40.29 🍅🍅🍅🍅🍅🍅: 🧔🧔 Food Inflation → Essential Commodities Act..................................................... 659
40.30 👻👻⚖🍅🍅🍅🍅🍅🍅✋Agro Ordinance#3 → ECA Ordinance/Act 2020 ....................................... 659
40.30.1 👻👻⚖🍅🍅🍅🍅🍅🍅✋ECA Amendment 2020: Economic Policy Uncertainty.................... 660
40.30.2 👻👻⚖🍅🍅🍅🍅🍅🍅✋ECA Amendment 2020: repealed in 2021-Dec .................................. 661
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 606
40.30.3 😷😷😷😷 ECA → N95 Masks and Sanitizers put under ECA ................................................. 661
40.30.4 ✍ Food Inflation: Conclusion? (खाद्य महंगाई /मुद्रा���त पर �न�षर्)............................................ 661
40.31 🍅🍅↘🤯🤯 Agro-Selling→ Deflation (2017 onwards)................................................................... 662
40.31.1 🍅🍅↘🤯🤯 Agro-Selling→ Deflation → Sugar mills’ problem ........................................... 662
40.31.2 🍅🍅↘🤯🤯 Agro-Selling→ Deflation → Sugar Subsidy & WTO order .............................. 663
40.32 �� Agriculture Production & Processing → Other Schemes ................................................. 663
40.32.1 👻👻👻👻👻👻👻👻 💸💸💸💸 Agriculture Infrastructure Fund (2020-Jul) ..................................... 663
40.32.2 �� Agro Produ. & Processing → Farmer Producer Company (FPC) .......................... 664
40.32.3 �� Agro Production & Processing → RKVY & RAFTAAR (2017).............................. 664
40.32.4 �� Agro Prod. & Processing → Green Revolution - Krishonnati Yojana ................... 665
40.32.5 �� Agro Production & Processing → PM Kisan Sampada Yojana .............................. 666
40.32.6 👻👻👻👻👻👻👻👻 Atma-Nirbhar: ”Op Green” expanded to all fruits & veggies..................... 666
40.32.7 👻👻👻👻🍭🍭🍭🍭 Atma-Nirbhar: Food Enterprises promotion (खाद्य उद्यमों को बढ़ावा)................. 667
40.33 🧃🧃Food Processing Industries for GSM3......................................................................................... 667
40.33.1 🧃🧃Food Processing: Meaning (खाद्य प्रसं �रण: अथर्/मतलब) .......................................................... 667
40.33.2 🧃🧃🧃🧃Food Processing Industry: Significance (मह�) ............................................................ 668
40.33.3 🧃🧃🧃🧃Food Processing Industry: Scope / Opportunities (अवसर) ......................................... 668
40.33.4 🧃🧃🧃🧃Food Processing Industry: Challenges → General (चुनौ�तयां) ...................................... 668
40.33.5 🧃🧃🧃🧃Supply Chain Management (SCM: आपू�त श्रृंखला प्रबं धन) ................................................. 669
40.33.6 🧃🧃🧃🧃SCM: Upstream-Downstream: Meaning ..................................................................... 669
40.33.7 🧃🧃🧃🧃🧃Food Processing: Upstream issues ......................................................................... 670
40.33.8 🧃🧃🧃🧃🧃🧃Food Processing: Downstream issues .................................................................... 670
40.33.9 🧃🧃🧃🧃🧃🧃🧃🧃Food Processing: Downstream issues → Export stage .................................. 671
40.33.10 🧃🧃✍Food Processing: Conclusion- हां इस �ेत्र पर �ान देना होगा........................................... 671
40.34 🐮🐮 Sectors → Agro Allied: → Animal husbandry (पशुपालन)......................................................... 672
40.34.1 🐮🐮🐮🐮🐮🐮 Livestock Census (पशुधन क� जनगणना) ..................................................................... 672
40.34.2 🐮🐮🐮🐮 Agro Allied: Animal husbandry → White Revolution ............................................... 673
40.34.3 🍋🍋🐮🐮Cow (welfare) Cess ....................................................................................................... 675
40.34.4 🐑🐑🐑🐑: ES2019 suggests focus on Small Ruminants ............................................................ 675
40.34.5 👻👻👻👻👻👻👻👻👻👻Atma-Nirbhar: Dairy cooperatives (दु�ालय सहकारी स�म�तयां) ......................... 675
40.34.6 🐟🐟Agro Allied: Fisheries → Blue revolution (म� → नीली क्रां�त).......................................... 675
40.34.7 👻👻👻👻👻👻👻👻Pradhan Mantri Matsya Sampada Yojana (2020)......................................... 676
40.34.8 🍤🍤🍤🍤 Shaphari certification for aquaculture exports (MPEDA, 2021) ............................ 677
40.34.9 Sweet Revolution (Honey / Beekeeping) मीठी क्रां�त, शहद, मधुम�ी पालन ................................... 677
40.34.10 🌈🌈Other revolutions:............................................................................................................... 677
40.35 🌽🌽🌽� Agriculture → Research Development & Education .................................................. 678
40.35.1 ⚠ Challenges in Agro R&D? <for Mains GSM3>............................................................... 678
40.35.2 ⚠ Challenges in Agro Education? <for Mains GSM3>...................................................... 678
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 607
40.35.3 🌽🌽🌽� Agriculture Research→ Agri- Life Science (कृ �ष जीवन �व�ान) .............................. 679
40.35.4 🌽🌽🌽� Agriculture → Extension Service (�व�ार-सेवा) <for GSM3>............................... 679
40.35.5 🌽🌽🌽� Agri-extension services → Timeline of schemes / events ................................. 680
40.35.6 🌽🌽🌽� AgriStack: integration of database for farmer welfare........................................ 681
40.35.7 � Extension Services: Conclusion template ........................................................................ 681
40.36 🤝🤝 Global Cooperation: Food and Agriculture Organisation (FAO) .......................................... 681
40.36.1 🤝🤝 Global Cooperation: International Years by United Nations (UN).............................. 681
40.36.2 🤝🤝 Global Cooperation: International Decades by UN (अंतरार्��ीय दशक) ............................... 682
40.36.3 🤝🤝 Global Cooperation: Misc. → SAARC Food Bank (2007) ............................................ 682
40.36.4 🤝🤝 Global Cooperation: Misc. → International Grains Council (London)....................... 682
40.36.5 🏆🏆 Global Awards related to Agro ......................................................................................... 682
40.36.6 ✍ Agriculture-Conclusion (�न�षर्) ....................................................................................... 682
40.37 ✍ Mains Qs from Agriculture in Previous UPSC Exams ............................................................ 683
40.37.1 ✍Mains Questions: Agro → Cropping & irrigation & Land Reforms ............................. 683
40.37.2 ✍Mains Questions: Agro →E-Tech. in aid of farmers ...................................................... 684
40.37.3 ✍Mains Questions: Agro →Food processing industry / Marketing ................................ 684
40.37.4 ✍Mains Questions: Agro → MSP ........................................................................................ 685
(Definition) Agriculture is a primary economic activity that includes growing crops, fruits,
vegetables, flowers and rearing of livestock. कृ �ष एक प्राथ�मक आ�थक ग�त�व�ध है �जसम� बढ़ती फसल�, फल, स��यां,
फू ल और पशुधन का पालन शा�मल है
- Modi-Target: Double farmers’ income by 2022-23 compared to 2015-16. (िकसान क� आय दुगनी करो)
- UN-SDG#1: End poverty in all forms. | UN-SDG#2: Eliminate global hunger, protect indigenous
seed and crop varieties, doubling agriculture productivity and small farmer incomes by 2030.
- Sir Arthur Lewis’ Dual Economy Model (द्वैत अथर्�व�ा): Economic development results in
labourer moving away from agriculture to the more productive industrial sector, & agriculture
sector becomes less important part GDP. कृ �ष से �व�नमार्ण और सेवा म� मजदू रों का गमन
- Indians in agriculture is steadily falling down: 55% (2011) to 42% (2018) (World Bank data).
- The growth rate of agri= zig zag due to El-Nino led drought years. Manmohan target 4% annual
growth rate, Modi’s 2x income target would require 10% annual growth rate in agriculture.
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 608
Agriculture & allied sectors 2014 2015 2016 2017 2018 2019- 2020- 2021-
(livestock, forestry, fishing) -15 -16 -17 -18 -19 20 21 22
Annual Growth Rate (%) -0.2 0.6% 6.8% 6.6% 2.6% 4.3% 3.6% 3.9%
- Within Agriculture & Allied sector: Highest production (money-wise)= Crops > Livestock >
Forestry > Fishing. (कृ �ष पर सं ल� �ेत्रों म� सबसे �ादा उ�ादन कहा से होता है)
- For more on GDP&GVA calculation- REF: �Pillar#4C.
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 609
* Hindi terms not given for most org. because above information is meant for MCQ only. In the mains
exam you may attribute all things to ‘कृ �ष और िकसान क�ाण मं त्रालय क� वैधा�नक / सहकारी / �ाय� सं �ा <insert
English term/abbreviation>’.
40.1.3 �🐮🐮🦈🦈 [Yearbook] Min. for Fisheries, Animal Husbandry and Dairying
This ministry was setup in 2019, with two departments
1. �Dept of Fisheries (Matsyapalan Vibhag)
2. � Dept of Animal Husbandry And Dairying (Pashupalan Aur Dairy Vibhag):
A) → Statutory: National Dairy Development Board (NDDB)
B) → Statutory: Animal Welfare Board of India under The Prevention of Cruelty to
Animals Act,1960.
Previously above subjects were under the Agri ministry.
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 610
40.2 ��COOPERATIVE SOCIETIES & NEW MINISTRY
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 611
⇒ (v) Credit cooperative societies: To collect money from members and give loans to the members
at affordable rates. Formed by farmers, villagers, caste-based organisations etc. [पूंजी/�ण देने के �लए]
⇒ (vi) Cooperative housing societies: To help members get houses by pooling land/loans etc.
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 612
⇒ So, without ‘active cooperation’ & confidence building of (non-BJP) State Governments, this
new ministry will struggle to accomplish its goal. (अतः गैर बीजेपी रा� सरकार के �व�ास सं पादन तथा सहकार के
�बना यह मं त्रालय ठीक से काम नहीं कर पाएगा)
⇒ Amul and IFFCO are profitable due to professional CEOs and managers.
⇒ But other Govt sponsered cooperative orgs such as NAFED are manned by IAS officers who
o A) are politically-aligned to ruling party & not immune to political pressures and/or
o B) lack the specialised MBA type knowledge for branding/biz management
(भारत म� कृ �ष डेयरी चीनी मील कपड़ा ब�िकंग �वत् इ�ािद म� एक लाख से �ादा सरकारी सोसाइटी है हालाँिक इनम� �ादातर सं �ान
जा�तवाद, राजनी�तकरन और �व�ीय ग़बन से जूझ रहे ह�। सरकार द्वारा सं चा�लत इस प्रकार के सं �ानों ने आइएएस अफ़सर क� जगह
पेशेवर मैनेजरों को उ� पदों पर �नयु� िकया जाए तो बेहतर से काम हो सकता है- अमूल और इफको क� तरह)
⇒ While India accounts for >17% of world population but barely 2.5 % of land of the world. (भारत के
पास आबादी के अनुपात म� जमीन ब�त कम है)
⇒ Agriculture is a purely land based activity. Size and quality of land has direct bearing on
agriculture productivity and farmers’ income. Land ownership also serves as a social value &
security against credit. (िकसान के �लए सामा�जक प्र�त�ा और कजर् लेने के �लए जमीन क� मा�लक� मह�पूण)र्
⇒ 🥵🥵Challenges? Rising population, division of land among heirs → fragmentation of
landholdings (भू�मजोत का �वखं डन). Small sized-farms are not conducive for farm-machinery →
productivity ⏬.छोटे खेतों म� बड़ी मशीन चला नहीं सकते → उ�ादकता कम😰😰
⇒ fragmentation of land holding has ⏫. Average size of a farm reduced from 0.725 hectare
(2003) to 0.512 ht (2019) (ज़मीन का भी खं डन हो रहा है. खेत क� औसत आकार कम हो रही है.)
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 613
⇒ 86% of agri-families have farm size of 2 hectres or less.
⇒ 😍😍Solution? Small-marginal farmers should be encouraged to join mfg / service sector jobs,
selling their land to big farmers = Land Consolidation (भू�म एकत्रीकरण)’.
⇒ Land Reform (भू�म सुधार)’ is the government led division of agricultural land and its reallocation
to landless people. Whereas, Land Acquisition (भू�म अ�धग्रहण) means Govt acquiring private land
for industrial or infrastructure development.
⇒ (1) Zamindari Abolition, Vinoba’s Bhudaan movement (2) Ceiling on Landholding i.e. fixing
maximum size of land holding that an individual can own. (3) Laws to protection of tenant
farmers (जोतदार िकसान)
⇒ (4) National Land Records Modernization Programme (NLRMP-2008: रा��ीय भू�म �रकॉडर् आधु�नक�करण
कायर्क्रम) by Department of Land Resources under Rural Development Ministry. Because digital
land records help reducing court case related to sale / inheritance & help keeping track of land
ceilings.
⇒ (5) Forest Rights Act: वन अ�धकार अ�ध�नयम 2006 which gives ‘Patta’ (farm land ownership title) to
the forest dwellers, if the given family was cultivating that forest land for the last 75 years.
⇒ Land is a state subject, so Union circulated Model Agriculture Land Leasing Act, 2016:
- 1) To protects land owner from illegal occupation by tenant farmer
- 2) To help tenant farmer get bank loans using leasing agreement as proof.
Further Self-study? (1) Land reforms is a Mains-GSM3 topic. Do selective study from
mrunal.org/tag/land-reforms (2) Soil pollution & soil erosion is Environment topic do it from your
Unacademy Notes. (3) Soil & Crop distribution: Geography topic from NCERT/ Majid/Unacademy
Booklet.
🔠🔠❓MCQ. Which of the following are responsible for the decrease of per capita holding of cultivated land in
India? (Asked in UPSC-CDS-2012-II)
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 614
1. Low per capita income. 2. Rapid rate of increase of population.
3. Practice of dividing land equally among the heirs. 4. Use of traditional techniques of ploughing.
Answer Codes: (a) 1 and 2 (b) 2 and 3 (c) 1 and 4 (d) 2,3 and 4
(Introduction: Origin) Since we can’t drastically increase the area under cultivation, so, agriculture
yield (amount of crop produced in a given acre of land) depends greatly on seed quality.
- For best yield, hybrid seeds must be replaced every year, and non-hybrid must be replaced every
three years. But in India, seed replacement rate is less than optimum because of (1) new seeds are
not affordable and 2) not available to all farmers. So, government has approved 100% FDI (in
automatic route) in seed development. सं कर बीजों को हर साल बदलना चािहए िकंतु गरीब िकसान के �लए मु��ल
- Seed village concept: Group of farmers in a village given training to produce seeds of various
crops so they can fulfill seed demand of their own & neighbouring villages.
- Seed bank / Seed vault is a depository that stores seeds to 1) preserve genetic diversity 2) supply
seeds during natural calamities and unforeseen conditions. Global Seed Vault is located in the
Svalbard @Norway, in Arctic.
- Agro Ministry gives funding for above two initiatives.
🔠🔠❓MCQ. Which best describes the main objective of Seed Village Concept? (UPSC-Pre-2015)
(a) Encouraging the farmers to use their own farm seeds and discouraging them to buy the seeds from
others.
(b) Involving the farmers for training in quality seed production and thereby to make available quality
seeds to others at appropriate time and affordable cost.
(c) Earmarking some villages exclusively for the production of certified seeds.
(d) Identifying the entrepreneurs in villages and providing them technology and finance to set up seed
companies.
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 615
- Biofortification: is the process by which the nutritional quality of food crops is increased. E.g.
ICAR developed CR Dhan 310- a rice variety that has higher protein & zinc content than
traditional rice. Germans developed Golden rice for VitaminA
Homework: read NCERT Class11 Economy: Ch2 for more vocabulary
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 616
➢ 2002: Environment ministry allowed Bt. Cotton (a non-food crop) cultivation in India
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 617
40.4.7 ✍ 🌱🌱🌱🌱 GM-Crops: Conclusion templates?
A. ✅Conclude in Favor: India needs self-sufficiency in agri bcoz 1) SDG goal of ZERO HUNGER
2) Economic goal of low food inflation. GM-crop can help in this regard, so a positive
consideration should be given for GM in India. भुखमरी और खाद्या� म� महंगाई से लड़ने के �लए अनुम�त दो
B. ✋Conclude Against: India is a signatory to Cartagena protocol to protect biodiversity. SDG
Goal (#2.5) also requires all nations to protect the genetic diversity of plants and animals. Given
the aforementioned concerns, GM crops should not be introduced in India without due
diligence. उ� भय�ानों को देखते �ए, जैव �व�वधता बनाए रखने के �लए, �ादा सं शोधन के �बना अनुम�त नहीं देनी चािहए
🎓🎓Further self study of GM Sci.tech → (i) NCERT Biology class 12 chapter 10, 12 (ii) Ravi
Agrahari’s Sci Tech book: ch. On Biotechnology OR any other material that you like/or you have
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 618
⇒ Challenges? While India accounts for more than 17% of world population but we have barely
4% of world's water resources. आबादी के िहसाब से जल सं साधन ब�त कम है भारत के पास
⇒ India is a water stressed country. >50% of the agri depends on rainfall. Only four months of
monsoon & if El-Nino we receive even less rainfall. → 2014 & 2015 drought → food inflation.
⇒ The countries with the largest areas under groundwater irrigation: India (39 million ha), China
ं ाई ब�त �ादा मात्रा म� होती है)
(19 million ha) and USA (17 million ha) (भारत म� भूजल द्वारा �सच
⇒ Irrigation water productivity is defined as ratio of the crop output to the irrigation water
applied. To produce 1 kg of rice, Indian farmers use 3,000-5,000 litres of water, whereas Chinese
farmers manage it within 350 litres of water. भारतीय िकसान ब�त �ादा पानी इ�ेमाल करते ह�
⇒ MSP, heavily subsidized electricity, water and fertilizers = 60% of water is consumed by water
intensive crops like paddy and sugarcane. चावल और ग�े क� खेती के चलते पानी �य �ादा
⇒ By 2050, India will be in the global hotspot for ‘water insecurity’. (जल असुर��तता)
⇒ To earn 2x (double) income, a farmer must cultivate multiple crops annually. But majority of
farmers face water shortage so they can’t do so. (�बना पानी के िकसान क� आमदनी दुगना करना असं भव)
40.5.1.1 🕵🕵 [Yearbook1] Dept. of Water Resources, River Development & Ganga Rejuvenation
जल सं साधन, नदी �वकास एवं गं गा सं र�ण �वभाग consists of <list not exhaustive>
Dept N/A (ये मं त्रालय के पास कोई �वभाग नहीं है)
Attached / - Central Water Commission (क� द्रीय जल आयोग) → National Water
subordinate offices Academy, Pune | Ganga Flood Control Commission | Bansagar
सं ल�/अधीन� कायार्लय Control Board (Son River)| Central Water and Power Research
Station | Central Soil and Materials Research Station
Statutory Bodies - Betwa River Board, Brahmaputra Board under respective Acts.
वैधा�नक सं �ा - Various water dispute tribunals (जल �ववाद �ाया�धकरण) under Inter-
State Water Disputes Act, 1956
- Under Environment Protection Act, 1986 →
- National Ganga River Basin Authority (NGRBA) → later, replaced by
“National Ganga Council” chaired by PM
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 619
- Central Ground Water Authority (क� द्रीय भूजल प्रा�धकरण) formed under
the Environment (Protection) Act.1986
Govt Companies - Water and Power Consultancy Services Ltd (WAPCOS)
- National Projects construction Corporation Ltd.
Autonomous Bodies - National Institute of Hydrology | Krishna River Management Board
- Godavari River Management Board
40.5.1.2 🕵🕵 [Yearbook2] Dept of Drinking Water And Sanitation: पेयजल और स्वच्छता �वभाग
→ doesn’t have any MCQ worth Organizations. (परी�ा के �लए जानने लायक कोई सं �ा नहीं)
40.5.3 🌧🌧🌧🌧🌧🌧 Water Schemes → Pradhan Mantri Krishi Sinchai Yojana (2015)
Boss? Agro Ministry (2015) (Implementation done by Jal Shakti Ministry etc). Valid till 2025-26.
Core Scheme = Not 100% Funded by Union. States required to contribute ₹₹
Aim? To improve the irrigation coverage, reduce wastage of water, using 4-pillar strategy:
1. Accelerated Irrigation Benefit Programme (AIBP: ��रत �संचाई लाभ कायर्क्रम) → Requires Jal Shkati
Ministry to finish the ongoing national irrigation projects at a faster pace.
2. Har Khet ko Pani → Requires Jal Shakti ministry to distribute water to each and every farm by
setting up canal network.
3. Watershed Development (जलस्राव �व�ार �वकास) → Requires Rural Development Ministry’s Dept of
Land Resources to setup water harvesting structures like check dams, Nala bund, farm ponds,
tanks etc. + traditional water storage systems such as Jal Mandir (Gujarat); Khatri & Kuhl (H.P.);
Zabo (Nagaland); Eri & Ooranis (T.N.); Dongs (Assam); Katas & Bandhas (Odisha & M.P.).
4. Per drop more crop → Requires Agriculture Ministry to improve the water usage efficiency
through Micro-irrigation devices such as drips, sprinklers, pivots, rain-guns. Related terms →
a. Fertigation: Mixing water-soluble fertilizers in drip system → fertilizer delivered into
the root system → ⏬ wastage of fertilizers.
b. Mulching: It is a simple process of covering the bare soil with straw, wood chips,
shredded bark etc. to ⏬ the water evaporation, soil erosion and weed growth.
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 620
⚠😰😰 🐘🐘 Micro-irrigation challenges? High cost of purchase. Trampling by elephant, boar, nilgai
etc. damages the equipment, but repairman not available locally and repair costs not covered in crop
insurance. So less adoption. (सू� �संचाई का सामान हाथी कु चल दे तो मर�त का पैसा नहीं देती सरकार)
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 621
40.5.8 🌧🌧🌧🌧🌧🌧 Water Schemes → Jal Jeevan Mission (Rural) (2021-Budget)
💼💼Budget-2021: Jal Jeevan Mission (Urban), will be launched
1) To provide Functional Household Tap Connection (FHTC) to houses in all 4378 Urban Local
Bodies. (शहरी आवास को नल द्वारा पानी)
2) This mission will also provide liquid waste management in 500 AMRUT cities. (What are
AMRUT cities? = Ref#5: Urban infrastructure) तरल अप�श� प्रबं धन
40.5.9 🌧🌧🌧🌧🌧🌧 Water Schemes → ATAL Bhujal Yojana (=ATAL JAL) (2019-Dec)
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 622
− Budget-2017: NABARD given funds for long term irrigation
NABARD
infrastructure (20k cr) and Micro Irrigation (5kcr)
40.5.11 ☔📈📈 Agri-Input → Water → Composite Water Management Index
⇒ NITI Aayog’s: Guidelines Version 1.0 in 2018, Version 2.0 in 2019. (समग्र जल प्रबं धन सूचकांक)
⇒ NITI divides India in: 1) non-Himalayan states 2) North-Eastern and Himalayan states, 3)
Union Territories (UTs).
⇒ NITI ranks them into nine themes and 28 indicators against the base year 2017-18.
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 623
40.6 🌽🌽🌽AGRI-INPUT → FERTILIZER (उवर्रक / खाद)
Ideal Nitrogen: Phosphorus: Potassium (NPK) ratio in soil: 4:2:1, for India it’s 8:3:1 because
subsidized cheap Urea → illiterate farmers use excessively. As a result →
1. Soil & groundwater pollution. (यू�रया के अ��धक उपयोग के चलते जमीन और भूजल प्रदू षण)
2. Subsidized urea smuggled to non-agro purpose in chemical industries related to dyeing, inks,
coatings, plastics, paints even synthetic milk. (गैर कृ �ष उपयोग के �लए त�री)
3. Subsidized urea also smuggled to Bangladesh and Nepal. (स�े यू�रया क� पड़ोसी देशों म� त�री)
4. Increased use & smuggling → increased subsidy burden → increased fiscal deficit.
So Govt. initiated one following reforms to control urea Misuse/Overuse/Diversion:
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 624
- Boss? Ministry of Chemicals and Fertilizers gives subsidy to company based on weight of the
different nutrient in the fertilizer. E.g.
Nutrient N (Nitrogen) P(Phosphorus) K(Potash) S(Sulphur)
₹ Subsidy per kg 19 15 11 4
(hypothetical Numbers)
- Above subsidy given to companies for producing non-UREA type “customized/mixed” fertilizer
according to soil requirement in each region.
- Example diammonium phosphate (DAP)- which contains Nitrogen (N) and Phosphorus (P).
- ☹Challenge? 1) Urea not covered in this scheme, Urea subsidy paid separately. Sometimes
government clears the urea subsidy files in faster manner but delays in NBS subsidy payments.
Because Government does not have enough money to clear all subsidies at once. Therefore
Fertilizer companies focus more on urea than other fertilizers → shortage in supply of non-Urea
fertilizers → Urea overuse continued (ग़ैर-यू�रया स��डी का भुगतान सरकार व� पर नहीं कर पाती �ोंिक सरकार
को पैसों क� िक़�त है। इस�लए क��नयां यू�रया उ�ादन पर �ादा ज़ोर देती है → बाज़ार म� यू�रया ही �ादा उपल� रहता है
इस�लए िकसान यू�रया इसक� �ादा ख़रीदते ह� �ोंिक ग़ैर-यू�रया खाद आसानी से उपल� निह होती है।)
- 2) because of the ongoing Russia Ukraine war: supply shortage in international market →
fertiliser prices are likely to ⏫ so govt may have to pay more quantity of subsidy to prevent the
price ⏫. (युक्रेन युद्ध के चलते आया�तत रसायनों/उवर्रकों क� िक़�त के चलते दामों म� वृ�द्ध होने का भय, �सवाय िक सरकार
क��नयों को दे दनादन स��डी देकर, दाम बढ़ने से रोक� ।)
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 625
3. ⏬ in pest and disease attack → Pesticide consumption is also ⏬. (क�टनाशक कम चािहए)
🔠🔠❓MCQ. Why does the Govt promote the use of Neem-coated Urea’ in agriculture? (Prelims-2016)
(a) Release of Neem oil in the soil increases nitrogen fixation by the soil microorganisms
(b) Neem coating slows down the rate of dissolution of urea in the soil
(c) Nitrous oxide, a greenhouse gas, is not at all released into atmosphere by crop fields
(d) It is a combination of a weedicide and a fertilizer for particular crops.
⇒ Scheme name: “Pradhanmantri Bhartiya Janurvarak Pariyojna” (PMBJP) / One Nation One
Fertiliser
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 626
⇒ Objective: If company receiving fertiliser subsidy from government → company has to use govt-
mandated brand name, logo and bag-colour design. (यिद कोई कं पनी भारत सरकार से उवर्रक क� स��डी प्रा�
कर रही है तो उसने उवर्रक फ�टलाइजर क� थेलीयों पर के वल, सरकार द्वारा �नधार्�रत नाम-लोगों इ�ािद इ�ेमाल करना होगा.)
⇒ Single brand name for UREA, DAP, MOP and NPK etc. would be BHARAT UREA, BHARAT
DAP, BHARAT MOP and BHARAT NPK etc. respectively
⇒ A logo showing “Pradhanmantri Bhartiya Janurvarak Pariyojna”.
🤩🤩 Benefit?
⇒ 1) Easy to spot such fertiliser bags so, if any smuggling/ diversion being done then easily it can be
detected. (त�री हो रही होगी तो तुरंत िदख जाएगा।)
⇒ 2) Govt can claim credit / fame among farmers. Farmers become aware / sensitive about the
subsidy being paid by Govt, and engage more positively towards the future reforms of Govt.
(िकसानों के बीच सरकार क� छ�व म� सुधार हो और सरकार द्वारा भ�व� म� िकए जाने वाले कृ �ष सुधारो का वो समथर्न कर�)
(Introduction: Definition) Pesticides and weedicides (क�टनाशक, खरपतवार नाशक) are chemicals which
are used for killing / controlling pests and weeds respectively.
⇒ 25% crop loss on account of pests, weed, diseases but India’s per hectare pesticide consumption
is far less than first world. We should encourage organic pesticides and biocontrol agents.
⇒ We should adopt Integrated Pest Management (IPM: एक�कृ त क�ट प्रबं धन) approach i.e. rather than
eradicating pest population to 100%, just try to keep crop damage to economically tolerable level.
Because even pests are important for biodiversity protection and food chain balance.
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 627
⇒ Spread awareness about proper use of chemical pesticides (esp. Endosulfan) so it doesn’t
contaminate in food / land / water / human bodies excessively. (सावधानीपूवर्क उपयोग के �लए जागृ�त )
⇒ 2019: Monsanto & its parent company Bayer fined in USA for their weedicide / herbicide ‘
Glyphosate’ (brand name ‘Roundup’) which was causing cancer. This weedicide is already
banned in Punjab, Kerala and selected states of India (2018).
⇒ Homework-Self-Study: Locust disaster Management. (िटड्डी आपदा प्रबं धन)
⇒ 🎓🎓✋Pesticides Management Bill, 2020 to regulate the trade, storage & use of pesticides but
NOT veryIMP4EXAM. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
40.8 🌽🌽🌽🌽☣ AGRI INPUTS → DON’T USE CHEMICALS → PKVY (2015)
(Intro: Definition) Organic farming is a type of agriculture that avoids the use of synthetic fertilizers,
pesticides, and other chemical inputs. It relies on crop rotation, crop residues, manures,
biofertilizers, biopesticides etc. (जै�वक खेती: कृ �त्रम उवर्रक, क�टनाशक और अ� रसायनों का उपयोग न कर�.)
⇒ 🤩🤩Ecological benefits? Less use of chemicals → biodiversity protected, less soil water air
pollution (because farmers will not burn the crop residue). [ जैव �व�वधता का र�ण होगा]
⇒ 🤩🤩Economic benefits? 1) organic products command higher prices among the health conscious
buyers from developed countries → more exports → less CAD, more farmer’s income. 2) less
use of chemical fertilizers → governments urea subsidy bill will decline → fiscal deficit can be
controlled. (चालू खाता घाटा, स��डी बोझ, राजकोषीय खाध म� कमी)
⇒ In 2003, Sikkim stopped entry of chemical fertilizers, and its Vidhan-Sabha declared the
intention to become a 100% organic state. The goal achieved in 2015. (�स��म सं पूणर्ता जै�वक खेती रा�)
⇒ 2015: To encourage organic farming in India, Union Govt. launched Paramparagat Krishi Vikas
Yojana (PKVY). Boss? Agro Ministry. Core Scheme = Not 100% paid by Union. (60:40,90:10)
⇒ Mechanism? Form a group of 50 farmers in a cluster to start organic farming. Every beneficiary
farmer is given ₹ 20,000 per acre for 3 years for doing organic farming.
⇒ Agro Ministry’s Jaivik Kheti webportal to help organic buyers & sellers connect with each other.
⇒ Agro Ministry’s Participatory Guarantee Scheme (PGS: सहभागी गारंटी योजना) for certification of
organic products. It assures the buyers the given fruit/vegetable/produce has organic origin.
(जै�वक उ�ादों का प्रमाणीकरण)
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 628
40.9 🌽🌽🌽🌽☣ AGRI INPUTS → PKVY (2015) → (BPKP-2021)
⇒ 2020: Agri ministry launched Bhartiya Prakritik Krishi Padhati (BPKP) as a sub-scheme of
Paramparagat Krishi Vikas Yojana (PKVY) (उप-योजना के �प म� शु� िकया)
⇒ helps farmers with natural farming (don’t use chemicals), biomass recycling, cow dung-urine
manure, and exclusion of all synthetic chemical inputs. (प्राकृ �तक खेती, बायोमास पुननर्वीनीकरण, गोबर-मूत्र से
खाद, और सभी कृ �त्रम रासाय�नक आदानों का बिह�ार।)
⇒ BPKP gives ₹12,200 / hectare financial support every 3 years. (�व�ीय सहायता दी जाती है।)
��FAQ: How is BPKP similar/different than PKVY – it seems to be like old wine new bottle?
Ans. Not important. To show-off to media, govts usually launch new scheme with same objective.
We need to prepare 2-3 lines & move to next topic.
40.9.1 🚫🚫🚫🚫🚫🚫☣Zero Budget Natural Farming (ZBNF: शू� बजट प्राकृ �तक खेती)
- 'Zero Budget' means without using any loan, and without spending any money on purchase of
inputs (seeds, fertilizers, pesticides). (बीज उवर्रक क�टनाशक म� पैसा खचर् िकए �बना, कजर् �लए �बना, खेती करना)
- 'Natural farming' means farming without chemicals. By using biofertilizers, earthworms, cow
dung etc. Associated keywords:
○ Jiwamrita’ (microbial culture) and ‘Bijamrita’ (seed treatment solution)
○ Biopesticides: ‘Agniastra’, ‘Brahmastra’ and ‘Neemastra’
○ Most of the above are made from Cow-urine.
○ ‘Waaphasa’ (giving water outside the plant’s canopy),
- ZBNF saves farmers from debt-traps; and protects the environment, soil and biodiversity. (कजर् के
�वष चक्र; पयार्वरण, �मट्टी और जैव �व�वधता क� र�ा)
- Practice first started in Karnataka by Subhash Palekar. Himachal, Andhra also frontrunners.
- � Budget-2019 promised to expand ZBNF in other parts of India. Govt thinking of launching
it as a sub-scheme (उप-योजना) under Paramparagat Krishi Vikas Yojana.
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 629
- ��Budget-2022:- Chemical-free Natural Farming will be promoted esp on farmers’ lands in
5-km wide corridors along river Ganga (गं गा नदी के 5 िकलोमीटर इलाके म� रसायन मु� प्राकृ �तक खेती बाड़ी को
प्रो�ाहन िदया जाएगा)
- ��Budget-2022:- SC/ST farmers to be given funding for agro forestry. Agro forestry is
integrating trees with crops and animals e.g. Bamboo & Oil-Palm trees in farm land. (अनुसू�चत
जा�त और जनजा�त के िकसानों को एग्रोफोरे��ी के �लए पैसा द�गे).
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 630
(Intro: Definition) It means the higher usage of combine harvesters, land levelers, cultivators,
tractors, reapers, threshers, trolleys and mechanical pickers etc. (कृ �ष म� मशीनों का �ादा उपयोग)
⇒ Significance? (1) ↑ productivity of land, labour by increasing work output per unit time. (2) ↑
employment opportunities to rural youth in production, operation, and repair-maintenance of
machines. (उ�ादन, सं चालन और मर�त-रखरखाव म� ग्रामीण युवा को रोजगार)
⇒ Labour augmenting technological progress: Allows each laborer to be more productive e.g.
Industrial revolution → James Hargreaves' Spinning Jenny that allowed each worker to spin
eight cotton threads at once (1770).
⇒ Capital augmenting technological progress: Allows capital assets / machinery to be more
productive. E.g. wooden plough replaced with steel plough → more sturdy, requires less
maintenance & repairs, resistant to water-fungal attacks.
⇒ After MNREGA scheme (wherein villagers are guaranteed 100 days of unskilled manual work),
the Punjab-Haryana farmers are facing shortage of farm-laborer in peak season, & forced them
to offer higher wages → many of those farmers opting for machinery to reduce labour
requirement. (पं जाब ह�रयाणा म� कृ �ष मजदू रों क� कमी के चलते मशीनों का उपयोग �ादा)
⇒ 📔📔📔📔ES21: Corona lockdown- movement of migrant farm labourers & farm machinery-
repair/movement affected = problems during harvesting season. (फसल कटाई म� िद�त आयी)
40.10.1 🌽🌽🌽🌽😥😥 Agri Inputs → Farm Mechanization: Challenges?
⇒ Indian tractor industry is the largest in the world, accounting for 1/3rd of total global production.
Nearly 80,000 tractors exported every year to African and Asian nations. But within India, the
utilization is low. India farm mechanization (40%) < China (60%)< Brazil (75%) < USA (95%).
⇒ Customized machinery required for India’s soil and climatic diversity so R&D, Make in India
required. Small-marginal farmers lack financial resources to own machines so renting centres
should be setup. (भारत क� जमीन और आबोहवा क� �व�वधता के अनु�प यं त्रों का सं शोधन और �वकास िकया जाए)
⇒ 📯📯 Agri Ministry Scheme? 2017: Green Revolution - Krishonnati Yojana → Sub-Mission on
Agricultural Mechanisation (SMAM): to address above challenges.
⇒ 📯📯 Agri Ministry launched Mobile App called FARMS (Farm Machinery Solutions) for farm
machinery renting.
⇒ 👜👜👜👜Budget-2022:- ‘Kisan Drones’ for crop assessment, digitization of land records, spraying
of insecticides, and nutrients. (फसल �नरी�ण, जमीन द�ावेजों को िड�जटल बनाना, िकट-नाशक दवाई तथा पोषक-त�ों
के �छड़काव के �लए "िकसान ड�ोन" को प्रो�ाहन द�गे)
🔠🔠❓MCQ. The substitution of steel for wooden ploughs in agricultural production is an example of _ _ _ _ _
_ _ _ technological progress. (Asked in UPSC-Pre-2015)
(a) labour-augmenting (b) capital-augmenting (c) capital-reducing (d) None of the above.
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 631
🔠🔠❓MCQ. Private investment in Indian agriculture is mostly on labour saving mechanization. This could be
a response to (Asked in UPSC-CDS-2015-II)
(a) rising productivity of agricultural sector (b) rising inequality in agriculture
(c) rising wages and tighter labour market (d) debt write-off by the Government
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 632
⇒ Boss? Ministry of Consumer Affairs, Food & Public Distribution → Statutory Body
Warehousing Development and Regulatory Authority (WDRA: भांडागारण �वकास एवं �व�नयामक
प्रा�धकरण)- law in 2007.
⇒ Farmer deposits his produce into WDRA registered warehouses and gets negotiable warehouse
receipt (NWR; परक्रा� गोदाम रसीद). He can use it in two ways
a. Pledge it in the banks to obtain loans for the next cropping cycle. OR
b. Trade it via the commodity exchange markets or electronic National Agriculture
Markets (e-NAM).
⇒ 🤩🤩Benefit? NWR prevents the distress sale of agriculture produce. Farmer can wait and watch
for the prices to improve before selling, while his crop is safely stored in the warehouse.
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 633
40.13🌽🌽🌽🌽 AGRI-OUTPUT → DON’T BURN THE CROP RESIDUE (फ़सल-अवशेष/ पराली)
(Intro: Origin) Every year during Sept-October, farmers of Punjab, Haryana, Uttar Pradesh burn the
paddy stubble & residue which are leftover from previous cropping season. Burning clears the farm
land for sowing wheat for next cropping season. अगले मौसम म� गे�ं उगाने के �लए फसल-अवशेष/ पराली जलाना
- Result? Thick smog, air pollution, particulate matter (PM 2.5) in Delhi.
- open burning of crop residues has ill effects on soil organic carbon and soil fertility
🤩🤩Solutions?
- In-situ composting (��ानी उपजाऊकरन)
- Machines like Rotary Slasher, Zero Till Seed Drill, Rotavators, 'Happy Seeder: They help in wheat
sowing without having to get rid of paddy straw on the land.
- 2015: National Green Tribunal order → Burning crop residue is a crime under Section 188 of the
IPC and under the Air and Pollution Control Act of 1981
- � Budget-2018: Union to give 100% funding to Punjab, Haryana and Delhi to tackle this
menace. Further, individual farmers to be given subsidy for such machinery purchase.
- ��ES20: PM2.5 emission (g/Kg) from burning crops: Sugarcane (12.0)> Maize (11.2)>
Cotton (9.8)> Rice (9.3)> wheat (8.5). So, we should promote low lignocellulosic crop residues
like rice, wheat, maize etc.
- Setup biomass depots for storage of crop residues. from there
- Thermal power plants to use crop residues with coal. (तापीय ऊजार्) → Budget 2022
announced use of 5-7% biomass pellets in thermal power plants.
- biochar briquettes as fuel for local industries, brick kiln and hotel/dhaba
(Intro: Origin) In the Post-independent India, despite the abolition of zamindari, the farmers were
not ‘liberated’ from exploitation. Because, the goons of local Baniyaa or money lender would forcibly
take away the farmers’ harvest without paying sufficient money. So, state governments enacted
APMC laws that “first sale of agriculture produce can occur only at the market yards / Mandis of
Agricultural Produce Market Committees (APMC).” (िकसानों को सा�कारों के वसूली/शोषण से बचाने के �लए रा�ों
ने कानून बनाए िक कृ �ष उपज क� सबसे पहली �बक्र� मात्रा एपीएमसी मं डी म� ही हो पाएगी)
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 634
40.14.1 ⚠APMC Problems? सम�ाएं / चुनौ�तयां
1. APMC trustees (office bearers) are politically influential persons. They enjoy a cozy relationship
with the licensed commission agents. These agents form cartel, manipulate prices, deprive
farmers of remunerative prices; engage in hoarding & artificial shortage of food supply in the
retail market, thereby driving up the food inflation for profiteering. (राजनी�तसे जुड़े त�, िकसान को अ��
क�मत नहीं देते, सं ग्रह-खोरी द्वारा बाजार म� चीजों को महंगा करके मुनाफाखोरी करते ह�)
2. APMC trustees lack the managerial skill / vision for vertical integration with food processing
industries. [because their only skill is ‘Politics’, प्रबं धन कौश� कम है]
3. While these Mandis charge multiple entry, exit and other fees. But money is siphoned off →
poor infrastructure, lack of cold-storage, transport facilities → waste of fruits & vegetables even
in good monsoon years. (शीतगार, प�रवहन बु�नयादी अवसं रचना क� कमी के चलते स�ी फल बबार्द)
40.14.2 🔨🔨Model APMC Act? (आदशर् कानून)
Since agriculture is a state subject, ultimately state governments have to reform their archaic laws.
Union Government already circulated a model APMC Act, 2003 (सातवीं अनुसूची म� रा� सूची म� है)
- It allows the private entrepreneurs and cooperatives to set up their parallel markets, & sell
directly to consumers
- It allows the corporate companies to engage farmers in ‘contract farming (अनुबंध खेती)’ and
directly purchase the produce from farmgate.
Further, Union Government released
1) Model Agricultural Produce and Livestock Marketing Act 2017 (APLM: मॉडल कृ �ष उपज और पशुधन
�वपणन) → it has better features than above model act, covering both Agro commodities as well as
livestock, fisheries and poultry.
2) Model Contract Farming Act, 2018 → aims to protect farmers engaged in contract farming with
better features than model APMC act 2003.
2016: NITI Aayog launched Agricultural Marketing and Farmer Friendly Reforms Index (AMFFRI)
to rank States and UTs. No state has achieved 100/100 score yet.
🔠🔠❓MCQ. In India, markets in agricultural products are regulated under the (UPSC-Pre-2015)
(a) Essential Commodities Act, 1955
(b) Agricultural Produce Market Committee Act enacted by States
(c) Agricultural Produce (Grading and Marking) Act, 1937
(d) Food Products Order, 1956 and Meat and Food Products Order, 1973
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 635
⇒ 2020-June: Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance,
2020. िकसान उ�ादन �ापार और वा�ण� (सं वधर्न और सु�वधा) अ�ादेश, later passed as Act in 2020-Sept
⇒ It will prevail / override over state APMC Acts. रा�ों के कानूनों के ऊपर यह कानून अ�धभावी / सव�प�र रहेगा.
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 636
40.15.1 ⚖�🛒🛒:👎👎👎👎 Criticism for Agro-Act#1: आलोचना/ �नंदा
1) Constitution of India → Seventh schedule → State list → Entry#14: Agriculture. Therefore only
the state legislature is empowered to laws on agriculture. Union is encroaching upon the state's
domain and harming the spirit of cooperative federalism. (सं �वधान क� सातवीं सूची अनुसार कृ �ष कानून बनाने
का हक रा�ों को िदया गया है. क� द्र सरकार अपनी मज� थोप के , सहकारी सं घवाद को नुकसान प�ंचा रही है)
a. �Counter: Union List Entry#42: Inter-State trade and commerce & Concurrent Entry
#Contract allow this. (सं घीय सूची और समवत� सूची के अंतगर्त क� द्र सरकार ऐसा कर सकती है)
2) � State govt prohibited from collecting taxes/fees → ⏬ Fiscal independence. ⏫States'
dependence on Finance Commission. (राजकोषीय �तं त्रता कम हो जाएगी हमेशा �व� आयोग के सामने कटोरा लेकर
खड़ा रहना पड़ेगा िक हमको पैसा चािहए�)
3) �Punjab Agri Acts much better. Union shd have copied it. (क� द्र ने पं जाब का अनुकरण करना चािहए )
4) Scope of mis-interpretation and exploitation of small farmers by big traders and Multinational
Corporations (MNCs: ब�रा��ीय कं प�नयों द्वारा छोटे िकसानों का शोषण).
5) Liberalisation / Deregulation of a sector has not always helped consumers e.g. in case of
education, health (looting by private colleges/hospitals). (उदारीकरण / �नयं त्रण हटाने से ग्राहकों का नुकसान)
6) If farmers are getting remunerative prices via these ordinances → they'll go less to the Govt's
MSP → MSP subsidy bill ⏬ → India will be able to comply with WTO subsidy norms in
future. So, PM Modi doing it under WTO pressure, and not for farmers' welfare. (स�े िदल से नहीं
लेिकन �व� �ापार सं गठन के दबाव म� िकया गया.)
7) Act prepared in haste, ignores X/Y/Z recommendation of past committees on agriculture.
Ordinance does not have X/Y/Z good provisions seen in other countries' agriculture Acts. (�व�भ�
स�म�तओ के सुझाव /�व�भ� देशों के कृ �ष कानूनो के अ�े मुद्दों को न अपनाकर करके ज� बाजी म� बनाया गया. )
o Counter Argument: ��ES21: Govt amended these laws based on recommendations
of National Commission on Farmers (under Dr M.S. Swaminathan, 2004) and many
other committees & they are in the best interests of the farmers.
⇒ �) Govt was unable to convince the farmers. (िकसान-प्रदशर्न, सरकार उ�� मनाने म� नाकामयाब रही।)
⇒ Non-stop farmer protests at Singhu border at Delhi-Haryana. Traffic-jam problem for other
citizens. Incidents of mob lynching. (आंदोलन के चलते यातायात/प�रवहन पर असर. �भड़ द्वारा लोगों का वध)
⇒ �) farm laws were suspended/dead from 2021-Jan: because Supreme Court had stayed farm
laws implementation “until further orders” (वैसे भी सुप्रीम कोटर् ने इन क़ानूनों को ��गत ही कर िदया)
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 637
⇒ �) the present farmer protests were preventing government from doing other set of reforms in
agriculture such as urea subsidy electricity subsidy etc. (सरदार यू�रया स��डी, �बजली स��डी म� सुधार करना
चाहती थी लेिकन इन कानूनों के �वरोध क� आग म� वो काम भी अटक गया था)
⇒ �) protesting farm leaders were demanding a new law to make MSP a legal right, similar to the
National Food Security Act. but this is financially difficult for the union government. But now
the protesters will return to their homes so farm leaders will not be able continue the protests for
MSP-legal right in an effective manner. (आंदोलनकारी िकसानों �ूनतम समथर्न मू� को क़ानूनन अ�धकार बनाने क�
माँग कर रहे थे, लेिकन पैसों क� िक़�त के चलते सरकार के �लए वो करना सं भव नहीं है।)
😥😥 Unofficial reasons: keeping farmers happy before upcoming State Vidhan Sabha elections in UP
and Punjab.
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 638
⇒ But such model laws were not adopted uniformly across all the states of India. (उ�रो�र समय म� बनी
क� द्र सरकारों ने रा�ों को आदशर् कृ �ष कानून लागू करने के �लए मनाने क� को�शश क�, लेिकन असफल.)
⇒ ��Coronavirus → economic slowdown → forced union government to implement farm
reforms at a faster pace. (कोरोना-आ�थक मं दी ने क� द्र सरकार को ज�ी से कृ �ष सुधार लागू करने के �लए मजबूर िकया)
⇒ But sadly the govt was unable to convince a section of farmers and contain their protests.
Ultimately, Govt has repealed the laws, for preventing further complications in law and public
order. (हालाँिक िकसानों के एक वगर् को मनाने म� सरकार असफल रही। और उनके लगातार आंदोलनो के चलते क़ानून �व�ा क�
सम�ाऑ को देखते �ए, सरकार ने है इन कृ �ष-सुधार क़ानूनों को रद्द िकया.)
⇒ Process of economic reforms has to be more consultative, more transparent to the potential
beneficiaries. It takes patience and humility to implement reforms. (भ�व� म� कृ �ष सुधार और आ�थक
सुधार से पहले सरकार ने �ादा लोगों का �व�ास-स�ादन करना चािहए, धैयर् और �वनम्रता से कायर् करना ।)
⇒ In future, BJP-ruled States’ govts may reform their State-APMC laws. Once those BJP-states do it
(and their local farmers benefit from it), then seeing their example-case study, the other states
will do it sooner or later. (हालाँिक भ�व� म� BJP शा�सत रा� सरकार� अपने कृ �ष क़ानूनो म� सुधार कर सकती है, और वहाँ
के िकसानो को लाभ होगा उसे देखकर अ� रा�ों पर भी दबाव बनेगा िक वे भी ऐसे कृ �ष-क़ानून सुधार करे।)
⇒ Farmers (Empowerment and Protection) Agreement on Price Assurance & Farm Services
Ordinance, 2020. िकसान मू� आ�ासन और कृ �ष सेवा (सश��करण और सं र�ण) अ�ादेश. Later passed as Act
⇒ Its provisions will prevail / override over state APMC Acts and Essential Commodities Act.
⇒ Contract farming agreement means an advance agreement between the farmer and the buyer
agent, before the production of farm commodities. (अनुबंध खेती: ग्राहक और िकसान के बीच, कृ �ष उ�ादन से
पहले, िकया गया एक अ�ग्रम समझौता है)
Contract farming agreement: ideal elements/ it should contain:
⇒ Estimate Date of supply & Minimum quality standards (आपू�त �त�थ �ूनतम गुणव�ा)
⇒ Selling Price. (�बक्र� क�मत/भाव)
⇒ What inputs or services will be provided by the buyer (e.g. Pepsico giving
seeds/fertilizers/pesticides) कं पनी कौन सी चीज� मुहैया करेगी
⇒ Copies of associated Insurance / loan document. (फसल बीमा और ऋण के कागजात)
⇒ �Duration of Contract: From minimum one crop season to maximum five years. It may be
renewed further afterwards, if both parties agree. (अनुबंध क� अव�ध: 1 फसल मौसम से लेकर 5 साल तक)
⇒ Contract farming agreement doesn't mean buyer has got ownership of the farmer's land, (तािक कोई
बदमाश ग्राहक/क�नी ऐसे समझौता के कागजात के बल पर िकसान क� जमीन हड़पना शु� न कर द�)
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 639
⇒ �Dispute settlement? Conciliation Board → Sub-divisional Magistrate (SDM) → Appellate
Authority (DM/collector/additional collector). (�ववाद �नपटान के �लए सुलह मं डल और अपील का प्रावधान)
⇒ �Penalty? Yes possible. But farmer's land can't be confiscated/attached for recovery of any
penalties/damages. (िकसान क� गलती/बदमाशी के चलते ग्राहक/कं पनी का नुकसान हो गया तो जुमार्ना/भरपाई मांग तो सकते
ह�, िकंतु िकसान से उसक� जमीन ज� नहीं कर सकते।)
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 640
40.17.2 🌽🌽🌽🌽Agri-Selling → Gramin Agricultural Markets (GrAMs)
- Boss? Agro Ministry (2018) → NABARD fund for Agri-Market Infrastructure Fund (AMIF).
- Gramin Haats are owned by Local Bodies (Panchayats/councils), Agricultural/ Horticultural
Departments of State Govts, Cooperatives, APMCs and Private Sector. Total ~22,000 of them.
Whereas APMC mandis are barely 580+.
- Budget-2018: 1) we will upgrade Gramin haat into GrAMs (ग्रामीण कृ �ष बाजार) 2) We’ll link them
with e-NAM. So, farmers can directly sell from nearby Gram Haat, instead of transporting the
produce to the APMC Mandis at the district level.
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 641
40.18🌽🌽🌽🌽🌽🌽🌽AGRI-SELLING → FARMER’S INCOME: SAS SURVEY DATA
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 642
- Modi-govt has target of doubling the farmers income (from base year 2015-16) in 2022-23. But
for that agricultural sector must grow at 10% annually whereas it’s struggling to grow even @5%!
Therefore, Govt. intervention is necessary in the form of subsidies, procurement, MSP and
minimum income support (PM-KISAN@6k/pa). इस�लए स��डी �वपणन �ूनतम समथर्न मू� �ूनतम आय
समथर्न के �प म� सरकारी ह��ेप ज�री
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 643
40.20.1 🌽🌽🌽🌽🌽🌽🌽 MSP covers which crops?
For 22 crops (MSP) + 1 sugarcane (FRP) = 23 viz.
14 kharif crops − Kharif: Grown In Summer / Monsoon Season.
− Paddy, Jowar, Bajra, Maize, Ragi, Arhar, Moong, Urad, Groundnut-In-Shell,
Soyabean, Sunflower, Sesamum (�तल), Nigerseed (राम�तल) And Cotton;
6 rabi crops − Rabi: grown in winter season.
− Wheat, Barley, Gram, Masur(Lentil), Rapeseed/Mustard,Safflower (कु सुम)
3 commercial − Jute, Copra (coconut) and Sugarcane.
/cash crops − For Sugarcane, mechanism is different: It requires the sugar mill companies
to pay the minimum Fair and Remunerative Price (FRP) fixed by Govt.
(Whereas for other 22, Govt itself procures @MSP)
** In addition, MSP of Toria (a type of oilseed crop) fixed on basis of rapeseed-mustard and MSP of
de-husked coconut (�छलका उतारा गया ना�रयल) fixed on the basis of the MSP of copra. But for MCQ if
asked then the safe number is ‘22’.
40.20.2 🌽🌽🌽🌽🌽🌽🌽 MSP computation, Swaminathan Committee?
Agro Ministry’s Commission for Agricultural Costs and Prices (CACP: कृ �ष लागत और मू� आयोग)
recommends MSP (& FRP for sugar) → Cabinet Committee on Economic Affairs (CCEA: आ�थक
मामलों क� कै �बनेट स�म�त) chaired by PM approves & announces MSP.
CACP’s computation method is →
A2 Actual costs directly incurred by the farmer on seeds, fertilizers,
pesticides, hired labour, depreciation on farm buildings & machinery,
interest on working capital, diesel/electricity for tractor/ pump sets etc.
FL Imputed cost of (unpaid) family labour.
(A2+FL) * 1.5 times This will be the official MSP. (from Budget-2018 onwards). So farmer
MINIMUM. sees 50% profit on this cost of production.
The National commission on farmers (2006) headed by Scientist MS Swaminathan had suggested
50% profit but using a different ‘C2 formula’, BUT
- C2 formula computed lot of costs, including imputed rent on his own land and imputed interest
on his own capital etc. (i.e. what if farmer had leased the farmland or gave his savings as loan to
someone else, instead of farming by himself, then how much rent / interest would he have
earned?) (का��नक �प से वह िकतना कमा लेता उसके भी कु छ आंकड़े जोड़े जाते ह�)
- If govt. used C2 formula, MSP will become very high due to aforementioned (hypothetical)
imputed costs → higher budgetary allocation, fiscal deficit will increase. So, Govt is using A2+FL
formula only.
- 2020: 😷😷Corona → 👻👻Atma-Nirbhar → Govt promised to ⏫MSP to help farmers.
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 644
40.20.3 📙📙📙📙ES22: Crop Diversification: by higher MSP (फ़सल �व�वधीकरण- उ� �ूनतम समथर्न मू� द्वारा)
Critiques argue that due to MSP policies, farmers are encouraged to grow mostly sugarcane, rice and
wheat, which creates 1) water shortage 2) supply-shortage of other crops. (सरकार क� �ूनतम समथर्न मू�
नी�तयों के चलते �ादातर िकसान ग�ा-गे�ं-चावल लगाना पसं द करते ह� �जससे पानी क� बबार्दी, अ� फसलों क� िक़�त होती है.)
⇒ So, to encourage crop diversification, govt is giving MSP @more than 50% of Cost Price for
certain crops e.g. mustard (100%), Masur (70+%), barley (60%) (इस�लए सरकार ने कु छ फसलों पर िकसान
क� लागत ख़चर् के ऊपर 50% से भी अ�धक एमएसपी जारी िकया है)
⇒ Benefits? - �1) crop diversification. 2) water & soil conservation 3) improve farmers income.
4) self-sufficiency in pulses and oilseeds → inflation control, food and nutritional security.
To ⏬ rice cultivation in the original green revolution states viz. Punjab, Haryana, Western UP
To ⏬ tobacco cultivation in Andhra Pradesh, Bihar, Gujarat, Karnataka etc
under this scheme, govt helps farmers to shift towards less water requiring crops such as oilseeds,
pulses, coarse cereals, , cotton, etc (चावल और त�ाकू के िकसानों को सरकार मदद करती है अ� फ़सल लगाने म�)
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 645
(d) Agricultural Produce Marketing Committee.
Central agencies namely, Food Corporation of India (FCI), Cotton Corporation of India (CCI), Jute
Corporation of India (JCI), Central Warehousing Corporation (CWC), National Agricultural
Cooperative Marketing Federation of India Ltd. (NAFED), National Consumer Cooperative
Federation of India Ltd. (NCCF), and Small Farmers Agro Consortium (SFAC) will purchase the
entire quantity offered by the farmers at MSP.
− So, it’s also called ‘Open Ended Procurement (खुले छोर का)’ i.e. whether farmer brings
20/200/2000/xyz kilo, Govt agencies will buy it, without any ‘quota’ for every farmer. [Although
in real life there are some state-wise quotas but we’ll not get into operational guidelines]
− Collectively, this entire mechanism is called Market Intervention Scheme and Price Support
Scheme (MIS-PSS: बाजार ह��ेप योजना और मू� समथर्न योजना).
− Boss? Agro Ministry. Central Sector Scheme = 100% paid by Union.
From Food Corporation of India’s point of view, the economic cost of food grains is:
1) MSP paid to farmers (technically called ‘Pooled cost of grains bought at MSP’)
2) + Bonus paid to farmers (if any. This is usually announced during election season for votebank
appeasement)
3) Procurement Incidentals: paid to truck drivers, loaders, diesel, cost of operating godowns etc.
4) Cost of Distribution: When delivering grains to States for their Public Distribution System
(PDS) shops, National Food Security Act (NFSA), Mid-day-meal schools etc. More in Pillar#6:
Malnutrition
🔠🔠❓ The economic cost of food grains to the Food Corporation Of India is Minimum Support Price and
bonus (if any) paid to the farmers plus _ _ . (Prelims 2019)
(a) Transportation cost only (b) Interest cost only
(c) Procurement incidentals and distribution costs (d) Procurement incidentals and charges for godowns
40.20.6 🌽🌽🌽🌽🌽🌽🌽= 👌👌 MSP Benefits?
Farmer always has the option to sell produce to govt, if he can’t get remunerative prices from
private merchants. It prevents distress-sale of produce at throwaway prices to private merchants.
(सरकार द्वारा आ�� िकसान, घबराहट म� उपज �नजी �ापारी को पानी के दामों पर नहीं बेचेगा)
Govt announces MSP before the sowing season for 23 crops including cereals, pulses, oilseeds &
certain cash crops. This advance information helps the farmer to make an informed decision
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 646
about which crop to sow for maximum economic benefit within the limitations of his farm size,
climate and irrigation facilities. (िकसान �नणर्य ले सकता है कौन सी फसल म� उसे �ादा फायदा होगा)
MSP sends a price-signal to market that if merchants don’t offer higher than MSP prices the
farmer may not sell them his produce. Thus MSP serves as an anchor or benchmark for agro-
commodity market. While MSP doesn’t guarantee that market prices will always be higher than
MSP, but at least it ensures the market prices will not be drastically lower than MSP. (�नजी बाजार के
मू�ों के �लए मानदंड का काम करता है)
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 647
1. Price Support Scheme (PSS: मू� समथर्न योजना): Central Agencies will henceforth also do physical
procurement of pulses, oilseeds and Copra. (दलहन, �तलहन और कोपरा)
2. Price Deficiency Payment Scheme (PDPS: मू� म� कमी भुगतान योजना): If Farmers sells oilseed crops
to private merchants in APMC-mandis who are paying them less than MSP price, then govt will
directly transfer the difference money in farmer’s bank account.
3. Private Procurement Stockist Scheme (PPSS: गैर-सरकारी प्रा�� थोक-�ापारी योजना): Private agencies
will be hired for procuring the commodities at MSP on behalf of Govt.
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 648
40.22.2 🌽🌽🌽📦📦📦📦📦 FCI → Solutions by 📔📔📔📔ES20
National Food Security Act (NFSA:रा�ी� य खाद्य सुर�ा अ�ध�नयम): It aims to provide rice(₹3/kg),
wheat(₹2/kg) and coarse grains (₹1/kg) at heavily subsidized price to 67% of Indian population.
o We should reduce the number of beneficiaries to bottom-20% poorest Indians.
o For ‘relatively less poor’ people, Govt should charge slightly higher prices. (More about
NFSAin Pillar6 → Malnutrition).
Conditional Cash Transfer Schemes (सशतर् नकदी ह�ांतरण योजनाएं -अ� देशों क� तरह हम भी ये कर�)
o Brazil (Bolsa Familia), Mexico (Oportuni dades), Philippines (Pantawid Pamilyang).
o Here poor families given money to buy (non-subsidized) foodgrains from market.
o We should explore similar ways of giving cash/food coupon/smart cards to ⏬ FCI’s
procurement and stock keeping burden.
40.23🌽🌽🌽📦📦🚝🚝: 🧔🧔 AGRI-SELLING: STORAGE AND TRANSPORT
💼💼Budget-2020 announced:
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 649
🚝🚝 ⇒ Indian Railways with refrigerated coaches in trains. ट�ेनों म� प्रशी�तत िड�े. �= improve
Kisan national cold supply chain for perishables, milk, meat and fish. (नाशपाती कृ �ष उपज,
Rail दू ध, मांस और मछली।)
⇒ �Challenge? Railway Ministry complained funding shortage for this project.
✈ Ministry of Civil Aviation (नाग�रक उड्डयन मं त्रालय) will permit new flights on international
Krishi and national routes to transport agricultural cargo.
Udaan 🤩🤩= farmers of North-East and tribal districts to sell their exotic fruits/flowers at
premium prices. (अनोखे/जं गली फल-फू लो को ऊँ ची क�मत)
We’ll encourage the Warehousing Development and Regulatory Authority (WDRA), Food
Corporation of India (FCI) and Central Warehousing Corporation (CWC) to build more
warehouses. [All these are bodies under Consumer Affairs Ministry]
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 650
- Compulsory to give Bank account number and its IFSC code (This code is written on bank’s
passbook, helps identify the name of the bank and address of the branch.)
- Complaint? District Level Grievance Redressal Committees. (�जला �र क� �शकायत �नवारण स�म�त)
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 651
40.25 🍅🍅🍅🍅🤯🤯AGRI-SELLING: FOOD INFLATION FOR CONSUMERS
(Intro-Origin) With green revolution, we became self-reliant in cereal production. But perishable
fruits and vegetables have remained our Achilles’ heel. Seasonal spikes in onion, tomatoes & pulses is
a recurring nightmare for middle class families of India. The underlying causes as following:
1. Demand Side: Growth of middle class & their disposable incomes → ⏫ demand of
fruits/veggies than before.
2. Supply Side: shortage of commodities on account of 1) poor monsoon & pests 2) post-harvest
losses due to unavailability of cold-storage & warehousing 3) hoarding (सं ग्रहखोरी/काला-बाजारी).
40.25.1 🍅🍅🍅🍅🍅🍅Food Inflation due to shortage of Pulses supply (दालों का उ�ादन)
1. Finest irrigated land used for cereal and cash crops like sugarcane because of better MSP. So
pulses’ area under cultivation is declining. Govt shd reform MSP for pulses cultivation, especially
in drought prone areas because pulses require less water than sugarcane. (दाल क� फसल म� ग�े से कम
पानी इ�ेमाल होता है, इस�लए सूखा प्रभा�वत �व�ारों म� उसे प्रो�ािहत िकया जाए)
2. Pulses make the soil nitrogen rich, it encourages weed growth- which ⏬ the pulses yield. Pulses
are themselves protein rich, so they’re more susceptible to (1) pests attack and (2) When stored
in open godowns, humid conditions = fungal growth. 25% of the produce is lost by this.
Solution? New seed varieties required but Indian scientists are focused on ‘cereals’ rather than
‘pulses’. (भारत के कृ �ष वै�ा�नकों का �ान दालों पर सं शोधन क� जगह खाद्या� अनाज पर सं शोधन म� �ादा होता है)
📈📈📈📈📈📈📈📈 Cobweb Cycle (मकड़ी का जाला)
⇒ if a farmer observes a high price for a specific crop for a year, he would opt to produce more of it
the next year. But if all farmers think with this mindset → excessive production & supply →
prices ⬇ → then they stop cultivating it in the next cycle → shortage in supply→ price ⬆.
⇒ Faulty producer expectations → cyclical fluctuation in supply & prices. (िकसान क� दोषपूणर् अपे�ाएँ →
उ�ादन और क�मतों मे चक्र�य उतार-चढ़ाव)
⇒ This is called ‘Cobweb’ Cycle. Term given by economist Nicholas Kaldor (1934)
⇒ ��ES20 blamed this phenomenon for price fluctuations in pulses.
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 652
40.25.2 🍅🍅🍅🍅🍅🍅Food Inflation due to shortage of Vegetable supply
1. Global Warming: April-May heat waves destroy nascent flowers / buds of vegetable plants. (वै��क
ताप मे वृ�द्ध के चलते नवजात फू ल / क�लयों का मुरजाना)
2. Pests & Diseases (क�ट और रोग): Maharashtra and Southern Indian farmers have been growing
tomatoes & onions since last 3 decades. But, overuse of general pesticides → whiteflies, red
mites, gram pod borers and other pests have gained immunity. → crop-loss has increased.
Farmers had started using Switzerland company’s seeds but later they were found to be
vulnerable to certain viral diseases.
3. UPA-Congress Govt (2004-14) had rapidly hiked MSP for wheat & rice so many farmers shifted
from veggies / pulses to cereal production. (गे�ं चावल म� �ादा समथर्न मू� के चलते दाल और स��यों क� फसल
कम होगा रहे ह� िकसान)
4. After demonetization (2016), cash based retail vegetable industry suffered → lower prices to
farmers in the last season. So they shifted away from vegetables towards sugarcane, maize, soya
etc. cash & cereal crops → veggies production ⏬.
5. Price wedge = large difference between the wholesale and retail prices. It’s due to high
transaction costs, poor marketing infra, huge margins by middleman etc
6. Heavy rains, Unseasonal rains, floods and cyclones disrupt the supply chains. e.g. 2021-Sept:
unseasonal rains in Punjab, Haryana, HP → Tomato crop damaged → inflation.
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 653
7. Farmer strike in Maharashtra, UP & MP, wherein they destroyed truckload of tomatoes, milk,
potatoes etc. (िकसानों द्वारा हड़ताल और प्रदशर्न ख़ुद अपना अनाज /स��याँ सड़क पर फ� क देते है)
8. Shortage of cold storage infrastructure (शीतागार). Big traders utilize them for hoarding onions
and potatoes, → less space for other vegetables’ storage even during bumper crops. 70% of
Tomatoes grown in Rabi Season- so in remaining months there will be shortage, if they’re not
stored.
9. Onion inflation – explained in separate section below.
10. 🤧🤧🤧🤧2020- Corona lockdown/supply-chain constrains= price rise in initial months, but later
on with unlockdown, prices moderated by 2020-December (तालाबं दी म� आपू�त श्रृंखला प्रबं धन म� चुनौ�तयां
�जसके चलते 2020 शु�आती महीनों म� खाद्य महंगाई बढ़ी हालांिक बाद के महीनों म� वापस कम �ई)
11. 2021- Soybean shortage → feed prices ⏫ → so fish & chicken prices⏫ (सोयाबीन चारा �आ महँ गा →
मुग�पालन और मछलीपालन करने वालों ने अपने दाम महँ गे क�ए)
12. 2022-August onwards: To increase the availability of wheat, rice and sugar in the local market,
government is either increases taxes on their exports and/or banning the export. I am not going
into the ball by ball commentary. let's wait for the EcoSurvey in 2023, to get the full
comprehensive overview of the entire year, after all our exam is not tomorrow morning. (घरेलू
बाज़ार म� गे�ं चावल और श�र क� स�ाई म� िद�त न आए इस�लए क� द्र सरकार �नयार्त होने वाली इन चीज़ों पर या तो प्र�तबं ध लगा
रही है या उस पर �ादा टै� लगाने का सोच रही है. इस बारे म� म� रोज़ रोज़ पढ़ने नहीं बैठँू गा. अगले साल का आ�थक सव��ण आने
दो। उसम� पूरे साल का ब�त �ौरा िदया होगा, तो एक बार म� समझ ल�गे �ोंिक हमारी परी�ा कल सुबह नहीं है.)
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 654
Transplantation (फ़सल बोना) December-January October-February
Harvest (फ़सल काटना) By May By June
Affected by weather/climate Maharashtra, Karnataka Punjab, UP, HP, Haryana,
in South India
Thus, if drought / cyclone / excess rain / pest attack in above months → huge supply shortage &
inflation.
⇒ NAFED procures and stores onion mostly in three states- Maharashtra, Madhya Pradesh and
Gujarat = more risk of adverse weather shocks / heavy rains / floods → transport bottlenecks.
Need to decentralise it with modern storage facilities at multiple states. (�सफर् तीन रा�ों म� �ाज का
भं डारण करने क� जगह, �वक� द्रीकृ त �प से अनेक रा�ों म� उ�� भं डा�रत िकया जाए, )
⇒ Health Ministry's eVIN (electronic vaccine intelligence network) =used for monitoring the
Vaccine supply. Similarly, onion supply online-monitoring systems need to be developed.
(ऑनलाइन तरीके से �जस प्रकार से वै�ीन क� �नगरानी रखी जाती है, ऐसा ही �ाज के साथ कर�)
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 655
⇒ Use of dehydrated onions that has longer shelf life should be promoted for buffer stock purposes.
Hydrated variety should be sold early. (सुखाए गए �ाज लं बी अव�ध तक �बगड़ते नहीं इस�लए उनका भं डारण िकया
जाए जबिक ताजा / ना सुखाए गए �ाज �ाज थोड़े पहले बेच िदया जाए)
⇒ 1964-65: A statutory corporation Food Corporation of India (FCI: भारतीय खाद्य �नगम) was set up
under Ministry of Consumer Affairs, Food and Public Distribution (उपभो�ा मामले, खाद्य और
सावर्ज�नक �वतरण). By default, FCI procures cereals/foodgrains @MSP & sells them to poor-families
via the Public Distribution System (PDS:सावर्ज�नक �वतरण प्रणाली) outlets.
⇒ However, during food inflation, FCI would also sell the grains in open market to ⏫supply,
⏬price rise. It’s called Open Market Sale Scheme [खुला बाजार �बक्र� ��म].
⇒ �Limitation? While OMSS can help during shortage / inflation of cereal grains (rice, wheat).
But, not much useful in veggies because they’re out of FCI-MSP ambit.
⇒ � Corona-2020: FCI starts selling wheat & rice to all the charitable/ non-govt orgs who are
running community kitchen for migrant workers / poor people. (कोरोना म� एफ़सीआई ने
सेवाभावी/समाजसेवी/ग़ैर-सरकारी सं �ाओं को भी दे दनादन अनाज बेचा तािक वो प्रवासी मज़दू रों म� खाना उपल� करा सके ।)
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 656
40.27.3 🍅🍅🍅🍅🍅🍅: 🧔🧔 Govt initiatives → Price Stabilization Fund (2014)
Due to faulty MSP polices Edible oilseeds’ production in India is inadequate to meet consumer
demand. And it is becoming expensive for India to import edible oil because [आयात महंगा हो रहा है �ोंिक]
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 657
⇒ High demand of oil due to due to fastfood, junkfood (wafers etc) habits of young generation.
⇒ � La Niña climatic conditions affecting crop production in Argentina, Brazil for Soyabean Oil
⇒ Malaysia and Indonesia’s Palm oil purchased in large quantity by China =less qty for India.
⇒ � edible oils used generating biofuels by USA/Brazil= less qty for India. [जैव �धन म� इ�ेमाल]
⇒ � Corona → supply chain constraints and labour issues in lock down.
⇒ 2021: Indian govt ⏬customs duty on imported palm oil to reduce prices in India and imposed
stock limits under Essential commodities act. आयात होने वाले पाम ऑयल पर सरकार ने सीमा शु� कम िकया
तािक भारत म� खाद्य तेलों क� महँ गाई दर म� कमी आ सके । आव�क व�ु अ�ध�नयम क़ानून के अंतगर्त �ॉक �ल�मट तय क�।
⇒ Critics argue reducing taxes on imported edible oils, is not going to help fighting inflation,
because of high demand by customers and profiteering by sellers. िकंतु आलोचकों का मानना है िक �ापा�रयों
क� मुनाफ़ाख़ोरी तथा ग्राहकों क� बढ़ती माँग के चलते खाद्य तेलों म� महँ गाई को क़ाबू म� नहीं हो सकती।
40.28.1 🏝🏝🏝🏝🏝🏝 🤯🤯: 🧔🧔 Govt initiatives → Edible oil ki New Scheme (NMEO-OP: 2021-Aug)
⇒ Boss? Agriculture Ministry launched National Mission on Edible Oils – Oil Palm (NMEO-OP)
to make India self-reliant on edible oil production. [खाद्य तेल उ�ादन म� भारत को ��नभर्र बनाने के �लए]
⇒ Centrally Sponsored Scheme = States also required to contribute money.[क� द्र द्वारा प्रायो�जत योजना.]
⇒ With a special focus on the North east region and the Andaman and Nicobar Islands[ख़ास ज़ोर]
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 658
⚾📻📻⚾🎓🎓✋ what is the exact formula for CPO adjusted with WPI to VP??? = NOT
IMPORANT. Don't waste time in such things it’ll give very poor cost benefit because scheme doesn’t
have a fancy name.
🤩🤩Conclusion: Presently India imports 98% of its palm oil requirement. Above scheme will greatly
help reducing our import bill, current account deficit, while creating income and employment
opportunities for farmers and youth. [सरकार का यह क़दम खाद्य तेल के आयात को कम करने म�, िकसानों और नौजवानों के
�लए रोज़गार के अवसर बढ़ाने म� मदद करेगा]
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 659
⇒ Essential commodities examples: In case of food items -cereals, pulses, potato, onions,
food items, fertilizers, medicine and edible oilseeds, and oils → Union Govt can impose
petroleum. stock limit only in the 4 extraordinary circumstances
⇒ However during what exact (असाधारण प�र���तयां) viz.
conditions, can the government ⇒ � War (युद्ध)
impose a stock limit? Ans. Vague ⇒ Famine (अकाल/सूखा)
law. Govt would do it randomly ⇒ � Grave Natural Calamity (गं भीर प्राकृ �तक आपदा)
based on election / media hype.
⇒ ��� Extraordinary Price Rise (असाधारण मू�
⇒ सरकार �ापारी पर �ॉक सीमा कब/िकतनी लगा वृ�द्ध/अ�ा�धक महंगाई). Which means compared to
सकती है? इस बारे म� कानून अ�� था। चुनावी average prices IF →
समय / मीिडया दबाव के आधार पर , o 100% price rise in horticultural
अचानक/अनपे��त �नणर्य होते है /perishable items (बागवानी/नाशपाती)
o 50% price rise in non-perishable (गैर
नाशपाती)
🧃🧃🧃🧃 Food processing companies were ✋Above stock limits may not apply to
also harassed unnecessary in stocklimits ⇒ �� Existing Food processing companies / food
(�ॉक सीमा म� खाद्य प्रसं �रण कं प�नयां परेशान होती value chain participants involved in agri
थी) processing, packaging, storage, transport, and
distribution. (प्रसं �रण, पैके�जंग, भं डारण, प�रवहन और
�वतरण)
40.30.1 👻👻⚖🍅🍅🍅🍅🍅🍅✋ECA Amendment 2020: Economic Policy Uncertainty
- As per the ECA (Amendment) Act 2020, Government can impose stocklimit ONLY in 4
extraordinary circumstances (mentioned in above table)
- Yet, 2021-July: Union Government imposed stock limits on pulses citing inflation. (but the price
rise was not crossing the 50% level required for non-perishable commodities.)
- Traders opposed. Then within 2 weeks, Government did ‘undo’ / reverted decision.
- Such Economic Policy Uncertainty discourage/demotivate private players from investing in
agriculture / warehouse infrastructure.
यद्य�प 2021 म� दालों क� क�मतों म� 50% बढ़ोतरी नहीं �ई थी िफर भी म� सरकार ने उस पर �ॉक सीमा लागू क�, जोिक इस कानून के
प्रावधान के �खलाफ़ है। �ापा�रयों के �वरोध के बाद सरकार ने अपने �नणर्य को वापस �लया, िकंतु आ�थक नी�तऑ म� इसप्रकार क�
अ�न��तता �नजी �ेत्र के उद्य�मयों को कृ �ष और गोदाम म� �ादा �नवेश करने से हतो�ािहत करती ह�।
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 660
40.30.2 👻👻⚖🍅🍅🍅🍅🍅🍅✋ECA Amendment 2020: repealed in 2021-Dec
Although farmers were not protesting against this reform. But, 2021-Dec: Govt repealed the above
amendment. Perhaps, because govt had to combat food inflation before Assembly elections and it
difficult to impose stock limits in presence of this amendment. हालाँिक िकसान इसका �वरोध नहीं कर रहे थे,
लेिकन िफर भी भारत सरकार ने इस सुधार को भी रद िकया है। शायद इस�लए �ोंिक चुनावी समय म� खाध महँ गाई से �नपटने के �लए
सरकार को �ोक-सीमा जारी करनी थी, लेिकन ये क़ानूनी सुधार बाधाएँ खड़ी कर रहा था।
40.30.3 😷😷😷😷 ECA → N95 Masks and Sanitizers put under ECA
⇒ 2020-March: Govt put them under ECA act to ⏫supply local market at reasonable prices. If
seller found black marketing and overpricing → 7 years jail / fine / both
⇒ 2020-June: Govt removed them from list, after State Governments reported there is sufficient
supply in market, and prices have become reasonable. (जब मा� और सै�नटाइजर वा�जब दाम पर उपल� होने
लगे तो सरकार ने आव�क व�ु कानून क� सूची म� से उ�� हटा िदया)
🔠🔠❓MCQ. Why India experienced high food inflation in the recent past? (UPSC-Pre-2011)
1. Due to a gradual switchover to the cultivation of commercial crops, the area under the
cultivation of food grains has steadily decreased in the last five years by about 30%.
2. As a consequence of increasing incomes, consumption patterns of the people have undergone a
significant change.
3. The food supply chain has structural constraints.
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 661
Answer Codes: (a) 1 and 2 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2, and 3
🔠🔠❓ Which were affecting price of rice in India in the recent past? (UPSC-Prelims-2020)
1) MSP 2) Government’s trading 3) Government’s stockpiling 4) Consumer subsidies
Codes: (a) 1,2 and 4 only (b) 1,3 and 4 only (c) 2 and 3 only (d) 1,2, 3 and 4
- Fair and Remunerative Price (FRP) is the minimum price decided by union govt at which
sugarcane is to be purchased by sugar mills from farmers. (क� द्र सरकार द्वारा �नधार्�रत एफ़आरपी वो �ूनतम
दाम है �जस पर चीनी �मलमा�लक ने िकसान से ग�ा ख़रीदना होगा)
- Some State govts may announce State Advised Price (SAP) at levels higher than FRP.
- Cane Reservation Area: sugar mills must buy sugarcane from farmers within a specified radius.
This is to protect the sugarcane farmer from cheap sugarcane import from States. (“ग�ा आर��त
�व�ार” यानी चीनी �मल मा�लक ने अपनी फे �री के इदर्-�गदर् के एक �नधार्�रत �व�ार के िकसानो से ही ग�ा ख़रीदना होगा।)
- In recent Years, Bumper production of sugarcane in India and Brazil → ⏫supply → ⏬
global sugar prices → but to keep Indian farmers happy Govt did not reduce FRP. Infact, FRP
has doubled in 10 years. (उ�ादन म� बढ़ोतरी को �व� बाज़ार म� श�र के दाम �गर गए लेिकन िकसानों को ख़ुश करने के �लए
�पछले 10 सालों म� भारत सरकार ग�े के समथर्न मू� को दुगना िकया)
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 662
- Mill-owners’ arrears to farmers (i.e. previous payment not cleared yet.) (सरकार द्वारा �नधार्�रत दामों पर
चीनी/श�र �मलमा�लकों ने िकसानों से ग�ा ख़रीदा होता है लेिकन हाल के वष� म� बाज़ार म� चीनी स�ी हो गयी लेिकन िकसानो को
खुश रखने के �लए सरकार ग�े के दाम बढ़ाती रही, इस�लए चीनी/श�र �मल-मा�लक िकसानो का बकाया पैसा चुका निह पा रहे)
Then govt doing following to help the sugar mill owners, in following ways:
- Soft loan / cheap loans to sugar mill owners in the arrears to farmers.
- Finance Ministry imposed 100% customs duty on imported sugar & 0% custom duty on export
of sugar to help Indian sugar mills.(आया�तत चीनी पर 100% सीमा शु�, �नयार्त चीनी पर 0% सीमा शु�)
- Subsidy to sugar exporters
40.31.2 🍅🍅↘🤯🤯 Agro-Selling→ Deflation → Sugar Subsidy & WTO order
2019: Australia, Brazil and Guatemala complained to WTO that
- Indian Govt’s subsidies/soft-loans/tariff barriers to sugar sector led to excess supply & "reduced"
global prices so their local industry is hurt. (भारत सरकार द्वारा ग�ा-चीनी उद्योग को स��डी और कराधान द्वारा जो
प्रो�ाहन िदया गया है उससे �व� बाज़ार म� चीनी के दाम �गर गए ह� और ब्राज़ील, ऑ��े�लया, �ाटेमाला के चीनी उद्योग को नुकसान
�आ है ऐसी �शकायत उ�ोंने �व� �ापार सं गठन म� क� गई है)
- While WTO’s Agreement on agriculture (AoA)’s “Peace-Clause” allows Indian govt to give
food-subsidies (More in 📑📑Pillar#3B: WTO) but such exemption is meant for ‘food security’ of
its own Indians. But sugar export subsides/taxation is going beyond the scope of food-security.
(हालाँिक शां�त-धारा के अंतगर्त भारत सरकार को �व� �ापार सं गठन ने अंधाँधून खाद्य स��डी देने क� छू ट दी थी, लेिकन वो छू ट
�सफ़र् भारतीय लोगों क� खाद्य सुर�ा के �लए थी। चीनी �नयार्त पर भारत के कदम, उस छू ट के दायरे से बाहर है)
- 2021: WTO ordered Indian govt to stop its sugar subsidies. Indian Commerce ministry said that
WTO judgement is “completely unacceptable” to India, and we’ll appeal against it. (�व� �ापार
सं गठन ने भारत को अपनी चीनी-स��डी बं द करने का आदेश िदया है। हालाँिक भारत सरकार इसके �ख़लाफ़ अपील म� जाएगी।)
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 663
⇒ Beneficiary? Farmers, Agriculture Cooperative Societies, Farmer Producers Organizations
(FPOs), Self Help Group (SHG), Agri-startups, Public Private Partnership (PPP) projects etc.
⇒ Banks and NBFCs will loan them total ₹1 lakh cr. (10k cr this + 30k cr each in next 3 years) =
total 1 lakh cr. NABARD may provide them with refinance. (Ref#1D)
⇒ 🔪🔪 Loan will be given for?
o Post-harvest Management Infrastructure (Warehouse, cold storage, etc. कटाई के बाद भं डारण
के �लए बु�नयादी ढांचा)
o Community Farming Assets (सामुदा�यक खेती क� प�रसं प��यां)
⇒ 🔪🔪 Loan duration? Medium to long term loans.(How many years exactly? Ans. not clearly
mentioned. (म�म से लं बी अव�ध के ऋण)
⇒ 🔪🔪 Loan Interest? To be decided by individual bank/NBFC.
⇒ 🔪🔪 Loan Interest Subvention? 3% by Government (�ाज म� स��डी/मदद)
⇒ 🔪🔪 Loan Default? = upto ₹2 cr credit guarantee by Credit Guarantee Fund Trust for Micro and
Small Enterprises (CGTMSE: Ref1D)
⇒ Scheme Valid for next ten years, starting from 2020
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 664
40.32.4 �� Agro Prod. & Processing → Green Revolution - Krishonnati Yojana
- Boss? Agro Ministry. Core scheme= not 100% paid by Union.
- 2017: Modi made this umbrella scheme (छतरी योजना) by combining previous 11 Congressi
Schemes viz.
1. Mission for Integrated Development of Horticulture (MIDH:बागबानी एक�कृ त �वकास): Bee keeping
also promoted in it. One of MIDH sub-mission is ‘Coordinated Programme on Horticulture
Assessment and Management using ‘geo-informatics’ (Project CHAMAN) to use space
technology / remote sensing data to assess the horticulture production & diseases in India. 2018:
Phase-II of Chaman launched.
2. National Food Security Mission (NFSM) to increase production of rice, wheat, pulses, millets
(coarse cereals) and commercial crops & restore soil fertility.
a. 2018 declared as “National Year of Millets”. Further, UN & FAO accepted India’s
proposal to celebrate 2023 as International Year of Millets (अंतरार्ष्ट�ीय बाजरा वषर्). Because,
millets are tolerant to drought, climate change, photo insensitive; need less water,
provide nutritious elements in poor families’ diet. So, Govt create two sub-missions.
i. NFSM on Makka and Jau.
ii. NFSM on Nutri-Cereals (पौ��क अनाज) - Jowar, Bajra, Ragi and little millets like
Kutki, Kodo, Sawa, Kangni and Cheena.
b. NFSM has another sub-mission: National Mission on Oilseeds and Oil Palm (NMOOP:
�तलहन और तेल पाम) to augment the availability of vegetable oils and to reduce the import of
edible oils. Associated term: Yellow Revolution.
3. National Mission for Sustainable Agriculture (NMSA: �ायी / सतत कृ �ष के �लए रा��ीय �मशन) to
encourage organic manures, bio fertilizers, cropping practices for soil and moisture conservation
measures; Rainfed Area Development (RAD) programme.
a. Subscheme: National Bamboo Mission (NBM) to augment the income of farmers.
Further, Indian Forest Act, 1927 was amended to exclude bamboo from the definition of
‘trees’. This will encourage bamboo grown outside forest area without interference from
Forest Department.
4. Sub-mission on Agriculture Extension (SMAE: कृ �ष �वस्तार पर उप �मशन): farmers training & skill
development with more use of electronic / print media, mobile apps and ICT tools, etc.
5. National e-Governance Plan on Agriculture (NeGP-A: राष्ट�ीय ई-गवन�स): to enhance reach of
extension services- about cropping methods, market prices etc. to the farmers.
6. Sub-Mission on Seeds and Planting Material (SMSP: बीज तथा पौध रोपण सामग्री): to promote new
technologies in seed production, processing, storage, certification and quality etc.
7. Sub-Mission on Agricultural Mechanisation (SMAM: कृ �ष मशीनीकरण पर उप�मशन): To increase the
availability of farm machines to small and marginal farmers. e.g. ‘Custom Hiring Centres’ where
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 665
they can rent the machines without spending money on individual ownership. encourage R&D
for small-sized machineries for small landholdings, hill-areas etc.
8. Sub Mission on Plant Protection and Plan Quarantine (SMPPQ: पौध सं र�ण और पौधों के अलगाव पर
उप�मशन ): To minimize the damage by insect pests, diseases, weeds, rodents, etc. and to shield our
agricultural biosecurity from alien species.
9. Integrated Scheme on Agriculture Census, Economics and Statistics (ISACES:कृ �ष गणना,
अथर्व्यवस्थाएं तथा सां��क� पर एक�कृ त योजना): For data collection which can be used for R&D and policy
making.
10. Integrated Scheme on Agricultural Cooperation (ISAC: कृ �ष सहयोग): Give financial assistance for
farmers' cooperatives for agricultural marketing, processing, storage etc.
11. Integrated Scheme on Agricultural Marketing (ISAM: कृ �ष �वपणन): To develop online and offline
agricultural marketing infrastructure.
<Homework? After Prelims, self-study their features in a more comprehensive manner from Yojana-
Kurukshetra magazines, because UPSC is in habit of asking about random obscure agro. schemes in
the mains exam. E.g. horticulture mission.>
40.32.6 👻👻🍅🍅🍅🍅🍅🍅 Atma-Nirbhar: ”Op Green” expanded to all fruits & veggies
⇒ Food Processing Ministry → PM Kisan Sampada Yojana → sub scheme called Operation Greens
for T-O-P: Tomato, Onion and Potato
⇒ 2020: �Corona → �ATMANIRBHAR= now we’ll expand from T-O-P to ALL fruits and
vegetables. It’ll provide
o 50% subsidy on transportation from surplus area to deficient area. (�जन �व�ारोम� �वपुल
उ�ादन/आपू�त है वहां से कमी/तं गी वाले बाजारों म� माल प�ंचाया जाए)
o Long term subsidy on storage infrastructure. (भं डारण के �लए बु�नयादी ढांचा)
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 666
⇒ Benefit? reduced food wastage, Better prices for farmers, affordable food for consumers
(अप�य/बबार्दी, िकसान को बेहतर क�मत, ग्राहक को िकफायती दाम)
🔠🔠❓ MCQ. which of the following can be considered as public investment in agriculture? (Prelims-2020)
1) Fixing Minimum Support Price for agriculture produce of all crops
2) Computerization of Primary Agriculture Credit Societies
3) Social Capital development
4) Free electricity supply of farmers
5) Waiver of agriculture loans by the banking system
6) Setting up of cold storage facilities by the governments
Codes: (a) 1, 2 and 5 only (b) 1, 3, 4 and 5 only (c) 2, 3 and 6 only (d) 1, 2, 3, 4, 5 and 6
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 667
🧂🧂Secondary Basic level of processing: cutting, drying, grinding etc.. (e.g. dried fish, turmeric
िद्वतीयक powder, chili powder, wheat flour.) काटने, सुखाने, पीसने के बाद
Combining multiple primary, secondary products from above and doing high
🧁🧁🧁🧁Tertiary
value addition (e.g. ice creams, biscuit, jam, cakes, pastries etc.) उपरो� प्राथ�मक और
तृतीयक
िद्वतीयक चरण क� चीजों म� और �ादा मू�वधर्न करना
40.33.2 🧃🧃🧃🧃Food Processing Industry: Significance (मह�)
⇒ Direct and indirect employment opportunities, ⏬migration. (बेरोजगारी और �ानांतर)
⇒ ⏬wastage of food, ⏬food inflation. (खाद्य चीजों क� �बगाड़ बबार्दी मं गाई)
⇒ ⏫export earning, ⏬Current Account Deficit, ⏫GDP
⇒ Farmer motivated for growing fruits, vegetables, milk, fish, meat, poultry, grain, etc. → doubling
his income.
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 668
⇒ Plethora of government schemes: overlapping, ambiguous, inefficient. (�मलते जुलते उद्दे� वाली ब�त
सारी सरकारी योजनाएं लेिकन प्रभाव म� बेअसर)
⇒ Obstacles in APMC Act, prevalence of middle-men. No direct linkages with farmers. (Until the
recent E-NAM And Agri-ordinances)
⇒ in the export market:
o 1) Competition from others: Kenya (Tea), Newzealand (Milk), ASEAN (Fish)
o 2) Our products get rejected on health & hygiene standards
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 669
�Farmer Suppliers of Seeds, Fertilizer, Pesticides and ⇒ middlemen / trader @Mandi
Agro-machinery. (बीज, उवर्रक, क�टनाशक और ⇒ Food processing company (if
कृ �ष-मशीनरी- के �वक्रेता/आपू�तकतार् ) he has contract farming
agreement)
�Food ⇒ Farmers, ⇒ Wholesalers (थोक �ापारी)
Processing ⇒ Mandi-agents ⇒ Retailers (खुदरा �ापारी)
Company ⇒ Suppliers of food-preservatives, edible- ⇒ E-Commerce
colors, plastic-aluminum packaging etc. Websites/Apps
⇒ Final customers
40.33.7 🧃🧃🧃🧃🧃Food Processing: Upstream issues
⇒ �Crops, fruits, vegetables: Climate change, heatwave, drought, diseases affecting the
production and quality. (जलवायु प�रवतर्न, स� गम� क� लहर, सूखा, बीमा�रयाँ)
⇒ R&D required to improve their shelf-life, taste, colour and texture for foreigners. (फल स�ी: लं बे
समय तक �बगड़े नहीं, �ाद रंग �चा �वदे�शयों को आक�षत लगे, ऐसे वै�ा�नक सं शोधन क� ज�रत)
⇒ �Cattle & Poultry: Foot & mouth disease, shortage of veterinary doctors, Avian Influenza,
Swine flu. Shortage of green fodder. (मवेशी-मुग�, रोग/�चिक�ा, हरी घास)
⇒ �Cooperative farming/Cooperative dairy sector suffering from politicisation / casteism /
scams. (सहकारी कृ �ष/डेयरी �ेत्र म� राजनी�तकरण, जा�तवाद और धांधली)
⇒ �Transport, Electricity, Infrastructure problems: milk/fruit/vegetable stored at village
collection point gets spoiled. (प�रवहन, �बजली, बु�नयादी सु�वधाएं )
40.33.8 🧃🧃🧃🧃🧃🧃Food Processing: Downstream issues
⇒ �Adulteration in spices, cereals and other food products. synthetic milk made from Detergent,
Urea and caustic soda. (मसाले, खाद्या�, दू ध - हर चीज म� �मलावट खोरी)
⇒ Indian consumers prefer to buy fresh vegetables/meat/fish rather than processed or frozen. (ताजा
स�ी खरीदना पसं द करता है)
⇒ �Rail Transport: timing-schedules, cold storage problems. Congested rail stations, lack of
sorting, grading, warehousing facilities nearby. (अप्रभावी रेल प�रवहन)
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 670
40.33.9 🧃🧃🧃🧃🧃🧃🧃🧃Food Processing: Downstream issues → Export stage
⇒ �Tea Competition from Sri Lanka, Kenya, Indonesia and China. Coffee Competition from
Brazil, Columbia. (�नयार्त बाजार म� अ� देशों क� चाय कॉफ� से �धार्)
⇒ �Port & Shipping: Environmental issues in land acquisition= hard to setup new port / expand
the existing port. (बं दरगाहों का �व�ार करने के �लए जमीन सं पादन मु��ल)
⇒ �Often our food-products get banned in the USA and EU for health/hygiene standards. (e.g.
mango: stone weevil insect, buffalo meat : foot-and-mouth disease, fish: heavy metal
contamination). Then we've to undergo a lengthy legal process & inspection process to get the
ban lifted. (�ा� / ��ता मानकों के चलते अमे�रका और यूरो�पयन यू�नयन म� हमारे �नयार्त का अ�ीकार/प्र�तबं ध)
⇒ �Protectionism: High level of taxes imposed on Indian Exports by USA/EU/China. (सं र�णवाद)
Ref-Pillar#3B. ++Refer to points mentioned in Agriculture Export Policy
Food processing industry can increase income of farmers, jobs for youth and export earnings & GDP
growth for India. It can also help in Sustainable Development Goals (SDG)-
⇒ SDG Goal #2: eliminate hunger and malnutrition. (भूख और कु पोषण को ख� करना)
⇒ SDG Goal #5: Gender empowerment via employment opportunities (मिहला सश��करण)
⇒ SDG Goal #8: Decent Work and Economic Growth (रोजगार के अवसर, आ�थक वृ�द्ध)
⇒ SDG Goal#12: Reduce food wastage at post-harvest supply chains. (कटाई के बाद क� आपू�त श्रृंखला म� खाद्य
बबार्दी �बगाड़ को कम कर�।)
Therefore the aforementioned issues need to be addressed on war footing /priority basis. (िकसान क�
आमदनी युवाओं के �लए रोजगार आ�थक वृ�द्ध सतत �वकास ल�- सभी जगह पर खाद्य प्रसं �रण उद्योग मदद कर सकता है अतः उपरो�
मुद्दों को युद्ध�र से �नपटना / प्राथ�मकता देना ज�री)
Homework After Prelims syllabus finished:
Mains-GSM1: Industrial location factors at mrunal.org/tag/gsm1-geo-location
Main-GSM3: Food Processing Industry at mrunal.org/tag/food-processing
But, without excessive focus on minute details. (बारीक� से नहीं, िक�ु ऊपर-ऊपर से)
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 671
40.34🐮🐮 SECTORS → AGRO ALLIED: → ANIMAL HUSBANDRY (पशुपालन)
- DPSP-Article 48: requires the State to organise animal husbandry on modern and scientific lines,
preserving and improving breeds, and prohibiting the slaughter of cows and other cattle.
- Per capita availability of milk and eggs has steadily ⏫ in recent years, says ��ES22
Above graph also gives a hint of why there is malnutrition in some states.
- Department of Animal Husbandry conducts livestock Census every 5 year since 1919-20.
- The 20th Livestock Census: data collection started in 2018-Oct. data released in 2019.
- India has the world's largest livestock population
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 672
Category Census- % growth / Internal Distribution:
(Largest to 2018-19 fall to More imp for StatePCS Exam than IAS exam
Smallest) (in previous
million) census
Cattle 192.49 0.8% ⇒ WB>UP>MP>BH>MH
⇒ Female Pop>Males.
⇒ Indigenous Population is more than
Crossbred/Exotic Pop.
⇒ In-Milk giving population greater than Dry
Population
Goat 148.88 10.1% RJ>WB>UP>BH>MP
Buffalo 109.85 1.1% UP>RJ>Guj>MP>Bihar
Sheep 74.26 14.1% Telangana>Andhra>Kar>RJ>TN
Pig 9.06 -12.0% Assam>JH>Megha>WB>Chhattisgarh
Mithun 0.38 26.7% It’s a Buffalo like animal found in Northeast
Only 4 States: Arunanchal>Naga>Mani>Mizo
Horses & 0.34 -46.0% UP>JK>RJ>BH>Guj
Ponies
Camel 0.25 -37.5% Only 4 States: RJ>Guj>Haryana>UP
Donkey 0.12 -62.5% RJ>MH>UP>Guj>BH
Mule 0.08 -60.0% info not available in Census document
Yak 0.06 -25.0% Only 5 States: J&K>Arunanchal>Sikkim>HP>WB
Total 535.78 4.6% Top 5-States: UP>Raj>MP>W.Bengal>Bihar
(Mammal)
Livestock
Separately
Poultry 851.81 16.8% Top 5-States: TN>Andhra>Telengana>WB>MH
40.34.2 🐮🐮🍼🍼 Agro Allied: Animal husbandry → White Revolution
- India ranks first in milk production, accounting for 20 percent of world production.
- 1970-1996: Operation Flood in 3 phases, to setup dairy farmers’ cooperatives → increase milk
production in India.
- Afterwards, milk production in India has been increasing steadily.
- All India per capita availability of milk is 375 grams per day, it varies between 71 grams per day
in Assam to 1120 grams per day in Punjab.
- White Revolution Scheme Boss? Department of Animal Husbandry & Dairying.
- Core Scheme = Not 100% Funded by Union.
- It is an Umbrella scheme covering many Congressi schemes like Dairy Entrepreneurship
Development, Livestock Census, National Livestock Mission, fodder & vaccination etc.
- Notable parts of White revolution are →
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 673
Table 2: by default, Animal husbandry ministry responsible for this
Pashudhan - Animal Wellness Programme with emergency helpline
Sanjivani - Farmers given Nakul Swasthya Patra: An Animal Health card with UID
identification number of each animal registered in a National Database.
e-Pashudhan Online portal for connecting farmers with breeders of indigenous bovine
Haat portal breeds for bulls, artificial insemination etc. (कृ �त्रम गभार्धान)
E-Gopala App National Dairy Development Board's (NDDB) App to give info on cattle care,
(2020-Sept) health and diet. Later, Animal's separate Unique Identification number
(UID/Aadhar) numbers to be added in e-GOPALA app to make it easier for
cattle owners to buy and sell animals. (मवे�शयों क� �बक्र� होगी आसान )
Rashtriya Gokul - Indigenous bovine breeds (�देशी गोजातीय न�)- conserve them & increase
mission their population. E.g. Gir, Sahiwal, Rathi, Deoni, Tharparkar, Red Sindhi.
- State govts are given money for establishing Gokul Gram breeding &
disease treatment centres.
National For development and conservation of indigenous breeds in a scientific
Kamdhenu manner. Two centres: 1) Itarsi near Hoshangabad in M.P. 2) Chintaladevi
breeding centre near Nellore in Andhra GK-NOTIMP.
Rashtriya Int-Budget-2019 setup this executive body in Department of Animal
Kamdhenu Aayog Husbandry & Dairying. Goals?
2019 - Genetic up-gradation of cow resources
- Enhance cow productivity through research in organic manure, biogas
etc; Cow welfare, cow protection laws.
Structure:
- Chairman with tenure of 2 years.
- Members from govt, research institutions, social workers etc their tenure
depends on govt’s discretion.. HQ: New Delhi.
💼💼Budget-2020 We’ll eliminate following disease by 2025:
o Cattle: Foot and Mouth disease, Brucellosis
o sheep and goat: Peste Des Petits Ruminants (PPR)
We’ll use MNREGA workers to develop fodder farms.
Dairy Sahakar dairy sector to get loans through National Cooperative Development
2021 Corporation (NCDC).
🐮🐮🐮🐮😢😢 Challenge in dairy sector?
1. Post-2017: Excess supply of milk in global market → crash in milk prices. So, Indian private
dairy owners also cut down their procurement prices, resulting in dairy farmers’ distress &
agitations. So, farmers spilling milk on highways in protest. (अ�ा�धक आपू�त → दामों म� �गरावट)
2. As animal gets old & stops giving milk → farmers sell it to slaughter house to get money to buy
new animals. But, this trade becoming difficult due to present socio-political atmosphere →
even leather-industry also suffering. (वतर्मान सामा�जक-राजनी�तक माहोल म� बूढ़े पशुओ ं को क़�खाने म� बेचने म�
िकसान को िद�त, �जससे िक चमड़ा उधयोग म� भी सम�ा)
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 674
3. RCEP Agreement Angle. �Ref- Handout: Pillar-3B
4. Corona-2020: ⏬ in milk demand due to lockdown, tea-shops, sweet shops, ice cream parlours,
restaurants, hotel etc shutdown → private dairies stopped milk procurement from the farmers
→ farmers started selling to milk cooperative dairies but they’re unable to pay money because
slow business. (लॉकडाउन के चलते �नजी डेयरी-मा�लकोने िकसानों से दू ध खरीदना िकया बं द तो िकसान सहकारी दू ध मं ड�लयों म�
�ादा दू ध भरवाने लगे िकंतु वहाँ पर भी धं धा मं दा है)
40.34.3 🍋🍋🍋🍋Cow (welfare) Cess
Punjab was the 1st State start to levy Cow (Welfare) Cess on sale of liquor, electricity etc. Later on
Chandigarh, Uttar Pradesh, Rajasthan also started collecting it.
Sheep and goat are collectively known as small ruminants (जुगाली करनेवाले छोटे जानवर)
− These small ruminants have higher survival rates under drought conditions compared to bovines
(गौ-जातीय पशु: Cattle, Buffalo, Mithun and Yak).
− They can even live on shrubs and trees. Their reproduction rates are higher than large
ruminants. Farmers/producers can sell them more frequently & no fear of ‘cow-vigilantism’. (गौ-
र�ा के �लए नाग�रकों द्वारा कानून को हाथ म� लेना)
− Thus, small ruminants can help ⏫ income of the small-marginal & women farmers. (छोटे सीमांत
और मिहला िकसानों क� आय म� बढ़ोतरी)
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 675
food security to a large population (more than 25 million Indians). Frozen shrimp is India’s largest
exported seafood item.
- Blue Revolution Boss? Dept of Fisheries. This is also a core scheme.
- Government gives money for modernization of boats, marketing & cold storage infrastructure.
National scheme for welfare of fishermen which gives money for construction of houses, tube
wells for drinking water etc. Promote Inland fisheries, aquaculture & pisciculture i.e. raising fish
in artificial tanks/ ponds.
- 💼💼 Budget-2019: Dept of Fisheries to launch Pradhan Mantri Matsya Sampada Yojana
(PMMSY) for infrastructure, post-harvest management, quality control etc.
- 💼💼Budget-2020:
- “Sagar mitras”: these extension workers to advise fishermen with processing and
marketing. मछु आरों को प्रस�रण-और �वपणन तालीम देने के �लए सागर-�मत्र
- Target to raise fishery export to ₹1 lakh crore by 2024-25.
- We’ll promote growing algae, sea-weed and Cage Culture (growing of fishes in existing
water resources in a net cage which allows free flow of water.)
- 💼💼Budget-2021: 5 major fishing harbours – Kochi, Chennai, Visakhapatnam, Paradip, and
Petuaghat (W.Bengal) – will be developed further (मछली पकड़ने के बं दरगाह अ�धक �वक�सत िकए जाएं गे)
- Mariculture = cultivation of marine organisms in their natural environment in sea upto 12
nautical miles from coast. Just like Agriculture, this is also a State-list subject. 2018: Agro
Ministry announced Draft National Policy on Mariculture which encourages State Govts to lease
the sea area to private entities & even farming of genetically modified species in enclosed / caged
marine spaces. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
⇒ Originally announced in Budget 2019. but was not launched in that financial year. Then Corona
→ Atma-Nirbhar 2020-May/Jun → yes we'll launch it.
⇒ Boss? Ministry of Fisheries, Animal Husbandry & Dairying
⇒ Type? It's an umbrella scheme worth >20kcr. Made up of two sub-schemes/parts:
o 1) Sub-scheme #1: Central Sector Scheme (=state not req to give money)
o 2) Sub-scheme #2: Centrally Sponsored Scheme (=States required to give money.)
This scheme provides Support / Funding / Subsidies for
�Sagar Mitra youth extension workers: They'll give training to fishermen.
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 676
🛶🛶🛶🛶☠Fishing Boat/Vessels → Loans interest subsidy and Insurance premium subsidies
(नाव/पोत के �लए ऋण के �ाज और बीमा िक� म� स��डी)
Inland Aquaculture, Coldwater Fisheries in Himalayan areas, (अंतद�शीय, शीत जल म�)
⇒ 2021: Marine Products Exports Development Authority (MPEDA, a statutory body under
Commerce Ministry) has developed a Shaphari certification scheme for aquaculture (e.g. fish,
shrimp etc), based on United Nations’ Food and Agriculture Organization’s technical guidelines.
⇒ If an Indian aquaculture farmer/company gets this certificate = means his shrimp/fish etc. are
free of harmful chemicals/pesticides/antibiotics. (प्रमाणपत्र क� मछली-झींगा म� जहरीले रसायन नहीं)
40.34.9 Sweet Revolution (Honey / Beekeeping) मीठी क्रां�त, शहद, मधुम�ी पालन
− 2017: �'Honey Mission' was launched by Khadi and Village Industries Commission (KVIC, a
statutory body under MSME Ministry). PM Modi termed it ‘Sweet revolution’. (शहद)
− 2020: Agri ministry launched National Beekeeping & Honey Mission (NBHM)
− Honey provides � income from selling honey to food processing industry, beeswax in
chemical industry, bee-venom to pharma industry etc.
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 677
40.35🌽🌽�� AGRICULTURE → RESEARCH DEVELOPMENT & EDUCATION
Indian Council of Agricultural Research (1929) is the apex body of agricultural research,
education and extension under the ministry of agriculture.
ICAR operates through 690 + Krishi Vigyan Kendra which provide last Mile connectivity to
farmers and help them adopt the latest cropping technologies.
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 678
- ��Budget-2022:- revise syllabus of agricultural universities for natural, zero-budget and
organic farming, modern-day agriculture, value addition and management. (कृ �ष �व��वद्यालयों के
अ�ासक्रम को नवीनतम िकया जाएगा। �जसम� प्राकृ �तक खेती, मू�वधर्न इ�ािद पर जोर िदया जाएगा)
40.35.3 🌽🌽🌽� Agriculture Research→ Agri- Life Science (कृ �ष जीवन �व�ान)
Table 3: it has four categories
1) Agricultural Biotechnology e.g. develop seeds, fertilizer, pesticides which are less
harmful to environment and human health
2) Novel Farming Systems e.g. indoor farming, aquaculture, algae-farming,
(नवीन कृ �ष प्रणाली) using insects as as fish-feed.
3) Bioenergy (जैव �धन) e.g. using agriwaste to generate bio-ethanol & electricity
4) Innovative Foods (अ�भनव खा�) e.g. lab-grown meat, Soya-milk etc.
− �Benefits? food production⏫, food/nutrition security, energy security, environmentally
sustainable, export earning. (खाद्य उ�ादन,पोषण सुर�ा, ऊजार् सुर�ा, पयार्वरण क� ��� से िटकाऊ, �नयार्त आमदनी।)
− �Challenges? Shortage of capital, shortage of SKILLED manpower. Startup Companies more
focused on e-commerce rather than agriculture. regulatory problems in genetically modified
(GM) crops. लेिकन भारत म� यह �ेत्र �ादा �वक�सत नहीं हो पाया �ोंिक पूंजी और मानव सं साधन क� कमी, �ाटर्-अप
कं पनीयो का �झान इ-कोमसर् क� ओर। जीएम फ़सलो के बारे मे �नयमो म� असमं जस
40.35.4 🌽🌽🌽� Agriculture → Extension Service (�व�ार-सेवा) <for GSM3>
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 679
Channel (मा�म) → 😰😰Challenges (सम�ाएं )
Group counselling via seminar, workshop, Farmers fear loss of workday, lack of
group discussion, field visit. motivation to spend time / travel.
Kurukshetra and other govt magazines / Illiteracy and poverty. then we’ve to use audio-
periodicals. visual methods such as….
Mass Media via Kisan TV (2014) and Public Marginal farmers may not have instruments to
Radio broadcast. (टीवी रेिडयो द्वारा जनसं पकर् ) watch them. Customized / tailor made advisory
/ information difficult to deliver.
E-Technology via E-Krishi (Webportal) ; Mass reach possible because more mobiles and
mKisan (SMS/USSD), Kisan Suvidha App etc jio4G effect.Tailor-made advisory can be given.
40.35.5 🌽🌽🌽� Agri-extension services → Timeline of schemes / events
- 1974: Krishi Vigyan Kendras (KVKs) under ICAR started.
- 1998: Agriculture Technology Management Agencies (ATMAs) supported by ICAR.
- 2002: Agriclinics by private individuals -usually, agri. graduates. They receive funding from
Agriculture Ministry.
- 2011: ICAR launched National Innovations on Climate Resilient Agriculture (NICRA)
- 2014 onwards: Modi launches Kisan TV, Kisan Suvidha App, mKisan portal etc.
- ICAR’s initiatives in recent years are as following.
o ARYA→ Attracting And Retaining Youth In Agriculture- For entrepreneurship in food
processing chains.
o READY→ Student Rural Entrepreneurship Awareness Development Yojana
o Krishi Unnati Mela → Jointly by ICAR & Agro Ministry’s other departments
o KRITAGYA Hackathon (2020) → Krishi-Taknik-Gyan Competition for college
students in startups to provide innovative solutions for agriculture Technology - esp.
women friendly farm machinery.
- 2017: Biotech-KISAN Programme by Ministry of Science and Technology → Department of
Biotechnology for scientist-farmer partnership
- 2018: Agricultural Education Portal EKTA by Dept of Agricultural Research & Education
- 2018: Agri Ministry launched Krishi Kalyan Abhiyaan to advice farmers on how to improve
their farming techniques, Bee Keeping, Mushroom cultivation, animal vaccination, etc
- 2020: Agri Ministry launched Sahakar Mitra scheme for paid internship for youth in
Cooperative organisations.
- 👜👜👜👜Budget-2022:- we will involve startups and PUBLIC PRIVATE PARTNERSHIP in Agri
R&D (कृ षी सं शोधन नवाचार म� �ाटर्अप और सावर्ज�नक �नजी भागीदारी क� मदद ली जाएगी)
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 680
40.35.6 🌽🌽🌽� AgriStack: integration of database for farmer welfare
- Agristack concept involves integrating database of farmer’s Aadhar number, his farm land
ownership, his loan records, cropping pattern, GPS-Satellite records, weather-climate in the
region etc. (िकसान के आधार काडर्, जमीन मा�लक�, ब�को से कजर्, वो �ा खेती बाड़ी करता है, उस इलाके म� हवामान क� ���त
इ�ािद डेटा/जानकारी का िड�जटल डेटाबेस म� एक�करण िकया जाए)
- It was proposed by NITI Aayog. 2021: Agri ministry signed agreements with private companies
of the likes of Amazon, Microsoft and Patanjali to start trials.
- �Benefit? 1] Soil Health Card, PM Fasal Bima, PM Kisan, etc scheme’s effectiveness can be
improved. 2] Such Data-GPS mapping can help food processing companies in warehouse, supply
chain management 3] Research Development in Cropping patterns. [सरकारी योजनाओं को �ादा बेहतर
ढंग से लागू िकया जा सके गा, खाद्य प्रसं �रण कं प�नयों को इस जीपीएस डेटा से अपनी आपू�त श्रृंखला प्रबं धन मदद �मल�, फसलों पर
और �ादा सं शोधन िकया जा सके गा]
- �Challenges? 1) Personal Data Privacy. 2) If private companies know too much about a
farmer’s land ownership, loan history, bank balance etc they could exploit him. [िकसानों के डेटा क�
�नजता का हनन, �नजी कं प�नयों के पास ब�त सारा डेटा चला गया तो िकसान का शोषण करने म� उसका दु�पयोग हो सकता है]
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 681
40.36.2 🤝🤝 Global Cooperation: International Decades by UN (अंतरार्��ीय दशक)
2018–2028 International Decade "Water for Sustainable Development"
2019–2029 1) Nelson Mandela Decade of Peace 2) United Nations Decade of Family Farming
2021–2030 United Nations Decade on Ecosystem Restoration
2021–2030 International Decade of Ocean Science for Sustainable Development
40.36.3 🤝🤝 Global Cooperation: Misc. → SAARC Food Bank (2007)
2007: South Asian Association for Regional Cooperation (SAARC) countries signed the
agreement to establish the SAARC Food Bank.
The Food Bank will help member nations’ people in case of emergencies.
Each member country is required to contribute either wheat/rice.
Stock is kept with respective Govt agencies like FCI. So, Bank doesn’t hv a HQ as such.
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 682
And / or to double the farmers income, we’ve to focus on Horticulture / Floriculture / Fisheries /
Animal Husbandry / Poultry / Food Processing / Extension Services and therefore addressing
aforementioned <insert name of > challenges is need of the hour.
40.37✍ MAINS QS FROM AGRICULTURE IN PREVIOUS UPSC EXAMS
Suggested reading?
1) Cropping Pattern, Irrigation Types: Prepare from Geography
2) Web-resources mentioned in this handout for Food processing and land reforms.
3) Intro conclusions of past five years’ economic surveys (usually their vol2 ch.7 deals with Agro).
4) Chief Editor’s Desk (Preface) of last 2 years’ Yojana & Kurukshetra magazines from
http://yojana.gov.in/Recent_archive_2018.asp (change year number for getting previous Archives). If a
particular month’s magazine issue is devoted to Agro → further go through index & refer to article
inside it depending on exam requirement.
40.37.1 ✍Mains Questions: Agro → Cropping & irrigation & Land Reforms
GSM3 Syllabus Topic: Major crops cropping patterns in various parts of the country, different types
of irrigation and Land reforms in India.
What is Integrated Farming System? How is it helpful to small and marginal farmers in India? 2022
समेिकत कृ �ष प्रणाली �ा है? भारत म� छोटे और सीमांत िकसानों के �लए यह कै से लाभदायक हो सकती है?. ✅Solved in
Youtube
How did land reforms in some parts of the country help to improve the socio-economic 2021
conditions of marginal and small farmers? देश के कु छ भागों म� भू�म सुधारों ने सीमांत और लघु िकसानों क�
सामा�जक-आ�थक ���त िक सुधारने के �लए िकस प्रकार सहायता क� है? ✅Solved in FREE CLASS
Q04. How and to what extent would micro-irrigation help in solving India's water crisis? भारत के 2021
ं ाई कै से और िकस सीमा तक सहायक होगी? ✅Solved in FREE CLASS
जल सं कट के समाधान म�, सू�-�सच
What is the present challenges before crop diversification? How do emerging technologies 2021
provide an opportunity for crop diversification? फ़सल �व�वधता है के सम� मौजूदा चुनौ�तयाँ �ा ह�? उभरती
प्रौद्यो�गक�याँ फ़सल �व�वधता के �लए िकस प्रकार अवसर प्रदान करती है ? ✅Solved in FREE CLASS
What are the major factors responsible for making rice-wheat system a success? In spite of this 2020
success how has this system become bane in India? (धान-गे�ं प्रणाली को सफल बनाने के �लए कौन-से प्रमुख
कारक उ�रदायी ह�? इस सफलता के बावजूद यह प्रणाली भारत म� अ�भशाप कै से बन गई है?)
How far is the Integrated Farming System (IFS) helpful in sustaining agricultural production? 2019
Elaborate on the impact of the National Watershed Project in increasing agricultural production
from water-stressed areas.
Sikkim first ‘Organic State’ in India. What are the ecological and economical benefits? 2018
Assess the role of National Horticulture Mission (NHM) in boosting the production, productivity 2018
and income of horticulture farms. How far has it succeeded in increasing the income of farmers?
How has the emphasis on certain crops brought about changes in cropping patterns in recent 2018
past? Elaborate the emphasis on millets production and consumption.
What are the major reasons for declining rice and wheat yield in the cropping system? How crop 2017
diversification is helpful to stabilize the yield of the crop in the system?
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 683
What is water-use efficiency? Describe the role of micro-irrigation in increasing the water-use 2016
efficiency.
What is allelopathy? Discuss its role in major cropping systems of irrigated agriculture. 2016
Given the vulnerability of Indian agriculture to vagaries of nature, discuss the need for crop 2016
insurance and bring out the salient features of the Pradhan Mantri Fasal Bima Yojana (PMFBY)
Discuss the role of land reforms in agricultural development. Identify the factors that were 2016
responsible for the success of land reforms in India.
Establish the relationship between land reform, agriculture productivity and elimination of 2013
poverty in Indian Economy. Discussion the difficulty in designing and implementation of the
agriculture friendly land reforms in India.
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 684
What are the reasons for poor acceptance of cost effective small processing unit? How the 2017
food processing unit will be helpful to uplift the socio-economic status of poor farmers?
Livestock rearing has a big potential for providing non-farm employment and income in 2015
rural areas. Discuss suggesting suitable measures to promote this sectors in India
In view of the declining average size of land holdings in India which has made agriculture 2015
non-viable for a majority of farmers, should contract farming and land leasing be
promoted in agriculture? Critically evaluate the pros and cons.
What are the impediments in marketing and supply chain management in industry in 2015
India? Can e-commerce help in overcoming these bottlenecks?
There is also a point of view that agriculture produce market committees (APMCs) set up 2014
under the state acts have not only impeded the development of agriculture but also have
been the cause of food inflation in India. Critically examine.
India needs to strengthen measures to promote the pink revolution in food industry for 2013
better nutrition and health. Critically elucidate the statement.
40.37.4 ✍Mains Questions: Agro → MSP
GSM3 Syllabus Topic: Farm subsidies and MSP and issues therein (direct and indirect); PDS
(objectives, functioning, limitations, revamping, issues of buffer stocks & food security)
Critically examine the need and feasibility of providing agriculture-debt waiver to small mock
and marginal farmers of India. कजार् माफ� देने क� ज�रत और �वहा�रकता पर गं भीर समी�ा क��जए
Enumerate the salient features of the agriculture reform laws issued by the union mock
government in 2020 and discuss the reasons behind their repeal. (क� द्र सरकार द्वारा 2020 म� जारी
िकए गए कृ �ष सुधार क़ानूनों के मु� प्रावधानों क� सूची दी�जए और उ�� हटाने/रद करने के कारणो क� चचार् क��जए)
What are the reformative steps taken by the government to make food grain distribution 2019
system more effective? Ref: Pillar6: Hunger
What do you mean by Minimum Support Price (MSP)? How will MSP rescue the 2018
farmers from the low income trap?
How do subsidies affect the cropping pattern, crop diversity and economy of farmers? 2017
What is the significance of crop insurance, minimum support price and food processing
for small and marginal farmers?
“In the villages itself no form of credit organisation will be suitable except the 2014
cooperative society.” – All Indian rural credit survey. Discuss this statement in the
background of agriculture finance in India. What constraints and challenges do financial
institutions supplying agricultural finances? How can technology be used to better reach
and serve rural clients?
Food security bill is expected to eliminate hunger and malnutrition in India. Critically 2013
discuss various apprehensions in its effective implementation & concerns it has
generated in WTO.
What are the different types of agriculture subsidies given to farmers at the national and 2013
state levels? Critically analyze the agriculture subsidy regime with the reference to the
distortions created by it.
�Next HDT: Pillar4B: Sectors of Economy → MFG, MSME, Make/Assemble in India etc.
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 685
Pillar4B: sectors of Economy: MFG, Startup-IPR, Make in India, EoD, MSME-Textile
Table of Contents
41 �Mfg & Services: Industrial policy and LPG reforms ...............................................................690
41.1 �Liberalization, Privatization and Globalization? ............................................................691
41.1.1 � Liberalization :उदारीकरण .............................................................................................691
41.1.2 💂💂 → �Privatization: �नजीकरण .....................................................................................692
41.1.3 🌐🌐Globalization: वै�ीकरण ................................................................................................693
41.2 🤖🤖Beyond LPG → towards 4th Industrial Revolution ......................................................693
41.2.1 🤖🤖🤖🤖 GPAI – the new GANG for A.I. (2020-June) ................................................694
41.2.2 🤖🤖 Beyond LPG → 4th Industrial Revolution → New Industrial Policy .............694
41.2.3 🤖🤖 4th Industrial Revolution → Samarth Udyog Bharat 4.0 ..................................694
41.3 ⛸🗑🗑🗑🗑🗑🗑 Circular Economy (प�रक्रामी अथर्�व�ा) ..........................................................695
41.3.1 🏭🏭 Circular Economy: Business Models ......................................................................696
41.3.2 🚧🚧Circular Economy: Roadmap for India/how to achieve? ....................................698
41.3.3 🚧🚧Circular Economy: India Plastics Pact (IPP) 2021 ....................................................698
41.4 �Mfg Policy → National Mfg Policy 2011: रा��ीय उ�ादन नी�त .............................................698
41.4.1 🏭🏭 Mfg Infrastructure → NIMZ, रा��ीय उ�ादन और �नवेश �ेत्र .........................................699
41.4.2 🏭🏭 Mfg Infrastructure → Industrial Corridors (औद्यो�गक ग�लयारे) .............................699
41.5 �🦁🦁 Mfg & Services → Make in India: Why? (2014) ....................................................700
41.6 �🦁🦁 Make in India: How?...................................................................................................702
41.7 �🦁🦁:📟📟 📺📺📺📺 Mfg: Assemble in India (अस�बल इन इं िडया) ..............................................705
41.7.1 �🦁🦁:📟📟 📺📺📺📺: Assemble in In India → “Network products” ........................705
41.7.2 �🦁🦁:📟📟 📺📺📺📺: Assemble in In India → how will it benefit India? ...............706
41.7.3 �🦁🦁:📟📟 📺📺📺📺: Assemble in In India → Wild Geese Flying Model (1960s) ..706
41.7.4 �🦁🦁:📟📟 📺📺📺📺: Assemble in In India → Policy recommendations? ...............706
41.7.5 👻👻👻👻👻👻:🧔🧔🧔🧔Production Linked Incentive Scheme (PLI: उ�ादन आधा�रत प्रो�ाहन)
707
41.7.6 👻👻👻👻👻👻:🧔🧔🧔🧔 PLI Scheme ke 13 Sectors ....................................................................707
41.7.7 👻👻👻👻👻👻:🧔🧔🧔🧔 -🤩🤩PLI Scheme: Benefits?..............................................................708
41.8 🌱🌱🌱🌱 Mfg & Services → Startup India (2016) ...................................................................708
41.8.1 🌱🌱🌱🌱:💼💼 Budget-2019 on Start-ups ...........................................................................709
41.8.2 🌱🌱🌱🌱:💼💼 Budget-2020, 2021 and 2022 on Start-ups ...............................................709
41.8.3 🌱🌱🌱🌱 Startup: Misc Terms and trends ........................................................................709
41.8.4 🌱🌱🤵🤵 Startup: Factors affecting new firms creation (📔📔📔📔ES20) .........................710
41.9 🦁🦁🦁🦁 Mfg Policy → National Policy on Electronics 2019 ...............................................710
41.9.1 🔌🔌🔌🔌Mfg → Electronics Development Fund (EDF: इले��ॉ�नक� �वकास �न�ध) .............711
41.9.2 🔌🔌🔌🔌Mfg → Design Linked Incentive (DLI) for Semi-Conductor Chips .................712
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 686
41.9.3 🦁🦁🦁🦁 → National Digital Communications Policy (2018) ..................................712
41.9.4 🦁🦁🦁🦁 → National Policy on Software Products - 2019 ..........................................712
41.9.5 🦁🦁🦁🦁 → Quantum Technology (�ांटम प्रौद्यो�गक�) 2020 ..............................................712
41.10 🌱🌱🌱🌱⚠ Startup Criticism / challenges (�नदं ा/आलोचना) ......................................................713
41.11 🌱🌱🌱🌱 → 🤒🤒 Startup → (SHUTDOWN) “EXIT” of Sick Industries .............................714
42 🔬🔬Mfg & Services → Intellectual Property Rights .......................................................................715
42.1.1 🔬🔬🕵🕵WIPO is known for...............................................................................................715
42.1.2 🔬🔬IPR → Indian Laws ....................................................................................................715
42.2 🔬🔬IPR → Patents → What can’t be Patented? ...................................................................716
42.3 🔬🔬IPR → Patents → Compulsory Licensing (अ�नवायर् लाइस��सगं ) .........................................716
42.3.1 🔬🔬🔬🔬Patent pools (पेटंटो का समूहीकरण) ............................................................................717
42.3.2 🔬🔬🔬🔬Trips Waiver demand by India & S.Africa .......................................................718
42.3.3 💊💊India can be "pharmacy of the world" says 📔📔📔📔ES21 .......................................718
42.4 🔬🔬IPR → Evergreening of Patents (पेट�ट को सदाबहार करना / रखना) ..........................................719
42.5 🔬🔬IPR → Utility Patents: उपयो�गता पेट�ट ...................................................................................719
42.6 🔬🔬🔬🔬 IPR → National IPR Policy 2016 ...............................................................................719
42.7 🔬🔬🔬🔬 = Patents Approval Speed very slow in India- says 📙📙📙📙ES22 😥😥 ........................720
42.7.1 🔬🔬🔬🔬 = Reasons for slow speed in Patent Approval: (पेट�ट-अज़� �न�ादन म� देरी के कारण:)
720
42.8 🔬🔬🔬🔬 IPR → Notable Schemes (कु छ उ�ेखनीय योजनाएं ).........................................................720
42.9 🔬🔬🔬🔬 IPR → Indices & Rankings ........................................................................................722
42.9.1 🔬🔬🔬🔬 IPR Index → Global Innovation Index (GII: वै��क नवीनीकरण सूचकांक) ..........722
42.9.2 📊📊 Index → Global Competitiveness Index (GCI) by WEF...................................722
42.9.3 📊📊 Index → NITI’s India Innovation Index (भारत नवाचार सूचकांक) ............................722
42.9.4 🔬🔬🔬🔬 IPR Index → Misc. फालतू वाले ..............................................................................723
42.10 🔬🔬🔬🔬 Pvt sector not spending enough ₹₹ on R&D says ES21 ..........................................723
42.10.1 🔬🔬🔬🔬 Number of patents filed by a resident of a given country ..............................723
42.10.2 🔬🔬🔬🔬 Gross domestic expenditure on Research & Development (GERD) ...........723
43 🏄🏄Sectors: Ease of Doing Business Report ...................................................................................724
43.1.1 🏄🏄📊📊EoD → Indian States’ EoD: BRAP Ranking ....................................................725
43.1.2 🏄🏄📊📊EoD → Economic Freedom of the World .......................................................725
43.1.3 📔📔📔📔ES20 Vol1ch6 on Ease of Doing Biz in India: observed...................................725
43.1.4 🏄🏄 EODB 2.0 in 👜👜👜👜Budget-2022 (�ापार सुगमता का दू सरा चरण) .....................................726
43.2 🤵🤵🤵Pro-Business vs Pro-Crony, 📔📔📔📔ES20Vol1Ch3 ....................................................726
43.2.1 �🤝🤝🤝🤝Cronyism: Related Party Transaction (RPT: सं बं�धत प�ों से लेनदेन) .............726
43.2.2 �🤲🤲: 🛒🛒🛒🛒Cronyism: Economist David Ricardo & Rent Seeking ....................727
43.2.3 🤵🤵🤵 Pro-business vs Pro-Crony Policies ..................................................................727
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 687
43.3 🏄🏄⚖ Ease of doing Biz → Judicial Reforms: �ा�यक सुधार .................................................728
43.3.1 🏄🏄⚖: 🕵🕵 Suggested reforms#1: recruit more judges (�ायाधीशों क� भत�) ................728
43.3.2 🏄🏄⚖: 🕵🕵 Suggested reforms#2: Create a new Judicial Administrative Service..729
43.3.3 🏄🏄⚖: 🗓🗓🗓🗓 Suggested reforms#3: ⏫ courts’ working days (अदालत क� छु �ट्टयाँ कम
करो) 729
43.3.4 🏄🏄⚖: 📡📡📡📡 Suggested reforms#4: E-governance, ICT-Technology ..................729
43.3.5 🏄🏄⚖: 📡📡📡📡 ENFORCING CONTRACTS PORTAL (2021-June) ..........................729
43.3.6 🏄🏄⚖: International Arbitration Centre @GIFT city - in 👜👜👜👜Budget-2022..........730
43.3.7 🏄🏄⚖: ✍Conclusion on Judicial reforms? (�न�षर्) .................................................730
43.3.8 🕵🕵🤲🤲🤲🤲Transparency International → Corruption Perceptions Index ..............730
43.4 🕵🕵🕵🕵 ES21: Over regulation in India ...................................................................................731
43.4.1 🕵🕵🕵🕵 Overregulation & Uncertainty (अ�त �नयमन तथा अ�न��तता) ................................731
43.4.2 🕵🕵🕵🕵 Overregulation: Way Forward- TORA Act (आगे का रा�ा) ..............................731
43.4.3 🕵🕵🕵🕵 Overregulation Solution: Doctrine of Business Judgment Rule ...................732
43.4.4 🕵🕵🕵🕵 Overregulation Solution: ‘Minimum Government and Maximum
Governance’: ...........................................................................................................................................732
43.4.5 🕵🕵🕵🕵 Overregulation Solution: Tribunals Reforms Ordinance, 2021-April ........732
43.5 🏄🏄👷👷Ease of doing Biz → Labour Reforms : श्रम सुधार ........................................................733
43.6 👷👷Ease of doing Biz → Fixed Term Employment 2018 .....................................................735
43.7 👷👷💰💰 Minimum Wages (�ूनतम वेतन) ......................................................................................735
43.7.1 👷👷💰💰⚖ Minimum Wages Act (�ूनतम मजदू री अ�ध�नयम 1948) ...................................736
43.7.2 👷👷💰💰 Minimum Wage Reform: Anoop Satpathy Committee (2019) .....................736
43.8 👷👷💰💰💰💰 Minimum Wages → Code on Wages 2019 (वेतन कोड/ सं िहता) ............................737
43.8.1 👷👷💰💰💰💰 Code on Wages 2019 →Salient Features (figures not IMP) ....................738
43.8.2 📔📔📔📔 ES19 on Minimum Wages reforms (what more we can do?)........................739
43.8.3 � Conclusion: Indeed minimum wage enforcement is important........................739
43.9 🏄🏄🏭🏭Ease of doing Biz (EoD) → Factories Act reforms..................................................740
43.9.1 🏭🏭⚖ Factories (Amendment) Bill, 2014 ...................................................................741
43.10 �⚔�(EoD) → Industrial Dispute Act 1947, 2010 .......................................................741
43.11 🏄🏄🤳🤳Ease of doing Biz → Shram suvidha Portal (2014) ................................................741
43.11.1 👷👷 🖱🖱 Worker Types → Unorganized workers → E-Shram Portal for them (2021-
Aug) 742
43.12 🏄🏄🤳🤳 😷😷😷⚖EoD → Corona: Suspension of Labour Laws? ....................................742
43.12.1 😷😷😷⚖Corona Suspension Labour laws: Union says NO!! .................................742
43.12.2 😷😷😷⚖ DON'T punish employers if they can't pay full salaries- SC ...................743
43.12.3 😷😷😷⚖ Banking = Public Utility Service (सावर्ज�नक उपयो�गता सेवा) ..........................743
43.13 🏄🏄🛒🛒Ease of doing Biz → Building Homes & Running Shops.......................................744
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 688
43.13.1 🏄🏄🛒🛒Ease of doing Biz → Model Shops & Establishments Bill, 2016 ..................744
43.13.2 🏄🏄🏡🏡Ease of doing Biz → Real Estate Regulation & Development Act (RERA) 744
44 Sectors of Economy → Mfg → 👘👘Textile & MSME ..................................................................746
44.1 �👘👘Textiles Ministry (कपडा / व� मं त्रालय) ...........................................................................746
44.1.1 👘👘👘👘👘👘 Textile Ministry → Notable schemes / initiatives ...................................747
44.1.2 👘👘👘👘Textile & Leather Industry: Past Economic Surveys’ suggestions: ...............748
44.2 👶👶👶👶 Mfg & Services → MSME → Ministry ..................................................................749
44.2.1 �👶👶👶👶 MSME Problems: RBI’s UK Sinha report (2019) .....................................750
44.3 🧔🧔🧔🧔MSME: Truckload of Scheme/Initiatives ......................................................................751
44.3.1 🧔🧔🧔🧔MSME Ministry → PM's Employment Generation Programme (PMEGP-
2008) 751
44.3.2 👶👶👶👶👶👶👶👶 MSME Ministry → Public Procurement Order(सावर्ज�नक खरीद/अ�धप्रा��
आदेश) 751
44.3.3 👶👶👶👶👶👶👶👶👶👶 Public Procurement → GeM Portal .............................................751
44.3.4 🛒🛒🛒🛒Public Procurement → Various Models – L1, QCBS, SSS- in 📙📙📙📙ES22 ....752
44.3.5 🧔🧔🧔🧔 MSME → PM's Initiatives for MSMEs (2018, Nov) .....................................752
44.3.6 🗺🗺One District One Product (ODOP: 2021) ..............................................................753
44.3.7 👻👻👻👻👻👻👻🏭🏭 MSME → Atma-Nirbhar Funding/Schemes (2020, Corona) ..753
44.3.8 👶👶👶👶Ubharte Sitaare Programme for MSME Exporters (USP: 2021-Aug) ..............753
44.4 👶👶🏭🏭 🧔🧔🧔🧔 MSME Ministry → Misc. Initiatives ..............................................................753
44.4.1 🧔🧔🧔🧔 MSME Ministry → ASPIRE (2015) ................................................................753
44.4.2 🧔🧔🧔🧔MSME Ministry → Solar Charkha Mission (2018) .......................................754
44.4.3 🧔🧔🧔🧔MSME Ministry → Gramodyog Vikas Yojana ..............................................754
44.4.4 🧔🧔🧔🧔MSME Ministry → Portals / Helplines ...............................................................754
44.4.5 🧔🧔🧔🧔 MSME: Funds for their development ...................................................................755
44.5 📔📔📔📔 �↘�🏭🏭 ES19: MSME dwarfism shd be discouraged (बौनापन) ..........................755
44.5.1 �↘�🏭🏭: 🧔🧔 MSME ‘Dwarfism’ is caused by Govt schemes .........................756
44.5.2 �↗🤴🤴🤴🤴 MSME ‘Dwarfism’: Suggested Reforms by ES19 ..............................756
44.5.3 👻👻 �🏭🏭 ATMANI: MSME Definition Changed by Government .......................757
44.5.4 � Conclusion-Template for MSME (�न�षर्) ..............................................................757
45 �💿💿Service Sector (सेवा �ेत्र) ..........................................................................................................758
45.1.1 �💿💿Service Sector: IT & BPM....................................................................................758
45.1.2 �💿💿Other Service Provider (OSP) guidelines of the Department of Telecom. .758
45.1.3 �💿💿💿💿: Knowledge economy of India: Threats/Challenges ................................759
45.1.4 Sunrise sector in 👜👜👜👜Budget-2022 (सूय�दय �ेत्र: जहाँ तेज़ वृ�द्ध क� सं भावना) ........................759
45.2 🖱🖱🖱🖱 SERVICE SECTOR → E-Commerce (ई वा�ण� / ऑनलाइन �बक्र�) ...................................759
45.2.1 🖱🖱🖱🖱 E-Commerce Rules 2019-Feb .............................................................................760
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 689
45.2.2 🖱🖱🖱🖱 E-Commerce: (Draft) CONSUMER PROTECTION (E-COMMERCE) RULES,
2020 760
45.2.3 🖱🖱🖱🖱🖱🖱 Criticism against E-COMMERCE) RULES: (आलोचना) ..................................761
45.2.4 🖱🖱🖱🖱 E-Commerce: Open Network for Digital Commerce (ONDC): .......................761
45.3 🕵🕵 Mfg → Bodies for quality standards (गुणव�ा के मानक) ....................................................762
45.3.1 🕵🕵Consumer Affairs Ministry → Statutory → BIS (1986).......................................762
45.3.2 🕵🕵 Power Ministry → Statutory → BEE (2001-02) ...................................................763
45.3.3 🕵🕵 Health ministry→ Statutory → FSSAI (2006) ......................................................764
45.3.4 🕵🕵 Commerce Ministry → Not-Statutory → QCI (1997) .......................................765
45.3.5 🕵🕵 Commerce Ministry → Not-Statutory → NPC (1958) ......................................766
45.3.6 🕵🕵🥇🥇One Nation, One Standard Scheme (2019) ..........................................................766
45.3.7 PARAKH Laboratory Network (2021) ..............................................................................766
45.4 🕵🕵🛒🛒 Consumer Protection Act, 2019 (उपभो�ा सं र�ण) .....................................................766
45.4.1 🕵🕵🛒🛒 Consumer Protection Act 2019 → bodies → Consumer court ..................766
45.4.2 🕵🕵🛒🛒 Consumer Protection Act 2019 → bodies → others.....................................767
45.4.3 🕵🕵🛒🛒 Consumer Protection Act 2019 → Features (प्रमुख/मु� प्रावधान) ....................767
45.5 ✍🎺🎺 Mains Questions in Previous GSM2 & GSM3 ........................................................768
45.5.1 ✍🎺🎺 Mock Questions for Mains ................................................................................768
45.5.2 ✍🎺🎺 Mock Questions for Mains → Post Independence: PM Rao (2020) ..........769
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 690
41.1 �LIBERALIZATION, PRIVATIZATION AND GLOBALIZATION?
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 691
41.1.2 💂💂 → �Privatization: �नजीकरण
1. Allowing private sector to enter into the sectors which were previously reserved for public sector
companies only, सावर्ज�नक �ेत्र के �लए आर��त उद्योगों म� �नजी �ेत्र क� कं प�नयों को अनुम�त देना
2. Converting public sector companies to private sector companies by reducing Government
shareholding to below 50% (📑📑Pillar#2 → Disinvestment)
Till 1991 After LPG-reforms
many of the industrial sectors were reserved for Only following industries are reserved for
the public sector Industries only → no public sector undertakings
competition, lack of innovation. कई �ेत्र सरकारी 1. Atomic Energy (परमाणु ऊजार्)
कं प�नयों के �लए आर��त थे. �नजी �ेत्र के उद्य�मयों को आने क� 2. Railways (now even there private train
मनाई। �धार् और नवाचार क� कमी
operators allowed (More in 📑📑Pillar#5)
Government would nationalise private sector - Stopped the practice of nationalisation.
industries in the national interest such as - Private sector companies were allowed in
banking, insurance, aviation. (�नजी कं प�नयों का Banking, Insurance, aviation, telecom and
रा��ीयकरण)
other sectors.
- रा��ीयकरण क� प्रिक्रया बं ध क�, और �नजी क��नयों को
ब�िकंग बीमा उड्डयन दू रसं चार इ�ािद �ेत्रों म� अनुम�त दी
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 692
41.1.3 🌐🌐Globalization: वै�ीकरण
Globalization is a process in which nations allow free flow of goods, services, labour, capital
investment, technology, ideas and innovations. व�ु, सेवाओं, श्रम, पूंजी �नवेश, प्रौद्यो�गक�, और �वचारों नवाचारों के
मु� प्रवाह क� प्रिक्रया को वै�ीकरण कहते ह�
😰😰Till 1991 🤩🤩After LPG-reforms
Inward looking economy, Import substitution India joined the WTO-regime, we gradually
policy, variety of tariff & non tariff barriers on relaxed the tariff and non tariff barriers on the
the imported goods & services → problem of imported goods and services. (Ref:
smuggling.(आयात प्र�त�ापन नी�त, शु� और गैर शु� 📑📑Pillar#3B)
बाधाए, त�री)
Very strict controls on currency convertibility, Norms where relaxed (Ref: 📑📑Pillar#3A)
foreign companies, and foreign investment. (मुद्रा (�नयमों म� ढील / छू ट)
प�रवतर्नीयता, �वदेशी �नवेश पर स� �नयं त्रण/रोक)
Further self study on the LPG reforms from NCERT class 11 ch.2 and 3. Mains Answer writing about
LPG reforms: youtube.com/user/TheMrunalPatel/search?query=rao
41.2 🤖🤖BEYOND LPG → TOWARDS 4TH INDUSTRIAL REVOLUTION
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 693
Timelines (Approx.) Industrial revolutions & their major components
before you arrive at home.)
- The 4th Industrial Revolution = automation of mfg processes through "smart factories" where
cyber-physical systems will make decisions, minimizing wastages, optimizing the use of energy
and raw material. (चौथी औद्यो�गक क्रां�त = �ाटर् कारखानों म� �व�नमार्ण, ऊजार् और क�े माल के �य म� कमी)
- Germany, France, China, USA etc. have already launched government funded programs
- 2017: Commerce ministry set up a taskforce on AI for India's economic transformation under
Dr. V. Kamakoti. 2018: Defense ministry set up a taskforce on AI for national security under N.
Chandrasekharan of Tata Sons. (इस मामले पर सरकार द्वारा �व�भ� स�म�तयों का भी गठन �आ है)
- 2018-Budget gave ₹100 crore to Department of Science & Technology for a mission on cyber
physical systems. NITI Ayog working on National Artificial Intelligence Mission.
- 2019-Budget announced a National Programme on 'Artificial Intelligence'.
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 694
machinery etc. (रा��ीय पूंजीगत माल नी�त) Sidenote: Textile Ministry’ SAMARTH scheme= skill
development in textile sector.
41.3 ⛸🗑🗑🗑🗑🗑🗑 CIRCULAR ECONOMY (प�रक्रामी अथर्�व�ा)
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 695
41.3.1 🏭🏭 Circular Economy: Business Models
A Circular Economy functions on following business models:
1) �Circular Supply Chain (प�रक्रामी आपू�त श्रृंखला): recyclable input materials. E.g. Used newspapers
→ pulp → paper rims for printing new newspapers.
2) Recovery & Recycling (बरामदगी और पुननर्वीनीकरण):
a. ���� Nike uses scraps of used shoes for filling sports surfaces like basketball
courts, tennis courts, etc.
b. ��� Japan decided to manufacture gold, silver and bronze medals for the 2021
Tokyo Olympics by extracting precious metals from electronic waste only. (ओलं �पक के पदक
म� धातु)
c. India can extract $1 billion worth gold from e-waste, 8 million tonnes of steel from
scrapped vehicles. In India, only 60% plastic is recycled, if we achieve 100% → ~14
lakhs jobs.
d. Homework? Environment → Plastic Waste Management Rules
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 696
3) �Product Life Extension (उ�ाद का जीवन �व�ार): through R&D, we can extend working lifecycle
of products, right to repair laws, refurbishment, upgrading and reselling of second-hand goods
esp. in mobile, laptop, TV, other consumer electronics and vehicle through olx, quikr etc.
4) �Sharing Platform / ownership (साझा करना): Airbnb app allows homeowners to rent their
property for short term to tourists. Uber uses taxis to deliver food. Thus, asset owners can gain a
new revenue stream, while construction for separate hotel, separate food-delivery trucks decline
= resource conservation.
5) �Product as a Service (उ�ाद एक सेवा के �प म� बेचना):
a. �Microsoft Office disk costs $150, however, they also offer Office365 as a ‘software
subscription service’ with deep discount for students so they can afford it at $1 per
month. This discourages piracy → more revenue to company → more R&D for future
upgrades.
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 697
b. �Some companies allow short term renting of computers, cameras and other gadgets
→ less generation of e-waste by consumers who don’t want the gadget on 24/7 basis.
c. �In some countries, Philips offers lighting as a service, wherein users are required to
pay for the consumed intensity, rather than how many bulbs purchased.
� Conclusion: Circular Economy aims at minimising waste and making the most out of the
available resources. SDG Goal#12 requires nations to ensure sustainable consumption and
production patterns. Therefore, we must focus on Circular Economy on war-footing. Taking note of
this, 👜👜👜👜Budget-2022 announced to focus on electronic waste, end-of-life vehicles, hazardous
industrial waste for promoting circular economy. (सं साधनों के अप�य म� कमी, सतत �वकास ल� क� प्रा��, अग्रता
क्रम से इस पर काम करना होगा. इसी को �ान म� रखते �ए नए बजट म� भी प�रक्रामी अथर्तंत्र पर ज़ोर िदया गया है).
41.4 �MFG POLICY → NATIONAL MFG POLICY 2011: रा��ीय उ�ादन नी�त
Boss? Commerce ministry → DIPP / DPIIT. (वा�ण� मं त्रालय)
- Target? To ⏫ manufacturing’s share in GDP to 25% by 2022, & create 100 million jobs.
- For this target, Govt will pursue ease of doing business, skill upgradation for young workforce,
funding for innovation & green Technologies (�वसाय करने म� आसानी, युवा के �लए कौशल, नवाचार और ह�रत
प्रौद्यो�गक� के �लए �व� पोषण)
- Creating National Investment and Manufacturing Zone (NIMZ).
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 698
41.4.1 🏭🏭 Mfg Infrastructure → NIMZ, रा��ीय उ�ादन और �नवेश �ेत्र
- NIMZ is an ‘industrial township’ containing Special Economic Zones, Industrial Parks &
Warehousing Zones, Export Oriented Units etc.
- NIMZ are given additional support by government e.g.
- Tax incentives, Relaxed norms for FDI approval (करों,�वदेशी प्र�� �नवेश म� �रयायत)
- Providing Rail, Road, energy, communication connectivity, schools-hospitals & other
social infrastructure for the workers, etc. in a time bound manner. (सं चार प�रवहन क� बु�नयादी
सु�वधाएँ )
- relaxations in the labour laws e.g. women allowed to work in night shift, easier hiring-
firing norms: काम पर रखने के - �नकालने के आसान मानदंड.
- NIMZ will be treated as self-governing bodies under Article 243(Q-c) of the Constitution. So the
traditional norms related to Municipality, its functions, election of ward members etc. will not
apply for this township area. (नगरपा�लका के पारंप�रक �नयम यहां पर नहीं लागू होते)
- We have more than 15 NIMZ such as Ahmedabad-Dholera Investment Region@Gujarat, Dadri-
Noida-Ghaziabad investment Region@Uttar Pradesh, Manesar-Bawal Investment
Region@Haryana etc.
- Previously, Delhi Mumbai Industrial Corridor had setup Special Investment Regions (SIR) in its
region. They’re converted into NIMZ.
- 2017: Commerce ministry launched Industrial Information System (IIS), a GIS-enabled
database of industrial areas across the country. This helps entrepreneurs to find out raw material,
distance from key transport hubs etc.
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 699
- 2017: Commerce Ministry approved Defence Park at Pallakad, Kerala.
- 2018: Two Defence Industrial Production Corridors: 1) Tamil Nadu 2) Uttar Pradesh.
Related? infrastructure, National Investment & Infrastructure Fund (NIIF) etc. in Pillar#5
Previous economic surveys observed that nations improve their GDP using three ways
1. Geology (भूत� खनन): Energy & Minerals resources e.g. W. Asia, Australia, Canada. India’s
challenges? Not enough crude oil resources, we still lack cost-effective technologies for large-
scale exploration of Shale gas and nuclear minerals. (�सफ़र् इस से भारत का GDP बढ़ाया नहीं जा सकता)
2. Geography (भूगोल पयर्टन): Tourism e.g. Mauritius, Caribbean. India’s challenges? While India has
great tourism potential due to its geographical, climatic and cultural diversity. But, tourism
income alone cannot sustain a large nation like India. (�सफ़र् पयर्टन क� आमदनी से भारत देश नहीं चल सकता।)
3. Jeans to Jets: As agrarian economy evolves, it’ll begin producing low-skill items like jeans →
further growth & technological advancements to produce jets, software & other high-skilled
goods and services → then country will outsource the jean mfg. to other third world nations.
USA grew like this. China, Thailand, Indonesia, Malaysia and other East Asian economies
pursuing this model. (कम कौश� द्वारा �न�मत व�ुओ ं से शु�आत, िफर उ� कौश� द्वारा �न�मत व�ुओ ं क� तरफ गमन –
जैसा अ� पूव� ए�शयाई देशों ने िकया, भारत म� भी करना चािहए)
India’s case is unique because post LPG-reforms we directly jumped from Agriculture to IT/service
sector. Our growth in (low skill) mfg sector was sub-optimal due to 1) Electricity, road and other
infrastructural bottlenecks 2) Outdated factory and labour laws that prevent ease of doing business.
(हालाँिक भारत म� ये हो नहीं पाया �ोंिक �बजली सड़क और अ� बु�नयादी अवसं रचना क� कमी थी तथा फै �री कानून-श्रम कानून के
जजर्र प्रावधानो के चलते उद्योगप�तयों को �ापार म� सुगमता नहीं थी )
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 700
➢ In the advanced economies, not more than 25% of the population engaged in agri: USA 4%, UK
5%, France 14%, Australia 16%. (�वक�सत देशों के �ादातर श्र�मक कृ �ष नहीं िकंतु औद्यो�गक �ेत्रों म� काम करते ह�)
➢ Whereas in India >40%, because the non-agricultural sector has not been adequately developed
to absorb the labourers from the growing population. (बढ़ती आबादी को रोजगार देने के �लए)
➢ Demographic dividend= economic growth potential when share of the working-age population
becomes larger than the non-working-age population. India 65% population is below the age of
35 age. (जनसं �ा क� लाभांश: जब ब�ों और बुजुग� का अनुपात नौजवानों क� आबादी के सामने/ अनुपात म� कम हो)
➢ Industries use raw materials from agriculture and agriculture sector needs industrial equipment
and machinery such as pump set, tractor, electricity etc. So both are complementary to each
other. Industrial activities provide higher wages / remuneration than agricultural labour.
(औद्यो�गक �ेत्र म� कृ �ष �ेत्र से �ादा वेतन)
➢ So, industrialization is the only answer to reap India’s demographic dividend. Further, to double
farmers’ income, some of the small-marginal farmers should opt for industrial / service sector
jobs so that land consolidation & mechanization can help doubling the incomes for rest of the
farmers. (भू-एक�करण और मशीनीकरण द्वारा िकसानों क� आय को दोगुना करना)
Keeping these angles in mind, 2014: PM Modi launched ‘Make in India (मेक इन इं िडया)’
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 701
41.6 �🦁🦁 MAKE IN INDIA: HOW?
Nodal? Commerce ministry. (वा�ण� मं त्रालय)
Objective? Promote India as global hub for manufacturing goods & services, design and innovation
in 25 sectors. Later it was expanded to total 27 sectors. Basically it focuses:
FDI norms relaxed for facilitating investment (�नवेश क� सु�वधा)
fostering innovation, research development (R&D) (नवाचार को बढ़ावा देना)
building infrastructure (बु�नयादी अवसं रचना)
making it easy to do business by relaxing the factory-labour-tax laws & administrative
procedures (�ापार करने म� आसानी प्रदान करना)
enhancing skill development (कौशल �वकास को बढ़ाना)
Sectors (�ेत्र) Make in India Initiatives- some notable examples
🚗🚗Auto National Automotive Testing and R&D Infrastructure Project (NATRiP)
Components project for encouraging R&D
🚗🚗Automobiles FAME-India [Faster Adoption and Manufacturing of (Hybrid &) Electric
Vehicles in India]. More in Pillar5: Infrastructure → transport
infrastructure.
Electric, Ethanol and Methanol Vehicles exempted from Permit.
🛩🛩Aviation National Civil Aviation Policy (NCAP) & UDAAN scheme to boost
उड्डयन regional air connectivity. Faster approval to the Greenfield airports in the
North East areas
2016: FDI policy relaxed for Aviation.
💊💊Biotech New biotechnology parks launched, FDI policy relaxed.
⚗Chemicals New plastic parks launched.
⚒Construction Real Estate (Regulation and Development) Act, 2016- for granting quick
मकान �नमार्ण permissions to the builders at the same time protecting the home buyers.
🔫🔫Defense Defence Procurement Procedure (DPP-2016: र�ा अ�धप्रा�� प्रिक्रया) :
Manufacturing Government will give first priority to the indigenously designed
र�ा श�ों का �व�नमार्ण developed and manufactured (IDDM) defence equipments.
Updated Defense Offset Norms (र�ा ऑफसेट मानदंड) i.e. when government
buys defence equipments from a foreign company, that foreign company
will have to reinvest “x%” of the income back into Indian industries.
👻👻 2020: Atma-Nirbhar:- Banned import of 101 defense items.
🔌🔌Electronic New electronic parks approved, subsidy to entrepreneurs for purchasing
System Design machinery.
National Electronics Policy 2019 <its salient features given under the
Standup India portion of this handout>
🍭🍭🍭🍭Food New Mega Food parks, cold storages, abattoirs approved.
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 702
Processing � 2020: Atma-Nirbhar:- needs funds & support (�Pillar#4A)
💾💾IT and IT 2016: 100% automatic FDI in market-place E-commerce.
enabled Services Post demonetisation many initiatives to ⏫digital payment systems.
(IT & ITeS) Pradhan Mantri Digital Saksharta Abhiyan (PMGDISHA), Digital India
Mission- All of them directly and indirectly increase the demand of
computer hardware and software.
Public Procurement (Preference to Make in India) Order 2017 which
requires govt depts to buy India-made desktops and computer parts.
👢👢 Leather India is 2nd largest producer of footwear, second largest exporter of leather
चमड़ा और जूता उद्योग garments. New leather parks and clusters to be approved
Global demand for footwear is moving towards non-leather footwear for
their comfort & cheapness, so we need R&D.
📡📡Audio-Visual Single window clearances for film shootings for foreign film makers in
Media and India. Relaxed the norms to start new private FM radio stations.
Entertainment Budget-2019: Previously Single Window clearance to foreigner film
मनोरंजन �ेत्र makers for shooting movies. This facility made open to Indian as well.
Cinematography Amendment bill: unauthorized camcording /
duplication of movie → upto 3 years jail + 10 lakh fine.
⛏🎖🎖Mining Mines and Minerals (Development and Regulation) Act (MMDR)
खनन amended in 2015-16 for ease of mining exploration.
� 2020: Atma-Nirbhar:- more reforms (�Ref: Pill#5)
⛽Oil and Gas Gas based Thermal Power Projects approved.
Gas grid projects to deliver gas through pipeline.
Strategic oil reserves created. Hydrocarbon Exploration and Licensing
Policy (HELP) 2016 To facilitate the exploration of all type of
hydrocarbons. (Ref�Pillar#3A)
PM-Ujjwalla yojana to encourage poor families adopt LPG - indirectly
boosts the demand & mfg of gas stoves, lighters etc. (Ref�Pillar#5)
💊💊Pharma Additional NIPER institutes approved → ⏫availability of trained
औष�ध manpower. FDI norms relaxed. Compulsory licensing of expensive
MNC-patented drugs to encourage generic drugs’ production in India.
<Ref: IPR portion of this handout.>
⚓Ports (बं दर) Sagarmala Project to improve port infrastructure.<Ref�Pill#5>
🚅🚅 Railways New Metro Rail Policy 2017 with public private partnership. Mumbai-
(अ��रथ) Ahmedabad high speed rail project with help of Japan.
Permitted private train operators (More in �Pillar#5)
🚗🚗 Highways Expressways between Vadodara Mumbai,Delhi-Mumbai, Bangalore-
(राजमागर्) Chennai etc.
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 703
NHAI approved new investment models.
Bharatmala project for highway construction. (More in 📑📑Pillar#5)
🔋🔋Renewable Preference to domestic manufacturers for purchasing equipment for
Energy Jawaharlal Nehru National Solar Mission and similar projects.
(नवीकरणीय ऊजार्) Although later USA complaint to WTO that it is a ‘non-tariff’ barrier.
(More in �Pillar#3B-WTO)
🛰🛰Space ISRO’s commercial arm Antrix Corporation Ltd. getting other countries
अवकाश to launch their satellites using ISRO’s expertise.
(Ref: Pill#5) � 2020: Atma-Nirbhar:- more reforms to encourage private sector in
space research / space tourism (Ref: Pill#5)
👚👚Textiles India Handloom Brand launched. Special Textile Package to increase jobs
कपड़ा उद्योग and machinery upgradation. Apparel and garment manufacturing parks
setup in North East.
🔥🔥Thermal Power New thermal power plants with green supercritical technology. UDAY
ताप ऊजार् scheme to cover the losses of distribution companies. DD Gram Jyoti
(Ref: Pill#5) Yojana & Saubhagya scheme to increase the electricity penetration in
rural households. Unnat Jyoti by Affordable LED for All (UJALA) scheme
to increase consumption of LED bulbs.
🥂🥂Tourism and e-Visa scheme, Swadesh Darshan scheme, PRASAD scheme etc. to
Hospitality, � increase tourism
Wellness Yoga day, AYUSH Ministry to attract foreigners for medical tourism
प्रवासन Tourism sector contributes significantly in terms of GDP, foreign
exchange earnings and employment. But growth rate has been falling in
recent years. So, ES18-19 suggested Government to promote Ayurveda,
Health and Medical Tourism in India so as to overcome the ‘seasonality’
aspect of recreational tourism.
Other services Medical Value Travel/medical tourism
Transport and Logistics, Communication
Accounting and Finance, Legal Services
Environmental Services, Education Services
** In 2018, Government expanded 25 sectors to 27 sectors. Some original sectors were
removed/renamed/modified/replaced. So, above list will not total to 27. But hairsplittery unnecessary
for Mains. We only need to develop vocabulary from above table.
⚠😰😰 Challenge? Most of the jobs in above 27 sectors are skill intensive while India is burdened
with vast pool of unskilled labour. So, govt has to pay more attention to education, skill development
schemes incl. Skill India (2015) → 📑📑more in Pillar#6. (मजदू रों के कौशल �वकास पर �ान देना होगा)
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 704
(1) It was launched in the year 2018. (2) Its objective is to foster innovation
Codes: (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2
41.7 �🦁🦁:📟📟 📺📺📺📺 MFG: ASSEMBLE IN INDIA (अस�बल इन इं�डया)
📔📔📔📔ES20 Vol1Ch5 suggested we move from ‘Make in India’ towards Assemble in India
👗👗 🧸🧸 👢👢 Make in India 👟👟 📟📟 📺📺 🔋🔋 🔌🔌 Assemble in India
What? textiles, clothing, footwear, toys (कपड़े व� Products of Apple, Samsung, Sony, Nike,
जूते �खलौने) Adidas etc.
How? Traditional Unskilled Labour Semi-skilled labour
पारंप�रक अकु शल श्र�मक। अनपढ़ से भी काम चल जाए आं�शक �प से कु शल श्र�मकों के द्वारा
41.7.1 �🦁🦁:📟📟 📺📺📺📺: Assemble in In India → “Network products”
- (Definition) Network Products: Their production occurs across Global Value Chains (GVCs)
operated by Multinational Companies (MNCs) such as Apple, Samsung, Sony, Nike, Adidas etc.
(ब�रा��ीय �नगमों द्वारा वै��क मू� श्रृंखला के द्वारा “नेटवकर् उ�ादों” को बनाया जाता)
⇒ Product is designed by their Headquarter (HQ) located in a rich country @US/EU/Japan. But
Product assembly/manufacturing in done low wage countries.
⇒ Further, these products are not produced from start to finish within a single country. (अलग-अलग
देशों म� �वशेष�ता के अनुसार उ�ादन िकया जाता है)
⇒ Instead, countries specialize in particular stages of production sequence. E.g. Iphone:
⇒ LCD screen @South Korea
⇒ + Processor @Taiwan
⇒ +WiFi chip @Malaysia
⇒ → above parts are finally assembled in Foxconn Factory in China.
⇒ 2020-July: Apple's contract manufacturer Foxconn started iPhone 11 mfg in its Chennai factory.
(Due to the USA-China trade war, companies are shifting the factories away from China. Ref
�Pillar#3B for trade war / protectionism)
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 705
41.7.2 �🦁🦁:📟📟 📺📺📺📺: Assemble in In India → how will it benefit India?
IF India joins the assembly chain of Network Products (नेटवकर् उ�ाद) esp. computers, TV, mobile,
electronics (�वद्युत उप�र), road-vehicles (सड़क वाहन), then…
Assemble in India 2025 2030
New Jobs in India रोजगार सृजन → 4 cr 8 cr ⏫
India’s share in World Export वै��क �नयार्त म� भागीदारी → 3.5% 6% ⏫
41.7.3 �🦁🦁:📟📟 📺📺📺📺: Assemble in In India → Wild Geese Flying Model (1960s)
⇒ Formulated by Japanese economist Kaname Akamatsu. जं गली हंसों का उदयन मॉडल
⇒ Japanese companies (Sony) first started assembling Camera, mobiles, TV etc. then later
outsourced manufacturing to South Korea, Malaysia.
⇒ Then South Korean companies (Samsung, LG etc) grew and they started outsourced mfg to other
Asian nations like Taiwan, Thailand etc.
⇒ Thus, Networked Goods assembly will continuously move from the more advanced countries to
the less advanced ones. उ�ादन क� प्रिक्रया �ादा-�वक�सत देशो से कम-�वक�सत देशो मे �ानांत�रत होती है।
⇒ ��ES20 observed: India is presently at a stage where it can become part of this flying model.
⇒ India has experience of Network products in the Automobile sector: Suzuki, Honda, Ford, Fiat,
and Renault etc. import some of the components and finally ‘assemble’ Car in India. But such
cars are made for domestic consumers (and not ‘exported’ to rich countries, unlike the China-
assembled Iphone & SonyTV).
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 706
के कनार्टक फै ��ी म� मजदू रों द्वारा आगजनी और लूट. सरकार के �लए �वदेशी कं प�नयों को आक�षत करना, साथ ही साथ �ानीय
मजदू रों के अ�धकारों क� र�ा करना, साथ ही साथ मजदू र सं घ क� हड़लात/िहसं ा को रोकना - इन सब का सं तुलन आव�क)
Base year 2019-20. But to some companies given option to select 2020-21 as base
year, if they want. Who are those Companies? Ans. Not IMP.
Scheme Validity till 2025-26.
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 707
Sr Mfg Approving Org ₹₹
13 Solar Photovoltaic Modules Ministry of New and Renewable 4500 cr
Energy
Total ₹1.97 Lcr
Total: ₹1.97 lakh crores worth of subsidy will be provided. Presently 13 sectors. Later more sectors
may be added / Government may increase scheme funds….so above table’s numbers may change.
(इसम� अलग अलग समय पर अ� �ेत्रों को जोड़ा जाता है और स��डी क� रक़म म� बदलाव िकए जाते ह� लेिकन ब�त बारीक� से PHD
करने म� फ़ायदा कम, व� क� बबार्दी �ादा है। )
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 708
turnover..“- These “x” and “y” requirement would be kept relaxed for a start-up company.
(सरकारी खरीद के दौरान पात्रता के �नयमों म� छू ट)
- Relaxed norms for exit i.e. winding up the companies. (फै ��ी बं ध करने क� क़ानूनी प्रिक्रया म� आसानी)
- Govt established "Fund of Funds for Startups" (FFS) in Commerce Ministry. This fund will
provide money to other startup related schemes. (सरकार ने �न�धयों क� �न�ध बनायी है)
- Industry-academia partnership, incubation and hand holding, Mobile app and Portal, Legal and
Technical Support for filing the patent, lower / zero fees for patent applications etc.
- Foreign Venture Capital Investors (FVCI) given certain technical relaxations by Income Tax
Dept (for TDS/ tax withholding) and Reserve Bank of India (for currency convertibility).
- Startup India Seed Fund Scheme (SISFS): By the Ministry of Commerce to provide financial
assistance to 3600 startups from 1st April 2021 to next four years. (आ�थक मदद/ शु�आती पूंजी)
- Prarambh Startup India International Summit 2021: Indian Commerce ministry + BIMSTEC
(Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) countries viz.
Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka & Thailand.
Rank (2020)→ 1 2 3 4 5
Largest number
Maharashtra Karnataka Delhi UP Haryana
found in State →
Largest number Healthcare & Professional Food
IT services Education
found in Sector → Life Science services Beverages
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 709
41.8.4 🌱🌱🌱🌱 Startup: Factors affecting new firms creation (📔📔📔📔ES20)
10% ⬆ in registration of new firms in a district = 1.8% ⬆ in that district’s Gross Domestic
District Product (GDDP: सकल घरेलू �जला उ�ाद म� वृ�द्ध होती है जब उस �ज़ले म� नई कं प�नयां लगायी जाती है )
Thus, entrepreneurship at district – has a significant impact on wealth creation at the grassroot
level. (उद्य�मता से जमीनी �र पर धन सृजन म� मदद �मलती है)
� Report: startup ecosystem for budding entrepreneurs in 2021- Released by DPIIT: Gujarat and
Karnataka emerged the ‘best performers’. (�ाटर्अप कं प�नयों के उद्य�मयों को सबसे �ादा प्रो�ाहन देने वाले रा�ों म�
गुजरात और कनार्टक शा�मल. )
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 710
- Sovereign Patent Fund (SPF: सावर्भौम पेट�ट �नधी): Govt will buy Patents / Intellectual Property Rights
(IPR) from the innovators / Corporate Companies → allow MSME industries to use those IPR
for electronics manufacturing, without having to pay hefty royalties to original patent holder..
- Targets for 2025? Turnover of $400 billion. Produce 100 crore units of mobile handsets & export
60 crores units out of that. Create 1 crore jobs.
- SAMRIDH SCHEME: MeitY scheme for helping Software Product related start-ups.
- Meta resources = are facilities that allow easier access to network-based resources in a defined
subject area. e.g. electronic devices that helps you read e-books, audiobooks, smartwatches for
GPS-tracking your cycling etc (नेटवकर् म� ��त सं साधनों को आसानी से इ�ेमाल िकया जा सके → उसम� मदद करने
वाली चीज़ को मेटा-सं साधन कहा जाता है। जैसे िक मोबाइल फ़ोन, �ाटर्-घड़ी इ�ािद)
- Boss? Meity gave money to Canara bank’s CANBANK Venture Capital Funds Ltd.
- 2015: EDF was set up as a “Fund of Funds” (बृहद �न�ध) → money is given to “Daughter Funds”
(उप-�न�धया) e.g. SEBI registered venture capital funds who are investing in electronics related
startup companies.
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 711
41.9.2 🔌🔌🔌🔌Mfg → Design Linked Incentive (DLI) for Semi-Conductor Chips
- MINISTRY of Electronics and Information Technology (MEITY) → Centre for Development
of Advanced Computing (C-DAC) → design linked incentive (DLI) scheme.
- 😍😍 Govt will give 4-6% subsidy to Indian company for semi-conductor chips, Integrated
Circuits (ICs), Chipsets, etc. to ⏬reliance on Taiwan for Chips. (ताइवान से आयात कम करना पड़े)
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 712
�Budget-2020: National Mission on Quantum Technologies for a period of 5 years.
Related Topics: 5g, public data etc in Pillar#5: communication infrastructure.
- “Valuation game”: Startup try to ⏫ subscribers with cashback /discounts → show the data to
investors about company’s projected sales/growth/valuation to get more funding → eventually
convert the private limited company into public limited company & launch IPO to get even more
capital → people subscribe in IPO hoping large amount of dividend while the promoter leaves
with money & company sees fall in revenue once the cashbacks and discounts are stopped.
- Paytm IPO mega flop: public bought shares at ₹2150 → presently fallen to ₹1230 (2022-Jan).
Resulting in >50% loss on investment.
- Past Economic Surveys: Most of the startups are focused on e-commerce aggregation i.e.
Connecting the buyers with sellers (Uber, Zomato, Flipkart, Pepperfry etc.) due to ‘valuation
game’, whereas India needs more startups in Agriculture, Manufacturing, Healthcare and
Education. (कृ �ष, �व�नमार्ण, �ा� सेवा और �श�ा।)
- 2019: Dr.Raghuram Rajan noted: There is no ‘free lunch’ in economy so when ‘superstar’
companies are giving free products / cashback to consumer - who is paying for it? is it company
itself or the government (through tax-holidays & subsidies given to that company!)
- While Start-up entrepreneurs must be encouraged but at the same time, (fake) Angel investors’
tax evasion and avoidance has to be discouraged. (ref: Pillar#2: Black Money handout).
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 713
41.11 🌱🌱🌱🌱 → 🤒🤒 STARTUP → (SHUTDOWN) “EXIT” OF SICK INDUSTRIES
Sick industries: बीमार उद्योग in an entity that has accumulated more losses than its entire net worth
(networth = assets minus liabilities).
Industrial sickness can be a result of (आंत�रक और बाह्य कारक)
⇒ Internal factors like mismanagement, workers low morale & strikes etc.
⇒ External factors like rising cost of energy & raw material, fall in product demand etc.
1985: PM Rajiv Gandhi in enacted Sick Industrial Companies Act → Statutory body in Finance
Ministry → Board for Industrial and Financial Reconstruction (BIFR).
⇒ BIFR would A) help the SICK industry with new funds or B) shut down the SICK industry on
case to case basis.
⇒ Ideally, a sick industry should be liquidated so its labour and capital can be shifted to healthy
companies. (आदशर् प�र���तयों म� तो बीमार उद्योग िक मजदू र और पूंजी �� उद्योग क� तरफ गमन करने चािहए )
⇒ But, above bodies’ decision making was very slow so sick companies will not quickly shut down,
and continue to receive Government funding/support, as if Abhimanyu entered the
‘‘Chakravyuh’ but never exits. So previous economic surveys used term ‘Chakravyuh challenge’.
2016: PM Modi repealed this Act & its statutory bodies. Their pending cases referred to National
Company Law Tribunal (NCLT). So now if a firm becomes sick then:
- IF wilful defaulter or incapable defaulter → liquidation under the SARFAESI Act
- ELSE I&B Code: IP will make a resolution plan within “x” number of days → if IP’s resolution
plan is not agreeable to the lenders → liquidation.
- If a startup company wants to (voluntarily) shut down, it can make application under
I&B Code → IP will liquidate it within 90 days. This helps the entrepreneur to pull out
his portion of capital (to start another startup = Ease of doing business).
✍Conclusion Template: Startups have always been the engine of progress. The mega corporations
of today were startups of yesterday. Startups can be effective instruments for reaping India’s
demographic dividend, catalyze employment generation and augment its economic growth. The
aforementioned policies/ schemes are significant in this regard.
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 714
(भारत के जनसां��क�य लाभांश क� प्रा��, रोजगार सृजन, आ�थक वृ�द्ध के �लए �ाटर्अप को मदद करना बेहद ज�री।)
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 715
42.2 🔬🔬IPR → PATENTS → WHAT CAN’T BE PATENTED?
⇒ Frivolous inventions. E.g. schoolbag, laptop bag (मामूली आ�व�ार)
⇒ Anything seriously harmful to public order, morality, humans, animals, plants or environment.
E.g. Stone-pelting machine (प�रबाजी करने क� मशीन का पेटंट नहीं �मल सकता)
⇒ Atomic energy related inventions.
⇒ Mere discovery of a scientific principle or the formulation of an abstract theory or discovery of
any living thing or non-living substance occurring in nature;
⇒ Plants-seeds varieties, biological process to create them; (Ref �Pil#4A Pepsi-Potato)
⇒ animals breeding; Medical treatment of humans and animals
⇒ Mere discovery of a new form of a known substance which does not ⏫ efficiency.
⇒ Mere re-arrangement or duplication of known devices.
⇒ Mere aggregation of properties of the components e.g. lemon + sugar + water = juice
⇒ Traditional knowledge. E.g. Ayurvedic information.
⇒ Mathematical formula, business method, method of playing game e.g. Dhoni’s helicopter shot.
⇒ computer program, presentation of information
⇒ Integrated circuit (Its IPR can be registered separately under Semiconductor Integrated Circuits
Layout-Design Act)
⇒ literary, dramatic, musical or artistic work; cinema-TV shows. (सािह� नाट्य सं गीत कला )
⇒ If public interest is involved → Government can use, manufacture, import or sell a patented
invention without the patent-owner’s consent. Permitted under WTO’s TRIPS agreement.
(जनिहत म� सरकार पेट�ट वाली दवाई का भी �बना पेट�ट-धारक क� अनुम�त के उ�ादन करवा सकती है.)
⇒ 2012: Shortage of an anticancer drug Nexavar in Indian market. Bayer Pharma (Germany) held
patent & production rights & sold of ₹ 2.50 lakhs per 120 tables.
⇒ So, Indian Govt used Indian Patent Act to ‘Compulsory License’ to an Indian company NATCO
to produce this drug, sell it at ₹ 8880 per 120 tablets & pay 6% royalty to Bayer.
⇒ US & EU are apprehensive of Indian Govt issuing CL, because their MNCs will suffer, if such low
prices and royalty % are forced. (भारत सरकार के इन कदमों से गोरे देश �च�ं तत)
⇒ 2020: newspaper columns on how CL can help making Corona drugs cheap.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 716
42.3.1 🔬🔬🔬🔬Patent pools (पेटंटो का समूहीकरण)
⇒ Patent pools are voluntary agreements between two or more patent holders. (�ै��क समझौते) to
create a "pool" → Appoint a manager → Manager gives the production/licence rights to
multiple third parties for a cheap cost → manager distributes the royalty/license fees among the
patent holders.
⇒ Why in the news? Costa Rica and other poor nations are proposing patent pools for Corona
related drugs/vaccines.
⇒ Pharma MNCs of USA & UK etc are opposed to this idea since it'll harm their monopoly &
profiteering. (गोरों क� िफरंगीं कं प�नया इससे नाराज़ �ोंिक उनके एका�धकार और मुनाफाखोरी को ख़तरा)
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 717
42.3.2 🔬🔬🔬🔬Trips Waiver demand by India & S.Africa
⇒ 2020-Oct: India and South Africa jointly proposed waiver from the TRIPS Agreement for
COVID-19 for drugs, vaccines, diagnostics kits, personal protective equipment (PPE), and other
medical technologies. In simple words: (कोरोना के साथ जुड़ी �ई चीजों को बौ�द्धक सं पदा सं �ध म� मु��/�रयायत दी
जाए-ऐसा प्र�ाव भारत और अफ्रीका ने �मलकर �व� �ापार सं गठन म� िकया है)
⇒ First world countries should proactively share such patents / technology with third world
countries. (प्रथम �व� के देशों ने उसक� उ�ादन प्रौद्यो�गक� तीसरे �व� के देशों के साथ साजा करनी चािहए)
⇒ if a third world country is using such patented-technology of a 1st world country then it should
be allowed, without any complaints/penalties at WIPO/WTO. (तािक अ� देश भी उसका उ�ादन कर सके ,
�बना �व� �ापार सं गठन म� �शकायत से डरे)
⇒ 2020-USA opposed this but 2021-now willing to support it. (�पछले साल �वरोध िकया हालांिक अब समथर्न)
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 718
42.4 🔬🔬IPR → EVERGREENING OF PATENTS (पेट�ट को सदाबहार करना / रखना)
⇒ Patent is a statutory right given for an invention for a limited period of time. (पेटंट - एक सी�मत समय
के �लए एक आ�व�ार के �लए िदया गया एक वैधा�नक, ‘�ेत्रीय’ अ�धकार है।)
⇒ Patent protection is a territorial right and therefore it is effective only within a country. Suppose
a pharma company is given 20 years patent for xyz drug in India, others cannot manufacture it
during that period. (20 वषर् के बाद ये अ�धकार ख़� हो जाता है।)
⇒ But when the patent is about to expire, the company just slightly modifies the original drug
formula to create a new drug and seeks patent for that new drug. This unethical practice is called
“Evergreening”. (औष�ध के मूल त� म� थोड़ा ब�त मामूली फे रबदल करके दोबारा पेटंट लेने क� फज� को�शश)
⇒ Indian Patent Act prohibits Evergreening. (under Section 3(d)). (क़ानून म� प्र�तबं �धत है)
⇒ (2013) A Swiss pharma company Norvatis’s blood cancer drug Glivec’s patent was about to
expire, they had sought patent for similar new anti-cancer drug but lost the case in Supreme
Court India. SC allowed Indian companies can produce generic version of this anti cancer drug
→ patient will get it at cheaper price.
🔠🔠❓MCQ. Find correct about ‘National Intellectual Property Rights Policy’ (Asked in UPSC-Pre-2017)
a) It reiterates India’s commitment to Doha Development Agenda & TRIPS Agreement.
b) Dept of Industrial Policy and Promotion is nodal agency for regulating IPR in India.
c) Both a and b [d)Neither a nor b
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 719
42.7 🔬🔬🔬🔬 =🥱🥱 PATENTS APPROVAL SPEED VERY SLOW IN INDIA- SAYS 📙📙📙📙ES22 😥😥
Country (2020) China USA Japan Korea India
No. of Patents granted 5.30 lakh 3.52 lakh 1.79 lakh 1.35 lakh 28,000+�
After a Patent application is filed → it goes through various stages of inspections by the patent
examiner, hearings, and final approval. (पेट�ट अज़� दा�ख़ल होने के बाद उसे अलग अलग चरणों से गुज़रना होता है �जसके
बाद अं�तम-मं ज़ूरी/अनुम�त �मल�गी)
However, within India: average time taken to clear a patent application gradually the speed is
increasing. (हालाँिक �पछले कु छ वष� म� थोड़ी तेज़ी आयी है।)
42.7.1 🔬🔬🔬🔬 =🥱🥱 Reasons for slow speed in Patent Approval: (पेट�ट-अज़� �न�ादन म� देरी के कारण:)
😥😥 India does not have enough patent examiners: (भारत म� पयार्� मात्रा म� पेट�ट परी�कों क� िक़�त/कमी है)
Country (2020) → China USA Japan � India
No. of Patent Examiner → 13,000+ 8000+ 1600+ ONLY 615
😥😥 There is no legal/official time limit prescribed within which govt authorities must approve or
reject a patent. → So depends on officer’s hardworking/lazy nature. (िकतने िदनों के भीतर पेट�ट अज़� को बहाल
या ख़ा�रज करना है? उसक� कोई क़ानूनन तय-समय सीमा नहीं है। वो अफ़सर िकतना मेहनती या आलसी ह� इस पर �नभर्र है।)
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 720
competition to create softwares and apps for culture, distance education, science,
health, sports, fitness,, chemistry, artificial intelligence etc in Corona.
SETU in − Self Employment and Talent Utilisation (SETU) in NITI ayog
NITI − to setup incubators for innovation. Incubators are centers that help aspiring
(2015) entrepreneurs to develop /experiment with products without investing in all the
machineries beforehand.
Smart − Organized by the HRD/Edu Ministry since 2017 onwards.
India − 2019: College students asked to give innovative ideas to solve the challenges
Hackatho faced by public sector organisations, industries and even NGOs. 36 hrs software
n development competition, 5 days hardware development competition etc.
😷😷 − 2020: YUKTI 2.0 Young India Combating COVID with Knowledge,
YUKTI Technology and Innovation (YUKTI) is HRD/Edu Ministry's portal for sharing
2.0 info about: Research, Innovation, Technologies, Startup (सं शोधन,
नवप�रवतर्न,तकनीक,�ाटर्अप) esp. those related to Corona
KAPILA − 2020-: HRD/Edu Ministry’s Kalam Program for Intellectual Property Literacy
and Awareness Campaign (KAPILA). [कॉलेज के छात्र और अ�ापकों म� IPR जागृ�त]
− To create awareness about Intellectual Property Rights (IPR) and patents among
students and teachers in Higher Education Institutions (HEIs)
Misc. Dept of Science Technology launched
कु ल �मलाकर 1. INSPIRE (Innovation in Science Pursuit for Inspired Research) – scholarship
छात्रवृ�� and awards given to students and faculty.
इनाम इ�ा�द 2. MANAK (Million Minds Augmenting National Aspiration and Knowledge)
3. NIDHI (National Initiative for Developing and Harnessing Innovation)
4. NIDHI-PRAYAS (PRomoting and Accelerating Young and ASpiring technology
entrepreneurs)
HRD Ministry launched Uchhattar Avishkar Yojana (UAY) for IITs
All these schemes provide some type of grant, funding, scholarship, award the
innovator. By default they’re 100% Union fund. Internal difference & exact
features= poor cost benefit.
✍ Conclusion template? Innovations / Startup can turn Indian youths from job seekers into job
creators. They encourage entrepreneurship, innovation and creation of revolutionary new products
that can be used by people around the world. Hence startups are important / protecting their IPR is
important. Aforementioned initiatives / schemes are important in that regard. ये सब ज�री तािक भारत के
नौजवानों को नौकरी- याचक से नौकरी-दाता बनाना सके , क्रां�तकारी नए उ�ादन करे, �जससे दु�नया के लोगों क� सु�वधा बढ़ सके .
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 721
🔠🔠❓ The policy of Intellectual Property Rights (IPRs) is the responsibility of _ _ _ _ (UPSC-CDS-i-2020)
a) Ministry of Law and Justice b) Department of Science and Technology
c) Department for Promotion of Industry and Internal Trade d) Ministry of Human Resource Development
🔠🔠❓NIDHI is an umbrella scheme for the promotion of (Asked in UPSC-CDS-2021-i)
(a) young and aspiring innovators. (b) scientific research.
(c) primary health care. (d) primary education in rural areas.
42.9 🔬🔬📊📊 IPR → INDICES & RANKINGS
42.9.1 🔬🔬📊📊 IPR Index → Global Innovation Index (GII: वै��क नवीनीकरण सूचकांक)
by WIPO, Cornell University (USA), Insead Business School (Paris).
⇒ 2020-Sept: Ranking: 1) Switzerland 2) Sweden 3) US…... 48) India. Report-Theme- Who Will
Finance Innovation? (नवाचार का �व�पोषण कौन करेगा)
⇒ 2021-Sept: Ranking : 1) Switzerland 2) Sweden 3) US…… 46) India. India’s rank improved by 2
positions: 48th (2020) to 46th (2021). Theme: Tracking Innovation through COVID-19 Crisis.
⇒ India’s overall rank continuously ⏫ since 2015. (सतत �प से अपना र�क बेहतर �आ है)
⇒ GII ranks a country based on performance across 7 pillars viz. 1) knowledge and technology
outputs, 2) market sophistication, 3) human capital and research, 4) institutions, 5) business
sophistication, 6) infrastructure, 7) creative outputs.
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 722
2) Performance Includes two pillars: (6) Knowledge Output and (7) Knowledge Diffusion.
NITI Aayog’s India Innovation Index 2021 (published in 2022-JuL)- Top3 (Major States) Karnataka,
Telangana and Haryana. Bottom-3 (Major States) Chhattisgarh, Odisha and Bihar.
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 723
Contribution in % of GDP spent on R&D (जीडीपी 📔📔📔📔ES21 TARGET/suggestion (आ�थक
R&D Funding का िकतना प्र�तशत िह�ा सं शोधन और सव��ण के मुता�बक ल� �ा होना चािहए)
�वकास म� जा रहा है)
India → 0.65%- 0.70% of GDP more than 2% of GDP
China → 1.35% (in 2005), 2.5% (2020) N/A
Others in top 10 1.5%-3% of GDP. N/A
economies →
Suppose $100 is being spent on R&D → within that how much is the contribution of the govt sector
and private sector? (सं शोधन एवं �वकास के कु ल खचर् म� सरकार और �नजी �ेत्र क� िह�ेदारी)
Contribution in R&D Funding Govt Private sector
India More than 55% Less than 40%
Top 10 economies of the world except India Less than 40% 68%
⇒ German govt gives no tax benefit yet their private sector spends a large amount of funds on the
research development. जमर्न सरकार कं प�नयों को सं शोधन करने पर टै� म� कोई �रयायत नहीं देती िफर भी वहां जमकर
सं शोधन होता है
⇒ While India Govt provides tax benefits to companies who invest more money in R&D yet
companies are not doing it enthusiastically. हालांिक भारत सरकार सं शोधन और �वकास म� �नवेश करने वाली
कं प�नयों को टै� म� �रयायत देती है लेिकन िफर भी भारतीय कं प�नयां इस बारे म� उदासीनता िदखाती ह�
⇒ such 'jugaad mentality' is not helping real professional Innovation, Which is required for success
of make in India and assemble in India. भारत क� �नजी �ेत्र क� कं प�नयों म� जुगाड़-मान�सकता के चलते पेशेवर तरीके
से नवाचार नहीं हो रहा.
Figure 1: अपना �बजनेस शु� करने के �लए सरकारी द�रों के च�र काटते काटते थक चुका �ं
- �ापार करने म� सुगमता का �रपोटर् is an index by the World Bank to measure how easy or difficult it is to
run a business organisation in a given country, based on simple average (equally weighted) of 10
parameters- such as no. of documents, time & cost involved in registering a property, getting an
electricity connection, paying taxes etc.
- As such no specific themes are given in these reports.
Rank 2020 (released in #1: NZ>Singapore>Hongkong> India (63) >... Somalia (190)
2019-Oct) → Report acknowledges India as one of the top 10 improvers, third time in
a row. India’s rank in 2017 (#130) to 2020 (#63) = shows a jump of 67
steps- this is highest by any large country since 2011.
Rank 2021 (it was to be 2020 Aug: World Bank has paused/suspended this report because of
released in 2020 BUT) allegations of data manipulation / irregularities about China’s rank.
(डाटा म� धांधली /छे ड़छाड़ हो रही है ऐसे आरोपों के चलते इस साल �रपोटर् को ��गत िकया)
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 724
Table 1: India’s ranking on 10 parameters-✋✋ although no need to memorize now!
Ease of Doing Biz Parameters Rank-2018 Rank-2019 Improved 2019 over 2018
Overall 100 77 100 -77=23
Starting a Business 156 137 19
🏗🏗 Construction Permits 181 52 129 (highest jump)
🔌🔌Getting Electricity 29 24 5
Registering Property 154 166 -12
💰💰Getting Credit (loan) 29 22 7
🧕🧕Protecting Minority
4 7 -3
Investors
🍋🍋Paying Taxes 119 121 -2 (despite apps & portals!)
Trading across Borders 146 80 66
Enforcing Contracts 164 163 1
🔪🔪Resolving Insolvency 103 108 -5 (despite I&B Code)
🔠🔠❓MCQ. According to the World Bank’s Doing Business Report, 2019, India’s ranking has improved in
in which of the following areas compared to previous year? (UPSC’s-CDS-ii-2018):
1) Paying taxes 2) Resolving insolvency 3) Starting a business 4) Construction Permits
Answer Codes: A) 1 only B) 1 and 2 only C) only 3 and 4 D) All four areas.
🔠🔠❓MCQ Which one of the following is not a sub-index of ‘Ease of Doing Business Index? (Prelims-2020)
(a) Maintenance of law and order (b) Paying taxes
(c) Registering property (d) Dealing with construction permits
🚩🚩🚩FAQ: Do I have to remember ranking when this report is banned? Ans. No. but keywords
should be kept in mind, for vocabulary for Mains Answer writing.
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 725
⇒ � 45 documents required to get Delhi Police’s permission for opening a restaurant. Far less
number of documents required for a gun license!
⇒ � Hong Kong construction permits available within 2 months, India takes 4 months.
We’ve already learned some of the measures for Ease of Doing Biz in the handouts of tax related
portals, Foreign Trade policy, WTO: TFA agreement etc. Apart from that…
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 726
⇒ Minister gives 2G spectrum / coal auction / highway construction rights to a company. THEN
company appoints that minister's wife/son as a consultant/director & pays a hefty salary.
Companies Act has norms to regulate RPT. But, often Crony capitalists, wilful defaulters and tax-
avoiders misuse RPT using loopholes.
📔📔📔📔ES20 observed
This type of rent-seeking behaviour was more prevalent till 2011. (यानी िक परो� �प से कांग्रेस सरकार
�नक�ी और भ्र� थी- ऐसा आ�थक सव��ण कहना चाहता है )
After CAG / Media reported the scam, the profits, share prices, SENSEX performance of such
crony firms greatly declined, since they couldn't compete with the innovative firms.
CEA Subramanian K. used ‘Herfindahl Index’ to prove this. Economist Herfindahl’s Index
(1950) is used for monitoring the level of competition among the companies.
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 727
🤵🤵Pro-business policies (�ापार समथर्क) �Pro-crony Policy (प�पाती नी�तया)
⇒ Transparency in bidding for natural resources ⇒ Government gives preferential treatment
(प्राकृ �तक सं साधनों क� नीलामीमे लगाने म� पारद�शता) to crony companies. (कं प�नयो के प�पाती �प
से आवं टन)
🤩🤩Result? Competition, innovation, lower prices ⇒ Reverse will happen → Wealth is
and better service quality for citizens → demand destroyed. (धन का नाश/�य होता है।)
⬆ → production ⬆ → GDP → (new) wealth
created.
✍Conclusion: Cronyism doesn’t foster competitive markets. It fosters inefficiencies & results in
erosion of wealth. As Dr. Raghuram Rajan said, ‘There is a need for saving capitalism from the crony
capitalists”. अ�मता म� बढ़ोतरी पूंजी का �य बबार्दी
43.3 🏄🏄⚖ EASE OF DOING BIZ → JUDICIAL REFORMS: �ा�यक सुधार
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 728
High Court: Each HC Judges disposes ~2300 cases per year. So to clear all the backlog cases In
the next five years, ~360 additional HC judges required.
Similarly a few more judges also required at the supreme court.
43.3.3 🏄🏄⚖: 🗓🗓🗓🗓 Suggested reforms#3: ⏫ courts’ working days (अदालत क� छु �ट्टयाँ कम करो)
Presently Central Government offices are open for 244 days per year.
HC open for only 232 days, SC open for only 190 days in a year- Because they take longer
vacations in summer, winter, Holi, Diwali, Dussehra. (कायर् के िदनों म� बढ़ोतरी, तािक के स ज�ी से �नपटा सके )
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 729
⇒ This portal provides 1) information/statistics about cases in Commercial/Civil Courts of Delhi,
Mumbai, Bengaluru and Kolkata 2) Commercial laws for reading/reference purpose. (भारत क�
प्रमुख शहरों म� दीवानी अदालतों म� िकतने िक इस जारी है उसका डेटा तथा �व�वध दीवानी कानूनों को पढ़ने क� सु�वधा)
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 730
43.4 🕵🕵🕵🕵 📔📔📔📔ES21: OVER REGULATION IN INDIA
⇒ If a company wants to undergo voluntary liquidation India: it takes 1570 days because The
company will have to seek a variety of no-objection certificates (NoC) from tax authorities,
Employee Provident Fund Organization, Foreign exchange laws etc. (यिद कोई �ै��क �प से ही अपनी
कं पनी बं द करना चाहे तब भी भारत म� 1500 िदन से �ादा लग जाते ह� �व�वध �वभागों से अनाप�� प्रमाण पत्र हा�सल करने म�)
⇒ Even if there is no tax dispute or court litigation pending and even if all the paperwork is
complete, Still it will take so much time. (भले कोई मुकदमे ना चल रहे हो, सारे कागजात �नयमों के िहसाब से जमा
िकए गए हो, िफर भी इतना व� लगता है)
⇒ As per the World Bank’ Ease of Doing Business report, it takes 1445 days to resolve a
commercial contract in India as compared just 120 days in Singapore. (दीवानी मुकदमे/वा�ण��क �ववाद
�नपटाने म� भारत म� 1400 से �ादा िदन लगते ह� जबिक �संगापुर म� यही दीवानी के स 120 िदन म� �नपट जाते है)
⇒ such over regulation results in undue delays, rent seeking, opaque decision making by the
Government officials. (इस प्रकार का अ�त �नयमन- देरी, भ्र�ाचार, गैर-पारदश� �नणर्य प्रिक्रया को प्रो�ािहत करता है)
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 731
⇒ Then any rule, which is not explicitly given on the website = will not apply to people. �जसके अंतगर्त
हर एक �वभाग ने सारे �नयमों को अपनी वेबसाइट म� अंग्रेजी िहंदी तथा प्रादे�शक भाषा म� डालना होगा. जो �नयम वेबसाइट पर नहीं
डाला होगा, उस �नयम को मानने के �लए नाग�रक बा� नहीं होगा)
⇒ e.g. If the Education ministry’s TORA page says “for scholarship scheme: Student need to
submit ONLY aadhar card and school marksheet”, then officials can’t insist on a "student
identity card" as additional proof.
⇒ Benefit? ⏬officers' discretion → ⏬ the opportunities for bribery and harassment.(अफसरों के
�ववेकाधीन स�ा, भ्र�ाचार, उ�ीड़न के अवसरों म� कमी आएगी)
⇒ You may read more about this at https://mrunal.org/2017/08/upsc-mains-answer-writing-gsm4-
transparency-of-rules-act-tora.html
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 732
1. Public at large is not the litigant. सामा� जनता यहां पर वादकारी/मुकदमेबाज नहीं थी.
2. These tribunals have not reduced the workload of High Court in a significant manner. इन िट��ूनल
को बनाने के बाद भी हाईकोटर् के कायर् बोज म� कोई कमी नहीं आई थी
3. too many officials' salary/bunglow/cars budget burden. इतने सारे पदा�धका�रयों के तन�ाह गाड़ी बं गले के खच�
का सरकार पर बोझ
There are multiple Central laws related to labour e.g. Minimum Wages Act, 1948; the Payment of
Wages Act, 1936; the Payment of Bonus Act, 1965; and the Equal Remuneration Act, 1976.
Entrepreneur has to fill up multiple forms to prove his compliance, and he’s subjected to multiple
annual inspections by the govt officials = No ease of doing biz. Therefore, Second National Labour
Commission (2002) recommended govt to simplify & consolidate these laws. 2017-18: Govt
announced to replace existing central laws with just four labour codes (श्रम सं िहता /कानून) -
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 733
Before above labour code bills were passed, Labour Ministry kept amending the existing laws for ease
of doing business and for workers welfare such as. (जब उ� श्रम सिहत आए सं सद म� पा�रत नहीं �ई थी तो पुराने वाले
कानूनों म� सरकार सुधार िकए जाती थी)
Passed Provisions
🤰🤰Maternity Benefit - Applies to factory, mines, plantations, shops and other
(Amendment) Act, establishments.
2017: - Increased paid maternity leave from 12 weeks to 26 weeks (for the
मातृ� लाभ (सं शोधन) first two children only.)
अ�ध�नयम, 2017 - If woman worker adopts a baby <3 years (or gets a baby through
surrogacy)= 12 weeks paid leave for her as well.
- If factory has 50 workers/> then boss must install creche facility;
allow mother to visit child min. 4xtimes a day.
- After maternity leave is over, boss may even allow the woman
worker to work from home.
- Boss must inform every woman worker of her rights in writing.
Payment of Wages Previously the employer was legally required to pay salary in ‘physical
(Amendment) Act, cash only’- in certain industries. Act reformed to allow salary payment in
2017 cheque/NEFT to encourage less cash economy.
👼👼Child Labour It amends the 1986’s act to provide that →
(Prohibition) Children below 14 years can’t be employed anywhere, EXCEPT:
Amendment Act, - TV/ Cinema /Sports (but not circus)
2016: - Non hazardous family enterprise work after the school hours.
बाल श्रम (�नषेध) सं शोधन Adolescents between 14 to 18 age can be employed but only in non-
अ�ध�नयम, 2016 hazardous work. Any violations = Jail + penalty. District Magistrate
given additional powers. Criticism? Chemical mixing, battery acid
recycling etc. occupations removed from the ‘hazardous list’ so Ease of
doing biz for their owners, but exploitation of adolescent workers.
Apprentices - The original 1961 Act regulated the training of apprentices in the
(Amendment) Act, industry. But rules were draconian e.g. Govt shall decide the
2014 apprentice youth’s stipend, holiday, overtime. If factory owner is
प्र�श�ु violating any norm → jail.
- So, the 2014’s amendment relaxed the norms, Factory owner will
decide stipend, holiday etc. and if any violations then only penalty,
no jail for him.
🔠🔠❓MCQ. Which of the following statements is/are correct regarding the Maternity Benefit (Amendment)
Act, 2017? (Prelims-2019)
1. Pregnant women are entitled for 3 months pre-delivery and three months post-delivery paid leave
2. Enterprises with creches must allow the mother minimum six creche visits daily
3. Women with two children get reduced entitlements.
Codes: (a) 1 and 2 only (b) 2 only (c) 3 only (d) 1,2 and 3
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 734
43.6 👷👷EASE OF DOING BIZ → FIXED TERM EMPLOYMENT 2018
- Fixed-term employee (�न��त-अव�ध कामदार) is a contractual worker hired for a fixed period. If his
contract is not renewed on expiry then he’s deemed automatically terminated. No notice for
termination is required. Just like a permanent worker, a fixed-term worker is entitled to all
benefits such as wages, hours of work, allowances, EPFO-ESIC and other statutory benefits (But
only for the duration of contract).
- 2016: Labour Ministry allowed Fixed term employment only to the textile sector using the
powers under Industrial Employment (Standing Orders) Act.
- Budget-2018: permitted in all manufacturing sectors.
- 🤩🤩Good? When factory owner has large production order to fulfill, he can hire more people for
short duration without the compulsion of giving them ‘permanent jobs’. → → Ease of doing
business. (अचानक से उ�ादन का बड़ा ऑडर्र पूरा करना हो तो अ�ायी �प से ढेर सारे लोगों को काम पर रखा जाए )
- 😰😰Bad? Trade Unions fear the industrialist will convert all the permanent jobs into ‘fixed term
contract jobs’ → boss may simply refuse to renew contract without giving reasons & replace
them with cheaper younger labourers= job security is diminished. Although Govt clarified that
industrialist can’t convert existing permanent jobs into fixed-term contract jobs.
🔠🔠❓MCQ. Find correct statement(s) about the Industrial Employment (Standing Orders) Central
(Amendment) Rules, 2018: (Prelims-2019)
1. If rules for fixed-term employment are implemented, it becomes easier for the firms/companies to lay off
workers
2. No notice of termination of employment shall be necessary in the case of temporary workman.
Codes: (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 735
⇒ After independence, Directive Principles of State Policy (रा� के नी�त-�नद�शक त�) mandated the
State (रा� नी�त के पथ प्रदशर्क �सद्धांत)
o to secure a living wage, a decent standard of life for all workers (Article 43),
o to provide adequate means of livelihood for all citizens & equal pay for equal work for
men and women (Article 39)
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 736
Accordingly, Anoop suggested two proposals:
Proposal#1 (all India) Proposal#2 (Zonal) 📌📌
⇒ National-level minimum wage (NMW): ₹ Indian states and union territories should be
375 per day x 26 working days in the month divided into 5 regions, and have separate
= ₹ 9,750 a month. Additional ₹ 1430 house minimum wages suitable to the local realities
rent allowance / city compensatory and as per socio-economic and labour market
allowance for urban workers. contexts.
⇒ These will be applicable to all, irrespective of ⇒ Zone1 (Assam, Bihar etc): ₹ 8892/month
sectors, skills, occupations and rural-urban ⇒ To…
locations. ⇒ Zone5 (Delhi, Punjab type small &
⇒ Although it’s not implemented. (इसको नहीं माना developed regions with higher cost of
गया है दू सरे प्र�ाव को माना है) living): ₹ 11,622/month
2021-June: Anoop Satpathy recommendations were not acceptable to the union government
(perhaps pressure from the businessmen lobby not to increase minimum wages so much) so now
labour ministry has set up a new committee under Ajit Mishra. (उद्योगपितयों के िवरोध के चलते सरकार ने अनूप क�
िसफ़ा�रशों को नहीं माना बिल्क एक नई सिमित बना दी)
43.8 👷👷💰💰🧔🧔 MINIMUM WAGES → CODE ON WAGES 2019 (वेतन कोड/ सं िहता)
This new act aims to merge the existing Minimum Wages Act, 1948, the Payment of Wages Act,
1936, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976 into a single Code on
Wages, with following features:
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 737
Domain Sectors covered
🧔🧔 Union Sectors: Air transport service, Railways, Major Ports, mines, oil field,
Government telecommunication, banking and insurance company, Central
Government Jobs, CPSEs, autonomous bodies, their subsidiary bodies
क� द्र सरकार To fix minimum wages here, Government will setup a Central Advisory
इन �ेत्रों म� Body of Employers, Employees, Independent Experts and 5 State
�ूनतम वेतन representatives
तय करेगी Based on Central Advisory Body’s recommendations, the Union will fix
Floor Wages, for different geographical areas Taking into account
minimum living stds. (Meaning Anoop’s idea is accepted) (भारत के भौगो�लक
िह�ों के �लए रा�ी� य वेतन सीमा के अधीन �नतम मजदू री)
� State Govts Sectors: They’ll look after all the other sectors of employment which are
रा� सरकार� यहाँ not in Union’s domain.
�ूनतम वेतन तय They’ll have individual State Advisory Board.
कर�गी They must keep Minimum wages > or = Floor Wages.
− �Update Frequency? minimum wages norms will be revised every 5 yrs or less.
43.8.1 👷👷💰💰💰💰 Code on Wages 2019 →Salient Features (figures not IMP)
⇒ Depending on sector: Union / State will fix max. hours in a normal
Overtime Pay working day.
⇒ If worker doing more: “Overtime Wage” =Min. 2x normal wages
⇒ Boss (Employer) may pay wages (i) daily, (ii) weekly, (iii) fortnightly,
Payment Frequency or (iv) monthly.
⇒ In coin, currency, cheque, bank money, e-transfer
⇒ Boss (Employer) may deduct worker’s wages for 1) penalty 2) absence
Deduction (कटौती)
3) rental home 4) advance / loan etc.
⇒ If worker’s salary less than “X” ₹ , then he is given Right to bonus
Right to Bonus
⇒ 8.33% of wages or ₹ 100 Whichever higher
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 738
⇒ But not more than 20% of his annual wages. + other caveats notIMP
Gender ⇒ It is forbidden. Employer must give equal pay for equal work
discrimination ⇒ एक समान काम के �लए मिहला और पु�ष को एक समान वेतन �मले
Penalty for
⇒ Upto 3 months jail, ₹ 1 lakh fine
violation
- Above Code on Wages is already passed by Parliament and signed by the President. But to
implement it in reality, the Govt of India need to notify the rules & announce the minimum
wages. But, due to Corona, implementation delayed
43.8.2 📔📔📔📔 ES19 on Minimum Wages reforms (what more we can do?)
Economic Survey 2019 appreciated Code on Wages and suggested further reforms →
43.8.2.1 Simplification and Rationalisation (सरलीकरण िकया जाए, �ायो�चत बनाया जाए)
− Present system is extremely complex with nearly 2000 minimum wages defined for various
scheduled job categories. They should be clubbed together into four minimum wages based on
skill category i.e UNSKILLED, SEMI-SKILLED, SKILLED and HIGHLY SKILLED.
− Such Wage Code should be applicable on all jobs, all workers, and all sectors of economy-
Whether it is organised or unorganised.
43.8.2.3 Adopt Best Practices from abroad (अ� देशों क� अ�� नी�तयों से सीखे)
We should also implement the following best practices from other Nations:
UAE: All companies are legally mandated to pay all types of salary through banks only.
South Africa: ‘Impimpi Alive’ system wherein workers can send anonymous SMS messages to
Labour Department, and within 48 hrs, an inspector will come to the factory.
U.S.: They’ve apps to notify the minimum wages related updates to all the workers & companies.
43.8.3 � Conclusion: Indeed minimum wage enforcement is important
Minimum wages is a subset of labour welfare policies. So we can always connect it with keyword
such as inclusive growth, sustainable development, poverty removal, Social justice and accordingly
we can make a conclusion linking them all:
⇒ India is witnessing a period of demographic dividend (जनसां��क�य लाभांश). But, even if the youth is
equipped with vocational skills (�ावसा�यक कौशल ) but unable to find well paying jobs, then such
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 739
circumstances will breed social unrest and perpetuate social injustice. (अ�� तन�ाह नहीं �मलेगी तो
समाज म� तनाव बढ़ेगा, सामा�जक �ाय नहीं हो पाएगा)
⇒ SDG Goal #8 requires India to promote full and productive employment and decent work for all.
Minimum wages protect the vulnerable workers, reduce inequality and poverty. (सतत �वकास ल�ों
म� भी सभी को रोजगार देने क� बात तभी और समानता और गरीबी कम होगी)
⇒ Therefore, establishing an effective minimum wage system is important for sustainable
development and inclusive growth (सतत एवं समावेशी �वकास के �लए यह अ�त आव�क) .
Alternatively you can make a conclusion on the line that “although for complying with the DPSP we
have enacted multiple laws but successive Committees and economic surveys observed these laws
have failed to bring about the change in letter and spirit so aforementioned reforms are necessary.”
Factories Act 1948 regulates safety, health & welfare of workers. (कारखाना अ�ध�नयम: मज़दू रों के �ा� सुर�ा
क�ाण के �लए)
− The original act defines a factory as a premise where manufacturing is done using power and
minimum 10/> workers are employed during last 12 months. (20 workers, if no power used).
− If an establishment is classified as ‘factory’, then the entrepreneur is required to install
washroom, drinking water facility, spittoons, creche and other amenities depending on how
many workers are employed. (अगर आप क� इकाई को फै ��ी म� वग�कृ त िकया गया तो मजदू रों के �लए थूकदान,
�शशुगृह, ठं डे पानी, साफ शौचालय जैसी �व�भ� सु�वधाएं देनी होगी)
− He cannot engage women workers in night shift or near dangerous machineries.(मिहलाओं को रा�त्र
के दौरान और ख़तरनाक मशीनरी के पास काम करने क� अनुम�त नहीं)
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 740
− His premises will be subjected to government inspection, If any violation he can be arrested and
jailed. (=more opportunity for the factory inspector to demand bribes)
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 741
2. Entrepreneur can do online registration & payment of ESIC and EPFO for his workers.
3. Entrepreneur can upload compliance documents under various factory / labour acts.
Separately, Labour Ministry also launched Samadhan portal (Software Application for Monitoring
and Disposal, Handling of Industrial Disputes) for handling industrial disputes between workers’
trade union vs industrialist.
43.11.1 👷👷 🖱🖱 Worker Types → Unorganized workers → E-Shram Portal for them (2021-Aug)
- National Database of Unorganized Workers By Ministry of Labour & Employment
- to register approx 38 crore Unorganised Workers of India such as construction workers, migrant
workers, street vendors, domestic workers, milkman, truck drivers, fisherman, agriculture
workers etc. असं गिठत �ेत्र के मज़दू रों के पं जीकरण के �लए श्रम मं त्रालय का एक ऑनलाइन पोटर्ल बनाया गया है
- There is no registration free. Upon registration the workers shall be issued a e-SHRAM card with
unique Universal Account Number (UAN). पं जीकरण के �लए कोई फ�स नहीं लग�गी
- He can use it for various social security schemes through this Card anywhere anytime.
- �E-Shram Portal registered worker will get Rs 1.0 lakh on partial disability and Rs 2.0 Lakh
Accidental Death. आं�शक �वकलांगता और आक��क मृ�ु पर मुआवजा �मलेगा
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 742
⇒ Article 254 (2): In the concurrent list topics: States need to obtain the President's assent to
modify their own State law. (In practice, President of India will act as per the advice of PM) (रा�
ने समवत� सूची के कानून म� सुधार के �लए रा��प�त क� अनुम�त लेना ज�री)
⇒ So, Union Govt has clarified to Parliament, "we'll not entertain that above reforms by State
governments." (क� द्र सरकार ने �� िकया है िक “हम रा� सरकारों द्वारा श्रम कानून के �गन के प्र�ावों पर �वचार नहीं कर�गे/
अनुम�त नहीं द�ग”े )
⇒ In other words, UP will not be allowed to suspend labour laws for 3 years, Madhya Pradesh will
not be allowed to suspend it for 1000 days etc.
⇒ Further, the Union Government had enacted Inter-State Migrant Workmen Act, 1979 to protect
migrant workers. Union may take actions under this law, if / when the situation requires. (अंतर-
रा� प्रवासी श्र�मक अ�ध�नयम)
43.12.2 😷😷�⚖ DON'T punish employers if they can't pay full salaries- SC
2020-March: Ministry of Home Affairs (MHA) ordered all employers to pay full salaries to workers,
even during Corona lockdown. (Using powers of the Disaster Management Act, 2005: आपदा प्रबं धन
कानून के अंतगर्त गृह मं त्रालय ने सभी नौकरीदाताओं को अपने कमर्चा�रओ को लोकड़ाऊन मे भी पूरा वेतन देने के आदेश)
⇒ MSME owners went to SC with petition, "our business is down. We can't pay full salaries, please
save us!" → SC: Ordered the government not to take any punitive detections against the
employees, if they can't pay full salaries to workers. (सुप्रीम कोटर् ने आदेश जारी िकया है, “पूरी तन�ाह नहीं देने
पर कोई सजा मत दी�जए”)
⇒ 2020-May: Home ministry has withdrawn the order. (गृह मं त्रालय ने आदेश को वापस �लया)
43.12.3 😷😷😷⚖ Banking = Public Utility Service (सावर्ज�नक उपयो�गता सेवा)
Under the Industrial Disputes Act: workers enjoy a 'statutory right to strike' (औद्यो�गक �ववाद अ�ध�नयम म�
मजदू रों को हड़ताल पर जाने का कानूनन हक)
⇒ but there are certain restrictions e.g. (1) Government employees (2) Public Utility Services
employees are not allowed this right. (e.g. Electricity company, Telecom company etc.) (हालाँिक
कु छ श्र�मकों को ये हक़ नहीं है)
⇒ If 'public utility' workers go on strike → it will be deemed "illegal strike" (गेर-कानूनी)
o = 1) the owner can dismiss such workers from job (नोकरी से �नकाल देना)
o = 2) workers may be required to pay compensation to the owner for business
losses. (नुकसान क� भरपाई)
⇒ if bankers go on strike (for salary rise) → Atma-Nirbhar Bharat initiatives related to MSME
loans etc. will get delayed → Difficult to revive the economy. So, (ब�क कम� भी कोरोना वायरस ने हड़ताल पर
चले गए तो भारी सम�ा)
⇒ 2020-April: Union labour ministry notified that the banking industry will also be treated as
Public Utility Service.
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 743
43.13🏄🏄🛒🛒EASE OF DOING BIZ → BUILDING HOMES & RUNNING SHOPS
43.13.1 🏄🏄🛒🛒Ease of doing Biz → Model Shops & Establishments Bill, 2016
- State list subject. Each state has separate Shops and Establishment Act to govern the working
conditions, wage payments, leaves and holidays, work hours, etc. (दुकानों के बारे म� हर रा� का अलग
क़ानून होता है)
- Union govt has circulated Model Shops and Establishments Bill, 2016 to the States & UT with
legislatures to adopt / customize it as per their wish. (क� द्र सरकार ने आदशर् दुकान� और प्र�त�ान �वधेयक रा�
सरकारों को अपनाने के �लए कहा)
- This bill allows the shopkeeper / malls the freedom to operate for 24/7 and 365 days in a year
without any restriction on opening/closing time and enables employment of women during
night shifts with safety provisions. E.g. 2019-Feb Gujarat adopted this bill with certain
modifications. (पूरा िदन पूरी रात पूरा वषर् दुकान शॉ�पंग मॉल खुला रख सकते ह� मिहलाओं को भी रा�त्र म� नौकरी करने क� छू ट
हालाँिक उनक� सुर�ा का �ान रखना होगा)
🤩🤩Benefits? 1) ease of doing biz 2) overtime benefit to worker 3) separate workers may be
employed in day shift and night shift = more jobs. (रात क� पारी म� अलग मजदू र को रख�गे तो दो-दो लोगों को काम
�मले= रोज़गार सृजन म� मदद)
43.13.2 🏄🏄🏡🏡Ease of doing Biz → Real Estate Regulation & Development Act (RERA)
�रयल ए�ेट (�व�नयमन और �वकास) अ�ध�नयम/ क़ानून
Boss? Ministry of Housing and Urban Poverty Alleviation: आवास और शहरी गरीबी उपशमन
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 744
- While “land” is in the State List of the Constitution, but purchase of home / property / real estate
= ‘Contract’ in the Concurrent List. (अनुबंध �वषय सं �वधान क� समवत� सूची म� है)
- So, Parliament enacted RERA Act, 2016 to regulate transactions between home/commercial
property buyers and builders of the real estate projects, by setting up state level regulatory
authorities called Real Estate Regulatory Authorities: �रयल ए�ेट �व�नयामक प्रा�धकरण (RERAs) →
higher appeal to Real Estate Appellate Tribunals (अपीलीय �ाया�धकरण).
- First, builder must get his project registered @RERA’s website. including the facilities like fire
fighting systems, sewage treatment plants, functional lifts etc. He can’t make advertisements or
accept money from buyers before that registration. (�ब�र ने मकान �बक्र� का �व�ापन तथा ग्राहकों से पैसा लेने से
पहले प्रोजे� को रेरा वेबसाइट पे पं जीकृ त करवाना ज�री)
- Real estate agents dealing in these projects also need to register with RERAs.
- After RERA registration, project details will be published on RERA website where buyer can
cross check / file complaints. (मकान का कोई प्रोजे� असली है या फ़ज़� रेरा क� वेबसाइट पर ग्राहक सु�न��त कर पाएगा)
- Then builder can accept money from buyers, but in a separate bank account. If the project is not
completed in time → builder will have to pay the home/shop/office-buyer’s monthly interest on
bank loans (if any). RERA can order further relief / refund / arrange another builder to finish the
project. (�ब�र ग्राहकों का पैसा अलग ब�क अकाउं ट खोलकर उसम� जमा कर� .)
- If defects found in building upto 5 years → builder must repair free of cost.(पाँच साल तक मकान क�
मर�त मु� म�)
- Punishment? Penalty + jail upto 3 years. (�ब�र पर जेल और जुमार्ने के प्रावधान)
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 745
new businesses create further job opportunities, which help reduce poverty & inequality in a country.
Thus, ease of doing business for ‘corporates’ results into the ease of living for poor people. The
aforementioned scheme / policies / act / initiatives / challenges will play pivotal role in that regard /
must be addressed on priority basis.
रोजगार सृजन, गरीबी �नवारण के �लए ज�री है- कॉरपोरेट कं प�नयों को �ापार म� सुगमता होगी तभी गरीबों को (रोजगार क�) सुगमता
होगी। उकत सुधार आव�क / उ� सम�ाओ को अग्रता क्रम से सुलझाना ज�री
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 746
+ various autonomous bodies, export promotion councils, research associations and advisory boards
for apparel, textile, wool, silk, carpet etc.
44.1.1 👘👘👘👘👘👘 Textile Ministry → Notable schemes / initiatives
Indian textile industry, the second largest manufacturer and exporter in the world. Textile sector is
the biggest employer after agriculture employing 4.5 crore people directly and another 6 crore people
in allied sectors.
1. Jute Packaging Material (JPM) Act, 1987: requires the foodgrains and sugar companies to pack
“x%” of their produce in jute bags only. This ensures that jute bag industry can survive against
the competition of cheap plastic bags. खाद्या� और चीनी कं प�नयों ने अपना कु छ सामान अ�नवायर् �प से जूट बैग म� ही
सं ग्रिहत करना होगा तािक जूट उद्योग को धं धा �मलता रहे वरना तो �ा��क क� थै�लयों से वो �धार् नहीं कर पाएं गे!
2. Technical textiles = Fishing nets, bullet proof jackets, shoe laces, surgical gowns, parachute etc.
items. Technical Textiles are lightest and toughest. They have a variety of applications in
automobile, aerospace, architecture and building, occupational therapy, sport and apparel
industries etc. (रोज़ाना सामा� �प से पहनने के कपड़ों के अलावा वाली चीज़�)
- 💼💼Budget-2020: India imports a technical textiles worth US$ 16 billion every year. So,
to reverse this trend, we’ll launch a National Technical Textiles Mission (रा��ीय तकनीक� व�
�मशन) from 2020-21 to 2023-24.
3. Project India Size: Presently the makers of shoe / shirt / pants etc. refer to size charts developed
by UK / US standards e.g. Size 44 shirt, XL t-shirt etc. Textile ministry’s project aims to develop
size charts specific to Indian consumers' measurements.
4. India Handloom Brand logo (2015): It certifies that given handloom product - sari, dress
material, bedsheet etc. is 1) Indeed handmade 2) has zero defect 3) has zero negative impact on
the environment 4) has authentic Indian traditional design. Such brand logo increases the appeal
of Indian handcrafts to (mainly foreign) buyers. To obtain this logo, the weaver/entrepreneur
applies online to Textile Ministry → Development Commissioners for handloom. (सु�न��त करता है,
िक हाथ द्वारा �न�मत, �नमार्ण म� कोई ख़ामी नहीं, पयार्वरण पर कोई नकारा�क असर नहीं और पारंप�रक भारतीय शैली से बनाया है)
5. Previously, UPA/Congress had Mahatma Gandhi Bunkar Bima Yojana (MGBBY)- although
gradually Modi switched those beneficiaries to Pradhan Mantri Suraksha Bima Yojana. So we
need not worry about this obscure scheme.
6. 2016: ‘Pehchan’ cards given to handicraft artisans- linked with their Aadhaar numbers and bank
accounts to help them avail various scheme benefits.
7. e-Cocoon App a mobile application for quality certification in silkworm seed sector.
8. E-Dhaga App, BunkarMitra helpline to advising the weavers on business.
9. 💼💼Budget-2021: Total Seven (7) PRADHAN MANTRI Mega Investment Textiles Parks (PM-
MITRA) will be launched for booting textile exports
- Union govt to give 30% subsidy on project cost. State govt to provide 1000 acre land. 7
such parks will be setup in various states.
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 747
- '5F' Formula for Success:- (Cotton/Jute/Silk) Farm to fibre → fibre to factory → factory
to fashion → fashion to foreign export.
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 748
textile/leather hubs and they get duty free access to USA/EU for being L.D.C. so India textile
industry facing steep competition.(Ref 📑📑Pillar#3B:WTO)
�👘👘👘👘 Conclusion-Template? Textile / Leather industry has great potential to generate new jobs
especially for Indian women, & augment our income from exports. These industries can greatly help
achieving SDG Goal #1: End poverty, Goal #5: Gender Empowerment, Goal #8: Promote sustained,
inclusive and sustainable economic growth, Goal #10: Reduce inequality within India.
Aforementioned policy / scheme / initiative / challenges are crucial in that regard / must be
addressed on priority basis. मिहलाओं के �लए रोजगार- मिहला सश��करण, गरीबी �नवारण, �नयार्त म� बढ़ोतरी के �लए इस �ेत्र
क� सम�ाओं को ज� से/ अग्रता क्रम से �नपटाना ज�री.
Micro, Small & Medium Enterprises, सू� , लघु और म�म उद्यम मं त्रालय : List not exhaustive →
Govt Company National Small Industries Corporation Limited (NSIC)
Attached offices Development Commissioner (MSME)
Statutory Bodies Khadi & Village Industries Commission (KVIC), Coir Board
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 749
44.2.1 �👶👶👶👶 MSME Problems: RBI’s UK Sinha report (2019)
MSMEs contribute 45% to the manufacturing sector’s output and 40% to the nation’s exports. We
should do following to help them: लघु उद्योगों क� बेहतरी के �लए �रज़वर् ब�क क� UK �स�ा स�म�त ने �न� �सफ़ा�रश क� है:
44.2.1.5 🌞🌞 Give them training & social security. (तालीम व सामा�जक सुर�ा)
Focus on technology adoption, capacity building, upstream and downstream linkages.
Teach rural entrepreneurs how to register for GST, how to file IT return/PAN application, loan
document preparation, etc.
Government should actively enroll MSME employees in pension & insurance schemes.
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 750
++ many other technical reforms, but this is more than enough for 250 words Mains Q.
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 751
- Boss? Commerce Ministry’s not-for-profit company named ‘GeM Special purpose vehicle
(SPV)’. (खास उद्दे� से बनाई गई कं पनी)
- SWAYATT is Commerce Ministry’s initiative to promote Start-ups, Women and Youth
entrepreneurs through GeM portal. (मिहला और नौजवान उद्य�मयों को इस पोटर्ल म� पं जीकृ त करना)
- ��ES22: Wrote a very lengthy case study-commentary on GEM Portal is ‘bahut-mahaan’
(very great). But for General Studies = Not very IMP. If Public Administration optional → Read
from Economic Survey 2021-22 (published in Jan-2022) Ch.02: Fiscal Development Page 73
onwards. (उसने लंबी कहानी तो िलखी है लेिकन मझु े परी�ा के िलए कुछ ख़ास मज़ा निह आया, िसवाय के लोक-प्रशासन आपका
वैकिल्पक िवषय हो)
44.3.4 🛒🛒🛒🛒Public Procurement → Various Models – L1, QCBS, SSS- in 📙📙📙📙ES22 🎓🎓✋
- ��ES22: Wrote a very lengthy Case-Study/commentary on Methods of Public Procurement /
tenders: such as (1) Least Cost System (L1) (2) Quality-cum-Cost Based Selection (QCBS) (3)
Single Source Selection (SSS) etc. (सरकारी ख़रीद म� िकस ठे केदार का ट�डर पास िकया जाए उसके अलग अलग तरीक़े )
- But for GS = Not very IMP. If Public Administration optional → Read from Economic Survey
2021-22 (published in Jan-2022) Ch.02: Fiscal Development Page 76 onwards. (उसने लं बी कहानी तो
�लखी है लेिकन मुझे परी�ा के �लए कु छ ख़ास मज़ा निह आया, �सवाय के लोक-प्रशासन आपका वैक��क �वषय हो)
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 752
✓ For minor violations under the Companies Act, entrepreneurs no longer have to approach
NCLT, but file penalties online using simple forms. (सामा� अपराधों के �लए िट��ूनल म� जाने क� ज�रत नहीं
सीधा ऑनलाइन जुमार्ने का भुगतान)
44.3.6 🗺🗺One District One Product (ODOP: 2021)
⇒ By Ministry of Commerce with the help of other union and state government organisations
⇒ To convert each District in Export Hub by identifying products with export potential, e.g.
Rajasthan → Blue Pottery (Jaipur). Through marketing / branding / logistic / infrastructure
support, incubation centres, training, research and development (R&D). प्र�ेक �ज़ले म� से िकसी एक ख़ास
चीज़ के �नयार्त के �लए मदद
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 753
- To encourage Innovation & Rural Entrepreneurship, this scheme will set up Business Incubators
and Startup fund for agro-based industry.
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 754
complaint for delayed payments. व� भी भुगतान नहीं हो रहा तो �शकायत
- 👜👜👜👜Budget-2022: When seller gives bill → 75% payment to be
released within 10 days by Govt. with Online bill tracking system
- MSME Ministry’s webportal to connect jobseekers (passed out trainees /
MSME- Sampark students of MSME Technology Centres) to recruiters (various
companies).
Udyam Sangam, - MSME ministry organizes such Workshops, Conventions, Mela usually
Udyam Samvad at Delhi.
Udyami Mitra Toll-free helpline mainly to help the first generation entrepreneurs. पहली पीढ़ी
Yojana के उद्य�मयों को सलाह मशवरा मदद तालीम के �लए हे�लाइन है
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 755
Acts / Policy Only Applicable on Implications
Employees’ State Insurance 10/> workers Factory owner required to co-
Act, 1948 contribute ₹ ₹ in insurance / pension
accounts of low-salaried workers
Employees’ Provident Fund 20/> workers Factory owner required to co-
& Miscellaneous Provisions contribute ₹ ₹ in insurance / pension
Act, 1952 accounts of low-salaried workers
Similarly, small firms get benefit of
− Priority Sector Lending (Ref:Pillar#1A2: Monetary policy), Public Procurement Quota.
− Benefits in Government tendering such as no need to pay fees / security deposits. Some
tender/contracts are exclusively reserved for MSME.
− GST Composition scheme: where they have to submit the collected GST to Government on a
quarterly basis instead of monthly basis, if turnover less than “X” crores. (Ref: Pillar#2-GST)
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 756
− Focus on Service Sectors with high spillover effects (�वन प्रभाव) such as Tourism. Because it can
open up new jobs in tour and safari guides, hotels, catering and housekeeping staff, shops at
tourist spots etc. It would also reduce the migration of the rural labour force to other States.
NOTE: in above image, please read "<" sign as "NOT MORE THAN (से अ�धक नहीं)
Investment: �नवेश annual turnover: वा�षक कारोबार
MSME-Type No. of Units (2022-January)
Micro 62 lakhs
Small 3 lakh
Medium 34,000
Total MSME 66 lakh approx.
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 757
कमजोर वगर् को रोजगार के अवसर देता है. मानव �वकास के �लए और औद्यो�गक �वकास के �लए इनको मदद देना ज�री. इस�लए उ�
सुधार मह�पूणर् है या उ� सम�ाओं को अग्रता क्रम से सुलझाना ज�री.
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 758
45.1.3 �💿💿💿💿:😰😰 Knowledge economy of India: Threats/Challenges
Knowledge economy is primarily based on intangible assets such as the value of its workers'
knowledge and IPR. e.g. Space, Pharma, IT, e-learning etc. �ान अथर्�व�ा मु� �प से अमूतर् सं प�� जैसे िक इसके
श्र�मकों के �ान या बौ�द्धक सं पदा पर आधा�रत होती है.
45.1.4 🌄🌄 Sunrise sector in 👜👜👜👜Budget-2022 (सूय�दय �ेत्र: जहाँ तेज़ वृ�द्ध क� सं भावना)
- A sunrise industry is a new business sector showing potential for rapid growth.
- ��Budget-2022: we’ll help following Sunrise Sectors: Artificial Intelligence, Geospatial Systems
and Drones, Semiconductor and its eco-system, Space Economy, Genomics and Pharmaceuticals,
Green Energy, and Clean Mobility Systems. (इन सब सूय�दय �ेत्रों को नया बजट मदद करेगा.)
Marketplace E-Commerce companies were engaging in Anti-Competitive (�धार् �वरोधी) behaviour e.g.
- 😰😰Flipkart / Amazon would enter in exclusive partnerships with top smartphone brands such
as Xiaomi and Oppo- Prohibiting them from selling their mobile phones through other online or
offline channels → offline mobile shops suffer.
- 😰😰Flipkart / Amazon run “Marketplace E-Commerce model” i.e. they allow any merchant to
list their products on their website. However they will also have their own merchant company
(e.g. Amazon’s cloudtail pvt ltd) who would offer deep discounts / cashbacks to the customers.
→ Other online merchants on the same web platform will suffer. Offline brick and mortar shop
merchants (=kiranawalla) will also suffer.
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 759
- 2021: Competition Commission of India [a statutory body under the Corporate Affairs ministry]
is investigating this. However Flipkart Amazon went to court to stop investigation but uski ball-
by-ball news commentary not imp. Wait till final outcome. भारतीय प्र�त�धार् आयोग जांच कर रहा है
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 760
⇒ 5) Amazon cannot share the personal data of the customer with third party without the approval
of customer. (ग्राहक क� अनुम�त के �बना अमेजॉन उसका �नजी डाटा िकसी तीसरी पाट� के साथ साझा नहीं कर सकता)
“�ड�जटल वा�ण� के �लए खुला/ओपन नेटवकर् ” = एक एसा िड�जटल-मं च जो �वक्रेताओं को अलग अलग ई कॉमसर् कं प�नयों पर अपना
सामान बेचने म� मदद करेगा। इससे �वक्रेताओं का पं जीकरण, �वक्रेताओं पर लगने वाली फ़�स, व�ुओ ं क� क़�मत� तथा वणर्न, ग्राहक सुर�ा
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 761
इ�ािद के �लए एक आदशर्/एकसमान �व�ा/प्रणाली बनेगी, �जसम� �वक्रेता और ग्राहक दोनों के िहतों क� र�ा होगी और एमेज़ोन जेसी
कं पनीयो द्वारा शोषण कम होगा।
🔠🔠MCQ. Find correct about foreign-owned e-commerce firms operating in India? (Prelims-2022)
1. They can sell their own goods in addition to offering their platforms as market-places.
2. The degree to which they can own big sellers on their platforms is limited.
Codes: (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 762
45.3.1.1 🕵🕵: 🥇🥇 BIS & Gold -Silver Hallmarking (�णर् तथा चाँदी हॉलमा�कग के �लए �नयम।)
⇒ Bureau of Indian Standards (BIS, Statutory body under Ministry of Consumer Affairs). → Gold
Hallmarking and Silver hallmarking (to certify purity of metal)
⇒ Year 2000: BIS started for Gold in 3 grades viz. 14 carat, 18 carat and 22 carat.
⇒ So far it was voluntary (=Non compulsory) BUT From June 2021, Hallmarking became
compulsory for Gold & Silver- with following rules:
● ) Jewellers with annual turnover upto Rs. 40 lac will be exempted from mandatory
hallmarking छोटे जौह�रयों पर ये �नयम अ�नवायर् निह।
● 2) Jewellers can continue to buy back old gold jewellery without hallmark from
consumer. यिद ग्राहक �बना हॉलमा�कग का भी सोना बेचने आए तो जोहरी उसे खरीद सकता है।
⇒ �Direct benefit: customer assured of gold quality. ग्राहकों के �लए �णर् गुणव�ा सु�न��त होगी
⇒ �Hidden benefit: Since big Jewellers must register & get their products certified so tax
authorities get data mining opportunities about how much gold items traded, whether jeweller
depositing proportionate amount of taxes or evading it? Etc. परो� �प से कर चोरी पर लगाम.
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 763
45.3.3 🕵🕵 Health ministry→ Statutory → FSSAI (2006)
⇒ Food Safety and Standards Authority of India (भारतीय खाद्य सुर�ा और मानक प्रा�धकरण) lays down
scientific standards for food manufacture, storage, distribution, sale and import in India.
⇒ FSSAI chairman may be a non-bureaucrat, food-scientist etc. While FSSAI functions under the
Administrative control of Health ministry, FSSAI Chairperson enjoys rank of an independent
Secretary to Government of India. He’s not ‘under’ any department of Health Ministry.
⇒ FSSAI act repealed previous central Acts like Prevention of Food Adulteration Act 1954, & other
laws / orders of Fruits, Meat Edible Oils, Edible Flour, Milk Products etc.
⇒ FSSAI labelling rules 2011: Every package containing vegetarian food item must contain a square
symbol with a Green Colour filled circle inside. If egg / non-vegetarian item then Brown Color.
⇒ FSSAI packaging rules banned the use of recycled plastic and newspaper for packing / wrapping
food articles due to chemicals/cancer fear. (खाद्य पदाथ� को अखबार म� लपेट नहीं सकते �ोंिक क� सर का जो�खम)
⇒ FSSAI rules ban the use of calcium carbide and acetylene gas for artificial ripening of fruits,
however ethylene gas is permitted upto certain limits. (फल पकाने वाले रसायनों के उपयोग पर प्र�तबं ध)
⇒ Food product should not contain more than 2% Trans Fatty Acids (TFAs) from 1/1/2022
⇒ 2021: FSSAI has banned blending of mustard oil with any kind of edible oil from 2021. Because
such mixing/blending associated with dropsy disease/allergy. (सरसों का तेल िकसी अ� खाद्य तेल के साथ
�म�श्रत करने पर प्र�तबं ध �ोंिक ऐसा �मश्रण कु छ बीमा�रयाँ पेदा करता है)
⇒ Monosodium Glutamate (MSG) is a flavor enhancer in Chinese food, but leads to obesity and
liver inflation. Earlier FSSAI had banned sale of Nestle's Maggi noodles because it contained lead
and MSG, although later HC lifted the ban.
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 764
⇒ 2019: Ministry of Health and Family Welfare will provide training & certificates to youth → they
become ‘Food Safety Mitra’ → they help food processing companies / restaurants etc to comply
with FSSAI norms & earn consultancy fees from them.
⇒ 2022: working on a packaged/junk-food rating similar to energy rating on Fridge. But it is a draft
stage.
Related-Misc.? AGMARK is given by Agro Ministry→ Directorate of Marketing & Inspection →
under the Agricultural Produce(Grading and Marking ) Act, 1986. It covers Agriculture
commodities, wool, cotton, meat etc.
Now just because above 1 MCQ asked, some Current Affairs PDF walla seems to be giving a
disproportionate amount of coverage to this body for example: (ज�रत से �ादा कवरे ज िदया जा रहा है)
BHOG Voluntary certification for the Prasad / Food at religious places.
State Food Safety Index 2021: FSSAI released ranking
- Gujarat was ranked #1 in the country in terms of food safety. Separate
ranking for UT/Small States but poor cost:benefit in memorising.
- According to the World Health Organisation (WHO), 10% of the
population across the world falls ill due to contaminated food.
World Food Safety Day June 7th.
FoSCoS online platform of FSSAI
✋But, such misc PIB/Yearbook type GK / ranking= poor cost benefit don’t waste time.
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 765
45.3.5 🕵🕵 Commerce Ministry → Not-Statutory → NPC (1958)
⇒ National Productivity Council of India (NPC)- autonomous body setup under DPIIT, provides
research and consultancy service for Industrial Engineering, Agri-Business, Quality
Management, Human Resources Management etc to companies.
⇒ Commerce minister is the president of this body.
Nodal? Ministry of Consumer Affairs, Food and Public Distribution (उपभो�ा मामलों का मं त्रालय)
It replaces replace the original act of 1986.
45.4.1 🕵🕵🛒🛒 Consumer Protection Act 2019 → bodies → Consumer court
Consumer Disputes Redressal Commissions (CDRCs: उपभो�ा �ववाद �नवारण आयोग).
CDRC at District �जला �र पर State रा� �र पर National रा��ीय �र पर**
hears complaints upto ₹ Upto ₹1 cr >1 cr upto 10 cr >10 cr (More than ten crore)
(Original Limit)
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 766
CDRC at District �जला �र पर State रा� �र पर National रा��ीय �र पर**
REFORM in 2021# Upto ₹50 lakh ₹50l to 2 cr >2 cr
• # Previously the limits were bigger and as a result district and state commissions were burdened
with too many cases, resulting into case pendency. So, Govt has changed the hearing limits. ग्राहक
सुर�ा क़ानून म� �जला रा� और रा��ीय ग्राहक अदालत इतने लाख �पये तक के मामलों क� सुनवाई कर सकते ह� उन सीमाओं म� सुधार.
• **2020: National Consumer Dispute Redressal Commission (NCDRC) has launched E-Daakhil
Portal to help the consumers file online complaints under the Consumer Protection Act.
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 767
45.5 ✍🎺🎺 MAINS QUESTIONS IN PREVIOUS GSM2 & GSM3
“The emergence of 4th Industrial Revolution (Digital Revolution) has initiated e- 2020
Governance as an integral part of government”. Discuss. (" चौथी औद्यो�गक क्रां�त (िड�जटल -GSM2
क्रां�त) के प्रादुभार्व ने ई-गवनर्� को सरकार का अ�वभा� अंग बनाने म� पहल क� है". )
Account for the failure of manufacturing sector in achieving the goal of labour-intensive 2017
exports rather than capital-intensive exports. Suggest measures for more labour-
intensive rather than capital-intensive exports. पूंजी-सा� �नयार्त के क� अपे�ा अ�धक श्रम सा�
�नयार्त को बढ़ाने हेतु उपाय सुझाएँ ? Ans. Sp. Class
"Success of 'Make in India' programme depends on the success of 'Skill India' 2015
programme and radical labour reforms." Discuss with logical arguments. कौशल भारत क�
सफलता और श्रम कानून म� सुधार के �बना 'मेक इन इं िडया' सफल नहीं हो सकता - ता�कक �प से समझाइए
While we found India's demographic dividend, we ignore the dropping rates of 2014
employability. What are we missing while doing so? Where will the jobs that India
desperately needs come from? Explain. भारत के पास जनसं �ा क� लाभांश तो है िकंतु रोजगार के दर कम
हो रही है. हमने नई नौक�रयां कहां पर खड़ी करनी होगी?
Normally countries shift from agriculture to industry and then later to services, but 2014
India shifted directly from agriculture to services. What are the reasons for the huge
growth of services vis-a-vis industry in the country? Can India become a developed
country without a strong industrial base? �ा भारत एक मजबूत औद्यो�गक �ेत्र के �बना एक �वक�सत
देश बन सकता है?
Examine the impact of liberalization on companies owned by Indian. Are the competing 2013
with the MNCs satisfactorily? �ा उदारीकरण के बाद भारतीय कं प�नयां ब�रा��ीय �नगमों से �धार् कर पा रहे
ह�?
Has the Indian governmental system responded adequately to the demands of 2016
Liberalization, Privatization and Globalization started in 1991? Suggest reforms? एलपीजी
सुधार के अनुसंधान म� सरकार ने और �ा-�ा करना चािहए?
45.5.1 ✍🎺🎺 Mock Questions for Mains
1) Discuss the significance of minimum wages in reaping India’s demographic dividend. जनसां��क�
लाभांश के �लए �ूनतम वेतन का मह�
2) Examine critically the problems in the present system of minimum wages in India & suggest
remedies. का वतर्मान �ूनतम वेतन �व�ा म� �ा सम�ाएं ह�?
3) Despite India’s outstanding growth in the last two decades, low pay and wage inequality remain
serious obstacles towards achieving inclusive growth. Suggest remedies to address this problem /
OR How does the Code on Wages 2019 address this? वेतन सं िहता भारत म� समावेशी �वकास म� कै से मदद कर
सकती ह�?
4) “Job creation in India suffers from policies that discourage small firms from growing large.”
Suggest remedial steps through which MSMEs’ efficacy in job creation and GDP growth rate can
be augmented further. भारत म� छोटे उद्योग को बड़ा होने म� हतो�ािहत करने वाली नी�तयों के चलते रोजगार सृजन नहीं हो पा
रहा. इसके �लए सुझाव दी�जए
5) “Pro-crony policies result in destruction of wealth whereas pro-business policies help in creation
of wealth.” Comment प�पाती पूंजीवाद वाली नी�तयों से रा��ीय धन क� तबाही जबिक �ापार वादी नी�तयों से धन �नमार्ण म�
मदद हो सकती है िट�णी क��जए
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 768
6) Examine critically the factors responsible for the uneven growth of Startup firms across various
regions of India. भारत के �व�भ� प्रादे�शक �ेत्रों म� �ाटर्अप क� असमान वृ�द्ध के कारकों क� समी�ा क��जए
7) Enumerate the steps taken under Atma-Nirbhar to revive the MSME sector in India, in the
aftermath of corona crisis. एमएसएमई उद्योगों को पुनज��वत करने के �लए आ� �नभर्र भारत अ�भयान म� उठाए गए क़दमों
क� सूची दी�जए
8) Examine the opportunities and challenges in India becoming pharmacy of the world. (भारत तो �व�
का औषधालय बनाने के �लए उपल� अवसरों और चुनौ�तयों क� जांच कर� )
9) While India has become a “knowledge based economy” it is yet to become a thriving “hub of
research and development”. Examine Critically. (हालाँिक भारत एक "�ान आधा�रत अथर्�व�ा" बन गया है, यह
अभी तक "अनुसंधान और �वकास का एक स�� क� द्र" बनना बाक� है। ग�ीर �प से समी�ा क��जए।
10) Indian administration suffers from over regulation. Explain how a Transparency of Rules Act
(TORA) can help improving ease of doing business in India? (भारतीय प्रशासन को अ�त-�नयमन से ग्र� है ।
समझाइए िक कै से �नयमों क� पारद�शता अ�ध�नयम (TORA) भारत म� �ापार करने म� आसानी म� सुधार म� मदद कर सकता है?)
45.5.2 ✍🎺🎺 Mock Questions for Mains → Post Independence: PM Rao (2020)
11) (GS1) Evaluate PM Rao as one of the makers/architects of modern India. (आधु�नक भारत के
�नमार्ता/रच�यता के �प म� प्रधानमं त्री नर�स�ा राव का मू�ांकन)
12) (GS3) “Legacy Rao’s reforms is an Indian economy where GROWTH has priority over
Redistribution.” Examine critically. नर�स�ा राव क� आ�थक सुधारों क� �वरासत - ऐसी अथर्�व�ा है जहां पर (अमीरों
क�) आ�थक वृ�द्ध को (गरीबों म� उसके ) पुन�वतरण से �ादा वरीयता �मली है" समी�ा क��जए
13) (GS4) “Though written in ancient times, Kautilya’s treaties are effective for modern day crisis
management.” Elucidate with an example of a modern leader/reformer. (हालांिक कौिट� के �सद्धांत
प्राचीन समय म� �लखे गए थे िकंतु आधु�नक समय म� भी सं कट प्रबं धन म� भी उतने ही प्रभावी ह�. िकसी आधु�नक नेता/सुधारक के
उदाहरण के साथ �व�ृत �प से समझाइए).
✅Model Ans to PM RAO:= https://youtube.com/c/TheMrunalPatel → in search box type "RAO".
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 769
�� PILLAR#4E: MACROECONOMIC INDICATORS: INFLATION, WPI-CPI; ETC
Table of Contents
49 🍅🍅Pillar#4C: Indicators → Inflation ............................................................................................................ 849
49.1 🍅🍅Inflationary and deflationary gaps ............................................................................................. 849
49.2 Combating inflation or deflation ...................................................................................................... 851
49.3 🍅🍅🍅🍅 Inflation: Types based on causation (कारकता के अनुसार) ....................................................... 852
49.4 🍅🍅🍅🍅 Inflation types based on Speed / Quantum ........................................................................ 854
49.4.1 🗓🗓 Inflation → Base Effect? ................................................................................................. 854
49.5 🍅🍅🍅🍅 Effects on individuals ........................................................................................................... 855
49.6 🍅🍅🍅🍅🍅🍅Pillar#4: Indices: CPI, WPI, IIP & others ...................................................................... 856
49.7 🍅🍅🍅🍅🍅🍅Index → Inflation indices.............................................................................................. 856
49.7.1 🍅🍅🍅🍅🍅🍅Wage Rate Index (WRI: वेतन दर सूचकांक) – calculation reforms in 2021 .................. 857
49.7.2 🍅🍅🍅🍅🍅🍅CPI-IW: New reforms in data collection (2020)...................................................... 857
49.7.3 🍅🍅🍅🍅🍅🍅Index → Inflation → CPI (All India), NSO, Base: 2012 .................................. 857
49.7.4 🍅🍅🍅🍅🍅🍅 Inflation rate %: how is it calculated? ...................................................................... 858
49.7.5 🍅🍅🍅🍅🍅🍅 Headline vs Core CPI? .............................................................................................. 858
49.7.6 🍅🍅🍅🍅🍅🍅 “Refined Core Inflation”? ......................................................................................... 859
49.7.7 🍅🍅🍅🍅🍅🍅 CPI Inflation is higher in urban areas than rural area because.............................. 859
49.7.8 🍅🍅🍅🍅🍅🍅 CPI in Corona- ES21 ................................................................................................. 860
49.7.9 🍅🍅🍅🍅🍅🍅: 🐯🐯Inflation targeting by RBI- focus on Core CPI or Headline CPI? ................. 860
49.7.10 🍅🍅🍅🍅🍅🍅Index → Consumer Food Price Index (CFPI: उपभो�ा खाद्य महंगाई सूचकांक) ............. 861
49.7.11 🍅🍅🍅🍅🍅🍅Index → Inflation → Wholesale Price Index, EA-DPIIT, Base: 2011 ............ 861
49.7.12 🍅🍅🍅🍅🍅🍅WPI Kabhi ⏬ kabhi ⏫ .......................................................................................... 862
49.7.13 🍅🍅🍅🍅🍅🍅Index → Inflation → Other Indices.................................................................... 864
49.7.14 🍅🍅🍅🍅🍅🍅: Inflation observations by ES20 Vol2Ch5 ........................................................... 864
49.7.15 🍅🍅🍅🍅🍅🍅: Inflation observations by 📙📙📙📙ES22.................................................................... 865
49.7.16 🍽🍽🍽🍽🍽🍽 Thalinomics by ES20: Vol1Ch11 ......................................................................... 865
49.7.17 🍽🍽🍽🍽🍽🍽 Thalinomics data in ES21.......................................................................................... 865
49.7.18 🍅🍅🍅🍅American Inflation Impact on India? ............................................................................. 866
49.8 🛠🛠🛠🛠🛠🛠Index → Production → Index of Industrial Production (IIP) ....................................... 867
49.8.1 IIP's weights in ascending order (classification: use based) .................................................. 868
49.8.2 🛠🛠🛠🛠🛠🛠 IIP's weights in (sector-based) ............................................................................. 868
49.8.3 🛠🛠🛠🛠🛠🛠: IIP Before Corona Year 2020 .............................................................................. 868
49.8.4 🛠🛠🛠🛠🛠🛠: IIP in Corona-2020 ............................................................................................. 869
49.9 🛠🛠🛠🛠🛠🛠Index → Production → Index of Eight Core Industries ................................................. 869
49.10 🛠🛠🛠🛠🛠🛠Index → Production → Misc. indices .......................................................................... 869
49.10.1 ✍🎺🎺 Mock Questions for Mains → Inflation ................................................................... 870
(Batch: PCB7) Mrunal’s Economy Pillar#4E: Indicators- Inflation-CPI, WPI; IIP→ Page 848
49 🍅🍅PILLAR#4C: INDICATORS → INFLATION
Inflation is the rise in the general level of prices of goods and services in an economy over a
period of time. (व�ु और सेवाओं क� सामा� क�मतों म� होने वाली बढ़ोतरी को महंगाई या मुद्रा���त कहते ह�)
Deflation is inverse of above definition. Deflation occurs when the inflation rate falls below 0%
(मुद्रा अव���त- महंगाई जब 0% से भी कम हो जाए)
(Batch: PCB7) Mrunal’s Economy Pillar#4E: Indicators- Inflation-CPI, WPI; IIP→ Page 849
🍅🍅🍅🍅 Inflationary Gap 🍅🍅📉📉Deflationary Gap
(मुद्रा���तकारी अंतर ) (अव���तकारी अंतर )
It could have occurred because of It could have occurred because of
1. ↑ Money supply 1. ↓ Money supply
2. ↑ Propensity to consume, 2. ↑ Propensity to SAVE / Consumer delaying
3. ↑ Investment expenditure purchase with hopes of further fall in prices.
4. ↑ Fiscal deficit 3. ↓ Investment expenditure,
5. ↑ NET exports 4. ↑ Fiscal consolidation
6. High growth → higher Aggregate demand 5. ↓ NET exports
→ could lead to inflation. 6. Depression / Recession that results into
falling ‘Aggregate demand’.
🍅🍅🍅🍅🍅🍅🍅🍅 Inflationary Spiral 📉📉📉📉📉📉Deflationary Spiral
(मुद्रा���त म� उ�रो�र वृ�द्ध) Fall in prices → lower profit to firm → lower
When inflation increases, workers demand production, lower wages / workers laid off →
higher wages to keep up with the cost of living lower demand → lower prices → ...
→ firms pass these higher labor costs on to
their customers → higher prices → more
inflation → …...
🔠🔠❓MCQ. A rise in general level of prices may be caused by (UPSC-Pre-2013)
1. An increase in the money supply. (मुद्रा आपू�त म� वृ�द्ध)
2. A decrease in the aggregate level of output.(उ�ादन म� कमी)
3. An increase in the demand. (मांग म� बढ़ोतरी)
Answer Codes: (a) 1 only (b) 1 and 2 only (c) 2 and 3 only (d) 1, 2 and 3
(Batch: PCB7) Mrunal’s Economy Pillar#4E: Indicators- Inflation-CPI, WPI; IIP→ Page 850
49.2 COMBATING INFLATION OR DEFLATION
(Batch: PCB7) Mrunal’s Economy Pillar#4E: Indicators- Inflation-CPI, WPI; IIP→ Page 851
49.3 🍅🍅🍅🍅 INFLATION: TYPES BASED ON CAUSATION (कारकता के अनुसार)
It’s ‘too much money chasing too few goods’ i.e. Prices are rising because
🛒🛒🛒🛒Demand-
people have excess money → demand for goods and services exceeds the
Pull Inflation
available supply. MNREGA, Pay Commission, PM KISAN6k/Rahul’s
(मांगज�नत)
NYAY72k/Universal Basic Income(UBI) etc. could lead to this.
💵💵💵💵💵💵 When RBI printing of more money results in inflation (Recall ‘Monetising
Monetary inflation the deficit’ from Pillar#2: FRBM Handout).
Price rise due to increased cost of inputs e.g.
- Expensive crude oil → higher costs for Transport Companies.
Cost-Push Inflation
- Trade / labour unions’ protests / strikes → wage hike.
🛠🛠 (लागतज�नत)
- Natural disasters → Lower potato / chilly production → Chips
makers have to pay more for inputs.
When Cartels / Monopolists / Oligopolists deliberately cut down the supply
⛽ Profit – Push
/ production or hike the prices because of greed / profit motive. E.g. OPEC
Inflation
group oil production cut.
Linked to the “price/wage inflationary spiral” i.e. when inflation rises,
workers demand higher wages to keep up with the cost of living → firms
Built-in-Inflation
passing these higher labor costs on to their customers as higher prices →
more inflation.
During war, Govt imposes price controls and rationing to keep prices
Repressed Inflation under check. But the moment such controls are withdrawn, prices will go
(द�मत ���त) up (because traders will want to cover up their previous losses by raising
prices). This is called Repressed Inflation.
(Batch: PCB7) Mrunal’s Economy Pillar#4E: Indicators- Inflation-CPI, WPI; IIP→ Page 852
Persistent high inflation, high unemployment and low growth resulting
Stagflation
into a stagnant economy.
Term to denote episodic price rise in one / small group of commodities
Skewflation while Inflation in the remaining goods and services remain usual. E.g. pulse
/ tomato / onion inflation in india.
🗞🗞 Headline It is the measure of the total inflation within an economy, usually presented
Inflation (सु�ख) in the form of CPI or WPI.
🔬🔬 Core inflation Headline inflation MINUS inflation in food & energy articles.
(प्रमुख मुद्रा���त) Accordingly, it can be CPI (Headline) or WPI (Headline)
In Pillar#1: Philip curve we learned that deflation → unemployment, so,
RBI tries to stimulate economy by increasing the money supply, Govt tries
Reflation
to give ‘fiscal stimulus’ by reducing taxes / increasing public
(पुन: मुद्रा���त)
procurement…. Such actions take economy from deflationary path
towards inflation path, this is process is ‘Reflation’.
Inflation that is part of a particular economic system. A complete change in
economic policy would be needed to get rid of it. e.g.
- To keep farmers happy, Govt keeps raising MSP for wheat / rice but
Structural Inflation
not so much for pulses → inflation in pulses.
(सं रचना�क मुद्रा���त)
- APMC reforms not taken → cartelization & hoarding → inflation.
- When global crude prices falling, Govt raises Excise / VAT to get more
money for their schemes, so, petrol-diesel not getting cheaper
🔠🔠❓MCQ. Which one of the following is likely to be the most inflationary in its effects? [इनम� से
कौन सी चीज सबसे �ादा महंगाई पैदा करेगी] (Prelims-2021)
A. Repayment of Public debt [सरकारी ऋण का भुगतान]
B. Borrowing from public to finance a budget deficit [ बजट घाटे का �व� पोषण करने के �लए जनता से कजार्]
C. Borrowing from the banks to finance a budget deficit [ब�कों से कजार् �लया]
D. Creation of new money to finance a budget deficit [बजट घाटे का �व� पोषण करने के �लए नया पैसा छापा जाए]
(Batch: PCB7) Mrunal’s Economy Pillar#4E: Indicators- Inflation-CPI, WPI; IIP→ Page 853
49.4 🍅🍅🍅🍅 INFLATION TYPES BASED ON SPEED / QUANTUM
1. 🐌🐌 Creeping Inflation: ~4% per annum. It's regarded safe and essential for job creation and
economic growth.
2. 🐪🐪 Walking / Trotting: >4% onwards → Running Inflation: When shifts to double digit.
3. 🐎🐎 Galloping / Hyperinflation (अ�त ���त): Very high level. 20%-100%-even 10,000% or more,
as observed in Germany after Treaty of Versailles due to monetized deficit. Modern day
Venezuela, Zimbabwe, Iran due to misgovernance of ruling parties resulting into broken
economy & shortage of essential commodities. Here, money becomes quite worthless and new
currency may have to be introduced. (Related: redenomination, More in 📑📑Pillar#1A1)
🔠🔠❓MCQ. Which is likely to be the most inflationary in its effect? (Asked in UPSC-Pre-2013)
(a) Repayment of public debt (b) Borrowing from the public to finance a budget deficit
(c) Borrowing from banks to finance a budget deficit
(d) Creating new money to finance a budget deficit
🔠🔠❓MCQ. A rapid increase in the rate of inflation is sometimes attributed to the "base effect".
What is "base effect"?(Asked in UPSC-Pre-2011)
(a) It is the impact of drastic deficiency in supply due to failure of crops
(b) It is the impact of the surge in demand due to rapid economic growth
(c) It is the impact of the price levels of previous year on the calculation of inflation rate
(d) None of the statements
(Batch: PCB7) Mrunal’s Economy Pillar#4E: Indicators- Inflation-CPI, WPI; IIP→ Page 854
49.5 🍅🍅🍅🍅 EFFECTS ON INDIVIDUALS
(Batch: PCB7) Mrunal’s Economy Pillar#4E: Indicators- Inflation-CPI, WPI; IIP→ Page 855
C) Both A and B D) Neither A nor B
(Batch: PCB7) Mrunal’s Economy Pillar#4E: Indicators- Inflation-CPI, WPI; IIP→ Page 856
49.7.1 🍅🍅🍅🍅🍅🍅👷👷Wage Rate Index (WRI: वेतन दर सूचकांक) – calculation reforms in 2021
- prepared by Labour Bureau, an attached office of the Ministry of Labour.
- It surveys/monitors the wages across various industries.
😰😰Before 🤩🤩Reforms in 2021
Base year 1963-65. Base year 2016
Less number of industries surveyed Added more number of industry in the survey list- e.g.
synthetic textiles, textile garments, printing and
publishing, footwear, petroleum, chemical & gases,
fertilizers, drugs & medicines
- Utility of WRI? This database will be helpful in designing the minimum wages under the new
wage code law. (वेतन दर सूचकांक �जसम� श्रम मं त्रालय िक ऑिफ़स द्वारा �व�वध उद्योगों म� वेतन का �ा दर चल रहा है उसका
सव��ण िकया जाए और उस िहसाब से �ूनतम वेतन क� दरों म� सुधार िकया जाए।)
🔠🔠❓MCQ. Which of the following brings out the CPI for Industrial Workers?( UPSC-Pre-2015)
(a) The Reserve Bank of India (b) The Department of Economic Affairs
(c) The Labour Bureau (d) The Department of Personnel and Training
(Batch: PCB7) Mrunal’s Economy Pillar#4E: Indicators- Inflation-CPI, WPI; IIP→ Page 857
Monthly CPI Components in (All India) Index → (decreasing order) Wt.
Clothing / footwear 6.53
Misc. Personal care (soap etc) 3.89
Household goods & Services 3.80
Pan Masala, Tobacco, Intoxicants 2.38
Total Weight 100
- For Individual CPI for Urban and Rural areas, these weights are assigned differently. E.g. CPI
rural has zero weight to housing & 54.18 weight to food and beverages.
⇒ Trend? CPI was towards Inflationary path in UPA/Manmohan era. → CPI was towards
Deflationary path during Modi 1.0 era (2014-19)- mainly due to falling food prices. Food
commands ~46% weight in CPI calculation. (�Ref: 4A: Agro Handout)
⇒ Modi 2.0 era (2019-May onwards): back to inflationary path due to oil, onion etc.
- Headline CPI (सु�ख मुद्रा���त) = The inflation figure arrived based on all of the above components
of CPI (All India).
- Core CPI (प्रमुख मुद्रा ���त) = Headline CPI MINUS (inflation in food & energy)
(Batch: PCB7) Mrunal’s Economy Pillar#4E: Indicators- Inflation-CPI, WPI; IIP→ Page 858
49.7.6 🍅🍅🍅🍅🍅🍅 “Refined Core Inflation”?
⇒ Conventionally, core inflation is calculated by excluding ‘food and beverages’ and ‘fuel and light’
from overall inflation.
⇒ However, in NSO’s CPI- the petrol and diesel are counted under ‘transport and
communication’ and NOT under ‘fuel and light’. (एनएसओ क� �गनती म� पेट�ोल-डीज़ल के दाम ‘�धन’ निह
‘प�रवहन’ श्रेणी म� िदखाए जाते है इस�लए सीधा सीधा कोर/प्रमुख महंगाई �गनना मु��ल)
⇒ Therefore, it is difficult to directly calculate core inflation using NSO data tables
⇒ So, ��ES22 proposed a new ‘Refined Core Inflation’ concept to deduct the petrol-diesel
prices (which are under ‘transport and communication’ category). What are its interpretations?
NOT-IMP. (तो नए आ�थक सव��ण ने �गनती का नया तरीक़ा �सखाया हालाँिक मुझे परी�ा के �लए वो ब�त ज़ोरदार नहीं लगता)
49.7.7 🍅🍅🍅🍅🍅🍅 CPI Inflation is higher in urban areas than rural area because
1. Housing prices are counted in the urban area's CPI calculation, but not in rural area. ग्रामीण
इलाकों क� महंगाई �गनती म� मकानों के दाम नहीं �गने जाते.
(Batch: PCB7) Mrunal’s Economy Pillar#4E: Indicators- Inflation-CPI, WPI; IIP→ Page 859
2. Fuel & light component, Clothing and footwear component = These have higher weightage
in urban areas' CPI than in rural areas. शहरी इलाकों क� महंगाई क� �गनती म� ऊजार्, प्रकाश, कपड़े जूतों क�
क़�मतों को ग्रामीण सीपीआई के मुकाबले �ादा वजन िदया जाता है.
📔📔📔📔ES21: The difference between rural-urban CPI inflation, was high in 2019, but difference
declined in 2020. (2019 म� गांव और शहरों क� महंगाई दर म� काफ� अंतर था िकंतु 2020 म� यह अंतर कम �आ है.)
49.7.9 🍅🍅🍅🍅🍅🍅: 🐯🐯Inflation targeting by RBI- focus on Core CPI or Headline CPI?
⇒ At present the RBI act requires the central bank to control the inflation between 2 to 6%
(Headline) CPI (All India combined) “क� द्रीय ब�क ने महंगाई को उपभो�ा मू� सूचकांक के िहसाब से 2-6% म�
�नयं �त्रत/काबू म� रखना है”- ऐसा RBI क़ानून म� �लखा है (More in 📑📑Pillar#1A2)
⇒ However, Some experts say that instead of headline CPI, RBI should target the core inflation i.e.
CPI minus fuel & food. कु छ �वशेष� कहते ह� िक �रजवर् ब�क ने के वल मूल/बु�नयादी महंगाई पर ही �ान देना चािहए, तथा
खाद्य महंगाई और ऊजार् महंगाई को नजरअंदाज करना चािहए.
⇒ This is because food and fuel price shocks are transitory, mainly supply driven and therefore
can't be controlled by RBI's monetary policy tools. �ोंिक वह (खाद्य और क�ा तेल) महंगाई तो �ादातर आपू�त
पर आधा�रत ह�, और �रजवर् ब�क क� मौिद्रक नी�त के साधनों से �नयं �त्रत नहीं हो सकती.
📔📔📔📔ES21 says above argument may be correct for first world, but not for third world because
(हालांिक यह दलील प्रथम �व� म� स� हो सकती है िकंतु तीसरे �व� म� नहीं �ोंिक:)
⇒ 1) Consumption smoothing is difficult for many Indians i.e. Striking a good balance between
their spending and saving. Because they do not have a steady source of income / permanent job,
agriculture monsoon uncertainty, lack of life/health/crop/cattle insurance, lack of financial
planning/financial inclusion etc. So, food inflation hurts them the most & RBI can't turn blind
eye to their welfare/plight. (�ादातर भारतीय अपने खचर् और बचत म� सुचा�रता हा�सल नहीं कर पाते �ोंिक आमदनी के
�ायी साधन नहीं, बा�रश पर कृ �ष �नभर्र, बीमा लेने म� उदासीनता, �व�ीय समावेशन / आ�थक आयोजन क� कमी. इस�लए खाद्य
महंगाई उ�� ब�त परेशान करती है और �रजवर् ब�क उनके क�ाण/परेशानी को नजरअंदाज नहीं कर सकती)
⇒ 2) In poor families' household expenditure- food cost occupies a high share. food prices very
volatile in India. (गरीब प�रवारों के घरेलू खचर् म� खाद्य एक बड़ा िह�ा है, भारत म� खाद्य चीजों के दाम काफ� अ��र रहते ह�)
Food item its price changes in India within how many months?
Vegetable Twice a month (हर 1 महीने 2 बार स��यों के दाम म� बदलाव आ जाता है)
(Batch: PCB7) Mrunal’s Economy Pillar#4E: Indicators- Inflation-CPI, WPI; IIP→ Page 860
Pulses Thrice every 2 months (हर 2 महीने म� 3 बार दाल के दाम बदल जाते ह�)
Cereal Every 3.5 months
Milk Every 5 months
So, if RBI totally neglects the food inflation and focuses only on the CPI Core inflation, It will not be
in the best interest of the Indian citizens. So 📔📔📔📔ES21 suggestion:
1. RBI should focus on more core inflation. And separately look at food inflation data. In other
words, RBI should ignore fuel inflation! (�रजवर् ब�क ने प्रमुख/मूल/बु�नयादी मुद्रा���त पर �ादा �ान देना चािहए
लेिकन साथ ही साथ खाद्य महंगाई का भी �ाल रखना चािहए.)
2. CPI base year 2012. CPI gives very high weightage to the food. But people's food habits have
undergone changes between 2011-2020 so, Index components need to be updated. (�पछले एक दशक
म� लोगों क� भोजन आदतों म� काफ� बदलाव आया है इस�लए उपभो�ा मू� सूचकांक म� सुधार क� आव�कता)
3. Number of e-commerce transactions ⏫. So, CPI price survey data should also captured E-
Commerce websites prices as well. (ऑनलाइन वेबसाइट से भी जो खरीद-�बक्र� हो रही है, उन मू�ों को भी महँ गाई
सव��ण म� शा�मल िकया जाए)
49.7.10 🍅🍅🍅🍅🍅🍅Index → Consumer Food Price Index (CFPI: उपभो�ा खाद्य महंगाई सूचकांक)
(Batch: PCB7) Mrunal’s Economy Pillar#4E: Indicators- Inflation-CPI, WPI; IIP→ Page 861
Monthly WPI Components in descending order→ Wt.
Primary Articles: ~23%
A. (Unprocessed) food articles, eggs, meat-fishes, oil seeds etc. (~19%)
B. Crude Petroleum (~2%)
C. Minerals (~0.8%)
Fuel & Power: High Speed Diesel (HSD) > Petrol > LPG ~13%
Total 100%
WPI: monthly growth is zigzag although towards deflationary path nowadays. During initial Modi
raj it even went into negative zone for some months due to fall in global crude price (although since
Union/State Govts kept raising Excise/VAT so it was not felt in real life).
(Batch: PCB7) Mrunal’s Economy Pillar#4E: Indicators- Inflation-CPI, WPI; IIP→ Page 862
WPI ⏬Between 2020-January to April 2020: Crude oil price had declined significantly due to
lockdown, fall in demand all over the world. As a result, Indian WPI also declined significantly. (इन
2020 के शु�आती महीनों म� क�े तेल क� क़�मतों म� काफ़� �गरावट आयी थी, इस�लए WPI म� भी �गरावट देखी गई)
⇒ WPI (after reforms in 2017) doesn’t count indirect taxes on any commodity. It only looks at the
basic price (without indirect taxes). So, even if petrol diesel appears expensive to Indian
customers due to high level of Excise+VAT taxes, it’ll not reflect that in WPI. (WPI म� व�ुओ ं पर
लगने वाले टै�/ को नहीं देखा जाता, के वल व�ु के मूल मू� देख� जाते ह�, इस�लए ग्राहकों को क� द्र और रा� सरकार के �व�भ� करों
के चलते पेट�ोल डीज़ल महँ गा लगे, िक�ु WPI को नहीं लगेगा) For more on crude oil prices 📑📑Ref: Pillar#3A]
⇒ April-July 2020 : WPI inflation in the negative figure, while CPI-C inflation more than 6% (also
known as “Divergence between WPI and CPI”) as because
1. CPI monitors price+ (indirect taxes) on it. Whereas WPI ignores taxes.
2. CPI gives higher weightage to Food than WPI [उपभो�ा सूचकांक म� खाद्य पदाथ� को �ादा वजन िदया जाता
है]
3. 2021: WPI � from (4.83% Feb) → (7.39% Mar) → (10.49% April:). Why?
4. global commodity prices� �due to vaccination & revival in USA/EU (अमे�रका यूरोप म� टीकाकरण
के बाद आ�थक पुनज�वन के चलते क�े माल उ�ादन व�ुओ ं क� मांग और क�मतों म� बढ़ोतरी)
5. � costs in the production and distribution = wholesale prices increased. (उ�ादन तथा �वतरण क�
लागत ख़चर् म� बढ़ोतरी)
6. labour shortages by reverse migration & social distancing in factories (प्रवासी मज़दू रों क� वतन
वापसी, सामा�जक दू री �नयमों के चलते उ�ादन म� बाधाएँ ,)
7. ��ES22: again talked about the divergence between CPI and WPI and hoped that
ultimately it will reduce.
8. ��ES222: also talked abt ‘divergence between CPI (Rural) vs CPI (Urban) because both
have different weights to some goods/services. (ग्रामीण और शहरी उपभो�ा महँ गाई सूचकांक म� कु छ चीज़ों
को अलग अलग भारत िदया गया है इस�लए दोनों का जवाब अलग अलग आता है)
(Batch: PCB7) Mrunal’s Economy Pillar#4E: Indicators- Inflation-CPI, WPI; IIP→ Page 863
🔠🔠❓Find correct statement(s) (UPSC-Prelims-2020)
1. The weightage of food in CPI is higher than that in Wholesale Price Index (WPI).
2. The WPI does not capture changes in the prices of services, which CPI does.
3. RBI has adopted WPI as its key measure of inflation and to decide on the key policy rates.
Codes: [a) 1 and 2 only [b) 2 only [c) 3 only 4, [d) 1, 2 and 3
🔠🔠❓ Which goods are included to estimate food inflation in India? (UPSC-CAPF-2020)
1. Wheat 2. Paddy 3. Tobacco 4. Sugar.
Codes: (a) 1, 2 and 3 (b) 2, 3 and 4 (c) 1, 3 & 4 (d) 1, 2 & 4
(Batch: PCB7) Mrunal’s Economy Pillar#4E: Indicators- Inflation-CPI, WPI; IIP→ Page 864
⇒ Some areas have witness higher level of inflation than all India average. E.g. Lakshadweep
Andaman (geographical isolation), Manipur (frequent highway Bandh/blockades), Kerala
(floods) etc. (कु छ इलाकों म� भारत के औसत के मुकाबले �ादा महंगाई पाई जाती है)
⇒ Rest of the Chapter is mostly bol Bacchan about reason for the price in onion and tomato, and
some contrived mathematical models and graphs to downplay the problem of inflation िक कांग्रेस
सरकार �नक�ी थी,मोदी सरकार म� महंगाई काबू म� ही है.
(Batch: PCB7) Mrunal’s Economy Pillar#4E: Indicators- Inflation-CPI, WPI; IIP→ Page 865
June to Dec 2020 Urban: most Urban: cheapest Rural: most Rural: cheapest
expensive expensive
Veg. thali Andaman & Madhya Pradesh Andaman & Uttar Pradesh
(शाकाहारी) Nicobar ₹40 ₹24 Nicobar ₹39 ₹23
Non veg thali Mizoram ₹52 Haryana ₹28 Arunachal ₹49 Chandigarh ₹30
✋While above trend is not important for the scope of MCQs, but think for interviews- Even
though Thali is cheapest in Uttar Pradesh (rural) and Madhya Pradesh (Urban) Then why is there
malnutrition in these States? [अगर इन रा�ों म� थाली इतनी स�ी है तो कु पोषण �ों है? इस प्रकार िक रा� आधा�रत
UPSC इं टर�ू प्र� के �लए सोच �वचार कर�]
− � 1) US Feds will ⬆ repo to combat American inflation. US Feds will reduce bond purchase
program (=Fed-Tapering) → �loan interest rates in India → Foreign Portfolio Investors
(FPI-who invest upto 10% in a single Indian company’s shares)- those FPIs may pullout money
from India to give it as loans in American market → Indian share market ⬇. → Indian investors
also lose money → Indian investors flock towards gold, real-estate & cryptocurrency for better
returns → new set of problems related to tax evasion that we learned in Pillar2B.
− � 2) When FPI pullout money from Indian sharemarket → Rupee weakens →⬆ imports
become more expensive →⬆ inflation → RBI forced to ⬆ repo to combat inflation = expensive
loans will harm India’s post-Corona economic revival.
− �3) Imported goods and services from America will become expensive for India.
(Batch: PCB7) Mrunal’s Economy Pillar#4E: Indicators- Inflation-CPI, WPI; IIP→ Page 866
− However, ��ES22 said consumer price inflation in India remained under moderate level
compared to many other nations- like USA (7%), UK, Brazil, Turkey, Argentina (50%) etc.
(अमरीका म� महँ गाई/मुद्रा���त �पछले 30 वष� म� सबसे �ादा अ�धक पाई गई है इससे लड़ने के �लए अमे�रक� क� द्रीय ब�क जो क़दम
उठाएगी उसके प�रणाम��प �वदेशी पोटर्फो�लयो �नवेशक- भारतीय शेयर बाज़ार से भाग जाएं गे। �जससे भारतीय �पया कमज़ोर
होगा,भारत म� क�ा तेल और अ� आयात महँ गे होंगे, िफर भारत म� भी महँ गाई दर बढ़ेगा। उस भारतीय महँ गाई से लड़ने के �लए भारतीय
�रज़वर् ब�क लोन क� �ाज दर महँ गे करेगी तो कोरोना प�ात भारतीय अथर्�व�ा को पुनज��वत करने म� सम�ा/िद�त� आ सकती है)
Note: in above table CPI, WPI and IIP Data for 2021-22 is upto Apr-Nov 2021 from ES21. What
about latest data? Ans. Wait for Free Win23 Series after Feb-2023.
औद्यो�गक उ�ादन सूचकांक is a monthly index prepared by NSO, Base Year 2011 and Laspeyres Formula.
IIP measures production of 407 item groups related to (Classification#1: type of goods):
(Batch: PCB7) Mrunal’s Economy Pillar#4E: Indicators- Inflation-CPI, WPI; IIP→ Page 867
🎓🎓Note: % shows the weights assigned to them in IIP formula:
Primary goods (34% प्राथ�मक वस्तु): directly obtained from natural sources e.g. Ores, Minerals,
Crude Oil; energy goods -Petrol, Diesel, Electricity (Both Renewable and Non-Renewable).
Capital goods (8% पूंजीगत सामान): Plants & machinery used for further production e.g. Boilers, Air
& Gas Compressors, Engines, Transformers, Commercial Vehicles etc.
Infrastructure/ construction goods (12% बु�नयादी ढांचागत/�नमार्ण वस्तु): e.g. paints, cement, cables,
bricks and tiles, rail materials, etc.
Intermediate goods (17% बु�नयादी ढांचागत/�नमार्ण वस्तु): which goes as input in production e.g.
Cotton yarn, Plywood, Steel Tubes/ Pipes, Fasteners, etc.
Consumer durables (13% �टकाऊ उपभोक्ता सामान): Products directly used by consumers and having
a longer durability (2 years or more). E.g. Pressure Cooker, TV, AC, Tyres, Telephone , Mobile,
Cars, Motorcycles, Scooters, Jewellery etc.
Consumer non-durables (15% गैर-�टकाऊ): Products that are directly used by consumers and can’t
be preserved for long periods. e.g.: Soyabean Oil, Milk Powder, Maida, Rice, Biscuits, Sugar, Tea,
Cigarettes etc.
🔠🔠❓MCQ. As per the use-based classification of the IIP, the maximum weight has been assigned
to _ _(UPSC-CDS-2020-ii)
(a) primary goods (b) intermediate goods (c) consumer durables (d) consumer non-durables
(Batch: PCB7) Mrunal’s Economy Pillar#4E: Indicators- Inflation-CPI, WPI; IIP→ Page 868
49.8.4 🛠🛠🛠🛠🛠🛠: IIP in Corona-2020
⇒ 2020: The IIP growth started falling immediately after the Corona lockdown reaching its
historical low in April-2020. Then it began recovering in the subsequent months.
⇒ 2021-March: IIP �� to 22%, but mostly due to low base effect.
🔠🔠❓MCQ. In the 'Index of Eight Core Industries', which is given highest weight? (Pre-2015)
(a) Coal production(b) Electricity generation (c) Fertilizer production(d) Steel production
Indices Features
By NSO, covering all registered units under factories act, and
Annual Survey of electricity companies.
Industries (ASI) NOT Surveyed: Defense Factories, Oil-gas Storage, Restaurants,
उद्योगों का वा�षक सव��ण Hotels, Café, Computer Services, Departmental Units such as
Railway Workshops, Govt. Mints, Sanitary, Water Supply, etc.
(Batch: PCB7) Mrunal’s Economy Pillar#4E: Indicators- Inflation-CPI, WPI; IIP→ Page 869
Indices Features
Because IIP & ASI only cover manufactured items & electricity, so, NSO
Index of Service
working on (Experimental) Index of Service Production covering
Production (ISP)
Banking, Insurance, Education, Telecom and transport.
Services Business 11. Also known as Services Purchasing Managers’ Index. It’s done
Activity Index by A private sector company IHS Markit India. mentioned in
��ES21.
Order Books, Inventories and Capacity Utilization Survey.
RBI’s OBICUS
Quarterly survey to assess consumption & investment demand.
HSBC’s Purchasing Manager Index (PMI) : by surveying 400+
companies senior executives.
Economic Health
SBI’s Composite Index based on its loan portfolio, inflation,
Indices by
consumer spending etc.
Commercial Banks
Such indices have scale of 0-100 points. Above 50 means economic
growth, below 50 means contraction compared to previous period.
London’s Baltic Exchange measures the cost to transport raw material by
sea. If ⏫ → world economy is growing, and vice versa. Post-Subprime
Baltic Dry Index
crisis fell, then rose from 2016-18, then again falling in 2018 due to
protectionism. (समुद्र के रा�े क�े माल का अंतररा��ीय प�रवहन करने क� लागतखचर्)
(Batch: PCB7) Mrunal’s Economy Pillar#4E: Indicators- Inflation-CPI, WPI; IIP→ Page 870
🥶🥶FAQ: Do I have to remember all this Ministries/Govt orgs/Schemes/Portals/Rails given here?
Ans. NOT Necessary. However, Some rough idea necessary for occasional [Yearbook] /
Scheme/Portal type MCQs. I’ve pasted info here so as to save your time in not having to google.
इतने सारे सरकारी सं �ान और योजनाएं याद रहे तो ठीक, वरना नींद खोने क� ज�रत नहीं। म�ने तो माल बटोर के आपको िदया है तािक
आपक� मेहनत बचे, इधर-उधर google pe ढू ंढना नहीं पड़े.
Pillar#5A: INFRASTRUCTURE Part#1- Bijli, Paani, Sadak
Table of Contents
50 🧱🧱 Infrastructure → Meaning & Characteristics ........................................................................................ 873
50.1 🏅🏅⚒Infrastructure → Mining (खनन) / Basic Industries................................................................. 875
50.1.1 �🚟🚟 [Yearbook] Ministry of Heavy Industries & Public Enterprises.................................. 875
50.1.2 � 🔩🔩 [Yearbook] Ministry of Steel (इ�ात मं त्रालय) ................................................................... 875
50.1.3 �🧪🧪 [Yearbook] Ministry of Chemicals & Fertilizers ........................................................... 876
50.1.4 �⛽ [Yearbook] Yearbook: Ministry of Petroleum & Natural Gas ..................................... 877
50.1.5 �Lakhshya portal by petroleum ministry (2021) .................................................................... 877
50.1.6 ⛽ Dutch Disease & Resource Curse- ES2016-17 .................................................................... 877
50.1.7 �Crude Oil Prices, Petrol Diesel pe Taxes, Oil Bonds, NELP-HELP Policies .......................... 878
50.1.8 �[Yearbook] Ministry of Mines ( खान मं त्रालय) .......................................................................... 878
50.1.9 🏅🏅⚒🗺🗺 Mineral Products in India: (भारत के ख�नज उ�ादन)..................................................... 879
50.1.10 🏅🏅⚒📯📯 National Mineral Policy (NMP) 2019 ...................................................................... 880
50.1.11 🏅🏅⚒⚖ Mining → MMDR Act 2015..................................................................................... 880
50.1.12 🏅🏅⚒⚖ Mines & Minerals (Development & Regulation) Amendment Bill/Act, 2021 ..... 881
50.2 🔥🔥 Mining → Coal (कोयला) ................................................................................................................... 881
50.2.1 🔥🔥� [Yearbook] Coal Ministry (कोयला मं त्रालय) consists of → ............................................... 882
50.2.2 🔥🔥⚖ Coal Mining- Nationalization & Entry of Private Sector ............................................. 883
50.2.3 🔥🔥⚖ Mineral Laws (Amendment) Ordinance/Act 2020....................................................... 883
50.2.4 🔥🔥🔥🔥 Coal selling – Shakti Policy (2017)? ............................................................................... 884
50.2.5 👻👻👻👻👻👻Mining → Atma-Nirbhar (खनन) .............................................................................. 885
50.2.6 🔥🔥🔥🔥 Coal Crisis/Shortage in 2021-Oct ................................................................................... 885
50.2.7 🔥🔥 📔📔📔📔 Coal Energy: Economic survey suggestions / observations: ................................. 886
50.2.8 🔥🔥🔥🔥⚒ Mining → Misc. Schemes, Apps, Portals, Issues .................................................... 887
51 🔌🔌Infra → Energy → Electricity (ऊजार् → �वद्युत) .......................................................................................... 888
51.1.1 �🔌🔌 [Yearbook] Ministry of Power (�वद्युत-ऊजार् मं त्रालय) ......................................................... 888
51.2 �🔌🔌 National Electricity Distribution Company ........................................................................... 889
51.2.1 🔌🔌 IEX = Current-PDF-walla gone crazy (इसके पीछे PDF वाले दीवाने हो गए है).............................. 889
51.3 🔌🔌✝☪🕉🕉 Electricity → One Nation-One Grid .......................................................................... 890
51.3.1 🔌🔌♻ Grid → Green Energy Corridor Project (ह�रत ऊजार् ग�लयारा प�रयोजना) ............................. 890
51.3.2 🔌🔌♻ Grid → GREEN Grids / OSOWOG ............................................................................... 890
51.4 🔌🔌🔌 Electricity → Power Ministry’s Apps/Portal Overdoze ........................................................ 891
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 871
51.5 🔌🔌🔌🔌🔌🔌Electricity → Integrated Power Development Scheme.................................................... 891
51.5.1 🔌🔌⏱ Electricity → Prepaid Smart Meters for Electricity ...................................................... 892
51.6 🔌🔌🔌🔌:🧔🧔🧔🧔Electricity: NPA Solve → UDAY (2015).................................................................... 892
51.6.1 👻👻⚡Energy → DISCOMs Liquidity injection (पैसा क� तरलता देके जान फूं कना) ........................... 894
51.6.2 👻👻⚡Energy infra→ Electricity reforms in Atma-Nirbhar (�बजली �ेत्र म� सुधार) ...................... 894
51.7 🔌🔌Electricity (Amendment) Bill 2022 (�बजली सुधार �वधेयक ) ................................................................ 894
51.7.1 🔌🔌🔌🔌⚖Electricity (Rights of Consumers) Rules,2020: �बजली उपभो�ा अ�धकार �नयम ............. 896
51.8 🔌🔌🔌🔌🔌🔌Electricity → Deen dayal gram jyoti Yojana (2015) ........................................................ 896
51.9 🔌🔌🔌🔌🔌🔌 Electricity → PM Sahaj Bijli Har Ghar Yojana (saubhagya) .......................................... 897
51.9.1 ⚡☂🧔🧔🧔🧔Revamped Distribution Sector Scheme (2021-June) ........................................ 897
51.9.2 🔌🔌✍Conclusion: yes electricity access is imp. ........................................................................ 898
51.10 🔌🔌🔌🔌↘ Electricity → Use ‘Less’ → Energy Efficiency ........................................................... 899
51.10.1 🔌🔌🔌🔌↘🧔🧔🧔🧔 Electricity → Use ‘Less’ → PAT Mechanism ........................................... 899
51.10.2 🔌🔌 💡💡↘ 🧔🧔🧔🧔 Electricity → Use ‘Less’ → National LED Programme ......................... 899
51.10.3 🔌🔌 💡💡↘ 🧔🧔🧔🧔 Electricity → Use ‘Less’ → Gram Ujala Programme ............................. 900
51.10.4 🔌🔌 💡💡↘ 🧔🧔🧔🧔 Electricity → Use ‘Less’ → Misc. Schemes & Topics ............................. 900
51.10.5 🔌🔌 💡💡↘ 🧔🧔🧔🧔 Energy → Index → Global Reports ......................................................... 901
51.11 🔌🔌♻ Infra → Energy → Renewable (नवीकरणीय ऊजार्) .................................................................. 902
51.11.1 🔌🔌♻ PM Modi’s Panchamrit @COP-26 Glasgow, UK.......................................................... 902
51.11.2 🔌🔌♻� Energy → Renewable → [Yearbook] MNRE ......................................................... 903
51.11.3 🔌🔌🔌🔌🔌🔌🔌🔌 💦💦 Renewable → KUSUM (Solar for farmer) 2019....................................... 903
51.11.4 🔌🔌🔌🔌🔌🔌🔌🔌 Renewable → Jawaharlal Nehru National Solar Mission .............................. 904
51.11.5 🔌🔌♻🧔🧔🧔🧔 Renewable → Renewable Purchase Obligation (RPO)................................... 905
51.11.6 🔌🔌♻🧔🧔🧔🧔 Renewable →World's largest Hybrid renewable energy park- Khavda ........ 905
51.11.7 🔌🔌🔌🔌🔌🔌🔌🔌 Renewable /energy Efficiency → Ranking / Portals........................................ 905
51.12 🧯🧯🧯🧯 Infra → Energy → Cooking (रसोई के �लए)............................................................................ 906
51.12.1 🧯🧯🧯🧯: 🧔🧔🧔🧔 Cooking → Pratyaksh Hanstantrit Labh (PAHAL-2015)............................. 906
51.12.2 🧯🧯🧯🧯: 🧔🧔🧔🧔: 😷😷 LPG PAHAL-subsidy paused in Corona ................................................ 906
51.12.3 🧯🧯🧯🧯 👩👩:🧔🧔🧔🧔 Cooking → Pradhan Mantri Ujjwala Yojana 1.0 (PMUY)..................... 907
51.12.4 🧯🧯🧯🧯 👩👩:🧔🧔🧔🧔 Pradhan Mantri Ujjwala Yojana 2.0 [प्रधानमं त्री उ�ला योजना का दू सरा चरण] . 907
51.12.5 🧔🧔🧔🧔 🧯🧯🧯🧯 Cooking → Kerosene subsidy stopped (2020) ............................................... 908
51.12.6 🧔🧔🧔🧔 🧯🧯🧯🧯 Cooking → Misc. (�व�वध योजनाएं ) ....................................................................... 908
51.12.7 👻👻 ⚡☢Energy infra→ Atomic energy → Atma-Nirbhar (परमाणु ऊजार्).............................. 909
52 🌧🌧 Infra → Water & Sanitation (जल व् ��ता) ............................................................................................. 909
52.1 🚽🚽🚽🚽🚽🚽 Infra → Sanitation→ Swachh Bharat Mission (SBM: 2014) .......................................... 909
52.1.1 🚽🚽🚽🚽 Target of Swatchhta Diwas 2/10/2019 → Gandhi’s 150th Birth Anniversary ............ 910
52.1.2 🚽🚽🚽🚽 SBM → How to achieve targets? .................................................................................... 910
52.1.3 🚽🚽� SBM → Who implements this scheme? (कौनसा मं त्रालय करता है) ..................................... 910
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 872
52.2 🚽🚽SBM Gramin Phase 2 (�� भारत का दू सरा चरण) ................................................................................. 910
52.2.1 Urban Swachh Bharat Mission 2.0 announced in Budget-2021 .............................................. 911
52.2.2 🚽🚽SBM Protocols (कायर्पद्ध�त)......................................................................................................... 911
52.2.3 📔📔📔📔Why do we need SBM? Economic surveys observed: ................................................... 911
52.2.4 📔📔📔📔 Swatchh Bharat: What more can we do- Eco Survey19 Suggestions? ........................ 911
52.2.5 🏬🏬 📊📊 Sanitation → Index: Swachh Sarvekshan 2022 by Urban Ministry .......................... 912
52.2.6 🏬🏬 📊📊 Sanitation → Index: Prerak Dauur Samman............................................................... 912
52.2.7 � Infra → Sanitation → Swachhta Udyami Yojana (2014)................................................... 912
52.2.8 🚽🚽�Conclusion: Summary: Yes SBM is important ............................................................... 912
52.3 ✍Mains Questions in past UPSC exams............................................................................................ 913
Definition: Infrastructure is the set of basic facilities that help an economy to function & grow such
as Energy, Irrigation, Roads, Railway & Telecommunication. (बु�नयादी सं रचना / अवसं रचना- वो �ूनतम सु�वधाएँ
ह� जो एक अथर्तंत्र को कायर्रत रखने, और �वक�सत करने म� मदद करती है- जैसे क� �बजली पानी सड़क प�रवहन सं चार.)
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 873
3. ‘Output’ is often Non-Tradable. e.g. A road / bridge / airport constructed at one place cannot be
‘transferred’ to another place unlike a box of carrots.
4. Sometimes intangible in nature e.g. we can’t touch spectrum or electricity. (अमूतर् है, छू निह सकते)
5. Consumption is often ‘Non-Rival’ in nature e.g. 1 person using a road or street light it doesn’t
make product ‘unavailable’ for others (unlike a privately owned iphone.)
6. Price Exclusion often difficult. A rural road/street light can’t be ‘denied’, even if a person not
paying taxes or user-fees. (whereas if a person cannot afford iPhone, he is excluded from buying)
7. Usually creates positive externality: e.g. new railway station / airport → that much more
business for taxi-walla & hotel owners in the surrounding area. (सकारा�क बाह्यता)
Category Sectors granted ‘infra’ status by FinMin → Dept. of Economic Affairs
Transport & - Roads and bridges, Ports, Shipyard, Inland Waterways, Airport, Railway,
Logistics: tunnels, bridges, Transport, Logistics Infrastructure.
-
प�रवहन और रसद Commerce Ministry is working ong a ‘National Logistics Policy’
Energy Electricity, Oil, Gas (�बजली, तेल, गैस)
Water & Water supply & treatment, Sewage/Solid Waste Management, Irrigation
Sanitation जल आपू�त, ठोस अप�श� प्रबं धन, �संचाई
Communication Telecommunication (दू रसं चार)
Social & - Hospitals, Education Institutions, Sports Infrastructure, Tourism
Commercial infrastructure -hotels, ropeways and cable cars etc.
Infrastructure - Industrial Parks, food parks, textile parks, SEZ etc.
(सामा�जक और - Cold storage, Soil-testing laboratories
वा�ण��क) - Affordable Housing
If a sector gets infrastructure ‘status’ → its entrepreneurs may get following benefits:
1. Govt could give tax benefits, lease public land at a token price, faster environment clearance,
faster FDI approval etc. (करों म� छू ट, जमीन �रयायती दामों पर, ��रत �प से पयार्वरण/�वदेशी �नवेश क� मं जूरी)
2. RBI could help them by relaxing the External Commercial Borrowing (ECB) norms, Debt
restructuring (e.g. RBI’s 5/25 rule), Changing PSL norms etc. (�वदेशी ऋण क� सीमाओं पर छू ट)
3. SEBI could relax norms for REITS/InvITs etc. funds to help them mobilize capital easily for the
infrastructure sector. Similarly, IRDAI & PFRDA could oblige insurance and pension cos. to
invest minimum X% in infrastructure companies etc. (�नवेश के �नयमों को सरल िकया जाए)
4. They could get easier funding from World bank & other multilateral banks.
👜👜👜👜Budget-2022:- We’ll give “infrastructure” status to Data Centres, Energy Storage Systems,
grid-scale battery systems, EV charging infra → so they can benefit from tax/subsidies/schemes
benefits meant for other infrastructure sectors. (डेटा स�टर ऊजार् सं र�ण इ�ािद �ेत्रों को इं फ्रा���र क� सं �ा/दजार् दीया
जाएगी तािक उ�� भी वही टै�, स��डी, लोन क� �रयायत�/छू ट �मल� जो अ� इ�फ्रा���र उद्योगों को �मलती है.)
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 874
50.1 🏅🏅⚒INFRASTRUCTURE → MINING (खनन) / BASIC INDUSTRIES
Basic industries (बु�नयादी supply their products to manufacture other goods. Examples: Iron and
उद्योग) steel, copper, aluminum, chemical etc.
Capital goods industries goods that are used in producing other goods e.g. textile machinery,
(पूंजीगत माल उद्योग) conveyor belts, mining equipment etc.
Heavy industries (भारी producing large and heavy products e.g. Ship building, bulldozers,
उद्योग) industrial machinery, electric transformers etc.
�Difference between Dept/Statutory/Attached/Autonomous Body etc? =
https://unacademy.com/lesson/mrunals-yearbook-ministries-and-departments-forms-of-
government-organisations-in-hindi/7KCEZHT4
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 875
E-governance Steel Import Monitoring System (SIMS) portal.
(*) means approved for strategic disinvestment (=privatization) in 2019
Largest Steel 1 2 3
Producer China (54%) India (6%) Japan
Consumer China (49%) USA India (6%)
50.1.2.1 🔩🔩 Steel → Purvodaya Initiative (2020)
⇒ The eastern states of India (Odisha, Jharkhand, West Bengal, Chhattisgarh, and Northern
Andhra Pradesh) are home to 80% of Indian iron reserves.
⇒ Purvodaya Initiative: Setup new steel plants, transport infra etc. Boss? Steel Ministry will
coordinate with other Central Ministries, State Governments and Private Companies.
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 876
50.1.4 �⛽ [Yearbook] Yearbook: Ministry of Petroleum & Natural Gas
पेट�ो�लयम एवं प्राकृ �तक गैस मं त्रालय
Dept ⇒ N/A
Attached / ⇒ Directorate General of Hydrocarbons: regulator for the upstream
Subordinate activities i.e. oil and gas exploration and production activities. 2018:
offices: proposal to give it statutory status was REJECTED.
Statutory ⇒ 2006’s Act: Petroleum and Natural Gas Regulatory Board: regulator for
the downstream activities i.e. laying of pipelines and fuel marketing
CPSE ⇒ (*) Bharat Petroleum Corp Ltd, (*) Hindustan Petroleum Corp Ltd
क� द्र सरकार के ⇒ Engineers India Limited → consultancy services for petro refineries etc
सावर्ज�नक �ेत्र के ⇒ Gas Authority of India, Indian Oil Corporation, Oil India,
उपक्रम/ ⇒ Oil & Natural Gas Corporation (ONGC),
सरकारी कं प�नयां ⇒ ONGC-Videsh Ltd (OVL)- associated with foreign exploration projects
like Sakhalin (Russia), Al-Furat (Syria), Greater Nile (Sudan), San
Cristobal ( Venezuela).
(*) means approved for strategic disinvestment (=privatization) in 2019
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 877
50.1.7 ⛽Crude Oil Prices, Petrol Diesel pe Taxes, Oil Bonds, NELP-HELP Policies
Ref: Pillar2A2- Indirect Taxes and Pillar3A: Import Export.
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 878
50.1.9 🏅🏅⚒🗺🗺 Mineral Products in India: (भारत के ख�नज उ�ादन)
Hydrocarbon Energy Minerals (Coal, Lignite, Petroleum & Natural Gas 4 types
Atomic Minerals (Ilmenite, Rutile, Zircon, Uranium, And Monazite) 5 types
Metallic 10
Non-Metallic 21
Minor Minerals. 55
Total number of products 95 types
By default, the ‘regulation of mines and mineral development’, falls under Union List. But,
- �Minor minerals: गौण ख�नज = Their legislation, royalty, administrative work is delegated to the
States’ domain e.g. Sand, Mica, Marble, Granite, Agate, Chalk, Gypsum, Shale etc.
- 🧔🧔Major minerals: प्रमुख ख�नज = Any mineral that is not in Minor mineral list is called ‘Major
Mineral’ → Union’s domain e.g. atomic minerals, bauxite, iron, coal, petroleum, natural gas etc.
🔠🔠❓ MCQ. Find correct statement(s) about minor minerals in India: (Prelims-2019)
1. Sand is a ‘minor mineral’ according to the prevailing law in the country.
2. State Governments have the power to grant mining leases of minor minerals, but the powers
regarding the formation of rules related to the grant of minor minerals lie with the Centre Govt.
3. State Governments have the power to frame rules to prevent illegal mining of minor minerals.
Ans Codes: (a) 1 and 3 only (b) 2 and 3 only (c) 3 only (d) 1, 2 and 3 only
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 879
🔠🔠❓MCQ. Which of the following are designated as major minerals? 1) Bentonite 2) Chromite
3) Kyanite 4) Sillimanite (Prelims-2020)
[a) 1 and 2 only [b) 4 only [c) 1 and 3 only [d) 2, 3 and 4 only
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 880
50.1.12 🏅🏅⚒⚖ Mines & Minerals (Development & Regulation) Amendment Bill/Act, 2021
✋NOTE: following amendment does not apply to coal and atomic minerals
😰😰BEFORE 🤩🤩AFTER
- Union government to could reserve any - (In future) when new mines are
mine a particular end-use. auction….No mineral can be reserved for
- e.g. if Tata was allotted an iron ore mine, he captive use.
could only use its ore for his own steel plant - The mining company may do whatever it
and cannot send the iron or to any other wishes e.g. Tata can use the iron ore for his
company. Such mines are known as captive own steel plant AND/OR Sale it to some
mines. other company. [खदान कं पनी चाहे तो अपने उ�ादन
के �लए ख�नज का इ�ेमाल कर� या िकसी और कं पनी को
बेचने सरकार – सरकार इन मामलों पर कोई पाबं दी नहीं]
Union govt had allowed State government to Union Govt will specify the time period within
conducted the auction of mines (except Coal which state government must complete the
and atomic minerals) But some states were very auction. otherwise union government will do
lazy and not completing the auction process in auction for that state। [यिद तय समय सीमा म� रा�
a timely and transparent fashion. सरकार खदानों क� नीलामी नहीं करेगी, तो क� द्र सरकार उस रा�
के �लए नीलामी कर देगी]
If mining company doesn’t do mining for 2 😷😷 Govt may give 2 years + one-year extra
years then their lease will expire. (=Govt may extension/relief = total 3 years relief to exiting
sell the mine, to some other company)। खनन company. (e.g. in case Company could not start
कं पनी ने खदान �मलने के बाद दो वष� के भीतर ही उ�ादन शु� the mining process due to Corona
करना होगा वरना उसका आवं टन रद्द हो जाएगा lockdown/labour/disaster) [एक साल अ�त�र� छू ट
यानी तीन साल तक भी उ�ादन नहीं शु� िकया तो सरकार
आवं टन रद्द नहीं करेगी]
⇒ Top five largest coal reserves: USA > Russia > China > Australia > #5: India. (प्राकृ �तक भं डार)
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 881
⇒ Although India is the world's 2nd largest coal producer (उ�ादन) but our requirements are higher
than production, so, we import >₹1.50 Lcr coal, annually.
⇒ Coal is used in many industries such as electricity, steel, cement, paper, brick-kilns, etc
Coal Type Note Carbon %
Peat Highest moisture = smoke pollution. Most inferior in energy 40
Lignite Important states: TN (Neyveli), Gujarat, Rajasthan 40-60
/Brown Coal
Bituminous/ - Upon heating, it releases a liquid called Bitumin. 60-80
Black-Coal - Used to make coking coal, gas coal, steam coal.
- Imp states: Chattisgarh, Jharkhand, WB, MP, Odisha
Anthracite Burns with short blue flame, lowest moisture, highest energy. 80-90
Hard Coal �ूनतम नमी और मह�म ऊजार्
🔠🔠❓MCQ. In India, what is the role of the Coal Controller’s Organization (CCO) ?
1. CCO is the major source of Coal Statistics in Government of India. (कोयले के बारे म� आंकड़े जमा करना)
2. It monitors progress of development of Captive Coal/Lignite blocks. (कै ��व कोयला खदानों के �वकास का
मुआयना/ �नरी�ण करना)
3. It hears any objection to the Government’s notification relating to acquisition of coal-bearing
areas. (कोयला �व�ारों के ज़मीन अ�धग्रहण के सरकारी ऐलानों के �ख़लाफ़ �वरोध/�शकायतों को सुनना)
4. It ensures that coal mining companies deliver the coal to end users in the prescribed time. (यह
सु�न��त करना िक कोयला कं प�नयां तय समय पर ग्राहक को कोयला प�ँ चाये)
Codes: (a) 1, 2 and 3 (b) 3 and 4 only (c) 1 and 2 only (d) 1, 2 and 4
🔠🔠❓MCQ. Consider the following statements relating to Coal India Limited : (UPSC-CDS-2019-
i)
1. It is designated as a ‘Maha Ratna’ company under the Ministry of Coal.
2. It is the single largest coal producing company in the world.
3. The Headquarters of Coal India Limited is located at Ranchi Jharkhand.
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 882
Codes: a) 1 only b) 1 and 2 only c) 2 and 3 only d) 1, 2 and 3
🔠🔠❓ Find correct statement(s) about Coal India Limited (CIL? (UPSC-CDS-i-2020)
1. CIL has its headquarters Kolkata.
2. CIL operates through 82 mining areas spread over twenty provincial States of India.
3. CIL is the single largest coal-producing company in the world.
Codes: a) 1 only b) 1 and 3 only c) 2 and 3 only d)1, 2 and 3
- 1973: Coal Mines Nationalization Act → Coal India and other CPSEs took over private coal
mining companies. They will dig coal, sell it to thermal power plants & other industries.
- 1993: Private Coal mining allowed for ONLY for captive use (अंकु�शत उपयोग) i.e. industrialist
wanting coal for his own steel, cement, aluminium etc. manufacturing processes → UPA-raj
Captive Mining rights given to ministers’ relatives → they sold rights to needy companies
@higher price= SCAM, then 2014: SC cancelled coal block allocations.
- 2015: Coal Mines Special Provision Act: It opens up commercial coal mining for both private
and public entities, and thus ends monopoly of Coal India. (doesn’t mean captive mining is
outlawed. Companies who already have such captive mining rights, which were not cancelled by
SC- they’re allowed to operate. Then Govt takes some reforms #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 883
⇒ Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act) AND
⇒ Coal Mines (Special Provisions) Act, 2015 (CMSP Act).
😰😰Before ordinance/Act 🤩🤩After
Who can do Only companies related to Any India-registered company. So it’ll also
bidding in the iron steel, power coal sectors. encourage competition and attract FDI in
coal mining such Indian companies
auction?
Prior experience Yes. खनन के अनुभव क� आव�कता Prior experience in mining not required.
required before होगी, तभी नीलामी म� िह�ा ले सकते ह� अनुभव आव�क नहीं
bidding
What type of Separate licenses for Single/Composite license called ‘prospecting
license is /are i. prospecting (survey) license-cum-mining lease’
given? ii. actual mining (पूव��ण-सह-खनन का सं यु� अ�धकारपत्र')
How does Govt Companies to pay a fixed Rs. ⇒ Revenue sharing model= i.e. Mining
earn money? amount per tonne of coal company needs to give a certain portion
mined. क�नी प्र�त टन कोयले के of its revenue (=income from coal sales)
उ�ादन के िहसाब से �न��त रक़म to the govt irrespective of profit or loss in
सरकार को दे दी थी that sale. कं पनी ने कोयले क� �बक्र� क� आमदनी का
कु छ िह�ा सरकार को देना होगा
⇒ During the auction: minimum bidding
is 4% revenue share to the government.
Then whichever company is offering
higher % revenue share (e.g.5%,10%...)
will be given the mining rights.
Captive Miner Captive miner can’t sell coal ⇒ Can sell upto 50% of production. [अंकु�शत
अंकु�शत कोयला खनन to third party. He must use कोयला खनन कं पनी=पहले कोयले को �सफ़र् अपने �ील
कं पनी coal for his own steel, cement सीम�ट उद्योग म� इ�ेमाल कर सकते. अब वे उस कोयला
etc industry only. उ�ादन का 50% खुले बाज़ार म� बेच भी सकते ह�]
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 884
- National Coal Index: Coal Ministry's index to measure coal price change compared to the base
year 2017-18. It monitors the price of both domestically produced coal & imported coal. [इन रा��ीय
कोयला सूचकांक- भारत म� उ�ािदत तथा �वदेशों से आया�तत कोयले क� क़�मतों पर नज़र रखता है]
Apps?
1. Coal Mitra App by Power Ministry to help companies in buying / selling coal.
2. UTTAM App by coal ministry to monitor coal quality coming from a particular mine.
⇒ 1) Coal India does not have the technology for mining in the rainy season (वैसे तो भारत म� कोयले के
आर��त भं डार �वपुल मात्रा म� है लेिकन सरकारी कं पनी कोल इं िडया के पास बा�रश म� खनन करने क� अ�� टे�ोलॉजी नहीं है.)
⇒ 2) Coal India’s profits are not reinvested in expansion of the mining activities/research but
rather to give as dividend (so as to help government in its welfare schemes and Fiscal deficit
management. Ref Pillar2D) (सरकारी क�नी को जो भी मुनाफ़ा होता है उससे से कोयला खनन क� नई नई टे�ोलॉजी और
मशीनरी ख़रीदी चािहए। लेिकन वे �ादातर मुनाफ़ा लाभांश/िड�वड�ड के �प म� सरकार को देती है, तािक सरकार का राजकोषीय घाटा
कम हो सके , चुनावों के �लए ग़रीब क�ाण योजना चला सके । )
⇒ 3) so we have to rely on imported coal but China and Australia coal mining activities have facing
problems by the foreign environment activists like Greta Thurnberg. → Those foreign coal
mining company is required to invest in the green technology, which is increasing their cost of
production → expensive coal import for India. (चीन और ऑ��े�लया म� भी कोयला खनन पर �व�वध पयार्वरण
�नयमों के चलते भारत के �लए आया�तत कोयला महँ गा �आ है)
⇒ 4) Corona-lockdown: supply chain issues. (तालाबं दी के चलते आपू�त �ं खला म� िद�त�)
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 885
50.2.7 🔥🔥 📔📔📔📔 Coal Energy: Economic survey suggestions / observations:
1. Carbon Imperialism (काबर्न साम्रा�वाद) is a modern day type of imperialism wherein the 1st world
nations are trying to enforce their views about energy-consumption upon the 3rd nations with
hidden agenda to 1) To sell their nuclear fuel & technology. 2) To portray 3rd world in bad light
for using coal power and thereby ⏬ their own culpability for global warming. India's
Contribution to GHG <10% and Per capita emission is less than 2 tons, yet 1st world nations
portray us as villains. (�वकासशील देशों को अपनी परमाणु ऊजार् और तकनीक बेचने के �लए तथा जलवायु प�रवतर्न म� अपनी
अपरा�धक ता को छु पाने के �लए �वक�सत देश कोयला ताप आधा�रत ऊजार् क� �नंदा करते है)
2. But for India coal based electricity is a necessary evil because
a. Wind and solar power are Non-dispatchable (गैर प्रेषणीय), meaning electricity can be
generated only when there is fast wind blowing or there is appropriate sunshine
b. Land requirement for solar based powerplant is 10 times that of thermal power plant.
c. Challenges in acquiring Nuclear Fuel and Nuclear Technology
d. Unemployment if we shut down coal mining & thermal plants. Further mains self study
at mrunal.org/2017/09/upsc-mains-answer-writing-gsm3-carbon-imperialism.html
3. 💼💼Budget-2020: Some of the Indian thermal power plants are old and their carbon emission
levels are high. We’ll close them & use their vacated land for alternative use. (बेहद प्रदू षण करने वाले
पुराने �ांट्स बं ध कर�गे और उस जमीन का कोई ओर वैक��क इ�ेमाल कर�गे)
4. 👜👜👜👜Budget-2022:- Carbon Neutral Economy: 5-7% biomass pellets will be co-fired in thermal
power plants → 😍😍 extra income to farmers +⏬ stubble burning in agriculture fields. (फ़सल
अवशेष/पराली को जलाने क� जगह उसम� से बायोमास-पेलेट बनाकर कोयला �बजली घरों म� इ�ेमाल िकए जाएं गे।)
5. 👜👜👜👜Budget-2022:- Announced projects for 1) coal gasification 2) conversion of coal into
chemicals.
a. Gasification of coal is a process in which coal is partially oxidated by air, oxygen, steam
or carbon dioxide → to produce a fuel gas. (कोयले के आं�शक ओ��डेशन द्वारा �धन गैस बनाना।)
b. Coal can be used for producing chemicals like Formaldehyde, ethylene and propylene,
acetic acid. (कोयले म� से �व�वध रसायनों का उ�ादन)
6. 📙📙📙📙ES22 quoted World bank’s report Minerals for Climate Action: we need following
minerals to ⏫ clean energy:- (1) Copper, Aluminum, Iron, Manganese, Nickel for developing
solar cells, wind turbines, nuclear reactors. (2) Lithium and Graphite for storing electricity.
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 886
😰😰But India doesn’t have enough of these mineral resources. (�� ऊजार् के साधनों और सं ग्रहण के �लए इन
ख�नजों क� ज़�रत, िक�ु भारत के पास पयार्� मात्रा म� ये ख�नज स��� उपल� नहीं)
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 887
51 🔌🔌INFRA → ENERGY → ELECTRICITY (ऊजार् → �वद्यतु )
- (Origin) Electricity is a key element in modern day life. Right from running irrigation pumps to
charging mobile phones, electricity is a prerequisite for agricultural growth and digital
connectivity. (�बजली है आधु�नक जीवन का अ�नवायर् िह�ा - चाहे कृ �ष �संचाई हो या मोबाइल फोन सं चार)
- (Significance) Greater access to energy improves both economic growth & human development
of a country. If India wants to improve its Human Development → we must � per capita
energy consumption by 4xtimes. (मानव �वकास को बेहतर करने के �लए प्र�त ��� ऊजार् खपत बढ़ानी होगी)
- (DATA) India’s per-capita energy consumption of only ~1/3rd of the global average. OR
Though India accounts for ~18% world’s population, it uses only around 6%of world’s energy.
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 888
⇒ Central Electricity Authority (CEA: के �ीय �वदयु् त प्रा�धकरण): prescribes the standards
for construction of electrical plants, electric lines etc.
⇒ Central & State Electricity Regulatory Commissions (�वद्युत �नयामक आयोग) for fixing
the electricity tariff (prices).
⇒ Appellate Tribunal for Electricity (APTEL), Bureau of Energy Efficiency (BEE);
⇒ Damodar Valley Corporation (DVC); Bhakra Beas Management Board
⇒ Joint Electricity Regulatory Commission (JERC) for GOA & UTs
⇒ JERC for Manipur and Mizoram
Autonom Central Power Research Institute, National Power Training Institute
CPSE − National Thermal Power Corporation (NTPC)
सरकारी − National Hydroelectric Power Corporation (NHPC)
कं पनी − SJVN ltd: Satluj Vidhyut (GoI 62%, Himachal 27%, rest % with other investors)
− Power Finance Corp (PFC), Power Grid Corporation of India (POWER GRID)
− Power System Operation Corporation Limited (POSOCO)
− EESL- Energy Efficiency Services Limited- joint venture of NTPC Limited, PFC,
REC and POWERGRID- known for its subsidized UJALA LED bulbs
− (*) THDC India Limited: Tehri Hydro (GoI: 75%, UP State:25%)
− (*) Rural Electrification Corporation (REC)- known for DD Gram Jyoti.
− (*) North Eastern Electric Power Corporation (NEEPCO)
(*) means approved for strategic disinvestment (=privatization) in 2019
51.2 �🔌🔌 NATIONAL ELECTRICITY DISTRIBUTION COMPANY
- PM Modi had announced 24x7 power to all by 2022. But, since private and State-Government
owned electricity distribution companies are suffering NPA/debt issues, the electricity
distribution sector is not expanding fast enough to achieve this target.
- So, 2019-June: NTPC and Power Grid Corporation of India have formed a 50:50 joint venture
company → named National Electricity Distribution Company.
- Objective? electricity distribution business on a pan-India basis.
51.2.1 🔌🔌 IEX = Current-PDF-walla gone crazy (इसके पीछे PDF वाले दीवाने हो गए है)
✋ this GK very poor cost benefit for exam, But CA-PDF walla gone crazy. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
A private sector company: Indian Energy Exchange Limited (IEX) →
⇒ IEX launched a green term-ahead market (G-TAM). basically future/forward contracts for
renewable energy. (Ref 1C)
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 889
⇒ IEX’s subsidiary company → Indian Gas Exchange (IGX) → online trading of natural gas.
⇒ IEX + Power Exchange India Limited (PXIL) → It allows players (thermal powerplants,
DISCOMS etc) to buy/sell electricity from anywhere across the country with just one hour’s
prior notice. = "REAL TIME MARKET" (RTM)
- Initially, individual states’ electricity grids (�बजली �ग्रड) were interconnected to form 5 regional
grid regions namely Northern, Eastern, Western, North Eastern & Southern region. If a state
had surplus electricity, it could sell ONLY to other states in that region.
- So, One Nation-One Grid concept aims to connect all 5 regional grids into one national grid so,
electricity can be transferred from surplus region to deficient region.
- Here buying-selling of surplus electricity is done through power exchanges like —Power
Exchange of India (PXIL) and India Energy Exchange (IEX).
- Boss? Power ministry → Power Grid Corporation of India Limited.
51.3.1 🔌🔌♻ Grid → Green Energy Corridor Project (ह�रत ऊजार् ग�लयारा प�रयोजना)
- Project will enable the flow of renewable energy into this National Grid Network. So that
renewable energy rich States like Rajasthan (solar), Tamil Nadu (wind) can sell the electricity to
other states. (एक रा� क� ह�रत �बजली अ� रा�ों को मुहैया/उपल� क� जा सके ।)
- 2022- Phase-II of the scheme started. Union govt to give 33% subsidy on project cost.
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 890
51.4 🔌🔌🔌 ELECTRICITY → POWER MINISTRY’S APPS/PORTAL OVERDOZE😰😰
��FAQ: Do I’ve to remember all this? Ans. No. I’ve given to prevent your FOMO feeling from
CA-PDFs/365s. (आपको ये डर नहीं रहे िक आपके पास ही माल नहीं है इस�लए आपको यह माल िदया है. नींद खोने क� ज़�रत नहीं.)
Garv app to monitor progress of how many villages electrified under DD Gram Jyoti
Yojana.
DEEP portal to help DISCOM companies buy electricity from thermal plants through
auction.
Vidyut PRAVAH & to let people know how much electricity is generated in India, vs. current
MERIT app price, demand & shortages, inter-state purchase of electricity etc.
Urja Mitra App to notify users about upcoming electricity outages.
TARANG App to monitor upcoming power projects & stalled projects.
And lastly, Power Ministry → Central Electricity Authority (CEA) → National Power Portal (NPP)
where above Apps’ data can be displayed
51.5 🔌🔌🔌🔌🔌🔌ELECTRICITY → INTEGRATED POWER DEVELOPMENT SCHEME
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 891
शहरों म� �बजली उपल� बेहतर करने के �लए
Originally Manmohan had launched Restructured Accelerated Power Development and Reforms
Programme (RAPDRP), Modi repacked/renamed it as IPDS. एक�कृ त �बजली �वकास योजना
- Boss? Ministry of Power (2014). Central Sector Scheme = 100% funded by Union.
- Target? To strengthen power infrastructure, especially in urban areas.
- How? All Electricity Distribution Companies (Discoms: �बजली �वतरण कं प�नयां) are given ₹ ₹
assistance for improving distribution network, installing ICT enabled smart meters for billing
and collection. Install solar panels if not possible to join an area with grid.
Note: Prices quoted in above chart are only for illustration, they may not be real/accurate.
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 892
During UPA/Congress-raj, DISCOMs were suffering losses because: 😰😰
1. Floods and cyclones, environmental activism by NGT/SC, scams in coal allocation → coal
mining ⏬ → Coal became expensive😰😰 → Thermal electricity production became expensive.
(बाढ़ चक्रवात, पयार्वरणीय अ�त सतकर् ता, कोयला खदान आवं टन म� धांधली)
2. 20% of the electricity is lost wasted during the transmission and distribution. But electricity
companies do not have enough money to upgrade their network/equipment. (नए उपकरण/ साधन
ख़रीदने के �लए पैसा निह, इस�लए पुरानी/जजर्�रत लाइनों म� सं चार के दौरान २०% �बजली बबार्द हो जाती है)
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 893
4. 😰😰Electricity thefts rampant but State Govts ignore it for vote bank politics. (लोकलुभावन के �लए
िकसानों को स�े म� �बजली, तथा सरकारों क� �बजली चोरी के �खलाफ लड़ने म� उदासीनता के चलते �बजली कं प�नयां घोर नुकसानी म�)
😰😰DISCOM were making huge losses → Modi launches a scheme to help them called, ‘Ujwal
Discom Assurance Yojana’ (UDAY).
Boss? Ministry of Power (2014)
Target? Financial revival of DISCOMs via following method:
- Whatever was the debt of a DISCOM on 30/9/15: State Govt will take over 75% of the debt in
a phased manner. [It is optional for States to do this.]
- To repay this debt, State govt. will mobilize ₹ issuing bonds in the market. These bonds will
be non-SLR in nature. So, banks are buying them, it will be not counted in their SLR quota.
What is SLR? (More in 📑📑Pillar#1A2: Monetary Policy).
⇒ (if States do above thing) → Union will give them extra ₹₹ for Deendayal Upadhyaya Gram
Jyoti Yojana (DDUGJY), Integrated Power Development Scheme (IPDS), and other such
schemes of (1) Ministry of Power and (2) Ministry of New and Renewable Energy.
⇒ By 2019-20, first phase completed. Data showed that scheme failed to completely solve the
problem of the electricity companies. Then power minister said we will launch UDAY 2.0
scheme with better features but no development yet. [पहले चरण म� कु छ ख़ास सफलता हा�सल नहीं �ई
हालाँिक दू सरा चरण शु� करना बाक़� है]
51.6.1 👻👻⚡Energy → DISCOMs Liquidity injection (पैसा क� तरलता देके जान फूं कना)
⇒ Corona lockdown → Industry and railways shutdown → � demand for electricity → losses
for Electricity/Power Distribution Company (DISCOM).
⇒ Atma-Nirbhar: Govt will give ₹₹ to (i) Power Finance Corporation (ii) Rural Electrification
Corporation (PFC-REC) → they’ll invest ₹₹ in DISCOMS.
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 894
�Union looks after �States look after
electricity supply chain electricity distribution
electricity generation
electricity transmission
ELECTRICITY (AMENDMENT) BILL, 2022 aims to amend the Electricity Act, 2003. But it is mostly
in negative news because of the following reasons: (�न� कारणों से �ववादों म� है)
⇒ �Bill makes it easier for multiple electricity discoms to operate within an area. This will
increase the competition → State owned (Sarkaari) DISCOM fear this will weaken their
monopoly → biz loss for Sarkaari DISCOM→ privatisation (like AirIndia) → possible jobless
for employees. (एक इलाक़े म� 1 से �ादा �बजली �वतरण कं प�नया काम कर पाएँ गी । �जससे �धार् बढ़ेगी, लेिकन सरकारी
�बजली कं प�नयां �धार् म� िटक नहीं पाएँ गी, घाटे म� चलेगी। िफर एयर इं िडया क� तरह उनका भी �नजीकरण कर िदया जाएगा। और
उनके क�मयों क� नौकरी चली जाएगी ऐसा अंदेशा/�वरोध.)
⇒ �If discom defaults on the payment to electricity generation Company (genco) → Union
government’s can order the stopping electricity supply to such DISCOM. Since most State-
owned (sarkari) Discoms are in losses, unable to pay → electricity might get stopped. (यिद कोई
�बजली �वतरण कं पनी ने �बजली उ�ादन कं पनी का बकाया पैसा व� भी नहीं चुकाया तो क� द्र सरकार उन �बजली �वतरण कं प�नयों
क� �बजली आपू�त बं द करवा सकती है। अब वैसे भी �ादातर रा� सरकार क� सरकारी �बजली कं प�नयां घाटे म� चल रही है, वे
�बजली उ�ादक कं प�नयों को पैसा चुका निह पाती, तो उनका �बजली स�ाई/आपू�त क� द्र-सरकार बं द करवाएगी, ऐसा अंदेशा।)
⇒ �Discoms will compulsorily have to buy minimum X% renewable electricity & distribute it to
customers. Else there will be penalty. This mechanism is known as Renewable Purchase
Obligation (RPO). But, Renewable energy is more expensive than thermal (Coal) energy, so
Discoms apprehensive/opposed. (अ�नवायर् �प से �बजली �वतरण कं पनी ने कु छ �� ऊजार् ख़रीदके ग्राहकों को बेचनी
होगी। वरना जुमार्ना लगेगा। लेिकन �� ऊजार्, कोयला ऊजार् के मुक़ाबले महँ गी होती है इस�लए �बजली कं प�नयों म� एतराज़।)
⇒ �Requires state govt to setup Cross-subsidy Balancing Fund. Some state governments are
opposed to take such additional responsibilities. (how this fund will work? Not important.) (रा�
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 895
सरकारों ने एक क्रॉस स��डी बैल��संग/सं तुलन कोष/फं ड बनाना होगा तो रा� सरकारों को नाराज़गी है िक हम पर ये अनाव�क
�ज़�ेदारी थोपी गई। ये फं ड कै से काम करेगा? उसम� अपने को िदमाग़ ख़चर् करने क� �ादा ज़�रत नहीं है।)
�Conclusion: Appreciable attempt by the union government to increase the competition,
accountability and sustainability in the electricity supply. While there are apprehension among
certain quarters, regarding certain provisions of the bill. But, to clean up the energy sector, painful
medicine will have to be taken. (�बजली स�ाई आपू�त म� �धार्, जवाबदेही और वह�नयता/शा�तता/िटकाऊपन बढ़ाने के �लए
क� द्र सरकार का एक प्रशं सनीय क़दम है हालाँिक कु छ लोगों म� �वरोध ह� लेिकन ऊजार् �ेत्र को दु�� करने के �लए कड़वी दवाई ज़�री है।)
Lack of rural lighting= ⏫use of kerosene lamps → ⏫pollution, import bill, subsidy bill. So, PM
Manmohan’s Rajiv Gandhi Grameen Vidyutikaran Yojana → Modi restructured as DDUGJY.
⇒ Boss? Ministry of Power → Rural Electrification Corporation-REC (2015)
⇒ Central Sector Scheme = 100% funded by Union.
⇒ Target? 24×7 uninterrupted ‘metered’ electricity supply to each rural household by 2022, by
doing following →
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 896
⇒ 1) Separate feeder lines for rural households vs agricultural use. (कृ �ष और ग्रामीण �रहायशी के �लए दो अलग
अलग सं भरक लाइन) 2) Strengthen sub-transmission and distribution network to reduce power
losses. 3) Install electricity meters.
How?
⇒ Based on SECC-2011, identify beneficiaries, give them free electricity connection with meter.
⇒ If a household in remote area → not possible to join with grid connected electricity lines→ then
solar cell, DC battery pack, LED lights will be given.
₹ ₹ Funding?
⇒ As of 31/3/2019: All the States have reported 100% electrification of all households except few
households in Naxal affected Bastar region of Chhattisgarh.
Boss? Power ministry with >₹3 lakh cr funding. - it will act as an ‘umbrella scheme’ subsuming
previous schemes:
⇒ Deen Dayal Upadhyaya Gram Jyoti Yojana [DDUGJY] / SAUBHAGYA = for improving the
electricity supply in rural area. (गाँवो के �लए)
⇒ Integrated Power Development Scheme(IPDS) = for electricity supply in urban area. (शहर)
⇒ Prime Minister’s Development Program (PMDP) = for electricity infrastructure in Union
Territories of J&K and Ladakh (ज�ू क�ीर और लद्दाख के �लए)
⇒ ��ES22: thanks to all these initiatives, 96% Indian families have electricity connection.
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 897
51.9.1.1 ⚡☂🧔🧔🧔🧔 RDSS: Features?
Basically the similar features like the previous schemes like DDUGJY, IDPS etc i.e.
⇒ Separation of Agriculture feeder lines. [कृ �ष उपयोग क� �बजली के �लए अलग तार �बछाई जाएगी]
⇒ Solarization of electricity feeder lines under KUSUM = Basically, farmer can sell the excess
electricity from their solarplant to electricity company → extra income for farmer! [कु सुम योजना म�
िकसान ने जो सूयर् ऊजार् से �बजली बनायी है उसे वो �बजली कं पनी को बेच पाएगा]
⇒ Smart electricity meters will be installed [for all users other than agriculture]→ electricity
consumption level will be monitored through artificial intelligence (AI) → power outages
solved in a faster manner. Government will give upto 15-50% subsidy to DISCOM companies,
depending on performance & gen-vs- sp.category state. [कृ �ष के अलावा वाले ग्राहकों के िठकानों पर �ाटर्
�बजली मीटर लगाए जाएं गे �जसक� कृ �त्रम बु�द्धम�ा से �नगरानी होगी, तािक �बजली कटौती का तुरंत उपचार हो सक� ]
⇒ modernisation of state-level electricity distribution infra. [रा� �र पर �बजली अवसं रचना का
आधु�नक�करण]
⇒ Special focus/ extra funding for special category states. Furthermore, UT JK, Ladakh, Andaman
& Nicobar Islands, and Lakshadweep Will also be considered under “special category states” [So,
they can also get extra funding] [�वशेष श्रेणी के रा�ों को अ�त�र� पैसा द�गे]
⇒ Annually the electricity distribution companies [DISCOMs] will be reviewed for their
performance. ONLY If a DISCOM scores minimum 60% marks in performance review= Will be
given government funding. [जो �बजली कं पनी प्रदशर्न मानकों पर कम से कम 60 प्र�तशत गुण सालाना हा�सल करेगी, उसी
को सरकार पैसा देगी]
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 898
^SEE basically same MCQ reused/recycled in two different exams of UPSC
2008: Environment Ministry’s National Action Plan on Climate Change (NAPCC: जलवायु प�रवतर्न पर
रा��ीय कायर् योजना ) One of its 8 components is National Mission for Enhanced Energy Efficiency
(NMEEE: व�धत ऊजार् कायर्�मता का रा�ी� य �नयोग ) → PAT.
Boss? Power Ministry → Bureau of Energy Efficiency (BEE).
⇒ Under Perform Achieve and Trade (PAT: प्रदशर्न, हा�सल और �ापार करना) mechanism:
⇒ 8 energy intensive industries are given ‘quotas’ viz. Thermal Power, Aluminium, Cement,
Fertilizer, Iron-steel, Pulp-paper, Textiles and Chlor-alkali.
⇒ They’ve to cut their energy consumption according to the quotas, else face penalties.
⇒ Overachieving firm can obtain Energy Saving Certificates (ESCerts) from BEE’s PATNET portal
and sell it to the underachieving firm (similar to PSLC certificates).
⇒ Central Electricity Regulatory Commission (a statutory body) regulates the prices.
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 899
Boss? Power Ministry gives ₹ ₹ to Energy Efficiency Services Ltd (EESL) for:
− Unnat Jeevan by Affordable LEDs and Appliances for All (UJALA) for subsidized home Light-
emitting Diode (LEDs) bulbs. Previously called DELP (Domestic Efficient Lighting Program).
− Street Lighting National Program: whereas EESL replaces conventional Halogen Street Bulbs
with LED street bulbs, free of cost.
Boss? Ministry of Power → its company Energy Efficiency Services Limited (EESL) → its company
Convergence Energy Services Limited (CESL).
− What? Exchange villagers' yellow bulbs with LED bulbs i.e. Villager submits working
incandescent (Filament-walla yellow) bulbs → plus pays ₹10 = gets LED bulb with 3 years
warranty. Maximum quota=5 LED bulbs per villager. गाँव वालों को उनक� िफ़लाम�ट ब� क� एवज़ म� LED
ब� स�े म� िदए जाएं गे.
− Benefit? a 12 Watt LED bulb = light of 100 watt incandescent bulb so �Energy bill for villager,
�CO2 Emission from Thermal power plants, �Waste generation (LED bulbs have longer
lifespan than incandescent).
51.10.4 🔌🔌 💡💡↘ 🧔🧔🧔🧔 Electricity → Use ‘Less’ → Misc. Schemes & Topics
��Budget-2022:- We’ll setup an Energy Service Company (ESCO) to promote
ESCO
Company
energy efficiency in large commercial buildings (बड़ी वा�ण��क इमारतों म� ऊजार् कायर् द�ता
को बढ़ाने के �लए एक नई क�नी बनायी जाएगी.)
Atal Jyoti Yojana (Ajay): FREE Solar Street Light with LED in
1. Special category states
2. 5 states - Assam, Bihar, Jharkhand, Odisha and Uttar Pradesh.
AJAY
3. NITI-ayog-walle Aspirational districts in other states
4. Andaman Nicobar and Lakshadweep
Funding: MNRE 75% + 25% from MPLADS of given constituency.
- Ministry of Power and Ministry of Textiles give money to Energy Efficiency
SAATHI Services Limited (EESL) → give energy efficient instruments to small and
medium Powerlooms to reduce their energy consumption.
Star Label To help the customer to use energy efficient appliances. 📑📑Refer BEE in Pillar #4B
Smart Ministry of Power → Energy Efficiency Services Ltd. (EESL) helps DISCOMs to
Electricity install Smart Electricity Meters. 🤩🤩Benefits? IT enabled monitoring, no need to
Meters manually read the meters, power theft difficult etc.
- Since 2019: Govt allowed ethanol production from surplus rice/maize available
FCI
with the Food Corporation of India (FCI).(More in 📑📑Pillar#4A)
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 900
⇒ BEE’s National strategy document ‘UNNATEE’ (Unlocking NATional Energy
UNNATEE
Efficiency Potential) for developing an energy efficient nation (2017-2031).
⇒ Power Ministry’s knowledge portal namely Simplified Digital Hands-on
SIDHIEE
Information on Energy Efficiency in MSMEs for sharing best practices
⇒ BEE’s Eco-Niwas Samhita for minimum energy conservation standards in
Residential Buildings.
Buildings
⇒ EESL’s Building Energy Efficiency Programme (BEEP) for commercial
buildings
🎓🎓Self Study: Nuclear Power from Unacademy Sci/geography-Booklet
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 901
🔌🔌 💡💡↘ ✍ Energy Efficiency Conclusion? Under the Paris agreement, India has pledged to
⏬ emissions intensity of its GDP by 33-35% by 2030. Energy efficiency is a crucial factor in this.
Aforementioned initiatives will help in a long way to achieve our promises under Intended nationally
determined contributions (INDC: रा��ीय �र पर �नधार्�रत योगदान) under UNFCCC’s Paris agreement. (सकल
घरेलू उ�ाद क� उ�जर्न तीव्रता कम करने क� भारत ने पे�रस सं �ध म� प्र�त�ा ली है उसम� उ� योजनाओं से काफ� मदद �मलेगी.)
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 902
Area 🎯🎯Target 🎯🎯Modi included in
originally @Glasgow NDC (2022)
Summit (2021)
removed from atmosphere through
absorption in processes like photosynthesis or
physical removal (उ�जर्न को शुद्ध �प से 0/शू� िकया
जाएगा)
5) REDUCE TOTAL projected carbon N/A 2030 Not included
emissions by 1 bn tonnes from now to 2030.
(काबर्न उ�जर्न म� 1 टन क� कटौती)
6) Carbon sink of 2.5-3 billion tonnes via Yes N/A Yes
afforestation
⇒ 👜👜👜👜Budget-2022:- Solar Power: Target of 280 GW of installed solar capacity by 2030. We’ll
give Production Linked Incentive (PLI) for manufacture of solar cells (Ref:Pillar4B).
Boss? Ministry of New and Renewable Energy. Kisan Urja Suraksha evam Utthaan Mahabhiyan
(KUSUM) has components A, B, C but the gist of the matter is:
Farmers are encouraged to install Solar pump tube wells for irrigation 💦💦 → less diesel
consumption in pumpsets.
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 903
Farmers, panchayats, cooperatives can install upto 2 MW renewable power plants in their barren
/ cultivable lands.
Above people can sell the excess electricity to the DISCOMS. Its price will be decided by the
respective State Electricity Regulatory Commissions (SERC).
₹ ₹ Funding? Union 30%+ State 30%+ Bank Loan 30% +10% by the farmer himself= 100%
🤩🤩Benefit? Diesel & Thermal electricity will ⏬ → 27 million CO2 emission reduced / per year.
🔠🔠❓ What is the minimum reduction in projected demand of conventional energy at the end of
five years as per the 'development of solar cities' programme? (UPSC-CAPF-2020)
(a) 2 per cent (b) 5 per cent (c) 10 per cent (d) 15 per cent
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 904
51.11.5 🔌🔌♻🧔🧔🧔🧔 Renewable → Renewable Purchase Obligation (RPO)
Applicable to? Power distribution companies, large electricity consumers and captive power plants.
They are obliged to buy min. “X” % of the electricity from renewable energy sources.
This ensures solar, wind and other renewable power producers receive sufficient of consumers /
market demand. This “X%” quota is decided by the MNRE.
First time setup in 2014 (11.50%, With internal bifurcation for solar and non solar),
Quota raised over years. 2018: 17%, 2019: 17.5%.....2022: 21% [=10.50% from solar + 10.50%
from Non solar=21%]
This mechanism is called Renewable Purchase Obligations (RPOs: नवीकरणीय खरीद के दा�य�). Its
prices are decided by CERC/SERC depending on whether its Interstate or intrastate sale.
Related? Renewable Generation Obligation (RGO: नवीकरणीय सृजन दा�य�): It requires coal based
thermal plants to generate/procure “x%” of renewable energy.
51.11.6 🔌🔌♻🧔🧔🧔🧔 Renewable →World's largest Hybrid renewable energy park- Khavda
Near the Indo- Pakistan border near Khavda, in Kutch, Gujarat. 30,000-MW capacity (solar+Wind)
over 72,600 hectares of land give to Adani Green, Gujarat State Electricity company etc.
SARAL INDEX ⇒ Who? Jointly developed by Ministry of New & Renewable Energy
for Solar rooftop (MNRE), Shakti Sustainable Energy Foundation (SSEF), Associated
Chambers of Commerce and Industry of India (ASSOCHAM) and Ernst
& Young (EY).
⇒ What? State Rooftop Solar Attractiveness Index (SARAL) ranks the
States for their attractiveness for rooftop development.
SAATHEE Portal Power ministry’s portal to monitor energy efficiency in various states
�Conclusion? Access to clean, reliable and affordable energy increases the ease of living, improves
education and human development. Aforementioned schemes / initiatives / challenges are important
in that regard / need to be addressed on priority basis. ��, �व�सनीय और स�ी ऊजार् तक प�ंचने से जीवनयापन म�
आसानी होती है, �श�ा और मानव �वकास म� सुधार होता है। इस�लए अग्रता क्रम से �ान देना ज�री
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 905
51.12🧯🧯🍽🍽 INFRA → ENERGY → COOKING (रसोई के �लए)
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 906
⇒ This has saved >₹25,000 crore subsidy bill for the government but caused hardship for the
middle class families.
🔠🔠❓ PAHAL, an initiative for subsidy to bank account, is related to _ _ _ (UPSC-CAPF-2020)
(a) LPG consumers (b) internet consumers
(c) farmers for fertilisers (d) Central Government Employees for medical treatment
51.12.3 🧯🧯🧯🧯 👩👩:🧔🧔🧔🧔 Cooking → Pradhan Mantri Ujjwala Yojana 1.0 (PMUY)
Ordinarily, a customer has to pay ~₹ 1000+ as refundable security deposit to get the LPG connection
from Oil Marketing Company (OMC: Bharat Gas HP Gas etc.).
Scheme gives Deposit-free LPG connections + rubber tube + pressure regulator to the women of
Below Poverty Line (BPL: गरीबी रेखा के नीचे) families. (Although they have to pay money for the
stove and cylinders to actually start cooking.)
The BPL families identified using SECC-2011 data. Later, beneficiary list was expanded to cover
the forest dwellers, people residing in Islands etc. whose name may not be in SECC-2011 data.
Boss? Petroleum Ministry pays ₹ ₹ OMC. Central Sector scheme = 100% funded by Union.
Benefit? firewood/kerosene consumption ↓= indoor pollution ↓= health + environment :-)
2019: Himachal =first state in the country to have “100% LPG gas coverage”.
2020: Corona Lockdown = poor families’ income� �, so can’t afford to pay for cylinders so,
PMUY beneficiaries eligible for 3 FREE LPG cylinders upto 30/June/2020.
51.12.4 🧯🧯🧯🧯 👩👩:🧔🧔🧔🧔 Pradhan Mantri Ujjwala Yojana 2.0 [प्रधानमं त्री उ�ला योजना का दू सरा चरण]
⇒ Boss? Ministry of Petroleum and Natural Gas (MoPNG).
⇒ Phase1 / 1.0 = 2016. Phase-2/2.0 = 2021 onwards. [पहला चरण समा� । दू सरा चरण शु� िकया गया]
⇒ 2.0 = aims to cover A) poor who were not subscribed in 1.0 AND B) poor migrant workers, due
to lack of address proof/documents.
⇒ Eligibility? Adult woman from – poor household, Socio-Economic Caste Census (SECC)-walle
eligible households, SC, ST, Pradhan Mantri Awas Yojana (Gramin), Antyodaya Anna Yojana
(AAY), Tea Garden workers, Forest Dwellers, families residing in Islands
⇒ (Poor) Migrants will not be required to submit ration cards or address proof. They’ll get
connection based on self-declaration (गरीब प्रवासी मज़दू रों �नवास �ान का सुबूत नहीं देना होगा। �सफ़र् �यं को �
प्रमा�णत करना होगा िक म� 1 प्रवासी मज़दू र �ँ ।)
🤩🤩What will Beneficiary get? = 1) Deposit-free LPG connection. 2) First cylinder free 3)
Hotplate/Stove free.
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 907
51.12.5 🧔🧔🧔🧔 🧯🧯🧯🧯 Cooking → Kerosene subsidy stopped (2020)
⇒ kerosene is traditionally used in cooking and light. (रसोई �धन तथा प्रकाश के �लए के रोसीन का उपयोग)
⇒ Boss & principle is same as PAHAL-LPG. Kerosene is sold at market price → subsidy ₹ ₹
transferred to poor family’s bank account. This discourages PDS shopkeeper from diverting
subsidized kerosene to the rickshaw-wallas.
⇒ but govt schemes to provide electricity (SAUBHAGYA) & LPG cylinders (PM Ujjwala) to poor
→ so kerosene requirement � (लेिकन �बजली और LPG क� योजनाओं के चलते के रोसीन क� ज़�रत �ई कम)
⇒ So, from 1/3/2020: Govt stopped giving kerosene subsidy. (अतः सरकार ने के रो�सन स��डी को िकया बं द)
⇒ Now, kerosene is being sold @public distribution system (PDS) stores BUT with zero subsidy.
(राशन क� दुकानों पर के रो�सन क� �बक्र� जारी है िकंतु बाज़ार मू� पर बेचा जाता है। स�े दाम पर/स��डी के साथ नहीं बेचा जाता।)
It’s just a gathering of 100 LPG customers in an area, they’ll discuss LPG
PM LPG
benefits, women empowerment. Petroleum Ministry aimed to organize 1
Panchayat Scheme
lakh such Panchayats across India by 31/3/2019.
To lay down Natural Gas Grid Pipeline across 5 states, viz. UP, Bihar,
PM Urja Ganga Jharkhand, Odisha & W.Bengal. The supply of such Piped Natural Gas
2016 (PNG) can help homes, hotels, fertilizer companies & electricity companies
→ helps creating a gas based economy.
connect all major demand and supply centres in India. → easy availability of
National Gas Grid natural gas across all regions → to achieve uniform economic and social
progress.
Ministry of Chemicals and Fertilizers pays ₹ ₹ subsidy to entrepreneurs to
City Compost
create compost (कू ड़ा खाद) from city (municipal) waste → supply it to farmers
Scheme (2016)
at subsidized rate.
- It’s a sub-component of Swachh Bharat mission (Gramin). Core Scheme
= not 100% funded by Union.
- Boss? Dept of Drinking Water and Sanitation.
GOBARdhan
- GOBARdhan scheme helps farmers & rural entrepreneurs to convert
(2018)
cattle dung & other biowaste to biogas and organic manure. Depending
on the population of the gram panchayat, they will be given up to ₹ 20
Lakh to setup such project.
- It is a web portal developed jointly by ministries of Agriculture, Animal
Unified
husbandry, petroleum, Jal Shakti for above gobar / cattle dung related
Gobardhan
activities
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 908
- Bio-gas is produced naturally through anaerobic decomposition of
agriculture residue, cattle dung etc. → purification and Compression,
CBG: SATAT
→ Compressed Bio-Gas (CBG) with >95% pure methane.
(2018):
- 2018-SATAT Initiative by the Ministry of Petroleum and Natural Gas to
promote CBG as an automotive fuel.
- Also known as flexible-fuel vehicle / dual-fuel / Alternative fuel engine:
Definition: Flex
Capable of using traditional Petrol/diesel, as well as alternative fuels
Engine
such as ethanol and methanol.
- 2020-Petroleum and Natural Gas Regulatory Board (PNGRB) notified
Unified Gas Price new tariff rules for natural gas pipelines. Basically new rules will ⏬
System (2020) cost of natural gas for users who are further away from sources of
natural gas. Further technical details NOTIMP.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
51.12.7 👻👻 ⚡☢Energy infra→ Atomic energy → Atma-Nirbhar (परमाणु ऊजार्)
⇒ � PPP mode: Research reactor → produces medical isotopes → use in cancer treatment.
(अनुसंधान �रए�र से के �र �चिक�ा के �लए समस्था�नक त�/आइसोटोप का �नमार्ण)
⇒ � PPP mode: Irradiation facilities for Food preservation. (खाद्य सं र�ण के �लए �विकरण)
� Conclusion? Energy is the prerequisite for development of any society. Energy improves the
access to healthcare, education and overall wellbeing. SDG Goal#7 requires India to provide
affordable, reliable and modern energy services to all by 2030. Aforementioned Scheme/ Challenge
need to be addressed on priority basis….. �व�सनीय और स�ी ऊजार् िकसी भी समाज क� �श�ा �ा� खुशहाली और
�वकास के �लए अ�नवायर् होती है. इस�लए सतत �वकास ल�ों म� भी इसे �ान िदया गया है. ऊकत योजना/ चुनौ�तयों पे �ान देना ज�री
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 909
🔠🔠❓ The Global Goalkeeper Award is given by (UPSC-CDS-i-2020)
a) Bill and Melinda Gates Foundation b) the United Nations Environment Programme
c) Kellogg School of Management d) World Meteorological Organization
52.1.1 🚽🚽🎯🎯 Target of Swatchhta Diwas 2/10/2019 → Gandhi’s 150th Birth Anniversary
Open Defecation Free (ODF: खुले म� शौच मु�) India.
Eradicating manual scavenging (मानव मल-मूत्र को हटाने के �लये सफाई कमर्चा�रयों के �नयोजन को ख� करना)
Improving Municipal Solid Waste Management (MSWM: नगरपा�लका ठोस अप�श� प्रबं धन)
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 910
52.2.1 Urban Swachh Bharat Mission 2.0 announced in 💼💼Budget-2021
Timeline? 5 years from 2021-2026. Funding? >1 lakh cr. With following features
⇒ Management of faecal sludge & waste water [मल क�चड़ और अप�श� जल का प्रबं धन]
⇒ Segregation of garbage. [कचरे का पृथ�रण]
⇒ Reduction in single-use plastic [एकल उपयोग �ा��क म� कमी]
⇒ �air pollution from construction -demolition activities [�नमार्ण और �व�ं स ग�त�व�धयों से वायु प्रदू षण]
⇒ Bio-remediation of all dump sites [डंप साइटों म� जैव उपचारण]
52.2.2 🚽🚽SBM Protocols (कायर्पद्ध�त)
⇒ Open Defection Free status (+) [खुले म� शौच मु� ���त तथा]
ODF+ protocol ⇒ Operations and maintenance of community toilets and public toilets।
(सावर्ज�नक शौचालयों का यो� तरीके से सं चालन और रखरखाव)
⇒ Above things from ODF+ and additionally, focuses on safe management
of faecal sludge from toilets (मल का सुर��त प्रबं धन)
ODF++ protocol
⇒ Untreated sludge should NOT be discharged into water bodies etc
(अनुपचा�रत कु डा-क�चड़ को पानी मे नही छोड़ना)
Water + protocol untreated wastewater should NOT be discharged in water bodies etc.
52.2.4 📔📔📔📔 Swatchh Bharat: What more can we do- Eco Survey19 Suggestions?
1) Some rural males still don’t use toilets. Even in urban areas, people keep their homes clean but
litter in public places. So, we have to inculcate a behavioral change.[लोगों के �वहार/बतार्व म� सुधार ज़�री]
a. ��ES22 found that average 70% Indians use toilets. But, Bihar (49%), Jharkhand
(57%), Odisha (60%), Manipur (65%), MP (65%), West Bengal (68%), Assam (69%) and
Uttar Pradesh (69%) have remained below the national average. (इन रा�ों म� शौचालय उपयोग
करने वाले लोगों क� सं �ा रा��ीय औसत से कम है।)
2) Water crisis so we’ve to adopt eco-friendly water conservation in toilets. e.g. Bio toilets, dual
flush toilets. जैव शौचालय, दोहरी �श शौचालय
3) Clean India should also be pollution free India, so we should focus
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 911
a. industrial effluent, plastic menace, controlling air pollution etc. (औद्यो�गक अप�श�, �ा��क
क� चुनौती, वायु प्रदू षण)
b. bioremediation, river surface cleaning, river front development. (जैव-उपचार, निदयों के तल क�
सफाई, �रवर फ्रंट का �वकास)
c. afforestation and biodiversity conservation. (वृ�ारोपण तथा जैव �व�वधता का सं र�ण)
4) To do above things, we need to get ₹₹ via: Micro-financing (सू� �व�पोषण), Concessional Loans
(�रयायती दरों पर लोन/ ऋण ), Corporate Social Responsibility (कॉरपोरेट का सामा�जक उ�रदा�य�),
Crowdfunding (जनसमूह के द्वारा �व�पोषण), Public Private Partnership (सावर्ज�नक-�नजी भागीदारी)
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 912
Mahatma Gandhi once said, “Sanitation is more important than independence.” Therefore, only a
Clean, Health and Beautiful India can be our fitting tribute to Gandhi’s 150th Birth anniversary.
(“��ता �तं त्रता से भी अ�धक मह�पूण,र् ग�रमा पूणर् जीवन के �लए ज�री है-गांधी” इस�लए एक �� �� और सुंदर भारत बनाकर
ही हम अपने रा��� पता को स�ी श्रद्धांज�ल दे सकते ह�).
So, aforementioned reforms are necessary, need to be pursued on a priority basis or war footing.
52.3 ✍MAINS QUESTIONS IN PAST UPSC EXAMS
Explain the purpose of the Green Grid Initiative launched at world leaders Summit of the 2021
COP 26 UN Climate Change Conference in Glassgow in November, 2021. When was this
idea first floated in the International Solar Alliance (ISA)? (Answer in 150 words)
नव�र,2021 म� �ासगो म� �व� के नेताओं के �शखर स�ेलन म� सी. ओ. पी. 26 सं यु� रा�� जलवायु प�रवतर्न स�ेलन म�,
आर� क� गई ह�रत �ग्रड पहल का प्रयोजन �� क��जए। अंतरार्��ीय सौर गठबं धन (आई एस ए) म� यह �वचार पहली बार कब
िदया गया था? ✅ANS. Solved in Free Sp.Class
With growing energy needs should India keep on expanding its nuclear energy 2018
Programme? Discuss the facts and fears associated with nuclear energy. परमाणु ऊजार् के साथ जुड़े
�ए त� और भय�ान
Access to affordable, reliable, sustainable and modern energy is the sine qua non to achieve 2018
Sustainable Development Goals (SDGs). Comment on the progress made in India in this
regard. सतत �वकास ल�ों (एसडीजी) को प्रा� करने के �लए स�ी, �व�सनीय, िटकाऊ और आधु�नक ऊजार् एक
अ�नवायर् चीज है -इसम� सरकार ने �ा कदम उठाए ह� Ans. Mrunal’s Web Article
📑📑NEXT Handout 5B: Transport Infrastructure (Rail, Road, EV, Shipping, Aviation, Tourism)
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 913
Pillar#5B: Infrastructure- Sadak (Transport), My City, Village & Home
Table of Contents
54 🛶🛶Infra → Transport → H20 → Inland Waterways ................................................................................. 918
54.1.1 🛶🛶 �Inland Waterways → IWAI ............................................................................................ 918
54.1.2 🛶🛶 Inland Waterways → National Waterways (रा��ीय जलमागर्)................................................... 918
54.1.3 🛶🛶🛶🛶🛶🛶 Inland Waterways → Jal Marg Vikas Project (2014) ............................................. 919
54.1.4 🛶🛶⚖: 🧔🧔The Inland Vessels Bill/Act, 2021 (आंत�रक जलमागर् जहाज़ �वधेयक) ............................. 920
54.2 ⚓Infra → Transport → H20 → Shipping & Ports .......................................................................... 920
54.2.1 � [Yearbook] Ministry of Ports, Shipping and Waterways नौवहन मं त्रालय consists of ............ 920
54.2.2 ⚓Types of Ports- Classification Method#1: Major and Minor Ports .................................... 921
54.2.3 ⚓Types of Ports- Classification Method#2 .............................................................................. 922
54.2.4 ⚓⚖Major Port Authorities Bill, 2020 .................................................................................... 923
54.2.5 ⚓�Ports → Challenges in India बं दरगाह म� चुनौ�तया................................................................. 923
54.2.6 ⚓🚛🚛🚛🚛ES20 Vol1ch6: logistics Challenge in India (मालसामान प�रवहन) ................................. 923
54.2.7 National Logistics Policy 2022 by Commerce Ministry’s DPIIT .............................................. 924
54.2.8 ⚓🚛🚛🚛🚛 Logistics Ranking (don’t loose sleep) ...................................................................... 924
54.2.9 ⚓🧔🧔🧔🧔 Infra → Transport → H20 → Ports → Sagarmala Project.................................. 924
54.2.10 ⚓ 🧔🧔🧔🧔 Infra → Transport → H20 → Blue economy Policy 2021 ................................. 925
54.2.11 ⚓ 🧔🧔🧔🧔 Infra → Transport → H20 → Maritime Vision 2030 ......................................... 925
54.2.12 ⚓🚕🚕 ⚖ Infra → Transport → Multi-Modal Transportation of Goods Bill, 2019 .......... 925
55 🚕🚕 Infra → Transport → Road (सड़क) .......................................................................................................... 926
55.1.1 [Yearbook] Min. of Road Transport & Highways सडक प�रवहन एवं राजमागर् मं त्रालय →.................. 926
55.2 🚕🚕 Infra → Transport → Road → Types ........................................................................................... 926
55.3 🚕🚕 � TRANSPORT→ NHAI (1988, भारतीय राष्ट�ीय राजमागर् प्रा�धकरण) ................................................. 927
55.4 🚕🚕🚕🚕🚕🚕 TRANSPORT→ NHDP (1998)......................................................................................... 927
55.5 🚕🚕🚕🚕🚕🚕 TRANSPORT→ Pradhan Mantri Gram Sadak Yojana (2000) ...................................... 927
55.5.1 🚕🚕🚕🚕🚕🚕 TRANSPORT→ Bharatmala Pariyojana (2017) .................................................... 928
55.5.2 🚕🚕🚕🚕 TRANSPORT→ E-toll collection via FASTag (2017) ................................................ 928
55.5.3 🚕🚕🚕🚕 TRANSPORT→ NoWAIT@Railway Crossing: Setu Bharatam.................................. 928
55.5.4 🚕🚕🚕🚕 TRANSPORT→ Char Dham Mahamarg Vikas Pariyojana ........................................ 929
55.6 ⛽↘: 🧔🧔🧔🧔 TRANSPORT→ ⏬Fossil Fuel Use→ E20 Blending........................................... 929
55.6.1 ⛽↘: 🧔🧔🧔🧔 TRANSPORT→ ⏬Fossil Fuel Use→ National Hydrogen Mission ........ 929
55.7 ⛽↘: 🚕🚕🚕🚕 TRANSPORT→ ⏬ Fossil Fuel USE→ Electric Vehicle ..................................... 930
55.7.1 🚕🚕🚕🚕🚕🚕🚕🚕 EVs in India: steps taken to promote them ....................................................... 931
55.7.2 🚕🚕🚕🚕🚕🚕 100% EV Adoption? NITI vs Highway Ministry differ ......................................... 931
55.7.3 🚕🚕🚕🚕🚕🚕 📔📔 ES19: EVs in India: Charging is the biggest challenge ................................... 931
55.7.4 🚕🚕🚕🚕E-Vehicle: Lithium → Khanij Bidesh India Ltd (2019) ............................................... 932
55.7.5 🚕🚕🚕🚕✍ EV-Conclusion:.......................................................................................................... 932
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 914
55.7.6 🚕🚕🚕🚕 TRANSPORT→ 🚕🚕🚕🚕 ⏬ Fossil Fuel Emission → Bharat Stage Norms ............. 932
55.7.7 🚕🚕🚕🚕 ⏬Decarbonizing Transport in India (2020-June) ...................................................... 933
55.7.8 🚕🚕🚕🚕 ⏬Vehicle Scrappage Policy [वाहन प�रमाजर्न नी�त] ............................................................ 933
55.7.9 👜👜👜👜Budget-2022 on Road Transport / EV ............................................................................ 933
55.7.10 NCAP program for Car Safety 2022 ............................................................................................ 934
55.8 🛵🛵⚔🚕🚕⚖ Motor Vehicle Amendment Act 2019 ........................................................................ 934
55.8.1 🛵🛵⚔🚕🚕⚖ MOTOR VEHICLE AMENDMENT ACT 2019 → Gig Drivers .................... 934
55.9 🚕🚕🚕🚕 TRANSPORT→ Bridges & Tunnel & Misc. (सेतु और सुरंग) ..................................................... 935
55.10 🚕🚕🚕🚕Transport → Transborder Connectivity (सीमापार स�द्धन)................................................... 936
56 🚝🚝 Transport → Railway (अ�ीरथ) ................................................................................................................. 937
56.1.1 🚝🚝 Railways → Concepts ............................................................................................................ 938
56.2 🚝🚝 Railways → Modernization (आधु�नक�करण).................................................................................... 939
56.3 🚝🚝🚝 Railways → Modernization → Personnel & Organizational Reforms (का�मक और सं गठना�क
सुधार) 939
56.3.1 🚝🚝🚝 Railways Personnel Reforms → Unification of Services (सेवाओं का एक�करण) ............... 939
56.3.2 🚝🚝🚝 Railways Organizational Reforms → Restructuring of Railway Board ...................... 940
56.4 🚝🚝 🧔🧔:👲👲 Railways Modernization → Private Train Operators................................................... 940
56.4.1 (🚝🚝 🧔🧔:👲👲) 👿👿✋ Challenges in allowing private trains (चुनौ�तयां)..................................... 941
56.4.2 (🚝🚝 🧔🧔:👲👲) ✍Private Trains → Conclusion- welcome this reform .................................. 941
56.5 🚝🚝 Railways → Modernization attempts before 2019 ....................................................................... 941
56.5.1 🚝🚝 🔖🔖 Railways Fares (िकराया)→ Rail Development Authority .............................................. 942
56.5.2 🚝🚝 🔖🔖 Railways Fares→ Concepts ............................................................................................ 942
56.5.3 🚝🚝 Transport → Rail-Modernization → Green Initiatives by Railways ............................... 942
56.5.4 🚝🚝 Transport → Rail-Modernization → Electric Traction .................................................... 942
56.5.5 🚝🚝 National Rail Plan for India – 2030 [भारत के �लए रा�ी� य रेल योजना - 2030] ............................... 943
56.5.6 🚝🚝 Transport → Rail-Modernization → Safety [रेल सुर�ा] ...................................................... 943
56.5.7 🚝🚝 Transport → Rail Safety → Railways Protection Force (RPF) initiatives-2019............... 943
56.5.8 🚝🚝 Transport → Rail-Types (अ��रथो के प्रकार) ............................................................................. 943
56.5.9 🚝🚝 Transport → Dedicated Freight Corridor (DFC) ............................................................... 945
56.5.10 🚝🚝 Transport → Metro Rail ........................................................................................................ 945
56.5.11 🚝🚝 Transport → Metro Rail → Metro Rail Policy 2017 ......................................................... 945
56.5.12 🚝🚝 Transport → Metrolite, MetroNEO = Cheaper Metros for smaller cities (2021)............ 945
56.5.13 🚝🚝 Transport → 👜👜👜👜Budget-2022 on Railways & goods/cargo transport ....................... 946
56.5.14 🚝🚝 Transport → Hyperloop using vacuum tube ...................................................................... 946
56.6 ✈ Transport → Aviation (उड्डयन / हवाई यात्रा)........................................................................................ 946
56.6.1 [Yearbook] Ministry of Civil Aviation नागर �वमानन / नाग�रक उड्डयन मं त्रालय ................................... 947
56.6.2 ✈ Transport → Cheap flights to Small Towns → UDAN .................................................... 948
56.6.3 ✈ Transport → Udan 3.0 (2018) .............................................................................................. 948
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 915
56.6.4 ✈ Transport → Build More Airports → NABH Nirman ...................................................... 948
56.6.5 ✈ Transport → Challenges to aviation sector (चुनौ�तयां) .......................................................... 949
56.6.6 �Airfare price ceiling (हवाई यात्रा दरों म� �नयं त्रण)................................................................................. 949
56.6.7 ✈ Transport → Drone Regulation (ड�ोन �व�नयमन) & GARUD Portal ....................................... 949
56.6.8 ✈ Transport → Drones in 👜👜👜👜Budget-2022 ...................................................................... 950
56.6.9 ✈ Transport → Drone Challenges ........................................................................................... 950
56.7 🤧🤧 ⛴✈ Vande Bharat Mission 2020- Indians ki watan-waapsi.................................................. 950
56.7.1 🤧🤧 ⛴✈Airbubble Agreement ................................................................................................ 951
56.8 🗽🗽Tourism & Museum Infrastructure (प्रवासन व सं ग्रहालय) .................................................................. 951
56.8.1 �🗽🗽 [Yearbook] Ministry of Tourism .................................................................................... 951
56.8.2 🏬🏬 Tourism→ PRASAD & HRIDAY Mission .......................................................................... 952
56.8.3 👻👻 🏬🏬 Tourism Ministry→ Atma-Nirbhar initiatives & 👜👜👜👜Budget-2022..................... 952
56.8.4 Dharamshala Declaration 2022 .................................................................................................... 952
56.8.5 �🎷🎷🎷🎷 [Yearbook] Ministry of Culture (सं �ृ�त मं त्रालय)........................................................ 952
56.8.6 🗽🗽Tourism → Museum Infra in Budget-2020 (सं ग्रहालय) ......................................................... 953
56.9 ✍Mains Questions in past UPSC exams............................................................................................ 953
57 Infrastructure → 🏬🏬 URBAN (शहरी बु�नयादी अवसं रचना) .................................................................................. 954
57.1 🏬🏬 URBAN → Census definitions ...................................................................................................... 954
57.2 🏬🏬 URBAN → [Yearbook] MoHUA .................................................................................................. 955
57.2.1 2020 marks 5th Anniversary of Urban Mission ........................................................................... 956
57.3 🏬🏬 URBAN → AMRUT Mission (2015) → 500 cities ...................................................................... 956
57.4 🏬🏬 URBAN → Smart Cities Mission (2015) → 100 cities ................................................................ 957
57.4.1 🏬🏬 Smart Cities → Selection process (चयन प्रिक्रया) ..................................................................... 958
57.4.2 🏬🏬 💸💸 Smart Cities → funding and administration (�व� और प्रशासन) ...................................... 958
57.4.3 🏬🏬 👿👿 Smart Cities → Criticism / Challenges (आलोचना / चुनौ�तयाँ)........................................... 959
57.4.4 🏬🏬 👭👭Sister City project ............................................................................................................. 959
57.4.5 🏬🏬 Cities → 👜👜👜👜Budget-2022:- Urban Infrastructure related announcements............... 959
57.4.6 🏬🏬 � Cities → TULIP Internship (2020-June) ...................................................................... 960
57.4.7 🏬🏬 �� URBAN → Misc → PH friendly → Sugamya Bharat (2014) ............................. 960
57.4.8 🏬🏬 Cities → Misc → Floor Space index (FSI) ........................................................................... 960
57.4.9 🏬🏬 🌲🌲🌲🌲🌲🌲 URBAN → Misc → Nagar VAN (2020-Jun) .................................................. 960
57.4.10 🏬🏬 URBAN → Misc → Parliament area, Central Vista ........................................................... 961
57.4.11 🏬🏬 📊📊 Cities → Index: TWO Indices for Quality of Life ....................................................... 961
57.4.12 🏬🏬 📊📊 Cities → Index → Misc. (don’t loose sleep) ................................................................ 961
57.4.13 ✍ Urbanization conclusion (शहरीकरण: �न�षर्) ........................................................................... 962
57.5 (🏠🏠) Infra → (Urban and Rural) → Housing for all by 2022 .......................................................... 962
57.5.1 👻👻(🏠🏠) → Affordable rental housing Complexes (AHRC) ................................................... 963
57.5.2 (🏠🏠) → PMAY–U → Angikaar .................................................................................................. 964
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 916
57.5.3 (🏠🏠) → National Urban Housing Fund (2018) ........................................................................ 964
57.5.4 👻👻 (🏠🏠) → SWAMIH Fund (�के �ए मकान प्रोजे� ख� करने वा�े �ब�र को थोड़ी लोन देदो योजना) ....... 964
57.5.5 (🏠🏠) PM Unauthorized colonies in Delhi Awaas adhikar Yojna (PM-UDAY) ..................... 964
57.5.6 (🏠🏠) Sustainable Housing → World Habitat Award to Odisha’s JAGA Mission ................. 964
57.5.7 (🏠🏠) Sustainable Housing → Global Housing Technology Challenge 2019 .......................... 965
57.5.8 (🏠🏠) → Model Tenancy Act (आदशर् िकरायेदारी अ�ध�नयम) ............................................................... 965
57.5.9 (🏠🏠) → Corona: Landlords, tenants, rent & eviction ............................................................... 965
58 Infra → Rural (🏞🏞) ......................................................................................................................................... 966
58.1.1 � [Yearbook] Ministry of Rural Development ग्रामीण �वकास मं त्रालय.......................................... 966
58.2 🏞🏞 RURAL → Shyama Prasad Mukherjee rurban mission .............................................................. 967
58.3 🏞🏞 RURAL → Rashtriya Gram Swaraj Abhiyan (2018).................................................................... 967
58.3.1 🏞🏞 📲📲 Panchayati Raj Day & Portals & Awareness Campaigns ............................................ 968
58.3.2 👻👻🏞🏞 📐📐 Land Assets registration- Swamitva scheme for land survey (2020).................... 968
58.3.3 🏞🏞 📐📐 Land Assets registration- ULPIN in 👜👜👜👜Budget-2022........................................... 968
58.3.4 🏞🏞 📐📐 Land Assets registration- Case Studies from Bihar & Kerala........................................ 968
58.3.5 🏞🏞 ��💪💪Model Panchayat Citizens Charter framework (2021)...................................... 969
58.4 🏞🏞🏞🏞🏞🏞 RURAL → MPLADS (1993).............................................................................................. 969
58.4.1 🏞🏞 🤧🤧 MPLADS Suspended (योजना को ��गत करना) ................................................................... 970
58.5 🏞🏞 RURAL → Adarsh Gram Yojanas ................................................................................................. 971
58.6 🏞🏞 RURAL → Border Area Development Programme (BADP)...................................................... 971
58.6.1 🏞🏞 Border infra & Backward Regions Infra → 👜👜👜👜Budget-2022 ........................................ 972
58.6.2 🏞🏞 Border infra and Shekatkar Committee (सीमा �ेत्रों म� बु�नयादी अवसं रचना) ................................ 972
58.7 🌬🌬⚔Infrastructure: Disaster, Security & Strategic Affairs .............................................................. 973
58.7.1 �� [Yearbook] Ministry of Home (गृह मं त्रालय) ..................................................................... 973
58.7.2 � 🌬🌬 Disaster Infrastructure → Home Ministry → CDRI 2019 ........................................ 974
58.7.3 �🛡🛡 Ministry of Defence (र�ा मं त्रालय) ...................................................................................... 974
58.7.4 🕵🕵🕵🕵 → 🤵🤵🤵🤵 Ordnance Factory Board abolished & Essential Defence Services Bill .... 975
58.7.5 👻👻👻👻👻👻👻👻Draft Defence Production and Export Promotion Policy 2020 ....................... 976
58.7.6 �Ministry of External Affairs (�वदेश मामलों का मं त्रालय)................................................................ 976
58.7.7 ✍ 🎺🎺 Mains previous years’ questions from these topics...................................................... 976
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 917
53 🛶🛶INFRA → TRANSPORT → H20 → INLAND WATERWAYS
Inland Waterways Transport (IWT: अंतद�शीय जलमागर् प�रवहन) has following benefits →
Lower CO2 emissions & fuel in transporting per tonne of cargo than Rail / Road.
IWT requires very little land acquisition (भू�म अ�धग्रहण) than Rail / Road.
IWT eases traffic congestion (यातायात जमाव/क� भीड़) on Road/Rail networks.
53.1.1 🛶🛶 �Inland Waterways → IWAI
Inland Waterway Authority of India (IWAI: भारतीय अंतद�शीय जलमागर् प्रा�धकरण) is a Statutory Body under
Ministry of Shipping, responsible for the development, management, safety, survey of inland
waterways.
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 918
53.1.3 🛶🛶🛶🛶🛶🛶 Inland Waterways → Jal Marg Vikas Project (2014)
NW-1 has low depth upstream of Farakka → difficult to take big vessels.
- This project aims to develop infrastructure, navigational locks to make NW1 enable commercial
navigation on Varanasi-Haldia stretch of river Ganga.
- Plus, provisions for Roll on-Roll off (Ro-Ro) ferries, Digital dashboard / portals for River
Information System (RIS) and Vessel Traffic Management System (VTMS) etc.
- Central Sector Scheme (0% from States) + loans from World Bank (IBRD) + PPP.
- 2018-Nov: Modi inaugurated India's first multi-modal terminal (एका�धक मॉडल ट�मनल) @Varanasi
& welcomed the cargo ship ‘MV Rabindranath Tagore’ coming from Kolkata.
- Entire project will by finished by March 2023 & will help to convert Ganga into ‘Arth Ganga’
(River of wealth)
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 919
Side Note: Same Varanasi also designated as India’s first ‘freight village (माल गांव)’ i.e. an area where
national and international cargo operators carry out their activities.
53.1.4 🛶🛶⚖: 🧔🧔The Inland Vessels Bill/Act, 2021 (आंत�रक जलमागर् जहाज़ �वधेयक)
⇒ To replace the Inland Vessels Act, 1917.
⇒ bring all inland vessels & waterways in India under union government regulation.
⇒ Union govt to decide maximum weight/passenger capacity, max pollutant discharge of vessel,
Minimum educational qualification of the shipping crew etc. [आंत�रक जलमागर् िकतने सामान/आद�मयों का
वज़न ढो सकते ह�? जहाज़ िकतना प्रदू षण फै ला सकते ह�? जहाज़ क�मयों क� �ूनतम शै��णक यो�ता �ा होनी चािहए? इ�ािद
�नयम क� द्र सरकार तय करेगी. रा� सरकार तय नहीं करेगी.]
⇒ if vessel sends SOS help emergency distress signal and yet nearby vessels do not respond then
they will be punished. [यिद पानी म� फँ सी तनावग्र� जहाज़ मदद के �लए सं देश भेज� तो आस पास म� जा रहे जहाज़ों ने
अ�नवायर् �प से उसक� मदद करनी होगी अ�था उन पर जुमार्ना लगेगा।]
⇒ � Controversy? Non-BJP State Govts unhappy because inland shipping is Concurrent List
Item but most of the powers vested to Union as per this bill/law. State govts given no role in it,
this is against the spirit of cooperative federalism. [हालाँिक आंत�रक जलमागर् समवत� सूची म� है िकंतु सभी स�ाएँ
क� द्र ने अपने पास रख ली है. इस�लए ग़ैर BJP रा� सरकार� नाराज़ है क� ये क़ानून ‘सहकारी सं घवाद’ क� भावना के �ख़लाफ़ है]
53.2.1 � [Yearbook] Ministry of Ports, Shipping and Waterways नौवहन मं त्रालय consists of
Old name: "Ministry of Shipping". New Name: "Ministry of Ports, Shipping and Waterways. (2020)"
Dept. N/A
Statutory ⇒ Inland Waterway Authority of India (IWAI: भारतीय अंतद�शीय जलमागर् प्रा�धकरण)
वैधा�नक सं �ाएं ⇒ Tariff Authority for Major Ports (TAMP) to decide fees of Major ports.
Attached / ⇒ Directorate General of Shipping, Mumbai नौवहन महा�नदेशालय- he is also the
Subordinate National Authority for Ships Recycling, under Recycling of Ships Act, 2019
(office of Ship Recycling @Gandhinagar, Gujarat)
⇒ DG Lighthouses and Lightships| Minor Ports Survey Org, लघु प�न सव��ण,
CPSE ⇒ (*) Shipping Corporation of India, Mumbai | (*) Dredging Corporation of
सरकारी कं पनी India Limited | (*) Kamarajar (Ennore, Tamilandu) Port Limited,
⇒ Cochin Shipyard Limited, Cochin
⇒ Central Inland Water Transport Corporation Ltd | Hooghly Dock & Port
Engineers Ltd | Sethusamundaram Corporation Ltd
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 920
(*) means approved for strategic disinvestment (=privatization) in 2019.
Global ⇒ International Maritime Organization (HQ: London, UK) – is a United
Cooperation Nations specialized agency for regulating shipping.
अंतररा��ीय ⇒ Its Hong Kong International Convention (2009) deals with the safe and
सहयोग environmentally sound recycling of ships. 2019: India ratified it.
⇒ United Nations Convention On the Law Of the Sea (समुद्र कानूनों के बारे म� सं यु� रा��
का अंतररा��ीय स�ेलन) Signed in 1982, Jamaica. Sometimes appears in news due to
2012 case where Italian marine soldiers on the Enrica Lexie ship killed 2
fishermen of Kerala, suspecting them to be pirates.
⇒ Ropax= roll on-roll off-cum-passenger ferry service. Such shipping vessel can transport persons
and vehicles over water. 2020-March: Shipping ministry launched ropax service between
Mumbai and Mandwa (Maharashtra).
MCQ. Which one of the following statements best describes the ‘Polar Code’ ? (Prelims-2022)
A. It is the international code of safety for ships operating in polar waters.
B. It is the agreement of the countries around the North Pole regarding the demarcation of their
territories in the polar region.
C. It is a set of norms to be followed by the countries whose scientists undertake research studies in
the North Pole and South Pole.
D. It is a trade and security agreement of the member countries of the Arctic Council.
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 921
Table 1: ⚓List of Major Ports in India: (A: Artificial, N: Natural harbor)
A/ NAME of the Major Port STATE
N?
N Jawaharlal Nehru, Nhava Shewa MH (2)
N Mumbai
N Deendayal Port Kandala, Kutch. Tidal port (�ारीय बं दरगाह). Developed in the Guj (1)
50s because Karachi port lost in Partition. Kandla is also the first Exclusive
Economic Zone (EEZ) in India and Asia (concept nowadays called ‘SEZ)
N Mormugao. Tidal Port, @Zuvari estuary, iron-ore export Goa (1)
A New Mangalore. Deep water, all weather port. Karnataka(1)
N Cochin/Kochi. Willingdon island Kerala(1)
Total Major Ports (West Coast) 6
N Haldia | Kolkata. Oldest major port of India. Problem? It’s a Riverine Port WB(1)
(नदी तटीय बं दरगाह) so Need constant dredging (�नकषर्ण) to remove silt & keep
depth.
N Vishakhapatnam & Eastern Naval command AP(1)
A Paradeep (Manmade lagoon) Odisha(1)
N V.O. Chidambarnar Port, Tuticorin TN (3)
A Chennai (all weather Port)
A Kamarajar Port Ennore (private, under companies Act)
Total Ports East Coast 6
Additionally,
⇒ 2010: Manmohan announced to setup Port Blair (Andaman Nicobar) as Major port.
⇒ 2016: Modi announced to setup Sagar in west Bengal, Duggirajupatnam in Andhra Pradesh,
Vadhavan in Maharashtra, Enayam in Tamil Nadu as major ports.
⇒ 2020-Feb: Govt announced setting up a new major port at Vadhavan in Maharashtra. It’ll be
developed by a Special Purpose Vehicle (SPV) company wherein Jawaharlal Nehru Port Trust
(JNPT) will have 50%/> or higher shareholding.
⇒ But, Govt Annual reports & IYB still continue to list only 12 major ports, given in above table so
we need not lose sleep.
⇒ �Budget-2020: we’ll consider corporatizing at least one major port (= converting it into a
Public limited company) and subsequently listing its shares on the stock exchanges.
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 922
Packet Station Ferry Ports for transporting passengers and mail on water for short distances.
Inland Ports away from sea coast via river/canal. e.g. Kolkata,Memphis, Rhine,Manchester
Out Ports deep water ports built away from the actual port to recieve very large ships e.g.
Piraeus is outport of Athens (Greece)
Ports of Call where ships used to anchor for refuelling, watering and taking food supplies
e.g. Aden, Honolulu, Singapore
Entrepot collection centres where the goods brought from different countries for export.
Ports e.g. Singapore,Asia. Rotterdam (Europe), Copenhagen (Baltic region)
Naval Ports for war ship repair/construction e.g. Kochi, Karwar
🔠🔠❓Singapore is known as Port of Call because (UPSC-CAPF-2020)
(a) it deals in the processing and shipping of oil
(b) it is a deep water port built away from the actual port
(c) it is on main sea route where ships use to anchor for refueling, watering and taking food items
(d) it serves the parent ports by receiving ships which are unable to approach due to their large size
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 923
Days taken for cargo to reach Delhi to 5 days
Maharashtra
Customs clearance, loading cargo in 14 days, because port infrastructure is poor. narrow
ship roads, very little use of automatic cranes etc.
Shipping from Mumbai to USA 19 days
Unloading cargo in USA dock including 1 day
customs clearance
Transporting to customer 2 days
Total 41 days😰😰
⇒ ��ES20 gave case studies of Electronics export, carpet import etc. and found
Loading/unloading/customs inspection processes at Indian airports is vastly superior to its
seaports. Ironically, customs clearance processes for imports are better/faster than those for
exports. whereas the Govt should focus on making it ‘easier’ to export for improving our CAD &
BoP! (�वडंबना यह है िक आयात करने के �लए कम द�ावेज जमा करने पड़ते ह�, और �नयार्त करने के �लए �ादा!)
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 924
Purpose Vehicles (SPVs) companies (in which State & private players may also have
shareholding) → SPVs implement various projects under Sagarmala.
- To develop/improve ports, encourage coastal shipping. बं दरगाहों को बनानां/बेहतर करना
- Costal Economic Zones (CEZs: तटवत� आ�थक �ेत्र) to create manufacturing & employment
opportunities. Give them Hinterland connectivity through rail, road, inland water transport.
- Skill development, training for coastal community. [बं दरगाहो को आंत�रक इलाक़ों से जोड़ना]
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 925
54 🚕🚕 INFRA → TRANSPORT → ROAD (सड़क)
(Intro) A good road network is an essential requirement for the rapid growth of the economy. Roads
provide connectivity to remote areas, open up backward regions and facilitate access to markets,
trade and investment. सड़क प�रवहन का देश क� आ�थक वृ�द्ध म� मह�. �पछड़े इलाकों म� �ापार/�नवेश को प्रो�ाहन
(Data) Largest road network in world #1 USA (66 lakh kms) #2 India (64 lakh kms)
54.1.1 [Yearbook] Min. of Road Transport & Highways सडक प�रवहन एवं राजमागर् मं त्रालय →
Dept /Attached N/A
Statutory Bodies National Highways Authority of India (NHAI) भारतीय रा��ीय राजमागर् प्रा�धकरण
CPSE National Highways and Infrastructure Development Corporation
Number plate - 2019: Govt allowed “LA-” number plate mark for vehicles registered
in UT of Ladakh. (Lakshadweep: “LD” plates)
- 2021: BH-series of number plates for Defense personnel, Govt
employees and private sector companies, which have their offices in
four or more States/UTs Ministry.
E-Governance - Vahan Portal: vehicle registration, taxation, permit, fitness and
modules associated services across the country [वाहनो का पं जीकरण]
- Sarathi Portal: driving license, learner licence, driving schools and
related activities. [वाहनचालको का पं जीकरण]
- mParivahan App: has features similar to above two portals
- Integrated Road Accident Database Project (iRAD) with help of lIT
Madras and National Informatics Centre (NIC)
- Data Lake and Project Management Software → NHAI's digital
platform for paper-less decision making & dispute resolutions related
to highway construction.
54.2 🚕🚕 INFRA → TRANSPORT → ROAD → TYPES
Name → Responsibility of Connects [ये मागर् िकसे जोड़ता है?]
National Highways Union Government State capitals, major cities, ports
State Highways State Government State Capital to District HQ
District Roads Zila Parishad District HQ to tehsil and Blocks
Village Roads Gram Panchayat Villages to neighboring towns
Expressway PPP / SPV Six to eight lane high class highways e.g. A’bad
(usually under aegis Vadodara Expressway made by SPV owned by
for NHAI) NHAI+ IRB Infrastructure Developers.
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 926
⇒ 3 organizations associated with highway construction: 1) National highways authority of India
(NHAI), 2) State Public Works Department (PWD: लोक �नमार्ण �वभाग), 3) Border roads
Organization (BRO:सीमा सड़क सं गठन under Defense Ministry)
⇒ In terms of total road length (bigger to smaller): Other roads >> State highways >> National
highways >> expressways [सड़कों क� ल�ाई के िहसाब से बड़े से छोटा]
- Boss? Rural Development Ministry. Centrally Sponsored Scheme → Core Scheme = NOT 100%
funded by Union. (General-60:40, Sp. Cat States-90:10)
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 927
- 2000: PM Vajpayee launched to construct all-weather single (lane) roads for all unconnected
rural habitations �जन ग्रामीण इलाकों म� पहले से सड़क क� सु�वधा नहीं वहां तमाम मौसमों म� कायर्रत रहे ऐसी सड़कों का �नमार्ण
- upto min. 500 population (plains) by 2019
- 250/> (Sp.Cat States, tribal districts and desert areas) by 2019
- 100-249 population (if Naxal/LWE: Left Wing Extremism affected areas) by 2020
- PMGSY – II (2013 onwards): To repair previous rural roads and to construct new roads.
- PMGSY Phase-III (2019-20 to 2024-25): To upgrade 1,25,000 kms of road in the next five years.
In this phase, we’ll also construct road bridges. We’ll connect with roads with Agricultural
Markets, Schools and Hospitals. [तीसरे चरण म� सड़कों को �नमार्ण, पुल भी बनाएँ गे।]
- To ⏬carbon footprint, PMGSY roads are built using Green Technology, Waste Plastic and
Cold Mix Technology. (🎓🎓Read more in environment books/courses)
- 🤩🤩 Benefit of Rural Roads? World Bank study (2019) found that PMGSY roads had a positive
impact on human capital formation in rural India by increasing ⏫ 1) school enrolment 2)
institutional delivery 3) vaccination. (�व� ब�क ने पाया िक गाँव म� सड़क �नमार्ण से मानव पूंजी �वकास होता है →
�ोंिक सड़को क� सु�वधा होगी तो ब�ों के �ू ल-प्रवेश, घर क� जगह अ�तालों म� बाल-प्रसव,और टीकाकरण म� वृ�द्ध होती है.)
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 928
54.5.4 🚕🚕🚕🚕 TRANSPORT→ Char Dham Mahamarg Vikas Pariyojana
⇒ Boss? Road Ministry to build/renovate roads to connect four prominent Dhams in Uttarakhand
viz. Gangotri, Yamunotri, Kedarnath and Badrinath.
🤩🤩Conclusion? Appreciative step that will help saving Rs 30,000 crore of fuel import bill per year,
energy security/self reliance, lower carbon emissions, better air quality, use of damaged/rotten
foodgrains productively, increasing farmers' incomes, employment generation. [सरकार का प्रशं सनीय क़दम
�जससे �धन आयात �बल/ चालू खाता घाटा/वायु प्रदू षण कम होगा। ऊजार् सुर�ा/ ऊजार् आ��नभर्रता / िकसानों क� आमदनी / रोज़गार
बढ़े। �बगड़ा �आ सड़ा �आ अनाज भी �धन बनाने म� काम आएगा।]
54.6.1 ⛽↘: 🧔🧔🧔🧔 TRANSPORT→ ⏬Fossil Fuel Use→ National Hydrogen Mission
- Announced by Budget-2021 and then by PM Modi on 15th August 2021 speech
- Boss? Ministry of New and Renewable Energy
- For manufacturing of hydrogen and fuel cells- for Indian transport sector and industry sector.
- Fertilizer, steel, petrochemicals etc industries may be mandated to use minimum x% of their
energy requirement from green hydrogen.
- Green hydrogen=Produced from renewable energy. Grey hydrogen =Produced from fossil fuel.
Blue hydrogen=Produced from fossil fuel with carbon capture and storage option.
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 929
Table 2: Misc. Schemes / Initiatives related to Fossil Fuel
Figure 1: Elon Musk is renowned for his Tesla brand of Electric cars
- (Definition) Electric vehicle (इले���क वाहन) is an automobile that is propelled by the energy stored
in rechargeable batteries. Such vehicles are further classified into
○ 1) Battery Electric Vehicles (BEVs) and
○ 2) Hybrid Electric Vehicles (HEVs) which can run on both battery (using electric motor)
and petrol/diesel (using internal combustion engine).
- (Origin of the problem) In India, transport sector is the second largest contributor to CO2
emissions after the industrial sector. Electric vehicle can help reducing it.
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 930
- (Data) Currently, the market share of electric cars is less than 1% in India, compared to
compared to 2% in China and nearly 40% in Norway.
- Why encourage? 1) less import of crude oil import = less CAD 2) India can emerge as a hub for
manufacturing for EVs. This can provide employment opportunities and earning of foreign
exchange through exports. रोजगार व �वदेशी मुद्रा कमाने का साधन बन सकता है
- 2017: NITI proposes at least 40% private transportation should be electric by 2030.
- 2019-Jun: NITI proposed only electric vehicles should be sold after 2030. However, automobile
makers have heavily criticized this move. So, ultimately
- 2019-Aug: Union Minister of Road Transport and Highway, Nitin Gadkari cleared the air that 1)
There will be no ban on petrol and diesel vehicles in the country. 2) Govt has not set any
deadline for automakers to switch to electric vehicles. 3) I am the minister, NITI Aayog does not
have the authority to set Electric Vehicle deadline.
Sidenote: GERMAN CARMAKER Volkswagen announced it’ll stop selling fossil fuel / Internal
combustion engines (ICE) cars in Europe by 2035. It’ll sell only electric vehicles.
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 931
observed that more than such tax incentives, need of the hour is to develop charging station
infrastructure in India because:
EV batteries limited driving range. So, charging stations must be available throughout the roads.
Else, people will prefer Internal Combustion Engines (ICE) vehicles like petrol-diesel cars.
Depending on the technology of charging stations, it can take from 30 minutes to 8 hours to
recharge the battery. So, universal charging standards are required in India.
Govt should also inform users about the availability of charging stations in their vicinity with the
help of physical science, GPS maps / Apps. (सावर्�त्रक चा�जग मानक)
India's climate is much hotter than Norway. High temperature =⏬ battery life cycle. We’ve to
encourage R&D accordingly. Otherwise, frequent battery replacement costs will discourage
potential buyers. (बार-बार बैटरी बदलवाने का खचार् ग्राहक को हतो�ािहत कर सकता है.)
EV batteries’ primary components is Lithium. China has secured a supply of this metals from
Congo, Bolivia, Chile, Australia. India shd also expand to such upstream areas to secure Lithium
54.7.6 🚕🚕🚕🚕 TRANSPORT→ 🚕🚕🚕🚕 ⏬ Fossil Fuel Emission → Bharat Stage Norms
⇒ Environment Ministry → Statutory Body: Central Pollution Control Board (CPCB) has
instituted Bharat Stage emission norms (BS) norms . जीवा� �धन उ�जर्न मानक
⇒ Higher number = stricter norms = more expensive for automakers to design such engines.
- 1/4/2017: BS-IV compliant vehicles made compulsory.
BS-IV(4)
- 1/4/2020: SC banned their sale from this date
BS-V(5) Modi decided we’ll directly jump to Stage 6.
Only this type of vehicles can be sold from 1/4/2020 onwards
BS-VI(6)
Stage-VI vehicles will emit less Sulphur and Nitrogen Oxides than their predecessors.
⇒ 1) Many buyers awaiting new BS6 cars’ prices to fall instead of buying BS4 models.
⇒ 2) Even though the BS4 car may be cheaper, it’ll not have good re-sale value in the 2nd-hand
used market after 5-6 years. So buyers are hesitant.
⇒ 1+2 = among reasons for � in automobile sales in 2019 (वाहनों क� �बक्र� म� कमी)
⇒ Separately, Dept of Heavy Industry notified Corporate Average Fuel Efficiency (CAFE) norms
for passenger cars (E.g. taxis, buses), requiring them to ⏬CO2 emission from 2017 onwards.
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 932
54.7.7 🚕🚕🚕🚕 ⏬Decarbonizing Transport in India (2020-June)
⇒ 5 year Project by NITI + OECD's International Transport Forum (ITF)
⇒ 13% of India's Co2 emissions come from the transport sector. This project aims to reduce it.
प�रवहन म� काबर्न क� उ�जर्न को कम करना
⇒ �More details prepare from Environment lecture/Current PDFs.
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 933
54.7.10 🚗🚗NCAP program for Car Safety 2022
⇒ Transport Ministry’s Bharat New Car Assessment Program (NCAP) for awarding ‘Star Ratings’
to automobiles based upon their performance in crash tests, will be introduced on April 1, 2023.
⇒ Bharat NCAP is applicable on type approved motor vehicles of category M1 (i.e. having 8 seats +
driver seat). This will help customers to opt for safer cars based upon their star-ratings. (वाहन
िकतना सुर��त है उसके बारे म� नए “एनएसीपी” मानदंड)
54.8 🛵🛵⚔🚕🚕⚖ MOTOR VEHICLE AMENDMENT ACT 2019
- Road accidents claim ~1.5 lakh lives every year. So, Union’s Motor Vehicles Act, 1988 was
amended in 2019 with steep penalties such as Drunk-driving fine increased from ₹ 2,000 to ₹
10,000 etc. (ट�ैिफक �नयमों का उ�ं घन करना, मिदरा/शराब पीकर गाड़ी चलाना इन सब पर भारी जुमार्ना)
- Even road contractors & Enginers can be punished if faulty infrastructure results in accidents.
- Concurrent List Entry 35: Mechanically propelled vehicles. So, both union and states can enact
laws but Union’s law will prevail. [समवत� सूची]
- But, some State Govts have notified reduced penalties. Union Highway Minister said, “States can
revise fines if they want. However, peoples’ lives should be saved."
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 934
54.9 🚕🚕🔗🔗 TRANSPORT→ BRIDGES & TUNNEL & MISC. (सेतु और सुरंग)
IRAD Integrated Road Accident Database Project (iRAD) by IIT-Madras and NIC.
IBMS Road Ministry developed an Indian Bridge Management System (IBMS)
webportal to monitor 50,000+ bridges on National Highways of India. Such
database can help 1) repair works 2) mega-sized trucks could be diverted to other
routes to avoid structural damage to small bridges.
Maitri Setu connecting Sabroom (Tripura) with Ramgarh (Bangladesh) over Feni River →
From Ramgarh (Bangladesh) → Chattogram port is hardly 80 kilometres from
Ramgarh = so, will help Northeastern Indian States to export through sea port.
Constructed by India's National Highways & Infra Development Corporation
Limited (NHIDCL). This is also part of HIRA-wala Development= Highways, I-
ways (information highway/communication infra), Railways and Airways.
Bogibeel The longest Rail-cum-Road Bridge of the India (4.94 km).
Bridge Connects Assam’s two districts over Brahmaputra river. 2018: Modi inaugurated.
Dhola- Longest road bridge of India (9.15kms) to connect Dhola in Assam to Sadiya in
Sadiya Arunachal over river Lohit, a tributary of River Brahmaputra. 2017: Modi
Bridge inaugurated.
Dhubri- 19.3 kms road bridge to connect Dhubri (Assam) and Phulbari (Meghalaya) over
Phulbari river Brahmaputra. 2019: Modi approved, will finish by 2026-27, then it’ll become
Bridge longest bridge.
Diffo Bridge built over Diffo River in Arunachal Pradesh.
River India’s longest river ropeway (2kms) to connects north & south banks of the
Ropeway Brahmaputra river in Kachari Ghat, Guwahati, Assam.
SARDP-NE Road Ministry → extra funds for roads in North East. Special Accelerated Road
Development Programme (SARDP-NE)
Atal Tunnel World's longest highway tunnel (9.02 km) from Manali to Lahaul-Spiti valley in
Himachal built by the Border Roads Organisation (BRO, under Defense Ministry).
Sela Tunnel Arunachal Pradesh passing thru Sela Pass. It’ll cut down the distance to China
border through Tawang by 10 km. At a height of over 13,000 feet.
Mavala Mavala = India's Biggest tunnel boring machine used for creating tunnels for
Machine India's first undersea tunnel Road -In Mumbai -To connect South Mumbai with
Worli. "Mavala" word associated with infantry Warriors in Shivaji Army.
��MCQ. Which is NOT correct about the Atal Tunnel? (IES-2021)
a) It is the highest altitude tunnel in the world। सब �व� म� सबसे �ादा उचाई पर ��त सुरंग है
b) It was inaugurated on 03 October 2020 in Rohtang ये तारीख को उद्घाटन �आ था
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 935
c) In connects Manali to Lahaul-Spiti valley। इन दो जगह को जोड़ती है
d) It is capable of handling 5000 cars and 2500 trucks per day with maximum speed of 80 kmph
54.10🚕🚕🚕🚕TRANSPORT → TRANSBORDER CONNECTIVITY (सीमापार स�द्धन)
Kartarpur - Kartarpur Sahib is located on the Ravi river bank, Pakistan, about 4.5 km
Sahib from the international border.
Corridor - Here Guru Nanak Sahib spent his 18 years until his death in 1539.
(2019) - 2019: 550th birth anniversary of Guru Nanak Sahib.
- Govt launched Visa-free corridor - Indian citizens and OCI (Overseas
Citizens of India) can travel from India to Pak.
Kaladan - To connect Haldia/Kolkata Port → Sittwe Port (Myanmar) → Kaladan
Multi-Modal River → Road transport to Mizoram.
- in other words, this project aims to provide alternate connectivity between
eastern ports of India to Mizoram via Myanmar.
Sonamura- - Sonamura (Tripura) to Daudkandi (Bangladesh)
Daudkandi - This is a riverine route connecting Tripura’s Gomati river with India’s
(2020-Sept) national waterways through Bangladesh’s Meghna river.
IMT India-Myanmar-Thailand Trilateral Highway
BBIN Bangladesh-Bhutan-India-Nepal (BBIN) Motor Vehicles Agreement (MVA) to
(2015) enable movement of passenger and cargo vehicles across borders. While
Bangladesh, India and Nepal have implemented it but Bhutan’s yet to do
INSTC International North–South Transport Corridor (अंतरार्��ीय उ�र-द��ण प�रवहन ग�लयारा):
(2000) - Members: India, Iran, Russia, Turkey, Azerbaijan, Kazakhstan, Armenia,
Belarus, Tajikistan, Kyrgyzstan, Oman, Ukraine, Syria. Observer member -
Bulgaria. (It helps connecting Afghanistan through Chabahar port although
directly it may not be passing through it.)
- With ship, rail, and road route for faster cargo transport.
Ashgabat - Ashgabat (@Turkmenistan) Agreement For multimodal goods transport
agreement between Central Asia and the Persian Gulf.
(2011) - Signatories: Kazakhstan, Uzbekistan, Turkmenistan, Iran, Oman, Pakistan
(2016), India (2018). This also creates synergy for INTC.
Gwadar - Gwadar Port@Pakistan. So obviously China helped building it.
Chabahar - Chabahar Port@Iran. India helped building it.
- 2016: PM Modi signed agreement with Iran to construct a railway line from
Chabahar port to Zahedan (a region bordering Afghanistan)
- 2020-Jul: Iran dropped India from project citing India’s funding delays.
Separately, Iran is also seeking a 25 years economic and security partnership
pact with China to get billions of funding. So, critics term it as failure of
Indian diplomacy. ईरान चीन क� गोद म� बैठ गया वह भारतीय कू टनी�त क� �वफलता
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 936
OBOR China One Belt One Road (OBOR) initiative to connect Asia, Africa and Europe
(2013) via 6 proposed corridors
1. New Eurasia Land Bridge Economic Corridor
2. China-Mongolia-Russia economic corridor
3. China-Central Asia-West Asia Economic Corridor
4. China-Indochina Peninsula Economic Corridor
5. Bangladesh, China, India, Myanmar Economic Corridor (BCIM): 2019-
April: China dropped this BCIM from the OBOR list.
6. China-Pakistan Economic Corridor: It passes through Gilgit-Baltistan - a
territory of India that is illegally occupied by Pakistan.
7. India has not officially joined, YET.
🤧🤧 Corona = Partner nations unable to repay infrastructure loans taken from
China. Now China is thinking of shifting its policy. e.g. loan restructuring
(Changing interest rate/tenure), fresh loans at 0% etc.
B3W US President Joe Biden’s Build Back Better World (B3W) initiative announced in
G7 Summit 2020 for infrastructure development in the aftermath of Corona.
Blue Dot ⇒ Proposed by the USA, Japan and Australia. India is yet to join.
Network ⇒ If an infrastructure project gets ‘Blue Dot’ Certification = Project has high
(2019) standards of quality, transparency, sustainability, and developmental impact.
⇒ It will encourage pvt investors from 1st world nations in such projects.
✍ Conclusion? Good connectivity is a fundamental requirement equitable industrial growth in all
regions. SDG Goal #9 requires India to build resilient infra including all weather roads connecting
all villages. Aforementioned scheme / policy / challenges….(सभी इलाकों म� सं तु�लत ओधो�गक �वकास के �लए
अ�� प�रवहन सु�वधा ज�री। सतत �वकास ल� के अनुसार गांव गांव तक सभी मौसमों म� कायर्रत हो ऐसी सड़कों का �नमार्ण)
⇒ 1853: First railway from Mumbai to Thane (34kms). Governor General Dalhousie
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 937
⇒ 1921: Acworth Committee recommends separation of rail budget from General budget; practice
started from 1924-25, ended in 2017 by PM Modi 🧔🧔.(More in 📑📑Pillar#2D)
⇒ Today, Indian railways 4th largest network (>65,000 route-km) after US, China,Russia.
⇒ 2019-20: Railways carried >8 billion passengers = Largest in the world
Ministry of Railways रेलवे मं त्रालय consists of
Dept N/A
Zonal - 17th zone is Metro Railway Zone = Kolkata
Headquarter - (proposed) 18th Zone is: South Coast Railway - Vishakhapatnam (Andhra)
Subordinate - Railway Recruitment Boards.
Offices - Railway Staff College, Vadodara, Guj
- Indian Railway Engineering Institute, Pune.
Statutory Railway Board, under the Indian Railway Board Act, 1905
CPSE - IRCON (Construction), IRFC (Finance), IRCTC (Catering Tourism),
- Konkan Railway Corporation Ltd.,Mumbai Rail Vikas Corporation,
- RITES (Technical and Economic Services), Rail-Tel (communication), Rail
Vikas Nigam Ltd.
- Dedicated Freight Corridor Corp. of India Ltd.,
- Bharat Wagon and Engineering Co. Ltd., Burn Standard Coy. Ltd,
Braithwaite and Company Ltd.
- (*)Container Corporation of India Ltd. (CONCOR)
(*) means approved for strategic disinvestment (=privatization) in 2019
55.1.1 🚝🚝 Railways → Concepts
Cross - To keep rail travel cheap for the poor people, Railways keeps the
Subsidization passenger tickets lower than its input cost.
क्रॉस सहा�यक�करण - To compensate this loss, Railways keeps freight (goods transport) prices
higher. This is called “Cross subsidization”
Operating Ratio - It means Railways operating expenses divided by its operating revenues.
सं चालन अनुपात - 2017: 98.4% (means only ₹ 1.6 rupees left out of every ₹ 100 revenue
earned.) → 2018: 96.2%
- Budget-2019: we’ll try to improve it to 95%
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 938
55.2 🚝🚝 RAILWAYS → MODERNIZATION (आधु�नक�करण)
- 1) Cross subsidization, poor operating ratio → sanitation, service quality & safety compromised.
Railways ill-equipped to combat robberies, vandalism, stone-pelting.
- 2) While truck transport-more pollution, expensive and slow than trains, yet more than 2/3rd
cargo carried by trucks. 3) Too many rail stoppages to appease the voters → speed slow.
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 939
⇒ Bibek Debroy Committee (2015) suggested merger of these services into two services 1) technical
and 2) non-technical. That’d have been more rational decision.
55.3.2 🚝🚝🚝 Railways Organizational Reforms → Restructuring of Railway Board
BEFORE AFTER (रेलवे बोडर् का पुनगर्ठन)
Railway Board, the apex decision Similar to a Company board.
making body of Railways had ⇒ Chairman of the Railway board will be the Chief
⇒ One Chairman [अ��] Executive Officer (CEO: मु� कायर्कारी अ�धकारी)
⇒ Members selected from various ⇒ 4 functional Members (कायर्परक सद�) i.e. officers from
Railway departments. [अलग अलग Railways selected on merit cum seniority basis.
रेल �वभागों से सद�ों को चुना जाता था] ⇒ Some independent members with knowledge &
experience in industry, finance, economics and
management fields
55.4 🚝🚝 🧔🧔:👲👲 RAILWAYS MODERNIZATION → PRIVATE TRAIN OPERATORS
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 940
⇒ 2006: Ministry of Railways allowed private operators to run container trains on the Indian
Railways (IR) network. [नीजी �खलािड़यों क� मालवाहक गािड़यों को तो ये अनुम�त काफ़� समय पहले से दी गई थी]
⇒ Railways constituted Amitabh Kant Panel for entry of private operators in passenger trains.
⇒ 2019-Oct: FIRST ‘Private’ train: Lucknow-Delhi Tejas Express launched. It’s operated by
IRCTC. Although, IRCTC is a subsidiary co of Ministry of Railways. So, technically, it’s not ‘fully
private train’ but if this experiment successful, then actual private operators may be allowed.
⇒ 2020-Jan: Indian Railways has invited private companies to apply for running 150 passenger
trains on 100 routes. Draft proposal is as following:
Table 5: Draft Public Private Partnership (PPP) model for private railways
Private player will Design, Build, Finance and Operate (DBFO: िडजाइन,
Model �नमार्ण, �व� और सं चालन) his private trains on the routes given to him. Train
must have minimum 16 coaches.
Concession Period 35 Years. After that, the govt may renew/ Govt itself may start operating
(�रयायत क� अव�ध): it / select another party...depending on the mutually agreed conditions
private train operator will share a % of his revenue with the Government.
Fees
(�नजी सं चालक ने अपनी आमद म� से कु छ प्र�तशत सरकार को देना होगा)
55.4.1 (🚝🚝 🧔🧔:👲👲) 👿👿✋ Challenges in allowing private trains (चुनौ�तयां)
1. Apprehension among railway employees about job-loss, if Govt �number of Govt trains.
2. Coordination / ego-tussle (सम�य / अहं-तु��) between private crew running the train and railways
Govt officials operating the track & signal system.
3. Fixing responsibility / insurance claims during train accidents. [नुक़सान/बीमा-दावों क� �ज़�ेदारी]
4. To keep their operational costs low, Private airlines not doing regular service-maintenance of
aircrafts- which endangers passenger security (यात्री सुऱ�ा). Similar danger in private railways.
5. In the aviation sector, Jet Airways et al engaged in Predatory Pricing (= selling tickets at deep
discount) to kill rival companies. Eventually all suffering from losses. Similar crisis in mobile
service providers (Jio vs others). So, fair competition & price regulatory mechanism required.
(सरकार ने �� प्र�तयो�गता एवं क�मत �नयं त्रण सु�न��त करना होगा)
6. If private player imports railway from foreign country, its repair parts / mechanic may not be
easily available in India…. <We can find 500 such faults but not imp.>
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 941
- Project Unigauge to convert selected routes into broad gauge.
- Presently, in terms of track length: Broad > Meter > Narrow.
Project Saksham 2018: Skill / Training program for railway employees. Phase-II in 2019.
Mission Avataran (2016) To transform Indian Railways’ speed, safety, profitability
Yatri Mitra Sewa wheelchair cum porter services for PH passengers (2016)
Rail Drishti Portal Webportal for customer complaints & train information
55.5.1 🚝🚝 🔖🔖 Railways Fares (िकराया)→ Rail Development Authority
⇒ 2017: Modi Govt setup “Rail Development Authority (रेल �वकास प्रा�धकरण)” - non-Constitutional,
non-statutory body via cabinet resolution. It’s headed by a chairman + 3 members; 5 years term.
⇒ Suggest Tariff (fares) determination, efficiency and performance standards, customer
satisfaction, technological upgrades..
⇒ Although it can only ‘suggest’ (यह सं �ा के वल सुझाव दे सकती है) because under Railway Act, only the
Railway Board can decide on the fares of rail services.
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 942
⇒ 2018 Still, forgetting above ANTI-arguments, Committee on Economic Affairs (CCEA)
approved 100% Electric Traction by 31/3/2022.
55.5.5 🚝🚝 National Rail Plan for India – 2030 [भारत के �लए रा��ीय रेल योजना - 2030]
⇒ freight transport- � Railways share by 45% and � avg speed by 50kmph. (माल वाहन ने रेलवे क�
िह�ेदारी और रेलवे क� ग�त को बढ़ाना)
⇒ 100% electrification of engines (रेल इं जनों को डीज़ल क� जगह �वद्युत/ �बजली से चलाना)
⇒ � speed to 160 kmph on Delhi-Howrah and Delhi-Mumbai routes
⇒ Identify new Dedicated Freight Corridors and High Speed Rail Corridors.
⇒ Develop more railway stations, improve track safety etc (रेल अड्डे और सुर�ा)
Table 6: ✋✋✋✋Table has very little utility in the UPSC, self-study for other exams:
Red ribbon to spread AIDS awareness
Rajdhani Connects Delhi with state capitals. Started in 1969
Shatabdi Connects Metro cities with other cities. called “Shatabdi” because started in
1988 Nehru’s centenary.
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 943
Garib-rath AC trains for poor people- at cheaper cost. But seat space narrow, no
2006 (Lalu) food/bedding given. So it's called ‘No frills’.
Duranto Express Duranto means ‘restless’ in Bengali. Long distance non-stop from source to
2009 (Mamta) destination. Speed as fast as Rajdhani and Shatabdi. Although now stops at
more stations for voters appeasement so original objective is defeated.
Mumbai Monorail Monorail runs on a single rail. rail may be located either above or beneath
2014 the railway cars. 2014: Started in Mumbai by Maharashtra State Govt.
Mumbai-A’bad - Length: ~520 km; proposed speed ~320 kmph.
bullet train 2014 - Duration: 3-4 hours (currently 8 hours)
- Project funded by JICA (Japanese International Cooperation Agency).
- 😰😰Challenges? Farmers protest against the land acquisition, Ticket
price will have to be kept very high ELSE difficult to recover the cost.
🤩🤩Benefit? Even if the cost is not recovered, experience gained → later
-
try ‘Make in india’ & export bullet trains to third world.
- (Full) Budget-2019: Once above project is finished in 2023, we’ll launch
second bullet train from Delhi to Amritsar via Chandigarh. The project
will be funded by the Govt and not by any public private partnership.
AntyodayaExpress These trains have only general coaches and they’re unreserved. (2016)
Humsafar Express Attempted to give a taste of 'luxury' to the common man. Fully AC coaches,
2016 more comfortable seats, LCD TV, laptop-mobile charging, coffee/tea/soup
vending machine, toilet's flush button has automatic perfume releaser.
Tejas Express’16 Similar to above. Their new version even has Small TV behind every chair.
Gatimaan ‘16 Semi-high speed train, maximum speed 160 kmph, runs on electricity.
UDAY Utkrisht Double-Decker Air-conditioned Yatri (UDAY Express) connects
2018 notable cities of Southern India. features similar to above
Vande Bharat ⇒ Same as above, made by Integral Coach Factory in Chennai. Technical
Express 2019 name ‘Train 18’. First train on Delhi -Kanpur-Allahabad-Varanasi.
⇒ Amrit Mahotsav of independence for 75 weeks started from 12th March
2021 and will continue till 15th August, 2023. So, During these 75 weeks
of the Amrit Mahotsav of Independence, 75 Vande Bharat trains will be
launched to connect every corner of the country.
⇒ Sidenote: Amrit Kaal =for the NEXT 25 years until India celebrates 100
years of its independence.
🚝🚝Shramik 2020-May: During corona crisis to bring migrants within Indian states back
Special Trains to their home states in India. (भारत मे ही ��त प्रवासी मजदू र)
Bharat Gaurav Pvt tour operators can lease Govt’s trains on tour circuit. (भारत गौरव योजना के
Scheme (2021) अंतगर्त �नजी �ेत्र के ऑपरेटर भी िकराये पर सरकारी ट�ेन लेकर पयर्टन �लों पर उसे चलाए)
Future of Rail 2019-January: This report was launched International Energy Agency (IEA,
report an autonomous body based in Paris).
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 944
55.5.9 🚝🚝 Transport → Dedicated Freight Corridor (DFC)
⇒ 2006: Started to construct 2800kms separate railway line exclusively for the cargo trains
⇒ Eastern Arm:- Ludhiana (Punjab) to Haryana, UP, Bihar, Jharkhand to Dankuni (WB)
⇒ Western Arm:- Dadri (UP) to Haryana, Rajasthan, Gujarat to Jawaharlal Nehru Port @Mumbai.
⇒ �Benefits? Faster cargo movement (60km/h instead of present 20km/h)
55.5.12 🚝🚝 Transport → Metrolite, MetroNEO = Cheaper Metros for smaller cities (2021)
💼💼Budget-2021 announced Metro Lite and Metro Neo for smaller cities like Nashik, Thane,
Gorakhpur, Jammu, Srinagar and Coimbatore. They are cheaper than normal Metro rail.
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 945
Type of Metro Cost to build 1 kilometre of track & train
Normal / conventional metro rail 222 cr
Metro Lite = looks like a tramway 140 cr
Metro Neo= looks like an electric trolleybus 71 cr
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 946
55.6.1 [Yearbook] Ministry of Civil Aviation नागर �वमानन / नाग�रक उड्डयन मं त्रालय
Dept N/A [मं त्रालय के नीचे कोई �वभाग नहीं है]
Attached ⇒ Directorate General of Civil Aviation (DGCA: महा �नद�शक): registers civil
aircrafts, gives license to pilots, supervises gliding clubs, implements
Chicago Convention on International Civil Aviation.
⇒ e-GCA online platform of Directorate General of Civil Aviation (DGCA)
for pilot licensing etc.
Statutory − Airports Authority of India (AAI, Act 1994: भारतीय �वमानप�न प्रा�धकरण):
Bodies Statutory body responsible for creating, upgrading, maintaining airports &
वैधा�नक सं �ाएं runaways in India. It operates 130+ airports in India- some directly, some
via PPP basis e.g. GMR group → Delhi and Mumbai airports, Adani
group → A’bad, Lucknow etc.
− Airports Economic Regulatory Authority (Act 2008): Statutory regulator
setup with powers regulate fees/tariffs charged at airports. 2019: New bill to
increase its powers through some technical reforms.
− Rajiv Gandhi National Aviation University
− Commission of Railway Safety (CRS) is under Administrative control of
Aviation Ministry.
CPSE − (1) Air India (Govt sold to Tata Ref: Pillar2D).
सरकारी कं प�नयां − (2) Pawan Hans (Helicopter- Govt wants to privatize it as well)
− (3) Hotel Corporation of India Ltd.
Autonomous (1) Bureau of Civil Aviation Security,
(2) Indira Gandhi Rashtriya Uran Akademi
Civil Aviation Policy 2016: Highlights →
1. More airports and flights for North East & small towns to improve regional connectivity.
2. Making the air travel more affordable for middle class [म�म वगर् के �लए हवाई यात्रा स�ी करवाएँ गे]
3. Improving Airplanes’ Maintenance, Repair and Overhaul (MRO) operations.
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 947
55.6.2 ✈ Transport → Cheap flights to Small Towns → UDAN
Related Topic: No Frills airports (�बना तामझाम वाले स�े हवाई-अड्डे) → AAI develops No Frills airports at
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 948
small towns / North East with only basic safety and security features. No fancy lounges with
airconditoners, no aerobridges, no conveyor belts for luggage. It’s just a single storey building
without any posh facility → low operational costs.
for more about the public private partnership (PPP) in Airport → Refer Pillar5C: PPP.
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 949
- Then for every flight, Drone user must ask permission from mobile app. Based on the zone &
GPS location its system will automatically permit / deny.
- Any drone without a digital permit will not be able to takeoff. Thus, it has “no permission, no
takeoff” (NPNT) mechanism.
- 🤧🤧 😷😷 2020: Garud Portal: DGCA to give fastrack permission to Govt agencies for COVID-19
related drone operations.
- ��ES22: Ministry of Civil Aviation has � the drone registration fees, � the numbers
documents for registration, � the penalties. So we should explore similar process simplification
in other sectors as well. (आ�थक सव��ण म� पाया िक सरकार ने ड�ोन पं जीकरण म� लगने वाले द�ावेजों और फ़�स क� मात्रा म�
कटौती क� है. इसी प्रकार का प्रिक्रया-सरलीकरण अ� �ेत्रों म� भी करना चािहए.)
Figure 2: Akshay may need ‘Airlift’, but ‘Bhai’ doesn’t need Vande Bharat Mission. Capable of 1) becoming Captain of a ship 2)
Rescuing kidnapped nurses 3) surviving oil-mine blast- all in Middle East
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 950
⇒ for bringing Indians back to India, who were stuck overseas during Corona.
⇒ Over 30 lakh Indians returned by 2020-Dec= India’s largest repatriation (प्र�ावतर्न/ वतन वापसी)
operation since the 1990’s Gulf/Kuwait war. [But UPSC doesn’t usually engage in superlatives-
KBC-GK: biggest/largest/longest...so not really imp whether it’s bigger than Gulf rescue.]
⇒ Separately, to provide skill/employment for these returned-Indians, Govt also launched
SWADES (Skilled Workers Arrival Database for Employment Support) but all skill schemes
under �Pillar6: HRD.
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 951
55.8.2 🏬🏬 Tourism→ PRASAD & HRIDAY Mission
Both are Central Sector Schemes: 100% funded by Union. Both aim to improve the city
infrastructure & amenities with special focus on improving the tourism.
PRASAD (2014-15) HRIDAY (2014-15)
Pilgrimage Rejuvenation & National Heritage City Development and Augmentation Yojana
Spiritual Augmentation Drive. [धरोहर वाले शहेरो का �वकास]
Ministry of Tourism, initially Ministry of Urban Development, 12 cities: Ajmer (Rajasthan),
12 cities but then list keeps Amaravati (Andhra Pradesh), Amritsar (Punjab), Badami
getting expanded to 20+. [यात्रा (Karnataka), Dwaraka (Gujarat), Gaya (Bihar), Kanchipuram
धाम वाले शहेरो का �वकास] (Tamil Nadu), Mathura (UP), Puri (Odisha), Varanasi (Uttar
Pradesh), Velankanni (Tamil Nadu), Warangal (Telangana),
⇒ 2015: Ministry of Tourism launched the Swadesh Darshan Scheme to develop circuits having
tourism potential e.g. Tourist reception Centres, Solid Waste Management, Streetlight,
Landscaping, parking etc. where the Private Sector is not willing to invest.
⇒ To facilitate international tourism, India introduced the e-Tourist Visa online application
system. 2016: Government renamed e-Visa scheme with five sub-categories i.e. ‘e-Tourist Visa’,
‘e-Business Visa’, ‘e-Medical Visa’, ‘e-Conference Visa’ and ‘e-Medical Attendant Visa
⇒ � Travel and Tourism Competitiveness Index by World Economic Forum (WEF)- India
ranked 34th (2019).
Dept ⇒ N/A
Attached ⇒ Archaeological Survey of India, New Delhi (पुरात� �वभाग)
सं ल� ⇒ National Archives of India, New Delhi
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 952
Subordinate 1] Kolkata: = Anthropological Survey of India [मानव �व�ान सव��ण], National Library
अधीन� [रा��ीय पु�कालय], 2] Delhi = National Museum [रा��ीय सं ग्रहालय]
Autonomous ⇒ Lalit Kala Akademi, New Delhi| National School of Drama, New Delhi
Bodies ⇒ Sahitya Akademi, New Delhi| Sangeet Natak Akademi, New Delhi
�ाय� सं �ान ⇒ Central Institute of Buddhist Studies, Leh
⇒ Central Universities of Tibetan Studies, Sarnath, Varanasi
⇒ The Asiatic Society , Kolkata| Jallianwala Bagh National Memorial Trust
⇒ Zonal Cultural centers
💼💼Budget-2020: an Indian Institute of Heritage and Conservation under Ministry of Culture with
the status of a deemed University. (Although location = yet to be announced)
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 953
56 INFRASTRUCTURE → 🏬🏬 URBAN (शहरी बु�नयादी अवसं रचना)
2011 2030
Urban population 31% 40% (and 50% by 2050)
Contribution to GDP 63% 75%
Introduction (Data): Urban areas support >30% of India’s population and contribute to more than
60% of India's GDP. These figures are expected to grow to 40% and 75% respectively by 2030. देश क�
आबादी और सकल घरेलू उ�ाद का एक बड़ा िह�ा शहरी इलाकों से आता है.
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 954
Further,
� 🏬🏬 Ministry of Housing & Urban Affairs आवासन एवं शहरी कायर् मं त्रालय consists of →
Dept NA
Attached ⇒ Central Public Works Department (CPWD) के �ीय लोक �नमार्ण �वभाग
offices ⇒ National Buildings Organisation (NBO) रा��ीय भवन �नमार्ण सं गठन
⇒ Land & Development Office (L&DO)- it has two Portals: 1) E-
SAMPADA- for allocation of central govt houses/office buildings 2)
E-DHARTI - property disputes, registration etc in Delhi
Statutory − Delhi Development Authority, Rajghat Samadhi Committee,
वैधा�नक − Delhi Urban Arts Commission, Capital Region Planning Board
Autonomous − National Institute of Urban Affairs
Bodies �ाय� सं सथान − Building Materials & Technology Promotion Council (BMTPC)
− Central Government Employees Welfare Housing Organisation
− National Cooperative Housing Federation of India (NCHFI)
Subordinate − Town & Country Planning Organisation
Office अधीन� कायार्लय − Government of India Stationery Office
− Department of Publication (responsible for printing Gazettes)
CPSE सावर्ज�नक �ेत्र के − Housing and Urban Development Corporation Ltd. (HUDCO)
उपक्रम − National Buildings Construction Corporation Limited
− (*) Hindustan Prefab Limited (HPL)
(*) means approved for strategic disinvestment (=privatization) in 2019
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 955
E-governance − 2019: mHariyali App to encourage Public to plant trees & uploads it
geotagged photos through App.
MCQ. Find correct: (Prelims-2022)
1. The India Sanitation Coalition is a platform to promote sustainable sanitation and is funded by
the Government of India and the World Health Organization.
2. The National Institute of Urban Affairs is an apex body of the Ministry of Housing and Urban
Affairs in Government of India and provides innovative solutions to address the challenges of
Urban India.
Answer Codes: (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2
56.2.1 2020 marks 5 Anniversary of Urban Mission
th
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 956
⇒ Focus on circular economy for water management, with latest global technology. [जल प्रबं धन के �लए
वै��क �र क� प्रौद्यो�गक� तथा प�रक्रामी अथर्तंत्र के �सद्धांतों का उपयोग िकया जाएगा] (More on circular economy in
�Pillar#4B)
56.4 🏬🏬 URBAN → SMART CITIES MISSION (2015) → 100 CITIES
Definition: It is a city with smart physical, civic and economic infrastructure. It provide smart
technology, utility & mobility to its residents through 0% bureaucratic hassles & 100% use of
Information and Communications Technology (ICT). Although ICT/computerization itself is not
the ‘end goal’ of a smart City. The end goal is to improve quality of life, ease of living, economic
growth and sustainable development. (ऐसा शहर जहा पर भौ�तक, नगरपा�लका और आ�थक बु�नयादी ढांचे '�ाटर्' होते है.
इस शहर म� 0% नौकरशाही / लाल-फ�ताशाही, तथा १००% और सूचना और सं चार प्रौद्यो�गक� (ICT) के 100% उपयोग होता है. इसका
अं�तम ल� - जीवन �र म� सुधार, आ�थक वृ�द्ध और सतत �वकास है)
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 957
Infra. अवसं रचना 🤩🤩Facilities in a Smart City
Education �श�ा From nursery to college- all educational facilities will be available.
💉💉Healthcare - From Primary Health Care Centre to multispecialty hospital and even
�ा� veterinary hospital for the pets will be available.
- 108 ambulance with maximum 30 minutes of response time.
📞📞Communicatio Wifi @all houses. Apps, emergency helplines for medical / fire / police.
n
Economic Bank-ATM, Centres for Skill Development & Startup Incubation;
आ�थक Warehousing, Freight Terminals, Export Parks
56.4.1 🏬🏬 Smart Cities → Selection process (चयन प्रिक्रया)
- Cities prepare Smart city plan → send to state government → MoHUA → final selection among
total 100 slots with internal quotas assigned to each state/UT in proportion of their population
and number of statutory towns.
- So, UP (13) > TN (12) > Maharashtra (10)......Union territories and special category states are
given minimum 1 City each e.g. Srinagar(J&K), Arunachal (Pasighat, Itanagar), Kavaratti
(Lakshadweep), Andaman-Nicobar-Islands (PortBlair) etc.
- 💼💼Budget-2020: we’ll develop five new smart cities. But, names yet to be announced.
🔠🔠❓MCQ. Which one of the following cities was not included in the list of smart cities in India?
(Asked in UPSC-CDS-2019-i) a) Silvassa b) Jorhat c) Itanagar d) Kavaratti
Co-contribution from (State / UT) + its respective Urban Local Body (ULB) x% (majority
shareholder)
Any private company or financial intermediary (Bank / NBFC) → y% (minority
shareholder)
Total shareholding 100% (but x% must be > greater than y%) 100%
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 958
56.4.3 🏬🏬 👿👿 Smart Cities → Criticism / Challenges (आलोचना / चुनौ�तयाँ)
1. 😰😰 India is a country of poor people and rural people. So, instead of spending ₹ 1000 crore x 100
big cities, it would have been better to spend ₹ 10 crores each on 10,000 towns and villages where
people are struggling for basic amenities like water and electricity. �सफर् कु छ बड़े शहरों का �वकास
2. 😰😰 Excessive reliance on ICT in city administration makes us more vulnerable to hacking &
cyber warfare. City will completely stop functioning if electricity gone during natural disasters /
nuclear attacks. प्राकृ �तक आपदा / परमाणु/ साइबर हमले- म� शहरों क� भेद्यता बढ़ जाएगी.. जनजीवन एकदम ठ� हो सकता
3. 😰😰 Nothing will be free except the Wi-Fi because the SPV company will charge user-fees on
everything from water, sanitation, education and healthcare. हर चीज पर फ�स.कु छ भी मु� नहीं �मलेगा
4. 😰😰 Soul of the city & sense of the community will be lost. It will become an artificial jungle of
concrete and internet cables. People will become Digital-Zombies where nobody has time for
anybody except their electronic gadgets. समुदाय क� भावना और शहर क� आ�ा चली जाएगी हर आदमी मोबाइल
कं �ूटर का िड�जटल गुलाम बन जाएगा।
5. IT data centres require centralized air conditioning (AC) to keep the server infrastructure cool.
But large number of such AC units turn the city into an ‘urban heat island‘ (गम� ब�त बढ़ जाएगी)
6. Wi-Fi, Internet and mobile telephony generates elector-magnetic radiation, which is harmful for
birds, insects and small animals. (�वद्युत-चु�क�य तरंगों से इं सान, पशु प��यों को ख़तरा)
✋Counter-argument? Smart city will improve the quality of life & create economic opportunities.
And looking at such best cities, even the voters in the small cities will become more assertive in
demanding better quality of city administration from their municipal corporators → then even small
towns will become more clean and comfortable to live. �ाटर् शहरों क� सु�वधा देखकर छोटे शहर के वोटर भी अपने
�ा�नक नेताओं से अ�� शहरी बु�नयादी सु�वधाओं क� मांग कर�गे �जससे िक पूरे भारत म� जीवन �र म� बढ़ोतरी होगी
⇒ So, Top-20 best performing smart cities will be paired with Bottom-20 worst performing smart
cities as ‘Sister Cities’. अ�ा प्रदशर्न करने वाले शहरों क� बुरा प्रदशर्न करने वाले शहरों के साथ जुगलबं दी
⇒ E.g. Ahmedabad (Rank#1) paired with Chandigarh (Rank#81)
⇒ �Benefit? Sharing of best practices with each other, inspiration & motivation etc.
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 959
56.4.6 🏬🏬 � Cities → TULIP Internship (2020-June)
⇒ TULIP (The Urban Learning Internship Programme.)
⇒ � Boss? Joint initiative by Minister for Housing and Urban Development (MoHUA) and the
All India Council for Technical Education (AICTE, Statutory body under the HRD/Edu
Ministry) for giving 1 crore internships by 2025.
⇒ Urban local bodies (ULB) can announce Internship opportunities on TULIP website.
⇒ Internship subjects? Urban Planning, Water Supply, Waste Management, Slum rehabilitation,
Digital Governance, Transport Engineering, Municipal Finance. (शहरी �नयोजन, जल आपू�त, अप�श�
ु ी-पुनवार्स, िड�जटल प्रशासन, प�रवहन इं जी�नय�रंग, नगर �नगम �व� प्रबं धन )
प्रबं धन, झ�
⇒ Eligibility? Indian citizen who finished the final year of college within the last 18 months. (यो�ता)
⇒ Duration of Internship? eight weeks to one year. (इं टनर्�शप/ प्र�श�ुओ ं क� अव�ध)
⇒ Budget allocation? No separate budget provided but stipend may be given from the funds
available under may be used from smart cities, AMRUT etc schemes, if ULBs wish
⇒ �Further administrative procedures / Salient features of the scheme = poor cost benefit.
- Ramps in public buildings / railways / airports; toilets for wheelchair users, Braille symbols and
auditory signals in lifts, disabled-friendly websites etc. so that life becomes easier for the PH.
- Under Accessible India Campaign (Sugamya Bharat Abhiyaan), Divyangjan Dept hires auditors
to check public buildings & websites → then respective organization required to do above things
under the Persons with Disabilities Act (�वकलांग ��� अ�ध�नयम). Grants given as & where required.
- + Awareness generation, IEC, mobile app etc.
⇒ 2021: Hyderabad city became the Only city of India to get "Tree Cities of the World" title/status
by the UN-FAO + a private organization Arbor Day Foundation.
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 960
⇒ Chandigarh became the first region in India to launch "Carbon Watch"- it is a mobile application
to assess the carbon footprint of an individual through his activities related to transport, energy,
waste generation.
i. Ease of Living Index (EoLI) Top5: Bengaluru, Pune Ahmedabad Chennai Surat.
ii. Municipal Performance Index (MPI) Top5: Indore, Surat, Bhopal, Pimpri-Chinchwad, Pune.
Note: Above rankings for Million+ Pollution walli Cities. There is Separate ranking for cities with
less than million population. इसके अलावा 10 लाख से कम आबादी वाले शहरों के �लए अलग से र�िकंग बनाया है.
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 961
⇒ 2021: New Zealand’s Auckland is world’s most liveable city due to its
successful handling of the Corona pandemic. (रहने यो� सबसे उपयु� शहर)
Global Real Estate By a low-profile private organization. Poor Cost:Benefit preparing. कोई छोटी
Transparency Index वाली �नजी �ेत्र क� सं �ा बनाती है ऐसे हर सूचकांक को पढ़ने म� खास फायदा नहीं
भारत म� ब�त तेजी से शहरीकरण हो रहा है गांव क� आबादी भी �ानांतर कर शहरों क� तरफ आ रही है �जससे शहरी बु�नयादी अवसं रचना
अ�ा�धक बोझ महसूस कर रही है। सतत �वकास ल� प्रा�� के �लए इन चुनो�तयो से लड़ना ज�री/ अग्रता क्रम से सुधार आव�क
56.5 (🏠🏠) INFRA → (URBAN AND RURAL) → HOUSING FOR ALL BY 2022
- 1985: Indira Awas Yojana for rural areas gave money to poor families to build homes,
- 2008: Rajiv Rinn Yojana for urban areas gave home loan Interest subsidy to poor.
- 2015-16: Modi restructured them into Pradhan Mantri Awas Yojana (PMAY).
- It’s a Centrally Sponsered Scheme → Core Scheme = NOT 100% funded by Union. States also
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 962
- Target: Housing for all by 2022. PMAY has two components.
🏠🏠 � PMAY (Urban) 🏠🏠 � PMAY (Rural)
by Ministry of Housing and Urban Affairs By Ministry of Rural Development .
It has following components: (योजना के घटक/अवयव) Beneficiaries are identified through SECC-
1. If person owns land: give him ₹ 1.50 lakh to 2011 data, and verified by Gram Sabha.
build / renovate his house. They’re given money to build home.
2. If a builder is keeping 35% apartments’ quota - ₹ 1.50 lakh (plains area),
for EWS then builder gets subsidy. - ₹ 1.60 lakh (hilly states)
- Additionally, they can get upto ₹ 70,000
3. Slum redevelopment (झोपिड़यों को हटाकर गरीबों को
as bank loans
प�े मकान बना कर देना)
Money transferred to beneficiary’s bank
4. Credit-linked subsidy scheme (CLSS): account via AwaasSoft web platform.
Depending on the annual income, the - Convergence with other schemes to
beneficiaries are classified into 3 groups: provide electricity, LPG, drinking water
a. Economically Weaker Section (EWS), & toilet. अ� योजनाओं के साथ सम�य
b. Low Income Groups (LIGs) - Also provides skill programs for rural
c. Middle Income Groups (MIGs: i.e. masons. ग्रामीण कारीगरों के �लए कौशल कायर्क्रम
annual income upto ₹ 18 lakhs).
These groups are given 3-4% interest subsidy on
loan amounts upto ₹ “x” lakhs. Govt has setup
Credit-linked Subsidy Services Awas (CLAP)
Portal where beneficiary can track his application
status in real-time.
5) AHRC: given below
56.5.1 👻👻(🏠🏠) → Affordable rental housing Complexes (AHRC)
िकराए के मकान िकफायती दरों पर गरीबों और प्रवासी श्र�मकों के �लए. → �ब�र सरकारी जमीन पर / जजर्र सरकारी मकानों तो तोड़कर
नए मकान बनाएगा- गरीब िकरायेदारों के �लए. इस योजना म� �ब�र को �रयायती दरों पर कजार् और टै� म� लाभ िदया जाएगा
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 963
56.5.2 (🏠🏠) → PMAY–U → Angikaar
⇒ Pradhan Mantri Awas Yojana – Urban (PMAY–U) → Angikaar campaign launched to mobilise
communities for water & energy conservation, waste management, sanitation, hygiene. �बजली पानी
बचाओ ��ता अ�भयान जागृ�त अ�भयान
- They’ll raise mobilize ₹ 60,000 crores in next 4 years to finance the PMAY (Urban).
- This money will be raised through ‘extra Budgetary Resources’ i.e. BMTPC itself borrowing from
market / CPSEs / lenders without involvement of Govt. (so Govt’s fiscal deficit appears under
control.) (More in 📑📑Pillar#2D) (बजटेतर सं साधन)
56.5.4 👻👻 (🏠🏠) → SWAMIH Fund (�के �ए मकान प्रोजे� ख� करने वा�े �ब�र को थोड़ी लोन देदो योजना)
⇒ MoHUA, LIC, Banks etc gave ₹₹ to SBICAP Ventures Ltd (an NBFC) → "Special Window for
Completion of Affordable and Mid-Income Housing (Swamih Investment Fund)".
⇒ SWAMIH Fund gives loans stalled projects for affordable and Middle-Income Housing. e.g.
Builder unable to finish project → extra ₹₹ from here, so he can finish project.
56.5.6 (🏠🏠) Sustainable Housing → World Habitat Award to Odisha’s JAGA Mission
⇒ By a UK-based organization in partnership with United Nation (UN)-Habitat
⇒ 2019-Bronze award given Odisha government's Odisha Liveable Habitat Mission also known as
‘Jaga Mission’ in partnership with Tata Trust.
⇒ In this scheme, urban slum dwellers are given land ownership titles, create road, streetlight,
water-sanitation infrastructure → Then Govt will not evict /destroy their slums. Permanent
home address proof also helps poor families to enroll children in school, open bank accounts etc.
⇒ Beneficiaries are given 30 square metre of land free of cost and for the remaining land they have
to pay as per the State Govt determined price. (गरीब प�रवार को 30 वगर् मीटर जमीन मु� म� और उसे अ�त�र�
जमीन गरीब को चािहए तो रा� सरकार द्वारा �नधार्�रत रकम, गरीब प�रवार ने अदा करनी होगी)
FAQ: Do I’ve to remember this? Ans. Yes, 1-2 case studies shd be remembered
for citing as example for GSM1: urbanization problem remedies
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 964
56.5.7 (🏠🏠) Sustainable Housing → Global Housing Technology Challenge
- � Boss? Ministry of Housing and Urban Affairs
- asked experts / private sector companies to propose disaster-resilient, environment friendly,
cost-effective and speedy construction technologies.
- They’ll be implemented on a pilot basis in some cities to see the results.
Since it is not possible to construct houses for each and everyone, we also need to promote rental
housing especially for migrant workers. But, current Rental Laws are archaic. So, 2019-20 Ministry
of Housing & Urban Affairs drafted a Model Tenancy Law with following features, and asked States
to adopt it: . [क� द्र सरकार ने आदशर् िकराएदारी अ�ध�नयम अपनाने के �लए रा� सरकारों को सू�चत िकया है. यह अ�ध�नयम ग्रामीण
और शहरी दोनों इलाकों के िकरायेदारों और मकान मा�लक ऊपर लागू होगा.]
It covers properties rented for residential, commercial, educational use- both urban and rural.
digital platform to upload rent agreements. Houses cannot be rented on Verbal agreements.
[के वल �ल�खत करारनामे पर ही मकान िकराये पर िदया जा सकता है। मौ�खक बात/ ज़ुबान देने मात्र से नहीं]
Specific provisions about security deposit, penalties, eviction of Tenant - in a way that it protects
both the tenant and landlord. (िकरायेदार और मकान मा�लक दोनों के िहतों को सुर��त रखने के प्रावधान)
If tenant refuses to vacate after expiry of agreement / after doing nuisance, then landlord can
claim double the monthly rent for two months, and four times the monthly rent thereafter etc.
[अव�ध समा�� के बावजूद यिद िकरायेदार मकान ख़ाली नहीं करेगा, उपद्रव करेगा- तो मकान मा�लक उसे दोगुना /चार गुना िकराया
भी माँग सकता है]
In case of a force majeure event, tenant unable to pay rent then the landlord shall allow the
tenant to continue in possession until 1 month after disaster/pandemic etc ends. [महामारी और दू सरी
अप्र�ा�शत घटनाओं म� मकानमा�लक- िकरायेदार को घर से नहीं �नकाल सकता, चाहे िकरायेदार िकराया देने म� असमथर् हो. हालांिक
ऐसी आपदा ख� होने के एक महीने बाद मकानमा�लक िकरायेदार को घर से �नकाल सकता है.]
Dy.Collector rank officials will be designated as ‘Rent Authority. Higher appeal to Rent Court →
Rent Tribunal. Disputes will be settled within 60 days deadline. (इन मामलों क� सुनवाई के �लए िकराया
प्रा�धकरण और अपीलीय सं �ाओं का भी प्रावधान)
⇒ Some landlord widows / elderly solely relying on rent income for their survival. They also need
protection. (कु छ मकान मा�लक, �वधवा, बुजुग� के �लए िकराया ही उनक� आमदनी का सहारा था)
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 965
⇒ Some state governments announced relief/rules to address this. But, if all States adopt Central
government’s Model Tenancy Act, 2019- It will be useful. (आदशर् िकराएदार अ�ध�नयम अपनाया जाए तो
भ�व� म� इन सबक� भी मदद हो सकती है)
🏠🏠 ✍ Conclusion Housing? A homeless family is more vulnerable to crime, disease & disasters.
SDG Goal #11 requires India to provide safe and affordable housing to all by 2030. Aforementioned
scheme / policy / challenges….. अपराध, बीमारी और आपदाओं म� एक बेघर प�रवार क� भेद्यता अ�ो से अ�धक होती है. सतत
�वकास ल� : सभी को सुर��त और िकफायती आवास उपल� कराना ज�री
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 966
57.2 🏞🏞 RURAL → SHYAMA PRASAD MUKHERJEE RURBAN MISSION
2004: President Dr. Kalam suggested PURA (Providing Urban Amenities in Rural Areas), but failed
to takeoff because inter-ministerial miscoordination in UPA. → Modi repacked (2016)
- �Boss? Rural Development Ministry. Core Scheme = NOT 100% funded by Union.
- 15-20 villages clusters are selected. They’re given ₹ ₹ to improve Electricity, water, roads; centres
for Agri Processing, Tourism, Skill development etc.
🤩🤩Benefit? economic opportunity & ease of living will improve in the rural areas itself → cities will
face less migration and congestion (गांव म� ही अगर शहरों जेवीसी सु�वधा �मलेगी तो �ाना�रण / अ�तप्रजन कम होगा).
🔠🔠❓ Who among the following envisioned the framework of sustainable development called PURA
(Providing Urban Amenities to Rural Areas)? (UPSC-Geologist-2020)
a) Jawaharlal Nehru b) A.P.J. Abdul Kalam c) Atal Bihari Vajpayee d) K.R. Narayanan
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 967
→ they become capable to achieve SDG goals. (पं चायती सं �ाओं म� ई प्रशासन, पं चायत भवनों का मर�त
पुननर्वीनीकरण, पं चायत कमर्चा�रयों क� तालीम और �मता �नमार्ण के �लए पैसा द�ग)े
- Boss? Panchayati Raj Ministry. Core Scheme = NOT 100% ₹₹ by Union. States also have to pay
57.3.2 👻👻🏞🏞 📐📐 Land Assets registration- Swamitva scheme for land survey (2020)
⇒ Ministry of Panchayati Raj → launched on pilot basis in 6 states. (प्रायो�गक तौर पर चु�नदं ा रा�ों म� ही)
⇒ Rural inhabited lands will be survey with drones and technology. (जमीन का सव��ण)
⇒ It will help getting clarity over property rights → Land revenue collection, Bank loans
application approval, Settlement of Title Disputes (जमीन मा�लक क� के कोटर् �ववादों का �नपटान)
57.3.4 🏞🏞 📐📐 Land Assets registration- Case Studies from Bihar & Kerala
Bihar ⇒ BIHAR HAS become the first state in the country to introduce the concept of a
dynamic map for villages
⇒ Map will get updated every time land ownership changes hands. This will
reduce legal disputes. (�बहार म� �जतनी बार ज़मीन को बेचा जाएगा उतनी बार मा�लक� के न�ों को
अपडेट िकया जाएगा- ताक� ज़मीन �ववादों म� कमी हो)
Karnataka ⇒ Bhoomi project → digitize all land records.
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 968
⇒ Dishaank app to enable citizens to avail the information about the land and its
ownership as recorded in the Bhoomi database.
(कनार्टक म� सभी ज़मीन द�ावेजों का भू�म प्रोजे� के अंतगर्त िड�ज-करण िकया गया है। आम नाग�रक भी ये
सारी जानकारी अपने मोबाइल पे देख सके इस�लए िदशांक नाम क� एप बनायी गई)
Members of Parliament Local Area Development Scheme (सांसद �ानीय �ेत्र �वकास योजना).
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 969
Central Sector Scheme =100% funded by Union.
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 970
✅Arguments favouring suspension ✋Opposing scheme suspension
योजना ��गत करना= सही कदम योजना ��गत नहीं करनी चािहए थी
media-limelight. But such "election धांधली तो हर योजना म� होती है िकंतु इसका उपाय यह नहीं योजना
rush"= Work done in a haphazardly. बं द कर दी जाए ब�� योजना क� खा�मयों को दू र करना चािहए
⇒ भाई भतीजावाद, भ्र�ाचार, तु�ीकरण, चुनाव से पहले
ज�बाजी म� ढेर सारी रकम और प्रोजे� जारी करना-
लेिकन गुणव�ा पूणर् सं प��यों का �नमार्ण नहीं
🔠🔠❓ Find wrong statements about MPLADS? (UPSC-CDS-i-2020)
(a) Members of the Parliament (MPs) sanction, execute and complete works under the scheme.
(b) Nominated Parliament can recommend works for implementation anywhere in the country.
(c) The scheme is fully funded by the Government of India.
(d) The annual entitlement per MP is Rs.5 crore.
🔠🔠❓Which of the following statements are correct about MPLADS? (UPSC-Prelims-2020)
1) MPLADS funds must be used to create durable assets like physical infra for health, education
2) A specified portion of each MP’s fund must benefit SC/ST populations
3) MPLADS funds are sanctioned on yearly basis and unused funds cannot be carried forward to
next year.
4) The district authority must inspect at least 10% of all works under implementation every year
Codes: [a) 1 and 2 only [b) 3 and 4 only [c) 1, 2 and 3 only [d) 1, 2 and 4 only
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 971
− सीमा �ेत्र �वकास कायर्क्रम (BADP) covers 17 states/UT which people living within 50 kilometres of the
International Border. Funding for roads, bridges, school, hospital etc.
− Eligible states are: Arunachal Pradesh, Assam, Bihar, Gujarat, Himachal Pradesh, Jammu
Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Punjab, Rajasthan, Sikkim, Tripura, Uttar
Pradesh, Uttarakhand, West Bengal.
− RELATED event: Seemant Vikasotsav @Dhordo, Kutch to sensitize the border population about
their role in national security and development.
57.6.2 🏞🏞 Border infra and Shekatkar Committee (सीमा �ेत्रों म� बु�नयादी अवसं रचना)
2015: Defense ministry setup Lt General D B Shekatkar Committee to enhance combat capability
and rebalance defence expenditure of the armed forces. 2020-May: Defence ministry announced
we'll implement it suggestions related to border infrastructure namely,
⇒ Border Roads Organisation (BRO)'s road construction work → Outsource to private players via
Engineering Procurement Contract (EPC), if costing more than ₹100 cr= faster and more
professional building of roads.
⇒ BRO to be given high-tech machines for snow clearance on Himalayan roads. Use Geo-Textiles
for soil stabilisation, to prevent landslide damage to roads. सड़क से बफर् हटाने और भू�लन से नुकसान रोकने
के �लए अद्यतन मशीन और तकनीक�
⇒ Field officers to be given more financial and administrative powers. �ानीय अ�धका�रयों को �ादा �व�ीय
और प्रशास�नक स�ाई दी जाएं गी तािक ज�ी कम हो सके
⇒ Reforms for land acquisition and environmental clearance. भू�म अ�धग्रहण और पयार्वरणीय मं जूरी।
⇒ �? Socio economic development & �security in border areas. सामा�जक आ�थक �वकास और सुर�ा
✍Conclusion? SDG Goal #8 requires India to provide decent work and economic growth
opportunities to all. Since majority of Indians reside in rural areas, the rural infrastructure
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 972
development is the lynchpin factor in this regard. Aforementioned scheme / policy /… सतत �वकास
ल�: सभी लोगो को काम और आ�थक �वकास के अवसर देना । चूंिक अ�धकांश भारतीय आबादी ग्रामीण �ेत्रों म� �नवास करते ह�, इस�लए
ग्रामीण बु�नयादी सु�वधाओं का �वकास अ�ाव�क है.
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 973
⚖ Home ministry also looks after the administrative matters related to Padma Awards, and
legislative matters related to Passport Act & Citizenship. (नाग�रकता)
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 974
iDEX (2018)
- For Innovations for Defence Excellence (iDEX)
⇒ Hindustan Aeronautics Limited, HAL.
CPSE ⇒ Bharat Electronics, Bharat Dynamics
सरकारी ⇒ Garden Reach Shipbuilders, Goa Shipyard, Hindustan Shipyard, Mazagon
कं प�नयां Dock Shipbuilders | Mishra Dhatu Nigam Limited, MIDHANI.
⇒ (*) Bharat Earth Movers
Local ⇒ Cantonment Boards: Civic administration bodies (Ref Laxmikanth for more)
Governance ⇒ e-Chhawani Portal = e-governance portal for cantonment boards.
⇒ �OPERATION SAMUDRA SETU: Indian Navy as a part of national effort
Operations
to repatriate Indian citizens from overseas. (भारतीयों क� वतन वापसी कोरोना म�)
Exercises
⇒ + many other defense exercises etc. self-Study from CA-PDF
(*) means approved for strategic disinvestment (=privatization) in 2019
57.7.4 🕵🕵🕵🕵✋ → 🤵🤵🤵🤵 Ordnance Factory Board abolished & Essential Defence Services Bill
😰😰BEFORE 🤩🤩AFTER 2021-Oct
⇒ Department of Defence Production → ⇒ This OFB&OF corporatized / converted from
Subordinate organization: Ordnance “departmental undertaking” (�वभागीय उपक्रम) to
Factory Board (OFB, HQ: Kolkata) → Defence Public Sector Undertakings (DPSUs
41 Ordnance factories (OFs) र�ा �ेत्र के सावर्ज�नक �ेत्र के उपक्रम)
⇒ This can also be termed as ⇒ Meaning it is re-registered into (total seven)
“Departmental Undertaking” similar Government companies under Companies Act
to Dept of Post & Ministry of Railways [आयुध �नमार्णी बोडर् और उसके नीचे क� ह�थयार फै ���यां जो
(More in �Pillar#2D: Types of Org) पहले एक �वभागीय उपक्रम के �प म� कायर् करती थीं उ�� अब
सरकारी कं प�नयों के �प म� पं जीकृ त िकया गया है]
76,000 workers in 41 Ordnance factories - Eventually, through merger/privatization of
produce less than ₹12,000 cr worth of companies and voluntary retirement scheme
defence equipment annually = problem of (VRS) of employees, this problem will be
overstaffing & low output. solved. (More in �Pillar#1B1: PSBs)
- Ordnance Factory workers are afraid of job loss
[इतने सारे मजदू र काम करते थे लेिकन उ�ादन काफ� कम and so they were planning to go on strike/hartal
था. यानी क� अनाव�क �प से अ��धक मानव बल को so government has passed Essential Defence
Services Bill to stop them from going on
नौकरी पर रखा गया. भ�व� म� इन सब सरकारी ह�थयार
Hartal/Strike.
फै ���यों का एक�करण, �नजीकरण तथा कमर्चा�रयों को
- If employee/worker in these defense factory
�े��क �नवृ�� योजना द्वारा नौकरी से हटाया जाएगा.
goes on strike, he will be punished with up to 1
हालांिक “हमारी नौकरी चली जाएगी” इस डर से कमर्चारी year jail or Rs 10,000 fine, or both.
हड़ताल पे उतरे- तो उ�� रोकने के �लए सरकार ने
“आव�क र�ा सेवा �वधेयक” पास करवाया है, तािक
हड़ताली कमर्चारी को जेल तथा जुमार्ना हो सके ]
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 975
57.7.5 👻👻👻👻👻👻👻👻Draft Defence Production and Export Promotion Policy 2020
⇒ By Defence ministry to �dependence on imports, Achieve US$ Bn exports by 2025.
⇒ Encourage "Make in India" via domestic research, IPR protection, FDI & Ease of Doing Business,
Training subsidies, support to MSMEs/Startups etc (र�ा उ�ादन तथा �नयार्त प्रो�ाहन नीती= र�ा उपकरणों का
भारत म� ही उ�ादन, सं शोधन, बौ�द्धक सं पदा र�ण, �वदेशी प्र�� �नवेश म� बढ़ोतरी, �ापार म� सुगमता इ�ािद कदम उठाए जाएं गे)
57.7.6 �Ministry of External Affairs (�वदेश मामलों का मं त्रालय)
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 976
MRUNAL’S ECONOMY PILLAR#5C: INFRASTRUCTURE: Communication, IT, PPP, NIP etc
Table of Contents
58 📡📡Infrastructure → Communication (सं चार) .......................................................................................... 979
58.1.1 � [Yearbook] Ministry of Communication (सं चार मं त्रालय) ....................................................... 979
58.1.2 � Ministry of Communication → Fraud Prevention Bodies................................................ 980
58.1.3 �Dept of Telecommunications → Digital Communications Commission ......................... 980
58.1.4 � Ministry of Electronics & IT इले��ो�नक� एवं सूचना प्रौद्यो�गक� मं त्रालय............................................ 980
58.2 Communication (💻💻/📞📞) related Regulators /Apps / Portals ......................................................... 981
58.2.1 � Comm → Regulators → TRAI ............................................................................................ 981
58.2.2 �📞📞 Comm → Stolen phone? → Central Equipment Identity Register portal ............... 981
58.2.3 �📞📞 Telecom → Emergency Response Support System (ERSS) ......................................... 982
58.3 📞📞☎ Communication → Telecom .................................................................................................. 982
58.4 ☎� ⚔� Adjusted Gross Revenue (AGR) ............................................................................ 982
58.4.1 ☎� ⚔� AGR Dues → Relief Package 2021-SEPT .................................................... 983
58.4.2 ☎� ⚔� AGR: Interest Payment in form of equities/shares- Vodafone-Idea (Vi). 984
58.4.3 ☎� ⚔� : AGR: Way forward/Conclusion ................................................................. 984
58.4.4 ☎⚔🤬🤬 Controversy: Telecom → 2G Spectrum Scam ........................................................ 984
58.4.5 ☎⚔🤬🤬 Controversy: Telecom → Interconnect Usage Charges (IUC) ............................. 985
58.5 💻💻 Communication → IT → Digital India programme .................................................................. 985
58.5.1 💻💻 Digital India → PM-WANI Public Wifi (2020-Dec)......................................................... 987
58.5.2 💻💻/📞📞 → IT/Telecom → Training (Misc. schemes) ............................................................ 988
58.6 💻💻💻💻💻💻💻💻 Communication → IT → 5G revolution in India.................................................... 988
58.6.1 💻💻💻💻💻💻💻💻 Challenges and Opportunities in of 5G (इसे अपनाने म� चुनौ�तयां+अवसर ) ............... 989
58.6.2 � 5G Hackathon by DoT (2020)............................................................................................... 990
58.6.3 💻💻💻💻💻💻5G Trials start in India (2021, 2022) ......................................................................... 990
58.6.4 � NEST Division in MEA.......................................................................................................... 990
58.7 💻💻 Communication → IT → Private initiatives for internet........................................................... 990
58.7.1 💻💻📊📊 COMMUNICATION → IT → Rankings .................................................................... 990
58.8 📔📔 📔📔 💾💾 ES19: Public Data: For the people, by the people ........................................................... 991
58.8.1 💾💾Types of Government Data .................................................................................................... 992
58.8.2 💾💾 🥰🥰Public Data: Opportunities through Data integration ................................................. 992
58.8.3 💾💾 Telangana Government’s Samagra Vedika initiative:......................................................... 993
58.8.4 💾💾 Govt efforts to release statistical data [सां��क� डेटा को सावर्ज�नक बनाना]................................... 993
58.8.5 💾💾💾💾 Challenges in public data [सावर्ज�नक डेटा क�चुनौ�तयां] .......................................................... 993
58.8.6 💾💾🧾🧾⚖ Draft Data Empowerment and Protection Architecture (DEPA) ......................... 994
58.8.7 💾💾 ✍🏼🏼Conclusion: Public Data (सावर्ज�नक डेटा) .............................................................................. 994
58.9 �📽📽 [YB] Ministry of Information & Broadcasting (सूचना एवं प्रसारण मं त्रालय) ................................. 994
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 977
58.9.1 �🤬🤬🤬🤬 Comm → Regulators (Statutory) → Censor board .............................................. 995
58.9.2 �🗞🗞 Comm → Regulators (Statutory) → Press Council of India ...................................... 995
58.10 🔭🔭🔭🔭SPACE TECH Infrastructure (अवकाश �ेत्र) .......................................................................... 997
58.10.1 👻👻👻👻👻👻Space Tech: Atma-Nirbhar ................................................................................... 997
58.10.2 📙📙📙📙ES22: using cartography and geospatial data to track development........................ 997
59 🧱🧱🧱🧱 Infra → GSM3: Investment Models (�नवेश के तरीके )...................................................................... 999
59.1 🧔🧔🧔🧔🧔🧔 Infra.Dev.→ PPP (Public Private Partnership)................................................................ 999
59.2 🧔🧔🧔🧔🧔🧔🧔🧔 Infra.Dev. → PPP (Greenfield) Models ................................................................... 1000
59.2.1 🧔🧔🧔🧔🧔🧔🧔🧔 Infra.Dev. → PPP (Brownfield) BLT & ToT .................................................. 1002
59.2.2 🧔🧔🧔🧔🧔🧔🧔🧔 Infra.Dev. → PPP (Brownfield) → OMDA Model....................................... 1002
59.2.3 🧔🧔🧔🧔🧔🧔🧔🧔 PPP/Privatization: Airport Bundling............................................................... 1003
59.3 🧔🧔🧔🤵🤵 Infra.Dev. → Non-PPP .................................................................................................... 1003
59.4 🧔🧔🧔🤵🤵 🛡🛡 Infra.Dev. → Non-PPP → GOCO for Indian Army ............................................... 1003
59.4.1 🛡🛡GoCo Mechanism? ................................................................................................................. 1004
59.4.2 🛡🛡GoCo: Pros and Cons ............................................................................................................. 1004
59.5 🧔🧔🧔🧔🧔🤵🤵Hybrid Annuity Model (HAM) = mix of PPP + NonPPP ....................................... 1005
59.6 🧔🧔🧔🧔🧔🧔Infra.Dev → Misc. Topics................................................................................................. 1006
59.6.1 �👊👊👊👊Swiss Challenge (��स चुनौती / ललकार) ........................................................................ 1006
59.6.2 🧔🧔🧔🧔🧔🧔Viability Gap Funding (VGF: �वहायर्ता अ�र फं िडगं ) ................................................. 1006
59.7 💰💰💰💰 Infrastructure Funds ............................................................................................................... 1007
59.7.1 💰💰💰💰 National Investment and Infrastructure Fund (NIIF: 2015)..................................... 1007
59.7.2 👜👜 (Full) Budget-2019 on NIIF, Investment & PPP ............................................................... 1008
59.7.3 👻👻Atma-Nirbhar 3.0: NIIF Strategic Opportunities Fund..................................................... 1008
59.8 💰💰💰💰 Infra Finance → National infrastructure pipeline (NIP) .................................................... 1009
59.8.1 💰💰💰💰 NIP → Infra Finance Reforms → Financial Market Reforms .................................. 1010
59.8.2 💰💰💰💰 NIP → Infra Finance Reforms → Credit Enhancement Fund (CEF) ...................... 1010
59.8.3 💰💰💰💰 NIP → Others reforms .................................................................................................. 1010
59.9 💰💰💰💰 Infra Finance → NIP, NMP, GATI Shakti ........................................................................... 1010
59.9.1 💰💰💰💰 👜👜 Budget-2021: National MONETISATION Pipeline 2021................................... 1011
59.10 💰💰💰💰:� Infra Finance: Gati Shakti Plan 2021 [₹100 lakh cr]..................................................... 1011
59.10.1 (💰💰💰💰:�) PM GatiShakti — National Master Plan Digital Portal .................................. 1012
59.10.2 👜👜👜👜Budget-2022 on Infra Finance................................................................................... 1012
59.11 (🧔🧔🧔🧔🧔🧔)😰😰PPP challenges (चुनौ�तयां)....................................................................................... 1012
59.12 🧱🧱✍Infra → Conclusion (सार / �न�षर्) ....................................................................................... 1013
59.13 ✍Mains Questions in past UPSC exams ..................................................................................... 1013
59.13.1 Mains Mock Questions from these topics ............................................................................ 1013
59.13.2 ✍ 🎺🎺 Mains previous years’ questions from these topics ............................................... 1014
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 978
58 📡📡INFRASTRUCTURE → COMMUNICATION (सं चार)
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 979
Autonomous − Centre for Development of Telematics (C-DOT)
58.1.2 � Ministry of Communication → Fraud Prevention Bodies
2021: Communication minister to set up two bodies
- 1) Digital intelligence unit (DIU) against Unsolicited commercial communication -
Telemarketing, SMS spam.
- 2) Telecom analytics for fraud management and consumer protection (TAFCOP).
🤩🤩Objective? Combat: digital frauds involving Mobile calls and SMS.
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 980
App ⇒ 2017: UMANG- Unified Mobile Application for New-Age Governance
(UMANG). It delivers government services by by Central and State
Government departments and Local bodies such as locating exam centre,
booking govt doctor appointment, applying for soil health card & filing
EPFO complaints.
- Data Security Council : is a (private sector) not-for-profit body on data protection by
NASSCOM. NASSCOM is a not-for-profit association of Software companies.
58.2.2 �📞📞 Comm → Stolen phone? → Central Equipment Identity Register portal
⇒ By Dept of Telecom
⇒ If your mobile gets stolen or lost → file First Information Report (FIR) in Police → upload FIR
details and International Mobile Equipment Identity (IMEI) on this portal
⇒ Govt will block the IMEI number of the phone → Phone will become unusable for the thief.
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 981
58.2.3 �📞📞 Telecom → Emergency Response Support System (ERSS)
- Boss? Home Ministry. Launched pan-India in 2019-Feb. Although some states yet to roll it out.
- Victim dials 112 → Emergency Response Centre (आपातकालीन प्र�तिक्रया क� द्र) → redirect to police
(100), fire (101), health (108), women's safety (1090) & other helplines.
- Alternatively, victim can use Panic Button on the phone by longpressing ‘5’ or ‘9’, or, '112 India'
mobile app which also has a ‘shout’ button so registered volunteers close to the victim can come
for immediate assistance before police/firemen arrive.
⇒ Early 90s: LPG reforms, private sector telecom companies allowed to start operating in India.
⇒ They had to obtain telecom licenses & pay certain fees to the Govt every year.
⇒ This fees is calculated as a % of their Adjusted Gross Revenue (AGR: समायो�जत सकल राज� / आमद).
⇒ Later, Department of Telecommunications (DoT) and Private Telecom Companies differed over
the definition / formula of AGR. → Matter went to Supreme Court.
⇒ DoT said [Telecom revenue + non-telecom revenue] → Adjusted Gross Revenue (AGR). Uska
pay X% to government as “licence and spectrum fee.”. (Started from 1999)
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 982
⇒ Telecom companies (Telecos) demanded that non-telecom biz revenue (e.g. rent on property,
interest from bond investments, dividend from subsidiary companies etc) should not be counted
in this AGR formula. AGR क� �गनती म� ग़ैर टेलीकॉम आमदनी को भी �गना जाता था, टेलीकॉम कं प�नयों को इससे एतराज़
था लेिकन वो सुप्रीम कोटर् म� के स हार गए.
⇒ 2019: Supreme Court judgement: Department of telecom (DoT)’s definition of AGR is right.
Telcos must pay the AGR, interest and penalty on late payment.
Company Jio Vodafone-IDEA (Vi) Airtel
AGR dues in Crore >62 kcr >58 kcr >43 kcr
(figures not IMP)
⇒ Telecos unable to pay this much money. If govt did not help → weaker companies like
Vodafone-Idea could shut down → Bad loan/NPA for banks, job loss, foreign investors
confidence loss. [कं प�नयों ने AGR का बकाया पैसा, तथा उस पर �ाज और दंड क� रक़म सरकार को चुकानी है लेिकन उनका
धं धा नुक़सान म� है. यिद सरकार कोई राहत नहीं देगी तो वोडाफ़ोन के िदवा�लयेपन जो�खम]
⇒ IF Vodafone shuts down – only 2 Telecos left [Jio+Airtel] = Duopoly = not good for customer.
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 983
58.4.2 ☎� ⚔� AGR: Interest Payment in form of equities/shares- Vodafone-Idea (Vi)
[कं पनी बकाया AGR के ऊपर चढने वाले �ाज क� रक़म सरकार को �पए मुद्रा क� जगह अपने शेयर के �प म� अदा करे]
Vodafone-Idea (Vi) has opted for 4 year moratorium on AGR payment (of ₹58,000 cr). So, they need
to pay total ₹16,000 crore interest rate for next four years to Govt, in the form of A) Rupee currency
or B) Equity (shares of the company) so, Vi’s promoters i) Vodafone Group and ii) Aditya Birla
group will transfer Rs.16,000 worth of shares to Govt. as interest payment. Resultant situation:
Party → Govt +Vodafone +Aditya Birla +Others =Total
Shareholding (%) 35.8% 28.5% 17.8% 17.9% =100%
To run telecom business, two things required → A) License, B) Access to Spectrum. Spectrum
refers to the radio waves that are used by mobile phones to transmit data.
- UPA-1: we’ll give give license by “First Come First Serve Basis”, and whoever gets the license, he
will automatically get free 2G spectrum linked with his License.
- 😰😰Scam? Certain shell companies who had no intention of actually running telecom business
applied and got licence & free spectrum → they sold it to the needy companies at higher prices,
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 984
thus, making windfall profit without doing any business at all. UPA’s ally DMK party’s A.Raja
(Telecom Minister) & Kanimozhi were arrested → later acquitted (2017).
Present system:
- A) Companies has to apply for Unified License (i.e. valid for both voice and data services) and
- B) Company has to separately buy Spectrum through Dept of Telecom’s auctioning.
- 1977: National Informatics Centre (NIC) to develop websites, softwares, ICT services for govt
- 2006: Manmohan’s National e-Governance Plan (NeGP)
- 2014: Modi’s Digital India Mission by restructuring above things:
Boss? Ministry of Electronics & IT. Central Sector Scheme = 100% Funded by Union.
Digital India program (िड�जटल इं िडया कायर्क्रम) 9 Pillars:
1) Broadband Communication Ministry’s Department of Telecom (DoT) →
Highways
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 985
- 1) Bharatnet Project/ National Optical Fibre Network (NOFN):
Connect all 2.50 lakh+ village Panchayats with broadband.
👜👜👜👜Budget-2022:- We'll finish Bharatnet via PPP by 2025.
- 2) National Broadband Mission: To provide broadband access to all
villages by 2022.
- 3) Ghar Tak Fiber to connect Bihar villages through high speed
internet. Launched 2020-Sept.
- 4) PM-WANI Public Wifi launched in 2020-Dec.
1) Broadband National Knowledge Network (NKN): to provide highspeed internet
Highways (Gbps speed) to all universities, libraries, laboratories, healthcare,
(continued) research & agricultural institutions
2) Universal Access Telecom companies required to pay ₹ ₹ to DoT’s Universal Service
to Mobile Obligation Fund (USOF: �व��ापी सेवा कतर्� �न�ध) → new mobile towers in
Connectivity unconnected rural / remote / LWE (naxal) areas.
👜👜👜👜Budget-2022:- Universal Service Obligation Fund (USOF)’s 5%
funds will be allocated for R&D on affordable broadband and affordable
mobile service. Target- Rural and remote areas.
3) Public Internet - MEITY → Setup Common Services Centre (CSC) in all 2.50 lakh+
Access Programme gram panchayat. So, even if a poorman doesn’t own PC/mobile, he
(सावर्ज�नक इंटरनेट ए�ेस can use CSC to apply online for exams/schemes/certificates, check
कायर्क्रम)
result, pay bills etc.
- Dept of Post to create similar facilities in 1.50Lakh post offices.
4) e-Governance Develop more apps, websites and portals to reduce to improve Govt’s
5) e-Kranti - efficiency, reduce corruption. e.g.
Electronic Delivery - FinMin → Dept of Expenditure Controller General of Accounts
of Services (CGA) → Public Financial Management System (PFMS) webportal to
disbursal of scheme money.
- Same CGA → Bharatkosh webportal for transactions related to govt’s
“Non-tax revenue receipts” e.g. selling Yojana / Kurukshetra
magazines online.
- Dept of Post → online tracking of speed post, online sale of stamps.
- NIC’s Sandesh App = Whatsapp like app only for Govt employees.
- MeghRaj platform: To provide Cloud Computing services Benefit?
Cloud servers can store the file & run the softwares/Apps →
individual Govt. organizations needn't buy very powerful CPU/large
hard disks etc.
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 986
- State Wide Area Network (SWAN) to run State Government website
& e-governance services.
Similarly, portals / apps for paying taxes, getting passport, registering a
company, applying for admissions etc.
6) Information for - MyGov.in: to facilitate 2-way idea exchange between citizens and
All Government for good governance.
सबको जानकारी /सूचना - Data.gov.In: researchers can obtain datasets related to ministries,
प्रदान करना
departments, Macroeconomic indicators etc.
- E-taal portal: It tracks the statistics of govt-citizen transactions e.g.
“x” number of RTI applications filed online by the people in “y” age
group from “z” state.
- IGNOU, Delhi University etc. given funding to put their courses /
learning modules online.
- mKisan app/portal for e-extension services to farmers.And so on….
7) Electronics Mfg Ref: Pillar#4 → Mfg → National Policy on Electronics (NPE)
8) IT for Jobs 1) IT cos given subsidies & tax benefits for setting up BPO/call centers in
रोजगार सृजन North East. 2) More computer courses for villagers and ITIs.
9) Early Harvest Focuses on projects to be implemented within short timeline. e.g
Programmes - Biometric attendance in govt organisations to check the absenteeism
शीघ्र प�रणाम कायर्क्रम of employees, teachers and students
- 👦👦Women and Child Ministry → Khoyapaya portal to announce
lost children so others may inform the authorities.
- 👦👦Labour Ministry → Pencil portal to complaint about child
labour.
- �HRD Ministry → Convert all school books into ebooks.
- 🌪🌪IMD + NDMA → SMS based weather info. & disaster alerts
- MEITY → CERT-In → Cyber Swachhta Kendra webportal for free
tools for removal of botnet / malware / ransomware such as Petya,
WannaCry etc.
- MEITY → Digilocker: It’s similar to google drive to store files.
citizen opens an online account linked with Aadhar number. 1) He
can store his important documents 2) Organizations can send
electronic copies of documents (e.g. driving license, Voter ID, School
certificates) directly into his lockers. 3) he can even sign documents
using eSign facility.
- 👻👻👻👻MEITY → Saathi Chat Bot For corona awareness
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 987
⇒ Pradhan Mantri Wireless Access Network Interface (PM-WANI) scheme is meant to provide
public Wi-Fi service through Public Data Offices (PDOs) spread across India.
⇒ A kirana shop owner, a tea-stall vendor, or a Common Service Centre (CSC) — can register as
PDO → install wireless routers & provide the internet to people.
⇒ Such PDO will not have to pay any license fees to Govt, for providing internet services (unlike
JioFiber, Airtel Broadband etc companies)
⇒ �Benefit? � domination/looting by the Internet service providers(ISPs) and 3g/4g mobile
companies & their roaming charges on data usages.
छोटे �ापा�रयों क� दुकानों म�, सामा� सेवा के �ों म�, वायरलेस राउटर �ा�पत कर सावर्ज�नक वाई फ़ाई. तािक मु� म�/ िकफ़ायती दामों पर
इं टरनेट क� सु�वधा लोगों को �मल सके .
🔠🔠❓MCQ. Which are aims of "Digital India" Plan of the Govt of India? (UPSC-Pre-2018)
1. Formation of India's own Internet companies like China did.
2. Establish a policy framework to encourage overseas multinational corporations that collect Big
Data to build their large data centres within our national geographical boundaries.
3. Connect villages to the Internet and bring Wi-Fi to schools, public places and major tourist
centres.
Answer Codes: (a) 1 and 2 only (b) 3 only (c) 2 and 3 only (d) 1, 2 and 3
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 988
Mid Band 🤩🤩🤩🤩 (middle) 🤩🤩🤩🤩 (middle level)
High Band 😰😰 (smallest area covered) 🤩🤩🤩🤩🤩🤩(20Gigabits per sec)
Latency is the amount of time taken by data to travel between its source and destination. 5G has
very low latency. (स्रोत और ल� के बीच डाटा प�ंचाने म� ब�त ही कम �वलं ब होता है)
Network slicing (नेटवकर् के टुकड़े करना): mobile operators to create multiple virtual networks within a
single physical 5G network. Provide faster data to tele-surgery in rural areas, driverless car, etc.
Thus, 5g is useful in Internet of Things (IoT) and machine to machine (M2M) communications,
CCTV surveillance, drones, real time data analytics, industrial revolution 4.0.
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 989
Considering these benefits, USA, China, S. Korea are working on war-footing to implement 5g.
Our Department of Telecom too had setup A.J.Paul Raj Committee, it prepared a roadmap for
rollout of 5G telephony in India by 2020.
Govt wants to auction 5G spectrum [8300MHz] at a reserve price of ₹5 Lcr. (Reserve price नीलामी
म� आर��त रकम = minimum this amount required to participate in the auction.) But,
Airtel,Vodafone unable to afford. Only Reliance-Jio may buy 5G= monopoly = not in the best
interest of consumers. (मुकेश अंबानी के के हाथ म� 5g का एका�धकार होने का भय)
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 990
− To measure internet speed, affordability, cyber security & govt
regulation etc-Then ranking given on each of these parameters so
poor-cost benefit #� ��थोड़ा-पढ़ो-आगे-बढ़ो
− While India in top 10 in terms of Internet affordability but
speed/reliability is very poor
Global Cybersecurity by the International Telecomm. Union (ITU)-under United Nations
Index (UN). India given 10th Rank in 2021. We are ahead of China & Pakistan
� Conclusion: SDG Goal #9 (infrastructure) requires India to provide universal telephone and
internet connectivity to all. Above scheme / policy helps in digital access, digital inclusion, digital
empowerment and bridging the digital divide. Thus, it’ll play an important role in transforming
India into a knowledge-based economy and digitally empowered society.
सबको सावर्�त्रक �प से टेलीफोन और इं टरनेट क� सु�वधा मुहैया कराएं गे तभी िड�जटल समावेशन -सश��करण होगा। अमीर गरीब
ग्रामीण शहरी के बीच िड�जटल खाई/�वभाजन कम होगा- सतत �वकास ल� को हा�सल करने के �लए अग्रता क्रम से यह सब करना ज�री
(Define) Data is a set of factual information stored in digital form. (िड�जटल �प म� सं ग्रहीत त�ा�क जानकारी)
(Origin) When people conduct their day-to-day activities online, they leave digital footprints- in
chatting, searching google, buying on amazon, file taxes, posting on social media etc. While doing
these activities online, people produce data about themselves which is stored on public and private
servers. [इं टरनेट पर रोज़ाना �व�वध ग�त�व�धयों के चलते ह� लोग �यं ही ख़ुद का डेटा सावर्ज�नक और �नजी सवर्र म� जमा करवाते ह�]
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 991
58.8.1 💾💾Types of Government Data
1) Administrative data (प्रशास�नक डाटा): Birth-death records, pensions, tax records, marriage records,
crime reports, land-property registrations, vehicle registrations etc.
2) Survey data (सव��ण): Census data, National Sample Survey data about employment, education,
literacy, nutrition etc. [जनगणना रोज़गार �श�ा सा�रता पोषण]
3) Transactions data (लेनदेन सं बं धी): e-National Agriculture Market data, Taxes, User-fees such as
railways etc.
4) Institutional data (सं �ागत): Public school data on pupils, public hospital data on patients, etc.
Most such data are held locally, predominantly in paper based form.
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 992
- Similarly, Uber can use public bus transport / passengers data to identify congested
areas, deploy more taxis / rickshaws in the peak hours accordingly. [िकस इलाक़े म� िकस समय
पर सावर्ज�नक बसों क� िक़�त रहती है यह डेटा -टै�ी कं प�नयों को बेचा जाए]
- Since govt is selling data-> it’ll earn a new stream of revenue to control fiscal deficit. [इस
प्रकार सावर्ज�नक डेटा को बेचकर सरकार अपनी आमदनी बढ़ाएं तो उसक� राजकोषीय घाटे म� कटौती होगी]
- 2019: Considering these benefits, MEITY setup Kris Gopal Krishnan committee for the
regulation of non-personal data such as community data, anonymous data. (गैर-�नजी डेटा)
58.8.4 💾💾 Govt efforts to release statistical data [सां��क� डेटा को सावर्ज�नक बनाना]
Following initiatives to help the policymakers, researchers, innovators, data scientists, journalists and
citizens to find statistical information related to governance:
⇒ National Informatics Centre (NIC) → Open Government Data (https:// data.gov.in)
⇒ NITI announced to launch National Data and Analytics Platform (NDAP) in 2021
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 993
− Many State govt create ‘online dashboards’ for monitoring schemes BUT These dashboards are
not easily accessible to citizens, require password; sometimes portals are not functional or
contain outdated data [रा� सरकारों द्वारा बनाएँ ऑनलाइन डैशबोडर् म� सामा� �प से डेटा ब�त ही पुराना होता है]
58.9 �📽📽 [YB] MINISTRY OF INFORMATION & BROADCASTING (सूचना एवं प्रसारण मं त्रालय)
Dept N/A
Attached 1. Press Information Bureau (PIB).पत्र सूचना कायार्लय
offices 2. Publications Division.प्रकाशन �वभाग
सं ल� सं �ाएं 3. Office of the Registrar of Newspapers for India
4. Directorate of Photo Division,
5. New Media Wing, Electronic Media Monitoring Centre
6. National Film Archives of India (Merged in NFDC)
7. Directorate of Film Festivals (Merged in NFDC)
Statutory 1. Press Council of India (भारतीय प्रेस प�रषद)
Bodies 2. Central Board of Film Certification (के �ीय िफ� प्रमाणन बोडर्) → Film
वै�ा�नक सं �ाएं Certification Appellate Tribunal (this tribunal removed in 2021)
3. Prasar Bharati: a) All India Radio b) Doordarshan
CPSE सरकारी 1. National Film Development Corporation Limited (NFDC)
कं पनी 2. Broadcast Engineering Consultants (India) Limited (BECIL)
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 994
Autonomous 1. Film and Television Institute of India (FTII), Pune
Organizations 2. Satyajit Ray Film and Television Institute, Kolkata
�ाय� सं �ाएं 3. Indian Institute of Mass Communication
4. Children’s Film Society of India (Merged in NFDC)
Activities - 2019: launched Doordarshan Arunprabha, a dedicated 24x7 TV channel for
प्रवृ��यां Arunachal
- Responsible for 1) National Film Awards, 2) International Film Festival of
India- which is jointly hosted by this ministry & State Government of Goa.
INDEX? सूचकांक - Press Freedom Index: Compiled by a Paris based non government
organisation Reporters sans frontières (Reporters Without Borders)
- 2021's top3 rankers: Norway, Finland, Denmark. 142: India.
✋But this type of low profile bodies giving negative rankings about India’s
freedom/democracy are not really important for exam! #⏳📚📚थोड़ा-पढ़ो-आगे-बढ़ो
58.9.1 �🤬🤬🤬🤬 Comm → Regulators (Statutory) → Censor board
Indian Cinematograph Act, 1952 → Central Board of Film Certification (CBFC: क� द्रीय िफ� प्रमाणन बोडर्)
commonly known as ‘Censor board’, under Ministry of Information & Broadcasting. It gives
following types of movie certificates:
- Unrestricted public exhibition (U)
- Parental guidance for children <12 (U/A) e.g. “Jungle Book”
- Adult (A)
- Viewing by specialized groups only (S) e.g. documentary movie about surgeries, meant to be
shown to doctors only, because ordinary person may get disturbed by the blood & gore.
😰😰Controversy? 1) Former chairman Pahlaj Nihalani would do excessive cuts in the movies to stop
display of smoking-alcohol, Cuss words, Kiss scenes etc. leading to debate on ‘social values vs artistic
freedom of expression’. (सामा�जक मू� बनाम अ�भ��� क� कला�क �तं त्रता)
2) Film Certification Appellate Tribunal was abolished in 2021 (Ref Pillar4B)
- 1978: Press Council Act → भारतीय प्रेस प�रषद, a statutory body under Ministry of Information &
Broadcasting. Readers can complaint against violation of press ethics (e.g. yellow journalism,
paid news, hate news).
- Newspaper / Journalists can complaint if their freedom of press violated.
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 995
- Chairman + members from journalism field, (members from LS & RS), members sent by (UGC,
Bar Council, Sahitya academy).
Press Council of India doesn’t cover TV-News channel and so we have →
News channels ⇒ News broadcaster association (NBA): Non-statutory Self regulatory body
set up by the news channels themselves (2008)
⇒ It punishes news-channels if they spread misinformation, hate news, harm
privacy of women by showing rape victim name / face etc.
Entertainment ⇒ Broadcasting Content Complaints Council (BCCC): Non-statutory Self
channels मनोरंजन regulatory body set up by non-news general entertainment channels
themselves. (2011) Punishes them for objectionable content.
Over the Top e.g. Netflix, Amazon Prime, Hotstar, ALT-Balaji, SonyLIV etc
(OTT) ⇒ Before: they were regulated by the Ministry of Electronics and
platforms Information Technology.(MEITY)
⇒ 2020-Nov: Their regulation shifted to the Ministry of Information and
Broadcasting (I&B). It's likely to ⏫censorship over their content.
Notable laws ⇒ 1954: Drugs and Magic Remedies Act prohibits advertising drugs for
�व�ापनों के साथ जुड़े cancer, diabetes, abortion etc. (औष�ध और जादुई इलाज कानून)
कु छ प्रमुख क़ानून ⇒ 1986: Indecent Representation of Women (Prohibition) prohibits
indecent representation of women in Print Media, TV etc
⇒ 1995: Cable Television Networks (Regulation) Act prohibits sports-
gambling ads. �Controversy? ads about online sports gambling sites
shown in IPL
Television is a data-matrix to calculate popularity of a TV show/channel. Broadcast
Rating Point Audience Research Council (BARC), a private organization, prepared such
(TRP) TRP. 😰😰Controversy? Data Manipulation by some journalists.
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 996
58.10🔭🔭🔭🔭SPACE TECH INFRASTRUCTURE (अवकाश �ेत्र)
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 997
⇒ Geospatial data = Geospatial data is information that describes objects or events with a location
on surface. e.g. tracking location of Amazon / Flipkart delivery package or Google maps showing
traffic jams. (भू-�ा�नक डेटा यानी एसी जानकारी जो िकसी व�ु या घटना को नक़्शे क� सतह पर अंिकत करती है, जेसे क�
ट�ािफ़क-जाम, कु �रयर िडलीवरी।)
⇒ 📙📙📙📙ES22 Vol1Ch11 showed many competitive maps to track the development of India
example. Map of Airports in India showing 2016: 60+ airports → 2021: 130 Airports. Thus, the
number of airports have increased in India
⇒ Similarly, national highways, bank branches, metros, etc. increased.
⇒ India’s night-time luminosity map → more urbanisation has taken place, access to electricity has
improved. (रा�त्र के नक़्शे म� �वगत वष� के मुक़ाबले वतर्मान समय म� भारत का �ादा इलाक़ा प्रका�शत िदखता है यानी िक
शहरीकरण बढ़ा है �बजली क� उपल�ता बढ़ी है.)
⇒ Tracking the Kharif and Rabi crop sowing cycles and crop stubble burning (फसलों का बीजारोपण और
पराली जलाना)
⇒ so we can use such Geospatial data for planning, SDG goals, tracking scheme implementation,
deciding property tax rates, deforestation, disaster management etc. (इस प्रकार के भू-�ा�नक डेटा का
आ�थक आयोजन, सतत् �वकास ल�ों क� �नगरानी, सं प�� के कर तय करना, -वृ�छे दन/पैड-कटाई को रोकना, आपदा प्रबं धन
इ�ािद अनेक �ेत्रों म� इ�ेमाल कर सकते ह�)
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 998
59 🧱🧱🧱🧱 INFRA → GSM3: INVESTMENT MODELS (�नवेश के तरीके )
Origin: Infrastructure projects require large amount of investment. Govt alone can’t finance it due to
fiscal deficit targets. राजकोषीय घाटा �नयं त्रण ल� के चलते सरकार बु�नयादी सु�वधाओं म� खुद अके ले पूरा �नवेश नहीं कर सकती
- Such projects also require the level of technical expertise, management skills and professionalism
that may not be available in the traditional bureaucratic apparatus. (तकनीक� �वशेष�ता, प्रबं धन कौशल
और �ावसा�यकता)
- Therefore, Infrastructure investment / development has to be done through:
I. PPP: BoT, BOOT
II. Non-PPP: such as EPC, Outsourcing (Contracting-Out)
III. Or a mixture of both using Hybrid Annuity Model
59.1 🧔🧔🧔🧔🧔🧔 INFRA.DEV.→ PPP (PUBLIC PRIVATE PARTNERSHIP)
- Definition: is a long-term contract between a public sector organization (Union/State/Local
Body/PSU) and a private sector company (सावर्ज�नक-�नजी �ेत्र क� भागीदारी - सरकारी और �नजी �ेत्र क�
इकाइओ बीच एक लं बी / दीघर् अव�ध का समझौता है)
- to build a public infrastructure (highway, ports etc.) or सावर्ज�नक अवसं रचना
- to provide public utility service (electricity, gas, water, transport, etc.). सावर्ज�नक सु�वधा
- In such PPP contract the ownership, risks & rewards are shared in some fashion. Unlike
privatization where it's completely transferred from public sector to private sector. मा�लक�/�ा�म�,
धं धे के जो�खम और मुनाफे /लाभांश क� िह�ेदारी होती है
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 999
- PPP can be :
A. for a Greenfield project (ग्रीनफ�� प�रयोजना) e.g. GMR group building fresh new airport in
Hyderabad. OR
B. for a Brownfield project e.g. Private companies upgrading the existing airports at Delhi and
Mumbai. [जहाँ पर पहले से ही कोई इमारत ���त थी, उसे और बड़ा/बेहतर बनाया जा रहा है]
- PPP can be :
A. Done by govt forming a Joint Venture (सं यु� उद्यम 50:50) or Special Purpose Vehicle (SPV:
�वशेष उद्दे� से बनाई गई कं पनी) company with equity from public and private sector. OR
B. Done by Govt granting ‘Concession / lease / licence / permit’ (a legal right) to private
company (=Concessionaire) to design, develop, finance, construct, operate, maintain a
greenfield / brownfield infrastructure asset. [सरकार �नजी कं पनी को अनु�ा पत्र देकर बनवा सकती है]
59.2 🧔🧔🧔🧔🧔🧔🧔🧔 INFRA.DEV. → PPP (GREENFIELD) MODELS
<list not exhaustive, there may more types apart from the following list>
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 1000
- Build–own–operate–transfer (BOOT: �नमार्ण-�ा�म�-सं चालन-ह�ांतरण)
(BoT: Toll / Annuity) DBFO / BOOT
Who owns Private player but after time limit is over / his investment recovered,
infrastructure? the ownership transferred to Govt.
Who is responsible for Govt. प्रोजे� ख़चर् के �लए पैसों का Private player responsible to arrange
financing the project इं तज़ाम सरकार करेगी from his pocket / market. �नजी �खलाड़ी
cost? पैसों का इं तज़ाम करने के �लए �ादा �ज़�ेदार होगा
Who is the responsible Private player during the contract period, then government itself may
for the building, start operating it (or outsource it to a third private company)
operation and �नमार्ण , सं चालन और रखरखाव: अनुबंध अव�ध के दौरान �नजी �खलाड़ी �ज़�ेदार, अव�ध ख़�
maintenance (O&M)? होने के बाद सरकार �ज़�ेदार
Who collects the toll / - If BoT: Toll (पथकर) model Could be toll or annuity depending
fees from users? then Private player levies on project.
जनता से फ़�स कौन लेगा? toll from users (e.g. E.g. Delhi-Mumbai highway - private
highway)- but he’ll face a players would love to have a Toll
risk- what if less traffic! model, whereas in Nagaland Manipur
- If BoT: Annuity (वा�षक�) highway they’d prefer annuity model
model then Govt pays due to less growth projection in
private player fixed ₹ ₹ at traffic.
regular period from its
budget.
Example(s) उदाहरण NHAI highways** Water pipeline contracts by
Municipal corporations
- Some alternatives to above: Build Own Operate (BOO) / Build-develop-operate (BDO) /
Design-construct-manage-finance (DCMF): In these models private player remains the owner
in perpetuity (सदा के �लए मा�लक).
- ** 2020-July: Govt announced some technical reforms in BoT model for highway construction
but very poor cost benefit in chasing.
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 1001
59.2.1 🧔🧔🧔🧔🧔🧔🧔🧔 Infra.Dev. → PPP (Brownfield) BLT & ToT
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 1002
59.2.3 🧔🧔🧔🧔🧔🧔🧔🧔 PPP/Privatization: Airport Bundling
- AAI to privatise airports in a pair of profit-making airport with loss making airport(s) e.g. 1)
Varanasi Airport with (Kushinagar and Gaya airport) 2) Amritsar airport with Kangra 3) Raipur
Airport with Jalgaon. 4) Indore with Jabalpur etc यिद �नजी �खलाड़ी ने सरकार द्वारा बनाया गया मुनाफ़े वाला
एअरपोटर् चलाना है तो नुकसान वाला एक एअरपोटर् क� भी �ज�ेदारी लेनी होगी
- So, investor will have to compulsorily buy Loss making airport if he wants to buy profit making
airport. This will �AAI’s burden of running loss making airport.
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 1003
59.4.1 🛡🛡GoCo Mechanism?
⇒ Government-Owned Contractor-Operated (GOCO) model: private contractors operate the
army’s base workshops that repair equipment from guns and vehicles to tanks and helicopters.
⇒ Government remains the owner of the ABW workshop / COD depot। �नजी �खलाड़ी सेना के ह�थयार और
वाहनों क� मर�त करेगा, िकंतु उस ज़मीन और मर�त के � पर मा�लक� सरकार क� रहेगी।
⇒ But a private player is given a contract to take over the operation / running of such a workshop /
depot. He’ll be responsible for warehousing operations, transportation of material, repair,
maintenance etc.
⇒ He will have to absorb the existing civilian employees working there. वहाँ कायर्रत वतर्मान सरकारी क�मयों
को �नजी �खलाड़ी ने अपनी कं पनी म� नौकरी म� रखना होगा, तािक बेरोज़गारी न हो।
⇒ Private player must be an Indian registered company with at least 10 years of working experience
& “y” crore of turnover
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 1004
😍😍Benefits? फायदे 😪😪Challenges? चुनौ�तयां
�खलाड़ी का जमीन मशीनरी इ�ािद म� �नवेश का पैसा बच related work. �नजी �खलािड़ओ को �सफर् ट�क क� फै ��ी
जाएगा, �ोंिक सरकार पहले से ही बना चुक� है। म� िदलच�ी है �ोंिक वहां पर मुनाफे के अवसर �ादा है
⇒ Strategic / Security challenges: what if pvt
player sells the tank/radar blueprints to
Pakistan/China? साम�रक चुनो�तया: दु�न देश को
सेना क� गु� जानकारी बेच दी तो ?
59.5 🧔🧔🧔🧔🧔🤵🤵HYBRID ANNUITY MODEL (HAM) = MIX OF PPP + NONPPP
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 1005
Hybrid Annuity Model (HAM) 60%
BOT (Toll) Model 10%
Engineering, Procurement, Construction (EPC) 30%
Total projects under Bharatmala → 100%
59.6 🧔🧔🧔🧔🧔🧔INFRA.DEV → MISC. TOPICS
59.6.1 �👊👊🤵🤵Swiss Challenge (��स चुनौती / ललकार)
Without waiting for the government advertisement, suppose a private company (Mukesh Ambani)
sends a suo-moto / unsolicited proposal to develop a railway station.
- Government puts it online so other private companies can challenge it.
- Ratan Tata challenges, “I can finish this project at 10% less price and / or 5 additional facilities in
the same price etc.” → Mukesh Ambani is given opportunity to counter Ratan Tata’s proposal,
then Government selects the best offer.
- 2015: While Govt of India was considering to allow Swiss challenge method for infrastructure
development, but Vijay Kelkar committee on PPP reforms suggested not to do it.
- Because there is a scope for non-transparency / collusion: What if both Ratan Tata and Mukesh
Ambani decide internally -“I will not challenge your projects in X cities and you will not challenge
me in Y cities! And together we’ll milk the maximum money from govt!”
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 1006
59.7 💰💰💰💰 INFRASTRUCTURE FUNDS
Global Infrastructure - By World Bank to help emerging economies and developing
Facility (GIF: 2004) countries.
- It provides ₹ ₹ & advisory to design PPP contract.
National Investment During UPA raj, the ₹ ₹ from disinvestment were transferred in this
Fund (NIF: 2005) fund to finance various schemes, projects, PSB recapitalization.
India Infrastructure setup in Dept of Economic Affairs with ₹ 100 crores to help PPP
Project Development projects.
Fund (IIPDF: 2007)
59.7.1 💰💰💰💰 National Investment and Infrastructure Fund (NIIF: 2015)
- रा�ी� य �नवेश और बु�नयादी ढांचा कोष ₹ 40,000 crore. Out of that 49% from Dept of Economic Affairs
(FinMin), remaining by domestic & foreign investors & financial intermediaries.
- SEBI registered NIIF as Category II Alternative Investment Funds.
- NIIF is ‘fund of funds’ → gives funding to other funds. E.g. 2017: India & UK set up Green
Growth Equity Fund (GGEF) to finance green infrastructure projects in India. So, from Indian
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 1007
side NIIF invested money in GGEF.
🔠🔠❓MCQ. With reference to ‘National Investment and Infrastructure Fund’, which of the
following statements is/are correct?(Asked in UPSC-Pre-2017)
1] It is an organ of NITI Aayog. 2] It has a corpus of Rs. 4,00,000 crore at present.
Answer Code: (a) 1 only (b) 2 only (c) Both 1 and 2(d) Neither 1 nor 2
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 1008
59.8 💰💰💰💰 INFRA FINANCE → NATIONAL INFRASTRUCTURE PIPELINE (NIP)
⇒ 15th Aug, 2019: PM Modi announced Rs.100 lakh crore would be invested on infrastructure
over the next five years.
⇒ 2019-Sept: Finance Ministry set up a task force under the Secretary of Dept of Economic Affairs
(DEA). Based on its report,
⇒ 2019-Dec: FM Nirmala S. announced NIP (रा��ीय अवसं रचना पाइपलाइन). It aims to mobilize 102 lakh
crore worth infrastructure investment in the next five year (2019-20 to 2024-25).
⇒ 2020-Apr: Investment target has been � from ₹ 102 lakh cr to 111 lakh cr
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 1009
⇒ This funding will be spread across Energy (24%), Roads (19%), Urban (16%), Railways (13%),
Irrigation (7%) etc.
⇒ Sources of Funding/investment? Centre 39% + Private 21% + State 40%=100% funding.
Further, the Government will also initiate following reforms:
59.8.1 💰💰💰💰 NIP → Infra Finance Reforms → Financial Market Reforms
1) Government and SEBI will undertake technical reforms to strengthen municipal bond market,
and NBFCs such as
a) infrastructure investment trusts (InvITs),
b) Infrastructure Development Funds (IDFs),
2) Stringent monitoring to prevent ILFS-NBFC type crisis in future.
3) FDI, FPI investment norms will be relaxed.
59.8.2 💰💰💰💰 NIP → Infra Finance Reforms → Credit Enhancement Fund (CEF)
⇒ Pension and insurance companies usually avoid investing in bonds lower than ‘AA’ rating, due
to strict regulatory norms by PFRDA and IRDAI respectively.
⇒ So Government will ask them to relax the investment norms for infrastructure projects.
⇒ Many of Indian infrastructure companies / projects have poor bond-rating. So, Government will
setup a Credit Enhancement Fund (CEF: ऋण सं वधर्न �न�ध), which will basically provide guarantee to
such projects’ lenders → bond rating upgraded → more investors attracted.
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 1010
NAME Announced Objectives
National 💼💼Budget- To mobilise money by above thing by selling/renting
Monetisation 2021 Government companies’ assets to mobilze ₹2.5 lakh crores
Plan Given in Next Section →
Gati Shakti 2021-Aug National Master Plan worth ₹100 trillion to improve transport/
by PM speed of transport (rail, road, airway, waterway etc)
Given in Next Section →
59.9.1 💰💰💰💰 👜👜 Budget-2021: National MONETISATION Pipeline 2021
सरकारी सड़क, मालगाड़ी के �ड�े, रेलवे �ेशन, �बजलीघर, खेलकू द �े�डयम इ�ा�द चीजों का सरकार मुद्रीकरण करेगी अथार्त -
इ�� बेचकर/िकराए पर देकर सरकार पैसा जुटाएगी। इस कायर्क्रम क� �परेखा बनाने क� �ज�ेदारी नी�त आयोग को दी गई है.
Govt planning to sell/lease assets including Roads, Railway Wagons, Railway Station, Electricity
stations, Telecom Towers, Jawaharlal Nehru Sports Stadium etc. These assets will be sold/leased in
following models-
1) Toll operate transfer
2) InvITS (Infrastructure investment trusts, Ref Pillar#1C)
3) Operation and maintenance contract
4) Operation management development agreement (ODMA)
NITI tasked to prepare National MONETISATION pipeline i.e. how to accomplish above things in
systematic manner. Target ₹2.5 lakh crore. Out of them majority will come via Roads (27%),
Railways (25%), Power (15%), oil & gas pipelines (8%) and Telecom (6%).
(सरकारी सड़क, मालगाड़ी के िड�े, रेलवे �ेशन, �बजलीघर, खेलकू द �ेिडयम इ�ािद चीजों का सरकार मुद्रीकरण करेगी अथार्त -
इ�� बेचकर/िकराए पर देकर सरकार पैसा जुटाएगी। इस कायर्क्रम क� �परेखा बनाने क� �ज�ेदारी नी�त आयोग को दी गई है.)
59.10💰💰💰💰:🚗🚗🚊🚊✈⛵ INFRA FINANCE: GATI SHAKTI PLAN 2021 [₹100 LAKH CR]
वतर्मान म� रेलवे, राजमागर्, वायुमागर् और जलमागर् से सं बं �धत मं त्रालय अलग अलग िक़ले/सूबे के ��प म� अपनी नी�तयां और योजनाएं
बनाते ह�। ग�त श�� योजना इन सब प�रवहन माग� को को एक�कृ त ��प म� आयो�जत कर- भारत के आम आदमी और उद्योगप�तयों
को तेज़ प�रवहन क� सु�वधा देना चाहता है
- Presently all transportation modes (rail, road, airway, waterway) etc are treated in silos while
Individual ministries design their schemes and policies.
- GATI Shakti plan will integrate them for faster connectivity with a ₹100-trillion [=100 lakh
crore]– as per PM’s 15th Aug 2021 speech.
- �How govt will mobilize ₹100 lakh cr? Critiques argue that PM Modi just renaming the same
100 lakh cr-walla National Infrastructure Pipeline (2019) again as “GATI Shakti”. But details
not announced to difficult to say whether both [NIP vs GATI] are same or different?
- Common man will be able to travel at a faster speed.
- Biz man will be able to receive raw materials and send finished goods at a faster speed
- It will help creating new (special) economic zones for exports, synergy with make in India,
assemble in India, production linked incentive scheme.
- Thus, our local manufacturers will become globally competitive → � Jobs, GDP. [यह तेज प�रवहन
योजना द्वारा भारत के �व�नमार्णकतार् अंतररा��ीय �र पर दू सरे �नयार्तकों को �धार्/ट�र दे पाएं गे �जससे भारत म� रोज़गार और
आ�थक वृ�द्ध दर म� बढ़ोतरी के अवसर होंगे]
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 1011
59.10.1 (💰💰💰💰:🚗🚗🚊🚊✈⛵) 💻💻📡📡 PM GatiShakti — National Master Plan Digital Portal
− (2021-Oct)Digital portal to connect 16 ministries — Roads and Highways, Railways, Shipping,
Petroleum and Gas, Power, Telecom, Shipping, and Aviation etc
− NODAL? Dept for Promotion of Industry & Internal Trade (DPIIT) under Commerce Ministry.
− Portal developed by? Bhaskaracharya Institute for Space Applications and Geoinformatics
(BISAG, Autonomous Scientific Society under the MeitY Ministry).
− Benefit? for better coordination in planning and project approval.
− E.g. if new railway line is to be constructed → i) environment ministry can give faster clearance
and ii) power ministry can lay down electricity cables for the railway in a faster manner.
− Portal would officers in different-different ministries to be constant touch in real time. [ग�त श��
वेब पोटर्ल जहाँ पर अलग अलग 16 मं त्रालय के बीच प्रभावी �प से सम�य िकया जा सके । जैसे िक रेलवे क� पटरी �बछाते व� तुरंत
ही पयार्वरण मं त्रालय से अनुम�त �मले और ऊजार् मं त्रालय तुरंत ही रेलवे-इं जन के �लए �बजली क� लाइन� �बछा द� इ�ािद.]
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 1012
5. Private players providing substandard services / construction material to keep bigger profit
margin. Solution? Performance / service audit. सड़क/हवाई अड्डे के �नमार्ण के दौरान मुनाफा �ादा रखने के �लए
घिटया िक� क� सामग्री
6. PPP not appropriate for small sized projects e.g. building a school.
7. In India, PPP model projects confined mostly to airports & highways. In other sectors, growth is
either mostly private sector led (e.g. Telecom / ICT) or mostly public sector led (e.g. Railways &
atomic energy) even though there is lot of scope for synergy. भारत म� कु छ �ेत्रों तक ही सी�मत है
8. Allegations of political connivance / crony capitalism where some firms given large number of
airports, without sufficient history / experience in this business. (प�पाती पूंजीवाद: गौतम अदाणी को हवाई
अड्डे चलाने का लं बा अनुभव नहीं है िफर भी उसको ब�त सारे प्रोजे� दे िदए गए ह�- एसा �वप� का आरोप)
59.12 🧱🧱✍INFRA → CONCLUSION (सार / �न�षर्)
Infrastructure is a critical determinant of economic development. It has a direct bearing on
investment, manufacturing sector, logistics and productivity. Infrastructure is equally important for
social sectors - be it education or health. Therefore SDG Goal #9 focuses on building resilient &
sustainable infrastructure. [बु�नयादी अवसं रचना िकसी भी देश के आ�थक �वकास का एक मह�पूणर् �नधार्रक है। इसका सीधा
असर �नवेश, �व�नमार्ण �ेत्र, रसद आपू�त श्रृंखला, और उ�ादकता पर पड़ता है। सामा�जक �ेत्रों के �लए भी ये मह�पूणर् है - चाहे वह
�श�ा हो या �ा�। अत: सतत �वकास के �लए यह करना ज�री]
A. Aforementioned scheme / policy / initiative is important in that regard. OR
B. Aforementioned challenges need to be addressed on priority basis. OR अग्रता क्रम से
C. While the aforementioned XYZ, PPP-investment model may not be the panacea in every case
but it can surely help improving our infrastructure. - रामबाण इलाज नहीं लेिकन उपयोगी है
59.13 ✍MAINS QUESTIONS IN PAST UPSC EXAMS
- GS1 Syllabus Topic: Urbanization: problems and remedies
- GS2 Syllabus Topic: Welfare Schemes (centre, states; performance, mechanisms)
- GS3 Syllabus Topic: Infrastructure (energy, ports, roads, airports, railways); Investment models
59.13.1 Mains Mock Questions from these topics
1. “Construction of toilets is only “one part” of the solution for a clean India.” Elaborate. ("शौचालय
�नमार्ण, �� भारत के �लए समाधान का के वल एक ही िह�ा है।" �व�ृत �ा�ा कर� |)
2. Discuss the significance of Panchayat Citizen Charter and Tax Payers Charter in furthering good
governance in India. [पं चायत नाग�रक अ�धकार पत्र और करदाता अ�धकार पत्र का सुशासन म� मह�]
3. Discuss the significance of Rental homes in providing affordable housing to all in urban areas.
What has been done by government in this regard in the recent years? शहरी �ेत्रों म� सभी को िकफायती
आवास प्रदान करने म� िकराये के घरों के मह� पर चचार् कर� . हाल के वष� म� इस सं बंध म� सरकार द्वारा �ा िकया गया है
4. "India stands to gain a lot from the global 5G revolution." Elaborate (“भारत,वै��क 5 जी क्रां�त से ब�त
कु छ हा�सल करने के �लए प�रप� है। ”�व�ृत �ा�ा कर� | )
5. Mobile Telecom industry in India has been facing challenges in recent times. What has been
done by government of India to address their grievances? [भारत का मोबाइल टेलीकॉम �ेत्र कु छ सम�ाओं से
जूझ रहा है, उसके �नपटान के �लए सरकार ने �ा िकया है?]
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 1013
6. “Aggregation of public data holds a variety of applications for good governance.” Substantiate
with examples.("सावर्ज�नक डाटा का सम�यन- सुशासन के �लए कई प्रकार क� उपयो�गता रखता है।" सउदाहरण अपने कथन
क� पु�� कर� | )
7. “Public data is as important for good governance as national highways are for economic
growth.” Discuss. ("सावर्ज�नक डाटा सुशासन के �लए उतना ही मह�पूणर् है �जतना िक रा�ी� य राजमागर् आ�थक �वकास के
�लए है ।" चचार् कर�।)
8. Discuss significance of National Infra Pipeline, National Monetisation Plan and Gati Shakti in
augmenting the infrastructure development of India. [बु�नयादी अवसर इतना �नमार्ण म� इन तीनों का मह�]
59.13.2 ✍ 🎺🎺 Mains previous years’ questions from these topics
Why is Public Private Partnership (PPP) required in infrastructural projects? Examine the 2022
role of PPP model in the redevelopment of Railway Stations in India. (बु�नयादी ढांचागत
प�रयोजनाओं म� सावर्ज�नक �नजी साझेदारी (पी.पी.पी.) क� आव�कता �ों है? भारत म� रेलवे �ेशनों के पुन�वकास म�
पी.पी.पी. मॉडल क� भू�मका का परी�ण क��जए) Ans. In Youtube- GSM3-Economy
The Gati-Shakti Yojana needs meticulous coordination between the government and the 2022
private sector to achieve the goal of connectivity. Discuss.(ग�त-श�� योजना को सं योजकता के ल�
को प्रा� करने के �लए सरकार और �नजी �ेत्र के म� सतकर् सम�य क� आव�कता है। �ववेचना क��जए)
Ans. In Youtube- GSM2-Govt-Schmes
"Investment in infrastructure is essential for a more rapid & inclusive economic growth." 2021
Discuss in the light of India's experience. (250 words) "तीव्रतर एवं समावेशी आ�थक सं वृ�द्ध के �लए
आधा�रक-अवसं रचना म� �नवेश आव�क है।" भारतीय अनुभव क� प�रप्रे� म� �ववेचना क��जए। Ans. Ans. Free
Special Class
Explain the meaning of investment in an economy in terms of capital formation. Discuss 2020
the factors to be considered while designing a concession agreement between a public
entity and a private entity. (एक अथर्�व�ा म� पूँजी �नमार्ण के �प म� �व�नयोग के अथर् क� �ा�ा क��जए. उन
कारकों क� �ववेचना क��जए, �जन पर एक सावर्ज�नक एवं एक �नजी �नकाय के म� �रआयत (कॉनसेशन एग्रीमे�) तैयार
करते समय �वचार िकया जाना चािहए) Ans. Free Special Class
Explain how private public partnership agreements, in longer gestation infrastructure 2014
projects, can transfer unsustainable liabilities to the future. What arrangements need to be
put in place to ensure that successive generations’ capacities are not compromised? �नजी-
सावर्ज�नक भागीदारी,समझौते (तथा), दीघर्कालीन अवसं रचना प�रयोजनाए, भ�व� मे देनदा�रयों को कै से �ानांत�रत कर
सकती ह�। भावी पीिढ़यों क� �मताओं से समझौता न िकया जाए इसे सु�न��त करने के �लए �ा �व�ा करने क�
आव�कता है ? समझाए ? (Ans. Similar to 2020-walla Q given above)
Adaptation of PPP model for infrastructure development of the country has not been free 2013
from criticism. Critically discuss the pros and cons of the model.
देश के बु�नयादी ढांचे के �वकास के �लए �नजी-सावर्ज�नक भागीदारी / पीपीपी मॉडल का अंगीकरण आलोचना से मु� नहीं
�आ है। पीपीपी मॉडल के प� एवं �वप� पर आलोचना�क चचार् कर�।
Examine the developments of Airports in India through Joint Ventures under Public- 2017
Private Partnership(PPP) model. What are the challenges faced by the authorities in this
regard. (�नजी-सावर्ज�नक भागीदारी (पीपीपी) मॉडल के अ�गर्त सं यु� उद्यम के मा�म से भारत म� होने वाले हवाई
अड्डों के �वकास का परी�ण कर�। इस सं बंध म� प्रा�धका�रयों को िकस प्रकार क� चुनौ�तयों का सामना करना पड़ रहा है?)
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 1014
PILLAR#6A-DEMOGRAPHY, HEALTH AND HUNGER
�FAQ: Why your handout crossed 1000 pages, it is very bulky? Ans. Because it covers →
Table of Contents
60 👫👫HRD → Population Census (जनगणना)............................................................................................... 1018
60.1.1 �🔢🔢Census -2021 ................................................................................................................... 1018
60.1.2 �🔢🔢Census → Demand for OBC Caste Census................................................................. 1019
60.1.3 👫👫👫👫Demographic transition → Census perspective .......................................................... 1020
60.1.4 👫👫👫👫Demographic Transition → Theoretical Perspective.................................................. 1020
60.1.5 👫👫x👫👫=🌩🌩🌩🌩Malthusian Theory of Population Growth .................................................. 1021
60.2 👫👫👫👫Demographic Indicators (जनसां��क� सं के तक) ........................................................................... 1021
60.2.1 📊📊 Census-2011: migration & occupation (�ाना�रण) ............................................................ 1023
60.3 💊💊💉💉💉💉 Demographic Indicators: 500 Jaat ke Reports ................................................................ 1024
60.3.1 💊💊💉💉💉💉 NITI’s “Healthy States, Progressive India”/Heath Index .................................... 1024
60.3.2 💊💊💉💉💉💉 National Family Health Survey (NFHS) ................................................................ 1024
60.3.3 💊💊💉💉💉💉National Health Profile 2019 (Released in 2019-Oct) ........................................... 1025
60.3.4 👫👫👫👫Demographic Indicators → Sample Registration System (SRS) ............................... 1025
60.4 👫👫↘ 📜📜:🧔🧔National Population Policy 2000 (रा��ीय जनसं �ा नी�त) ............................................... 1026
60.4.1 👫👫↗�:📊📊 World Population Prospects 2019 (Released in 2019-Jul)............................ 1026
60.4.2 👫👫↗�:📊📊 State of World Population Report................................................................... 1026
60.5 📔📔📔📔 ES19: Indian Demography @2040- Policy suggestions ....................................................... 1027
60.5.1 �<��Demographic Changes (जनसां��क� प�रवतर्न) and Education ................................. 1027
60.5.2 �<��Demo Changes: Working-Age Population (कायर्शील आयु क� जनसं �ा) .................. 1027
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1015
60.5.3 �<��Demographic Changes and Health Care Facilities (�ा� सु�वधा) ....................... 1028
60.5.4 �<�� Demographic Changes and: Retirement Age (�नवृ�� आयु)................................... 1028
61 💊💊 HRD → Health (�ा�) .......................................................................................................................... 1028
61.1.1 � 🧬🧬 🔬🔬 [YEARBOOK] Ministry of Science and Technology.......................................... 1029
61.1.2 �💊💊💉💉 [YEARBOOK] Ministry of Health And Family Welfare...................................... 1030
61.1.3 💊💊🌐🌐� World Health Organization (WHO: �व� �ा� सं गठन)........................................... 1031
61.1.4 💊💊🌱🌱�[YEARBOOK] Ayush Ministry ............................................................................... 1032
61.1.5 💊💊 📜📜:🧔🧔 → National Health Policy 2017 (रा��ीय �ा� नी�त) ................................................ 1033
61.1.6 💊💊 📜📜:🧔🧔 → National Policy for Rare Diseases-2020 ......................................................... 1033
61.2 💊💊🤑🤑� → Cheap Medicine → NPPA Price control .................................................................. 1034
61.3 💊💊📯📯📯📯 → Cheap Medicine → PM Bhartiya Janaushadi Pariyojana ........................................ 1034
61.4 💊💊📯📯📯📯 → National Health Mission (2005: रा��ीय �ा� �मशन) ..................................................... 1035
61.5 💊💊 → Mother & Child Healthcare (🤰🤰🤰🤰) .................................................................................... 1036
61.5.1 🤰🤰🤰🤰📯📯📯📯 → Integrated Child Development Services (ICDS-1975) ........................... 1036
61.5.2 🤰🤰🤰🤰📯📯📯📯 → via NRHM’s JSY & JSSK............................................................................. 1037
61.5.3 🤰🤰🤰🤰📯📯📯📯 → PM Matru Vandana Yojana (₹ 5k for 1st child+1k from other scheme*)
1038
61.5.4 Paalan 1000 - Journey of the First 1000 Days', ......................................................................... 1039
61.5.5 🤰🤰🤰🤰💉💉 → Vaccination (टीकाकरण) ........................................................................................ 1039
61.5.6 🤰🤰🤰🤰💉💉💉💉 Intensified Mission Indradhanush (IMI) 3.0 from 2021 onwards................ 1040
61.6 💊💊💊🦸🦸 → Adolescent boys and girls (िकशोर) ............................................................................... 1040
61.6.1 🤰🤰🤰🤰🤰🤰🤰🤰 → WCD Ministry’s 3 Umbrella Schemes in 2021 ........................................ 1041
61.6.2 Saksham Anganwadis in 👜👜👜👜Budget-2022 .......................................................................... 1041
61.7 💊💊📯📯📯📯 → Ayushman Bharat & PMJAY ₹ 5 lakh insurance ...................................................... 1042
61.7.1 🍋🍋Health Cess to build hospitals-2020 .................................................................................... 1042
61.7.2 🍋🍋Pradhan Mantri Swasthya Suraksha Nidhi (PMSSN) 2021-March.................................. 1043
61.7.3 💸💸💸🍽🍽15th FC: Sector Specific Grants (�ेत्र-�व�श� अनुदान)-Health ................................ 1043
61.8 💊💊📯📯📯📯 → National Health Mission → Comm/Non-Comm diseases ..................................... 1044
61.8.1 🤧🤧 PRADHAN MANTRI TB MUKT BHARAT ABHIYAN ................................................. 1044
61.8.2 🦗🦗🦗🦗🦗🦗 Communicable Diseases: Malaria free country: ................................................... 1045
61.8.3 🌴🌴[🦇🦇 🐷🐷]🤒🤒 Communicable Diseases: “One Health” approach .................................... 1045
61.9 🤒🤒ES21vol1Ch5 on Healthcare problems-Solutions ....................................................................... 1046
61.9.1 🤒🤒🤒🤒🤒🤒ES21: Indian Healthcare Problems:........................................................................ 1046
61.9.2 🤒🤒🤒🤒🤒🤒ES21: Healthcare Solutions: Oligopsony for universal health insurance coverage
1047
61.9.3 🤒🤒🤒🤒🤒🤒ES21: Indian Healthcare Solutions: Patient Rights like UK, Sweden .................. 1047
61.10 😷😷ES21Vol1Ch1- Corona Saving Lives & Livelihood................................................................. 1048
61.10.1 😷😷Basic Reproduction Number R0...................................................................................... 1048
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1016
61.10.2 😷😷Mitigation versus suppression ......................................................................................... 1048
61.11 📙📙📙📙ES22 Barbell strategy/Agile Response vs Waterfall strategy ............................................ 1049
61.11.1 💦💦Waterfall strategy (USA, EU) (झरना/ जल प्रपात रणनी�त) ..................................................... 1049
61.11.2 ��👟👟 Barbell strategy/Agile Response- India: (बारबेल रणनी�त और फु त�ली प्र�तिक्रया) ................ 1050
61.12 👻👻👻👻: 💊💊📯📯📯📯 Atma-Nirbhar Bharat → Medicine / Health .............................................. 1051
61.12.1 👻👻👻👻: 💊💊📯📯📯📯→ Ayushman Bharat National Digital Health Mission (15th Aug, 2020)
1051
61.12.2 👻👻👻👻: 💊💊📯📯📯📯→Draft Health Data Management Policy (�ा� डेटा प्रबं धन नी�त) ........ 1052
61.12.3 👻👻👻👻👻👻Health → E-Sanjeevani telemedicine ................................................................ 1052
61.12.4 👻👻👻👻👻👻Health Training → iGOT.................................................................................... 1052
61.12.5 👻👻👻👻👻👻Health Training → COVID Warrior TRANING ............................................ 1052
61.12.6 👻👻👻👻👻👻👻👻 PM AtmaNirbhar Swasth Bharat Yojana [PMASBY] from 👜👜Budget-2021
1052
61.12.7 👻👻👻👻👻👻👻👻 PM-Ayushman Bharat Health Infrastructure Mission (PM-ABHIM) .... 1053
61.13 👻👻 💉💉 📯📯📯📯: Corona → Vaccination Timeline ..................................................................... 1053
61.14 👻👻 💉💉 📯📯📯📯: Corona → Vaccine Procurement Policy 2021................................................. 1053
61.14.1 💉💉 Booster Dose / precautionary Dose (2022) ................................................................... 1054
61.14.2 Vaccine hesitancy- how to reduce: (टीकाकरण से डर/िहचिकचाहट) ............................................. 1054
61.14.3 👻👻 💉💉 📯📯📯📯: Corona → Vaccine & Corona medicines pe 0% GST YES OR NO? ... 1054
61.15 👻👻👻👻: 💊💊💊💊💊💊: Corona → Health Apps / Portal / ORG ...................................................... 1054
61.15.1 🌐🌐🌐: COVAX Network to buy vaccine for member countries ............................................ 1054
61.15.2 👻👻👻👻👻👻: CoWIN (Covid Vaccine Intelligence Work) App & Portal ........................... 1054
61.15.3 💊💊😷😷 → Health: Corona related Drugs/Kits..................................................................... 1055
61.16 💊💊📯📯📯📯 → Health: Misc. Schemes (�व�वध गौण योजनाए).............................................................. 1056
61.16.1 💊💊✍→ Conclusion-Template-Health? (�न�षर्)................................................................... 1057
61.17 🍴🍴 HRD → Health → Hunger, Malnutrition, Food Security .................................................... 1058
61.17.1 🍴🍴 �[YEARBOOK] Min. of Consumer Affairs, Food & Public Distribution .................. 1059
61.17.2 🍴🍴📯📯📯📯 → Hunger → Schemes before NFSA .................................................................... 1059
61.17.3 🍴🍴📯📯📯📯 → Hunger → National Food Security Act 2013 (खाद्य सुर�ा कानून) ...................... 1060
61.17.4 🍴🍴📯📯📯📯:💳💳 → Hunger → NFSA → One Nation One Ration Card................................ 1062
61.17.5 🍴🍴📯📯📯📯 Hunger → Food distribution reforms taken by Govt ..................................... 1062
61.17.6 Fortification of Rice (चावल क� िकलेबंदी) ................................................................................... 1062
61.17.7 🍴🍴📯📯🧔🧔 Hunger → NFSA → ES20 says ⏬number of beneficiaries............................... 1062
61.17.8 👻👻👻👻🍴🍴📯📯📯📯 Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY)- free grains in
Corona 1063
61.17.9 👻👻👻👻🍴🍴📯📯📯📯 Corona: other initiatives for cooking / hunger? .................................. 1063
61.17.10 🍴🍴📯📯📯📯 → Hunger → Malnutrition (कु पोषण) → Poshan Abhiyaan (2018) ................ 1063
61.17.11 �Poshan → National Council on India's Nutrition Challenges ..................................... 1064
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1017
61.17.12 🍴🍴📯📯📯📯 → Hunger → Malnutrition (कु पोषण) → Mission Poshan 2.0 (2021) ............. 1065
61.17.13 🍴🍴🍴🍴 → Ranking: Global Hunger Index (GHI: वै��क भूख/�ुधा सूचकांक) ............................ 1065
61.17.14 🍴🍴🍴🍴 → Ranking: Food/Hunger ke 500 Types/Jaat-ke-Reports .................................... 1066
61.17.15 🍴🍴🍴🍴 ✍→ Conclusion-Template-Hunger? (�ुधा - �न�षर्) ............................................ 1066
61.17.16 Mains Questions ..................................................................................................................... 1066
- 1872: Mayo conducted Census for the first time in India, but not first time in World
- 1881: Ripon started census every decade.
- Constitution → Union List Entry 69 → Census Act 1948: Home Ministry → Registrar General
and Census Commissioner → At district level under respective DM (IAS).
- Post Independence: Census conducted every 10 years. 2011= 7th Census of Free India.
60.1.1 �🔢🔢Census -2021
⇒ 2019-Dec: Union Cabinet allotted Rs. ~8700+crores for conducting Census of India 2021
⇒ Following details will be captured: Housing Condition; Amenities & Assets, Demography,
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1018
Religion, SC & ST, Language, Literacy, Economic Activity, Migration & Fertility.
⇒ For the first time, Mobile app will be used for data collection.
⇒ Census-2021 was to be conducted in two phases:
⇒ 1) Population Enumeration: 9th February to 28th February 2021.
⇒ 2) House listing and Housing Census: April to September 2020.
⇒ In this phase, parallely, National Population Register (NPR: रा��ीय जनसं �ा र�ज�र) will also be
updated for entire India except Assam. NPR exercise done under Citizenship Act, 1955)
⇒ �Corona: Above census exercise postponed till further notice.
⇒ 2022: GOVERNMENT updates Census rules to allow online self-enumeration in the upcoming
Census. जनगणना म� ऑनलाइन तरीक़े से ��� ख़ुद अपना पं जीकरण और ख़ुद ही अपनी �गनती करवा सके ऐसे कु छ �नयमों को
सरकार लागू करने वाली।
🎓🎓Homework- NPR/Citizenship Amendment Act (CAA)/ NPR from POLITY
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1019
60.1.3 👫👫👫👫Demographic transition → Census perspective
Census Period जनसां��क�य प�रवतर्नकाल: Remarks
- In Census 1921 our population declined (-0.31%)
1) Stagnant Population ग�तहीन compared to 1911, due to WW1, Drought, Epidemics,
(1901-1921) Spanish flu influenza.
🥳🥳Birth rate: High. - This happened only once throughout the demographic
☠Death rate: High. history of India, so 1921 is called the year of Great
Demographic Divide
2) Steady Growth अ�वचल (1921-51) Called ‘Mortality induced growth’ because death rate had
🥳🥳Birth rate: High. declined and so population is rising. �ोंिक लोग कम हो रहे ह�
☠Death rate: Medium. इस�लए आबादी बढ़ रही है
- 🌽🌽 Agri revolution: famine impact reduced कृ �ष क्रां�त के
3) Rapid High Growth तेजी से उ� चलते अकाल क� प�र���तयों म� भुखमरी नहीं
�वकास (1951-1981) - � Medical research: epidemics contained & �चिक�ा
🥳🥳Birth rate: High. सं शोधन के चलते महामारी �नयं त्रण म�
- Life expectancy increased.
☠Death rate: Low.
- But people yet to change breeding behavior. Result:
population explosion / ‘Fertility induced growth’
4) High Growth with Definite
Signs of Slowing Down Birth rate is gradually ⏬ due to family planning, nuclear
(1981-2011) family, high cost of living. प�रवार �नयोजन, �वभ� प�रवार, जीवन
🥳🥳Birth rate: Medium → low. यापन क� उ� लागत के चलते युगल कम ब�े पैदा करते है
☠Death rate: Lower.
60.1.4 👫👫👫👫Demographic Transition → Theoretical Perspective
Stage 🥳🥳Birth rate ☠Death Rate India in this period
1: High HIGH HIGH Upto 1920
Stationary
2: Early HIGH MED. 1921-51
Expanding
3: Late MED. LOW 1971 onwards India is here.
Expanding
4: Low LOWEST LOWEST Population begins to “contract / shrink”.
Stationary Most developed countries in this phase. India
to enter here ~2026.
🔠🔠❓MCQ. Arrange the stages of demographic transition associated with economic development
(Prelims-2012)
1) Low birth rate with low death rate 2) High birth rate with high death rate
3) High birth rate with low death rate
Answer Codes: (a) 1, 2, 3 (b) 2, 1, 3 (c) 2, 3, 1 (d) 3, 2, 1
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1020
🔠🔠❓MCQ. Decadal growth rate of population in percentage was highest in India in the year
(UPSC-CDS-2020-ii)
(a) 1991 (b) 1981 (c) 1971 (d) 1961
🔠🔠❓Broadly both birth and death rates are low in which one of the following stages of
demographic transition model? [UPSC-CAPF-2021]
(a) High stationary stage (b) Early expanding stage
(c) Late expanding stage (d) Low stationary stage
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1021
Indicators Census-2011 definitions
Population density − Number of people per square kilometer.
(जनसं �ा घन�) − It was 382 in 2011
Decadal pop. growth − It is the Population in (Latest Census2011 – Last Census2001 / Last
rate Census 2001. It was 17.7% in 2011 (दशक�य जनसं �ा वृ�द्ध दर)
🥳🥳Birth Rate ज�दर − Number of live births per 1000 population. It’s ~20 in 2018 (SRS)
☠Death Rate मृ�ुदर − Number of live deaths per 1000 population. It’s ~6 in 2018 (SRS)
Population’s Growth − It is the difference between the birth rate and the death rate.
Rate
− If it’s a positive figure → rate of natural ⏫ in population.
जनसं �ा वृ�द्ध दर
− When it’s close to zero then population is said to be ‘stabilised’ or has
reached the ‘replacement level’.
Fertility Rate − number of live births per 1000 women in the childbearing age group
(प्रजनन दर) (15 to 49 years).
Total Fertility Rate − IF woman lived through above age group, how many babies would
(कु ल प्रजनन दर) she have produced hypothetically?
🤰🤰 → 👼👼 👼👼=2 − India’s target: 2.1 (Replacement level: प्र�त�ापन �र) i.e. she + her
husband replaced by two new human beings. The Extra 0.1 is kept to
compensate risk of unforeseen accident/deaths (of the babies).
− 📙📙📙📙ES22: Total Fertility Rate (TFR) declined from 2.2 (2015) to 2
(in 2019) which is a great achievement. This was achieved by ⏫ use
of contraceptives, better family planning, and girl education.
(गभर्�नरोधक साधनों का �ादा उपयोग, प�रवार �नयोजन के बारे म� अ�धक जानकारी, और
लड़िकयों क� �श�ा के चलते हम कु ल प्रजनन दर को कम कर पाए)
IMR: �शशु मृ�ु दर Infant Mortality Rate = number infant deaths under the age of 1 year per
1000 live births. It’s ~34/1000 in 2016 & 32 in 2018 (SRS).
CMR: बाल मृ�ु दर Child Mortality Rate = number child deaths under the age of 5 years per
1000 live births. It’s ~50 in 2016. SDG-2030-Target: 11
MMR: मातृ मृ�ु अनुपात Maternal Mortality Ratio = number of women who die in childbirth per
1 lakh live births. It’s ~130 in 2016. SDG-2030-Target: 70.
Life Expectancy Estimated number of years that an average person is expected to survive.
(जीवन प्र�ाशा) Indian Females (70), Males (67)
📆📆💀💀 - 📙📙📙📙ES22: Life Expectancy higher in urban areas (72.6 years) than in
rural areas (68.0 years)
- 📙📙📙📙ES22: Life Expectancy highest in Kerala and Delhi (75-75 years).
And Lowest in Chhattisgarh (65 years)
- 📙📙📙📙ES22: Females are expected to live longer than men in all areas,
except for Bihar and Jharkhand. (मिहलाओं क� जीवन प्र�ाशा पु�षों से �ादा �सवाय के
�बहार और झारखं ड। )
Sex Ratio - Sex Ratio = number of females per 1000 males. 2011: 943.
�लंगानुपात - Child Sex Ratio = girls (0-6 years) per 1000 boys in that age group. All
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1022
Indicators Census-2011 definitions
India declined from 927 (2001) → 919 (2011).
?? 👧👧 - 📙📙📙📙ES22: Sex ratio at birth for children born in the last five years
/ has improved in 2019-21 from 2015-16 in all states (Table 13), except
1000👦👦 for Himachal Pradesh, Bihar, Jharkhand, Chhattisgarh, Odisha,
Maharashtra, Tamil Nadu, Kerala, Meghalaya, Goa and Nagaland
- In India, sex ratio is expressed as no of females per thousand males
- But in some nations, it’s expressed as no of males per 1000 females
- @global: sex ratio is about 102 males per 100 females
- @ Asia: sex ratio is low i.e. # of men > # female
Age Pyramid It’s a structure that shows proportion of persons in different age groups
relative to the total population.
Dependency Ratio -👼👼 👴👴÷��= (population below 15 & above 64) divided by
�नभर्रता अनुपात (%) population in the 15-64 age group.
Demographic - Phenomenon when dependency ratio of a country declines, and
Dividend larger proportion of people in the working age compared to
(जनसां��क�य लाभांश) dependency age. जब �नभर्रता अनुपात म� �गरावट , और कायर्शील आयु म� लोगो क� सं �ा
बढ़े, उसे कहते है
- demographic dividend temporary because the larger pool of working
age people will eventually turn into non-working old people.
You can prepare ascending descending orders of states / UTs demographic indicators from here
cbhidghs.nic.in/WriteReadData/l892s/Chapter%201.pdf but very poor cost benefit
60.2.1 📊📊 Census-2011: migration & occupation (�ाना�रण)
Migrant: person settled in a place different from his previous residence.
�Push factors [ध�ा देनेवाले कारक] �Pull factors [आक�षत करने वाले कारक]
Push Factors: force that drives people away from a Pull Factors: force that draws people to
place. immigrate to a place.
Lack of jobs/good salary/Biz Opportunity Presence of it (धं धे/रोजगार के अवसर)
Lack of Basic amenities: water, shelter, hospital Presence of it (उन सु�वधाओं क� मौजूदगी/ उपल�
(पानी अ�ताल घर जैसी बु�नयादी सु�वधाएँ न होना) होना)
Disasters, floods, famines (आपदा, बाढ़, अकाल) Absence of it
Crime, War, lack of safety (अपराध, युद्ध, असुर��त) Safe, peaceful society (सुर��त और शांत समाज)
⇒ 37% of Indian are internal migrants. Among them, majority are female (70%)
⇒ Main reason for migration: A) Female: marriage (70%) B) Male: work & employment (28%)>
moved with household > moved after birth.
Occupation: Census divided the working population of India into four major categories:
1.Cultivators 2.Agricultural Labourers 3.Household Industry Workers 4.Other Workers
🔠🔠❓MCQ. According to the Census 2011, in India, what is the % of people (approximately) considered
to be migrants (internal),i.e. now settled in a place different from their previous residence? (CDS-i-2020)
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1023
(a) 25% (b) 35% (c) 45% (d) 55%
🔠🔠❓ Which is the biggest cause of migration of females in India? (UPSC-CDS-i-2020)
(a) Employment (b) Education (c) Marriage (d) Business
🔠🔠❓2011 Census has divided the working population of India into four major categories. Which one of
the following is NOT one of them ? (UPSC-CAPF-2020)
(a) Cultivators (b) Domestic workers (c) Household industrial workers (d) Agricultural Labourers
��Which one of the following is a pull factor for migration? [UPSC-CAPF-2021]
(a) Natural disaster (b) High wage (c) Housing shortage (d) Low income
- All India level: Total fertility rate has declined: 2.7 children (2005). This TFR � to 2.2 (2015)
and now � 2.0 (as per latest NFHS). (अ�खल भारतीय �र पर मिहलाओं के कु ल प्रजनन दर म� कमी आयी है.)
- But, still TFR>2.1 in Madhya Pradesh, Rajasthan, Jharkhand, Uttar Pradesh. (हालाँिक कु छ रा�ों म�
अभी भी मिहला कु ल प्रजनन दर �ादा है)
- Overall usage increased for Contraceptive’s usage, Vaccine usages� �, institutional births,
breast-feeding, women bank accounts, women mobile phones (इनम� बढ़ोतरी �ई है: गभर्�नरोधक-साधनो का
उपयोग, टीकाकरण, प्रसव अ�ताल म�, ब�ों का �नपान, मिहलाओं के ब�क खाते और मिहलाओं के मोबाइल फ़ोन)
- �child malnutrition but change is not significant as drastic changes in respect of these
indicators are unlikely in short span period. (बाल कु पोषण थोड़ा-सा/ह�ा सा कम �आ है, लेिकन बहोत प्रभावी
असर अभी तक नहीं देखी गई, �ोंिक ये कु छ सम�ाएँ है �जसम� कम अव�ध/ छोटे समय म� ज़ोरदार सुधार नहीं िदख सकता।)
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1024
- Anaemia among children and women continues to be a cause of concern. (मिहला और बालको म�
अनी�मया �चंता का �वषय अभी भी है।)
60.3.3 💊💊💉💉💉💉National Health Profile 2019 (Released in 2019-Oct)
Heath Ministry → DG Health Services → Central Bureau of Health Intelligence doing annually.
⇒ Only 1 Govt Doctor For 10,926 People. (WHO’s recommended doctor-population ratio of
1:1000) [हर 1 हजार लोगों के सामने एक डॉ�र होना चािहए]
⇒ India’s public expenditure on healthcare barely 1.28% of GDP. (WHO recommends 5%). �ा�
सेवाओं पर सरकारी खचर् ब�त कम हो रहा है
⇒ + other filler stuff: IMR & MMR �, life expectancy �, but anaemia is a huge health concern
as more than 50% of Indian women and children suffer from it.
It’s a 340 pages document, chasing the ascending descending ranks=poor cost:benefit.
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1025
60.4 👫👫↘ 📜📜:🧔🧔NATIONAL POPULATION POLICY 2000 (रा�ी� य जनसं �ा नी�त)
⇒ Achieving TFR= 2.1 (Replacement level) by 2010. (Although now shifted to 2025)
⇒ Achieve stable population by 2045 i.e. India’s population growth rate and age pyramid
composition should remain stable. ��र आबादी
⇒ Encourage family planning, use of contraceptives, safe abortions, HIV control, universal
immunization, compulsory registration of birth and death etc. प�रवार �नयोजन, गभर् �नरोधकों का उपयोग,
एचआईवी �नयं त्रण, टीकाकरण, ज� और मृ�ु का अ�नवायर् पं जीकरण
⇒ Recommended that Lok Sabha and the Rajya Sabha seats be freezed based on the 1971 Census,
until 2026. So that political parties don’t encourage people to produce more babies just to
increase number of parliament seats.
⇒ Setup two bodies →
⇒ A National Commission on Population (रा�ी� य जनसं �ा आयोग) Under the chairmanship of Prime
Minister, all CMs, selected union ministers, NGO & experts to oversee the implementation.
(Although appears defunct body).
⇒ 2005: Population Stabilization Fund (जनसं �ा ��रता कोष): An autonomous body, chaired by
Health Minister, for awareness generation, community participation, mobilising ₹ ₹ donations
etc. Known for 2 schemes:
- � Prerna Scheme (for encouraging delayed marriage, childbirth and spacing. ASHA
workers will give counselling to couples, provide contraceptives etc)
- � Santushti Scheme (Public Private Partnership for sterilization services, नसबं दी)
60.4.1 👫👫↗�:📊📊 World Population Prospects 2019 (Released in 2019-Jul)
Published by United Nations department of economic and social affairs.
2019 Population in billions % of world population
India 1.37 18%
China 1.43 19%
In the next 8 years (2027), India's population to cross China's. Then India will remain the most
populous country in the world for the entire century. 2027 के बाद भारत पूरी शता�ी के �लए दु�नया म� सबसे अ�धक
आबादी वाला देश
60.4.2 👫👫↗�:📊📊 State of World Population Report
⇒ By United Nations Population Fund (UNFPA)- United Nations sexual and reproductive health
agency HQ: New York.
⇒ Theme of 2021’s report: “My body is my own” Highlighted the problems of human rights
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1026
violation and child abuse. (“मेरा शरीर मेरा है”- मानव अ�धकार हनन तथा ब�ों का शोषण रोकना)
⇒ Theme of 2020’s report: ‘Against my will: defying the practices that harm women and girls and
undermine equality’. (मेरी इ�ा के �व�द्ध: मिहलाओं और लड़िकयों को नुकसान/ कमजोर करने वाली प्रथाओं को चुनौती
देना) Highlighted the problems of sex-selective abortion, neglect of girl child = 46 million Indian
girls are either not allowed to be born or died before age of 5 due to neglect. (2013-17). भ्रूणह�ा तथा
नवजात ब�ीओ क� उपे�ा के चलते 46 million लड़िकया भारत क� आबादी से गायब है.
⇒ Early marriage = obstacle to education, income and safety of women in India.
⇒ 2010-19: India’s population grew at 1.2% per year= more than double speed of China
🔠🔠❓ theme of the annual report UNFPA on State of World Population – 2019. (UPSC-CAPF-2019)?
a) Worlds apart : Reproductive health and rights in an age of inequality
b) The power of choice : Reproductive rights and the demographic transition.
c) Unfinished business – the pursuit of rights and choices for all
d) How our future depends on a girl at this decisive age
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1027
prevent social unrest from unemployment. उससे पहेले रोजगार सृजन नहीं िकया तो सामा�जक आक्रोश
⇒ The population of coastal States will begin to age sooner than the interior states. So, migration of
workers will have to encouraged, and we will have to provide them with affordable rental
homes. आंत�रक रा�ों से तटवत� रा�ों म� मजदू रों को लाना होगा, िकराये के मकानों को प्रो�ािहत करे
⇒ While the life expectancy will � but the total fertility rate will � so, some states will start
transitioning to an ageing society by the 2030s. कु छ रा�ों म� ब�त �ादा बुजुगर् हो जाएं गे
⇒ Due to ageing population and increasing pressure on pension funding, Germany, France, Japan
& others have begun raising the pensionable retirement.
��If India’s ⏫ the age of retirement: (सेवा�नवृ�� क� आयु म� बढ़ोतरी करना)
It’ll help keeping the Govt funded pension programs viable. सरकारी प�शन योजनाओ का बोज कम रहे
Income tax revenues will remain viable (Because salaried person is likely to pay more Income
Tax compared to a retired person who is receiving lower amount of pension.)
We can benefit from the experience of older people who continue in the job-service.
But, Govt should notify this change well at least 10 years in advance, so people can make their
pension/retirement plans accordingly. (अ�ग्रम जानकारी देकर चरणबद्ध तरीके से धीरे-धीरे लागू हो)
SDG Goal#3: Ensure Healthy Lives & Promote Well-being For All
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1028
India’s Baseline (आधार रे खा) India’s SDG-Target-2030 (ल�)
Maternal Mortality Ratio (MMR per 1 lakh Reduce to 70: Kerala, Maharashtra, Tamilnadu
live births): 130. मातृ मृ�ु अनुपात achieved. While UP, Assam etc. have 200+ deaths
Under-5 Child Mortality Rate (per 1000 live Reduce to 11: Only Kerala achieved so far (7)
birth): 50. बाल मृ�ु दर
Annual Reported TB cases per 1 lakh Reduce to 0
population: 138
No. of Govt doctors , nurses and midwives per Increase to 550: Only Kerala achieved so far
1,00,000 population: 221 (700)
SDG Goal #3 (health) also requires nations to reduce road accidents, alcohol and tobacco abuse,
mental-illness, and end HIV/AIDS, Malaria, Hepatitis and other communicable diseases. However,
India has not put any quantifiable targets for that. (हमने अपनी औकात के िहसाब से ल�ांक चुने है. )
61.1.1 � 🧬🧬 🔬🔬 [YEARBOOK] Ministry of Science and Technology
(�व�ान और प्रौद्यो�गक� मं त्रालय)
Dept ⇒ Department of Science and Technology (DST)
⇒ Department of Scientific and Industrial Research
⇒ Department of Biotechnology
Subordinate ⇒ Survey of India, The National Survey and Mapping Organisation
⇒ National Atlas and Thematic Mapping Organisation (NATMO)
Statutory ⇒ Under DST: Science & Engineering Research Board, Technology
Development Board
Autonomous ⇒ National Innovation Foundation in DST
⇒ Indian Science Cong. Association, KOLKATA, in DST
⇒ National Institute of Immunology, in Biotech Department
⇒ Technology Information, Forecasting and Assessment Council (TIFAC).
⇒ ++Truckload of Science and Research bodies.
CPSE ⇒ Bharat Immunological & Biological Corporation
सावर्ज�नक �ेत्र ⇒ Indian Vaccine Corporation Ltd (IVCOL)
उपक्रम ⇒ Biotechnology Industry Research Assistance Council (BIRAC)
⇒ (*) Central Electronics Ltd.
(*) means approved for strategic disinvestment (=privatization) in 2019
NOTE: Dept of Pharmaceutical = Chemical & Fertilizer ministry (Pillar#5)
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1029
61.1.2 �💊💊💉💉 [YEARBOOK] Ministry of Health And Family Welfare
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1030
reformer & founder of modern nursing.
− 2020- National Commission for Allied Healthcare Professionals Bill to cover
physiotherapist, X-ray Machine operator, physiotherapists, optometrists,
nutritionists etc. (�ा� सेवाओं से जुड़े पेशेवर)
Autonomous − National Population Stabilisation Fund
�ाय� सं �ा − All India Institute of Speech and Hearing, Mysore
− International Institute for Population Sciences, Mumbai, a ‘Deemed
University’, nodal for National Family Health Survey (NFHS). Five rounds of
NFHS (1992, 1998, 2005, 2015, 2019) done in India.
− Indian Pharmacopoeia Commission (IPC)
− Indian Council of Medical Research (ICMR, origin in 1911)
− National Inst of Mental Health and Neurosciences (NIMHANS), Bengaluru →
��Budget-2022: we’ll launch National Tele Mental Health Programme
under this organization.
Budget − �Budget-2020 allotted <₹70,000 cr on health which is barely 0.3% of GDP.
Even if we add union+state budgets = 1.6% of GDP.
− ��ES22: presently Union+State spending total 2.1% of GDP on health.
− National Health Policy 2017 aims to � it to 2.5% of GDP by 2025.
− WHO recommends minimum 5% of GDP be spent on public healthcare
CPSE − (*)Hospital Services Consultancy Ltd. (HSCC) (*)HLL Lifecare
Intl Bodies − UN Specialized Agency: World Health Organization (WHO) HQ: Geneva,
Switzerland (1948) specialized agency of United Nations सं यु� रा�� क� �वशेष एज�सी
(*) means approved for strategic disinvestment (=privatization) in 2019
61.1.3 💊💊🌐🌐� World Health Organization (WHO: �व� �ा� सं गठन)
⇒ at Geneva, Switzerland, 1948.
⇒ Its supreme decision making body known as Health Assembly (�ा� सभा)
⇒ It consists of all member states. It elects the Director-General of WHO for a period of five year.
⇒ WHO's Health Assembly's decisions are implemented by the Executive Board (कायर्कारी बोडर्).
⇒ The Executive Board has 34 individual health experts elected for three-year terms.
⇒ 2020: India's health minister Dr. Harsh Vardhan elected as the chairman of the Executive Board.
⇒ �WHO-Controversy#1? Mishandling of the Corona crisis. US President Trump wanted to
withdraw membership from WHO. Brazil also threatened similar.
⇒ �WHO-Controversy#2? Taiwan wants to be added as an observer in WHO. China hates this
because China says 'Taiwan is a part of China. Taiwan is not a separate country.'
2020: WHO panel to examine WHO's Response to Corona. Panel/ committee recommended:
⇒ 1) Need to setup a Pandemic Framework Convention Agreement within six months to address
gaps in international regulations. Setup an international pandemic financing facility [महामारीओं से
�नपटने के �लए एक अंतररा��ीय समझौता बने, महामारी के �ख़लाफ़ �व� पोषण / पैसा जुटाने के �लए के �लए अलग सं गठन बने,]
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1031
⇒ 2) �Power & Money of WHO [धन और स�ा को बढ़ाया जाए]
⇒ 3) WHO Director General should have a 7-year term With no reappointment. (Presently 5 years
term and reappointment possible, Once there was a director general who served for four
consecutive terms= 20 years then It is difficult to expect innovation, fresh ideas. Such person will
More likely surround himself with his own favourite people, and then administration will
become stagnant). [�व� �ा� सं गठन के डायरे�र जनरल को 7 साल का �सफर् एक कायर्काल �मले, पुनः �नयु�� न क�
जाए. अगर/ यिद एक ही आदमी पूरी �ज़दं गी नाग क� तरह फ़न फै ला के बैठा रहेगा उसी कु स� म� तो नवाचार हो नहीं सकता]
- Ministry of Ayurveda, Yoga (Maharshi Patanjali) and Naturopathy, Unani (Arabs. Noted person
in India: Hakim Ajmal Khan freedom fighter), Siddha (by Tamil Siddhar Saints) and
Homoeopathy (by a German Physician), abbreviated as AYUSH
- 2017: Sowa-Rigpa (Tibetan) medicine system is latest to be added in the Ayush list. Later Govt
setup its national research institute in Leh, Ladakh
Dept N/A
Autonomous − Morarji Desai National Institute of Yoga, Delhi
− National Institutes for individual subjects of AYUSH:
o Ayurveda @Jaipur, Naturopathy @Pune (campus name “Nisarga
gram”), Unani Medicine @Bangluru, Siddha @Chennai,
Homoeopathy @Kolkata, Sowa Rigpa@ Leh
− Central Councils for research in individual subjects of AYUSH
o Siddha@Chennai, other subjects’ @New Delhi
Statutory Following bodies regulate the syllabus/practionners:
Bodies − Central Council of Homoeopathy(CCH) 2020- It was replaced by National
Commission for Homoeopathy (NCH).
− Central Council for Indian Medicine (CCIM). 2020- It was replaced by
National Commission for Indian System of Medicine. Common entrance
and exit exam for Ayush practitioners etc.
− 2020: Institute of Teaching & Research in Ayurveda (ITRA) at Jamnagar,
Gujarat
Drugs & Cosmetics Act, 1940- two statutory bodies related to Ayush
1. Ayurveda, Siddha, Unani Drugs Technical Advisory Board (ASUDTAB)
2. Ayurveda, Siddha, Unani Drugs Consultative Committee (ASUDCC),
Attached / − National Medicinal Plant Board (NMPB)
Subordinate − Pharmacopoeia Commission for Indian Medicine & Homoeopathy
(PCIM&H)
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1032
CPSE [सरकारी − (*) Indian Medicine Pharmaceutical Corporation Ltd. approved for
क�नी] strategic disinvestment (=privatization) in 2019
E-Governance − National AYUSH Morbidity and Standardized Terminologies
Electronic(NAMASTE) Portal for illness/disease related database
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1033
61.2 💊💊🤑🤑� → CHEAP MEDICINE → NPPA PRICE CONTROL
- 1997: National Pharmaceutical Pricing Authority (NPPA: रा��ीय औष�ध मू� �नधार्रण प्रा�धकरण) setup as
an attached office under Dept of Pharmaceuticals under Ministry of Chemicals & Fertilizers.
- NPPA derives power from Essential Commodities Act, 1955 → Drugs Prices Control Order
(DPCO), 1995 & 2013. → NPPA monitors availability & prices of drugs. It enforces price
ceilings on 800+ essential medicines.
- 🤳🤳 Pharma Sahi Daam: NPPA’s app & portal. Customer can check drug prices before buying.
- 🤳🤳 Pharma Jan Samadhan: NPPA’s webportal where consumers can file complaint about drug
pricing and availability. (महंगी दवाई और दवाइयों क� अनुपल�ता के �खलाफ �शकायत)
- A coronary stent is a tube-shaped device placed in the arteries that supplies blood to heart. Stent
keeps the arteries open for coronary heart patients.
- 2017: NPPA enforced price ceilings on Stent to stop profiteering by the companies and hospitals.
- ��ES20 vol1ch4: NPPA drug price control has harmed more than it has helped. Its logical
argument is similar to what we learned in Pillar#4A: food inflation → Essential Commodities
Act. Here, NPPA price control → companies discouraged to produce more / innovate more →
shortage of medicine supply → chemist (illegally) demand more prices from patients. (ब�त �ादा
भाव �नयं त्रण से फायदा कम, नुकसान �ादा �ोंिक िफर कं प�नया मुनाफे म� कमी के चलते नवाचार /�रसचर् नहीं कर पाती)
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1034
Table 1: Related Terminologies
Generic Drug After a branded drug patent expires (or Govt gives Compulsory License), other
companies can manufacture the same formula. Such non-proprietary drug are
called ‘Generic’ Drugs. [पेटंट अव�ध ख़� होने पर कोई भी क�नी उस दवा को बना सकती है]
Fixed Dose It’s a cocktail / mixture or two or more drugs. Govt banned many FDCs because
Combinations they’re unsafe / multiple side effects. E.g. Corex, Saridon, D'Cold, Vicks Action
500.
🔠🔠❓MCQ. Find correct statements about Bureau of Pharma PSUs of India (BPPI) [CDS-2019-i]
1. It is the implementing agency of Pradhan Mantri Bhartiya Janaushadhi Pariyojana.
2. It has registered as an independent society under the Societies Registration Act, 1860.
Codes: a) 1 onlyb) 2 only c) Both 1 and 2 d) Neither 1 nor 2
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1035
61.5 💊💊 → MOTHER & CHILD HEALTHCARE (🤰🤰🤰🤰)
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1036
- National Creche Scheme: to setup Creches for working women.
- Child Protection Scheme: for children in difficult circumstances.
- 🤩🤩Benefits? ⏬ IMR, MMR & Anaemia, Immunization, Health check-up, Pre-school edu
61.5.2 🤰🤰🤰🤰📯📯📯📯 → via NRHM’s JSY & JSSK
Boss? Health Min’s National Rural Health Mission’s notable schemes for mother & child:
1. Accredited social health activists (ASHA workers) to provide Reproductive, Maternal,
Newborn, Child and Health and Adolescent (RMNCH+A) services.
2. 🤰🤰 Janani Suraksha Yojana (JSY):
a. BPL women (irrespective of age or number of children) is given conditional cash transfer
around ₹ 1000 for delivering child @hospital. The amount depends on whether it is a
rural area or urban area etc. गरीब मिहला का हॉ��टल म� प्रसव करवाने पर मिहला को ₹1000 �पये द�गे।
b. ASHA worker given bonus ₹ ₹ for bringing her to hospital.
3. 🤰🤰 Janani Shishu Suraksha Karyakram (JSSK):
a. Free normal / caesarean deliveries @public hospitals. मु� म� प्रसव
b. Free food, medicines, free transport from home to hospital by dialling 102.
4. Surakshit Matritva Aashwasan (Suman-2019): if pregnant women visits a govt hospital but
denied any of the scheme/services or her dignity is not respected then complaint can be
registered through SUMAN helpline/sms/web portal & govt will adopt ZERO tolerance to the
culprit doctor/nurse/wardboy. Result? ⏬IMR,MMR, ⏫Positive birthing experience। सरकारी
अ�ताल म� गभर्वती मिहला को अ�� सेवा न �मली तो �शकायत
5. Pradhan Mantri Surakshit Matritva Abhiyaan (2016): all pregnant women given free medical
checkup, iron folic acid (IFA), calcium tablets etc. on 9th of every month. This scheme is for
‘Antenatal Period’ = before the delivery. Private doctors also encouraged to ‘volunteer’ for this
campaign (in other words, Government will not pay them ₹ ₹ )
6. Laqshya- Labor Room Quality Improvement Initiative (2017): to ensure public hospital delivery
room is sterilized & has necessary medicines/equipment to deal with delivery related
complications / emergencies. (Side Note: Swatchha Bharat Mission’s sub-component ‘Kayakalp’
aims for cleanliness in Public hospitals)
7. Mother's Absolute Affection (MAA 2016): Awareness generation to encourage mothers to
breastfeed babies. Because exclusive breastfeeding for the first six months is essential to improve
child health & immunity. [�नपान को प्रो�ाहन देना]
8. Mission Parivar Vikas (2016): Uttar Pradesh, Bihar, Rajasthan, Madhya Pradesh, Chhattisgarh,
Jharkhand and Assam constitute 44% of the country’s population because of their high TFR. So
this mission aims for:
a. Encourage family planning in these states. प�रवार �नयोजन / नसबं धी
b. new FREE contraceptives in Govt hospitals:
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1037
i. ‘Chhaya’ contraceptive pill (गभर्�नरोधक गोली) which has to be taken only once in a
week. Chemical name: Centchroman, it’s a non-hormonal pill.
ii. ‘Antara’ injectable hormonal contraceptive which has to be taken once in three
months.
c. All India TFR = 2.2 (2016) → Reduce it to 2.1 (2025) कु ल प्रजनन डर म� कमी
61.5.3 🤰🤰🤰🤰📯📯📯📯 → PM Matru Vandana Yojana (₹ 5k for 1st child+1k from other scheme*)
Manmohan launched Indira Gandhi Matritva Sahyog → Modi renamed as Matritva Sahyog Yojana
(2014) → again renamed Pradhan Mantri Matru Vandana Yojana(2017)
- Boss? Ministry of Women and Child Development
- Core Scheme (Not 100% funded by Union). 60:40, 90:10
PM Matru Vandana Installment िक�#1 → ₹1k
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1038
61.5.4 �� Paalan 1000 - Journey of the First 1000 Days',
⇒ Health Ministry’s campaign and app
⇒ To guide parents with practical advice on how to improve child's physical, mental, emotional,
cognitive and social health for the 1st two years of a child’s life.
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1039
measles and hepatitis B.
In the subsequent years even more vaccines for Japanese Encephalitis etc.
Pregnant women also given vaccines for selected disease. [गभर्वती मिहलाओं के �लए भी]
⇒ 2017: Modi launches Intensified Mission Indradhanush (IMI) to cover atleast 90% children
below age of 2 and all pregnant women by 2018 December.
⇒ e-VIN (Electronic Vaccine Network): United Nations Development Programme (UNDP) gave ₹
₹ & technology to India for online monitoring of vaccine stocks. Health ministry runs it.
61.5.6 🤰🤰🤰🤰💉💉💉💉 Intensified Mission Indradhanush (IMI) 3.0 from 2021 onwards
लॉकडाउन के चलते �जन ब�ों-मिहलाओ का पो�लयो, धनु�ंभ इ�ािद टीकाकरण न हो पाया उनका टीकाकरण कर�गे
focus on Children and pregnant women who have missed their (non-corona) vaccine doses
during the corona pandemic/lockdown
Focus on migrants & remote area/ hard to reach areas। प्रवासी मज़दू र-प�रवार, दुगर्म प्रदेश पे �ान
Health ministry to use staggered approach = instead of inviting everyone at the same time, 10-10
beneficiaries will be invited. This will reduce crowding in Corona.
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1040
61.6.1 🤰🤰🤰🤰🤰🤰🤰🤰 → WCD Ministry’s 3 Umbrella Schemes in 2021
2021-March, Ministry of Women and Child Development announced that existing schemes will be
clubbed into 3 umbrella schemes. Reason? More effective monitoring & implementation.
प्रभावी �प से �नगरानी और अमल करने के �लए वतर्मान योजनाओं को तीन छतरी योजनाओं के नीचे वग�कृ त िकया गया है
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1041
61.7 💊💊📯📯📯📯 → AYUSHMAN BHARAT & PMJAY ₹ 5 LAKH INSURANCE
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1042
medical devices (आया�तत �चिक�ा उपकरण).
⇒ This Cess ₹₹ will be used for building (Ayushman Bharat ) hospitals in PPP mode,
⇒ In Aspirational Districts (आकांशी-�जले=backward districts identified by NITI Aayog.)
⇒ So the PM-JAY patients in those backward district, can actually get medical treatment.
Govt levies 4% Health & Education Cess on direct taxes such as income tax & corporation tax.
(What is Cess? Ref: Pillar#2A) प्र�� करों पर �ा� व �श�ा उपकर
2021-March: govt created a new “Non-Lapsable” fund under Public Account. (What is “Non-
Lapsable fund? Ref: Pillar#2D). लोक लेखा म� एक ग़ैर-��गत �न�ध बनायी जाएगी
This fund will receive ₹ ₹ from above cess. Health ministry will use this money for
1) Ayushmann Bharat & its sub schemes like PM-JAY (5L-Health insurance),
2) Pradhan Mantri Swasthya Suraksha Yojana (setting up AIIMS-like institutions in every state
& upgrading government medical colleges).
3) National Health Mission (NHM) रा��ीय �ा� �मशन
4) Health emergencies like Corona �ा� आपदाएँ
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1043
** Grants to Healthcare sector are unconditional i.e. not based on performance of State Govt.
⇒ Union and State Government together should spend 2.5% of GDP on Healthcare sector by 2025.
(क� द्र और रा� सरकार ने �मलकर �ा� �ेत्र म� सावर्ज�नक खचर् को बढ़ाकर जीडीपी के ढाई प्र�तशत तक करना चािहए)
⇒ All-India Services Act, 1951: (presently we've IAS,IPS,Indian Forest Service) → make 4th All
India service: "All India Medical and Health Service" → UPSC to conduct recruitment. This will
help addressing the shortage of doctor in backward states. आईएएस/आईपीएस क� तजर् पर एक और अ�खल
भारतीय सेवा बनाई जाए "अ�खल भारतीय �चिक�ा एवं �ा� सेवा" तािक �पछड़े रा�ों म� डॉ�रों क� कमी को पूरा िकया जा सके
⇒ Most of the medical colleges and super-speciality hospitals (e.g. Cancer) are concentrated in the
Western and Southern parts of India. Union and State government should make efforts to
address this.(प��मी/द��णी रा�ों के अलावा वाले �व�ार म� भी अ�� मेिडकल कॉलेज| अ�ताल बनाने पर जोर िदया जाए)
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1044
(सेवाभावी ��� और सं �ानों द्वारा टीबी के मरीज़ को गोद �लया जाए, मरीज़ के पोषण तथा उसके प�रजनो क� कौशल तालीम के �लए दान
म� पैसा िदया जाए ऐसी योजना। सरकार पर राजकोषीय बोझ कम होगा, समाज म� भी टीबी के मरीज़ों के प्र�त घृणा/लांछन क� भावना कम
होगी।)
⇒ WHO aims to eliminate Malaria from world by 2030. IF a Country has 0% local cases of Malaria
in 3 consecutive years =can apply for WHO certification of malaria-free status.
⇒ Examples: Australia, Brunei and Singapore, Algeria, Argentina, El Salvador (2021), China (2021)
⇒ ��ES22: while malaria not yet eliminated in India but we’ve eliminated polio, guinea worm
disease, yaws, maternal tetanus and neonatal tetanus. (भारत ने इन बीमारीयो को ख़� िकया)
⇒ One Health = An approach recognizes that animal health, human health and the environment’s
health are interconnected. Esp. for Zoonotic diseases (= spread from animal to human. [ख़ासकर
ऐसे रोग/बीमा�रयां जो जानवरों से मनु�ों म� फै लती है] For example
⇒ Environmental degradation: human encroachment in jungles → Nipah Virus spreads from
Jungle Bats to Domestic animals (Pigs) to Humans. [from Malaysia’s NIPAH Village]
⇒ Environmental degradation: Men kill Monkeys, Antelopes for meat → infected with Ebola
virus. [From Africa’s Ebola river region near Congo]
⇒ China’s Wuhan’s Wildlife Meat Market: Cats, ferrets, fruit bats, hamsters, racoon, etc. → Corona
⇒ �Boss? One Health approach is advocated by multiple orgs such as Food and Agriculture
Organization (FAO), the World Organisation for Animal Health (OIE), the World Health
Organization (WHO) and the United Nations Environment Programme (UNEP).
Why in news? Indian govt’s Dept of animal husbandry also organizing seminars/workshops on this
matter. Then CA-PDF-wallas have gone “crazier than usual” over this topic.
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1045
61.9 🤒🤒📔📔📔📔ES21VOL1CH5 ON HEALTHCARE PROBLEMS-SOLUTIONS
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1046
wearing seatbelt/helmet while driving, not wearing masks in Corona = they die prematurely =
Insurance companies have to pay hefty compensation to family= Insurance companies profit
�→ Insurance companies � premium (subscription fees) on new subscribers to cover the
losses. Thus, risky behaviour of some people create negative externalities for the entire
healthcare system through higher costs and poorer outcomes. लोगों क� शराब त�ाकू इ�ािद ग़ैर �ज़�ेदार/
ख़राब आदतों के चलते समय से पहले मृ�ु, बीमा कं पनी मुआवज़ा देती है िकंतु बीमा कं पनी का मुनाफ़ा इसके चलते कम होता है. तो
भ�व� म� नए ग्राहकों पर बीमा िक� का बोझ बढ़ता है।
⇒ �Hesitancy/Ignorance: 1) Even after a person has TB symptoms, they delay visiting doctor for
minimum 5.2 months, even in Delhi. As a result their disease has already become worse and they
have infected more people with TB. 2) Many Indian women die in breast cancer, cervical cancer
because they seek medical help very late, tumour has reached advanced stage. िहचिकचाहट / जाग�कता
क� कमी के चलते �यरोग और क� सर म� भी लोग जब तक ददर् असहनीय न हो जाए, डॉ�र से �मलते नहीं. अंतत: बीमारी ब�त गं भीर
हो जाती है, मरीज़ को बचाया नहीं जा सकता।
61.9.2 🤒🤒🤒🤒🤒🤒ES21: Healthcare Solutions: Oligopsony for universal health insurance coverage
⇒ Oligopsony = few buyers and many sellers. Then buyers can command the prices.
⇒ E.g. if individual purchases Rs. 5 lakh Health insurance from insurance company, he may have to
pay Rs 5,000-7000 [premium] scription fees= this discourages many middle-class families from
buying health insurance because the salaries are not very high.
⇒ But Rajasthan govt tied up with health insurance companies → Chiranjeevi Health Insurance
scheme. Poor get free health insurance, and non-poor (middle class) permanent residents of
Rajasthan can get it for Rs.850 premium.
⇒ So, Economic survey basically suggesting that we should adopt models of similar to 1st world
countries wherein few govt organizations / Union/State governments will purchase the
healthcare insurance for everyone & then give it for free/at affordable prices. प्रथम �व� के देशों म� कु छ
सरकारी सं �ान तमाम नाग�रकों के �लए �यं ही �ा� बीमा कं प�नयों से बीमा पॉ�लसी ख़रीदते ह� और िफर नाग�रकों को वह बीमा
पॉ�लसी मु� या िकफ़ायती दामों म� दी जाती है। इस प्रकार का मॉडल भारत म� अपनाया जाए।
61.9.3 🤒🤒🤒🤒🤒🤒ES21: Indian Healthcare Solutions: Patient Rights like UK, Sweden
⇒ Information asymmetry = one business party possesses more information than the other party =
they can exploit the situation. E.g. Nirav Modi knew the weaknesses of Punjab National Bank’s
LOU/SWIFT messaging system, while PNB did not know about Nirav Modi’s losses in diamond
business = Nirav Modi scammed PNB. (Ref Pillar: 1B2)
⇒ Similar information asymmetry exists even in Indian healthcare industry. जानकारी/सूचना क� कमी के
चलते �ापार म� एक ��� दू सरे का ग़लत फ़ायदा उठाता है।
⇒ Treatment costs are not uniform across hospitals. Cancer treatment at 1 hospital could cost “X”
lakh ₹, & same treatment could cost “3.7X” lakh ₹ at another hospital. Similarly, cardio (6.8x),
injuries (5.9x), gastro (6.2x), and respiratory (5.2x) disease, But patient does not know what is
the price range for treatment across different hospitals, which hospital has better success rate in
saving the patients? Etc. . एक ही बीमारी क� अलग अ�तालों म� अलग अलग फ़�स होती है। मरीज़ को पता नहीं कौनसा
अ�ताल िकफ़ायती है, िकस अ�ताल म� लोग कम मरते ह�?
⇒ So just like banking industry uses credit rating agencies to pass the loan applications (Ref#1B2),
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1047
Govt should create rating agencies to assess the quality of doctors and hospitals. E.g. 2004: UK
→ National Health Service (NHS) → Quality and Outcomes Framework (QOF) → annual
appraisal of all doctors→ further analyses through artificial intelligence- public reports/datasets
released. So patients can know which hospital is better? what is the price range of various
surgeries etc. इं ��ड म� गुणव�ा प�रणाम �परेखा / ढांचे के अंतगर्त सभी डॉ�रों का सालाना सव��ण- इस डेटा को सावर्ज�नक
�प से प्र�ुत िकया जाता है तािक सबको पता चले अलग अलग बीमा�रयों क� फ़�स �ा होती है, कौनसा अ�ताल बेहतर है इ�ािद
⇒ 1992: Finland’s Status and Rights of Patients Law= hospitals require to release the data of how
many patients died. Ombudsman system where patients families can complain against hospital.
िफनल�ड म� मरीज़ों के अ�धकारों के �लए क़ानून- अ�तालों ने अ�नवायर् �प से मरीज़ों के मृ�ु दर का डेटा प्रका�शत करना होगा,
अ�ताल के �ख़लाफ़ �ाय देने के �लए �शकायत �नवारण अ�धकारी।
⇒ COVID-19 virus - SARS-CoV-2 - first identified in Wuhan city of China in December 2019.
⇒ Hungarian physician Ignaz Semmelweis. = father of Hand washing / hygiene & hospital
sanitisation.
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1048
Implications? Without damaging the economy greatly, it’ll help Great damage to economy.
⏬death by 50% अथर्तांतर को बहोत �ादा हा�न प�ँ चाएँ अथर्तंत्र को अप्र�ा�शत हा�न
�बना मृ�ु दर म� 50% क� कटौती सं भव
⇒ Barbell strategy in finance = while making an investment in a risky situation you should first
hedge / protect yourself for the worst outcome initially. Then after new feedback/development
you should update your response state by step. बारबेल रणनी�त - अ�न��त प�र���तयों म� �नवेश करते व� सबसे
पहले “यिद ब�त ख़राब प�र���त होगी उससे �यं को सं भालना/सुर��त करना”। उसके बाद जैसे जैसे नई जानकारी सामने आये,
�नवेश के नए फ़ै सले लेते रहना।
⇒ So considering above angles, Indian policymakers followed a similar ‘barbell approach’. First
nationwide lock down to ‘save lives’ & ‘flatten the epidemic curve’ & reduce ‘R0’. Then gradual
unlock down to ‘save the livelihood.’ कोरोना महामारी म� भारत ने कु छ ऐसा ही िकया। सबसे पहले सबक� जान बचाने के
�लए �यं को सुर��त करने के �लए रा��
� ापी तालाबं दी। उसके बाद नई जानकारी और नए माहौल को देखते �ए धीरे धीरे लोकड़ाऊन
को खोला/ढीला गया बाक़� सब क� आजी�वका का भी र�ण हो सके ।
⇒ Parallely govt also focused on social distancing, contact tracing and vaccination.
✋In the remaining chapter1vol1- economic survey 2021 has done great appreciation of
government lockdown policies. But in retrospect, when we compare the situation in Corona wave 2.0
most of that appreciation looks redundant. इस पूरे प्रकरण म� कु ल �मलाकर सरकार क� पीठ थपथपायी गई है, हालाँिक
कोरोना सं क्रमण क� दू सरी लहर के बाद ये सब चीज़� / मुद्दे इतने �ादा आकषर्क नहीं िदख रहे ह�।
Note: ��ES22 has written a very long case-study about it, we’ll not do MBA/PHD on it, but
we’ll collect a few points for quoting in “GSM2- issues in policy design and implementation.”
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1049
⇒ it usually involves front-loading = spending greater amount in advance. (ढेर सारी रक़म शु�आत म� ही
ख़चर् कर दो) e.g. if government has to spend Rs.6000 in a year:
o �DONT do 2000 in January + 2000 in June + 2000 in December = 6,000.
o �DO ₹4000 in January + 2000 in June = 6,000
⇒ USA, EU etc. tried this type of fiscal stimulus packages to revive their economies post-Corona.
(what is fiscal stimulus? Ref: Pillar2D) (अमे�रका और यूरोप ने ने इस तरह का �व�ीय प्रो�ाहन पैकेज जारी िकया था)
⇒ � It does not give any space to adjust things based on new feedback or new development. e.g.
what if there is third wave of Corona with Omicron variant! (वा��वक जीवन क� नयी घटनाओं, प्र�तिक्रयाऑ
के िहसाब से बाद म� कोई सुधार कर नहीं सकते)
⇒ � you are left with less money in future. So even if you want to adjust some scheme, you
cannot do it. (वैसे भी ढेर सारा पैसा तो आपने शु� म� ही ख़चर् कर िदया तो अभी त�ूरा कु छ नया करोगे, जब पैसा तो बचा निह!)
Waterfall strategy assumes that future can be predicted and so we can go on a FIXED path of action.
Such thinking was also reflected in five-year plans (FYP) & its failures e.g. India forced to take “plan
holiday (1966-69)” after the failure of 3rd FYP due to wars and famines (REF Pillar4B)। (इस रणनी�त म�
हम मानते ह� िक हम भ�व� का पूवार्नुमान कर सकते ह�, और उस िहसाब से एक �न��त मागर् पर आगे बढ़ सकते ह�, और सब कु छ हमारे
योजना के िहसाब से ही होगा। पं चवष�य योजनाओं म� हमने एसा िकया था, तो असफलता �मली थी। जैसे क� युद्ध और अकाल के बाद तीसरी
पं चवष�य योजना क� नाकामयाबी के चलते हम� “योजना छु ट्टी” घो�षत करनी पड़ी थी।)
61.11.2 �👟👟 Barbell strategy/Agile Response- India: (बारबेल रणनी�त और फु त�ली प्र�तिक्रया)
It involves graded and incremental approach e.g. Give Corona vaccine to 1) Health workers and
senior citizen 2) other adults aged 18&above then 3) teenagers then 4) children. (धीरे धीरे हौले हौले
उ�रो�र आगे बढ़ेग।े दे दनादन सब वय�ों एकसाथ िटका मत दो, सबसे पहले बुजुगर् → बाद म� नौजवान → बाद म� िकशोर और
→ बाद म� छोटे ब�े।)
real-time adjustment based on feedback-loops, and new developments (वा��वक जीवन क� नयी
घटनाओं, प्र�तिक्रयाऑ के िहसाब से बाद म� सुधार करते रहो )
e.g. Atma Nirbhar Bharat Stimulus package 1.0 then 2.0 then 3.0 was done. Modi did not do
entire year ka “Atma Nirbhar Bharat” AT ONCE. (जैसे क� आ��नभर्र भारत को एक चरण ही नहीं, तीन चरणों म�
िकया गया)
RBI did not open all the “on-tap loan windows” at once. RBI gradually opened them based on
feedback. (REF: Pillar1A2 (�रज़वर् ब�क ने भी सारे लोन �खड़िकयाँ एक साथ नहीं खोली थी, धीरे धीरे खोली थी। )
Production linked incentive (PLI) scheme- 1) more number of sectors were gradually added later
on, based on feedback. e.g. Drone. 2) Base-Year/Subsidy calculation formula was changed based
on feedback. (REF: Pillar4B) (पीएलआई योजना म� नए नए �ेत्रों को जोड़ना स��डी �गनती फ़ॉमूर्ला म� सुधार करना)
Barbell/Agile improves responsiveness. It does not attempt to predict future. It tries to adjust
itself with the future evolving situations. (बारबेल रणनी�त और फु त�ली प्र�तिक्रया म� हम भ�व� का पूवार्नुमान नहीं
लगाते। हम अपनी योजनाओं को भ�व� म� हो रहे बदलावों के मुता�बक़ धीरे धीरे बदलते रहते ह�)
��FAQ: here you are saying that front loading is not done in the barbell strategy, but
government of India had done “front loading” in the PM-KISAN instalments as per Pillar4A. Ans. 1)
Economic Survey has to do chikni-chupdi fancy-talk even if in reality govt didn’t truly do it. 2) You
should simply accept and memorize the points for Mains Answer writing. You need not be
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1050
nitpicking over every single word. Such approach is not useful for clearing competitive exams. (मु�
परी�ा म� छाप दो मुद्दे! हम� इस मामले क� वकालत करने सुप्रीम कोटर् थोड़ी जाना है?)
61.12.1 👻👻👻👻: 💊💊📯📯📯📯→ Ayushman Bharat National Digital Health Mission (15th Aug, 2020)
⇒ 2020-15th August speech. PM announced National Digital Health Mission रा��ीय िड�जटल �ा� �मशन
⇒ 2021-Oct: launched with the name “Ayushman Bharat Digital Mission (ABDM)”
⇒ Boss? Health Ministry → National Health Authority (NHA) (Recall PM-JAY walli organization
from Pillar1D. This is same NHA)
⇒ National Health Authority (NHA) will act as the Health Information Exchange and Consent
Manager (HIE-CM). Which doctors/hospitals can access person’s health data? Ans. Person will
give consent about that to NHA.
⇒ Person registers on portal/App using mobile number or Aadhar card. Not compulsory to give
Aadhar card number at present. He gets 14 digit health ID number.
⇒ Citizens to be given Unique Health ID (UHID) with personal records about diseases, diagnosis,
report, medication etc. (रोग, �नदान, �रपोटर्, दवा आिद)
⇒ UHID will be free of cost, voluntary, consent-based with opt-out feature. (�न: शु�, �ै��क और
सहम�त-आधा�रत. मरीज अपना डेटा हटवा/िडलीट भी करवा सकते ह� ).
⇒ Patients can share with doctors = saves time/trouble of keeping multiple files/xerox/X-rays etc.
⇒ Can person delete his account /data? Ans. Yes
⇒ Can a person add a nominee to access account? (e.g. PH person unable to use phone wants to
add his guardian/relative?) Ans. Yes.
⇒ It’ll also connect with digi-doctor, tele-medicine, e-pharmacy. (िडजी-�चिक�क , दू रभाष-दवाइया, ई-
औषधालय)
⇒ ��Budget-2022: Ayushman Bharat Digital Mission → we'll create digital database/registries
of doctor, hospital, patient records.
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1051
61.12.2 👻👻👻👻: 💊💊📯📯📯📯→Draft Health Data Management Policy (�ा� डेटा प्रबं धन नी�त)
⇒ Released by National Health Authority (NHA) for National Digital Health Mission (NDHM):
⇒ covers all stakeholders- Patients, Doctors, Union & State Govt, Health insurance cos, pharma
cos, & research bodies. यह नी�त सभी ही धारकों को सं बो�धत करती
⇒ Patient health id number will be created free of cost. मु� म� �ा� सं �ाक िदया जाएगा
⇒ Patient will have the right to remove his personal data, get errors corrected, Restrict the
disclosure of data to other organizations, Request copy of data. मरीज अपना डाटा हटवा सकता है, डाटा
गल�तयों म� सुधार करवा सकता है, िकसी सं �ा से डाटा साझा करने से मना कर सकता है, अपने डेटा क� नकल मांग सकता है- यह सब
अ�धकार प्रा�
⇒ Data will be shared with orgs only with compliance of applicable laws and international
standards. भारतीय कानून और वै��क मानकों के आधार पर ही डाटा को अ� सं �ानों के साथ साझा िकया जाएगा
⇒ Awareness program about data privacy. डाटा �नजता के बारे म� जन जागृ�त अ�भयान
🤩🤩Conclusion? NDHM will help providing access to inclusive, affordable, and safe healthcare to the
people of India. This will greatly help in SDG goals.... रा�ी� य िड�जटल �ा� �मशन भारत के लोगों के �लए समावेशी,
स�ी और सुर��त �ा� सेवा प�ँ चाने म� मदद करेगा. सतत �वकास ल�ों क� प्रा�� के �लए उपयोगी
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1052
⇒ Centrally sponsored scheme. State governments also required to contribute money.
⇒ To detect and cure of new and emerging diseases, deal with present and future pandemics.
⇒ Develop Primary, Secondary, And Tertiary Care Health Systems.
⇒ Focus on IT enabled surveillance, Public Health Labs, National Centre for Disease Control etc.
⇒ Which state will receive how much doses from Union Govt? Ans. Depends on 1) population, 2)
disease burden 3) progress of vaccination. [in these three parameters higher the number more
vaccine doses will be given to state] 4) wastage of vaccines= if more wastage in a State then
union will give less doses in future. [क� द्र सरकार क� इस िकस रा� को िकतनी वै�ीन देगी? जवाब= �जन रा�ों म�
आबादी �ादा होगी, रोगप्रकोप �ादा होगा और वै�ीन क� बबार्दी कम रही होगी- उन रा�ों को �ादा कोटा ज�ा �मलेगा]
⇒ For 1st two doses = Every citizen above the age of 18 will be vaccinated free at centres run by the
Centre or a state government. नाग�रकों को क� द्र और रा� सरकार के क� द्रों म� मु� म� टीका लगवाए जाएं गे।
⇒ if person wants to get vaccinated at private centre then Vaccine fee @pvt hospital= Rs 780 for
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1053
Covishield, Rs 1,410 for Covaxin; and is Rs 1,145 for Sputnik V. ADD EXTRA Rs. 150 service
charge. और अगर ��� चाहे तो �नजी अ�तालों म� भी पैसा देकर टीका लगवा सकते ह�।
⇒ 2022: Govt started ) vaccination for 15-18 years age group teenagers.
61.14.3 👻👻 💉💉 📯📯📯📯: Corona → Vaccine & Corona medicines pe 0% GST YES OR NO?
Covered in 📑📑Pillar#2: GST.
61.15.2 👻👻👻👻💉💉: CoWIN (Covid Vaccine Intelligence Work) App & Portal
⇒ �Boss? Health ministry’s National Health Authority (NHA, same organization also looks after
PM-JAY ₹5lakh health insurance)
⇒ COWIN App & Portal helps people to register for vaccination slot and download the vaccine
certificate. [टीकाकरण के �लए पं जीकरण और प्रमाण पत्र उपल� करता है]
⇒ IF person does not have Aadhaar card then he can register with other documents like voter ID,
driving license, etc.[आधार काडर् आव�क नहीं]
⇒ 2021: PM Modi declared COWIN will be given Open source/free to all the nations, so other
nations don’t have to spend ₹₹ on developing similar software/app. [अ� देशों को मु� म� सो�वेयर द�गे]
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1054
Table 3: don't loose sleep
Diganostic kit: Corona Self Diagnostic kit developed by Defence Research and Development
DIPCOVAN Organisation's Defence Institute of Physiology and Allied Sciences (DIPAS)
laboratory. Can give result in 75 minutes & cost ₹75. This will be commercially
launched Delhi-based Vanguard Diagnostics company. डीआरडीओ द्वारा कोरोनावायरस
का घर पे ही �-परी�ण के �लए नई क�ट का �नमार्ण. ₹75 म� �मलेगी पर 75 �मनट म� नतीजा देगी
Corona Defence Research and Development Organisation (DRDO)'s new oral drug 2-
Medicines: deoxy-D-glucose (2-DG) drug can provide early relief from oxygen
2DG dependency among the Corona patients. Drugs Controller General of India
(DCGI) granted emergency use permission to it. कोरोना मरीज यह दवाई मुंह से लेगा तो
उसे ऑ�ीजन क� ज�रत कम होगी.
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1055
Amphotericin- ⇒ Myucomercosis is a black fungal infection occurring as a post-coronavirus
B complication. result in loss of vision if not treated immediately.
FOR ⇒ Excessive use of steroids in diabetes patients increases their vulnerability.
Mucormycosis ⇒ Myucomercosis is not contiguous from one person to another but, fungus
is present in a closed area and enters the respiratory system through air.
⇒ Antifungal injection Amphotericin-B required
Remdesivir This Anti-viral injection is meant to be used for critical/severe case of Corona.
But excessively prescribed even in normal cases → supply shortage of
injection and its black marketing. [अनाव�क �प से दे दनादन सभी मरीज़ों को दी गई �जसके
चलते स�ाई/आपू�त म� कमी �ई थी और कालाबाज़ारी म� शु� �ई थी]
61.16💊💊📯📯📯📯 → HEALTH: MISC. SCHEMES (�व�वध गौण योजनाए)
Pradhan Mantri सभी रा�ों म� ए� जेसे अ�ताल बनाओ योजना Central Sector Scheme: 100% funded by
Swasthya Union to ⏬regional imbalance in Healthcare infrastructure of India by
Suraksha 1. Setting up new AIIMS like Institutions
Yojana 2. Upgrading Government Medical Colleges.
Rashtriya Health Ministry gives ₹ ₹ for BPL patient suffering from major life threatening
Arogya Nidhi diseases to get FREE treatment at super specialty hospitals from this RAN fund
National Health Ministry to monitor
Pharmacovigila ⇒ Adverse Drugs Reactions (ADR: दवा क� प्र�तकू ल प्र�तिक्रया),
nce Programme ⇒ Spurious/Fake drugs. (�मलावटी / नकली दवा)
Deworming Children given Albendazole tablets, awareness, cleanliness etc. [कृ �महरण]
Science Ministry → Dept of Biotechnology launched this with 5 sub-missions:
1. GARBH-ini: A research mission to find out reasons for for pre-term /
Atal Jai
premature births. So such babies can be saved accordingly.
Anusandhan
2. IndCEPI: A Mission to develop affordable vaccines for endemic diseases.
Biotech
3. UNaTI: to transform health, agro & energy e.g. research on bio-fortified
Missions
and protein rich wheat.
2019
4. Mission on Antimicrobial Resistance
5. innovative technological for the Swachch Bharat mission
Boss? Ministry of Ayush
- Core Scheme (Not 100% funded by Union)
National Ayush
- Encourage the use of AYUSH medicine, setup new colleges, setup new
Mission (2014)
hospitals, increase manpower etc.
- Encourage Medicinal plants cultivation, ensure quality control of drugs
PM Vrikshayush Ayush Ministry scheme for medicinal plants’ cultivation and post-harvest
Yojana management (कटाई के बाद का प्रबं धन)
Ayush Ministry portal for online licensing of Ayurveda, Siddha, Unani and
🤳🤳 Homoeopathy drugs. It’ll also provide information of cancelled and spurious
e-AUSHADHI
drugs.
🤳🤳Yoga Apps ⇒ BHUVAN-YOGA: ISRO app to know about how many people participated
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1056
International Yoga day across different venues.
⇒ Yoga Locator: to find venues for International Yoga day.
⇒ 21 June: Day of Yoga (started since 2015, by UNGA)
🤳🤳Imp. Days ⇒ 4th January: Siddha Day. Ayush Ministry started this from 2018.
⇒ 1 Dec: World AIDS Day.
Disease ��ES22: India has eliminated eliminating polio, guinea worm disease,
eliminiated yaws and maternal tetanus and neonatal tetanus.
61.16.1 💊💊✍→ Conclusion-Template-Health? (�न�षर्)
- People can lead socially and economically productive life only when they have a good health. अ�े
�ा� के �बना मनु� सामा�जक और आ�थक �प से उ�ादक जीवन नहीं जी सकता।
- Preventable illness / death of a father / mother may push a family into poverty, students into
child labourers, adolescents into juvenile delinquents. बीमारे म� मा-बाप क� मृ�ु एक प�रवार को गरीबी म�, ब�ों
को बाल मजदू रों म�, िकशोरों को अपराध-जगत म� धके ल सकती है।
- Universal health coverage is therefore a prerequisite for human development. Else, India's
economic growth will neither be sustained or secured for long term. �ा� सेवाओं का सावर्�त्रक �प से
�मलना मानव �वकास क� पूवर् शतर् है, वरना वृ�द्ध दीघर्कालीन �प से / सतत �प से चल नहीं पाएगी।
- Aforementioned schemes / initiatives / challenges are important in that regard / need to be
addressed on priority basis / war-footing. ऊकत योजनाओ/ सम�ाओ को अग्रताक्रम देकर लागू करना / लड़ना ज�री
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1057
61.17🍴🍴 HRD → HEALTH → HUNGER, MALNUTRITION, FOOD SECURITY
- Hunger =distress arising from insufficient calorie / food intake. (भूख: भोजन न �मलने पर होने वाली पीड़ा )
- Malnutrition is the deficiency arising from insufficient calories and / or insufficient nutrients in
a person’s diet. (कु पोषण: अपयार्� भोजन / पोषक त�ों के चलते होंने वाला शारी�रक अभाव /सम�ा)
- खाद्य सुर�ा Food security means the availability of nutritious food at stable & affordable prices
round the year for all the people. (��र / िकफायती दामों पर पूरे साल पोषण�म आहार/भोजन �मलना )
SDG Goal#2 requires India to end hunger & achieve food security.
Food security Pillar What has India done to achieve it?
food should be available in Union: MSP, fertilizer subsidy, PM-KISAN
sufficient quantity at all times and States: cheap canal water and electricity to farmers.
at all places [पयार्� मात्रा म� भोजन �मले Together, they encourage farmers to produce more
सबको] grains.
Food should be affordable To Through National Food Security Act (NFSA), Govt provides
poor people. िकफायती दामों गरीबों को cheap grain to poor.
�मले
Food should be nutritious to Through Poshan Abhiyan, Mid-day meal, Integrated-Child
ensure healthy development of Development Services (ICDS) and half dozen other schemes,
body of mind. पोषणयु�, शरीर म��� Govt ensures nutritious food to children & women.
�वकास
In food prices and supply must be FCI keeps ‘buffer-stock’ of grains. It can be sold to open
stable. खा� चीजों म� दामों म� ��रता रहे market or distributed among people during high inflation,
natural disaster etc. (More in 📑📑Pillar#4A: agri)
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1058
61.17.1 🍴🍴 �[YEARBOOK] Min. of Consumer Affairs, Food & Public Distribution
उपभो�ा मामले, खाद्य और सावर्ज�नक �वतरण मं त्रालय consists of <notable organizations are >
Dept − Dept. of Consumer Affairs → Integrated Grievance Redress Mechanism
(INGRAM) portal for consumer complaints.
− Dept. of Food and Public Distribution
Attached / − Directorate of Sugar and Vegetable Oils → National Sugar Institute
subordinate offices − Indian Grain Storage Management & Research Institute
Statutory Bodies − Warehousing Development and Regulatory Authority (2007)
(we learned them − National Consumer Disputes Redressal Commission
in 📑📑Pillar#4A) − Bureau of Indian Standards (BIS)- ISI & Gold hallmarking
− + enforcement of Essential Commodities Act, 1955
Commercial − Food Corporation of India (FCI-statutory corporation, 1964)
Undertakings − Central Warehousing Corporation (Statutory corporation, 1962)
− Central Railside Warehouse Company Limited
− Hindustan Vegetable Oils Corporation Limited
Autonomous N/A or not MCQ worthy.
61.17.2 🍴🍴📯📯📯📯 → Hunger → Schemes before NFSA
TPDS-1997 Targeted Public Distribution System (ल��त सावर्ज�नक �वतरण प्रणाली )
- Panchayats, Self-help Groups, Co-operatives, Individuals are given
‘license’ to open fair price shops / PDS shops.
- Beneficiaries can buy subsidized grains, fuel (kerosene) etc. from such
shops using their ‘ration card’.
AAY-2000 - Antyodaya Anna Yojana to give 35 kg subsidized grains per poorest of
poor family per month.
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1059
NFSA-2013 National Food Security Act 2013 converted above scheme entitlements into
‘legal rights’. ऊकत योजनाओ म� �मलने वाली चीजों को कानूनन हक म� प�रव�तत िकया।
61.17.3 🍴🍴📯📯📯📯 → Hunger → National Food Security Act 2013 (खाद्य सुर�ा कानून)
- aims to provide subsidized food grains to poor families. स�ी क�मतों पर गरीब प�रवारों को भोजन /अ� देना
- Boss? Dept of Food and Public Distribution (खाद्य और सावर्ज�नक �वतरण का �वभाग)
- Union procures grains from farmers at Minimum Support Price (MSP: �ूनतम समथर्न मू�, Ref:4A).
- Union sells the grains to States at Central Issue Price (CIP: क� द्रीय �नगर्म मू�). Quantitative allotment
to each state is done on the basis of number of beneficiaries.
- NFSA Act requires that CIP can’t be greater than MSP.
- Food Subsidy = FCI’s Economic Cost MINUS Central Issue Price (CIP)
- States ultimately sell the grains to beneficiary through Fair Price Shops/Ration Shops/ Public
Distribution System/PDS Shops. (राशन क� दुकान�)
- It’s a Central Sector Scheme. Budget-2019 allotted >₹ 1.50 lakh crore for this.
- States shortlist the beneficiaries & sell them foodgrains in such manner that
- ~2/3rd =67% Indian population is covered, including
- 75% rural population is covered (तीन-चौथाई ग्रामीण आबादी को शा�मल िकया)
- 50% urban population is covered. (आधी शहरी आबादी को शा�मल िकया)
- Thus, both BPL and (slightly) above poverty line (APL) families are covered. गरीबी रेखा के नीचे/ऊपर
- These beneficiaries are entitled to grains at subsidized rate, through PDS shops →
Rice ₹ 3/kg
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1060
Wheat ₹ 2/kg These prices are fixed by Union. Union
Coarse grains ₹ 1/kg may update these subsidized prices, but
not higher than MSP.
🔠🔠❓MCQ. Find correct statement(s) about National Food Security Act, 2013 (UPSC-Pre-2018)
1. The families coming under category of 'below poverty line (BPL)' only are eligible to receive
subsidised food grains.
2. The eldest woman in a household, of age 18 years or above, shall be the head of the household for
the purpose of issuance of a ration card.
3. Pregnant women and lactating mothers are entitled to a 'take-home ration' of 1600 calories per
day during pregnancy and for six months thereafter.
Codes: (a) 1 and 2 only (b) 2 only (c) 1 and 3 only (d) 3 only
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1061
61.17.4 🍴🍴📯📯📯📯:💳💳 → Hunger → NFSA → One Nation One Ration Card
सामा� �प से राशन काडर् क� सु�वधा �ान- आधा�रत होती है, यानी मुंबई म� बनाया गया राशन काडर् लखनऊ म� स�ा अनाज ख़रीदने के
�लए इ�ेमाल नहीं कर सकते। “ एक रा�� एक राशन काडर् प्रणाली” क� जहाँ प्रवासी मज़दू र को एसी सु�वधा �मले। िक�ु कु छ रा�ों ने
अभी तक यह प्रणाली नहीं अपनायी तो नाराज़ सुप्रीम कोटर् ने उ�� 31 जुलाई तक का समय �दया।
😰😰BEFORE 🤩🤩AFTER
⇒ Generally ration card is made in the name ⇒ WILL BE ABLE TO DO IT.
of a family and it is location specific. ⇒ Project started from 2019 but in 2021: Four
⇒ So, if a migrant worker has got a ration card states were yet to join the scheme —
in Mumbai → he cannot use it for buying Assam, Chhattisgarh, Delhi and West
cheap grains at Pune (Intrastate) or Bengal. : SUPREME Court ordered all
Lucknow (Interstate). governments to implement this by a
deadline July 31, 2021.
Thus, ONORC aims to provide inter-state and intra- state portability of public distribution system
(PDS) / National Food security act (NFSA) entitlement. It functions using two portals:
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1062
money to buy (non-subsidized) foodgrains from the market. This will � FCI’s procurement
and stock keeping burden. (सशतर् नकदी ह�ांतरण योजनाएं : प�रवार बाजार भावों पर अ� खरीद ले)
61.17.8 👻👻👻👻🍴🍴📯📯📯📯 Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY)- free grains in
Corona
⇒ Corona → Atma-Nirbhar → PMGKAY: 80 crore poor people will to get 5 kg [wheat or rice] + 1
kg of pulses for free every month for the next three months.
⇒ Boss? Ministry of Consumer Affairs, Food & Public Distribution → FCI → releases the
foodgrains to State government. Funding: ₹1.5 lakh crores
⇒ Duration? Phase-1: from April to June 2020. Phase-2: July to November 2020. Then in 2021:
Scheme is extended, but only 5kg grain given, no pulses given. [दू सरे चरण म� दाल नहीं, के वल अनाज द�गे]
⇒ This scheme is valid till 2022-Dec.
With National Food security act, India achieved ‘food security’ but not nutritional security, because
malnutrition is caused by →
1. Income Inequality: Poor people unable to buy milk / veggies / almonds. Since ~21% of Indian
population is Below Poverty Line (2011), this is bound to happen. (आय म� असमानता)
2. Gender Inequality: Women eating last and least. >1/3rd of Indian women have low Body Mass
Index (BMI) (मिहलाओ से भेदभाव)
3. Social Inequality: SC/ST etc deprived of economic opportunities → unable to buy good food.
(सामा�जक असमानता- अनुसू�चत जाती/जनजा�त के प�रवार गरीबी के चलते अ�ा भोजन ले नहीं पाते)
4. Water-sanitation-disease e.g. open defecation → worms in intestine, enteropathy. (गं दगी, अंतड़ी म�
कृ �म/सूजन)
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1063
5. Psychological issues e.g. Anorexia nervosa: person fears gaining weight so avoids eating. Social
media/instagram → insecurity about weight gain & body image. (मनोवै�ा�नक कारण। अपने
�प/सुं दरता/बाहरी िदखाव के �लए असुर�ा क� भावना )
6. Dietary habits: Vegetarians suffer from protein deficiency, according to Western scientists.
(शाकाहार के चलते शरीर म� प्रोटीन क� कमी)
To address above problems, Govt. launched ….
2018: National Nutrition Mission = POSHAN = Prime Minister’s Overarching Scheme for Holistic
Nutrition. Motto: Sahi Poshan, Desh Roshan
- Boss? Ministry of Women and Child Development (मिहला एवं बाल �वकास मं त्रालय)
- Core Scheme (Not 100% funded by Union). 60:40, 90:10. Union will arrange its side of money-
half from budget and half from World Bank (IBRD) and other Multilateral Development Banks
(MDBs).
- Iron Folic Acid (IFA)tablets, nutritious food in Anganwadi / Schools, convergence with ongoing
schemes for women/child, Online monitoring, IEC awareness generation, E-learning, even Yoga.
- Bharatiya Poshan Krishi Kosh (BPKK) database of diverse crops across 128 agro-climatic zones
in India for better nutritional outcomes.
- Poshan Anthem song by Prasoon Joshi and Shankar Mahadevan.
- Rashtriya Poshan Mah – celebrated every year in the Month of September.
Objective & Indicators Target
1) Stunting in 0-6 group (all India average above 35%) In Bihar Reduce to 25% by 2022 (=
& Madhya Pradesh etc. it’s >40% Mission25 by 2022)
2) Stunting (low height for age), undernutrition, low- Reduce by 2% every year upto
birthweight. 31/3/2020
3) Anemia (र�ा�ता) in 0-6 age children, adolescent girls, Reduce by 3% every year upto
women. 31/3/2020
- Anaemia is a condition when blood doesn’t have enough Red
Blood Cells (RBC) or Haemoglobin → Blood unable to
transport enough Oxygen → Fatigue.
- Anemia results from poor diet, malaria etc. or genetic
disorders- sickle cell disease, Thalassamia.
- >½ of Pregnant women suffer from Anaemia in India.
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1064
61.17.12 🍴🍴📯📯📯📯 → Hunger → Malnutrition (कु पोषण) → Mission Poshan 2.0 (2021)
💼💼Budget-2021: we will launch Mission Poshan 2.0 by merging following two schemes
What about free meal in schools? Ans. Refer Pillar6B: → HRD Education
61.17.13 🍴🍴🍴🍴 → Ranking: Global Hunger Index (GHI: वै��क भूख/�ुधा सूचकांक)
Annual reported by Concern Worldwide (Ireland) and Welthungerhilfe (Germany). Previously this
report was prepared by IFPRI (International Food Policy Research Institute).
To compute the GHI, they measure four indicators:
1. Undernourishment: Population whose caloric intake is insufficient
2. Child wasting: low weight for height.
3. Child stunting: low height for age. caused by (chronic) long-term insufficient nutrients
4. Child mortality (0-5 age)
�India’s rank fallen: 94th (2020) → 101st (2021) to 107 (2022).
Although NITI Aayog defends, “International surveys’ methodologies are faulty, otherwise as per
Indian Govt’s own surveys there has been improvement in India.” (वै��क / आंतररा��ीय सं �ाओ के �गनती करने
के तरीकों म� ही गलती है, हम गलत नहीं है)
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1065
61.17.14 🍴🍴🍴🍴 → Ranking: Food/Hunger ke 500 Types/Jaat-ke-Reports
World’s Children report By UNICEF. Highlighted that in India, every second child is
affected by some form of malnutrition (2019)
Global Nutrition Report Nutrition for Growth (N4G) is partnership between the United
Kingdom, Brazil and Japan governments + donors + NGOs →
based on their 2013’s summit, group of experts started this annual
report. It doesn’t give a composite ‘rank’ but generates ‘profile’.
India is profiled as a nation suffering from anaemia and stunting.
State of Food Security and Annual report by Food and Agriculture Organization (FAO),
Nutrition in the World WHO & a few other org.
report It uses the Food Insecurity Experience Scale developed by FAO.
Food Waste Index Report By United Nations Environment Programme (UNEP). Found that
2021 [अ� बबार्दी सूचकांक] 50 kg of food is waste/thrown away per person every year in
Indian homes. Food Waste → Landfill → GHG Emission
Hunger Hotspots Report By Food and Agriculture Organisation and World Food
Programme. Identified Ethiopia, Madagascar, Yemen, South
Sudan and Nigeria for hunger problems.
Global Food Security Index By less-famous body London-based Economist Impact. So poor
cost benefit in memorising the India's ranking
🔠🔠❓MCQ. Which indicator(s) is/are used in Global Hunger Index Report?(Pre-2016)
1) Undernourishment 2) Child stunting 3) Child mortality
Codes: (a) 1 only (b) 2 and 3 only (c) 1, 2 and 3 (d) 1 and 3 only
Next Handout📑📑
#6B: Education, Skill Development.
#6C: Poverty.
#6D: Women & other Weaker Section, UNDP, HDI, SDG
Mains Qs of Pillar6 = at the end of Handout No. 6D
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1066
PILLAR#6B-EDUCATION, SKILL, POVERTY
Table of Contents
62 📐📐HRD → Education (�श�ा)................................................................................................................... 1069
62.1.1 📐📐 Edu →�[YEARBOOK] Ministry of Human Resource Development/Education ..... 1070
62.1.2 📐📐 � Bodies → Higher Edu → HEFA (2016) ..................................................................... 1071
62.1.3 📐📐 � Bodies → Vedic Edu → Bharatiya Shiksha Board.................................................... 1071
62.1.4 📐📐�[YEARBOOK] Notable Schools funded by Union ...................................................... 1072
62.2 �📯📯📯📯New education policy 2020 (नई �श�ा नी�त)........................................................................ 1072
62.2.1 ✍NEP-2020: Introduction (प�रचय) .......................................................................................... 1072
62.2.2 🏫🏫Education: Schooling → Curriculum changed (�ू ली पाठ्यक्रम म� बदलाव) ............................. 1073
62.2.3 �Education: Primary- other reforms (प्राथ�मक �श�ा म� सुधार).................................................... 1074
62.2.4 �Education: Primary- ECCE upto age 8 ................................................................................ 1074
62.2.5 🈶🈶Education: Language / Medium (भाषा /मा�म) ..................................................................... 1075
62.2.6 PM SHRI Schools Scheme (2022) .............................................................................................. 1075
62.2.7 �Education: Higher (उ� �श�ा) ............................................................................................... 1076
62.2.8 �Education: Higher → Credit (गुण आधा�रत �श�ा) .................................................................. 1076
62.2.9 �Education: Higher → Entry & Exit (प्रवेश और प्र�ान) .......................................................... 1077
62.2.10 �🕵🕵Education: Higher → New Orgs → HECI ............................................................. 1077
62.2.11 ��Education: Higher → New Orgs → Others............................................................ 1078
62.2.12 👨👨👨👴👴👴👴Education: Adult/PH (प्रौढ़ �श�ा और �वकलांग �श�ा) ................................................ 1078
62.2.13 �Education: Open/Distance/E-Learning (दू र - �श�ण/ई �श�ा)........................................... 1078
62.2.14 📊📊📊📊Assessment of students (छात्रों का मू�ांकन)................................................................... 1079
62.2.15 📊📊�Assessment of students: bodies (मू�ांकन/परी�ा के �लए सं �ाएं ) ..................................... 1079
62.2.16 📊📊📊📊Assessment of schools (�ू लों का आकलन) .................................................................... 1079
62.2.17 �Teachers recruitment and training (�श�कों क� भत� और तालीम)......................................... 1080
62.2.18 🤑🤑NEP-2020: Funding (�श�ा �ेत्र के �लए �व�पोषण) .................................................................. 1080
62.2.19 👿👿NEP-2020: Criticism (नई रा��ीय �श�ा नी�त के �खलाफ आलोचना/�नंदा) ...................................... 1080
62.2.20 ✍NEP-2020: Conclusion (�श�ा नी�त के बारे म� �न�षर्)............................................................. 1081
62.3 �🤳🤳PRAGYATA Guidelines on Digital Education (2020-Jul) ................................................... 1081
62.4 📐📐😋😋😋😋😋😋😋😋 Edu → Std1-8 → Mid-Day Meal Scheme (MDM-2001-2020) ...................... 1082
62.5 📐📐😋😋😋😋😋😋😋😋 Edu → Std1-8 → PM Poshan (2021-2026) ...................................................... 1083
62.6 📐📐📯📯📯📯 Edu → Std1-8 → Sarva Shiksha Abhiyaan (SSA-2001)............................................... 1084
62.6.1 📐📐📯📯📯📯Sarva Shiksha Abhiyan (SSA) → Notable Subscheme / Programs ...................... 1084
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1067
62.7 📐📐📯📯📯📯 Edu → Std. 9-12 → RMSA (2009) मा��मक �श�ा ............................................................ 1085
62.7.1 👻👻👻👻👻👻👻👻👻👻CBSE: Syllabus reduction (पाठ्यक्रम म� कटौती) ............................................... 1085
62.8 📐📐📯📯📯📯 Edu → Std. Jr.KG to 12: Samagra Shiksha scheme (2018).......................................... 1086
62.8.1 � 2019: NISHTHA scheme for Teachers training (2019) .................................................... 1086
62.9 Edu (📐📐📐📐) → Rankings for School Education ............................................................................. 1086
62.9.1 Annual Status of Education Report ASER Report by NGO Pratham ..................................... 1086
62.10 📐📐�:🧔🧔 Edu → no detention policy & RTE Amendment 2019 .......................................... 1088
62.11 🎓🎓Edu → CBSE Class12 Result 30:30:40 formula ...................................................................... 1088
62.12 📐📐🔠🔠🔠🔠🔠🔠 Edu → National testing agency (NTA) & NEET .............................................. 1088
62.13 📐📐 Edu → Higher Edu: Colleges & Uni. (उ�तर �श�ा) ................................................................. 1089
62.13.1 📐📐📐📐 Edu → Higher Edu: Ranking by Education Ministry ........................................... 1090
62.13.2 📐📐📐📐 Edu → Higher Edu: Ranking : Misc ....................................................................... 1090
62.14 👻👻👻👻📐📐🤳🤳 Edu → Portals/Apps/Orgs → Post-Corona ....................................................... 1091
62.15 📐📐🤳🤳 Edu → Misc. portals / initiatives (Before Corona) ......................................................... 1092
62.15.1 📐📐🤳🤳 Edu → Misc: School infra/result monitoring ........................................................ 1092
62.15.2 📐📐🤳🤳 Edu → Misc: E-learning .......................................................................................... 1092
62.15.3 📐📐🤳🤳 Edu → Misc: Anti-ragging / life values/mental health ......................................... 1093
62.15.4 📐📐🤳🤳 Edu → Misc: Startup ke liye .................................................................................... 1093
62.15.5 📐📐🤳🤳 Edu → Misc: Teachers’ training ............................................................................. 1094
62.15.6 📐📐🤳🤳 Edu → Misc: NRI/foreign teachers/students ko bring to India? ......................... 1094
62.15.7 📐📐🤳🤳 Edu → Misc: Girl students / girl scientists............................................................. 1094
62.15.8 📐📐🤳🤳 Edu → Misc: Making science/research useful/popular ........................................ 1095
62.15.9 📐📐🤳🤳 Edu → Misc: National Unity................................................................................... 1096
62.15.10 📐📐🤳🤳 Edu → Misc: Civic duties, Adult Edu (प्रौढ़ �श�ा) .................................................... 1096
62.16 📐📐 Edu → Misc. → Youth org. .................................................................................................... 1097
62.16.1 Yearbook: Ministry of Youth Affairs And Sports (युवा कायर् और खेल मं त्रालय) .......................... 1097
62.16.2 Youth Schemes= Central Sector Schemes = 100% funded by Union. ............................... 1097
62.16.3 ⚽�Khelo India Scheme → National Sports Education Board .................................... 1097
62.17 📐📐 ✍ Conclusion-Template-Education:.................................................................................... 1097
63 💇💇💇 HRD → Skilling, Vocational Training, Recruitment ............................................................... 1098
63.1 � Yearbook Recruitment & Training Related Ministries .............................................................. 1099
63.1.1 � Ministry of Personnel, Public Grievances & Pensions...................................................... 1099
63.1.2 👮👮 � 🤳🤳 Mission Karmayogi: Training of Civil servants (2020-Sept) ............................ 1100
63.1.3 � Yearbook: Ministry of Labour and Employment .............................................................. 1100
63.2 💇💇💇 �[YEARBOOK] Ministry of Skill Development & Entrepreneurship ........................... 1100
63.3 (💇💇💇)→ NSDC, NSDF, NSDA, NSQF, NCVET .......................................................................... 1101
63.3.1 � NCVET 2018 (�ावसा�यक �श�ा और प्र�श�ण के �लए रा�ी� य प�रषद) ................................................. 1102
63.4 (💇💇💇)📯📯📯📯 Skill India Campaign (2015: कौशल भारत अ�भयान) .................................................... 1102
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1068
63.4.1 (💇💇💇)📯📯📯📯 Skill India3 → National Policy for Skill Dev. & Entrepreneurship 2015 .. 1103
63.4.2 (💇💇💇)📯📯📯📯 Skill India4 → Pradhan Mantri Kaushal Vikas Yojana (PMKVY) ........... 1104
63.4.3 💇💇💇)📯📯📯📯 Skill India4 → PMKVY phase 3.0 (2020) ...................................................... 1104
63.5 (💇💇💇)📯📯📯📯 Skilling → SHREYAS Scheme (2019) ................................................................... 1105
63.5.1 👻👻👻👻👻👻(💇💇💇)Skilling → Post Corona / Atma-Nirbhar ............................................... 1105
63.6 (💇💇💇)📯📯📯📯 Skilling & Entrepreneurship → Before Corona.................................................... 1106
63.7 (💇💇💇)✍ Conclusion-Template-Skill (कौशल �वकास के बारे म� �न�षर्) ............................................... 1108
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1069
I. Not interested in education, lack of aspirations due to traditional gender / societal /
occupational norms in a village. (पढ़ाई म� ��च नहीं, गाँव के सामा�जक और ल��गक बं धनों के चलते जीवन म�
आगे बढ़ने क� आकां�ा नहीं)
II. Girls engaged in domestic work / early marriage. Non-availability of girls’ toilet
III. Financial constraints, engaged in child labour activities. (पैसों क� िक�त, बाल मजदू री)
IV. School is far off / transport / timings not suitable. (प�रवहन क� सम�ा)
V. Teacher absenteeism, Poor quality of teaching, Tribal students unfamiliar with
language/medium. (�श�कों क� अनुप���त, पढ़ाई के अ�� गुणव�ा नहीं, भाषा मा�म क� सम�ा)
VI. Dropout rates ⏫ after class8 as mid-day meal stops, while course difficulty and family
pressure to earn ⏫. (आठवीं क�ा के बाद �ू ल म� मु� का म�ान भोजन नहीं �मलता, ब�� �सलेबस क�
किठनाई और प�रवार से पैसे कमाने का दबाव बढ़ता है)
SDG Goal 4.1: Universal primary and secondary education
SDG Goal #4: India’s baseline in (brackets) India’s SDG Target 2030
Enrollment ratio from class 1 to 10 (75%) 100%
Dropout rate at Secondary level (17%) 10%
% of schools where Pupil Teacher ratio is 30% or less (70%) 100%
Improve Learning Outcomes in Maths, Language, Science 57-67% score in learning outcome
etc subjects at class 5 and class 8 (pathetic) quiz
🔠🔠❓MCQ. Which one of the following is correct for the purpose of Census 2011 [Asked in UPSC-CDS-2017-I]
a) a person aged 7 & above who can both read and write with understanding in any language is
treated as a literate
b) a person aged 8 & and above who can both read and write with understanding in any language is
treated as a literate
c) a person aged 9 & above who can both read and write with understanding in any language is
treated as a literate
d) a person aged 10 & above who can both read and write with understanding in any language is
treated as a literate
62.1.1 📐📐 Edu →�[YEARBOOK] Ministry of Human Resource Development/Education
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1071
(मानक�करण) Vedic education with new syllabus, conducting exams and issue certificates.
Kendriya Class 1 to 12, mainly for Govt employees- both in India, even abroad. Boss?
Vidyalayas Edu Ministry. Shaala Darpan: e-Governance platform for Kendriya Vidyalayas.
Kasturba Class 5 to Class 12 Residential (=with hostel) girl school for SC, ST, OBC,
Gandhi Balika Minorities & BPL. Boss? Edu Ministry
Vidyalaya
Eklavya schools Residential schools in high ST % population area. Boss? Tribal Affairs Ministry.
HRD/Edu Ministry’s free residential schools for talented rural children
Jawahar
from class 6 to 12. (प्र�तभावन ग्रामीण ब�ों के �लए �ू ल. �रहायशी छात्रालय क� सु�वधा)
Navodaya
Student has to pass an entrance exam to get admission, unlike the above
Vidyalayas
schools. [दा�ख़ला पाने के �लए प्रवेश परी�ा होती है.]
Initiative by HRD + Defence Ministry + Home Affairs Ministry for the
Seema Darshan students of Kendriya Vidyalayas and Navodaya Vidyalayas. Take them to
border area / meet with armed forces to cultivate the spirit of Patriotism.
62.2 �📯📯📯📯NEW EDUCATION POLICY 2020 (नई �श�ा नी�त)
⇒ 1948-49: University Education Commission [�व��वद्यालय �श�ा आयोग]
⇒ 1952-53: Secondary Education Commission
⇒ 1964-66: Education Commission under Dr. D.S. Kothari
⇒ 1968: National Policy on Education
⇒ 1976: 42nd Constitutional Amendment: Education put in Concurrent List (समवत� सूची)
⇒ 1986: National Policy on Education (NPE) → modified in 1992.
⇒ 2015-16: T.S.R. Subramaniam Committee for education policy
⇒ 2017-19: Dr. K. Kasturirangan Committee for education policy
62.2.1 ✍NEP-2020: Introduction (प�रचय)
(Origin) 2017: HRD/Edu Ministry had set up Dr. K. Kasturirangan Committee, to replace the
education policy of 1986. Based its report, Govt announced a new National Education Policy in
2020 with following salient features: �न��ल�खत मु� �वशेषताओं के साथ)
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1072
62.2.2 🏫🏫Education: Schooling → Curriculum changed (�ू ली पाठ्यक्रम म� बदलाव)
International studies have found 3-6 years = crucial for mental development. So, the Govt will target
it via 3 three years of Anganwadi/ pre schooling. (मान�सक �वकास के �लए प्री-�ू �लंग मह�पूणर् है ऐसा अंतररा��ीय
सं शोधन म� पाया गया)
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1073
62.2.3 �Education: Primary- other reforms (प्राथ�मक �श�ा म� सुधार)
⇒ 🎯🎯 Target: 100 % Gross Enrolment Ratio (GER) from pre-school to secondary school education
by 2030. (सकल प्रवेश अनुपात)
⇒ National Mission on Foundational Literacy and Numeracy - to ensure by 2025, all children in
class 3 are able to do basic level of reading and maths. (बु�नयादी सा�रता और ग�णत �मता)
⇒ ⚗No rigid separation between academic streams (sci vs commerce etc.) शै��णक धाराओं म� भेद नहीं
िकया जाएगा
⇒ No rigid separation curricular and extracurricular activities (अ�ास प्रवृ��यां बनाम पाठ्येतर प्रवृ��यां)
⇒ No rigid separation between vocational and academic streams. (�ावसा�यक और शै��णक धाराएँ )
⇒ 🔧🔧Vocational Education to start from Class 6 with Internships. (�ावसा�यक प्र�श�ण द�गे)
⇒ We'll use counsellors & social workers with schools e.g. Psychological counselling, sexual
harassment, bullying, depression (ब�ों के �लए मनोवै�ा�नक परामशर्दाता उपल� कराएँ गे)
⇒ Open / Distance learning for classes 3, 5 and 8 through NIOS. (दू र - �श�ण)
⇒ Collectively, it will help bring 2 crore "out of school" children back into the schooling. (ब�ों क�
�ू ल-वापसी)
Table 1: we will setup these institutes हम ये सब बनाएँ गे!
“Bal Bhavans” These will be special daytime boarding schools with art-related,
career-related, and play-related activities.
Samajik Chetna Kendras Social Consciousness Centres will be setup in the Free (Spare)
school infrastructure.
�Artists- कलाकारों के �नवास क� Colleges, school complex to have Artist(s)-in-Residence. Such
�व�ा artists will promote traditional arts / Lok Vidya.
62.2.4 �Education: Primary- ECCE upto age 8
⇒ For upto class12 NCERT will develop National Curricular Framework for School Education
(NCFSE: पाठ्यक्रम क� रा��ीय �परेखा)
⇒ For upto class8 NCERT to develop a National Curricular & Pedagogical Framework for Early
Childhood Care and Education (NCPFECCE or ECCE: बचपन क� परव�रश और �श�ा के �लए रा��ीय पाठ्यक्रम
और �श�ा शा�)
⇒ Ministries of HRD/Edu, Ministry of Women and Child Development (WCD), Ministry of
Health and Tribal Affairs will jointly implement ECCE. (ये तीन मं त्रालय लागू कर�गे)
⇒ ECCE to improve syllabus (Curriculum: पाठ्यक्रम) & teaching methodology (=pedagogy: �श�ा शा�)
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1074
But basically it involves ⏬pressure of rote-learning/coaching classes to pass the exams, ⏫critical
thinking ability & emotional intelligence, 21st century skills, scientific temper etc. समालोचना�क
सोच�मता, भावना�क बु�द्धम�ा, 21 वीं सदी का कौशल, वै�ा�नक �भाव। पढ़ाई का बोझ कम करने के �लए �व�भ� कदम ल�ग।े
⇒ ⏬in Curriculum to Core Concepts. पाठ्यक्रम म� कटौती करके के वल अ�त मह�पूणर् अवधारणाओं को �सखाना
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1075
62.2.7 �Education: Higher (उ� �श�ा)
⇒ 🎯🎯 Target: Gross Enrolment Ratio (GER: higher education): 26% (2018) → ⏫ 50% (2035);
⇒ Add 3.5 crore admission seats in higher education. (उ� �श�ा म� प्रवेश सीटों को बढ़ाया जाए)
⇒ Creative combinations of subjects & multi-disciplinary courses to be allowed. e.g. philosophy
and architecture, Earth Science and architecture. (अलग-अलग �वषयों का रचना�क सं योजन)
⇒ At present, most Private colleges are usually affiliated to some universities. Colleges have to
follow the admission process and syllabus defined by the university. In the next 15 years
gradually more autonomy will be given to colleges in this area. (महा�वद्यालयों को अपनी प्रवेश प्रिक्रया और
पाठ्यक्रम बनाने म� �ादा �तं त्रता दी जाएगी)
⇒ 🔧🔧Vocational education to be integrated. (�वसा�यक �श�ण को शा�मल िकया जाएगा)
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1076
62.2.9 �Education: Higher → Entry & Exit (प्रवेश और प्र�ान)
⇒ IIT: 4 years course = BTech degree. If a student is weak/wants to EXIT after 3 year, IIT will give
a Bachelor of Science (BSc) degree. Such proposal was approved in 2019
⇒ so with similar pattern, in NEP-2020 proposed: multiple entry and exit points with appropriate
certification. उ� �श�ा सं �ान म� प्रवेश के बाद अलग-अलग चरणों पर पढ़ाई छोड़ सकते ह� उस िहसाब से आपको
प्रमाणपत्र/उपा�ध �मले
If you Exit @ What you get? (इस चरण पर कॉलेज छोड़ �दया तो ये �मलेगा)
1 year Certificate प्रमाणपत्र
2 years Advanced Diploma उ� िड�ोमा
3 years Bachelor’s Degree �ातक क� उपा�ध
4 years Bachelor’s with Research अनुसंधान के साथ �ातक
62.2.10 �🕵🕵Education: Higher → New Orgs → HECI
🕵🕵BEFORE (पहले क� प्रणाली) 🕵🕵AFTER (भ�व� क� प्रणाली)
⇒ Multiple Regulators in the higher education Higher Education Commission of India(HECI:
sector for example UGC, AICTE, Medical भारत का उ� �श�ा आयोग) will be set up
Council of India (later replaced with ⇒ as a single umbrella body the for entire
National Medical Commission (NMC), Bar higher education, excluding medical and
Council of India etc. legal education (Bar council). भारत का उ�
�श�ा आयोग- जोिक �चिक�ा और वकालत के अलावा
सभी उ� �श�ा कायर्क्रमों का �नयं त्रण करेगा
⇒ It will penalise Higher education
Institutions (HEIs) For violating the rules.
(�नयमों का उ�ं घन करने वाले उ� �श�ा सं �ानों पर
जुमार्ना /दंड)
UGC / AICTE officers would demand bribes It will do faceless inspection with technology
during inspections/ for approving the funds =⏬ scope for bribery, similar to Faceless
(उ� �श�ा पर �नयं त्रण के �लए �व�भ� सं �ाएं थी �जन के assessment in Income Tax dept. (फे सलेस �नरी�ण)
अफसर प्र�� �नरी�ण के बहाने �र�तखोरी करते थे.)
Govt colleges may not be subjected to as strict Both Public and private higher education
rules as private sector colleges. (सरकारी कॉलेजों पर institutions will be governed by the same set of
गुणव�ा के �नयं त्रण �नजी कॉलेजों �जतने स� नहीं थे, उनक� rules.(सरकारी और �नजी सभी सं �ानों पर एक समान �नयम
खा�मयों और गल�तयों को नज़रअंदाज़ िकया जाता था।) लागू होंगे.)
⇒ We'll provide open learning for classes 3,5 and 8 through NIOS.
⇒ We will encourage more online / distance learning courses using Massive Open Online Courses
(MOOCs) technology.
⇒ E-learning content in Regional Languages. प्रादे�शक भाषाओं म� ई-�श�ण सामग्री
⇒ Divyang (PH) Friendly Education Software. �वकलांगों के �लए शै��णक सॉ�वेयर
�New ⇒ National Educational Technology Forum (NETF)
Org: ⇒ for idea exchange on how to use Technology for improving the learning, exams,
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1078
62.2.14 📊📊📊📊Assessment of students (छात्रों का मू�ांकन)
360 degree Holistic Progress Card to track Student Progress (समग्र �वकास काडर् के साथ मू�ांकन प्रिक्रया)
🔠🔠😰😰BEFORE 🔠🔠🤩🤩AFTER
Summative Assessment Exams = We'll encourage Formative Assessment = During the
only at the end of semester / year class- ask oral questions, give homework assignment etc
checking factual / memory based to check student's analytical/critical thinking, and
knowledge. conceptual clarity. [रचना�क आकलन तािक �वद्याथ� क� �व�ेषण
सत्रांत परी�ाएं �जसम� �सफर् याददा� / रटने का और वैचा�रक ��ता को जांच सके ]
मू�ांकन होता है
BOARD EXAM = test of memory & Board exams will test core concept and 'application of
factual knowledge. High stake exam: knowledge'. It'll be made 'low-stake' (e.g. school
life and death situation if 99% not assignments marks may be counted, more admission
scored. बोडर् क� परी�ा: जुए का ऊंचा और opportunities even with low score etc) �वद्याथ� क� रटने क�
जो�खम भरा दांव �जसम� बाजी �जदं गी और मौत क� �मता नहीं िकंतु वैचा�रक ��ता, �ान के अनुप्रयोग को परखा जाएगा. बोडर्
लगी हो. परी�ा म� अ�े गुण ना �मले तो भी “�जदं गी-बबार्द”- उस जो�खम को कम
िकया जाएगा।
62.2.15 📊📊�Assessment of students: bodies (मू�ांकन/परी�ा के �लए सं �ाएं )
�new body National Assessment Centre called 'PARAKH' (Performance Assessment,
Review, and Analysis of Knowledge for Holistic Development) for setting
assessment standards. परी�ा म� मू�ांकन कै से करना है उसक� मानक तैयार करने क� सं �ा
�existing National testing agency will continue to function and will offer common
body NTA entrance exams for admission in various college। अलग-अलग कॉलेजों म� दा�खले के �लए
सामा� प्रवेश परी�ा
62.2.16 📊📊📊📊Assessment of schools (�ू लों का आकलन)
States/UTs to setup State School Standards Authority (SSSA: �ू ल मानक के �लए रा� का प्रा�धकरण).
⇒ These bodies will require schools to disclose information e.g. how many seats/facilities/fees in
your school, how is your school's board exam result etc. → This will � public oversight and
accountability. �ू लों ने अ�नवायर् �प से अपने �वद्या�थयों क� सं �ा, बोडर् परी�ाओं म� प�रणाम, फ�स इ�ािद अलग-अलग
जानकारी देनी होगी �जससे सावर्ज�नक �नगरानी तथा जवाबदेही बढ़ेगी
⇒ School Quality Assessment & Accreditation Framework (SQAAF)= NOTIMP �ू लों के आकलन के
मानक।
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1079
62.2.17 �Teachers recruitment and training (�श�कों क� भत� और तालीम)
⇒ by 2030: Minimum degree qualification for teachers = 4-year integrated B.Ed. (�ूनतम यो�ता)
⇒ National Council for Teacher Education (NCTE) + NCERT to design as new framework for
Teacher Education (NCFTE: �श�कों क� तालीम/�श�ा के �लए रा��ीय �परेखा)
⇒ National Council for Teacher Education (NCTE) will design National Professional Standards for
Teachers (NPST: रा��ीय �ावसा�यक मानक)
⇒ Teachers' Recruitment will be made more transparent, merit based promotions, they will be
given more operational freedom in teaching etc. (भत� प्रिक्रया �ादा पारदश�, यो�ता आधा�रत पदो��त, पढ़ाने म�
�ादा �तं त्रता)
⇒ A National Mission for mentoring the (College) teachers. With help of senior/retired
faculty. (व�र�/�नवृ� प्रोफे सरों द्वारा वतर्मान �श�कों को गु��श�ा/तालीम दी जाएगी)
✋ Above fullforms / features not imp for UPSC but for UGC-NET/TAT
⇒ Union Budget’s Expenditure on Education as % of GDP= 2.8% annually from 2014 to 2018.
Then 3% (2019), 3.5% (2020)
⇒ Union+State's total public investment in education currently about 4.4% of GDP. NEP aims to
⏫ to 6% of GDP at earliest. (�श�ा म� सावर्ज�नक �नवेश को बढ़ाकर सकल घरेलू उ�ाद के 6% तक िकया जाएगा)
⇒ We'll expand & reform National Scholarship Portal to cover more SC/ST/OBC, and other
Socially and Economically Disadvantaged Groups(SEDGs) such as women, transgender, etc.
(कमजोर वगर् को छात्रवृ�� देने के �लए �व�भ� सुधार)
⇒ Gender Inclusion Fund to improve education of girl child. (ल��गक समावेशन �न�ध)
⇒ Special Education Zones for disadvantaged regions and groups (�वशेष �श�ा �ेत्र)
⇒ We will encourage private colleges to give scholarship to students (छात्रवृ��)
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1080
⇒ Only lip service about emotional needs of the students, depression and suicide due to excessive
competition. (छात्रों क� भावना�क ज�रतों के बारे म� �सफर् िदखावे के �लए �चकनी चुपड़ी बात�)
⇒ Doing Sanskrit promotion for RSS-BJP-Hindutva agenda.(सं �ृत का अनाव�क प्रसार)
⇒ X/Y/Z Good Recommendation of the previous committee/ best practices from the foreign
country are not adopted. (अ� देश और अ� स�म�त क� अ�� बातों को शा�मल नहीं िकया)
�❓Which of the following statements is NOT correct regarding the National Education Policy
2020 in India? [Asked in UPSC-IES-2021]
(a) It proposes sweeping changes in the Education system from pre-primary to PhD and skill
development.
(b) universities from among top 100 in the world will be able to set up campuses in India
(c) It expects that India will achieve 60% GER by 2030
(d) It suggests NAAC to be merged with UGC and AICTE
62.3 �🤳🤳PRAGYATA GUIDELINES ON DIGITAL EDUCATION (2020-JUL)
Figure 1: पूरा िदन कं �ूटर पर पढ़ाई करके मेरी आंखे दुख रही है😰😰
⇒ By HRD/Edu-Ministry ई �श�ा के बारे म� िदशा�नद�श
⇒ Corona lockdown= 240 million Indian children unable to go to school.
o Synchronous digital education: This is real-time (live) teaching. (जीवं त प्रसारण)
o Asynchronous digital education: non-real time e.g. article, recorded TV program.
⇒ PRAGYATA guidelines = eight steps of e-learning: Plan- Review- Arrange- Guide- Yak(talk)-
Assign- Track- Appreciate.
Class Screentime Recommendation (Synchronous/ Live classes)
Pre Primary not more than 30 minutes.
Classes 1 to 8 Not more than two lectures of 30-45 minutes each
Classes 9 to 12 Not more than four lectures of 30-45 minutes each on the days
⇒ Further individual school-teachers should not be required to teach more than 2 to 3 hrs of
online/day
⇒ Do's and Don'ts to ensure physical wellbeing (Back pain, eye strain), Mental health and
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1081
wellbeing, Cyber safety, Digital privacy. शारी�रक पीठ ददर्, आंखों का तनाव, मान�सक �ा�, साइबर सुर�ा,
िड�जटल गोपनीयता/�नजता।
For more on E-learning, E-Court, E-Diplomacy charms and challenges:
https://unacademy.com/class/economy-pillar1a2-monetary-policy1-money-supply-m1-m4/8FJCUJBT
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1082
− MDM gives free hot cooked meal to child in every govt / govt aided school / Madarsas / Maqtabs
(=Islamic school) upto class 8 for min. 200 days a year.
Lower primary (std.1 to 5) Min. 450 Calories and 12 gram of protein
Upper primary (std.6 to 8) Min. 700 Calories and 20 grams of protein
- ++ food security allowance to students if MDM can’t be provided due to non-availability of
food/cooks. [पका पकाया खाना नहीं दे पाए तो ब�े के प�रवार को पैसा िदया जाएगा]
- 🤩🤩Benefit? Ensures nutritional security & class attendance of poor children.
- Sub-component: Tithi Bhojan → People can contribute ₹ ₹ / food / sweets to school children to
celebrate important days such as child birth, marriage, birthdays etc. (लोग शुभअवसरो पे दान म� दे)
😣😣😣😣 MDM Challenges? 1) Siphoning of rations by teachers, slum children run away from school
after taking lunch, food prepared in unhygienic surroundings, 2) goons mix poison / pesticides, 3)
villagers resist hiring of Dalit cooks etc. 4) During Corona, schools closed down but students not
given take home ration or food allowance in many schools.
2021-Oct: Modi announced that above MDM scheme will be known as PM Poshan Scheme:
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1083
Mid-Day Meal Scheme PM Poshan (POshan SHakti Nirman)
Village self help groups (SHG) to be used for
supplying cooking ingredients. [िकसान उ�ाद सं गठन और
� सहायता समूहों क� मदद भी ली जाएगी]
Social Audio only done in few schools - Compulsory Social Audit for all schools by local
depending on enthusiasm of authority. public e.g. whether school giving proper food to
kids or not? [�ानीय लोगों द्वारा सामा�जक लेखा परी�ण]
- college student may also be used for monitoring.
[�नगरानी के �लए कॉलेज छात्रों क� भी मदद ली जाएगी]
�Criticism: National Education Policy (NEP) 2020 recommended breakfast in schools but not
done in new scheme. [रा��ीय �श�ा नीती म� तो सुबह का ना�ा भी देने क� बात थी, लेिकन नई योजना म� ऐसा नहीं िकया]
- Rashtriya Madhyamik Shiksha Abhiyan is Core Scheme (Not 100% funded by Union).
- Boss? Ministry of Human Resource and Development / Edu Ministry
- 2007: Union created non-lapsable fund under Public Account ‘Madhyamik and Uchchtar
Shiksha Kosh (MUSK)’. It receives ₹ ₹ from the education cess levied on direct taxes.
- RMSA aims for 100% universal retention upto class 10 by 2020. (=noone should ‘dropout’
before class10, सब ब�ों ने कम से कम दसवीं �श�ा तक पढ़ाई करनी चािहए �ू ल नहीं छोड़ना चािहए)
- ₹ ₹ for building school, library, laboratory, computer lab, toilets & hostels for girls, teachers
recruitment & salary etc.etc.
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1085
during Corona lockdown
⇒ � Controversy? Federalism, Nationalism, Secularism and other important topics were also
dropped from syllabus. (सं घवाद, रा��वाद, धमर्�नरपे�ता जैसे अ�त मह�पूणर् मुद्दों को अ�ासक्रम से हटाया गया)
⇒ CBSE clarified this is only one time step for 2020-21 only. So in future these topics may be re-
added. (�सफर् एक बार के �लए �लया गया कदम है)
⇒ 2021: Board Exam cancelled ki daily commentary = Mrunal.org/Current
62.8 📐📐📯📯📯📯 EDU → STD. JR.KG TO 12: SAMAGRA SHIKSHA SCHEME (2018)
कोरोना के चलते 10-12th क� बोडर् परी�ाएं �ई रद्द। तो �फर ब�ों को आगे क� क�ा/कोलेज म� दा�ख़ला कै से �मलेगा
Corona-2021: Central Board of School Education (CBSE) cancelled the Class12 board exams.
Student to get marksheet based internal exam using the 30:30:40 formula. How it worked? NOTIMP
- 2017: रा��ीय परी�ण एज�सी (NTA) setup as an autonomous body under HRD/Edu Ministry, registered
under Indian Societies Registration Act, 1860.
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1088
- Initially, NTA given ₹ 25 cr. then it’s supposed to be self-sustained (by charging exam fees)
- Structure:
○ Board of Governors → Chairman: A noted educationist. Members: From the institutes
for which NTA conducts entrance exam. [अ�� एक जानामाना �श�ा�वद होना चािहए]
○ A CEO / Director General for day to day affairs. [रोज़ का काम देखने के �लए]
Earlier CBSE conducted JEE, NEET & UGC NET entrance. NTA’s task is to conduct those exam
(online), and then expand itself to conduct other exams as well. Presently, NTA conducts →
1. Engineering: Joint Entrance Examination (JEE)
2. Medical: National Eligibility Cum Entrance Test (NEET: रा��ीय पात्रता व् प्रवेश परी�ा): twice a year
from 2019. It replaces the erstwhile All India Pre-Medical Test (AIPMT).
a. NEET remains in controversy because of the age limit criteria, stringent security checks,
wrong questions/ wrong translation, alleged injustice to non-English medium students,
Tamilandu Govt opposed. (त�मलनाडु का इ�ाम िक हमारे ग़ैर-अंग्रेज़ी मा�म के ब�ों के साथ अ�ाय)
b. 2022: Maximum age limit for appearing in NEET-UG exam is removed. (आयु मयार्दा ख़� )
3. UGC National Eligibility Test(NET) for Assistant Professorship & Research Fellows: twice a year.
4. Pharmacy: Graduate Pharmacy Aptitude Test (GPAT)
5. Management courses: Common Management Admission Test (CMAT)
6. Hotel Management Joint Entrance Examination
7. National Testing Agency (NTA): to get admission in 45 Central universities.
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1089
⇒ 😰😰Controversy because Jio Institute (Reliance Foundation), Pune also
shortlisted as a ‘greenfield project’ but they’ve not even started the institute yet.
Later, they even announced more institutes. Ball by ball
Deemed to ⇒ Based on UGC advise, HRD/Edu Ministry grants “Deemed to be University”
be status to an institute, then it gets freedom in deciding courses, syllabus,
University admissions and fees. [ये सं �ान अपना अ�ासक्रम, प्रवेश�न�त, फ�स इ�ािद तय कर सकता है]
⇒ Deemed Universities can also grant degrees on their own. During UPA raj,
many institutes given this tag, later 40+ found deficient in faculty &
infrastructure so blacklisted.[हालांिक ऐसी क� सं �ाओं म� बु�नयादी सु�वधा और �श�कों क� कमी]
⇒ 2017: SC ordered such institutes can’t use ‘university’ tag. So, Manipal
University need to use the term ‘Manipal Academy of Higher Education’ etc.
Sanskrit Central Sanskrit Universities Act, 2020 to convert following institutions into
Univ 'Central Universities' [क� द्रीय �व��वद्यालय कानून]
- 1) Rashtriya Sanskrit Sansthan, New Delhi,
- 2) Shri Lal Bahadur Shastri Rashtriya Sanskrit Vidyapeeth, New Delhi,
- 3) Rashtriya Sanskrit Vidyapeeth, Tirupati
(✋BUT MORE IMP for UGC-NET exam, less for IAS exam)
62.13.1 📐📐📊📊 Edu → Higher Edu: Ranking by Education Ministry
1. National Institutional Ranking Framework (NIRF) done annually since 2016. Separate rankings
for following categories- overall, universities, engineering, management, college, pharmacy,
medical, architecture, law, dental and research institutions. 2021: Overall #1= IIT Madras.
Research #1 = IISC Bengaluru. College#1: Miranda College.
2. Atal Ranking of Institutions on Innovation Achievements (ARIIA): It gives rankings for different
different types of institutes viz. 1) ranking Centrally funded technical institutions (eg IITs, NITs,
etc) 2) State Universities 3) State Standalone Technical colleges 3) Private Universities 4) Private
Standalone Technical Colleges 5) Non-Technical Government 6) Private Universities. Rank#1
given to IIT -Madras, Panjab University, College of Engineering Pune etc.
3. All India Survey on Higher Education (AISHE)
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1090
🔠🔠❓ National Institutional Ranking Framework 2021, ____ got overall top ranking? [IES-2021]
(a) Indian Institute of Technology, Madras (b) Indian Institute of Science, Bengaluru
(c) Indian Institute of Technology, Delhi (d) Indian Institute of Technology, Bombay
62.14👻👻😷😷📐📐🤳🤳 EDU → PORTALS/APPS/ORGS → POST-CORONA
🤳🤳 Abhyas app National Testing Agency (NTA)'s mobile app for IIT-JEE mock tests.
🤳🤳 VidyaDaan 2.0 HRD/Edu Ministry portal To help the educators contribute e-learning
(2020-April) content via DIKSHA portal
🤳🤳 YUKTI 2.0 Young India Combating COVID with Knowledge, Technology and
कोरोना सं शोधन के बारे म� Innovation (YUKTI) is HRD/Edu Ministry's portal for sharing info about:
Research, Innovation, Technologies, Startup (सं शोधन,
नवप�रवतर्न,तकनीक,�ाटर्अप) esp. those related to Corona
🤳🤳Bharat Padhe HRD/Edu Ministry campaign for Crowd sourcing of Ideas for Improving
Online (2020-April) Online Education ecosystem of India
🤳🤳SAMARTH ⇒ It is an open source Enterprises Resource Planning (ERP) software. उद्यम
सं साधन आयोजन के �लए बना सॉ�वेयर
⇒ Helps keeping track of student attendance, teacher salary, fees
collection, exam score etc. It is developed by the HRD/Edu Ministry
⇒ under the National Mission of Education in Information and
Communication Technology Scheme (NMEICT). =Such microscopic
technical preparation = NOTIMP
🎅🎅STARS program ⇒ Who? World Bank, Education Ministry, Department of Economic
by World Bank Affairs (DEA, FinMin),
�व� ब�क द्वारा आ�थक ⇒ What? $500 million to � school education in six States viz Himachal
सहायता Pradesh, Kerala, Madhya Pradesh, Maharashtra, Odisha, and
Rajasthan.
⇒ For Strengthening Teaching-Learning and Results for States' (STARS)
🤳🤳 GOAL Project Facebook + Tribal Affairs Ministry to skilling and mentorship of ST youth
through online mode.
📊📊Global Edu by UNESCO. 2020-June
Monitoring (GEM) Corona affected the access to education od 1.5 billion students across the
Report world. Poor suffered the most because of no access to internet.
Plus lots of data but poor cost-benefit in chasing it
🎅🎅Global launched by UNESCO. 2020-May
Education Coalition To coordinate educational activities during Post-Corona
Yuva 2.0 Competition for the young others to get their book published with the help
of national book trust (NBT)
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1091
62.15 📐📐🤳🤳 EDU → MISC. PORTALS / INITIATIVES (BEFORE CORONA)
✋As such Following things more imp4 UGCNET/TAT exams. less so for IAS यूपीएससी म� तो इ�ा-दु�ा
प्र� ही �नकले है. लेिकन अगर म� content नहीं दूंगा तो आपको लगेगा िक दू सरे CA-PDF वाले बेहतर है, भले परी�ा के �लए माल
�ादा उपयोगी न हो 😅😅
62.15.1 📐📐🤳🤳 Edu → Misc: School infra/result monitoring
- To collaborate with NGO, Corporates for sharing innovative
Shaala Saarthi portal
practices running schools. अ�े प्रबं धन प्रणा�लयों को साझा करना
Shaala Siddhi portal - Help the Schools in their self-evaluation. �वद्यालयों का � मू�ांकन
- HRD/Edu Ministry’s portal for Unified District Information on
UDISE+
School Education �जला �र पर �वद्यालय �श�ा क� जानकारी
62.15.2 📐📐🤳🤳 Edu → Misc: E-learning
Manodarpan Edu ministry provides psycho-social support to students, teachers and parents
AntiRagging App by University Grants Commission (UGC) to complaint against ragging.
- HRD/Edu Ministry’s (higher education) Student Induction Programme.
Deeksharambh UGC prepared guidelines for it e.g. setting up mentor groups, physical
2019 fitness & hobby groups, interaction with teacher before start of semester
etc. so freshers become comfortable in college.
Jeevan - UGC designed this Curriculum for Life Skills (Jeevan Kaushal) for
Kaushal Undergraduate to give them Life Skills e.g. communication skill,
interpersonal skill, time management, problem solving ability, decision
making capacity, leadership ability [सं वाद कौशल, समय प्रबं धन, सम�ा �नवारण, �नणर्य
�मता, नेतृ� �मता को बेहतर करने के �लए]
🔠🔠❓ Find correct Statements. [UPSC-IES-2021]
1. NISHTHA is a teachers training program.
2. SVANidhi is a scheme to facilitate artisans to access affordable working capital load.
3. SATYABHAMA is a scheme to promote research and development in science and technology.
4. Manodarpan is a scheme to promote tourism in rural parts of India.
Which of the above statements is/are correct?
(a) 1 and 3 only (b) 2 and 4 only (c) 3 and 4 only (d) 2 only
KIRAN � - Dept of Sci & Tech’ scheme for helping women scientists
- SEPARATELY, Social Justice Ministry has “KIRAN HELPLINE” For
mental health.
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1094
- HRD/Edu Ministry’s ‘UDAAN- Giving Wings to Girls’ scheme gives free
UDAAN coaching to 1000 selected girls so they can pass IIT/technical institutes’
entrance exam.
Dept of Sci & Tech’s scheme to encourage girls to join career in Science,
Vigyan Jyoti
Technology, Engineering and Mathematics (STEM)
- Dept of Sci & Tech’s "GATI- Gender advancement through transforming
institutions" to encourage women scientists.
GATI
- British Govt project "Athena SWAN" (Scientific Women's Academic
Network): similar objective & they’re collaborating with GATI
CURIE Dept of Sci & Tech’s scheme to improve R&D infra in women universities.
62.15.8 📐📐🤳🤳 Edu → Misc: Making science/research useful/popular
- Dept of Sci & Tech (DST) and IBM Computer company collaboration to
STEM promote STEM (Science, Technology, Engineering and Mathematics)
learning among students.
Unnat Bharat - HRD/Edu Ministry gives ₹ ₹ to IIT, NIT etc to carry out research /
Abhiyan 2014 consultancy for rural / local problems.
- ISRO to train 60 talented students from Class 9 to Class 12. ₹₹ by
DHRUV
HRD/Edu Ministry (So later some of them could become scientist)
STRIDE Faculty given ₹₹ for research in this Scheme for Trans-disciplinary Research for
India’s Developing Economy (STRIDE)
ECHO Prime Minister’s Principal Scientific Advisor (PSA) → setup EChO Network
for providing leadership training to scientists and researchers.
PMRF Prime Minister Research Fellows by HRD/Edu Ministry
Talented B.Tech / M.Tech / M.Sc students from selected institutes given direct
Ph.D admission in the IITs / IISc + monthly stipend.
IMPRINT India IIT and IISc joint initiative to solve major engineering and technology
challenges of India, started in 2015.
IMPRESS Impactful Policy Research in Social Science (IMPRESS). It gives ₹₹ to social
science research.
SPARC Scheme for Promotion of Academic and Research Collaboration (SPARC)
HRD/Edu Ministry gives ₹₹ for to Joint Research Projects between top ranked
Indian Institutions and globally ranked Foreign Institutions.
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1095
NRF − While China and USA spend over 2% of their GDP on research, India
Foundation spends less than 0.7%.
(proposed) − Presently individual ministries give research grants, which results into lack
of coordination, some sectors receive too much attention, some get
neglected. So, (Full) Budget-2019 announced to setup a National Research
Foundation (NRF) to coordination research funding in India.
Further, Ref: Pillar#4 handout → Smart India Hackathon, and truckload of other
schemes for IPR but beyond a point, poor cost benefit.
62.15.9 📐📐🤳🤳 Edu → Misc: National Unity
- HRD/Edu Ministry pairs 1 state/UT with another state on yearly basis e.g.
Ek Bharat
Rajasthan : West Bengal. They organize Youth Exchange, sports, singing-
Shrestha Bharat
dancing, cultural programs etc. → More unity in India & less stone pelting.
- Appointment of Language Teachers (ALT) Scheme: HRD/Edu Ministry to
ALT give ₹₹ for appointment and training of Hindi teachers in North Eastern
States and the Urdu Teachers in States/UTs.
62.15.10 📐📐🤳🤳 Edu → Misc: Civic duties, Adult Edu (प्रौढ़ �श�ा)
- HRD/Edu Ministry Launched on the 70th Constitution day on (26/11/19).
- The portal will be used primarily for holding monthly essay / quiz / poster
Kartavya Portal
making competitions for students for Nagrik Kartavya Paalan Abhiyan- to
create mass awareness about fundamental duties. नाग�रक कतर्� के प्र�त चेतना
Saakshar - HRD/Edu Ministry scheme for achieving min. 80% Adult literacy, &
Bharat 2009 reduce the gap between male-female adult literacy rates.
- Edu ministry scheme for adult-literacy through 4 month coaching course
Padhna Likhna
with help of civil society, NCC Cadets, CSR funding (Ref1C) etc.
Abhiyaan 2020
- Main focus on Aspirational Districts (Ref:4C NITI)
🔠🔠❓MCQ. ‘Unnat Bharat Abhiyan’ aims for ?(Asked in UPSC-Pre-2017)
a) Achieving 100% literacy by promoting collaboration between voluntary organizations and
government’s education system and local communities.
b) Connecting institutions of higher education with local communities to address development
challenges through appropriate technologies.
c) Strengthening India’s scientific research institutions in order to make India a scientific and
technological power.
d) Developing human capital by allocating special funds for health care and education of rural and
urban poor, and organizing skill development programmes and vocational training for them.
🔠🔠❓MCQ. ‘SWAYAM’, an initiative of the Govt of India, aims at: (Asked in UPSC-Pre-2016)
a) promoting the Self Help Groups in rural areas
b) providing financial and technical assistance to young start-up entrepreneurs
c) promoting the education and health of adolescent girls
d) providing affordable and quality education to the citizens for free
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1096
62.16 📐📐 EDU → MISC. → YOUTH ORG.
According to the National Youth policy 2014: adolescents=10-19 years, youth= 15-29 years.
62.16.1 Yearbook: Ministry of Youth Affairs And Sports (युवा कायर् और खेल मं त्रालय)
Dept 1) Dept of Youth Affairs 2) Dept. of Sports
Attached / ⇒ National Service Scheme (NSS) is a subordinate organization
Subordinate ⇒ whereas National Youth Corps and Youth Hostel are simply names of
(सं ल� / अधीन�) schemes.
Statutory ⇒ N/A or not MCQ worthy
Autonomous ⇒ Sports Authority of India (SAI)
bodies �ाय� ⇒ National Anti-Doping Agency (NADA), and Dope Testing laboratory.
सं �ान ⇒ National Sports Development Fund
⇒ Nehru Yuva Kendra Sangathan (NYKS-1972)
⇒ National Sports University, Manipur
62.16.2 Youth Schemes= Central Sector Schemes = 100% funded by Union.
Organization Notes
National Cadet Corps ⇒ Boss? Defence Ministry
(NCC-1948) ⇒ Motto: ‘Unity and Discipline’
National Service Scheme ⇒ Boss? Ministry of Youth affairs and Sports.
(NSS-1969) ⇒ Motto: “Not me, but you”. Voluntary Community Service.
1. Nehru Yuva Kendra ⇒ These Congressi-era things are all merged into a new
Sangathan (NYKS) umbrella’ scheme “Rashtriya Yuva Sashaktikaran Karyakram
2. National Youth Corps (RYSK)”
(NYC) ⇒ Boss? Ministry of Youth affairs and Sports
3. Youth Hostel
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1098
63.1 � YEARBOOK RECRUITMENT & TRAINING RELATED MINISTRIES
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1099
Autonomous National Recruitment Agency (NRA)
⇒ to conduct the Common Eligibility Test (CET) to screen/shortlist candidates
for Staff Selection Commission (SSC), Railway Recruitment Boards (RRBs)
and Institute of Banking Personnel Selection(IBPS).
⇒ Based on the score obtained in the CET, candidates may appear in the
domain-specific tests by SSC, RRBs & IBPS respectively for the actual
recruitment.
63.1.2 👮👮 � 🤳🤳 Mission Karmayogi: Training of Civil servants (2020-Sept)
Mission Karmayogi:- National Programme for Civil Services Capacity Building (NPCSCB) To
implement this, Govt employees will be trained for new India. Govt will setup….
- 1) Public Human Resources (HR) Council headed by Prime minister
- 2) setup a not-for-profit company Special Purpose Vehicle company for e-training
- 3) � Integrated Govt Online Training-iGOT Karmayogi Platform.
✋more details not important, unless PubAD is your optional subject
Dept ⇒ N/A
Attached/ ⇒ Director General Employment
Subordinate ⇒ Chief Labour Commissioner
⇒ Labour Bureau: It publishes Consumer Price Index Numbers for industrial
and agricultural rural workers.
⇒ Directorate General of Mines Safety (DGMS)
Statutory ⇒ Employees State Insurance Corporation (ESIC)
⇒ Employees Provident Fund Organisation (EPFO)
⇒ Central Govt Industrial Tribunal-cum-Labour Courts under the Industrial
Disputes Act 1947
Autonomous ⇒ V.V. Giri National Labour Institute, UP
CPSE ⇒ N/A or not MCQ worthy
63.2 💇💇💇 �[YEARBOOK] MINISTRY OF SKILL DEVELOPMENT & ENTREPRENEURSHIP
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1100
कौशल �वकास और उद्य�मता मं त्रालय consists of <list not exhaustive>
Dept N/A
Attached offices Directorate General of Training: to see Industrial Training Institute (ITI)
in State/UT have common syllabus, training modules
Statutory Bodies − N/A
Related company − National Skill Development Corporation (2008).
Autonomous body − 30+ Sector specific Skill Councils e.g. Beauty & Wellness Sector Skill
Council, Construction Skill Development Council, Furniture &
Fittings Skill Council etc.
Non-Statutory − National Council for Vocational Training (NCVT 1956)
regulatory body − National Skill Development Agency (NSDA 2013)
through gazette 2020: Govt merged above two bodies into a non-statutory regulatory
body known as ‘National Council for Vocational Education and
Training (NVCET)’
63.3 (💇💇💇)→ NSDC, NSDF, NSDA, NSQF, NCVET
- 2008: National Skill Development Corporation (NSDC: रा��ीय कौशल �वकास �नगम) setup as a not-
for-profit public limited company with shareholding: 49% from Skill Ministry + 51% from
private sector ASSOCHAM, CII and FICCI etc.
- 2009: National Skill Development Fund (NSDF-�न�ध) operated by Skill Ministry → NSDC. It
receives ₹ ₹ from various schemes & private donors → ₹ ₹ given to various ministries for
running their skill development programs.
- 2013: National Skill Development Agency (NSDA-एज�सी) Autonomous Body under Skill
Ministry. It’s responsible for:
- Preparing National Labour Market Information System (LMIS) database.
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1101
- National Quality Assurance Framework (NQAF) to ensure that the coaching training
courses’ syllabus / methods are actually useful for the jobs requirements in present and
future. (सु�न��त करना क� जो �सखाया जा रहा है वह असल म� नौकरी/धं धे म� उपयोगी है िक नहीं?)
- National Skills Qualifications Framework (NSQF: रा��ीय कौशल यो�ता फ्रे मवकर् ) to organize
learners’ qualifications according to a levels of knowledge, skills and aptitude, including
the Recognition of Prior Learning (RPL: पहले क� �वद्वता क� मा�ता). For example:
Sample NSQF Framework →
Sector Job title & Code NSQF Training Job Description & Skill Set
Level hrs
Beauty & Assistant Hair 3 150 An Assistant Hair Stylist shampoos
Wellness Stylist and conditions hair, blow dries hair,
(BWS) (BWS/Q0201) provides basic hair cuts as well as
assists the hair stylist.
Hair Stylist 4 300 In addition to above skills, he can do
(BWS/Q0202 ) advanced hair styling, color the hairs,
scalp massage etc.
63.3.1 � NCVET 2018 (�ावसा�यक �श�ा और प्र�श�ण के �लए रा��ीय प�रषद)
− ‘National Council for Vocational Education and Training (NVCET)’ under Skill Ministry, is a
non-statutory regulatory body setup through Gazette notification.
− NCVET will have Chairman + members.
NCVET will be responsible for
1. Advise on short term long term vocational programs / syllabus etc.
2. Overseeing the Sector Skill Councils (SSCs), Skill certification / assessment bodies.
3. Those SSCs will supervise ground level vocational training institutes: their recognition,
regulation, inspection, certification etc. So, NCVET will be an ‘indirect regulator’ of the ground
level vocational training institutes.
4. Grievance redressal, research, awareness generation and information dissemination and
grievance redressal.
63.4 (💇💇💇)📯📯📯📯 SKILL INDIA CAMPAIGN (2015: कौशल भारत अ�भयान)
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1102
Boss? Ministry of Skill Development and Entrepreneurship. 4 components
1. National Skill Development Mission 2015→
a. 2017: SANKALP (Skills Acquisition and Knowledge Awareness for Livelihood
Promotion) → To set up new training institutes, improve infrastructure of existing
institutes, Training of the trainers/assessors, encourage women, SC/ST/PH to join
programs. Core Scheme = States required to contribute some money.
b. 2017: STRIVE (Skill Strengthening for Industrial Value Enhancement) → To improve
the National Skill Development Corporation (NSDC), National Skill Development
Agency (NSDA), etc. Central sector scheme = States not required to contribute money.
c. World Bank is giving ₹ ₹ support to both the schemes.
2. Skill Loan scheme: Students given bank loan from ₹ 5,000/- to ₹ 1,50,000/- to join skill
programs. (�वद्या�थयों को कौशल प्र�श�ण के कोसर् करने के �लए ब�क से लोन / क़ज़ार् �मले)
a. Loan tenure upto 7 years, Interest rate varies as per bank.
b. Bank will not charge processing/application fees, bank will not demand collaterals.
c. National Credit Guarantee Trust Company Ltd (NCGTC, under Department of
Financial Services) gives credit guarantee.
d. Govt / Bank ‘MAY’ give interest subsidy, if they want.
3. National Policy for Skill Development & Entrepreneurship 2015. Shortnote below
4. Pradhan Mantri Kaushal Vikas Yojana (PMKVY) scheme. Shortnote Given below
63.4.1 (💇💇💇)📯📯📯📯 Skill India3 → National Policy for Skill Dev. & Entrepreneurship 2015
- India’s Social-traditional view sees ‘Graduation Degree’ as a status. Vocational training
programs such as mason, carpenter, hair stylist, bicycle repairman are seen as the last option for
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1103
academically ‘weak’ students. We’ll generate awareness to break this taboo & inferiority complex
(हीन भावना को समाज से हटाया जाए क� वे��ंग-�ं �बगं का काम पढ़ाई म� कमज़ोर ब�े ही करते ह�).
- We’ll try to add vocational skilling programs from class9 itself. (�ू ल से ही �सखाना शु� कर�गे)
- When Govt offers ‘free’ skill training, students don’t take it seriously (सरकारी कौशल कायर्क्रमों म� भी
थोड़ी ब�त फ़�स ल�गे, एकदम-मु� म� निह पढ़ाएँ गे, तािक प्र�श�ु �वद्याथ� उस तालीम को गं भीरता से ले।)
- We’ll do sector-wise skill gap analysis, update training syllabus, train the workforce accordingly
with Recognition of Prior Learning (RPL- पहले से �मली सीख / कौशल क� मा�ता).
- IT based monitoring, evaluation, placement (ऑनलाइन �नगरानी, तालीम के बाद रोज़गार िदलवाना)
- New ITIs will be set up in PPP mode. (सावर्ज�नक �नजी भागीदारी म� नए ITI खोल�गे)
63.4.2 (💇💇💇)📯📯📯📯 Skill India4 → Pradhan Mantri Kaushal Vikas Yojana (PMKVY)
Boss? Skill Ministry → ₹ ₹ to National Skill Development Corporation (NSDC) and State
Government’s State Skill Development Missions.
⇒ Centrally Sponsored Scheme → Core Scheme = Not 100% funded by Union.
⇒ Target: 40 crore people in India in different skills by 2022., through following components:
1) Short Term 150-300 hrs training at public sector Training institutes (e.g. ITI,
Training (STT): Polytechnics) and empanelled private sector training institutes. These
लघु अव�ध क� तालीम centres will be designated as ‘Kaushal Vikas Kendra’.
2) Recognition of Those who already have learned from job / informal training / personal
Prior Learning experience e.g. Tailors, Masons, Plumbers, Cobbler, Hair Stylist, etc.
(RPL: पहले क� �वद्वता Their skills are tested, they’re given certificate. So accordingly they may join
क� मा�ता) ‘bridge courses’ to enhance their skills without needing to join basic level
courses.
Special Project launching training programs in sectors / persons not covered in Short Term
Training (STT). (�ज�� यिद लघु अव�ध क� तालीम न �मल पाई, उनके �लए ख़ास कायर्क्रम का)
++ Training mela, rozgar mela, tracking of how many people got placement, etc.
🔠🔠❓MCQ. Find correct about Pradhan Mantri Kaushal Vikas Yojana: (UPSC-Pre-2018)
1. It is the flagship scheme of the Ministry of Labour and Employment.
2. It, among other things will also impart training in soft skills, entrepreneurship, financial and
digital literacy.
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1104
3. It aims to align the competencies of the unregulated workforce of the country to the National
Skill Qualification Framework.
Codes: (a) 1 and 3 only (b) 2 only (c) 2 and 3 only (d) 1, 2, and 3
63.5 (💇💇💇)📯📯📯📯 SKILLING → SHREYAS SCHEME (2019)
Boss? HRD/Edu Ministry’s Scheme for Higher Education Youth in Apprenticeship and Skills
(SHREYAS) scheme aims to cover 50 lakh students by 2022 in 3 ways:
1. SHREYAS Webbportal to connect Non-Technical college youth (BA/Bcom/BBA type) with
industries so they can join apprenticeship, earn stipend & increase their employability. Govt to
pay 25% of stipend (upto max₹ 1500 per month), rest by the industrialist.
2. Launching B.A (Professional), B.Sc (Professional), B.Com (Professional) etc. courses - They’ll
contain educational input + vocational input + a mandatory apprenticeship for 6-10 months
3. Colleges without ‘campus recruitment / placement’ facilities- they’ll be connected with Labour
Ministry’s National Career Service (NCS) portal so their students can find jobs/placement.
63.5.1 👻👻👻👻👻👻(💇💇💇)Skilling → Post Corona / Atma-Nirbhar
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1105
2020-Jul ⇒ by Skill Ministry → by National Skill Development Corporation
(NSDC) with help of a Bengaluru startup company "Betterplace".
⇒ To map regional details of workers vs local industry demands.
⇒ This will help govt to analyse the migration patterns and implement the
skill development courses श्र�मकों का �ववरण बनाम �ानीय उद्योग म� श्र�मकों क� मांग।
⇒ ��Budget-2022: we’ll connect the data of Udyam (MSME
registration), e-Shram (unorganised sector workers registration), NCS
(apply biodata online) and ASEEM portals → this will help in
employment generation
SAKSHAM DST (Department of Science & Technology) → TIFAC (Technology
(Shramik Shakti Information, Forecasting and Assessment Council)→ portal for laborers’
Manch) skill mapping, skill cards, conneting with employers for jobs.
Shramshakthi ⇒ Tribal Affairs Ministry’s portal for migrant workers.
Portal ⇒ Objective? connecting them with other schemes for employment &
skill development. श्र�मकों को रोज़गार कोश� क� अ� योजनाओं से जोड़ने के �लए।
PM-DAKSH ⇒ For skilling of marginalized persons including scheduled castes,
backward classes and safai karamcharis.
IISC Network ⇒ India International Skill Centre (IISC- a body under Skill Ministry) To
provide Indian workers to foreign countries.
⇒ For this, IISC signed agreements with Germany, Belarus, United
Kingdom, France, Australia, Japan and Qatar etc.
DESH-Stack eportal ⇒ ��Budget-2022: DESH-Stack e-portal: for on-line training for skill
development.
🔠🔠❓MCQ. ASEEM is _ _ _ _. (UPSC-CDS-2020-ii)
(a) Aatmanirbhar Skilled Employee Employer Measurement (b) Aatmanirbhar Skilled Employee
Employer Mapping (c) Aatmanirbhar Skilled Employee Enterprises Medium
(d) Automatic Skilled Employee Employer Mission
63.6 (💇💇💇)📯📯📯📯 SKILLING & ENTREPRENEURSHIP → BEFORE CORONA
YuWAAH ⇒ UNICEF project for skill development of adolescent and young Indians,
2019 labelled "Generation Unlimited India"
Pradhan Mantri - Boss? Skill Ministry
Yuva Udyami - Just the usual stuff- Connect the aspiring entrepreneurs with peers,
Mitra Vikas mentors, funding and business services. Setup incubators & training centres
Yojana (YUVA)
in colleges, ITI
Ref Pillar1D & Pradhan Mantri Mudra Yojana, Stand up India Loan Scheme
4B: Startup India Scheme, PM Rojgar Protsahan Yojana etc
Startup Village - Boss? Rural Development Ministry. Helps the rural poor to start business.
Entrep.ship - It’s a subcomponent of Deendayal Antyodaya Yojana – National Rural
Programme Livelihoods Mission (DAY-NRLM).
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1106
National Career 2015: Labour Ministry set up an online portal & offline centres to help ITI /
Service diploma / graduate job seekers connect with job givers. Organize rozgar melas,
spread career awareness etc.
National - Boss? Skill Ministry. After Youth has completed basic training in Industrial
Apprenticeship Training Institutes (ITIs) / Kaushal Vikas Kendra, then Industrialist takes
Promotion him as apprentice ((शा�गदर् / प्र�श�ु)), trains him in practical aspects, pays
Scheme stipend.
2016 - Govt pays part of the stipend.
- Target: ⏫ apprenticeship training to 50 lakh youth by 2020. Online
registration of apprentice, centralized monitoring, exam & certification.
Apprenticeship Under the Apprenticeship Act, Govt has notified these rules:
Rules - minimum monthly stipend: ₹5,000 for school pass out class5-9 and ₹9,000
for graduate
- 10-15% hike in stipend for 2nd and 3rd year of apprenticeship
Disturbed areas Rural Development Ministry (ग्राम �वकास मं त्रालय) →
अशांत �ेत्र - HIMAYAT: skill development in J&K
- ROSHNI: skill development in Naxal / LWE areas.
Minorities Minorities Ministry (अ�सं �क मं त्रालय) →
अ�सं �क - USTTAD: Upgrading the Skill and Training in Traditional Art craft for
Development
- Nai Manzil: Madressa students, school-dropouts given additional training
so they can get jobs.
- Nai Udan, Naya Savera: free coaching / stipend for competitive exams.
- Learn And Earn (Seekho Aur Kamao)
Yukti Yukti - Yogya Kalakriti ki Takneek: HRD/Edu Ministry’s scheme for skill
development of traditional craftsman
Women - Social Justice Ministry: National Backward Classes Finance & Development
Corporation (NBCFDC) → Mahila Samriddhi Yojana → Concessional
Loans for female entrepreneurs.
- Department of Financial Services → credit guarantee through NCGTC ltd
→ Standup India: SC/ST & Women entrepreneurs given loans from 10 lakh
to 1 cr in each SCB Bank branch.
- Women Child Ministry →
- PM Mahila Shakti Kendra for skilling & availing scheme benefits.
- Support to Training & Employment Program for Women (STEP)
Scheme
Jan Shikshan Skill Ministry’ vocational training centres for school dropouts & illiterates.
Sansthan Previously under HRD/Edu Ministry, it was called Shramik Vidyapeeth.
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1107
📊📊India Skill Survey conducted by Pvt orgs. & funded by AICTE, UNDP etc.
Report 2019 - More than 50% MBA and >40% of B.Tech/B.E are unemployable (रोज़गार के
�लए अयो�) because they do not have the skills required by the industries.
- Overall, ~53% of youth coming out of higher educational institutions are
unemployable. Although it is improvement compared to previous years.
Global Skills Park India’s first Global Skills Park is to be setup in Madhya Pradesh by Union Govt
(2018) + loans from Asian Development Bank (ADB)
Reskilling World Economic Forum's initiative to provide 1 billion people better edu, skills
Revolution & jobs by 2030. India joined as founding member (2020-Jan)
MNGF Skill Ministry gives Mahatma Gandhi National Fellowship (MNGF) to young
professionals for helping district level officials in skill dev programs.
ISDS Skill Ministry created this new Group A service, Indian Skill Development
Group ‘A’ Service Services (ISDS: भारतीय कौशल �वकास सेवाएं ). They’ll be recruited through Indian
Engineering Service Examination, conducted by UPSC. First batch taken in
2019, and undergoing training at Mysuru.
63.7 (💇💇💇)✍ CONCLUSION-TEMPLATE-SKILL (कौशल �वकास के बारे म� �न�षर्)
- According to India Skill report 2019 more than 50% of youth with college degrees are
unemployable. To reap the demographic dividend of India, it is therefore necessary to focus on
the vocational training and skill development. OR
- SDG Goal 8 requires India to provide full, productive & decent work/employment for all. A
person without skill remains either unemployed, disguisedly unemployed or underemployed.
Aforementioned schemes / initiatives / challenges are important in that regard / need to be
addressed on priority basis.
भारत के जनसां��क�य लाभांश को प्रा� करने के �लए, �ावसा�यक प्र�श�ण और कौशल �वकास पर �ान देना आव�क है। सतत
�वकास ल� प्रा�� हेतु सभी के �लए पूणर्, उ�ादक और स� रोजगार उपल� कराने क� आव�कता है। �बना कौशल वाला ��� या तो
बेरोजगार रहता है, प्र�� �प से बेरोजगार रहता है। उ� योजनाएँ / पहल / चुनौ�तयाँ उस सं बंध म� मह�पूणर् ह� / प्राथ�मकता के आधार पर
सं बो�धत करने क� आव�कता है।
🔠🔠❓MCQ. Find correct statement(s) about ‘National Career Service’: (Pre-2017)
1. National Career Service is an initiative of the Dept of Personnel and Training, Govt of India.
2. National Career Service has been launched in a Mission Mode to improve the employment
opportunities to uneducated youth of the country.
Codes: (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2
🔠🔠❓MCQ. To obtain demographic dividend, what should India do? (Asked in UPSC-Pre-2013)
(a) Promoting skill development (b) Introducing more social security schemes
(c) Reducing infant mortality rate (d) Privatization of higher education
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1108