RPSC RAS Mains Exam Paper-I:Unit II-Part A- Indian Economy

RPSC RAS Mains Exam Paper-I:Unit II-Part A- Indian Economy: Rajasthan Administrative Services Mains Exams Indian Economy Study Material. RAS Mains Indian Economy

Indian Economy

  • Major Sectors of Economy: Agriculture, Industry & Service- Current Status, Issues and Initiatives
  • Banking: Concept of Money supply & High Powered Money. Role and Functions of Central Bank & Commercial Banks, issues of NPA, Financial Inclusion. Monetary Policy- Concept, objectives & Instruments
  • Public Finance: Tax reforms in India- Direct & Indirect, subsidies- Cash Transfer and other related issues. Recent Fiscal Policy of India
  • Recent Trends in Indian Economy: Role of Foreign Capital, MNCs, PDS, FDI, Exim Policy, 12th Finance Commission, Poverty alleviation schemes.
RAS-Mains-GS-Paper-1-Unit-II-Indian-Economy

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The Indian economy was in distress at the brink of the country’s independence. Being a colony, she was fulfilling the development needs not of herself, but of a foreign land. The state, that should have been responsible for breakthroughs in agriculture and industry, refused to play even a minor role in this regard. On the other hand, during the half century before India’s independence, the world was seeing accelerated development and expansion in agriculture and industry – on the behest of an active role being played by the states.

India has the world’s sixth largest economy in measures of GDP. It has the third largest purchasing power in the world. When we talk about the global economy, India is one of its fastest emerging players. Since our liberalization in 1991, the economy has opened up and given us plenty of opportunities to succeed.  RAS Mains Indian Economy

GENERAL STUDIES OF RAJASTHAN-ALL IN ONE

In the Indian economy, both private sector and public sector companies co-exist in perfect harmony. The big industries, especially those for vast public use, are public sector companies. Some examples are MTNL, Mahanagar Gas etc. And the economy has seen a huge boost in the private sector as well since the liberalization in 1991. Hence India is the perfect example of a mixed economy.

One major advantage of India’s vast population is within the scope of human capital. And most of these human resources are youths. They are educated and skilled, giving India a huge advantage in the global market. They now need adequate employment opportunities to be successful.

British rulers never made any significant changes for the benefit of the social sector, and this hampered the productive capacity of the economy. During independence, India’s literacy was only 17 percent, with a life expectancy of 32.5 years. Therefore, once India became independent, systematic organisation of the economy was a real challenge for the government of that time. The need for delivering growth and development was in huge demand in front of the political leadership – as the country was riding on the promises and vibes of national fervour. Many important and strategic decisions were taken by 1956, which are still shaping India’s economic journey.

One of the most important sectors of the Indian economy remains Agriculture. Its share in the GDP of the country has declined and is currently at 14%. However, more than 50% of the total population of the country is still dependent on agriculture. Keeping this in mind, the Union Budget 2017 – 18 gave high priority to the agricultural sector and aimed to double farmers’ incomes by 2022. RAS Mains Indian Economy

Besides these developments and reforms, it is imperative to bear in mind that in order to tap the highest potential of the economy and ensure good governance, an optimal level of synergy is required between the central and state government. This will not only add strength to our cooperative federal structure but will also strengthen India’s economy. Initiatives such as – 
•    Goods and Services Tax (GST) 
•    Insolvency and Bankruptcy Code (IBC) 
•    Startup India 
•    Digital India

General Awareness/Current Affairs Yearbook 2020 – Study Portal

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Union Budget 2020-21 Key Highlights

Budget 2020 Highlights: Amidst the economy struggling with a six-year low GDP growth, Union Finance Minister Nirmala Sitharaman presented the Budget 2020 on Saturday that focused on raising the purchasing power by cutting income tax rates and boosting rural income. Union Budget 2020 Highlights

General Knowledge 2020 Yearbook – Download

This was the longest Budget speech by any finance minister, going beyond 2 hour 30 minutes. Sitharaman, 60, broke her own record of a 2-hour-17-minute-long maiden Budget speech in July 2019.

Union Budget 2020 Highlights

Fiscal deficit target pegged at 3.8% of GDP for FY20. Insurance cover for bank depositors has been raised from Rs 1 lakh to Rs 5 lakh. Check out your new tax rates here

In a shot in the arm for the middle class, Nirmala Sitharaman has proposed a new simplified tax regime soon. “10% tax for income between 5 lakh-7.5 lakh; 15% tax for income between 7.5 lakh to 10 lakh; 20% tax for income between 10 lakh to 12.5 lakh; 25% tax for income between 12.5 lakh to 15 lakh; 30% tax for income above 15 lakh. No income tax for those with taxable income below Rs 5 lakh,” says Sitharaman.

Union Budget 2020 highlights:

1. Between 2006-2016, 271 million are out of poverty and we should be proud of it, says Finance Minister Nirmala Sitharaman.

2. Country has moved on from over 4 per cent growth in 1950s to 7.4 per cent to 2014-19 period, says Sitharaman

3. Total of 60 lakh new taxpayers and 105 crore e-way bills generated under GST, says Nirmala Sitharaman. Average household now saves 4 percent of monthly spend due to reduced GST rates, she added.

4. Finance minister Nirmala Sitharaman says Central government debt reduced to 48.7 per cent of GDP in 2019 from 52.2 per cent.

5. Sitharaman now starts putting out a 16-point guide to make India an aspirational economy. India is now 5th largest economy in world, the FM says.

6. Government to incentivise farmers to go solar. Over 6 crore farmers under Pradhan Mantri Fasal Bima Yojna have been insured. Pradhan Mantri Kisan Urja Suraksha and Utthan Mahabhiyan (PM KUSUM) to be expanded, providing 20 lakh farmers in setting up standalone solar pumps.

7. Railways will set up Kisan Rail through PPP model so that perishable goods can be transported quickly. Krishi Udaan scheme to transport agri products to national as well international destinations to be launched

8. Agri-credit target for the year 2020-21 has been set at Rs 15 lakh crore.

9. Rs 69,000 crores for allocated for the healthcare sector, says Finance Minister Nirmala Sitharaman.

10. Education and training: Rs 99,300 crore allocated for education in FY21. Govt will start Ind-Sat Exam to promote study in India and a degree-level online education programme for the deprived. A total of Rs 3,000 crore will be given for skill development.

11. Allocation for Swachh Bharat Mission for 2020-21 stands at Rs 12,300 crore. In further push to PM Modi’s ‘Nal se jaal’ scheme, govt proposes Rs 3.6 lakh crore towards piped water supply to households.

12. National Textile Mission to be launched with a proposed Rs 1,480 crore allocation, says FM Nirmala Sitharaman.

13. To boost infrastructure, Sitharaman says 9,000 km of economic corridor will be set up. “Chennai-Bengaluru expressway will also be started. Delhi-Mumbai expressway to be completed By 2023,” says FM.

14. 550 WiFi facilities have been commissioned at railway stations.

1 lakh gram panchayats to get optical fibre link, says FM Sitharaman. An allocation of Rs 6,000 crore will be provided for BharatNet scheme.

15. Allocation of Rs 27,300 crore for development of industry and commerce.

16. FM Nirmala Sitharaman announces Rs 20,000 crore for renewable energy sector in a bid to tackle pollution and climate change. A new scheme of smart meters will be launched, says Sitharaman.

17. 100 more airports to be developed by 2025, says Sitharaman.  The FM also said 1,150 trains will run under the public private partnership (PPP) mode, also four stations will be redeveloped with the help of the private sector. Besides, the minister promised more Tejas type trains to connect tourist destinations. An allocation of Rs 8,000 crore will be made for National Mission on Quantum Computing and Technology.

18. Rs 35,600 crore allocated for nutritional related programme in FY21 while Rs 85,000 crore has been budgeted for the welfare of Scheduled Castes and other backward classes. Tourism promotion gets Rs 2500 crore.

19. Women schemes, senior citizens in Budget: Sitharaman says enrolment ration for girls under ‘Beti Bachao Beti Padhao ‘is higher than boys. “Gross enrollment of girls is 94.32 per cent in elementary levels, 81.32 per cent in secondary level and 59.7 per cent in higher secondary level,” she says. Further, Rs 28,600 crore will be allocated in FY21 for women-linked programmes. Allocation for senior citizens and ‘Divyang’ enhanced to Rs 9500 crore.

20. Here is something for Delhiites! Sitharaman proposes Rs 4,400 crore to tackle Delhi’s air pollution problem. Last year, the Supreme Court had termed the situation as “worse than Emergency” as air quality dipped to hazardous levels.

21. Your money gets safer! Insurance cover for bank depositors raised from Rs 1 lakh to Rs 5 lakh, says FM Nirmala Sitharaman.

Currently, in the (unlikely) event of a bank going bust in India, a depositor has claim to a maximum of Rs 1 lakh per account as insurance cover — even if the deposit in their account far exceeds Rs 1 lakh. Depositors holding more than Rs 1 lakh in their account have no legal remedy in case of the collapse of the bank.

22. Foreign direct investment (FDI) into the country has increased to $284 billion during 2014-19 from $190 billion in previous five years.

23. Nirvik (Niryat Rin Vikas Yojana) scheme to provide enhanced insurance cover and reduce premium for small exporters.

24. Focus on MSMEs: More than 5 lakh MSMEs benefited from RBI’s restructuring of loans, says FM Sitharaman. “Government has asked RBI to consider extending window of debt structuring by one year to March 2021 for this purpose,” she says.

25. Fiscal deficit target pegged at 3.8% of GDP for FY 2019-20.  FY21 fiscal deficit target pegged at 3.5% of GDP. Fiscal deficit is considered the most important marker of a government’s financial health. Not letting the fiscal deficit go completely out of control has been one of the standout achievements of the Modi government.

26. Government to sell part holding in LIC. Besides, govt to also sell stake in IDBI Bank to private investors. That LIC has been identified as a candidate for a potential public listing by the government, was reported first by The Indian Express in July 2019. The government’s move is a part of efforts to push through an aggressive disinvestment and asset monetisation programme.

27. Nominal growth of GDP for 2020-21 has been estimated at 10 per cent, says Nirmala Sitharaman.

28. Cheer for the middle class! Sitharaman proposes new simplified tax regime soon. New income tax rates: 10% tax for income between 5 lakh-7.5 lakh; 15% tax for income between 7.5 lakh to 10 lakh; 20% tax for income between 10 lakh to 12.5 lakh; 25% tax for income between 12.5 lakh to 15 lakh; 30% tax for income above 15 lakh.

29. On account of the income tax relief, Sitharaman says it will cost the exchequer Rs 48,000 crore revenue loss. “Dividend Distribution Tax to be removed. Dividend shall be taxed at the hands of the recipients,” she said.

30. To boost investments and shore up the lagging economy, corporate tax for existing companies slashed to 22 per cent. Govt proposes 100 per cent tax concession to sovereign wealth funds on investment in infra projects. Moreover, concessional tax rate of 15 per cent extended to power generation companies.

31. Coming to affordable housing now: Finance Minister Nirmala Sitharaman extends additional Rs 1.5 lakh tax benefit on interest paid on affordable housing loans to March 2021. In another boost, Sitharaman proposes tax holiday to affordable housing developers.

32. ‘Vivad se Vishwas’ scheme announced by Sitharaman for direct tax payers whose appeals are pending at various forums. 4.83 lakh direct cases pending in various appellate forums;

“Under the scheme, taxpayer to pay only amount of disputed tax. They will get complete waiver on interest and penalty if scheme is availed by March 31, 2020,” Sitharaman said.

33. 15th Finance Commission has cut state share of central taxes by one percentage point to 41 per cent.

Union Budget 2020 Highlights

Finance Minister Nirmala Sitharaman today delivered the longest budget speech in six years of the Narendra Modi government. She started her address in the Parliament by paying homage to her predecessor, the late Arun Jaitley, and went on to announce key reforms that sought to address both economic and social aspects of the country.

The three prominent themes of Union Budget 2020-21 were:

•        Aspirational India.

•        Caring Society.

•        Economic Development.

Here’s a look at the key highlights of Budget 2020:

Income Tax: Middle Class India Gets A Rs 40,000 Crore Boost

The Narendra Modi-led government offered an optional relief to individual taxpayers as it looked to bolster consumption and flagging economic growth. Union Budget 2020 Highlights

Taxpayers will now be able to avail a lower income tax rate on various slabs by foregoing certain deductions and exemptions, Sitharaman announced in the budget. The new regime will be optional and those who want to stick to claiming deductions will be allowed to do so.

Union Budget 2020 Highlights

The new income tax slabs and rates are as under:

•        Rs 5-7.5 lakh per annum: 10 percent from 20 percent earlier.

•        Rs 7.5-10 lakh per annum: 15 percent from 20 percent earlier.

•        Rs 10-12.5 lakh per annum: 20 percent from 30 percent earlier.

•        Rs 12.5-15 lakh per annum: 25 percent from 30 percent earlier.

•        Above Rs 15 lakh per annum: 30 percent without any exemptions.

All income below Rs 5 lakh per annum will be tax-exempt in both the old and new regime. The changes will result in a loss of Rs 40,000 crore to the exchequer.

Real Estate: Benefits for Buyers and Makers of Affordable Housing

In order to boost affordable housing in India and further the government’s ‘Housing for All’ initiative, Budget 2020 has proposed to extend the date of loan sanction for availing additional deduction of Rs 1.5 lakh by one year to March 31, 2021.

Property developers will also get a tax holiday on the profit earned on affordable housing projects approved by March 31, 2020. The finance minister also proposed to extend the date of approval for affordable housing projects for availing this tax holiday by an additional year. Union Budget 2020 Highlights

Union Budget 2020 Highlights

Dividend Distribution Tax Abolished

In a move that will offer some relief to India Inc., the Narendra Modi-led government eliminated the dividend distribution tax that’s levied on dividends issued by companies.

So far, companies were required to pay DDT at 15 percent, though including surcharge and cess put the effective rate at 20.56 percent. DDT was introduced in 1997 at a 7.5 percent flat rate in an effort towards efficient tax collection.

Fiscal Deficit Target for 2020-21: ‘Escape Clause’ Invoked

India’s fiscal deficit settled at 3.8 percent in 2019-20 and is targeted at 3.5 percent in 2020-21, Finance Minister Nirmala Sitharaman said. Importantly, the government has decided to invoke the ‘escape clause’ provided for in 2018 amendments to the Fiscal Responsibility and Budget Management Act.

For 2019-20, the fiscal deficit was estimated at 3.3 percent in Budget 2019. For the next fiscal too, the government will deviate from an earlier set fiscal path and target a fiscal deficit of 3.5 percent.

PMC Bank Aftermath: Big Jump in Bank Deposit Insurance Cover

The government has proposed to hike the bank deposit insurance cover to Rs 5 lakh from the current Rs 1 lakh, to protect depositors in the event of a lender’s collapse.

“There is a robust mechanism to monitor the health of all scheduled commercial banks and we want to assure depositors that their deposits are absolutely safe,” Sitharaman said during her budget speech.

The decision comes after the collapse of PMC Bank that led to restrictions on deposit withdrawals. According to the Reserve Bank of India’s Financial Stability Report, the Deposit Insurance and Credit Guarantee Corporation has received total claims of about Rs 14,100 crore across defaulting cooperative banks.

LIC Listing Proposed Via an IPO

The government has proposed to sell a part of its stake in Life Insurance Corporation of India through an initial public offering, the finance minister said in her budget speech. While she didn’t divulge any details, the news of an LIC listing sent insurance stocks scurrying for cover. The state-run insurer was established in 1956 and is fully owned by the Government of India. Union Budget 2020 Highlights

100 New Airports, 5 New Smart Cities, 10,000-Km Gas Grid

In her Budget 2020, the finance minister allocated Rs 1.7 lakh crore for a National infra Pipeline that aims “to improve ease of living for every citizen of our country” and provides huge opportunity for employment.

“I propose to set up a project preparation facility for infra projects. This programme would actively involve young engineers, management graduates and economists. It is also proposed to divert all infrastructure agencies of the government to involve youth power and startups,” Sitharaman said. Union Budget 2020 Highlights

A national policy will soon be released, she said.

Key Highlights of the Plan:

•        National infra pipeline of Rs 106 lakh crore addresses country’s needs.

•        To set up project preparation facility for infrastructure projects.

•        National logistics policy to be released soon.

•        Logistics policy to create single-window e-logistics market.

•        Delhi-Mumbai Expressway to be completed by 2023.

•        To monetize 12 lots of highway bundles by 2024.

•        Indian Railways commissioned 550 Wi-Fi facilities.

•        Railways has small operating surplus.

•        Solar power capacity to be set-up alongside rail tracks.

•        Four station redevelopment projects to be done through PPP mode.

•        More Tejas-like trains to connect iconic tourist destinations.

•        100 more airports to be developed by 2024.

•        To provide 20% equity, external assistance for metro projects.

•        To provide Rs 22,000 crore for power, renewable energy in FY21.

•        To expand national gas grid to 27,000 km from 16,200 km.

•        Aim policy to enable private sector to build data-centre parks.

•        Fibre-to-home through Bharat Net to link 1 lakh gram panchayats.

•        Propose to provide Rs 6,000 crore to Bharat Net.

•        To initiate two national level science schemes.

Vivad Se Vishwas: Amnesty Scheme to Reduce Direct Tax Litigation

The finance minister announced the ‘Vivad Se Vishwas’ scheme for tax litigation under which only the disputed tax amount will have to be paid on or before March 31, 2020. No interest or penalty will be charged. People who pay after this deadline, but before June 30 will have to pay some charge, Sitharaman said during her speech. Union Budget 2020 Highlights

Key Highlights of the Vivad Se Vishwas Scheme

•        ‘Vivad Se Vishwas’ scheme to reduce direct tax litigation

•        To amend the Income Tax Act to enable faceless appeal.

•        Under the scheme, assesse to pay only tax amount, not interest, penalty.

•        March 31 deadline for paying tax claim, avoid interest, penalty.

•        Those who avail after March 31 but before June 30 will have to pay some extra amount.

Government’s Disinvestment Target Doubled to a Lofty Rs 2.1 Lakh Crore

India has set itself the highest-ever disinvestment target for 2020-21 even as it missed its previous goal.

The central government aims to garner Rs 2.1 lakh crore through divestments in 2020-21, according to Union Budget 2020-21 documents. Of this, it expects to earn Rs 90,000 crore by selling stake in public sector banks and financial institutions, while the balance Rs 1.2 lakh crore will come by selling stake in central public sector enterprises. Union Budget 2020 Highlights

In 2019-20, the government had hoped to earn Rs 1.05 lakh crore through divestment receipts. That has now been revised lower at Rs 65,000 crore.

FPI Limit in Corporate Bonds Hiked

The government plans to increase the investment limit of foreign portfolio investors in corporate bonds from 9 percent to 15 percent, Sitharaman said. The finance minister said certain government securities will be open for foreign investors.

She also proposed debt-exchange traded funds comprising mainly government securities, while stating that Rs 22,000 crore has already provided as support to infrastructure project pipeline. Union Budget 2020 Highlights

Some Other Useful Links:

UPSC Prelims 2020 Test 1-40: IAS Test Series – Study Portal

General Awareness/Current Affairs Yearbook 2020 – Study Portal

General Awareness/Current Affairs Yearbook 2020 – Study Portal

UPSC Civil Services Preliminary Exam 2020 Complete Study Material GS Paper-1

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Three components of Aspirational India

  • Agriculture, Irrigation, and Rural Development
  • Wellness, Water, and Sanitation
  • Education and Skills

Sixteen Action Points for Agriculture, Irrigation and Rural Development

  • Rs. 2.83 lakh crore to be allocated for the following 16 Action Points:
    • Rs. 1.60 lakh crore for Agriculture, Irrigation & allied activities.
    • Rs. 1.23 lakh crore for Rural development & Panchayati Raj. –
  • Agriculture credit:
    • Rs. 15 lakh crore target set for the year 2020-21.
    • PM-KISAN beneficiaries to be covered under the KCC scheme.
    • NABARD Re-finance Scheme to be further expanded.
  • Comprehensive measures for 100 water-stressed districts proposed.
  • Blue Economy:
    • Rs. 1 lakh crore fisheries’ exports to be achieved by 2024-25.
    • Rs. 200 lakh tonnes fish production targeted by 2022-23.
    • 3477 Sagar Mitras and 500 Fish Farmer Producer Organisations to involve youth in fisheries extension.
    • Growing of algae, sea-weed and cage culture to be promoted.
    • Framework for development, management and conservation of marine fishery resources.
  • Kisan Rail to be setup by Indian Railways through PPP:
    • To build a seamless national cold supply chain for perishables (milk, meat, fish, etc.
    • Express and Freight trains to have refrigerated coaches.
  • Krishi Udaan to be launched by the Ministry of Civil Aviation:
    • Both international and national routes to be covered.
    • North-East and tribal districts to realize Improved value of agri-products.
  • One-Product One-District for better marketing and export in the Horticulture sector.
  • Balanced use of all kinds of fertilizers – traditional organic and innovative fertilizers.
  • Measures for organic, natural, and integrated farming:
    • Jaivik Kheti Portal – online national organic products market to be strengthened.
    • Zero-Budget Natural Farming (mentioned in July 2019 Budget) to be included.
    • Integrated Farming Systems in rain-fed areas to be expanded.
    • Multi-tier cropping, bee-keeping, solar pumps, solar energy production in non-cropping season to be added. Union Budget 2020 Highlights
  • PM-KUSUM to be expanded:
    • Rs. 20 lakh farmers to be provided for setting up stand-alone solar pumps.
    • Another Rs. 15 lakh farmer to be helped to solarise their grid-connected pump sets.
    • Scheme to enable farmers to set up solar power generation capacity on their fallow/barren lands and to sell it to the grid.
  • Village Storage Scheme:
    • To be run by the SHGs to provide farmers a good holding capacity and reduce their logistics cost.
    • Women, SHGs to regain their position as Dhaanya Lakshmi.
  • NABARD to map and geo-tag agri-warehouses, cold storages, reefer van facilities, etc.
  • Warehousing in line with Warehouse Development and Regulatory Authority (WDRA) norms:
    • Viability Gap Funding for setting up such efficient warehouses at the block/taluk level.
    • Food Corporation of India (FCI) and Central Warehousing Corporation (CWC) to undertake such warehouse building.
  • Financing on Negotiable Warehousing Receipts (e-NWR) to be integrated with e-NAM.
  • State governments who undertake implementation of model laws (issued by the Central government) to be encouraged. Union Budget 2020 Highlights
  • Livestock:
    • Doubling of milk processing capacity to 108 million MT from 53.5 million MT by 2025.
    • Artificial insemination to be increased to 70% from the present 30%.
    • MNREGS to be dovetailed to develop fodder farms.
    • Foot and Mouth Disease, Brucellosis in cattle and Peste Des Petits ruminants (PPR) in sheep and goat to be eliminated by 2025.
  • Deen Dayal Antyodaya Yojana – Rs. 5 crore households mobilized with 58 lakh SHGs for poverty alleviation.

Wellness, Water and Sanitation

  • 69,000 crore allocated for overall Healthcare sector.
  • 6400 crore (out of Rs. 69,000 crore) for PM Jan Arogya Yojana (PMJAY):
    • More than 20,000 hospitals already empanelled under PM Jan Arogya Yojana (PMJAY).
    • Viability Gap Funding window proposed for setting up hospitals in the PPP mode. Union Budget 2020 Highlights
    • Aspirational Districts with no Ayushman empanelled hospitals to be covered in the first phase.
    • Targeting diseases with an appropriately designed preventive regime using Machine Learning and AI.
  • Jan Aushadhi Kendra Scheme to offer 2000 medicines and 300 surgicals in all districts by 2024.
  • TB Harega Desh Jeetega campaign launched – commitment to end Tuberculosis by 2025.
  • Rs. 3.60 lakh crore approved for Jal Jeevan Mission:
    • Rs. 11,500 crore for the year 2020-21.
    • Augmenting local water sources, recharging existing sources, and promoting water harvesting and de-salination.
    • Cities with million-plus population to be encouraged to achieve the objective during the current year itself.
  • 12, 300 crore allocation for Swachh Bharat Mission in 2020-21:
  • Committment to ODF-Plus in order to sustain ODF behaviour.
  • Emphasis on liquid and grey water management.
  • Focus also on Solid-waste collection, source segregation, and processing. Union Budget 2020 Highlights

Education and Skills

  • 99,300 crore for education sector and Rs. 3000 crore for skill development in 2020­21.
  • New Education Policy to be announced soon.
  • National Police University and National Forensic Science University proposed for policing science, forensic science, and cyber-forensics.
  • Degree level full-fledged online education program by Top-100 institutions in the National Institutional Ranking Framework.
  • Up to 1-year internship to fresh engineers to be provided by Urban Local Bodies.
  • Budget proposes to attach a medical college to an existing district hospital in PPP mode.
  • Special bridge courses to be designed by the Ministries of Health, and Skill Development:
    • To fulfill the demand for teachers, nurses, para-medical staff and care-givers abroad.
    • To bring in equivalence in the skill sets of the workforce and employers’ standards.
  • 150 higher educational institutions to start apprenticeship embedded degree/diploma courses by March 2021.
  • External Commercial Borrowings and FDI to be enabled for education sector.
  • Ind-SAT proposed for Asian and African countries as a part of Study in India. Union Budget 2020 Highlights

Economic Development

Industry, Commerce and Investment

  • 27,300 crore allocated for 2020-21 for development and promotion of Industry and Commerce.
  • Investment Clearance Cell proposed to be set up:
    • To provide “end to end” facilitation and support.
    • To work through a portal.
  • Five new smart cities proposed to be developed.
  • Scheme to encourage manufacture of mobile phones, electronic equipment and semi­conductor packaging proposed.
  • National Technical Textiles Mission to be set up:
    • With four-year implementation period from 2020-21 to 2023-24.
    • At an estimated outlay of Rs 1480 crore.
    • To position India as a global leader in Technical Textiles.
  • New scheme NIRVIK to be launched to achieve higher export credit disbursement, which provides for:
    • Higher insurance coverage
    • Reduction in premium for small exporters
    • Simplified procedure for claim settlements.
  • Turnover of Government e-Marketplace (GeM) proposed to be taken to Rs 3 lakh crore.
  • Scheme for Revision of duties and taxes on exported products to be launched.
    • Exporters to be digitally refunded duties and taxes levied at the Central, State and local levels, which are otherwise not exempted or refunded.
  • All Ministries to issue quality standard orders as per PM’s vision of “Zero Defect-Zero Effect” manufacturing. Union Budget 2020 Highlights

Infrastructure

  • Rs. 100 lakh crore to be invested on infrastructure over the next 5 years.
  • National Infrastructure Pipeline:
    • Rs. 103 lakh crore worth projects; launched on 31st December 2019.
    • More than 6500 projects across sectors, to be classified as per their size and stage of development.
  • A National Logistics Policy to be released soon:
    • To clarify roles of the Union Government, State Governments and key regulators.
    • A single window e-logistics market to be created
    • Focus to be on generation of employment, skills and making MSMEs competitive.
  • National Skill Development Agency to give special thrust to infrastructure-focused skill development opportunities.
  • Project preparation facility for infrastructure projects proposed.
    • To actively involve young engineers, management graduates and economists from Universities.
  • Infrastructure agencies of the government to involve youth-power in start-ups. Union Budget 2020 Highlights
  • Rs. 1.7 lakh crore proposed for transport infrastructure in 2020-21.

Highways:

  • Accelerated development of highways to be undertaken, including:
    • 2500 Km access control highways.
    • 9000 Km of economic corridors.
    • 2000 Km of coastal and land port roads.
    • 2000 Km of strategic highways.
  • Delhi-Mumbai Expressway and two other packages to be completed by 2023.
  • Chennai-Bengaluru Expressway to be started.
  • Proposed to monetise at least 12 lots of highway bundles of over 6000 Km before 2024.

Indian Railways:

  • Five measures:
    • Large solar power capacity to be set up alongside rail tracks, on land owned by railways.
    • Four station re-development projects and operation of 150 passenger trains through PPP.
    • More Tejas type trains to connect iconic tourist destinations.
    • High speed train between Mumbai and Ahmedabad to be actively pursued. Union Budget 2020 Highlights
    • 148 km long Bengaluru Suburban transport project at a cost of Rs 18600 crore, to have fares on metro model. Central Government to provide 20% of equity and facilitate external assistance up to 60% of the project cost.
  • Indian Railways’ achievements:
    • 550 Wi-fi facilities commissioned in as many stations.
    • Zero unmanned crossings.
    • 27000 Km of tracks to be electrified.

Ports & Water-ways:

  • Corporatizing at least one major port and its listing on stock exchanges to be considered. Union Budget 2020 Highlights
  • Governance framework keeping with global benchmarks needed for more efficient sea­ports.
  • Economic activity along river banks to be energised as per Prime Minister’s Arth Ganga

Airports:

  • 100 more airports to be developed by 2024 to support Udaan scheme.
  • Air fleet number expected to go up from present 600 to 1200 during this time.

Electricity:

  • “Smart” metering to be promoted.
  • More measures to reform DISCOMs to be taken.

Power:

  • 22, 000 crore proposed for power and renewable energy sector in 2020-21.
  • Expansion of national gas grid from the present 16200 km to 27000 km proposed.
  • Further reforms to facilitate transparent price discovery and ease of transactions. Union Budget 2020 Highlights
Union Budget 2020 Highlights

New Economy

  • To take advantage of new technologies:
    • Policy to enable private sector to build Data Centre parks throughout the country to be brought out soon.
    • Fibre to the Home (FTTH) connections through Bharatnet to link 100,000 gram panchayats this year.
    • 6000 crore proposed for Bharatnet programme in 2020-21.
  • Measures proposed to benefit Start-ups:
    • A digital platform to be promoted to facilitate seamless application and capture of IPRs.
    • Knowledge Translation Clusters to be set up across different technology sectors including new and emerging areas.
    • For designing, fabrication and validation of proof of concept, and further scaling up Technology Clusters, harbouring test beds and small scale manufacturing facilities to be established.
    • Mapping of India’s genetic landscape- Two new national level Science Schemes to be initiated to create a comprehensive database. Union Budget 2020 Highlights
    • Early life funding proposed, including a seed fund to support ideation and development of early stage Start-ups.
  • 8000 crore proposed over five years for National Mission on Quantum Technologies and Applications. Union Budget 2020 Highlights

Caring Society

  • Focus on:
    • Women & child,
    • Social Welfare;
    • Culture and Tourism
  • Allocation of Rs. 35,600 crore for nutrition-related programmes proposed for the FY2020-21.
  • 28, 600 crore proposed for women specific programs.
  • Issue about age of a girl entering motherhood – proposed to appoint a task force to present its recommendations in six months’ time.
  • Financial support for wider acceptance of technologies, identified by Ministry of Housing and Urban Affairs to ensure no manual cleaning of sewer systems or septic tanks, to be provided.
  • 85, 000 crore proposed for 2020-21 for welfare of Scheduled Castes and Other Backward Classes.
  • 53, 700 crore provided to further development and welfare of Scheduled Tribes. Union Budget 2020 Highlights
  • Enhanced allocation of Rs. 9,500 crore provided for 2020-21 for senior citizens and Divyang.

Culture & Tourism

  • Allocation of Rs. 2500 crore for 2020-21 for tourism promotion.
  • 3150 crore proposed for Ministry of Culture for 2020-21.
  • An Indian Institute of Heritage and Conservation under Ministry of Culture proposed; with the status of a deemed University.
  • 5 archaeological sites to be developed as iconic sites with on-site Museums:
    • Rakhigarhi (Haryana)
    • Hastinapur (Uttar Pradesh)
    • Shivsagar (Assam)
    • Dholavira (Gujarat)
    • Adichanallur (Tamil Nadu)
  • Re-curation of the Indian Museum in Kolkata, announced by Prime Minister in January 2020. Union Budget 2020 Highlights
  • Museum on Numismatics and Trade to be located in the historic Old Mint building in Kolkata.
  • 4 more museums from across the country to be taken up for renovation and re-curation.
  • Support for setting up of a Tribal Museum in Ranchi (Jharkhand).
  • Maritime museum to be set up at Lothal- the Harrapan age maritime site near Ahmedabad, by Ministry of Shipping.
  • State governments expected to develop a roadmap for certain identified destinations and formulate financial plans during 2021 against which specified grants to be made available to the States in 2020-21. Union Budget 2020 Highlights

Environment & Climate Change

  • Allocation for this purpose to be Rs.4400 crore for 2020-21.
  • Proposed to advise the utilities to close the running old thermal power plants with carbon emission above the pre-set norms.
  • States that are formulating and implementing plans for ensuring cleaner air in cities above one million to be encouraged.
  • PM launched Coalition for Disaster Resilient Infrastructure (CDRI) with Secretariat in Delhi. Second such international initiative after International Solar Alliance. Union Budget 2020 Highlights

Governance

  • Clean, corruption-free, policy driven, good in intent and most importantly trusting in faith.
  • Taxpayer Charter to be enshrined in the Statute will bring fairness and efficiency in tax administration.
  • Companies Act to be amended to build into statues, criminal liability for certain acts that are civil in nature.
    • Other laws with such provisions are to be corrected after examination.
  • Major reforms in recruitment to Non-Gazetted posts in Government and Public sector banks: Union Budget 2020 Highlights
    • An independent, professional and specialist National Recruitment Agency (NRA) for conducting a computer-based online Common Eligibility Test for recruitment.
    • A test-centre in every district, particularly in the Aspirational Districts.
  • A robust mechanism to be evolved for appointment including direct recruitment to various Tribunals and specialised bodies to attract best talents and professional experts.
  • Contract Act to be strengthened.
  • New National Policy on Official Statistics to:
    • Promote use of latest technologies including AI.
    • Lay down a road-map towards modernised data collection, integrated information portal and timely dissemination of information.
  • A sum of Rs. 100 crore allocated to begin the preparations for G20 presidency to be hosted in India in the year 2022.
  • Development of North East region:
    • Improved flow of funds using online portal by the Government.
    • Greater access to financial assistance of Multilateral and Bilateral funding agencies.
  • Development of Union Territories of J&K and Ladakh:
    • An amount of Rs. 30,757 crore provided for the financial year 2020-21. Union Budget 2020 Highlights
    • The Union Territory of Ladakh has been provided with Rs. 5,958.

Financial Sector

  • Reforms accomplished in PSBs :
    • 10 banks consolidated into 4.
    • 3,50,000 crore capital infused.
  • Governance reforms to be carried out to bring in transparency and greater professionalism in PSBs.
  • Few PSBs to be encouraged to approach the capital market to raise additional capital
  • Deposit Insurance and Credit Guarantee Corporation (DICGC) permitted to increase Deposit Insurance Coverage to Rs. 5 lakh from Rs.1 lakh per depositor.
  • Scheduled Commercial Bank’s health under monitoring through a robust mechanism, keeping depositors’ money safe.
  • Cooperative Banks to be strengthen by amending Banking Regulation Act for:
    • Increasing professionalism.
    • Enabling access to capital.
    • Improving governance and oversight for sound banking through the RBI.
  • NBFCs eligibility limit for debt recovery reduced from:
    • Rs. 500 crore to Rs 100 crore asset size.
    • Rs. 1 crore to Rs 50 lakh loan size.
  • Private capital in Banking system:
    • Government to sell its balance holding in IDBI Bank to private, retail and institutional investors through the stock exchange.
  • Easier mobility in jobs:
    • Auto-enrolment in Universal Pension coverage.
    • Inter-operability mechanism to safeguard the accumulated corpus.
  • Pension Fund Regulatory Development Authority of India Act to be amended to:
    • Strengthen regulating role of PFRDAI.
    • Facilitate separation of NPS trust for government employees from PFRDAI.
    • Enable establishment of a Pension Trust by the employees other than Government.
  • Factor Regulation Act 2011 to be amended to:
    • Enable NBFCs to extend invoice financing to the MSMEs through TReDS
  • New scheme to provide subordinate debt for entrepreneurs of MSMEs by the banks
    • Would be counted as quasi-equity.
    • Would be fully guaranteed through the Credit Guarantee Trust for Medium and Small Entrepreneurs (CGTMSE).
    • The corpus of the CGTMSE would accordingly be augmented by the government. Union Budget 2020 Highlights
  • Window for MSME’s debt restructuring by RBI to be extended by one year till March 31, 2021.
    • More than five lakh MSMEs have already been benefitted.
  • An app-based invoice financing loans product for MSMEs to be launched.
    • To prevent the problem of delayed payments and consequential cash flows mismatches.
  • Export promotion of MSMEs:
    • For selected sector such as pharmaceuticals, auto components and others.
    • An Rs 1000 crore scheme anchored by EXIM Bank together with SIDBI.
    • Hand holding support for technology upgradations, R&D, business strategy etc.

Financial Market

  • Deepening Bond Market.
    • Certain specified categories of Government securities to be opened fully for non – resident investors also.
    • FPI limit in corporate bonds increased to 15% from 9% of its outstanding stock. Union Budget 2020 Highlights
  • New legislation to be formulated for laying down a mechanism for netting of financial contracts.
    • Scope of credit default swaps to expand.
  • Debt Based Exchange Traded Fund expanded by a new Debt-ETF consisting primarily of Government Securities.
    • To give attractive access to retail investors, pension funds and long-term investors.
  • A Partial Credit Guarantee scheme for the NBFCs formulated post the Union budget 2019-20 to address their liquidity constraints.
    • New mechanism to be devised to further this.
    • Government support to securities so floated.

Infrastructure Financing

  • 103 lakh crore National Infrastructure Pipeline projects earlier announced. Union Budget 2020 Highlights
  • Rs 22,000 crore to cater to the equity support to Infrastructure Finance Companies such as IIFCL and a subsidiary of NIIF.
  • IFSC, GIFT city: full of potential to become a centre of international finance as well as a centre for high end data processing:
    • An International Bullion exchange(s) to be set up as an additional option for trade by global market participants with the approval of regulator.

Disinvestment

  • Government to sell a part of its holding in LIC by way of Initial Public Offer (IPO).

Fiscal Management

  • XV Finance Commission (FC):
    • XV Finance Commission has given its first report for FY2020-21
    • Recommendations accepted in substantial measure
    • Its final report for five years beginning 2021-22 to be submitted during the latter part of the year.
  • GST Compensation Fund:
    • Balances due out of collection of the years 2016-17 and 2017-18 to be transferred to the Fund, in two instalments.
    • Hereinafter, transfers to the fund to be limited only to collection by way of GST compensation cess.
  • Overhaul of Centrally Sponsored Schemes and Central Sector Schemes necessary:
    • To align them with emerging social and economic needs of tomorrow
    • To ensure that scarce public resources are spent optimally
  • On the recent debate over transparency and credibility of projected fiscal numbers, it is assured that procedure adopted is compliant with the FRBM Act.
  • For the FY 2019-20:
    • Revised Estimates of Expenditure: at Rs.26.99 lakh crore
    • Revised Estimates of Receipts: estimated at Rs.19.32 lakh crore.
  • For year 2020-21:
    • Nominal growth of GDP estimated at 10%.
    • Receipts: estimated at Rs.22.46 lakh cr
    • Expenditure: at Rs.30.42 lakh cr.
  • Significant tax reforms for boosting investments recently undertaken. However, expected tax buoyancy expected to take time.
  • Fiscal deficit of 3.8% estimated in RE 2019-20 and 3.5% for BE 2020-21. It comprises two ingredients;
    • 3% for year 2019-20 and 3% for the 2020-21 budget estimate.
    • Deviation of 0.5%, consistent with Section 4(3) of FRBM Act, both for RE 2019-­20 and BE 2020-21. (Section 4 (2) of the FRBM Act provides for a trigger mechanism for a deviation from the estimated fiscal deficit on account of structural reforms in the economy with unanticipated fiscal implications.)
    • Return path, committing to fiscal consolidation without compromising needs of investment out of public funds, is laid in Medium Term Fiscal Policy cum Strategy Statement.
    • Market borrowings: Net market borrowings: Rs.4.99 lakh crore for 2019-20 and Rs.5.36 lakh crore for 2020-21.
  • A good part of the borrowings for the financial year 2020-21 to go towards Capital expenditure that has been scaled up by more than 21%.

Direct Tax

Direct Tax Proposals – To stimulate growth, simplify tax structure, bring ease of compliance, and reduce litigations. Union Budget 2020 Highlights

  • Personal Income Tax:
    • Significant relief to middle class taxpayers.
    • New and simplified personal income tax regime proposed:
Taxable Income Slab (Rs.) Existing tax rates New tax rates
0-2.5 Lakh Exempt Exempt
2.5-5 Lakh 5% 5%
5-7.5 Lakh 20% 10%
7.5-10 Lakh 20% 15%
10-12.5 Lakh 30% 20%
12.5-15 Lakh 30% 25%
Above 15 Lakh 30% 30%
  • Around 70 of the existing exemptions and deductions (more than 100) to be removed in the new simplified regime.
    • Remaining exemptions and deductions to be reviewed and rationalised in coming years.
    • New tax regime to be optional – an individual may continue to pay tax as per the old regime and avail deductions and exemptions.
    • Measures to pre-fill the income tax return initiated so that an individual who opts for the new regime gets pre-filled income tax returns and would need no assistance from an expert to pay income tax.
    • New regime to entail estimated revenue forgone of Rs. 40,000 crore per year.
  • Corporate Tax:
    • Tax rate of 15% extended to new electricity generation companies.
    • Indian corporate tax rates now amongst the lowest in the world.
  • Dividend Distribution Tax (DDT):
    • DDT removed making India a more attractive investment destination.
    • Deduction to be allowed for dividend received by holding company from its subsidiary.
    • 25,000 crore estimated annual revenue forgone.
  • Start-ups:
    • Start-ups with turnover up to Rs. 100 crore to enjoy 100% deduction for 3 consecutive assessment years out of 10 years.
    • Tax payment on ESOPs deferred.
  • MSMEs to boost less-cash economy:
    • Turnover threshold for audit increased to Rs. 5 crore from Rs. 1 crore for businesses carrying out less than 5% business transactions in cash.
  • Cooperatives:
    • Parity brought between cooperatives and corporate sector.
    • Option to cooperative societies to be taxed at 22% + 10% surcharge and 4% cess with no exemption/deductions.
    • Cooperative societies exempted from Alternate Minimum Tax (AMT) just like Companies are exempted from the Minimum Alternate Tax (MAT).
  • Tax concession for foreign investments:
    • 100% tax exemption to the interest, dividend and capital gains income on investment made in infrastructure and priority sectors before 31st March, 2024 with a minimum lock-in period of 3 years by the Sovereign Wealth Fund of foreign governments.
  • Affordable housing:
    • Additional deduction up to Rs. 1.5 lakhs for interest paid on loans taken for an affordable house extended till 31st March, 2021.
    • Date of approval of affordable housing projects for availing tax holiday on profits earned by developers extended till 31st March, 2021.

Tax Facilitation Measures

  • Instant PAN to be allotted online through Aadhaar.
  • ‘Vivad Se Vishwas’ scheme, with a deadline of 30th June, 2020, to reduce litigations in direct taxes:
    • Waiver of interest and penalty – only disputed taxes to be paid for payments till 31st March, 2020.
    • Additional amount to be paid if availed after 31st March, 2020.
    • Benefits to taxpayers in whose cases appeals are pending at any level.
  • Faceless appeals to be enabled by amending the Income Tax Act.
  • For charity institutions:
    • Pre-filling in return through information of donations furnished by the done.
    • Process of registration to be made completely electronic.
    • Unique registration number (URN) to be issued to all new and existing charity institutions.
    • Provisional registration to be allowed for new charity institutions for three years.
    • CBDT to adopt a Taxpayers’ Charter.
  • Losses of merged banks:
  • Amendments proposed to the Income-tax Act to ensure that entities benefit from unabsorbed losses and depreciation of the amalgamating entities.

Indirect Tax

  • GST:
    • Cash reward system envisaged to incentivise customers to seek invoice.
    • Simplified return with features like SMS based filing for nil return and improved input tax credit flow to be implemented from 1st April, 2020 as a pilot run.
    • Dynamic QR-code capturing GST parameters proposed for consumer invoices.
    • Electronic invoice to capture critical information in a centralized system to be implemented in a phased manner.
    • Aadhaar based verification of taxpayers being introduced to weed out dummy or non-existent units.
    • GST rate structure being deliberated to address inverted duty structure.
  • Customs Duties:
    • Customs duty raised on footwear to 35% from 25% and on furniture goods to 25% from 20%.
    • Basic customs duty on imports of news print and light-weight coated paper reduced from 10% to 5%.
    • Customs duty rates revised on electric vehicles and parts of mobiles.
    • 5% health cess to be imposed on the imports of medical devices, except those exempt from BCD.
    • Lower customs duty on certain inputs and raw materials like fuse, chemicals, and plastics.
    • Higher customs duty on certain goods like auto-parts, chemicals, etc. which are also being made domestically.
  • Trade Policy Measures
    • Customs Act being amended to enable proper checks of imports under FTAs.
    • Rules of Origin requirements to be reviewed for certain sensitive items.
    • Provisions relating to safeguard duties to be strengthened to enable regulating such surge in imports in a systematic way.
    • Provisions for checking dumping of goods and imports of subsidized goods being strengthened.
    • Suggestions for reviews of exemptions from customs duty to be crowd-sourced.
  • Excise duty proposed to be raised on Cigarettes and other tobacco products, no change made in the duty rates of bidis.
  • Anti-dumping duty on PTA abolished to benefit the textile sector.

Unprecedented Milestones and Achievements of Indian Economy

  • India now the fifth largest economy of the world.
  • 4% average growth clocked during 2014-19 with inflation averaging around 4.5%.
  • 271 million people raised out of poverty during 2006-16.
  • India’s Foreign Direct Investment elevated to US$ 284 billion during 2014-19 from US$ 190 billion during 2009-14.
  • Central Government debt reduced to 48.7% of GDP (March 2019) from 52.2% (March 2014).
  • Two cross-cutting developments:
    • Proliferation of technologies (Analytics, Machine Learning, robotics, Bio-informatics and Artificial Intelligence).
    • Highest ever number of people in the productive age group (15-65 years) in India.
  • GST removed many bottlenecks in the system.

Future Aim for sustaining India’s unique global leadership, driven by Digital Revolution

  • Seamless delivery of services through Digital Governance.
  • Improvement in physical quality of life through National Infrastructure Pipeline.
  • Risk mitigation through Disaster Resilience.
  • Social security through Pension and Insurance penetration.
Union Budget 2020-21 KEY NUMBERS (in Rs. Crore)
2018-19 (Actuals) 2019-20 (Budget Estimates) 2019-20 (Revised Estimates) 2020-21 (Budget Estimates)
Revenue Receipts 15,52,916 19,62,761 18,50,101 20,20,926
Capital Receipts 7,62,197 8,23,588 8,48,451 10,21,304
Total Receipts 23,15,113 27,86,349 26,98,552 30,42,230
Total Expenditure 23,15,113 27,86,349 26,98,552 30,42,230
Revenue Deficit 4,54,483 4,85,019 4,99,544 6,09,219
Effective Revenue Deficit 2,62,702 2,77,686 3,07,807 4,02,719
Fiscal Deficit 6,49,418 7,03,760 7,66,846 7,96,337
Primary Deficit 66,770 43,289 1,41,741 88,134
 

Source: PIB

Economic Survey 2020: Analysis, Highlights & Summary – PDF Download

Economic Survey 2019-20 PDF has been tabled in the Parliament by Chief Economic Advisor (CEA) Krishnamurthy V Subramanian. The Survey focuses on the theme of integrating old with new through Trust in the economy; promoting pro-business policies and creating wealth and job opportunities. The Survey projects India’s GDP growth at 6-6.5 percent in 2020-21. Have a look at the detailed analysis of the Economic Survey below along with the highlights and brief summary. India Economic Survey 2020

The Survey 2020 throws light on new ideas to boost growth and accelerate wealth creation. These are – Thalinomics, Adoption of China model, Trust and others. The Survey reviews and analyses the overall economic progress made in the last fiscal along with the key policy challenges. This annual document of the Union Finance Ministry focuses on the implementation of various Government Schemes and policies and their impact on the economy so far. Besides talking about the macroeconomic and microeconomic factors, GDP growth rate, Inflation, the Economic Survey 2019-2020 throws a light upon the major impact of employment, agricultural policies and climate change on the Indian Economy. India Economic Survey 2020

UPSC IAS Prelims 2020 Online 60 Days Programme

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On February 1, 2020, the Union Finance Minister Nirmala Sitharaman will present the Union Budget 2020-21, which lays out finances of the Central Government and estimated revenue and expenditure for 2020-21. Here is the detailed analysis and brief summary of the Economic Survey 2020. India Economic Survey 2020

Theme of Economic Survey 2020 – “Enable Markets, Promote ‘Pro-Business’ Policy & Strengthen ‘Trust’ in Economy”

Key Highlights of the Economic Budget 2020

Economic Survey 2020 PDF

India’s Overall Economic Performance in 2019-20: GDP, Inflation, Fiscal Developments, GST

– India witnessed a GDP growth of 4.8% in the first half of 2019-20 amidst weakened global trade and demand

– Growth of Agriculture and allied activities & Public administration, defence, and other services’ was higher in the first half of 2019-20 in comparison to second half 2018-19.

– Current Account Deficit (CAD) contracted to 1.5% of GDP in H1 of 2019-20

– Remarkable Foreign Direct Investment (FDI) and increase of foreign exchange reserves

– Headline inflation mounted from 3.3% in the first half of 2019-20 to 7.35% in December 2019-20 due to food inflation rise

– Survey predicts 5% GDP growth for 2019-20 overall based on CSO’s first Advance Estimates

– Revenue Receipts registered higher growth in H1 of 2019-20

– Gross GST monthly collections crossed Rs 1 lakh crore for five times in 2019-20 till December 2019

Economic Survey 2020 PDF

GDP Growth in 2020-21: Economic Survey 2019-20 projects the GDP Growth of 6% – 6.5% in fiscal 2020-21.

Economic Survey 2020 PDF

Wealth Creation: Invisible Hand Supported by Hand of Trust

The Economic Survey talks about the need to bring openness in the market for the creation of wealth through increased investment. In light of this, the survey points towards an Invisible Hand that is supported by the Hand of Trust. It presents an amalgamation of old and new; old in terms of ancient Indian tradition and new suggests the use of FinTech in Indian Public Sector Banks. It calls for strengthening this invisible hand through: Economic Survey 2020 PDF

– Equal opportunities for new entrants

– Fair competition & ease doing business

– Trade for job creation

– Scaling up of the banking sector

– Introduction of the idea of trust as a public good

Entrepreneurship and Wealth Creation

The Survey calls for the creation of wealth through:

– Entrepreneurship of the working class

– Pro-business policies to test the power of competitive markets

– Elimination of policies that weaken the markets

– Integration of Assemble in India into Make in India

– Scaling up of the banking sector

– Privatization to foster efficiency

Pro-business versus Pro-markets

The Economic Survey says that India needs more of pro-business policies and break away from pro-crony policies to become a USD 5 trillion economy. The Survey says that till 2011, several Pro-Crony policies were followed such as preferential allocation of natural resources. These pro-crony policies majorly led to willful defaults which drained off the banks. India Economic Survey 2020

Pro-Crony Meaning: In Favour of a close friend or companion

Undermining Markets: Is Government Intervention required?

The Survey suggests restricted government intervention in the markets. It lists out several instances where the intervention of Government has adversely affected the market such as imposing stock limits under Essential Commodities Act (ECA), 1955 that led to increase in onion prices in 2019; regulation of drug prices under ECA; intervention in the food grain market and so on. The government must analyse and then decide whether its intervention is even required in a particular market. This will directly benefit by encouraging investments and economic growth. India Economic Survey 2020

Creation of Jobs and Growth

 The Economic Survey calls for the integration of “Assemble in India” with “Make in India” to create more jobs and accelerate growth. The survey seeks to:

– Increase export market share to 3.5% by 2025 and 6% by 2030

– Creation of over 4 crore rewarding jobs by 2025 and over 8 crore jobs by 2030

This can be achieved by adopting China-like policies such as export of goods majorly to rich markets.

Targeting Ease of Doing Business

India was ranked at 63rd position in World Bank’s Doing Business 2019 rankings, a jump of 79 positions from 142nd rank in 2014. However, the economy is still trailing in several parameters such as Ease of Starting Business, Paying Taxes, Registering Property and Enforcing Contracts.

The Economic Survey calls for close coordination between the Logistics Divisions of Union Ministry of Commerce and Industry, Union Ministry of Shipping, Central Board of Indirect Taxes and Customs and the port authorities. There are some sectors that require a more focused approach such as the tourism sector, manufacturing sector and others. India Economic Survey 2020

Golden jubilee of Bank Nationalisation

The year 2019 marked the golden jubilee year of Bank Nationalisation. The Survey points out that the growth of Indian Banking Sector has not been proportionate with the overall growth of the economy. So far, only one Indian bank has made it to the list of Global Top 100 Banks. In 2019, a Rupee investment in public sector banks (PSBs) led to a loss of 23 paise on an average. The Survey calls for making PSBs more efficient through:

– Employee Stock Ownership Plan (ESOP) for employees of banks

– Creation of an entity similar to that of GSTN to aggregate data from all PSBs and ensure better monitoring of borrowers through artificial intelligence and machine learning. Economic Survey 2020 PDF

Economic Survey 2020 PDF

Privatisation and Wealth Creation

The Economic Survey 2020 calls for privatization to boost job and wealth creation. It examines the before and after the performance of over 10 CPSEs that underwent strategic disinvestment. The Strategic disinvestment in BPCL has led to an increase of over Rs. 30,000 crore wealth in India. Collectively, the net profit, net worth, return on assets (ROA) & equity (ROE) have improved notably. The more aggressive disinvestment is suggested for higher profitability. India Economic Survey 2020

Thalinomics: Economics of Plate of Food in India

This year, the Survey throws a light upon the price paid by a person for a Thali in India anywhere. The prices of a vegetarian Thali have declined sharply since 2015-16; however, this price increased in 2019-20. During 2006 – 2020, the affordability of Indian vegetarian Thalis improved by 29% and affordability of non-vegetarian Indian Thali improved by 18%. 

– RBI’s monetary policy stance remained “accommodative” in 2019-20

– The Repo rate was cut by 110 basis points in 2019-20 due to slower growth & lower inflation.

– Non Performing Advances (NPA) ratio remained unchanged for Commercial banks at 9.3% during March-September 2019

– Credit growth declined of banks & NBFCs declined.

Prices and Inflation

– CPI inflation increased to 4.1% in 2019-20 from 3.7% in 2018-19

– WPI inflation declined to 1.5% in 2019-20 from 4.7% in 2018-19

– The major drivers of CPI inflation in 2019-20 were food and beverages, particularly vegetables and pulses

Sustainable Development and Climate Change

– The Survey acknowledges that India is rightly moving forward on the path of Sustainable Development Goals (SDG) implementation. The states like Himachal Pradesh, Chandigarh, Kerala, and Tamil Nadu came out as front runners in SDG India Index 2019.

– Apart from this, India hosted COP-14 of UNCCD which resulted in the adoption of “Delhi Declaration”

– India strongly committed itself to implement the Paris Agreement at COP-25 of UNFCCC at Madrid, Spain.

– Indian Forest and tree cover increased to 80.73 million hectare

– One of the major concerns is still burning of agricultural residues that lead to high pollution levels and deteriorates air quality.

– International Solar Alliance (ISA)

Agriculture and Food Management

– The Economic Survey states that the largest proportion of the Indian population depends on agriculture for job opportunities. However, the share of agriculture and allied sectors in Gross Value Added (GVA) of India is continuously declining due to higher growth of non-agricultural sectors.

– The GVA at Basic Prices of ‘Agriculture, Forestry and Fishing’ sector expected to grow by 2.8% for 2019-20.

– Livestock sector has grown at 7.9% CAGR in the last five years. The income from Livestock has become a secondary source of income for rural families.

– The Survey stresses on the sustainability of food security by addressing the growing food subsidy bill and revising the rates and coverage under NFSA.

Industry and Infrastructure

– The industrial sector has registered a 0.6% growth in 2019-20 and 5% in 2018-19

– Fertilizer sector showcased a growth of 4% in 2019-20

– Steel sector registered a growth of 5.2% in 2019-20

– Over 119 crore telephone connections were provided until September 2019

– Report on National Infrastructure Pipeline projects total investment of Rs 102 lakh crore on infrastructure from 2020 to 2025 in India

– Industrial growth is estimated at 2.5% of fiscal 2019-20.

Employment, Social Infrastructure and Human Development

– The Government’s expenditure on social services such as health & education as a proportion of GDP increased to 7.7% in 2019-20.

– India improved its position in the Human Development Index by fetching 129th rank in 2018 from 130th in 2017.

– Total formal employment increased to 9.98% in 2017-18 from 8% in 2011-12.

– Gender disparity widened in the labour market due to a decrease in the female labour force.

– Citizens’ access to health services improved through Ayushman Bharat and Mission Indradhanush.

– Over 3.30 crore children & 87.18 lakh pregnant women have been vaccinated under Mission Indradhanush.

– In terms of houses, over 76% of households in rural and 96% in urban areas had pucca houses.

Key points to note
The Economic Survey is tabled a day before the presentation of Union Budget.
The Survey is prepared by the Finance Ministry’s Department of Economic Affairs.
The Chief Economic Advisor (CEA) of India is the chief author of the Economic Survey.
It consists of Volume I, Volume II and Statistical Appendix.
It details the state of Indian Economy, future prospects and key challenges.
It reveals the true GDP growth achieved in the past fiscal and projects the further GDP growth.
It talks about the job growth & annual collection of the Goods and Services Tax (GST).

Theme: Shifting gears with Investment as a key driver

The Economic Survey 2019 was focused on achieving Prime Minister Narendra Modi’s vision of USD 5 Trillion Indian Economy. The last year survey called for the adoption of behavioural economics to “nudge” people towards expected behaviour. The Survey 2018-19 projected the GDP growth at 7% for 2019-20. To achieve this growth, the Survey depicted Private Investment as a key driver for the overall growth and job creation. 

Some Other Useful Links:

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General Awareness/Current Affairs Yearbook 2020 – Study Portal

General Awareness/Current Affairs Yearbook 2020 – Study Portal

UPSC Civil Services Preliminary Exam 2020 Complete Study Material GS Paper-1

Important Topics for UPSC IAS Prelims and Mains Exam 2020 Part-2

State Wise Current Affairs General Knowledge Yearbook 2020

State Wise GK Current Affairs Yearbook 2020

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RBI’S INFLATION TARGETING PROMOTES INDIA’S GROWTH?

RBI-Inflation-growth-India-economy-reasons.

RBI India inflation growth: Indian Economy is being through a slowdown, and in this scenario, the efficacy of RBI’s Inflation targeting process has come under criticism, stating it as a reason behind this slowdown.#RBI #Inflation #India

So, the process of inflation targeting and the benefits accrued due to it and the possible reasons (apprehensions) behind various criticisms and the way forward has been discussed in this article in brief.

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What is Inflation Targeting?

  • Inflation Targeting is a part of monetary policy framework wherein the Central Bank of a country focuses on maintaining the rate of Inflation within a targeted range.
  • It is believed that increasing prices in an economy create uncertainties in decision making, adversely affecting savings and encouraging speculative investments (such as buying Gold).  Inflation targeting brings in more predictability and transparency in deciding monetary policy.
  • Inflation targeting was first adopted by New Zealand and subsequently, a large number of countries including India have been following Inflation Targeting as their core element of monetary policy.
  • In case of India, the Inflation targeting was introduced through the Monetary Policy Framework Agreement signed between the RBI and Government in 2015. As per terms of the agreement, RBI’s primary objective would be to maintain price stability, while keeping in mind the objective of growth. The RBI is required to maintain rate of inflation of 4% with a deviation of 2% i.e. inflation has to be maintained between 2% to 6%.

Benefits of Inflation Targeting

1. Enhanced Transparency: The Inflation targeting explicitly states as to what would be the targeted rate of Inflation in an economy. Such explicitly mandated target brings in more clarity and predictability with respect to the rate of Inflation and monetary policy formulation.
2. Promote Growth: A high rate of inflation leads to decrease in the purchasing power of currency, reduces the savings and investment rate, increases the unemployment and leads to overall decrease in the GDP growth rate.  Further, high rate of inflation is accompanied by higher levels of Fiscal Deficit and Current Account Deficit leading to an adverse impact on the macro-economic stability of the country. Hence, low and moderate level of inflation would incentivise the investors to undertake the investment in the economy leading to the promotion of higher growth and development.
3. Autonomy and Accountability of RBI: As per the monetary policy framework agreement, the RBI has been given complete autonomy in maintaining the rate of inflation within the mandated targets. If the RBI fails to maintain the Inflation within the target, then it would be required to submit in writing, the reasons for its failure.

Such a provision enables the RBI to enjoy autonomy and at the same time, it enables the Government to have enhanced accountability over the actions of the RBI.

4. Empirical Evidence:  The Inflation targeting has been quite successful in some of the advanced economies such as UK, New Zealand etc. These advanced economies have been able to maintain moderate rate of inflation for a much longer time leading to increased macro-economic stability.

Problems and Challenges with Inflation Targeting

1. Disregards the Multi-faceted role of RBI: In a developing country like India, it is not practical for the central bank to focus exclusively on inflation without taking into account the larger development context. The RBI needs to balance between growth, price stability and financial stability.
2. No Clear link between Price Stability and Financial Stability: Prior to 2008, advanced economies were able to maintain moderate rate of inflation for a long term mainly due to adoption of Inflation Targeting. It was believed that Inflation targeting was responsible for overall macroeconomic stability of the country.
However, the 2008 Global Financial Crisis has clearly proved that price stability alone cannot lead to financial stability and the excessive focus of the Central banks on the price stability may lead to neglect of other crucial functions such as regulation leading to the economic crisis.

3. Empirical Evidence failing in India: The RBI has been able to maintain stable rate of Inflation within the mandated range since last 2-3 years. However, inspite of stable rate of Inflation, Indian economy is facing challenges on multiple fronts. The GDP growth rate has been reduced to 25 quarter low of 5% for the first quarter of financial year 2019-20.

The unemployment has increased to 45- year high of 6.1%. There has been contraction in the manufacturing activity as evident in declining IIP. The agriculture sector is staring at agrarian distress. All these clearly highlight that the Inflation targeting has failed to promote growth and development.

4. Poor Monetary Policy Transmission: The Inflation targeting is more suited to the developed economies since the monetary policy transmission in such economies is quite efficient. However, in case of India, the monetary policy transmission is quite inefficient and this can in turn reduce the effectiveness of Inflation Targeting.
5. Hinder GDP Growth: In order to contain Inflation, the RBI would be required to increase the rate of Interest by following the contractionary monetary policy. However, such a policy would lead to increase in the rate of interest on the loans leading to decrease in investment and consumption expenditure leading to decline in the GDP growth rates. For example, during 2013-2015, the higher interest rates in the country on account of higher rate of inflation had led to decrease in the GDP growth rates.
6. Does not address the Supply Side Inflation: The inflation in India may take place due to supply side bottlenecks such as increase in global crude oil prices, poor monsoon, floods etc. For instance, the recent increase in the prices of Tomato and Onions is mainly on account of supply side disruptions.
Under such circumstances, RBI would have limited role to play in easing the rate of inflation. Rather, the Government of India would be required to address these supply side disruptions in order to moderate the prices of such commodities.

Way Forward

  • Post-Global Financial crisis, the dominant view around the world is that flexible inflation targeting, rather than pure inflation targeting is more efficient for monetary policy formulation.
  • According to the Flexible inflation targeting, the major role of the Central Bank would depend on the prevailing rate of inflation in the country. If the rate of inflation is way off the target, the primary emphasis of the central Bank would be to bring the rate of inflation within an acceptable range.
  • On the other hand, if the rate of inflation is within the range, the central Bank should focus on its other core objectives. Thus, it is being said that the Central banks should focus on flexible inflation targeting rather than pure inflation targeting. Here pure inflation targeting means RBI solely concentrating on the inflation targeting at the cost of other major functions of it.
  • In this aspect, there is a need for greater debate around kind of Inflation targeting in India.

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GOVERNMENT PROCURED ONLY 3% OF OILSEEDS AND PULSES UNDER PM-AASHA

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GOVERNMENT PROCURED ONLY 3% OF OILSEEDS AND PULSES UNDER PM-AASHA

Why in News?

  • Data from Agriculture Ministry has indicated that only less than 3% of this season’s sanctioned amount of pulses and oilseeds have actually been procured so far under the once-hyped PM-AASHA scheme.

About PM-AASHA:

  • The PM-AASHA or Pradhan Mantri Annadata Aay Sanrakshan Abhiyan was announced with great fanfare in September 2018, as an effort to ensure that farmers growing pulses, oilseeds and copra actually get the minimum support prices they are promised for their crops each year.
  • Apart from initiatives to allow cash payment to farmers or procurement by private traders, PM-AASHA’s main feature was a price support scheme whereby Central agencies would procure pulses and oilseeds directly from farmers.
  • The three schemes that are part of AASHA are:
    • The Price Support Scheme (PSS)
    • The Price Deficiency Payment Scheme (PDPS)
    • The Pilot of Private Procurement and Stockist Scheme (PPPS)
  • PSS – Under the PSS, physical procurement of pulses, oilseeds and copra will be done by Central Nodal Agencies.
  • Besides, NAFED and Food Cooperation of India will also take up procurement of crops under PSS.
  • The expenditure and losses due to procurement will be borne by the Centre.
  • PDPS – Under the PDPS, the Centre proposes to cover all oilseeds.
  • The difference between the MSP and actual selling/modal price will be directly paid into the farmer’s bank account.
  • Farmers who sell their crops in recognised mandis within the notified period can benefit from it.
  • PPSS – In the case of oilseeds, States will have the option to roll out PPSSs in select districts.
  • Under this, a private player can procure crops at MSP when market prices drop below MSP.
  • The private player will then be compensated through a service charge up to a maximum of 15% of the MSP.
  • The Centre had budgeted ₹15,053 crore over two years to implement the scheme apart from an additional government credit guarantee of ₹16,550 crore for agencies undertaking procurement.
  • It was launched as increasing MSP was not adequate and it is more important that farmers should get full benefit of the announced MSP.
  • Crops covered under the Scheme for this Season:
  • The main crops covered under the scheme this season are moong, urad, arhar, and groundnut and soya bean.
  • The late arrival of the monsoon means that harvests and crop arrivals also began slightly later than expected, especially for arhar or tur dal, so procurement is likely to continue, though tapering, until February.

Issues Associated with the MSP Scheme:

  • The scheme provides little to strengthen the procurement mechanism infrastructure in the country which largely only works for two crops – wheat and rice.
  • According to a survey conducted by the National Sample Survey Office (NSSO) in the 70th round in 2013, only 6% of farmers are able to sell their produce at MSP.
  • A 2017 study found that only 24% households were aware about the MSP of crops grown by them.
  • Further, the study found, although MSP is announced for the whole of India, the operation is limited only to few states where the designated government agencies procure the produce from farmers and except for crops like rice and wheat, quantity procured is very limited leading to low level of awareness.
  • According to a 2016 NITI Aayog evaluation report 79% farmers were dissatisfied with the MSP regime.
  • Some of the reasons for their dissatisfaction were delay in payments, lack of infrastructure at procurement centres, distance to procurement centres and delayed announcement of MSP rates.
  • NITI Aayog’s evaluation also found that there were several states where the procurement infrastructure facilities were ‘inadequate’.

What is the Current Issue regarding the PM-AASHA?

  • Procurement is still lagging badly in most States.
  • The highest sanctioned procurement is in Maharashtra, where 10 lakh tonnes of soya bean procurement were sanctioned, apart from 58,000 tonnes of moong and urad dal. However, barely 1,709 tonnes have been procured in the State so far, including just 14 tonnes of soya bean.
  • The highest procurement so far has taken place in Rajasthan, where more than 51,000 tonnes of moong and groundnut have been procured, against a total sanctioned amount of 9.6 lakh tonnes.
  • While almost 5 lakh tonnes had been sanctioned in Madhya Pradesh, and 1.18 lakh tonnes in Uttar Pradesh, procurement has not yet begun in either State.

MISSION FOR INTEGRATED DEVELOPMENT OF HORTICULTURE (MIDH)

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MISSION FOR INTEGRATED DEVELOPMENT OF HORTICULTURE (MIDH)

Why in News?

  • Information about the MIDH was provided by the Union Minister of Agriculture and Farmers’ Welfare in the Lok Sabha.

MIDH:

  • The MIDH is a centrally sponsored scheme for the holistic growth of the horticulture sector covering fruits, vegetables, root & tuber crops, mushrooms, spices, flowers, aromatic plants, coconut, cashew, cocoa and bamboo.
  • Under MIDH, the Government of India contributes 60% of the total outlay for developmental programmes in all the states except states in the North East and the Himalayas. 40% share is contributed by State Governments. In the case of North Eastern and Himalayan States, GOI contributes 90%.
  • MIDH also provides technical advice and administrative support to State Governments/State Horticulture Missions (SHMs) for the Saffron Mission and other horticulture-related activities like the Rashtriya Krishi Vikas Yojana (RKVY).
  • The Mission was started in 2014.

Objectives of the MIDH:

  • To promote the holistic growth of horticulture sector, including coconut through area-based regionally differentiated strategies which include research, technology promotion, extension, post-harvest management, processing and marketing in consonance with comparative advantage of each State/region and its diverse agri-climatic features.
  • To encourage aggregation of farmers into farmer groups like FIGs/FPOs and FPCs to bring economy of scale and scope.
  • To enhance horticulture production.
  • To augment farmers’ income.
  • To strengthen nutritional security.
  • To improve productivity by way of quality germ-plasm, planting material and water use efficiency through micro-irrigation.
  • To support skill development and create employment generation opportunities for the rural youth in horticulture and post-harvest management, especially in the cold chain sector.

MIDH Sub-Schemes:

  • National Horticulture Mission (NHM)
  • Horticulture Mission for North East & Himalayan States (HMNEH)
  • National Horticulture Board (NHB)
  • Coconut Development Board (CDB)
  • Central Institute for Horticulture (CIH), Nagaland

Major interventions of MIDH:

  • Setting up of nurseries, tissue culture units for production of quality seed and planting material.
  • Area expansion i.e., the establishment of new orchards and gardens for fruits, vegetables, and flowers.
  • Rejuvenation of unproductive, old, and senile orchards.
  • Protected cultivation, i.e. poly-house, green-house, etc., to improve productivity & grow off-season high value vegetables and flowers.
  • Organic farming and certification.
  • Creation of water resources structures and watershed management.
  • Bee-keeping for pollination.
  • Horticulture mechanization.
  • Creation of post-harvest management and marketing infrastructure.

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The decision of selection of the optional paper for IAS exam is an age old dilemma for Civil Services aspirants. As per the latest syllabus, the number of optional subjects to be selected is reduced to one, but aspirants are still confused if they make right choice or not. Though the weightage of the optional paper is only 500 marks out of 2025 marks as per the latest pattern of UPSC Civil Services exam, it is still a deciding factor in the final ranks due to the unpredictability associated with General Studies Papers (1000 marks  GS + 250 marks essay) and Interview (275 marks).

If we analyse the question papers and mark-list of last 5-10 years of UPSC Civil Services Exams, we can collect a lot interesting and valuable data. The UPSC questions have evolved and now the bias is more towards current related aspects of polity, economy, international relations etc than conventional topics. (Please also keep in mind that there is no guarantee by UPSC that the case will remain the same for future exams!) Due to high standard of questions and valuation, the marks scored by top candidates are coming down every year. The percentage of top ranks in IAS exam has come down from 58-60% in 3-4 years back to 50%, while the last rank of a successful candidate in General category is around 40% marks.

BLUE ECONOMY

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Commitment to the development of the Blue Economy has been expressed by a mention in the budget speech. This has laid the foundation and will provide the initial traction to create the space for implementation of the strategy.

  • The development of the Blue Economy can play a critical role in nation building.
  • It would enhance the GDP, not just by exploitation of under-water resources but by developing it as a platform for infrastructure expansion into the ocean, especially when there is a shortage of space on land.
  • The idea is to expand port activities on the sea rather than on land.
  • There is possible re-calibration of its growth potential, first, by improving the measurement of its contribution to the economy and then through strategic policy interventions to enhance its contribution to manufacturing and services.
  • A time-bound action plan can be set using the SMART (Specific, Measurable, Achievable, Realistic, Time-tested) formula.
  • A graded policy intervention will be the first part of implementation.
  • For the success of the idea, a dedicated national-level institution, skilled in such state-of-the-art analytical approaches, will have to be given this responsibility.

Scopes of growth and development

  • The sub-sectors includes blue trade in both goods and services, including the development of marine services (such as port services, ship repair, maritime finance and insurance, marine ICT and digitisation)
  • Blue investment (port and transloading in mid-seas, coastal-to-hinterland connectivity)
  • Blue SMEs — a sub-category of the SMEs as defined by the Ministry of Small and Medium Enterprises (MSME)
  • Blue manufacturing (development of dedicated industrial parks, as is being envisaged under the Sagarmala, protection risks of coastal natural calamities, etc.)
  • Some time-tested paradigms of PPPs (Public Private Partnerships) will be ideal for the growth and development of the sector.
  • A mechanism to coordinate the efforts of the coastal districts/municipalities/panchayats, coastal state governments, and the Union government will need to be established.

Meaning of the term “Blue Economy”

Blue economy’ is the integration of ocean economy development with values of social inclusion and environmental sustainability, along with dynamic and innovative business models.

For India, however, blue economy extends beyond being merely an economic and environmental proposition. It presents India with an unprecedented opportunity to meet its national objectives, strengthen connectivity with neighbours, and exert influence in the surrounding regions.

Introduction on oceans and Blue Economy

  • Oceans cover three quarters of the Earth’s surface, contain 97% of the Earth’s water, and represent 99% of the living area on the planet
  • Oceans are claimed to be ‘last frontiers’ of growth and development, but the immense potential that the Oceans present remains to be tapped fully
  • However, this potential needs to be harnessed in a balanced manner, where the preservation and health of Oceans are given their due importance, along with adherence to the United Nation’s Sustainable Development Goal 14 that states “Conserve and sustainably use the oceans, seas and marine resources for sustainable development.
  • The Ocean based Blue Economy is the next sunrise issue for development – “The Blue Economy: 10 years, 100 innovations, 100 million jobs”.
  • Blue Economy is based on the idea to use locally available resources and employ renewable inputs.
  • Marine based economic development will reduce environmental risks and mitigate ecological challenges. As a result, the optimized and responsible resource utilization will enable to achieve balanced socio­economic development

India’s Sagarmala initiative for port led development

  • India has a 7,517 km long coastline, 14,500 km of potentially navigable waterways, and strategic locations along major international maritime trade routes.
  • Data shows that despite its long coastline, India’s coasts only contribute to 15 percent of national trade activity.
  • The blueprint includes setting up new ports, modernizing existing ports, developing coastal zones and boosting local employment generation, establishing connectivity between ports and road, rail, multi-modal logistics parks, pipelines, and waterways, as well as promoting coastal community development.
  • This comprehensive plan is now pitched as India’s primary infrastructure focus, rivaling China’s Belt and Road Initiative (BRI) that seeks to expand and build regional connectivity infrastructure.
  • The government wants to transform the country’s ports and reduce logistics costs for domestic as well as import/export cargo by optimizing infrastructure investment.
  • The government has planned six megaports under the project, namely the Vizhinjam International Seaport (Kerala state), Colachel Seaport (Tamil Nadu), Vadhavan Port (Maharashtra), Tadadi Port (Karnataka), Machilipatnam Port (Andhra Pradesh), and Sagar Island Port (West Bengal).
  • India currently permits 100 percent FDI for the construction and maintenance of ports.

Key initiatives under Sagarmala are

  • Port modernization and new port development;
  • Port connectivity enhancement;
  • Port-led industrialization; and,
  • Coastal community development.

Advantage of coastal shipping in India

  • Logistics in India contribute to 19 percent of the GDP, and remains among the highest in the world as compared to China
  • Several studies show that using coastal shipping and inland waterways would be 60 to 80 percent cheaper than road or rail transport.
  • If coastal shipping is used to complement road and rail transport in India, it could therefore lead to significant logistics cost savings.

India to Develop New Sea Routes and Shipping Services

  • The Government proposes to develop new sea routes and shipping services connecting with various countries.
  • New sea routes are considered with a view to enhance regional connectivity from the strategic and trade perspectives, and also to enhance maritime cooperation with neighbouring countries like Sri Lanka, Maldives, Bangladesh, Myanmar and Thailand.

Steps been initiated by the Government for preventive/ mitigating security measures to deal with sea-piracy

  • Guidelines for anti-piracy measures to be implemented on Indian Ships through issued by the Directorate General of Shipping for elaborate anti-piracy measures, including safe house/citadel for vessels.
  • Banning of sailing vessels to ply in waters south or west of the line joining Salala and Male.
  • Naval escort provided by Indian naval ships in the Gulf of Aden
  • Enhanced vigil by the Indian Navy in the Indian Exclusive Economic Zone (EFZ) and westward up to 65 degree east longitude.
  • Active participation of India in the security meeting of the International Maritime Organization Contact Group on Piracy off the Coast of Somalia (CGPCS) and other international forums.
  • Directorate General of Shipping has issued circulars from time to time, emphasizing action to be taken by Indian Merchant Ships, Shipping companies and other departments.

Environmental Concerns

  • Ballast water: Cruise ships, large tankers, and bulk cargo carriers use a huge amount of ballast water, which is often taken on in the coastal waters in one region after ships discharge wastewater or unload cargo, and discharged at the next port of call, wherever more cargo is loaded. Ballast water discharge typically contains a variety of biological materials, including plants, animals, viruses, and bacteria. These materials often include non-native, nuisance, invasive, exotic species that can cause extensive ecological and economic damage to aquatic ecosystems along with serious human health problems.
  • Wildlife collisions: Marine mammals, such as whales and manatees, risk being struck by ships, causing injury and death.
  • Oil spills: While less frequent than the pollution that occurs from daily operations, oil spills have devastating effects. While being toxic to marine life, polycyclic aromatic hydrocarbons (PAHs), the components in crude oil, are very difficult to clean up, and last for years in the sediment and marine environment.
  • Solid Waste: Solid waste generated on a ship includes glass, paper, cardboard, aluminium and steel cans, and plastics. It can be either non-hazardous or hazardous in nature. Solid waste that enters the ocean may become marine debris, and can then pose a threat to marine organisms, humans, coastal communities, and industries that utilize marine waters.

Lessons from Other Countries growing via Blue Economy

  • The strategies of Australia, China, and Mauritius, for example, view the potential of sustainable ocean economy in meeting their countries’ development objectives.
  • In Australia, offshore oil and gas and aquaculture industry have dominated the blue economy
  • In Mauritius, meanwhile, coastal tourism and seaport-related activities contribute the largest share
  • For China, fisheries, tourism, and transport lead its marine economy
  • Future plans and policies of these countries have laid additional emphasis on innovation, marine research and development, and marine information and communication technologies (ICT).
  • For India, the marine services sector could be the backbone of its blue economy. In line with the ‘Digital India’ and ‘Make in India’ initiatives
  • India must focus on marine ICTs, and transport (shipping) and communication services, and the creation of a knowledge hub for marine research and development, alongside the more traditional sectors like fisheries and coastal tourism.

Way forward

  • Regional focus has turned towards the Indian Ocean as the new frontier for sustainable economic development, alongside concerns of security issues.
  • India should build on the momentum it has created thus far and take on a larger responsibility in developing and securing the Indian Ocean by developing ideas, norms and road maps for an inclusive and collaborative ocean governance society.
  • Developing a normative framework for doing business and harnessing the ocean’s potential in a sustainable manner is another area where India could demonstrate leadership.
  • India should start by creating robust mechanisms for knowledge creation. For instance, diverse platforms for interaction between sect oral experts, professionals, scientists, and the business community could be envisaged.
  • The existing and new multilateral trading agreements should also be modified and defined in a way that enables the creation of sustainable infrastructure to meet the demands of future economic activities.

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Economic Survey 2019: Key Highlights & Facts of the Economic Survey 2019

What is Economic Survey?

The Department of Economic Affairs, Finance Ministry of India presents the Economic Survey in the parliament every year, just before the Union Budget. It is prepared under the guidance of the Chief Economic Adviser, Finance Ministry. It is the ministry’s view on the annual economic development of the country. A flagship annual document of the Ministry of Finance, Government of India and Economic Survey reviews the developments in the Indian economy over the previous 12 months, summarizes the performance on major development programs, and highlights the policy initiatives of the government and the prospects of the economy in the short to medium term.

The Economic Survey 2019 has been tabled in the parliament on July 04, 2019. This is Narendra Modi government’s first Economic Survey in second tenure. Economic Survey 2019 will be tabled by Finance Minister Nirmala Sitharaman.

The Economic Survey 2019-20 has been prepared by the new Chief Economic Advisor KV Subramanian. “Looking forward with excitement to table my first – and the new Government’s first – Economic Survey in Parliament… #EcoSurvey2019,” CEA KV Subramanian said on his Twitter account.

Economic survey 2019 can be downloaded from a direct link of Press Information Bureau (PIB)  – Click Here

Key Highlights of the Economic Survey – 2019

1. Shifting gears: Private Investment as the Key Driver of Growth, Jobs, Exports and Demand

  • As per the Economic Survey 2019, the pathways for drop opened up in the last five years; and benefits of growth and macroeconomic stability reached to the bottom.
  • Sustained real GDP growth rate of 8 percent is needed for a USD 5 trillion economy by 2024-25.
  • Virtuous Cycle of savings, investment and exports supported by a favorable demographic phase is required for sustainable growth.
  • Private investment is the key driver for demand, capacity, labor productivity, new technology, creative destruction and job creation.
  • Survey views the economy as being either in a virtuous or a vicious cycle or never in equilibrium.

Key ingredients for a self-sustaining Virtuous Cycle

  1. Presenting data as a public good
  2. Emphasizing legal reforms
  3. Ensuring policy consistency
  4. Encouraging behavior change using principles of behavioral economics
  5. Nourishing MSMEs to create more jobs and become more productive
  6. Reducing the cost of capital
  7. Rationalizing the risk-return trade-off for investments

Policy for Real People, Not Robots: Behavioral Economics of “Nudge

  • Decisions by real people diverge from impractical robots theorised in classical economics
  • Behavioral economics provides insights to push or nudge people towards desirable behavior
  • Key principles of behavioral economics: Emphasizing the beneficial social norm; changing the default option; and Repeated reinforcements.

Survey calls to create an aspirational agenda for social change by using insights from behavioral economics:

  1. From ‘Beti Bachao Beti Padhao’ to ‘BADLAV’ (Beti Aapki Dhan Lakshmi Aur Vijay Lakshmi)
  2. From ‘Swachh Bharat’ to ‘Sundar Bharat’
  3. From ‘Give it up” for the LPG subsidy to ‘Think about the Subsidy’
  4. From ‘Tax evasion’ to ‘Tax compliance’

Here, “Dwarfs” refer to the firms having less than 100 workers despite being over 10 years old. These dwarf firms account for over 50 percent of all organised firms in manufacturing. Their contribution to employment is only 14 percent and just 8 percent to productivity.

• Large firms with more than 100 employees account for 75 percent employment and around 90 percent to productivity. These large MSMEs firms account for just 15 percent of the total organised sector by number.

• Survey throws light upon the growth of the MSME sector for achieving greater profits, boosting job creation and enabling enhanced productivity.

• Survey also focuses on tourism, hotel & catering, transport, real estate, entertainment sectors etc., for job creation.

• It calls for enabling MSMEs to grow by way of:

A sunset clause of less than 10 years for all size-based incentives

  – Deregulating labor law restrictions to create more jobs

  – Re-calibrating Priority Sector Lending (PSL) guidelines for direct credit flow to young firms

Creation of Data “Of the People, By the People, For the People

  • At present, society’s consumption of data is at the optimum level, given the technological advances.
  • This data is generated by the people; thereby, Government too can create data as public good, ensuring data privacy.
  • Government must intervene in creating data for the good of the people, especially for poor and social sectors.
  • Ending Matsyanyaya: Ways to ramp up the Lower Judiciary to clear backlog
  • Matsyanyaya: The idea of government in India was based on a theory called the Matsyanyaya, literally meaning the “law of fish” or the “law of the jungle.” Why should there be governments in the world at all?
  • In short, it refers to a Governance where strong prevails over the weak.
  • The Government is facing the biggest hurdles in name of contract enforcement and clearance resolution while working towards the ease of doing business and higher GDP growth in India.
  • Around 87.5 percent of the total pending cases are in the District and Subordinate courts.
  • 100 percent clearance rate can be achieved by just recruiting to fill in 2279 vacancies in the lower courts and 93 in High Courts.
  • Uttar Pradesh, Bihar, Odisha and West Bengal need special attention.
  • The backlog can be cleared with just 25 percent productivity improvements in lower courts, 4 percent in High Courts and 18 percent in Supreme Court.

How does Policy Uncertainty affect Investment?

India has witnessed significant reduction in Economic Policy Uncertainty over the last one decade. Considering that the uncertainty dampens investment growth India for about five quarters, the Survey proposes reduction in economic policy uncertainty by:

• Consistency of actual policy with forward guidance

• Quality assurance certification of processes in Government departments

From Swachh Bharat to Sundar Bharat via Swasth Bharat

• 93.1 percent of the households have access to toilets and 96.5 percent of those with access to toilets are using them in rural India.

• 100 percent Individual Households Latrine (IHHL) Coverage in 30 states and UTs

• Now, environmental and water management issues need to be incorporated in the Swachh Bharat Mission (SBM) for sustainable improvements in the long-term.

Inclusive Growth through Affordable, Reliable and Sustainable Energy

• India requires 2.5 times increase in per capita energy consumption to increase its real per capita GDP by USD 5000 at 2010 prices to enter the upper-middle income group.

• 4 times increase in per capita energy consumption is needed to achieve 0.8 Human Development Index score.

• India presently stands at 4th in wind power, 5th in solar power and 5th in renewable power installed capacity.

• Thermal power still plays a dominant role at 60 percent share

• Market share of electric cars is only 0.06 percent in India while it is 2 percent in China and 39 percent in Norway. India needs faster access to fast battery charging facilities to increase the market share of electric vehicles

Effective Use of Technology for Welfare Schemes like MGNREGS

• Survey depicts boost in efficiency of MGNREGS with use of technology that has led to significant reduction in delays in the payment of wages with adoption of NeFMS and DBT.

• Demand and supply of work under MGNREGS increased.

• Vulnerable sections such as women, SC and ST workforce increased under MGNREGS during economic distress.

Minimum Wage System to be redesigned for Inclusive Growth

• Survey proposes redesigning of Minimum Wage System for protecting workers and alleviating poverty

• India has 1,915 minimum wages for various scheduled job categories across states

• 1 in every 3 wage workers is not protected by the minimum wage law

• Survey proposes minimum wages to all employments/workers

• Government will soon notify ‘National Floor Minimum Wage’, varying across five geographical regions.

• States will fix the Minimum wages at levels not lower than the ‘floor wage’.

• It proposes ‘National level dashboard’ under the Ministry of Labour & Employment for regular notifications on minimum wages.

State of the Economy in 2018-19: A Macro View

• GDP to grow at 7 percent in 2019-20 due to growth of investment & consumption

• India’s share in world service exports increased from 2 percent in 2005 to 3.5 percent in 2017

• India’s foreign exchange reserves are placed at USD 422.2 billion in June 2019

• India still holds the top position of the fastest growing major economy in 2018-19.

• GDP Growth Rate moderated to 6.8 percent in 2018-19 from 7.2 percent in 2017-18.

• Inflation was at 3.4 percent in 2018-19

• Non-Performing Assets (NPAs) as percentage of Gross Advances reduced to 10.1 percent at end December 2018 from 11.5 percent at end March 2018.

• Growth in fixed investment grew to 10.0 percent in 2018-19

• Current account deficit was manageable at 2.1 percent of GDP

Fiscal Developments

• Fiscal deficit declined from 3.5 percent of GDP in 2017-18 to 3.4 percent in 2018-19.

• 2018-19 closed with fiscal deficit at 3.4 per cent of GDP

• Total Central Government expenditure fell by 0.3 percentage points in 2018-19.

Money Management & Inflation

• Banking system improved with the decline in the NPA ratios.

• Insolvency and Bankruptcy Code led to recovery and resolution of significant amount of distressed assets.

• As per RBI reports, banks received Rs 50,000 crore from previously non-performing accounts.

• Repo Rate first hiked by 50 bps and later reduced by 75 bps in 2018.

• Inflation continued to decline for fifth straight financial year and remained below 4 percent.

• Food inflation based on Consumer Food Price Index (CFPI) also continuing on its declining trend and remained below 2 percent.

• Housing and fuel are the main contributors of inflation based on CPI-C during FY 2018-19

Sustainable Development and Climate Change

• India’s SDG Index Score ranges between 42 and 69 for States and between 57 and 68 for UTs

• Kerala and Himachal Pradesh are the front runners with a score of 69 amongst states. Chandigarh and Puducherry are the front runners with a score of 68 and 65 respectively among the UTs.

• Namami Gange Mission was launched for achieving the SDG 6 with a budget outlay of Rs 20,000 crore.

• A comprehensive National Clean Air Programme (NCAP) was launched in 2019 as a pan India time bound strategy for prevention, control and abatement of air pollution.

Agriculture and Food Management

• Gross Value Added (GVA) in agriculture improved from -0.2 percent in 2014-15 to 6.3 percent in 2016-17 but decreased to 2.9 percent in 2018-19.

• Gross Capital Formation (GCF) in agriculture declined to 15.2 percent in 2017-18 as compared to 15.6 percent in 2016-17.

• Women’s participation in agriculture increased to 13.9 percent in 2015-16 from 11.7 percent in 2005-06.

• 89 percent of groundwater extracted is used for irrigation.

• Policies should focus on Dairying as India is the largest producer of milk; Livestock rearing; Fisheries sector as India is the second largest producer.

Industry and Infrastructure

• India’s ranking improved by 23rd to 77th position in 2018 among 190 countries assessed by the World Bank Doing Business (DB) Report 2019.

• Road construction grew at 30 km per day in 2018-19.

• Rail freight and passenger traffic grew by 5.33 percent and 0.64 percent respectively in 2018-19.

• Total telephone connections in India touched 118.34 crore in 2018-19.

• Public Private Partnerships are ideal for addressing infrastructure gaps

• Building sustainable and resilient infrastructure was given due importance with programmes such as SAUBHAGYA scheme, PMAY etc.

Services Sector

• Services sector contributed more than half of GVA growth in 2018-19.

• IT-BPM industry grew by 8.4 percent in 2017-18 to USD 167 billion.

• The services sector growth declined marginally to 7.5 percent in 2018-19.

• The sectors that saw growth were Financial services, real estate and professional services.

• The sectors that saw decline were Hotels, transport, communication and broadcasting services.

Health & Education

• Government expenditure on Health increased to 1.5 percent in 2018-19 from 1.2 percent in 2014-15.

• Government expenditure on Education increased to 3 percent in 2018-19.

• Affordable and quality healthcare being provided through National Health Mission and Ayushman Bharat scheme.

Source: PIB

RAS Mains Exam Complete Study Notes

Download RAS Mains Study Notes

Paper-I Paper-II Paper-III Paper-IV
Unit-I
Rajasthan History Administrative Ethics   Rajasthan Current Affairs General Hindi & English
Art-Culture Rajasthan National Current Affairs
Indian History   International Current Affairs
Indian Culture
World History
Unit-II
Economy-Rajasthan Science & Technology Public Administration
Indian Economy Agriculture-Rajasthan Polity & Administration
                                          Unit-III
Sociology Geography-Rajasthan Sports & Yoga
Management Geography-India Behaviour
Accounting & Auditing Geography-World Law
general studies of Rajasthan