Economic Development

Answer : Long-term Capital Gain Tax: It is the tax paid on profit generated by an asset such as real estate, shares or share-oriented products held for a particular time-frame. The definition of Long-term Capital Gains, or LTCG, is different for various products. Budget re-introduced LTCG tax on stocks. Investors will have to pay 10 per cent tax on profit exceeding Rs 1 lakh made from the sale of shares or equity mutual fund schemes held for over one year. Till now, LTCG was exempt from tax. The definition of a long-term investor in stocks for tax purposes is one year. LTCG tax on stocks was scrapped in 2004-05.

• The ‘grandfathering’ clause is the exemption granted to existing investors or gains made by them before the new tax law comes into force. Whenever the government introduces a stricter tax law, it has to ensure that investors who have committed money keeping in mind the easier tax regime are protected. In the matter of LTCG tax on shares, the government said gains from shares or equity mutual funds made till January 31, will be grandfathered - or exempted. There will be no LTCG tax on notional profit in share till then.

Dividend Distribution Tax (DDT): It distributed income by equity-oriented mutual funds at the rate of 10 percent (11.648 percent including surcharge and cess), to provide a level playing field across growth oriented and dividend distributing schemes. The proposed change in Capital Gains Tax will bring marginal revenue gain of about Rs. 20,000 crore in the first year, in view of grandfathering. Investors relying on dividends from equity funds such as balanced funds would have to reconsider their investment strategies. DDT will reduce the in-hand return to investor, if the dividend option is opted for. Dividend, however, remains tax-free in the hands of the investor. The fund houses will have to deduct DDT before distributing dividend.

• Presently, dividends received from all mutual funds are tax-free in the hands of the investors. However, in the case of debt funds, the fund house pays DDT. The DDT in debt mutual funds was introduced to reduce the arbitrage between bank fixed deposit and debt funds and bring them on almost equal footing. Importantly, in an equity mutual fund, there is no dividend distribution tax.

Answer : The Sustainable Development Goals (SDGs), otherwise known as the Global Goals, are a universal call to action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity. These 17 Goals build on the successes of the Millennium Development Goals, while including new areas such as climate change, economic inequality, innovation, sustainable consumption, peace and justice, among other priorities. The goals are interconnected – often the key to success on one will involve tackling issues more commonly associated with another.

Energy is backbone of any economy and India has taken various steps to improve their affordability, reliability through adopting new and modern energy resources such as-

• Target of 175 GW power through new and renewable sources under INDC (Intended Nationally Determined Contributions) under Paris Agreement.
• In same agreement India intends to achieve 40% cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030.
• Establishment of ISA (International Solar Alliance) for promoting solar power generation across world and India.
• Onshore and Off-shore wind energy tapping. Example -Target offshore wind farm with a capacity of around 1,000 megawatts (MW) in the Gulf of Khambhat, off the coast of Gujarat.
• In January 2013, the Union government launched the Ethanol Blended Petrol (EBP) programme, which made it mandatory for oil companies to sell petrol blended with at least 5 per cent of ethanol. The National Policy on Bio-fuels had set a target of 20 per cent blending of bio-fuel by 2017.

What further can be done?

• Dedicated nodal agency for focusing on new energy resources.
• Private participation for effectively utilizing the available resources.

Access to affordable, reliable, sustainable and modern energy is integral to global development and fulfilling targets under SDG.

Answer : Minimum Support Price is the price at which government purchases crops from the farmers, whatever may be the price for the crops. Minimum Support Price is an important part of India’s agricultural price policy. The MSP helps to incentivize the framers and thus ensures adequate food grains production in the country. At present, the MSP covers 24 crops that includes seven cereals (paddy, wheat, barley, jowar, bajra, maize and ragi); five pulses (gram, arhar/tur, moong, urad and lentil); eight oilseeds (groundnut, rapeseed/mustard, toria, soyabean, sunflower seed, sesamum, safflower seed and nigerseed); copra, raw cotton, raw jute and virginia flu cured (VFC) tobacco.

Thus the minimum support price is aimed to:

• Assure remunerative and relatively stable price environment for the farmers by inducing them to increase production and thereby augment the availability of food grains.
• Improve economic access of food to people.
• Evolve a production pattern which is in line with overall needs of the economy.

How MSP rescues the farmers from the low-income traps?

• During market failure, government provides them basic return on their produce.
• Farmers can sell their crops to FCI which help them to save cost on transportation.
• Because of assured price, farmers tend to increase the income through producing high MSP crop.

Way Ahead

• Government must promote allied areas in agriculture such as aquaculture, remuneration through producing and selling locally generated power.
• Govt. has to consider recommendation of MS Swaminathan, which recommended, among others, that the minimum support price be at least 1.5 times C2 (based on a comprehensive measure of cultivation costs that includes the imputed cost of capital and the rent on the land).
• Reducing disguised unemployment from agriculture sector.

Government in the Union Budget 2018–19 has announced the proposal to fix the Minimum Support Prices (MSP) at 50% in excess over the cost of production of crops which will ease stress from farmers.

Answer : A supermarket is a self-service shop offering a wide variety of food and household products, organized into sections and shelves. It is larger and has a wider selection than earlier grocery stores but is smaller and more limited in the range of merchandise than a hypermarket or big-box market.

Role of supermarkets in supply chain of perishable items such as fruits, vegetables, and food items are:

• Help to improve backward and forward linkages in agriculture sector.
• It has become the prerequisite for successful procurement and operational business practices for perishable products with the emerging trends of globalization and competitive marketplace.
• Increases durability of perishable items hence chance of better return improves.
• Provide opportunity to produce good quality of products.

They eliminate the number of intermediaries:

• Direct contact between producers (farmers) and procurers (wholesalers).
• Supermarkets provide good storage facilities and for longer duration. Hence farmers will not be stressed to sale their produce to local intermediaries.
• Farmers get guaranteed price from supermarket holders through contract farming.

Supermarket play vital role in procurement and selling of perishable items. There is need to increase penetration of supermarkets to bring out stress from agriculture sector.

Answer : The National Institution for Transforming India, also called NITI Aayog, was formed via a resolution of the Union Cabinet on January 1, 2015. NITI Aayog is the premier policy ‘Think Tank’ of the Government of India, providing both directional and policy inputs.

• While designing strategic and long term policies and programmes for the Government of India, NITI Aayog also provides relevant technical advice to the Centre and States.
• The Government of India, in keeping with its reform agenda, constituted the NITI Aayog to replace the Planning Commission instituted in 1950.

• At the core of NITI Aayog’s creation are two hubs – Team India Hub and the Knowledge and Innovation Hub. The Team India Hub leads the engagement of states with the Central government, while the Knowledge and Innovation Hub builds NITI’s think-tank capabilities. These hubs reflect the two key tasks of the Aayog.
• NITI Aayog is also developing itself as a State of the Art Resource Centre, with the necessary resources, knowledge and skills, that will enable it to act with speed, promote research and innovation, provide strategic policy vision for the government, and deal with contingent issues.

Answer : Protectionism is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations.

Currency manipulation is the deliberate attempt by authorities in a country to reduce the value of its currency in order to boost exports and stimulate economic growth. It is often referred to as a “Beggar thy Neighbour” policy as growth is bought at the expense of other countries’ exports in a zero-sum game. For example, China has allowed the Yuan to depreciate to mitigate the effect of tariffs imposed by the US.

There are two dimensions to the risks to macroeconomic stability of India from trade tensions:

• One dimension is that if the global economy slows down, it could result in contraction in global trade and hit India’s export volumes.
• The second dimension is that of the policy response of central banks globally to counter the effect of trade war i.e. the risk of trade war eventually turning into a currency war.

Way Ahead

• Pushing further structural reform is a measure that has to be pushed very hard and very aggressively.
• The infrastructure remains a key challenge as a way to boost demand and capacity.
• Diversifying India’s export market to counter the negative impact of protectionism and currency manipulation.

Answer : National Horticulture Mission was announced in 2004.The horticulture sector includes fruit, vegetables, spices, medicinal and aromatic plants, flowers, mushroom and a variety of plantation crops like coconut, areca nut, cashew nut and cocoa which has been contributing significantly to the GDP in agriculture (28.5 per cent from 8.5 per cent area).

Objectives of NHM

To develop horticulture to the maximum potential available in the State and to augment production of Fruits, Vegetable, flowers, Plantation crops, Spices, Medicinal Aromatic plants in the state.

• To provide holistic growth of the horticulture sector through an area based regionally differentiated strategies.
• To enhance horticulture production, improve nutritional security and income support to farm households.
• To establish convergence and synergy among multiple on-going and planned programmes for horticulture development.
• To promote, develop and disseminate technologies, through a seamless blend of traditional wisdom and modern scientific knowledge.
• To create opportunities for employment generation for skilled and unskilled persons, especially unemployed youth.

Production and productivity of Horticulture: Over the last decade, the area under horticulture grew at an average rate of 2.7% per annum and annual production increase at an average rate of 7.0% per annum.

Increasing Farmers’ Income

• The three crops: onion, potato and tomato-high worth items provide better return to the farmers
• Resource-poor farmers are likely to have benefitted most from the growth in horticulture sector.
• NHM helped in increasing the employment opportunities for the farmers.
• Post-harvest facilities availability improves the chance of longer survival of perishable items.
• Change in dietary habits increased the demands hence provide opportunity of better return.

Answer : Crop pattern refers to the proportion of area under different crops at a particular period of time. A change in cropping pattern means a change in the proportion of area under different crops. It can be described in a number of ways but the most convenient method is to classify the agricultural production into two groups i.e. food grains and non-food grains.

As a result of emphasis of certain food grains, output substantially increased from 81.0 million tonnes in the Third Plan (annual average) to 203 million tonnes in the Ninth Plan (annual average) and further to 212.0 million tonnes in 2003-04. HYVP was restricted to only five crops – wheat, rice, jowar, bajra and maize. India is the world’s largest producer of millets and second-largest producer of wheat, rice, and pulses.

Change in cropping pattern are-

• Excess focus on only two crop- Wheat and Rice, other crop got neglected.
• Distortion of other suitable cropping pattern in certain areas such as Osmanabad-Maharashtra farmers growing sugarcane and rice both water intensive crop, in place of soybean or millets.
• Prevalent monoculture in deltaic regions causes negative environmental impact.

Millets are ancient super grains -the reservoirs of nutrition for a better health. Millets (sorghum, pearl millet and small millets) are the important food and fodder crops in semi-arid regions and are predominantly gaining more importance in a world that is increasingly becoming populous, malnourished and facing large climatic uncertainties. These crops are adapted to wide range of temperatures, moisture-regimes and input conditions supplying food and feed to millions of dryland farmers, particularly in the developing world. Besides, they also form important raw material for potable alcohol and starch production in industrialized countries. Millets (great millet – Sorghum, pearl millet -Bajara, Finger millet – Ragi, Foxtail millet, Little millet, Proso millet, Barnyard millet and Kodo millet) are hardy and grow well in dry zones as rain-fed crops, under marginal conditions of soil fertility and moisture and are stable yielders.

India, the largest producer of millets in the world, is celebrating 2018 as the National Year of Millets.

Benefits of Millets

• Millets are indigenous to India, making them more accessible and cost-effective.
• Millets have a lower glycaemic index compared to rice, meaning the grains are digested and absorbed by the body slowly, lowering the blood glucose and insulin levels.
• Millets are also gluten-free, which means they can be used in place of wheat flour in rotis and baked products.
• Millets are also high on antioxidants.

Government is promoting cultivation of millets to achieve nutritional security and de-stressing farmers because acreage has declined to 14.72 million hectares in 2016-17 crop-year from 36.90 million hectares in 1965-66. Millet cultivation has declined due to change in consumption pattern, dietary habits, unavailability of millets, low yield, less demand and conversion of irrigated area for growing rice and wheat.

Government think tank NITI Ayog suggested for creating a sub mission on Nutri-cereals instead of the existing NFSM-Coarse Cereals. National Food Security Mission (NFSM) –Coarse Cereals are divided into two components: NFSM (Makka and Jau) and Sub Mission on Nutri-Cereals covering Jowar, Bajra, Ragi and little millets like Kutki, Kodo, Sawa, Kangni and Cheena.

Answer : Organic State carries far fewer toxic pesticide residues and is grown using no GMOs. It doesn’t poison farm workers or the micro-organisms living in the soil that produce healthy, drought-resistant crops. Organic farming is also better suited to climate change, protects biodiversity, enhances soil fertility, and, to top it off, organic foods are more nutritious and taste better. Sikkim, the picturesque northeastern Indian state in the eastern Himalayas, announced in January that it had transitioned completely to organic agriculture — the first state in the South Asian nation to do so.

Ecological & Economical Benefits of Organic State

• Could be the best way to handle water crisis as it will reduce the water use and increase water efficiency.
• Soil health of the region will be in good health with minimum chemicals use.
• Input cost for farmers will be reduced as chemicals fertilizers and pesticides use will reduce.
• Demand of organic food is very high across the world which ensures better return for producers.
• It will help to reduce the conversion of hazard into disasters as seen in Sikkim.
• It will help to maintain the biodiversity of the region.

Indian states, including Kerala, Mizoram, and Arunachal Pradesh are already working towards becoming organic.

Answer : India is a very big country with 2nd largest population in the world which will soon become most populous. So, the Indian economy is also very big and for such big and complex economy not one factor can bring growth. To decide whether savings rate is the most effective factor for India’s potential for growth or not will require to analyse other factors of growth first.

Other factors of growth

1. External investments which bring extra wealth to boost engine of growth for any country include Foreign Direct Investment (FDI), Foreign Institutional Investor (FII), Qualified Foreign Investors (QFI), sovereign wealth of other country, etc. These not only bring investment but also come with new modern technologies and processes which are crucial for growth because they improve efficiency.
2. Domestic investment is very important factor for growth of India. It helps industries and other sectors expand their capacities and bring new ventures also.
3. Credit accessibility and the rate of credit is another important factor. Every business depends on credit heavily. Easy loans by banks. NBFCs (Non-Banking Financial Companies) at cheaper rate is very important for growth. Along with that Bond market, Initial Public Offers, stock market are also very important to achieve growth potential of India.
4. Some other factors are: huge resource with big agrarian base, rich mineral resources, trained human resource with biggest pool of engineers and one of the largest middle class market of the world. These factors create a unique environment for continuous demand and capacity to cater this demand so that India’s growth potential is achieved.
5. The zeal to reform Indian Economy and improve ease of doing business, government is not less important than any other factor for growth.

Importance of savings rate for India’s growth

Savings rate in India peaked in 2008 with 38% of GDP as savings rate. That was the period when India’s growth rates was also around its peak. So, it is clear that savings rate is very important for Indian growth. It plays many important roles in growth:

• Gross savings rate as a percent of GDP in India is the range of 34%. But, majority of savings comes from domestic households and this is a case of worry for whole economy.
• The saving rate has big proportion of household saving which is a cheap source of funds for banking which, in turn, provides cheap credit for the economy.
• When the savings rate is channelised into investment, they start generating profit. The profit remains inside the economy, which could be reinvested to create a virtuous cycle of growth.
• The savings rate sustains the demands in the economy and gives stability to the growth.

So, it is clear that savings rate is the most effective factor for India’s potential growth. But it alone is not sufficient for India’s growth. Savings rate requires all other factors mentioned above along with ICOR (Incremental Capital Output Ratio) and disposable income for demands.

Answer : Manufacturing and labour intensive exports depend on many factors. These do not work in isolation. There are many reasons for failure of manufacturing to achieve goals of labour intensive exports and these reasons also hint towards suggestions to improve labour intensive over capital intensive exports.

Various reasons for failure

1. Long colonial past of India destroyed its manufacturing capacity which has not yet recovered fully. The manufacturing sector, itself, is growing slowly therefore the goal of labour intensive export could not be achieved.
2. Overall, global slowdown was one of the immediate causes of less global demands which also affected Indian labour intensive exports.
3. Inverted duty structure in many items created obstacle to produce cost effective labour intensive exports.
4. Economies like Bangladesh, Vietnam, etc. captured major share of some labour intensive global exports in textile, apparel, etc, giving a very tough competition to Indian exports.
5. Non-tariff barriers like sanitary and phytosanitary barriers hindered growth of Indian labour intensive exports especially in agro and food processing industries.
6. Lacking infrastructure like roads, electricity, cold storage, logistic chains are also important factors.
7. Growth in modern technology which reduced the requirement of labour and artificial intelligence was also a big factor of failure to achieve goals in labour intensive exports.
8. Although labour intensive sectors generate more employment but making profit on large scale is not easy. Hence, large industrial houses focus more on capital intensive sectors.
9. Usually, the labour intensive sectors function as small units. This explains why they fail to attract best of the talents like highly skilled manpower from IITs and IIMs. Therefore, potential of growth is not achieved.
10. As the labour intensive sectors are small, to achieve goals, it requires setting up such industries in huge numbers. But, Indian society prefers white collar services jobs over being labour or entrepreneur in small units. This also contributed to failure to achieve the goals.
11. 1The potential of soft power of Indian culture was not harnessed to promote hand-made and labour-intensive exports of India fully.

Alongwith many other reasons, the fact remains that Indian labour intensive manufacturing sector failed to modernise itself sufficiently. The standardization, specification and their advertisement were not upto the global requirements. Further, they could not avail the government incentives for export efficiently like big industrial houses created failure for manufacturing to achieve its goal in labour intensive sectors.

Suggested measures

• India is in dire need of employment for its growing population. Every month 1 million adds to its workforce but commensurate employment is not generated.
• So, specialized and big steps are required. There is need to identify potential labour intensive sectors. Economic Survey 2016-17 identifies apparel to generate 23.9 jobs per lakh investment against 0.1 in steel. Similar other sectors should be identified like jems & jwellery, textile, leather, agro based industries, FPI, transport, etc.
• Special zones like SEZ need to be created, which will provide significant tax breaks.

Several other measures should be taken like:

• Making speicalised bodies for labour intensive sector on the model of ASSOCHAM, FICCI, etc.
• Specialized government body should be created for hand holding, skilling, training of people interested in such industries which should also take care of global standards and specifications.
• Global shows and programmes be arranged to propagate such Indian goods in foreign markets.
• Foreign entrepreneurs should be invited to contribute in technology and processes to boost such Indian exports.

Overall, immensely potential Indian culture and soft power of most ancient civilization be harnessed to promote Indian labour intensive manufacturing, especially, handmade goods with a specialized tag for handmade and geographical indicators. Further, the capital-intensive sectors be given goals to generate employment and if they don’t meet goals then they should be made investment in labour intensive sector as CSR or separate mechanism be devised for it.

Answer : Public-Private Partnership (PPP) is a new model which is used specially in infrastructure projects. It brings private efficiency and energy into governmental accountability. This is very important in the case of developing airports in India.

To examine development of airports in India through PPP, we need to see why PPP has been introduced in developing airports. Earlier, Airport Authority of India was developing airports. But it put serious strain on government finances, leading to slow pace of developing airports. It created a gap between demand and supply for air services. This kept air services very costly and passenger traffic could not move beyond roads and railways. But this is not a case with most of the developed countries where passenger traffic mainly operates on air, while surface transport is used for cargo.

This situation was not good for the development of the countries like India. Gradually, aviation was opened up for private sector since 1994 onwards with the amendment of AAI Act to allow PPP in few activities of airports.

Later, entire airports development was opened for PPP; airports like Kochi and Hyderabad have been built on this model. Delhi Airport also saw contribution from PPP. PPP Model not only eased the burden on the government finances, it also generated revenue.

Thereby government got scope and ability to expand aviation in India for regional connectivity. If the scheme succeeds then significant shift of passengers could be experienced to aviation, freeing rail capacity for freight.

PPP model will help remove infrastructural and logistic bottlenecks.

Challenges faced by authorities in this regard:

• Challenge of land acquisition for airports.
• Due to fierce competition, many unrealistic bids were made, ultimately delaying or halting altogether many projects due to unviable finances.
• It becomes a challenge to keep a tab on the user charge of private operators. This has led to a situation wherein many operators collect more than their actual investments.
• The maintenance of airport becomes a challenge for authorities because private partners in PPP shy away from maintenance, mainly to increase their profits.
• Maintaining quality of infrastructure by private developer is also a big challenge.

But, despite all these challenges, PPP model for airport development is good and any deficiencies should be corrected so that Indian aviation sector prospers.

Answer : Explaining various revolutions in agriculture and its impact on poverty alleviation and food security in post-independent India requires understanding that agriculture is closely linked with land reforms and allied sectors like animal husbandry.

Explaining various revolutions:

• Land reforms and tenancy reforms had taken place immediately after the independence. But these reforms were insufficient to improve the situation of food security. These reforms also failed to alleviate poverty. Hence, the 1st revolution - revolution in agriculture was launched. It was:
• GREEN REVOLUTION was based on assured irrigation, chemical fertiliser and high yielding variety seeds. This gave a boost to agricultural production, and farm income, especially in Punjab, Haryana and Western UP shot up. Now there is a focus on Second Green Revolution and Evergreen Revolution for sustainable and organic agriculture.

Various other Revolutions in allied sectors:

1. White Revolution and Operation Flood which contributed to food security and poverty alleviation very effectively. Amul, Mother Dairy, Sanchi, Sudha and many more cooperatives are based on it.
2. Blue Revolution in fisheries which is especially important for coastal India.
3. Pink Revolution in meat and poultry.

How these revolutions helped in poverty alleviation:

• These revolutions increased food production immensely. Thereby, farmers could sell in market and 70-80% of India population still dependent on agriculture for their livelihood, benefited from them.
• The increased agro-productions opened many avenues. Agricultural products were exported. It gave boost to commercialisation of agro-products which generated profits. Many agro-based industries were set up. Subsequently high level of farmers’ income created demand and market for industrial consumer goods also.
• Impact of these revolutions could be assessed with the help of data of BPLs and poverty. Although there is no unanimity on the BPL data by different assessments but still it can be judiciously used. India, full of destitutes just after the Independence, saw about 40% of its population living below poverty line during 1990. Now, India has 21.9% of population living below poverty line, as per the Suresh Tendulakar’s estimates. Rangrajan Committee, World Bank and many other studies also suggest BPL population of India somewhere between 21-25%. So, these revolutions were very helpful in poverty alleviation.

How these revolutions helped in food security

• There were days when India was looking for foreign assistance even for basic needs of food. PL-480 programme was a stark example of above.
• But today, India produces record level of foodgrains at more than 270 mn tonnes. India occupies top places in many food products like milk, mango, banana, egg, fish and rice. All the revolutions have contributed directly to this development.
• Now India doesn’t depend on anyone for her food security. But for poverty alleviation, there is a need for another round of revolution in food processing and organic farming.

Answer : The World is changing very fast where cost effectiveness has become very important. But, despite being cost effective, the small units face less acceptance.

[A] Reasons for poor consumer acceptance:

• The smaller units usually produce non-standardised products.
• Usually, small units are not registered and don’t have certifications from Food Safety and Standards Authority of India (FSSAI), Organic India, Agricultural and Processed Food Products Export Development Authority (APEDA), Indian Standards Institute (ISI) etc.
• Varying taste and qualities are also contributing to poor acceptance.
• Hygienic practices and standards are compromised or at least there is a perception of such among the consumers, leading to poor acceptance.
• Not having great brand value also contributes to poor acceptance.
• Small units are not able to invest in promotion and advertisement, so lesser acceptance on account of lesser awareness about their products.

[B] Reasons for poor acceptance to establish small units

• Small unit are usually the domain of lower or middle-income groups. The middle-income groups aspire for white collar jobs. And lower strata are illiterate and poor, so unable to establish such units. Lesser profit is another factor for poor acceptance of small units among entrepreneurs.

[C] Social reasons

• Processed foods are yet not fully accepted among the Indian society, which still prefers freshly prepared food. Indian tradition gives preference to fresh food over processed ones.

How food processing can uplift poor farmers

• Food processing leads to immense value addition to food and agricultural products. For example, the raw potato bought from farmers for around Rs 200-800 per quintal (Rs 2-8 per kg) but sold in market at around Rs. 20 per kg. But, packaged chips of same potato is sold for Rs 20 for 55 grams.
• Food processing also increases the shelf life of the agro products, helping farmers wait for favourable price, and saving them from becoming a victim of distress sale.
• Food processing industry development will also create perpetual buyers of farm products which can uplift the economic status and thereby social status of poor farmers.
• Development of food processing industry and unit may lead to coming up of many cooperatives like Anand Milk Union Ltd. (AMUL). Here, poor farmer could become member of such cooperatives and the ultimate owner of the processing industry. Thereby, real upliftment in the socio-economic status of poor farmers will be realised.
• Such large industries like AMUL will also provide direct jobs to which poor and landless farmers can also join and realise upliftment.

Answer : Transform, Energise and Clean India (TEC) is the agenda of the Budget 2017-18. The TEC agenda is very specific which meant specific sectors like —

TEC term is not general. It denotes specific meaning. Clean does not mean clean India. Here, clean denotes corruption and political funding.

• Transform the quality of governance and quality of life of our people
• Energise various sections to society, specially the youth and the vulnerable and enable them to unleash their true potential and
• Clean the country from evils of corruption, black money and non-transparent political funding.

Various measures taken in the Budget

1. Measure to transform the quality of governance: It include the introduction of the Consolidated Outcome Budget covering all the Ministries and Departments.
2. Measure to transform quality of life: By plans to eliminate Kala Azar and Filariasis by 2017; Leprosy by 2018, Measles by 2020 and TB by 2023; establishment of new AIIMS in Jharkhand and Gujrat, increasing seats in medical colleges. Apart from health, various other sectors have also been covered.
3. Measures to energise youth: Innovation Fund for secondary education, UGC reforms (outcome based accreditation) SWAYM platform for 350 online courses, 100 international skill centre, SANKALP, STRIVE etc.
4. Measures to energise vulnerable section: Allocation has been increased for SCs, STs and minorities; Mahila Shakti Kendras at village level; Aadhar-based smart card for health of senior citizen; Increased allocation for Deendayal Antyodaya Yojana.
5. Measure to clean political funding in the country: Amendment is proposed to introduce electoral bonds.

After analysis of these measures it can be said that the measures are definitely firm steps to Transform, Energise and Clean India. Consolidated outcome budget is very progressive step. It has potential to really transform the governance in India.

But, there are certain limitations also. Outcome based budget is there but in very few sectors objective outcomes have been set.

In health, a time bound eradication of various disease has been set. But in many other sectors, similar objective outcomes could not be identified.

In measures about clean India, the step seems counter-productive because the electoral bonds will provide anonymity to the donor. Thereby its impact of cleaning political funding and corruption will be limited.

Answer : India is a large country and about 1 million are added to workforce every month. About 50% of population still depends on agriculture which needs to shift to industrial and services sector. But services can’t absorb so much rural population. Therefore, industries require exponential growth. But it is lagging behind the normal GDP growth itself. To understand whether changes in industrial policy will boost industrial growth, we need to know the reasons for industrial growth lagging behind GDP growth rate.

Reasons for slow industrial growth rate:

• During post-reform period, services sector got effective boost from ICT-led BPOs and IT companies. It outpaced every other sector due to a relatively more hassle-free environment and less government intervention. As services were growing very fast, it became a dominant factor of GDP growth, and industrial growth started slowing down.
• There have been some inherent factors as well which cause slow industrial growth. These include slow growth in electricity and energy sectors. Development of these sectors is essential for industrial growth.
• The poor state of infrastructure: port, shipping, road, railways, storage and logistics also contributed to less than satisfactory performance of industrial growth.
• Although, economy was opened in early 1990s but most of the sectors were not fully opened for FDI as it was capped at below 50%. This discouraged foreign companies from entering India with state of the art technologies.
• Slow technology adoption was another cause for slow industrial growth. Low investment in research and development also contributed to the slower adoption of efficient and modern technology that prevented faster growth in industrial production.
• Indian industries were largely depended on the bank loans, that too at high interest rates. Penetration of stock market, mutual funds were less along with less developed bond market in India. This prevented easy and cheap capital investment in Indian industries which was a big reason for its slower growth.
• Although there were LPG reforms and opening up of the economy, effective ease of doing business was still missing. Even after the abolition of licence raj, as many as 100 approvals were required to set a new industry or expand the capacities of old till recently. Overall, impact of delicensing was not effective on the ground.
• One of the biggest obstacles was, and still is harsh labour laws which disallow hiring and firing of labours. It requires cumbersome government approvals which is a big barrier for expansion of MSMEs into big industries as becoming big would have required more labour which would have attracted strict government regulations.
• Laws like MRTP Act proved to be less effective to improve the competitive environment for industries.
• In more recent years, specially post 2008 crisis, declining global demand in industrial goods also contributed to lagging industrial growth.
• Difficult procedure to revive or close sick industry and difficult bankruptcy laws were also in a way obstacle for industrial growth (ease of closing business was not there).

How far recent changes in Industrial policy can increase growth rate of industries?

• New Industrial Policy Draft 2017 was scheduled to be released in October 2017 but it has not been released yet. But there were several small changes brought in to influence industries’ growth by solving its various problems.
• Infrastructure bottlenecks have been addressed through various projects like Sagarmala, Bharatmala, Dedicated Freight Corridors, several industrial corridors. All these have potential to give boost to industrial growth.
• National Manufacturing Policy and new Special Economic Zones have potential to revamp industrial growth.
• Recently, labour laws were amended for easing norms for hiring and removing along with apprenticeship provisions which can benefit industries to a great strength.
• There is a complete overhaul in Ease of Doing Business environment with more than 300 objective targets in the Business Reform Action Plan. States are implementing such reforms with quick pace like Single Window Clearance, easy electricity connection, etc. It can catapult the industrial growth rate.
• Competition Act and Commercial Courts Act, although not the part of industrial policy, but will definitely create a positive environment for industrial growth.
• Schemes like Make in India, Start Up India, Stand Up India, Mudra Loans as well as opening up of most of sectors for 100% under automatic route will energise industrial growth in India.

But, how far the above change can increase industrial growth also depends on other factors. Will Indian industry embrace paradigm changes like Artificial Intelligence, Internet of Things, Robotics, Industrial Revolution 4.0? India needs to focus on these things, and improve investment in research and development along with focus on implementation of normal reforms on ground reality then only industrial growth will pick pace.

Answer : India is the most diverse country and growth is required to be more inclusive than any other country. Inclusive growth for India means that the growth or progress of India is such that each and every citizen benefits from growth equitably.

Salient features of inclusive growth

Economic growth is necessary precondition for inclusive growth but it has to have some basic features in order to be called it as inclusive:

• Elimination or faster reduction of poverty is very important feature of inclusive growth
• Elimination of horizontal and vertical inequalities
• Elimination of discrimination
• Creation of employment opportunities
• Access to a variety of public resources and institutions
• Continuous improvement in human development parameters of population at large is the very basic feature of inclusive growth.
• Rising literacy, mean year of schooling, increase in average life expectancy, decline in infant mortality, decline in maternal mortality are the cardinal features of inclusive growth.

Has India been experiencing such a growth process?

This is a very complex question to answer. India is a very large nation. Most of the states are bigger than many countries of the world. On the one hand, traditional orthodox elements are present, while on the other hand, ICT-based modern industrial society is also making its presence felt. In such a scenario, it is very difficult to give a black and white answer or a definite yes or no, whether India has been experiencing inclusive growth or not. To arrive at any answer, one needs to observe features of inclusivity and exclusivity present in India.

Features of inclusivity in Indian Growth Story:

• Rising income in general: Various estimates for BPL population show a fast decline of poverty, from 40% during 1990 to 21 - 25% today. Tendulkar Estimates show poverty estimate at 21.9% of the population. Similar figure was given by the Rangarajan Committee and the World Bank.
• Continuously rising literacy rate: from about 15 -18% after the Independence to 74% in 2011 Census.
• Average life expectancy and other health parameters also show continuous improvement. India may be behind many on HDI but there are definite signs of continuous improvement. Such development can not take place without inclusive growth.

Features of Exclusivity

• Recent study by the well-known economist Thomas Piketty has revealed that India is experiencing maximum inequality in wealth since 1922.
• World Inequality Report, Gini Coefficient of World Bank also highlight that inequality exists in the Indian society.
• Jobless growth also perpetuates unequal society.

After analyzing pros and cons, it can be conclusively said that Indian society is with very complex diversity and going through a phase of transition. The core of India’s growth is clearly inclusive. But there are clear signs of exclusive growth which is a byproduct of transition process towards modernity. We need to take measures so that the signs of exclusivity are resolved and Indian growth story becomes completely inclusive.

Measures for inclusive growth

• Intensive skilling and education programmes for poor so as they could become employable in modern and could reap the benefits of growth.
• Huge investment in healthcare so that healthcare expenses don’t pull middle and lower income group into poverty.
• Incentives for lower strata for becoming entrepreneur.
• Everyone should be linked with bank account and cheap credit should be accessible.
• Right to Work should become a Fundamental Right.
• Incentive to highly labor-intensive sectors.
• Tax structure should be made progressive to decrease indirect taxes and focus on direct tax.
• Universal basic Income.

Answer : Yield of any crop depends on many factors like soil fertility, suitability of crop to the local climate, status of pollution of soil water and air, irrigation facilities, quality of seeds, crop rotation and many more. There are some issues of declining yield of rice and wheat in the cropping system.

Major Reasons

1. Due to favourable MSP and assurance of government procurement, almost every farmer grows rice and wheat. This has led to monocropping of these. But any crop extracts specific nutrient from soil, and after continuous mono-cropping, soil becomes nutrient deficient and barren. Thereby, till fertility is restored, the crop in mono-cropping yield declines.
2. Yield will increase only with increase in productivity based on modernisation of agriculture. But the process of modernization is very slow.
3. Another reason is unsuitable cropping pattern. For example, area under paddy cultivation in Punjab grew 10 times in 50 years. But rice is a water guzzling crop, and it should be grown in area which witnesses at least 200 cm of annual rainfall. But Punjab experiences only 50 cm rainfall annually. This led to the situation when farmers started overexploiting groundwater, causing land salinity and declining yield.
4. Excess use of chemical fertiliser and pesticides has also degraded the soil fertility.
5. Climate change and adverse temperature, rain and unseasonal rain also contributing to declining yields.

How crop diversification is helpful to stabalise yield

• Different crops extract different nutrients, micro nutrients and mineral. So, with crop diversification, soil will not become deficient of the same nutrient every time and in due course, loss of nutrient could be restored.
• Diverse crops also add up biodiversity of soil microorganisms. More biodiversity of microorganisms in soil makes it healthier.
• Different crops are prone to different pests and diversification of crop away from Mono-cropping breaks the life cycle of pests and restores yield.
• Some crops like legumes or pulses performs nitrogen fixation which enhances soil fertility immensely and increases yield.
• There are some smother crops which controls weeds thereby stablises yields. Soyabean is one such crop. Maize and cotton also reduce weeds.

Indian food security requires evergreen revolution based on sustainable practices to feed large and growing population. Crop diversification, crop rotation, organic farming like sustainable practices are very important for it.

Answer : Subsidies are a kind of cushion provided by the government to farmers. Most Indian farmers are small and marginal, hence they are poor. So, they respond much favourably to the subsidies. As choice of crop is decided by farmer so subsidies have a definite effect on cropping pattern and crop diversity and in return economy of farmers also faces impact.

Various types of subsidies

• Subsidies through minimum support price
• Fertiliser subsidy in urea and other
• Electricity subsidy shows impact through irrigation pumps
• Subsidised seeds

How subsidies affect cropping pattern

• Farmers prefer all those crops and process which attracts maximum subsidies. So, they prefer the crops such as rice and wheat which receive regular upward revision in MSP along with assured procurement by the government agencies. Further, other factors such as availability of urea, seeds and electricity also encourage farmers to prefer irrigation-intensive crop.
• Thereby cropping pattern of the region is altered in response to subsidies. Like rice and wheat are dominating cropping pattern in almost all over India even to the unsuitable regions.

Crop diversity

• About 100 year ago, there were around 3000 food crops now it is limited to 150 crops only. This has intensified much further in the last 50 years due to policies of subsidy specially in foodgrain. It is clear from the total food grain production data of this year (2017) which is 273 million ton in which Rice (109) and wheat (97) constitutes 206 million ton. This is all happening due to impact of subsidies.

Impact on Economy of farmers

• Subsidies provide an economic cushion to farmers and affect favourably to economy of farmer. But, it also makes farmer dependent on policies of subsidies which sometimes make them victim of distress sale.

Significance of crop insurance for small and marginal farmers:

• Crop insurance in India was primarily provided only on crop loans to secure loans of Banks. So, earlier its significance was limited for small and marginal farmers for whom loan was less accessible.
• But now with PM FASAL BIMA YOJNA insurance will play very significantrole in the life of small and marginal farmer. It will protect farmers from crop loss and damage due to weather and other condition even after harvest. As the premium is only 1.5% to 2% so it becomes very important for small and marginal farmers also.

Significance of MSP for small & marginal farmers

• Commission for Agricultural Cost & Price (CACP) led MSP covers about 25 crops. MSP is regularly revised upward. But it has limited significance for small and marginal farmers because although MSP is declared on 25 crops but every crop is not procured.
• However, due to assured procurement of rice and wheat, MSP of rice and wheat becomes much significant for small and marginal farmers who can not wait for favourable prices from markets. So, MSP of rice and wheat is very important for small farmers.

Significance of food processing for small & marginal farmers

• Normally food processing industries require standardised crops with specification of fruits, vegetables and grains. This becomes capital intensive agriculture to grow such crops so there are limited significance for small and marginal farmers.
• But the local, unbranded and small brands of food processing will be very important even for small and marginal farms. Because, they don’t follow strict standardisation. Thereby they could provide assured market for small farmers products and increase their income. Even farmers themselves can become entrepreneur. So, the food processing is so important that it can become Sunrise industry for small and marginal farmers.

Economy and Nation stand on the base of agriculture and farmers. Modernisation and development with aforesaid policies has ensured food security to 120 crore Indians.

• In the modern globalized world, there has been an increasing trend towards ‘informalization’ of labour market conditions, especially in the developing countries. In the Indian context, the informal component roughly corresponds to ¾th of the total estimated employment.
• Post-globalization, state’s share in total employment has decreased substantially. Private firms on the other hand resorted to ‘cost cutting’ and maintaining low labour costs. Simplification of labour laws often resulted in adoption of ‘hire and fire’ policies leading to more informalization where the workers do not enjoy any forms of social protection.
• Globalization has also led to a further push towards automation in certain sectors with the incorporation of technology, both imported as well as indigenous, leading to the decline of formal employment.
• When a country embraces the market forces and incorporates capitalist elements, informalization of the labour market becomes inevitable. In order to attract MNCs and foreign investment, the state will have to make its labour laws more flexible. This often results in the flexible workforce (engaged in temporary and part-time employment) to become highly vulnerable in terms of job security and social protection. The process of informalization will also place a downward pressure on wages and working conditions in formal jobs as well. A relatively high proportion of informal jobs make it increasingly difficult for workers to bargain for decent wages, working conditions and social protection. This creates a vicious cycle in which the formal jobs become increasingly informalized with time.
• Even though informalization is inevitable and is, per se, not detrimental to the economy, there has to be a trade-off between the ‘hire and fire’ policies and social protection of workers. Provisions like unemployment benefits for certain months shared by government and the firms could, to an extent, address this issue.

• Financial inclusion is a national priority of the Government as it is an enabler for inclusive growth. Financial inclusion is important as it provides an avenue to the poor for bringing their savings into the formal financial system.
• Pradhan Mantri Jan-Dhan Yojana (PMJDY) is a national mission on financial inclusion encompassing an integrated approach to bring about comprehensive financial inclusion of all the households in the country. The plan envisages universal access to banking facilities with at least one basic banking account for every households, financial literacy, and access to credit, insurance and pension. In addition, the beneficiaries would get RuPay Debit card having inbuilt accidental insurance cover of Rs. 1 lakh. The scheme also envisages channeling of all Government benefits to the beneficiaries’ accounts and pushing the Direct Benefit Transfer (DBT) mechanism of the Union government.
• The scheme has, so far, managed to open 25 crore accounts, which have mobilized Rs. 74,000 crore deposits approximately. Roughly 14 crore accounts have been linked to Aadhaar numbers and 20 crore RuPay debit cards have been issued to these account holders.
• Despite these achievements, certain numbers reveal that financial inclusion may not be achieved by opening accounts alone. Basic savings account penetration in most states is still relatively low. Initially there were reports that many of the accounts opened under PMJDY were lying dormant. However, the recent data suggests that most of those accounts were later mobilized.

• There is no universally accepted definition of a Smart City. The conceptualisation of ‘Smart City’ varies from city to city and country to country, depending on the level of development, willingness to change and reform, resources and aspirations of the city residents. In general, a smart city can be termed as a city which is able to meet the aspirations of its people.
• A Smart City provides smart solutions to the urban problems. To provide for the aspirations and needs of the citizens, urban planners ideally aim at developing the entire urban ecosystem, which is represented by the four pillars of comprehensive development - institutional, physical, social and economic infrastructure. The cities can work towards developing such comprehensive infrastructure incrementally, adding on layers of ‘smartness’. Different methods like retrofitting, renovation, redevelopment and green field development are employed for the conception of smart cities in India. The need for smart cities arose due to the various challenges faced by the urban centers in India.
• 31% of Indian population resides in cities which contribute to 63% of the GDP. Urban areas are expected to house 40% of India’s population and contribute 75% of India’s GDP by 2030. This requires comprehensive development of urban infrastructure, improving the quality of life and attracting people and investment.
• Socio economic imperatives are the key factors behind the rapid urbanization in India. While cities are considered the growth engines of an economy they also attract poverty in large proportion. Indian cities are often symbolized by urban sprawls and impoverished slums. Reconciling the growing affluence and abject poverty is a huge task for the urban planner.
• Smart Cities Mission could be considered as an opportunity to address the numerous urban challenges by way of focused intervention in areas like urban management systems (including transportation and logistics), capacity building of urban institutions and local governments, technology domain etc. The Mission will also help in minimizing urban conflicts and creating enabling conditions for inclusive and equitable urbanization, pursuing a decentralization agenda.
• While rapid urbanization creates a rural-urban divide, ‘Smart Cities’ if coupled with the development of the rural-urban fringe (Rurban fringe) could support the integration of urban centers with the rural hinterlands as opposed to the creation of ‘islands of growth’ only in the urban sphere. ‘Being smart’ cannot just be the feature of cities, but for the villages as well. However, in the given scenario in which the rural areas are devoid of basic infrastructure, transforming the villages by providing all weather roads, 24 × 7 electric supply, cutting edge technology and IT infrastructure remains a difficult task. Schemes like PURA (Providing Urban Amenities to Rural Areas) and RURBAN also acknowledges this very fact and instead focus on providing basic facilities and services.

• Foreign Direct investment (FDI) is a critical driver of economic growth in the country in the past liberalized era. Non-sufficiency of domestic sources of funds for meeting the developmental needs of the country is the primary reason for the increasing demand of FDI. The inflow of FDI also means achieving technical know-how and generating employment. Especially in the current scenario when domestic investment activity is mired in twin balance sheet problem, FDI can act as a crowding-in factor and boost investment in the country.
• We often see very high investment commitments to the tune of trillions of Rupees in numerous investor meets across the country, which are far too much compared to the levels of FDI received by the country. While these MoUs (Memorandum of Understanding) promises a lot, what actually materializes would be of miniscule proportion. The huge gap between FDI commitments and actual FDI is because of several reasons.
• Promising FDI in each possible destination is a common practice to check government response and special considerations. The commitments would be translated to actual FDIs only after careful perusal and considering all the strategic and political implications. At times, economic downturn and financial strain can prevent investment in an intended project. Certain FDI commitments are for long term, such as the commitment by Japan for the high speed rail project, which cannot be evaluated in a short span. In the case of Chinese investments, strategic issues take precedence and the actual investment will only flow when the bilateral relation is improved.
• Despite all these issues, FDI inflows have risen rapidly from 24 billion Dollars in 2012to 44.2 billion Dollars in 2015. India has started closing the gap with China in terms of FDI as a percentage of GDP (2.3% of GDP for China and 2.1% for India). In terms of quality also Indian FDI inflows are better than China, as FDI into India mostly comprised of fresh equity infusions.
• Improving the investment climate in the country, especially in terms of case of doing business; faster clearances for investment projects, reforms in labour market including labour law reforms, improvement in bilateral relations, etc hold key to translating the FDI commitments into actual FDIs.

Answer : Inclusive growth is a concept that advances equitable opportunities for economic participants during economic growth with benefits to every section of the society. The inclusive growth challenge is huge in the Indian context where the majority of the labour force is unskilled and malnourished.

• To take care of the cared less segment of the Indian society and to use the used less man power in terms of inclusive growth is a challenge for the policymakers as the sheer number of less cared and used man power is huge.
• Economic growth can be made inclusive when it succeeds in generating sufficient employment opportunities to meet the aspirations of the new entrants into the labour force each year. There is also a need to shift the man power currently in disguised unemployment (especially in the agricultural sector) into the labour force and subsequently into workforce.
• Sufficient job opportunities are to be generated in non-agricultural sectors with primary focus on low-skilled manufacturing which could absorb the maximum number of the labour force. The experience of other emerging market countries and the ‘Asian tigers’ shows the urgent need to focus on this very segment.
• The manufacturing sector has been under-performing in the country and has been less labour intensive, failing to generate enough employment opportunities.
• The archaic labour law of the country has also been a hurdle in the path of case of doing business. India’s labour laws are considered more complex and less flexible compared to other countries. This coupled with red-tapism and political interference often pose challenges to the manufacturing and industry. Employers try to go around the law by hiring a large proportion of their labour force in the form of contract workers who do not enjoy any form of statutory social security protection and are often exploited by the employers.

Measures to address these challenges:

• There is a need to have national level labour reform code which addresses the concerns of the employees as well as employers. Labour laws need to be flexible, at the same time providing suitable social security protection to the work force. As informalization of the labour market is a reality in the globalized era, giving social protection to the workers is of utmost necessity amidst the concerns of exploitation in the informal and unorganized sector.
• There is also a need for a proper exit policy since the inability to exit is often referred as serious problem in the Indian economy, A strong bankruptcy code will also be necessary in this context.
• The most crucial aspects to address the inclusive growth challenge are human resource development by investment in health and education as well as the skill development of the labour force. The current allocations to the health and education sectors (1.4% and 2.9% of GDP respectively) are very low even compared to the developing country standards. This needs to be increased substantially. A labour force which is educated, healthy and adequately skilled is indispensable to reap any form of demographic dividend.

Answer : Land reform policy in India had two specific objectives; the first was to remove all impediments to increase agricultural production and the second was the elimination of all elements of exploitation and social injustice within the agrarian system.

The land reforms in India can be summarised into four main categories:

1. Abolition of intermediaries (Zamindari system)
2. Tenancy regulation (to improve the contractual terms including security of tenure)
3. A ceiling on landholdings (via Land ceiling Act)
4. Attempts to consolidate disparate landholdings.

Land reforms in India accepted the fundamental principle that land belongs to the tiller. This was meant to redistribute the rural income to the advantage of those who work in the fields.

• Land reforms were a success in states like Kerala, West Bengal and Jammu & Kashmir, and partially successful in certain other states. Strong grass root level movements in these states coupled with active political and bureaucratic involvement resulted in the success of land reforms. Strong implementation of laws such as the Land ceiling Act by the communist governments of Kerala and West Bengal, and an overall awareness among the people regarding the laws and reforms played a crucial role in its success.
• The agricultural development post independence had land reforms as a major factor. When the tiller became the owner of the land he had more incentives to invest in and improve his fields. Land reforms also resulted in more accessibility to institutional credit. The reduction in rural poverty owing to the reforms had a bearing on the agricultural development as well. Overall, the land reforms set the background for the green revolution in the country, which heralded the era of agricultural self sufficiency.

Answer : Indian agriculture is often termed as a gamble against monsoon. Variability of rainfall in time and space coupled with untimely entry of droughts and floods increases the vulnerability of Indian agriculture to vagaries of nature. Despite the country treading the path of high economic growth we frequently hear the news of farmer suicides in Vidarbha and Bundelkhand. Often, these farmers got caught in debt traps due to crop failure.

In the current scenario of rural and agricultural distress, crop insurance plan to assist in the stabilization of crop production and related income of farmers becomes inevitable. Crop insurance provides yield protection (coverage to farmers against production loss for crops), revenue protection (helps to manage yield and price risks) and group risk income protection (protection from any disastrous loss).

Salient features of PMFBY:

• Pradhan Mantri Fasal Bima Yojana is a new crop insurance scheme announced by government in January 2016 and rolled out from June 2016. The scheme allows farmers to pay a very low premium to insure their crops. Farmers will have to pay a premium of only 2% of the sum insured for kharif crops, 1.5% for Rabi crops and 5% for horticulture and cash crops. The difference between the premium paid by the farmers and the premium fixed by the insurance companies will be subsidised and there will be no cap on the maximum subsidy paid by the government. The subsidy will be borne equally by central and state governments.
• PMFBY replaces the existing schemes of National Agricultural Insurance Scheme (NAIS) and Modified National Agricultural Insurance Scheme (MNAIS) in which farmers had to pay a premium as high as 15%. PMFBY envisages covering 50% of gross cropped area as opposed to less than ¼th the area at present which has access to insurance.
• The scheme promises to provide prompt and easy settlement of claims through the use of technology like GPS and remote sensing to assess actual crop damage. The claim amount will be directly transferred to the bank accounts of farmers. PMFBY also provides for coverage of post-harvest losses and localised crop losses like hailstorms.
• PMFBY is a giant step in addressing the root cause of farmer and agricultural distress. Despite the financial burden, it is worth paying for the benefit of the backbone of Indian economy.

Answer : The spectre of jobless growth has haunted India for decades and recent data suggests that this trend is still continuing.India faces a serious challenge of dealing with joblessness despite statistically being the world’s fastest growing economy. The spread, depth and intensity of the problem, especially among the educated youth are not reflected in the latest unemployment number of 4.9 per cent in 2013-14. This estimate captures the chronically unemployed - those who sought or were available for work for the major part of the year - but it rarely figures in public discourse as the rate is relatively low and stable over time. Another reason is that the economy continues to generate employment opportunities even if they are largely casual or temporary in the informal sector. Educated youth prefer to wait for better opportunities, unlike the poor who take up whatever is available.

• The reasons for the ‘jobless-growth’ are multi-dimensional. More than 50% of population still depends on agriculture, but public investment in this sector is way below the requirement. Though 60% of India’s GDP growth is from service sector, manned by educated section but this doesn’t benefit around 90% of people in unorganized sector. The manufacturing sector has the potential to generate employment, but issues such as lack of adequate skills, infrastructural bottlenecks, lukewarm investment climate etc are hurdles in generating jobs. Due to stringent labour laws, corporate avoid recruitment in formal organized sector. MSME sector has witnessed poor growth rate during the last decade. There is a lack of basic infrastructure and there is dire need to provide skill training to our youth. We need capital investment in infrastructure, better education policy, and investment in research and development (R&D) activities, if we want to achieve the goal of social and economic democracy for all. The basis of a productive work force is education and good health but India still spends less than 1% on health and quality of education is abysmal. So to deal with jobless growth, there should be a multidimensional intervention focusing on education, skill development, infrastructure and agriculture.
• There is a view contrary to the ‘jobless growth’ prevalent in India. It was reported that since 2004-05, for the first time in the history of India, more workers have left agriculture for productive work in industry and services.The MGNREGA, rising minimum support prices for government procured food grains and an increasing demand for labour in construction drove wages upward after 2004-05. It is being said that there is a feedback loop between increasing demand, and production to meet that demand, that generates employment among those who will consume the products that are produced.
• However, it is clear that while economic liberalization pushed up the growth rate, it did not achieve the same success in generating employment. In other words, growth is not employment-intensive enough. Employment growth and elasticity have declined for all three sectors of the economy. It is important to recognize that India’s pattern of growth has been atypical and has not followed the standard path of development process from primary sector to manufacturing and then the tertiary, one driving the other. A growing reserve army of unemployed youth, particularly portends serious strains on the country’s social fabric. This threatens to turn India’s demographic dividend of having a young population into a curse. Therefore, itis of utmost importance that governmentexpeditiously address the challenge of jobless growth.

Answer : The livestock sector provides us with meat, dairy and eggs, as well as wool and leather. Livestock rearing is a key livelihood and risk mitigation strategy for small and marginal farmers, particularly across the rain-fed regions of India. It plays an important role in the national economy and in the socio-economic development of the country. Also, as livestock is less prone to global warming and climate change, it can be considered more reliable than rain-fed agriculture.

• Interestingly, today economic contribution of the livestock is more than the food grain crops. This hints towards a structural shift in the agricultural sector in the country. Livestock now controls a quarter of the agriculture gross domestic product (GDP).The policy makershave recognized livestock as the engine of agriculture growth, as is evident in National Livestock Policy, 2013 that has been formulated to have a policy framework for improving productivity of the livestock sector in a sustainable manner.
• The country needs suitable measures to promote this sector in India. We need to create effective institutional and policy frameworks to support intensive and commercial livestock rearing, both in the provision of services and also in facilitating access to markets. Livestock producers, including traditional pastoralists and small land holders, are both victims of natural resource degradation and contributors to it. To address this, we need to promote community-led interventions where community management and sustainable use of natural resources has positively impacted small holder livestock rearing. To improve the productivity and health of various species of livestock in a sustainable manner while reducing the negative effects on environment, there is need for greater focus on research and development particularly to address problems faced by farmers. Better coordination and convergence in the research efforts of various research and development institutions including the ICAR, State Agricultural and Veterinary Universities, NGOs and private sector R&D institutions is necessary for optimum utilization of research resources and efforts. Efforts would be made to identify the skills necessary to be imparted to the farmers and entrepreneurs to facilitate dissemination and adoption of technologies developed through research efforts. Livestock marketing facility is inadequate and often unorganized. It is necessary to create necessary infrastructure, policy and procedures to organize animal trade for better returns for farmers and faster growth of livestock sector. The processing industry would be encouraged to provide basic services and technology to farmers relating to livestock production and to establish marketing linkages to ensure remunerative returns to the farmers. Public Private Partnership initiatives for this purpose should be supported under ongoing schemes. Livestock farmers should be encouraged to organize as SHGs, Farmer Producers’ Organization, Producers’ Companies etc. to have better access to credit, inputs and marketing opportunity.
• The extent to which the pro-poor potential of livestock can be harnessed would depend on how technology, institutions, policies and financial support address the constraints of the sector. The future growth has to come from improvements in technology and service delivery systems leading to accelerated productivity, processing and marketing.

Answer : Agriculture is the lifeline of India, a significant contributor to the GDP and employs more than half the workforce. But it is one of the least reformed sectors and agricultural distress is caused due to various reasons, like too many small land holdings, lack of proper credit and insurances etc. About 85% small land holdings are less than 2 hectares. This seriously limits any productivity enhancing technology and if pushed far, degrades the land. Rural informal credit lenders charge high interests and often double up as buyers of the produce. Minimum support prices are not benefitting much either. The stagnating agricultural productivity, increasing costs of production and near stagnant prices for most crops, are turning agriculture into a non-viable livelihood option, particularly, for small and marginal farmers.

• In the present context, contract farming is playing an important role to overcome the farmer’s distress. Agriculture sector is facing a number of problems in the country and farmers actually don’t have many options in the matter of deciding whether or not to go in for contract farming. With rising debt and soaring seed and fertilizer costs, contract farming seems to be the only choice left open to them. This is mainly because the company provides all the material including seeds as well as technical know-how and there is also a guarantee of purchase of the produce after harvest. In most cases, the minimum price of the produce is fixed in advance. This makes the economic security offered by the contract farming very attractive.
• But, the critics of the contract farming believe that far from being a panacea for agriculture sector, contract farming is likely to increase the problems. The main concern is that the land, which is currently used to grow staple crops like wheat and rice, will be used to grow crops required by the food-processing industry, which also has a significant overseas market. The switch to contract farming, therefore, leads to a rise in exports. There is also a belief that it might also lead to the loss of natural seeds. Many times, the crop required by the company is not recommended for that particular area. This can also have negative implications on the quality of soil.
• Certainly, not all contract farming is bad for farmers. It can lead to sustainable cultivation practices. However, there is a need for the government to step in and monitor the contract farming practices.
• Land leasing is a way by which land holder gives his land to other person for a certain fix period with some fixed amount as a rent. This procedure is performed via proper agreement and land holder cannot take back his land before bond period. Land leasing can provide a steady return to a landowner without them having to do the actual farming. It allows a person to get into farming or expand their existing business without the high capital costs of land ownership. It doesn’t involve a large outlay of capital, so there is less financial burden.
• But there are certain issues with land leasing. There is no proper legal framework for assured land return to farmers from present holders. Farmer cannot sell their land to other in unforeseen circumstances. Land leasing doesn’t involve building equity and, importantly, it doesn’t have as much security and control. This is particularly important when farming organically and sustainably, which involves investing in the long-term health of the soil. An expert group under NITI Aayog, plans to finalize a law, which could free up the market for leasing farm land in India. The provisions of a proposed model law will make it easier for owners to lease out their farm land and give tenant farmers access to agricultural loans and insurance.
• Thus, it is clear that contract farming and land leasing could be an important source of the rural poor’s access to land and livelihoods.

Answer : Government’s “Digital India” project launched on 1st July 2015 envisions empowering citizens with e-access to government services and livelihood related services, among others. The project has three core components, viz. digital infrastructure, digital services and digital literacy. Mobile phone is the preferred delivery medium with focus on m-Governance and m-Services. The m-Agriculture and m-GramBazar, out of the seven components covered under m-Services, directly impact agricultural extension and marketing services.

Measure taken by government:

1. Government has put in operation three portals viz. farmer portal, kisan call centre and m-kisan portal to help farmers take informed decisions for efficient farming under varying agro-climatic conditions
2. Under the eGovernance program, soil health card software has been standardized and web-based software developed to provide integrated nutrient management recommendations using soil test crop response method for eight states.
3. Under National e-Governance Plan in Agriculture [NeGP-A] information is provided to farmers through multiple channels including Common Service Centres Internet Kiosks and SMSs. Currently, 12 identified clusters of services provide information on weather, soil health, seeds, nutrients, pests, irrigation, crops, good agricultural practices, farm machinery, marketing infrastructure; farm commodity prices, arrivals, procurement points, electronic certification for export & impor, drought relief & management, livestock, fisheries management, training, monitoring implementation and evaluation of schemes. The first phase of the project is under implementation in seven states out of 28 in the country.
4. National Bank for Agriculture and Rural Development has also designed agricultural portals for farmers.
5. Online National Agriculture Trading market to help farmers of India and increase the agriculture. By 2019, the two way platform will be created between farmers and buyers. This will be done through the broadband connectivity across the rural India.

Impact on farmers and agriculture: These programmes seek to transform rural India into a digitally-empowered knowledge economy. It will provide universal phone connectivity and access to broadband in 250,000 villages. Farmers can sell their produce through mandis or online platforms. The direct link between seller and buyer will erase out the mediators which will increase the profit margin of farmers and it will also benefit the end product customer also. This online trade will be free of cost; it will boost producer’s income. News about weather phenomena or hazardous events can be communicated so that preventive steps can be taken. Thus, it extends timely services to farmers through information technology and its tools. Farmers can learn new ideas and way of cropping with the help of internet. It will result in enhancing efficiency in agricultural governance through digital literacy and electronic delivery of services. Thus, the programs hold immense potential and efforts should be made to develop their strong linkages with agriculture sector through appropriate policy framework.

• Information and Communication Technology (ICT) has the potential to revolutionize Indian agriculture in terms of raising crop productivity and profitability per unit area and resources. As of March 2015, the national teledensity was 79% and rural teledensity 46.5%. Telecom Policy aims to increase rural teledensity to 60% by 2017 and 100% by 2020. For India, at a time when national, regional and international research institutes have already developed technologies, farmers need motivation and encouragement to adopt these proven yield-enhancing, cost-efficient and environment-friendly technologies. Acknowledging the slow impact of the ICT initiatives of the government and private sector, the digital India project should pay undivided attention to provide accurate and timely nformation from authentic sources to farmers on various identified aspects.

Answer : DBT was launched as a citizen empowerment tool with an objective to transfer benefits to the beneficiaries directly by removing the middlemen. It is aimed at better targeting of subsidies and reducing delays in the delivery of benefits such as scholarships and pensions to the intended beneficiaries. It will also help in curbing wastages and leakages, savings crores of rupees of public money, and result in financial inclusion.

• It aims to transfer subsidies, scholarships and other welfare benefits directly to the bank accounts of the beneficiaries. The primary aim of this Direct Benefit Transfer program is to bring transparency and terminate pilferage from distribution of funds sponsored by Central Government of India. The perceived benefits include elimination of middlemen which will result in reduction of leakages.The programme promises to transform service delivery in India by transferring government benefits and subsidies directly into the hands of residents through a biometric based identification system (Aadhaar), speeding up payments, removing leakages and enhancing financial inclusion. As Aadhar card is based on biometric identification, fake and duplicate beneficiaries will be eliminated.DBT scheme allows a time-bound transfer, hence avoids delays in transferring money, which is one of the biggest problems that beneficiaries are facing. This scheme eliminates intermediaries and rents for fair price shops as subsidies and benefits of welfare schemes are transferred directly. This will help Indian economy in the long run as the structural expenditure will be reduced. Also, there will be transparency in the distribution of benefits. As everyone can purchase goods at market price, there will be healthy competition between the sellers in the market. The problem of middlemen diverting subsidized grains to markets will be eliminated. It encourages people to have bank account. Circulation of money will be increased, and this can lead to a significant increase in the GDP.
• Now is an opportune time forDBT system in India. The confluence of four trends-the maturing of biometric technology (which allows the technology to be applied at scale), increasing cost effectiveness of mobile devices, increased mobile penetration (over 75%), and exponential increases in cheap computing power and storage-today makes it feasible for a DBT system to be implemented in a large country like ours. It allows India to ‘leapfrog’ generations of sub-optimal service delivery systems and migrate directly to a cutting-edge system. It is common conversation among policy and political circles that in India the “service delivery system is broken”, that the government is just sending more money down the same “leaky pipes”, and that until the “system is fixed”, nothing will improve. Aadhaar-DBT is a genuine, transformational effort to fix this delivery system. In fact, Aadhaar-DBT is probably the world’s largest anti-corruption programme. It is indeed an idea whose time has come. And it is time to give it our unqualified support.

Answer : India is largest producer and consumer of food items. The major challenges in India’s food processing industry include ineffective legal framework. There is a lack of clear national policy. Presently, food processing is governed and regulated by various statutes created by different ministries; there is no clear policy nationwide. Lack of such policy creates disparities and impedes the development of sector. Multiple laws have been enacted in India to ensure food safety standards. These laws are implemented by various ministries and departments. However, incoherence and inconsistency creates an environment of confusion in the food sector. The enactment of Food Safety Act, 2006, was aimed at consolidating the eight laws. However, the small and medium scale industries which do not keep a track of the latest regulatory mechanisms face hassles in the transition phase of the implementation of this act. One other major impediment is absence of robust infrastructure like cold storage, warehouses, logistic infrastructure like road, rail and air transport. Road transport is preferred over rail because of congestion of rail and delays. Expanding the capacity of rail freight will not only address this issue but also reduce carbon footprint. Also, India lacks adequate farm gate infrastructure in terms of sorting, harvesting, packaging, storage and transportation. There is a lack of trained manpower. Due to insufficient training and expertise of safety inspectors has resulted in undue harassment of the industry. Moreover, food safety laws are still not in tune with the global safety practices and hence our food processing exports face action under the SPS agreement. Given consumer’s preference towards branded goods and increasing demand for food, there is a large potential to create a new segment of branded food which can assure consumers of its freshness, healthiness, quality and traceability. Private sector participation in processing, branding and marketing that drove the agriculture and food sector in several developed and middle-income countries is yet to take off in India.

E- Commerce and Food Processing Industry: With rapidly growing e-commerce business, now food companies are looking to use this platform for selling their products so that they can expand their reach and visibility. E-commerce has expanded rapidly as retailers and other marketers of consumer packaged goods offer consumers the ability to shop online, letting them shop when and where they want. The food industry, however, has been the slowest major consumer sector to expand into e-commerce growth, due to issues such as freshness, product damage, low margins compared to other consumer products and logistical challenges. The following factors can be helpful for the sector:

• Dedicated e-tailers can stock inventory.
• Convenience and a large selection of products.
• Retail stores with an online store can make home delivery and pickup.
• Some of the biggest names in the industry - Amazon, eBay, and Google - are beginning to offer and promote same-day delivery services. As consumers get used to the convenience of ordering something online and receiving it the same day, grocery e-commerce will benefit too, with people more likely to buy food they know they will get quickly.

Answer : India is known to be one of the world’s largest importers of gold. It imports anything between 800-1000 tonnes of gold every year to meet its insatiable desire for this metal. This makes the yellow metal imports one of the main components of India’s burgeoning CAD besides oil imports. Despite the presence of large gold holdings in India, at almost 20,000 tonnes, it is neither traded nor monetized. Instead, individuals and institutions prefer to hoard the metal and hedge themselves against inflation and currency depreciation. It is against this background that the government recently announced the Gold Monetization Scheme (GMS). Gold bond scheme allows investors to invest in sovereign bonds linked directly to price of gold and will be paid off at market determined nominal interest rate. The principle amounts (value of gold items in rupees) will be the price of gold at the time of purchase and at the time of selling.

• Merits of Gold Monetization Scheme: There is a change in the customers’ perception of gold from being a traditional savings instrument into a financial savings instrument. Given that almost every household in India owns gold, this scheme will help achieve the larger goal of financial inclusion, by encouraging people to open gold savings account and become part of the banking network. It will reduce the load of CAD and balance of payments and therefore stabilize the Rupee, inflation and whole of macro economy. Previously, when investors parked their savings in physical gold, it did not contributed to any asset or capital formation. Through gold bond scheme, it will allow government to channelize those domestic savings to asset formations, like infrastructure and industrial growth. Investors will enjoy the flexibility to trade the bonds on stock market. They wouldn’t have to worry about keeping the physical gold safe. It is expected that the price of gold will fall and boost the industry that use gold as input, such as jewelry, pharmaceutical, chemical etc. It will help in curbing the black money formation and inclusion of non-formal households and investors into formal sector.
• However, there are certain disadvantages of the scheme as well. The customers will have to physically part with the gold for some years. As the gold will be melted, the gold jewelry will lose its form. The impurities can also reduce the weight of the gold. Gold coins and bars would not be as appeasing to average Indian families as jewelleries made of gold are. Gold is an asset too for these people owing to the fact that there is no taxation on how much gold a person has stocked in his lockers.Involvement of income tax offices that would want to know the source if a person pledges too much of gold in banks is not a pleasant thought for many and they may not want to risk getting revealed.
• Nonetheless, this scheme envisages that gold will not only be an instrument of security but will also give earnings and will become a part of nation building.It is important to communicate the objective of Government of India in launching the Gold Monetization Scheme. We should be able to pass the right message, an Indian Investor is intelligent enough to decide whether to opt for Gold Monetization Scheme or not.

Answer : ‘Make in India’ project is an ambitious project to spot India on the world map as the manufacturing hub. Looking at the present Indian economic situation and present demographic divide the manufacturing sector has the huge potential to generate millions of jobs and could help India in making it trade surplus nation. The success of ‘Make in India’ depends on various factors such as land acquisition, business friendly laws and policies, skilled labour, business environment etc.

Skilled India for “Make in India”

• The proper implementation and success of ‘Make in India’ is totally dependent upon the skilled labour. India presents a paradox of skill shortages vis-à-vis industry requirements, despite a situation of labour surplus. For example, around 15 percent of India’s trucks are idle due to a shortage of drivers, steel industry is short of metallurgists, healthcare sector is short of paramedics and technicians and the booming construction sector has a shortage of civil engineers. These skill mismatches must be met by stepping up enrolment in industrial training, vocational institutes and public-funded institutions of higher learning. The guarantee of demographic dividend India is proud of, lies with skill and trained manpower. So to overcome this concern, government has launched many programmes including Skill India program.

Features of Skill India

• The emphasis is to skill the youths in such a way so that they get employment and also improve entrepreneurship.
• Provides training, support and guidance for all occupations that were of traditional type like carpenters, cobblers, welders, blacksmiths, masons, nurses, tailors, weavers etc.
• More emphasis will be given on new areas like real estate, construction, transportation, textile, gem industry, jewellery designing, banking, tourism and various other sectors, where skill development is inadequate or nil.
• The training programmes would be on the lines of international level so that the youths of our country can not only meet the domestic demands but also of other countries like the US, Japan, China, Germany, Russia and those in the West Asia.

Labor reform and “Make in India”

• The call for greater action to spur economic growth assumes major reforms in labor market governance. India’s labor laws - numbering around 250 both at central and state level - are restrictive in nature and hurt investments in the manufacturing sector. Some initiatives have been taken like launching ShramSuvidha portal and an online facility for firms to file a common return on its portal to comply with as many as eight labour laws at one go, seeks to improve the ease of doing business and to push Make in India programme to boost economy. The central government must focus on two major priorities: reform of chapter VB and section 9A of the Industrial Disputes Act, 1947. Unless these two dreaded provisions are reviewed and substantially amended, the clarion call to come and “Make in India” may sound hollow and the dream of converting India into a global manufacturing hub may remain elusive.
• Chapter VB requires all establishments employing a “specified number” of workers to obtain prior permission of the appropriate government or designated authority before resorting to any layoffs, retrenchment or closure. Section 9A mandates that every employer who wishes to make any change in the conditions of service concerning any matter specified in the Fourth Schedule, shall notify workmen likely to be affected by the proposed change. And it prohibits the employer from giving effect to the change before the expiry of 21 days from such a notice.
• Regrettably, our labour courts and tribunals have not found the right balance. Any attempt by employers to adjust established service conditions is viewed as infringement of basic workers’ rights, and every consequent action of employers to retrench workers by declaring them as surplus is challenged as unfair labour practice in conciliation proceedings as well as labour courts and industrial tribunals. Globalization and evolving patterns of present-day manufacturing processes require a whole new set of responses to cater to the demands of fast-changing global markets. Supply-side imbalances can easily throw the best of businesses out of gear. India is at the pinnacle of its economy transformation, and a skilled, vibrant population is very much needed to take the country forward. Both the private sector and government should play an active role in this regard.
• Therefore, although a sound beginning has been made for the Make in India campaign, now the ball is in the government’s court to ensure its success.

Answer : The Special Economic Zone (SEZ) policy in India first came into inception on April 1, 2000. The prime objective was to enhance foreign investment and provide an internationally competitive and hassle free environment for exports. The main objectives behind the setting up of SEZs are generation of economic activity through exports, attracting investments primarily for infrastructure and generating employment. Manufacturing is crucial to India’s economic recovery. Thus, we need to review the problems of a large number of stalled economic zone projects across the country and address the issues plaguing the SEZs.

• The introduction of Minimum alternate tax and Dividend distribution tax has neutralized income tax benefits. From 2011-12, MAT exemptions for SEZ units and developers were withdrawn and DDT exemptions for developers were terminated. This was touted as a major reason for the slowdown in growth of SEZs. Under the original scheme, businesses in SEZs were exempted from the minimum alternate tax (MAT) on book profits and developers were exempted from payment of the dividend distribution tax (DDT). SEZ developers and units were given major direct and indirect tax incentives, such as exemption from income tax for 15 years in a phased manner, service tax and central sales tax exemptions, and duty-free import of goods into an SEZ. The tax corporate incentives for which no end date has been specified in the law is planned to be phased out from April 1, 2017. The phasing out of tax holidays is a worrying element for the future of SEZs. Also, the flip-flops on applicability of tax laws to SEZs show a lack of consistency on the part of the government. Also, the dual use of infrastructure for non-processing zones is a long-pending issue with the SEZ developers and units. This will allow developers to use the support infrastructure including schools, hospitals, and hotels, for people living outside the SEZs as well subject to payment of the applicable taxes. The SEZ is divided into processing and non-processing zones, wherein the production of goods and services takes place in processing zones while the non-processing zones is used for creation of support infrastructure. However, there have been concerns that though essential, the support infrastructure is often not viable due to low capacity utilization. It is not allowed to be used by entities outside the SEZs. The developers have been arguing that these conditions are unreasonable and impractical. SEZs were supposed to be areas where government provides state-of-the-art technology and infrastructure facility. However, later they were left to private developers. One of the biggest challenges faced by SEZ’s is the taking away of agricultural land from the farmers. The land acquisition policy is still caught in regular disruptive process in law making machinery of the country. The restrictive labour laws also hinder proper investment in any sector. There is also a need to streamline the processes regarding refunds and exemptions and optimize the use of facilities in processing zone. A SEZ is governed by a three-tier administrative set up. The lack of proactive assistance from development officials and timely approvals leads to delayed or stalled implementation of the projects. It is important that the provisions for SEZs should be spelt out clearly in the foreign trade policy. The free trade agreements signed with other countries have garnered an edge over the SEZs.
• The SEZs can drastically improve the economic activity in the country, make the country’s export competitive and globally noticeable, be net foreign exchange earner and provide immense employment opportunity. We need to properly address the issues related to tax norms, labor laws and DTA regulations so as to attract foreign investment and major industries to setup industries in the SEZ’s making it profitable and meeting its desired results.

Answer : Liberalization and reforms is one of the important factors contributing to the growth of services sector in India. With economic growth and rise in per capita income, there is a change in demand pattern from necessary to discretionary consumptions like education and personal and health care services. High income elasticity of demand for services has contributed to the high growth of this sector. Technological progress and availability of high skilled manpower has led to growth of services like information technology (IT) and IT enabled services (ITeS). Developed countries outsource its services to developing countries like India, leading to a rise in demand for services from the developing market. High government expenditure on certain services like community, social and personal services has also led to high growth of services.

• Creating a strong industrial base is necessary in India for a variety reasons. First and foremost, manufacturing is an essential sector of all economies, especially for a developing country. Without a base in industry, strong and sustainable growth is not possible in India. Second, improving the manufacturing sector is the first step in increasing exports from the country. Through an increased share in world exports, India can improve its standing in the global market, and integrate its economy with the economies of other nations. Another rationale for developing more manufactured goods in India is the increase on self-sufficiency and reliance from domestic firms, making the national economy stronger.

Answer : Demographic dividend refers to a period – usually 20 to 30 years – when a greater proportion of people are young and in the working age-group. This cuts spending on dependants, spurring economic growth.

• Reaping the benefits of a young working population via a demographic dividend is not a foregone conclusion, especially when India’s youth lack the preparation and opportunities necessary for gainful employment. According to a study by Federation of Indian Chambers of Commerce and Industry (FICCI) and Ernst & Young (EY) though the Indian higher education system has made considerable progress in terms of capacity creation and enrolment in the last decade, it lags significantly in terms of employability, global relevance and competitiveness. According to a report released at the FICCI Higher Education Summit the low employability of graduates is driven by factors like out-dated curricula, shortage of quality faculty, high student-teacher ratios, lack of institutional and industry linkages and lack of autonomy to introduce new and innovative courses.
• By ignoring quality education, India will not only lack number of research papers published vis-à-vis the global peers but also the number of patents filed by India. This further reduces India being prominently placed on the global higher education map as a hub for talent and a culture of research, innovation and entrepreneurship.
• However, three-pronged approach needs to be adopted. One, we should change the education system to ensure that it helps in creating skills which add to the employment potential. Two, there is a need to promote manufacturing at a large scale and also identify areas which have high employment generation potential. There is a need to promote manufacturing to harness low cost benefit in the areas, which India has natural advantage. Three, promoting MSME sector and entrepreneurship to generate meaningful employment will be a great idea.

Answer : In order to improve the marketing system encouraging cooperative marketing, establishment of regulated markets, and grading, storage and warehousing are essential. In this connection the role of Agricultural Produce Marketing Committee (Markets in most parts of the country are established and regulated under the State APMC Acts) has been indispensable till day.

• The purpose of regulation of agricultural markets was to protect farmers from the exploitation of intermediaries and traders and also to ensure better prices and timely payment for their produce. Over a period of time these markets have, however, acquired the status of restrictive and monopolistic markets, providing no help in direct and free marketing, organized retailing, smooth raw material supplies to agro – processing, competitive trading, information exchange and adoption of innovative marketing systems and technologies. A farmer cannot sell his produce directly in bulk except on retail basis to the consumers.
• Farmers have to bring their produce to the market yard. Exporters, processors and retail chain operators cannot get desired quality and quantity of produce for their business due to restrictions on direct marketing. The processor cannot buy the produce at the processing plant or at the warehouse. There is thus an enormous increase in the cost of marketing and the farmer end up getting a low price for his produce. Under the APMC Act, only State Governments are permitted to set up markets. Monopolistic practices and modalities of the State-controlled markets have prevented private investment in the sector.
• The licensing of traders in the regulated markets has led to the monopoly of the licensed traders acting as a major entry barrier for a new entrepreneur. The traders, commission agents and other functionaries organise themselves into associations, which generally do not allow easy entry of new persons, stifling the very spirit of competitive functioning.The model APMC Act allows States to collect market fees from the buyers/traders on the sale of notified agricultural produce which are generally high. The high incidence of commission charges on agricultural/horticultural produce renders marketing cost high. There are other charges like entry tax/octroi tax that vary across states as well as across commodities. These charges prevent the emergence of a nationwide common market for agricultural produce.

Answer : Credit is a catalyst that lubricates the process to accelerate the farm and non-farm sector development including rural industrialization, business and service segments of the economy. A number of factors inhibit smooth credit delivery to the agriculture sector. These are: (i) insistence on collateral, (ii) complicated loan administration procedures, (iii) distances from the villages to the branches, (iv) higher monitoring and follow up costs, (v) culture gap between bank officials and farmers, (vi) political interference, (vii) inflexible lending policies and procedures including cumbersome documentation, (viii) difficulties in recoveries of overdue loans, (ix) lack of provision for consumption credit, (x) absence of effective systems for screening credit risks and, finally (xi) a misplaced belief that the borrowers in the agricultural sector, particularly, small and marginal farmers with low per capita incomes are risky and hence non-bankable.

Non-banks and banks can provide the following ICT-enabled financial services for the rural sector:

• Mobile Financial Services: Given the pervasiveness of mobile phones in developing countries, financial service providers can use them to reach clients in rural areas and provide a broad array of financial products and services, including credit, insurance, payments, and deposits. Financial service providers can tailor financial products offered through mobile phones to rural needs.
• Branchless Banking: Field agents, equipped with mobile phones or point-of-sale devices, can serve as mobile branches. Agents can provide financial services to smallholders, take deposits, provide financial information, and keep records of clients’ creditworthiness. In this way, branchless banking deepens financial inclusion throughout rural areas.
• ATMs: Though ATMs are often associated with debit cards or smartcards, ATMs can serve as cash-dispensing machines in tandem with branchless banking, mobile financial services, and other ICT-enabled financial products. The availability of ATMs in rural areas can place cash-exchange points within reach.
• Smartcards: Though not entirely in the category of ICT, smartcards (or stored-value cards) are an alternate means of providing services when mobile financial services are not readily available. Pre-paid cards, debit cards, or credit cards provide payment and credit facilities to rural clients. Stored-value cards have historically assumed some level of literacy (in particular, the ability to sign for a transaction), but the advent of smartcards that use biometric devices eliminates the challenges associated with literacy barriers.

Answer : The new land acquisition Act mainly provides for acquisition of land by the government, among others for

• Its own use, hold and control, including for a public sector undertaking
• The use of private companies for stated public purpose, including for public–private partnership projects, but excluding for state or national highway projects
• Immediate and declared use by private companies for public purpose

When the government acquires land for immediate and for declared public purpose, and wants to control the land directly, the consent of land owner/s will not be required, except when it acquires land for private companies, the consent of at least 80% of the project-affected families will have to be obtained through prior information process.. For a public–private project, at least 75% of the affected families should have consented to the acquisition.

The Act forbids land acquisition when such acquisition cumulatively exceeds:

• 5% of multi-crop irrigated area in any district in any state of India, or
• 10% of single-crop net sown area in any district in any state of India, if the net sown area in that district was less than 50% of the total area of the district

Even below these thresholds, the Act requires that wherever multi-crop irrigated land is acquired, an equivalent area of cultivable wasteland shall be developed by the state for agricultural purposes. But these limits are not applicable to linear projects such as railways, highways, major district roads, power lines, and irrigation canals.

The Act proposes that the total minimum compensation shall be at least:

• four times the market value for land acquired in rural areas
• two times the market value for land acquired in urban areas

Besides the compensation, the Act proposes a wide range of extremely liberal rehabilitation and resettlement entitlements to land owners and livelihood losers from the land acquirers.

Along with the massive cost of acquisition, a major drawback of the Act is that land acquisition for a private sector company may take more than 50 months, with a series of mandatory steps and assessments that are required to be made by the company before the government initiates measures to acquire land. While the need for social impact assessment cannot be avoided due to inescapable environmental considerations in the backdrop of climate change and earth warming, bureaucratic procedural delays can be counted on for unnecessarily lengthening further the already cumbersome process of acquisition.

Answer : India has been in the news for its robust economic performance and for growth despite the recent global recession. The recent Indian Premier League suggests unbelievable investor confidence and provides great advertising opportunities, fantastic revenue, world-class sport, extraordinary entertainment, phenomenal television ratings and immense customer satisfaction. Yet, the incredible indices of development in India mask the inequity in the country and the human cost of the nation’s progress. For millions of Indians hunger is routine, malnutrition rife, employment insecure, social security non-existent, health care expensive, and livelihoods under threat. The vibrant economy, “the shining India,” is restricted to the upper classes, while the majority in Bharat eke out a meagre existence on the margins.

• Indices of wealth and development: The Gross Domestic Product (GDP), the indicator of economic growth, is employed to assess the wealth of nations and the well-being of societies. However, its adequacy to evaluate the human condition or the welfare of nations has been questioned. An increase in GDP reflects economic growth but neither take into consideration its sustainability, life expectancy, health and education of people nor its impact on the environment. An example of its biased assessment is that misfortunes for some, due to natural disasters and wars, also mean economic opportunity and wealth for construction, pharmaceutical and defence industries and an increase in the index.
• The Human Development Index (HDI) was conceptualised to focus on people-centred measures and policies, rather than on national incomes. The HDI employs life expectancy at birth, adult literacy and enrolment ratios and a measure of the GDP per capita to evaluate human health and longevity, knowledge and education and standards of living. While the HDI does provide a bigger picture when compared to the GDP, it has also been criticised for not capturing the complexity of the human situation.
• Inequity in plenty: The Gini quotient is a measure of inequality of income and wealth. The mapping of this parameter shows that many countries with high GDPs also have a high Gini index, suggesting that the measure of economic growth hides gross inequity and high human costs within countries. Recent attempts at evaluating human well-being use varied indicators such as environmental impact, government debt, diversity of species, etc. Bhutan has suggested happiness as an indicator of national well-being. Measures like the Net National Product take into account the depletion of human capital. However, the use of a single index to reflect well-being does not make these new attempts superior, only different. Nevertheless, most people will agree that any such measure should move beyond economics and economists; the debate must involve diverse stakeholders and the indicator(s) ought to express the multifaceted nature of human well-being.
• Capitalism and greed: The failure of communism, despite its ideals of a fairer society, to increase wealth resulted in its demise. Many nations now place their faith in capitalism and governments choose it as the strategy to create wealth for their people. The spectacular economic growth seen in Brazil, China and India after the liberalisation of their economies is proof of its enormous potential and success. However, the global banking crisis and the economic recession have left many bewildered. The debates tend to focus on free market operations and forces, their efficiency and their ability for self correction. Issues of justice, integrity and honesty are rarely elaborated to highlight the failure of the global banking system. The apologists of the system continue to justify the success of capitalism and argue that the recent crisis was a blip. Their arguments betray an ideological bias with the assumptions that an unregulated market is fair and competent, and that the exercise of private greed will be in the larger public interest. Few recognise the bi-directional relationship between capitalism and greed; each reinforces the other. Surely, a more honest conceptualisation of the conflicts of interest among the rich and powerful players who have benefited from the system, their biases and ideology is needed; the focus on the wealth created should also highlight the resultant gross inequity.
• Inherent talent or inherited advantage: Capitalism results in the creation of wealth. The supporters of the system argue that the “American dream” can be achieved by hard work, diligence and resourcefulness and can be replicated across the globe. They believe that the system rewards hard work and talent. However, even a cursory examination of the assets of and disparity across peoples suggests that those who succeed have inherited advantages and favourable playing fields, compared to those who did not. The focus on apparent merit does not take into account the different histories, the varied physical environment, the divergent contexts and the grossly dissimilar opportunities. The many economic policies of the International Monetary Fund and western financial institutions, driven by ideology rather than by reality, have resulted in further enslavement of many developing economies.
• The Indian context: The economic liberalisation and globalisation have resulted in massive and sustained growth in the Indian economy. Yet, an examination of the Human Development Index suggests that the country is poor on this measure. The trickle-down effect of development, talked about in theory, has little actual impact on the poor. The rights of the poor are probably more important than the rights of the rich who drive development. Economic policies should be clearly preceded by a careful assessment of their impact on the population, their lives and livelihoods. Care must be taken to ensure that regulations proposed by our legislatures and upheld by the judiciary are not pro-rich and at the cost of the rights of the poor.
• The need for regulation: Ancient wisdom argues that, under normal circumstances, the rich will get richer and the poor, poorer. Civilised societies will necessarily have to employ different standards to achieve an egalitarian social order. Such democratic ideals imply the use of regulation to curb the excesses of “laissez-faire” capitalism with its penchant for minimal controls. For example, the practice of forcibly acquiring agricultural and forest land, displacing the poor and tribal folk with the loss of their livelihood and culture is too big a sacrifice from these people in return for commitment of a fraction of the wealth of corporate houses in order to increase the GDP. “Progress and development” are high sounding clichés from capitalists and often spell the destruction of older forms of social existence. There is a need to foreground justice and equity, the basic precepts of enlightened nations. Without level playing fields and affirmative action, inequity will persist and increase, resulting in injustice to the vast majority of people who are without capital.
• Law and justice: It is generally believed that the theory of justice drives the practice of law. In reality, legal practice constantly engages with theory and re-equips it. It cites theory in specific contexts and provides perspectives, transforming and even re-making it. The demand for justice brings a case before the law; this claim puts the law under the scanner. Justice, then, renews the law and makes it contemporary; it extends its reach and re-interprets it. The demand for justice is never fully met, suggesting that the law needs to constantly keep up with the mandate for justice. The requirements of the context and the call of justice create the necessity for citing of the law in relation to the questions before it. Law-makers and the judiciary may opt to close the call of justice and renew the rule of the law in relation to the new question. Alternatively, they may take up the challenge and re-think, re-make, and cite the law, as best as they can, in ways that measure up to the call of justice. India needs to revitalise its statutes and transform its courts of law into courts of justice.
• Much of the debate on the creation of wealth employs a private language, replete with insider jargon. A refusal to comply with the unstated rules in such circles often results non-compliant voices being frozen out of professional circuits. These operations produce papers for academics, assignments for bureaucrats, policies for governments, wealth for capitalists and stories for the media, but they often discount the bigger picture that should dominate the discourse. The inequity is ignored, the discrimination disregarded, the ideology justified and injustice normalised. India should not only focus on economic growth but regulate its markets and economy with equity and integrity to provide justice for all its people.

Answer : When it comes to PPP, the country has invested the last decade-and-a-half in asset creation. So, a number of PPP concessions have been awarded in national highways and ports sectors. In the airports sector, private entities have developed metro airports at Bangalore, Hyderabad, Delhi and Mumbai through PPP concessions. In Railways, the concessions for the operation of container trains have been awarded under PPP. According to a World Bank report on private participation in infrastructure, private participation in 2011 was highly concentrated in just one country - India. The report ranks India as the largest market for PPP in the developing world. India alone accounted for over half of the total investments in new PPP projects in developing countries in 2011, when it implemented 43 projects which attracted total investment of $20 billion. But this is only half the battle won.

• The country has now entered an inflexion point in PPP where it is moving from asset creation to operation of projects. The shift is leading to problems in the absence of an institutional mechanism, like those present in other countries, to deal with renegotiations. There is suddenly a spate of PPP projects which have come up for renegotiation. GMR and GVK have walked out of recently-won mega-highway projects; the Gurgaon Expressway is in trouble and Delhi Airport has been shouting for resets. Adani Power and Tata Power are struggling to transform their imported coal-based projects into profit-making ventures on account of changes in input costs.
• The reasons for the failure of PPP projects in India are many, ranging from poor preparations, flawed risk-sharing, inappropriate business models and fiscal uncertainties to vested interests leading to development of skewed qualification criteria. No wonder the country has already entered a phase where PPP projects are increasingly running into issues. Interventions from regulatory bodies like Central Electricity Regulatory Commission and government agencies to make extra-contractual provisions to ensure projects continue to be implemented and operated in energy and infrastructure sectors are evidence of this phase.
• One of the key elements of successful PPP projects is clear understanding of the proposed asset and prudent sharing of risks and rewards associated with the asset. Due to inaccuracies in these, the risk-sharing and mitigation measures prove inadequate and inappropriate. Technical data availability and its quality has been a serious constraint in several PPP projects in India. Ill-equipped consultants, selected through the lowest bid, may also be one of the root causes. When the contract becomes untenable and renegotiations within the given framework are unachievable, the parties are likely to part ways since no developer and not even government agency would like to bleed perpetually. The cost of making a mistake in the planning stage is substantial, but in several such planning processes, we tend to focus on saving small and risking big.
• However it is not appropriate to shoot down the entire concept of PPP on the basis of some failure. The nature of problems being faced by PPP projects varies from one project or sector to another. One of the reasons for the problems with the few projects could be that construction and operation were done by two separate entities. This may have led to lack of integration. So, the lesson to learn is that design and construction risk should be properly taken care of on life cycle basis.

Answer : Copyright law applies to “works of authorship” that are fixed in a tangible medium of expression (such as a CD or a book), and applies automatically. Cospyright prohibits the reproduction, distribution, modification, public performance and public display of such items that is “substantially similar” to the original. For example, if the software is protected only by copyright, anyone can avoid paying a license fee by re-creating the software from scratch without copying it.

• Patents protect “inventions” that are useful, non-obvious and novel, and must be approved by the Patent and Trademark Office. The scope of the final patent may be quite different than the initial application.
• Trade secret law protects any information that is not “commonly known” and which the company has taken reasonable steps to keep in confidence. The protection is more limited than patent and copyright protection: Trade secret law prevents only misappropriation, which means wrongful taking. Trade secret law could protect secrets in the source code of the software, for example.

Answer : Corporate Social Responsibility (CSR) is a form of corporate self responsibility integrated into business model which functions as a built-in, self-regulating mechanism whereby a business engages in actions that appear to further some social good, beyond the interests of the firm and that which is required by law.

New Companies Bill, 2013 which replaces the old Companies Act, 1956 makes CSR a mandatory obligation. It states that 2 % of average net profit of last 3 years shall be spent on CSR by companies having net worth of Rs. 5 billion or more, turnover of Rs. 10 billion or more, or net profit of Rs. 50 million or more.

However, its implementation in right earnest faces certain challenges which include:

• “CSR” as a definition is vaguely defined.
• It puts additional financial strain on companies since they already pay taxes and hence, might pinch them during recession or sluggish growth. Further, when the whole concept was voluntary on the part of the organization ; CSR as a moral obligation was adhered-to but with the introduction of the necessity clause, the companies may feel an added burden and constriction. And, even after this mandatory clause, the newly introduced Bill does not speak unambiguously on the penal provisions; if a particular company does not bill-in for this mandate than the Bill does not in any way defines about the aftermath vis-à-vis regulation and punishment.
• Further, the Corporate Sector can put up a valid argument that all their profits has been adequately taxed-for; thus if such voluntary work for social upliftment also comes with a necessity clause then it can be construed as a sort of double-taxation
• Social and promoting inclusive growth is work of the State for which it has been mandated and thus calling for the corporate sector to necessarily pay from their legally earned profit can also be called as outsourcing governance and in a democratic nation like India is not seen favorable.

Other provisions and their implications are:

1. The Bill mandates companies to have at least 1/3rd of the board of directors to be independent, to promote greater transparency and accountability in governance. However, their independence has been questioned by experts as they are appointed and paid by promoters. Secondly, allowing hold of the post of maximum 20 directorships for a single individual may lead to dilution of his role.
2. The Bill addresses the issue of gender diversity, by incorporating the clause of having at least one woman among the board of directors. The challenge lies in supply of women professional at higher level when even in the global standard, there is highly discouraging data.
3. For independent auditing and accounting, NFRA (National Financial Regulating Authority) has to be constituted by Centre to deal with policies of accounting and auditing.
4. Issuance of DIN (Director Identification Number) and bringing them under the watch list of bureaucracy may discourage experts to be on board as “independent director”.

Answer : India enacted legislation relating to patent in 1970 and its patent industry is regulated by Indian Patent Act, 1970. Initially, it allowed only product patent, and no process patent. After the LPG (Liberalisation, Privatisation and Globalisation) era in 1991, Pharmaceuticals companies grew at an unprecedented pace. However, India had to revisit its patent laws in accordance with the provision of TRIPS agreement where India, along with many other countries, agreed to grant 20-year patents on pharmaceutical products from January 1, 2005.

Novartis filed patent for ‘Glivec’ and benefitted but later it tried to incorporate ‘beta crystalline form’ of Glivec and tried to monopolize the generation of Drugs. Initially, Madras court rejected its appeal on trying to attempt “Ever greening” of drugs. Later on further appeal, the Supreme Court said that the Patents (Amendment) Act, 2005 established that the “mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance” is not an invention — for the purpose of patenting. The court held that patents can be granted only for medicines that are truly new and innovative. The Supreme Court in its verdict said that since there is no data to prove that the beta-crystalline form of ‘Glivec’ had proved to have enhanced efficacy, hence SC rejected Novartis patent application for ‘Glivec’.

Pros of the Decision are:

• It will prevent monopolization of drugs.
• Will encourage generic industry and lower down the prices of the drugs.

Cons of the Decision are:

• It might discourage FDI in pharmaceuticals.
• Pharma industry may not invest in research and development (R&D)

Answer : Government of India decided to bring out the National Manufacturing Policy to bring about a quantitative and qualitative change with the following six objectives:

1. Increase manufacturing sector growth to 12-14% over the medium term to make it the engine of growth for the economy. The 2 to 4 % differential over the medium term growth rate of the overall economy will enable manufacturing to contribute at least 25% of the National GDP by 2022.
2. Increase the rate of job creation in manufacturing to create 100 million additional jobs by 2022.
3. Creation of appropriate skill sets among the rural migrant and urban poor to make growth inclusive.
4. Increase domestic value addition and technological depth in manufacturing.
5. Enhance global competitiveness of Indian manufacturing through appropriate policy support.
6. Ensure sustainability of growth, particularly with regard to the environment including energy efficiency, optimal utilization of natural resources and restoration of damaged/ degraded eco-systems.

Answer : Unit Links Insurance Plan (ULIP) and Mutual Fund (MF) are the two most preferred options for a part time investor to invest into equity. First of all it is important to understand the main differences between ULIP and MF. Mutual Fund is pure investments. ULIP are combination of Insurance and Investment.

• Since insurance money is loved by long term investors so in the garb of providing insurance cover (that was meager portion of the total investment portfolio of ULIP before September 1st decision) many hybrid insurance products came into market that allocated even less than 5% of the premium for insurance and the other was used for buying equity. Contextually speaking they have become more of a conventional MF where the ordinary investor provided their money to be invested in a varied portfolio which happened under the expert guidance of fund managers.
• Since MF money is equity investment money so a lot of regulatory strictures were built into it. This provided for a natural inclination of financial “regulatory-arbitrage” to favor ULIPs over MF. Probably this was the reason that made an abnormally high number of fund houses to open ULIPs under the garb of insurance whereas actually they were plain vanilla investment products.
• This was negatively affecting MF market and on the other side the ordinary investors in the name of insurance cover was getting into uninformed investment territory of equity market. Resultantly, market saw a lot of “miss-selling’ and ‘push-selling’ to the ordinary gullible investor both in the ULIPs and also in MF area. There was a lot of ‘churning’ in the MF domain and this was being miss-sold to the asymmetrically informed investor on the pretext of handsome return. In reality this was just filling the coffers of fund houses-the Trustees of MF that use to earn from the exit and entry load of these frequent selling-buying. This was further incentivised by making the agents monetary rewards from the ‘booty’ that they make their fund houses earn by this excessive churning. As a result of all this there was utter ambiguity in the market and among the investors.
• Apart from this there was also regulatory turf war between IRDA and SEBI over these ULIPs that was adding on to this ambiguity. Post the 1st September decision the scenario has become clearer. Now IRDA has been restored with the regulatory position of ULIPs thus clarifying to the market that it is insurance product where maximum portion of premium should be allocated to the insurance coverage.
• The lock-in period for all unit-linked products (ULIPs) has been increased from three years to five years, including the top-up premiums, thereby making them long-term financial instruments which basically provide risk protection. This has reduced the regulatory arbitrage between both these products thus giving them level playing fields. Earlier ULIPs and MF were both cutting into the market of one another with the main losers being the ordinary investor. Post this decision by MoF which also clarified the regulatory mechanism of both the financial investment portfolio the ordinary investors can have a sigh of relief.

Answer : The Fiscal Responsibility and Budget Management Act, 2003 (FRBMA) was enacted to institutionalise financial discipline, reduce India’s fiscal deficit, improve macroeconomic management and the overall management of the public funds by moving towards a balanced budget. The main purpose was to eliminate revenue deficit of the country (building revenue surplus thereafter) and bring down the fiscal deficit to a manageable 3% of the GDP by March 2008. However, due to the 2007 international financial crisis, the deadlines for the implementation of the targets in the Act was initially postponed and subsequently suspended in 2009.

The main provisions of the FRBM Act in its original form were:

• The revenue deficit as a ratio of GDP should be brought down by 0.5 per cent every year and eliminated by 2007-08;
• The fiscal deficit as a ratio of GDP should be reduced by 0.3 per cent every year and brought down to 3 per cent by 2007-08;
• The total liabilities of the Union Government should not rise by more than 9 per cent a year;
• The Union Government shall not give guarantee to loans raised by PSUs and State governments for more than 0.5 per cent of GDP in the aggregate;

Further, the Union Government should place three documents along with the budget, namely, the Macroeconomic Framework Statement, the Medium Term Fiscal Policy Statement and the Fiscal Policy Strategy Statement. In addition, the Finance Minister will have to make a statement at the end of the second quarter on the trend of fiscal indicators and corrective measures if they deviate from the budget estimates beyond the extent stipulated in the FRBM.

The availability of three background documents of the budget and a medium term review helping to critically review the budget proposals and projections while enabling continued debate on fiscal management throughout the financial year. This helped in improving accountability and facilitated in better fiscal management.

Initially, the FRBM Act proved to be effective, but due to the global financial crisis in 2008, this failed to achieve its objective in stipulated time. However, even its limited success has been hailed and in 2011, PMEAC (Prime Minister’s Economic Advisory Council) recommended for reinstatement of FRBM Act.

Answer : A tax expenditure program is government spending through the tax code. Tax expenditure can be defined as the “revenue foregone” due to provision of tax laws and various policies that allow:

• Deductions, exclusions and exemptions from taxpayers’ taxable expenditure, income or investment.
• Deferral of tax liability,
• Preferential tax rate.

For example, sops on excise and custom duties, etc. lead to the loss of government revenue and leads to tax expenditure.

Tax expenditures are considered “off-budget” spending by most economists and budget experts. Tax expenditures are easier to pass through legislature than increases in appropriations spending. They are easily seen as free benefits, when government grants are viewed as giveaways.

Tax expenditure affects the budgetary policies of the government. For example, housing sector in particular and real estate in general have been accommodated for “tax expenditure”, wherein Union Budget (2013) mentions of “First home loan for bank up to Rs. 25 lakh isentitled to deduction of interest up to Rs. 1 lakh. Other provisions of tax expenditure with respect to Housing Sector:

• Exemptions allowed for Deduction of HRA (income) tax.
• Exemptions allowed for Interest payment for housing loans.
• Subsidy given on various units for housing sector, etc.

Answer : The Food Security Bill aims to provide subsidized food grains to approximately two thirds of India’s 1.2 billion people. Under the provisions of the Bill, beneficiaries are to be able to purchase 5 kilograms per eligible person per month of cereals at Rs 3 per kg rice, wheat at Rs 2 per kg and coarse grains (millet) at Rs. 1 per kg.

Pregnant women, lactating mothers, and certain categories of children are eligible for daily free meals.

At the domestic front various apprehensions are raised in its effective implementation. They are:

• Expected to aggravate the food inflation.
• CACP (Commission on Agriculture Costs and Prices) fears severe imbalance in the production of oilseeds and pulses.
• Experts believe it to cast its effect on estimated cost of GDP by aggravating fiscal deficit.
• Loss of initiative in agriculture and loss of competition due to government dominance of grain market.
• Shift in consumer demand patterns.

Food Security Bill may lead to breach of agriculture subsidy limits fixed by the World Trade Organisation (WTO) and may attract penalties if some global rules are not amended. At the WTO, the developed countries are willing to offer a ‘peace clause’ that will allow developing nations, such as India, legal protection against action by other members for breaching food subsidy limits prescribed under the agriculture pact. This would be offered for a two/three-year period within which time the members hope to find a long-term solution to the issue.

Answer : Different types of agricultural subsidies given to farmers at the national and at state levels are of two types – Direct subsidy and indirect subsidy.

Direct subsidy:

1. Raw materials oriented subsidy like fertilizer, seed subsidy, etc.
2. Subsidy on energy inputs like electricity (power) and Diesel, etc.
3. Other infrastructure related subsidy like irrigation, etc.
4. Procurement prices net against natural calamity like MSP, FRP, etc.

Indirect subsidy:

1. Agricultural income is not taxed in India.
2. Various incentives provided for the marketing of food grains like Mandis, etc.

Distortions created by agricultural subsidy could be analyzed by its impact on various aspects like:

• The magnitude and incidence of subsidies, explicit and implicit, have spun out of control; their burden on government finances being unbearable, and their cost being felt in terms of a decline of real public investment in agriculture.
• Agricultural subsidies distort the cropping pattern and lead to inter-regional disparities in development.
• Subsidies on scarce inputs like water and power have distorted their optimal allocation.
• Subsidies basically cover only inefficiencies in the provision of governmental services and subsidies are mistargeted.
• Agricultural subsidies are biased against small and marginal farmers and how should government services be priced or recovery rates determined.
• The impact of subsidies on the quality of environment and ecology.

Answer : India has already seen the ‘green’ and ‘white’ revolutions in its food industry come to pass; it now seems well on its way to realizing a ‘pink revolution’ too; the modernization of meat production processes.

India is the largest dairy and milk producer worldwide. In 2012, it also became beef exporter as well. With respect to the prevailing malnutrition in the country, it seems pertinent that there should be focus on promotion of meat industries and there shall be promotion of “pink revolution” and it should include aspects of modernization of abattoir, cold storage facilities, etc.

The FAO outlined four steps that should be taken if India’s food industry is to successfully go pink. These recommended steps were:

• setting up state of the art meat processing plants;
• developing technologies to raise male buffalo calves for meat production;
• increasing the number of farmers rearing buffalo under contractual farming;
• And establishing disease-free zones for rearing animals.

It cannot be denied that industrial agriculture has led to the production of enormous amounts of food, using minimal labor and significantly lowering operation costs. However many of the true costs of the industrial meat production industry are part of a flow on effect, meaning the price tag does not reflect the cost of the effects on the public’s health, rural communities, animal welfare and the environment.

The ethical and environmental implications of ‘pink revolution’ are:

• One calorie from animal protein requires 11 times as much fossil fuel than required from one calorie of plant protein. Energy released is accumulated in the various processes like growing feed, transporting feed, transporting animals, processing animals, and packaging of meat, transporting meat and keeping meat cold.
• Animals excreta produced are used as fuels but it also is a source of contamination and pollution of ground water.
• Apart from ethical considerations like treatment of animals and keeping them in compact area, there is also significant risk to human health and environment.

Considering these, there should be a fine balance of supplementing “Pink revolution” with other revolutions for dietary needs like blue revolution, green revolutions, etc. to promote better nutrition and health to people.

Answer : It was in 1990s, the first initiation towards economic liberalization was undertaken by Dr Manmohan Singh, the then Finance Minister of India. Liberalization along with globalization has greatly influenced the Indian economy and made it a huge consumer market. This led to the growth of service sectors, industrial sectors and the agriculture sector to a great extent.

Besides, the impacts of liberalization on Indian companies are:

• Greater operational autonomy
• Greater financial flows due to increased FDI and FIIs.
• Increase in innovative products.
• Improvement in delivery of services.
• Better corporate governance.
• Increasing transparency and accountability in function.

Now, the question is, are they competing with MNCs satisfactorily?

• Given its educated manpower, especially engineers, and English skills, India is better than its neighbours. But there are important challenges such as leadership mindset, availability of an international ready talent pool, customer acceptance, and market understanding and branding.
• One of the greatest challenges before Indian companies is not having enough people with knowledge and experience of international markets, customers and suppliers. As a result of this, the management bandwidth itself becomes limited. Even if one makes an acquisition, making it work is something that Indian companies are still learning. Most companies do not understand sales and distribution in the international context.
• Though Indian companies have grown in volume and have become much more diversified, barring some sectors like services, pharmaceutical companies, etc. Indian companies lag behind MNCs in certain aspects like research & development (R&D). For example, General Electric (US headquartered MNC) invest more on R & D compared to their Indian counterpart. Secondly, most of the innovative and creative product at high end use owes its origin to MNCs like Microsoft, Google, etc.

Answer : The focus of land-reform policy in India was to increase agricultural productivity. Besides, it should help in creating conditions for evolving as speedily as possible as an agricultural economy with high levels of efficiency and productivity.

On the other hand, the ways in which land is taxed has implications for poverty reduction through agricultural growth. In theory, if the state taxes the value of land more heavily and productive activity less heavily, the outcome will almost certainly be more efficient land use, increased production and increased demand for labour. This will increase real wages for working people and probably broaden the ownership of land by bringing more land onto the market at a lower price.

The National Land Reforms Policy formulated in 2013 focuses on those aspects of land reforms which if implemented in true letter and spirit will have the potential to tilt the balance in favor of the landless and poor.

There are numbers of difficulties while designing and implementing an agricultural friendly land reform. They are:

1. Land, being a state subject has federal implications and hence, there is difficulty in achieving unanimity on legislative front.
2. Small size of land holdings further has created structural problems.
3. Obsolete land laws.
4. Patriarchal mindset still prevailing in society.

Answer : FDI entry into multi-trade retail sector on supply chain management will lead to greater investment in back-end and front-end infrastructure, minimization of waste, cold storage facilities, greater export potential, greater employment opportunities to people in general and farmer friendly market.

• The cold storage chains set up by international retailers will solve the perennial problem of wastages. As much as 40 % of India’s fruits and vegetables rot due to lack of processing facilities. The foreign retail giant houses like Wal-Mart and Carrefour can bring better managerial practices and IT- friendly techniques to cut wastages and set up integrated supply chains to gradually replace the present disorganized and fragmented retail market. According to McKinsey, India wastes nearly Rs. 50,000 crore in the food chain itself. With IT application, the modern retail stores can cut transaction costs such as due to inventory, delivery and handling.
• That is precisely how the US based Wal-Mart grew to be a giant because it reduced its distribution costs to 3% of sales compared to 4.5% of others.
• These international retail outlets can help develop the food processing industry which requires $28 billion of modern technology and infrastructure. Also a more advanced and efficient production and distribution cycle shall evolve. An improved distribution system and better supply chain management shall make an improvement in the product basket from India for exports.

Answer : As per current FDI policy in the retail sector, in multi-brand segment, where only 51 per cent FDI is allowed, it is “mandatory” for the company to procure 30 per cent from SMEs.Foreign retailers in multi-brand segment will have to make a minimum investment of 100 million in India, of which 50 per cent must be in the back end chain.Also FDI is allowed only in cities with a population of more than 10 lakhs as per the 2011 census. Still the FDI has not picked up as per expectation.

Reasons can be summed up as:

1. Lack of unanimity on issues in Centre and State.
2. Land acquisition has been a major concern.
3. Investor’s sentiments have not been high due to conflict between judiciary and executive.
4. Policy paralysis at various fronts
5. Gloomy financial scenario worldwide.

Answer : 115th Constitutional Amendment Bill was introduced in the Parliament for the introduction of Goods and Service Tax (GST). The rationale for introducing GST in India could be attributed to:

• Simplification of tax laws
• Broadening of tax base and minimizing exemptions
• Improve tax collections and boost India’s economic development by breaking tax barriers between States and integrating India through a uniform tax rate
• Efficiency as well as economy in tax collection

There are number of reasons which have contributed to the delay in roll out of its regime. The passage of the Constitutional Amendment Bill requires a two-thirds majority to pass in both houses of Parliament and more than half of state legislatures also need to give their assent. Hence, without the assent from states it is not possible to roll out GST.

The Goods and Services Tax, which will replace most of the indirect taxes with one single levy, was to originally rollout from April 1, 2010 but has been delayed because of the opposition from states. States like Karnataka and Gujarat opposed the deadline i.e. 1st April, 2010 as having inadequate ground level preparedness; some states also pointed out that the preparation of IT HSN (Harmonised System of Nomenclature) code and legislation is essential for tracking the movement of goods and services.

Compensation to states in lieu of the reduction in Central Sales Tax is proving to be another thorny issue that has the potential of derailing the centre-state talks on GST. Besides, ambiguity in consensus clause of GST council in Bill whether it calls for majority or unanimity, exclusion of certain commodities from GST which is contrary to recommendations of 13th Finance Commission, and different views on “Dispute settlement authority” constitution are some other cause of debate.

Answer : One key argument in support of PPPs from the public-sector perspective is that they avoid limitations on public-sector budgets, which today are one of the major restraining factors for developing economies. They also provide considerable improvement to the level of service delivered to the public by introducing private-sector efficiencies as well as innovations in working methods and uptake of new technologies. PPPs free up the public sector to act as a regulator and thus concentrate on service, planning and performance monitoring.

Besides other pros of the model are:

• Financial constraints are taken care of and greater ease in flow of money.
• Operational efficiency is catapulted to higher level.
• Improved accountability and greater transparency.
• Greater diversification is achieved as public sector eases the areas wherein private sector can venture.

PPPs come with their own set of challenges. The cons of the model are:

• Improper estimation of project costs,
• longer and more expensive procurement processes
• Unrealistic projection of cash inflows from the facilities created.
• Inadequate assessment of risks involved and clarity of sharing of risks.
• Overrun of cost and calculations going haywire.
• Since not properly defined, hence doesn’t come under the audit mechanism of CAG and hence, room for pervasive corruption.

Pros of PPP model:

• Integrates good factors of both public and private domain.
• Financial constraints are taken care of and greater ease in flow of money.
• Operational efficiency is catapulted to higher level.
• Improved accountability and greater transparency.
• Greater diversification is achieved as public sector eases the areas wherein private sector can venture.

• International trade served as an engine of economic development for many years. The export growth accounted for over 60% of the GDP growth of the developing countries and 40% of GDP growth of least developed countries between 2000 and 2005. The share of the developing countries in the world merchandise trade exceeded one third of the world trade and developing countries accounted for more than half of the world trade in 2007. However, the growth is concentrated in small number of developing countries and among few sectors. Even though the south-south trade increases significantly, the developed countries especially united States remain major market for the exports. The present economic down turn in the major export destinations of the developing countries and the consequent trade protectionism, delay in operationalisation of free trade agreements (e.g. Indo -ASEAN free trade agreement), the domestic subsidies program of the developed countries like US cotton subsidy program which reduced the cotton prices significantly and European Unionsugar production program which helps the farmers to sell their product below the production cost, infrastructure bottle necks and low skill capacity are the other factors that led to failure of trade to serve as an engine of economic growth.

Answer : The Damodaran Committee on customer service constituted by the RBI submitted its report in August 2011. The recommendations are

• It has recommended active involvement of the boards of banks to guarantee customer satisfaction.
• To include customer service and grievance redressal as a mandatory parameter in the performance appraisal report of every employee.
• It has suggested an agenda on the level of implementation of the Bank's Code of Commitments to Customers and an overview on the grievance redressal mechanism in the bank should be placed before the bank every quarter before the Customer Service Committee.
• Every board should ensure they have comprehensive policies for customer acceptance, care and severance.
• Emphasising on 'customer centricity', it has recommended that bank board’s should evolve human resources policies which will "recruit for attitude and train for skills."
• Branch Level Customer Committee meetings should be replaced with a meeting of customers of all banks of that area and be held in the presence of representatives of banks at periodic interval.

Answer : Small & Medium Enterprises Expo (SME Expo) provides the perfect platform for Small and Medium Enterprises from around the globe to interact, learn, develop lasting business relationships and explore new business opportunities. In short, it brings together people interested in doing business with each other - it connects buyers with sellers and start-ups with investors. Countries in the Middle East region can effectively create new employment opportunities for their youth by promoting and developing small and medium enterprises (SMEs) through a series of targeted support programmes, like learning how to use UNIDO software for effective business performance management. It helps entrepreneurs to monitor key performance indicators, productivity, quality and competitiveness of their enterprises, develop new business culture and knowledge gain. A strong entrepreneurial culture is essential for the future competitiveness of the economy and for generating economic growth. SMEs can create many jobs within a short period of time by increasing the revenue base and adding to the growth of national income, and may provide substitutes for imported goods.

• Small and Medium Enterprises (SMEs) occupy a dominant position in almost all economies of the world. More than 99 per cent of enterprises in European countries, USA and Japan are SMEs, contributing to more than 50 per cent of employment. Innovations, new technologies, highest possible performance and efficiency are among the main issues challenging SMEs in Arab countries. India and the Northern Emirates have enjoyed historical relations and have been dynamic partners in the trade and economic fields. India-UAE trade, valued at US$ 180 million per annum in the 1970s, is today in excess of US$ 44 billion making the UAE one of India's leading trade partners. Of the bilateral trade approximately 70% accounted from Dubai alone.
• Indian SMEs can make new alliances, explore Middle East and North Africa (MENA) market and opportunities, and expand their network. It will help Indian business to explore business opportunities, learn the latest market trends, establish contacts, exchange views, etc.
• Besides it will be an opportunity for Indian SMEs to display products and services as well as acquire latest technology and promotion of contract manufacturing and investment.
• It will also act as a gateway for Indian SMEs to accelerate their business network. Moreover it will provide a common platform to develop new trading and build new contacts in the fields of garments and textile, petrochemicals & plastic Industry, arts & handicrafts, education and specialized training, etc.

Answer : The solution has been designed to prevent a future debt crisis. In this direction:

• It hands the European Commission greater powers to sanction countries that do not keep down their debts and deficits.
• The European Commission can impose fines of 0.2 per cent of GDP which can only be overturned by a majority vote of member states in the council.
• The European Parliament has been given the right to call finance ministers from countries that have been warned.
• It also provides for European semester so as to annually assess national budgets.

The Stability and Growth Pact (SGP) is a rule-based framework for the coordination of national fiscal policies in the economic and monetary union (EMU). It was established to safeguard sound public finances, an important requirement for EMU to function properly. The Pact consists of a preventive and a dissuasive arm.

A set of legislative measures giving the European Commission the ability to impose sanctions on euro zone countries that fail to control high debts and deficits was approved by MEPs.

Following nearly a year of haggling between the European Council and the European Parliament-which saw MEPs make thousands of amendments to the original proposals-the so-called six packs passed in a series of tight votes during the Strasbourg plenary session.

The rules, designed to prevent a future debt crisis, hand the commission greater powers to sanction countries that do not keep down their debts and deficits. And in a victory for MEPs over France, a decision by the commission to impose a fine can only be overturned by a majority vote of member states in the council.

In addition, the parliament will have the right to call finance ministers from countries that have been warned to hearings, while the European semester provides for the annual assessment of national budgets. Falsified debt and deficit statistics can lead to a fine of 0.2 per cent of gross domestic product. And countries will be obliged to act pre-emptively to maintain the health of economies threatened by imbalances such as a housing-bubble.

Jerzy Buzek, president of the parliament, said the adoption of the six packs was "good news" for the EU. "We have developed a powerful and resistant armour against any future crisis," he claimed, adding that, "we cannot turn the clock back, but the package will ensure that member states' budgets will be credible."

The six packs are about more than sanctions, it is about prevention. It recognises that prevention is better than cure. It is also about more than fiscal discipline, it is about keeping European economies competitive to create jobs and achieve sustainable growth.

Answer : The WCO's primary function is to enhance the efficiency and effectiveness of member customs administrations, thereby assisting them to contribute successfully to national development goals, particularly revenue collection, national security, trade facilitation, community protection, and collection of trade statistics.

Answer : With India's freight traffic projected to grow at more than 7% p.a., the Government of India plans to urgently add more freight lines along these congested routes by establishing dedicated freight-only lines, mostly paralleling the existing quadrilateral. These corridors will help India make a quantum leap in increasing the railways' transportation capacity by building high-capacity, higher-speed dedicated freight corridors along the Golden Quadrilateral.

• The government's DFC program is proposed to be completed in stages, with the western corridor (Delhi-Mumbai) and the eastern corridor (Ludhiana-Delhi-Kolkata) being the first two to be developed. These corridors will help to boost India's industrial productivity by transporting raw materials to industrial hubs and manufactured goods to ports in a faster and more efficient manner, and at reduced costs. They will also provide a better standard of service to passengers, especially where this service has suffered due to the mixing of faster passenger traffic with the slower moving freight trains. Improvement of the eastern corridor will also contribute to the development of the proposed Trans-Asian Railway involving infrastructure investments in India, Bangladesh, and countries further east. Thus in a way it is complementary with the golden quadrilateral than competitive.

Answer : Repo rate is the rate at which RBI lends money to other commercial banks and Reverse repo rate as the name suggests is the Rate at which RBI borrows from other commercial banks. RBI has these interest rate instruments at its disposal to regulate the monetary policy of India. Both the repo and the reverse repo are treated as rates to control the short term money supply in the market. Officially they are considered as the Liquidity Adjustment Facility windows.

• Rise in these rates has clear meaning that there is excessive liquidity in the market and RBI wants to suck the extra money so that the financial market do not get ‘overheated’ under the fire of speculation. So, rise in these rates means that RBI is concerned about inflation, and wants to pass on the signal to the banking fraternity that they must increase the lending and thus the deposit rate so that extra cash is removed from the market. These monetary tools at the disposal of RBI also has symbolic meaning and with any fine tuning with these rates RBI wants to create a “domino-effect” to regulate the financial market.

Answer : India just hosted the costliest Common Wealth Games (CWG) ever in its history. Post a fairly good show that the nation was able to present to the international world now with the game ended a frank analysis can be done. Since more than one lakh crore rupees was involved from the State’s exchequer it becomes important that a cost benefit analysis is done.

• Certainly India is a nation that is home to world’s largest number of poor people, it is also home to highest number of malnourished children thus showing the maximum child mortality in absolute numbers.
• So, a point of view can be that such costly organization cannot be afforded by nation like India and this view comes out of the economic rate of return on investment. But we also cannot overlook that such events are important to showcase a nation’s might’s and heights. India coming second in the medal tally after Australia-the best she has ever performed at the CWG adds on to the positive sentiments as a nation. Moreover if we analyze even cost benefit analysis criteria for hosting such events than also it is fairly justified to have such events at regular intervals. But here it becomes mandatory that we enlarge the definition of cost benefit analysis including the intangibles and also for the projected benefits in the future which can be calculated on various Statistical methodologies like the cash discount method.
• What Delhi saw as improvement and increment in its civic infrastructure with newer satellite township densities that has come up will certainly pay-for in the coming days. Most important and underlying part of these games was that Delhi people learnt to be more disciplined as far as their interaction with public utilities is concerned. Traffic rules were strictly followed and experimentation of making a lane reserved for CWG also threw up newer visions about traffic control. All these are sadly not included in the strict economic terminology of cost benefit analysis and thus based on this we may be unjustified in judging the CWG and its contribution.

Answer : Wadhwa Committee looked into the matters related to the targeted Public Distribution System and found that there was large scale corruption resulting from diversion and leakages of food grains meant for the poor populace of the country. The committee suggested that PDS operations be computerized and human intervention be reduced to the extent possible, so as to check the diversions and leakages which plague the system at present.

Recognizing the fact that the need of the hour is the end to end computerization of the Public Distribution System, the Committee opined that if the disbursement to the beneficiaries in the State can be equated to the allocation to the State, there can be no diversion. In order to achieve this objective the first and foremost is the automation of allocation process at all stages. The State Government gets allocation of food grain from the Central Government through the Food Corporation of India (FCI). Then the State makes District wise allocation. The District Supply Officer then makes allocation to each Block/Taluk, from where allocation is made to each FPS (Fair Price Shop). It is necessary that each of these steps is computerized.

The committee also found that there is lot of pilferage at every level and no foolproof central monitoring system is there. Other deficiencies of this system are:

• Multiple ration cards being issued under a single name
• Faulty system of issue and record keeping
• Pilferage - PDS food grains find way to market and all the lot don’t reach the eligible/needy person
• No biometric identification for the users
• No central monitoring system to track the carriage trucks
• The delivery mechanism has no RFID (Radio Frequency Identification Device)
• Thus the committee has brought to the fore the deficiencies in the present PDS and has also recommended ways to reduce them. The onus now lies in the hands of the government to accept the recommendations and implement them so that the poor or the country get the justice.

Answer : China and India both are the most vigorously growing economies in this doomed scenario of financial recession that the world is into. Most interesting part of this growth-region that is made up of these two neighbors is that both are growing on different business models.

• India has over time with English educated middle class population has emerged as the service hub whereas China being a vast nation with abundant resources and huge floating population from the rural hinterlands to Eastern coastal industrial belts has seen some remarkable growth in the manufacturing sector. With handsome return on investment by FDI showing in these two nations in a global slowdown scenario, a lot of investment is getting into these two nations, according to their specific expertise.
• Since it is economically believed hypothesis that for each 100 US dollar invested in service sector there is employment generation for 47 people whereas for manufacturing sector it is 8 people. The reason behind this being the increased mechanization in the manufacturing sector makes machine to replace manual labor thus reducing the employment potential of this sector.
• Based on this analysis, China and India are seeing a totally different scenario as far as employment generation is concerned by the FDI money. India being service sector hub with expertise in call centers (of all genres), financial services and IT services has some handsome and constructive engagement of people with fair labor laws and salaries. This is further strengthened by the fact is India is a democracy unlike China that has politburo based single party Communist State where human rights rarely captures the centre point of public discourse.
• On the other hand this scenario is different in China. Though manufacturing sector is more capital intensive so even though China is attracting more Capital through FDI when compared to India but the urban-employment generation in China is relatively less intense. Moreover there are flax labor laws and poor salary structures. All this also makes China a more unequal society.

Answer : Uruguay round negotiations in 1995 and the resultant World Trade Organisation (WTO) that called for international trade between nations on equal footings introduced many changes. Trade related to goods, services, people (immigrants skilled labor i.e. on-site workers) and Capital was to be made more “impartial” so that there is gradual reduction in the treatment for these factors of trade arising from the host nation and from the imported country. Still there is lot of hiccups as far as a mutual consensus is to be developed among various nations. Still the talk is stuck post the Doha Development Round talks.

• As far as TRIPS is concerned there are conflicting views for it among the developing and the developed nations. The IPR regime that had to be followed uniformly could not happen and there is country specific intellectual property definition particularly in the new emerging fields of medicine, pharma, nanotechnology, environmental science, microbiology etc. The emerging economies are not ready to comply by the “liberal” definition of intellectual property that they were forced to comply in the other WTO negotiations at Geneva, Singapore and Seattle when the emerging economies were not that organized like they have formed unions now like BRICS, IBSA etc. So these developing nations were easily pressurized to comply by whatever demands that was put forward by the developed nations at the negotiating table. The “liberal” definition of intellectual property makes the well established MNCs from the Western economies that are on the throes of technical expertise, patent even the naturally evolved things like a particular phenotype-expressing gene link or any micro-organism. Adding to this is the unresolved ‘ever greening’ clause in the IPR draft bill that tends to makes their exclusive marketing rights of any product perennial. This step particularly harms the terminally ill patients like AIDS patient who need cheaper version i.e. generic version (in this the developing nations like India has build expertise) of anti-retro viral drugs that mostly are invented by the rich MNCs who have a lot of corporate and Federal funding for newer inventions. Moreover, this has steepened the trade conflicts between nations divided among the developing Southern nations and the developed Northern nations.

India being a signatory to World Intellectual Property Organisation convention

• Is pledged to gradually move towards a “product patent” regime from the present “process patent”.
• It has initiated this process from 2000 itself.
• Moreover India is also making its own patents globally registered so that it can reduce incidents like that of Basmati and turmeric.
• Also an autonomous body under Sam Pitroda has been esatablished namely National Knowledge Commission that caters to compiling all inventions and traditional knowledge that India has. This will reduce instances like plagiarism for economic gains by the rich nations having financial muscle to fight protracted legal wars.
• India is also improving upon its regulatory framework as far as piracy is concerned by bringing in constructive amendments in its Copyright Act of 1958.

Answer : Energy is the prime mover of economic growth. Availability of energy with required quality of supply is not only key to sustainable development, but also the commercial energy has a direct impact and influence on the quality of service in the fields of education, health and, in fact, even food security.

The approach of Integrated Energy Policy is summarized below:-

1. Till market matures in independent regulation across the energy streams is a necessity.
2. Pricing and resource allocation to be determined by market forces under an effective and credible regulatory oversight.
3. Transparent and targeted subsidies.
4. Improved efficiencies across the energy chain.
5. Policies that reflect externalities of energy consumption.
6. Incentives/disincentives to regulate market and consumer behaviour.
7. Management reforms to foster accountability and incentives for efficiency.

The broad vision behind the Energy Policy is to reliably meet the demand for energy services of all sectors at competitive prices. Further, lifeline energy needs of all households must be met even if that entails directed subsidies to vulnerable households. The demand must be met through safe, clean and convenient forms of energy at the least-cost in a technically efficient, economically viable and environmentally sustainable manner.

With consumption of 530 kg of oil equivalent per person of primary energy in the year 2004 compared to 1240 kg of oil equivalent per person in China and the world average of 1770 kg of oil equivalent per person, India’s per capita consumption of energy has been quite low, despite the fact that India is the sixth largest electricity market in terms of power generation. Per capita electricity consumption in India is only 615 Kwh per year as compared to world average of 2516 Kwh and 1585 Kwh in China.

Although nuclear power comprises a very small percentage of total energy consumption at this time, it is expected to increase in light of international civil nuclear energy cooperation deals. According to the Indian government, nearly 30 percent of India’s total energy needs are met through imports.

Despite increasing dependency on commercial fuels, a sizeable quantum of energy requirements (40% of total energy requirement), especially in the rural household sector, is met by non-commercial energy sources, which include fuel wood, crop residue, and animal waste, including human and draught animal power. However, other forms of commercial energy of a much higher quality and efficiency are steadily replacing the traditional energy resources being consumed in the rural sector.

China, on the other hand, is presently engaged in a massive effort to control its rising energy use while promoting the rapid growth of its economy. In real terms, China’s 2007 GDP was more than double that of 2000; the electric power sector added more than 90 GW of capacity in just one year; and 100 million tonnes of coal-equivalent energy savings are to be achieved by engaging nearly 1,000 of the economy’s largest energy-using enterprises.

China has a long history of pursuing energy efficiency and conservation. Now, having recognized the threat to energy security, sustainable economic growth, and the environment that is posed by rapid energy demand growth, China has placed energy efficiency and conservation as its highest priority energy strategy. Since issuing the Medium-and Long-term Plan for Energy Conservation in 2004, several important high-level actions have been taken to put China on a path toward less energy-intensive development. These have been greeted by observers with praise but also some skepticism.

Thus both, India and China, are progressively marching towards their goal of achieving self-sufficiency in energy sector. Both have been quite successful in their deliverance. But the major difference lies in the oil pricing mechanism of the two countries. Where India gives importance to market controlled pricing apart from the subsidized sectors, China goes for state-controlled pricing formula.

Despite the differences both the countries need to stress more on the non-conventional energy sources in order to promote sustainable development.

• Round-tripping, also known as round-trip transactions or “Lazy Susan’s”, is defined as a form of barter that involves a company selling “an unused asset to another company while at the same time agreeing to buy back the same or similar assets at about the same price.” Simplistically speaking, this is a money laundering technique. There is a view that bulk of the GDR/ADR as well as FII investments is nothing but money belonging to Indians stashed away in Switzerland and tax havens that is brought into India.
• Recently it captured the bulk of media attention and air time because the opaque participatory note (PN) mechanism of the FII regime has given a fillip to this practice of round tripping. Paradoxically government and RBI love these PN and do not want more disclosures and regulations on these as restriction of this money can bring crashing on the trading bourses of the nation. This can make the sentiments for the nation into negative territory.

Answer : IMF and World Bank (WB) both are international financial institutions made after the Bretton Woods Conference in 1945 attended by nations mostly from the League of Nations. After that initial establishment, presently almost all the nations have become member of these after ratifying the clauses mentioned in its AoA. Both have similar and contrasting functions at the same time.

• Being financial institutions both have got international mandate to stabilize the international financial status with economically stable conditions within a nation. They do the same with loans and grants to various nations so that they can engage themselves in the constructive development of resources within their nations including human resources. Periodically these Breton woods sisters (as both these are famously called) engage themselves with the nations of the world in summit level meet to discuss about the infrastructure development and create a common platform for constructive-engagements among the nations of the world. Being signatory to both these institutions also relatively eases the mutual engagements between the donor rich nations and poorer done nations.
• But in more than one way both these also carry out different functions according to the international mandate they generate from their Article of Associations (AoA). IMF is European based institution that is primarily engaged in stabilizing inter-national movement of currencies depending upon the exchange value of a nation’s currency. This implies that they are also engaged in export and import facilitation among nations. IMF also lends short term “conditioned” loans to various countries. Conditions primarily range from inflation-control to control of primary deficit to more free convertibility of Capital and current account of that nation with which IMF engages with particularly with respect to grants and loans. Moreover each signatory to IMF has relative voting right in the decision making process according to the Special drawing rights (SDR) each of them have in it. SDR depends upon the “security” amount that each of them had lent to it.
• WB on the other hand is more of developmental financial institution that is engaged in creating more infrastructures among the nations particularly the emerging and least developed nations. It gives relatively more of grants or money on easy terms and conditions to poorer nations and generally the loans of WB are for long term. This is the reason probably why it is also called International Bank for Reconstruction and Development (IBRD). WB is US based institution where decision making process is more democratic.

Answer : PIIGS nations is actually abbreviated form that sarcastically stood for Western European particularly Euro Zone nations namely Portugal, Iceland, Ireland, Greece and Spain that got badly engaged in the recent financial recession. With false reporting regarding their Sovereign status of their nations during the boom years has made their economy heavily leverage the finances of their national incomes. This has created a steep asset-liability mismatch and on time scale this has further steepened on the negative sides as the debt that these nations were engaged in was highly illiquid and also non performing type. Resultingly, the total deficit to GDP of these nations (with slight differences within them i.e. PIIGS), had crossed 100%.

• Simplistically speaking this means that the debt of these nation now was more than the total GDP of these nations which made the Sovereign listing of these nations spirally downgraded by the international rating agencies. As a result of which they had to go for IMF and Euro zone support as the government bonds that is considered the most secured investment portfolio also lost their demand as a result of which the yield on long term bond-paper showed in excess of a nominally acceptable rate. Since still these economies GDP growth are in the negative territory which means that these economies are shrinking making their recovery still dependent upon extraneous support.

• Government of India has been putting special emphasis on increasing agricultural output and its diversification in order to achieve 4% annual growth rate during 11th five year plan. A number of steps have been taken in this direction with a regionally differentiated approach that includes Micro irrigation schemes and micro-credit schemes for regions with bulk of marginalised farmers. Integrated Scheme of Oilseeds, Pulses, Oil Palm and Maize (ISOPOM) have been designed to give flexibility to the states as per their agro-climatic and socio-economic conditions, to utilize funds for the choice of crops. As its another feature specially directed to address the local needs flexibility has been given to the States for introducing innovative measures to the extent of 10 per cent of financial allocation. National Missions on Bamboo and Coconut had been deployed for crop diversification and by-product utilisation to enrich the returns of farmers as per the regional needs. In fact, all the flagship schemes such as National Horticulture Mission and Rashtriya Krishi Vikas Yojana too have modified to increase the scope of incorporating the elements of regionally differentiation.

Answer : ICAR is an autonomous organization under the department of agricultural research and education (DARE) ministry of agriculture, GOI. It is the apex body for coordinating, guiding and managing research and education in agriculture and allied areas.

• ICAR has played a pioneering role in ushering the Green revolution and subsequent researches in agriculture in India, which has enabled the country to increase the production of food grains by 4 times, horticultural crops by 6 times, fish by 9 times, milk 6 times and eggs 27 times since 1950-51 (as per 1991 agricultural census). It has developed and released nearly 3300HYVs of field crops for different agro-ecologies and has also been at the forefront in their dissipation. Its approach is that of using technology for improving crop productivity and nutritional value and creating models for achieving food, nutritional, environmental and livelihood security by sustainable management of natural resources in the country. National Agricultural Innovation Project (NAIP) which is currently the flagship program of ICAR is based on the above vision.

Answer : The pre-monsoon season in India comprising of the months of March, April and May is also popularly known as Hot Weather or Summer Season. The temperatures, particularly the maximum, during this season are very high over most parts of the country especially over central and northwest India. The maximum temperatures when become 4-5°C above normal, they are called as heat wave conditions causing great discomfort.

• During this season, northwest & adjoining central India is usually affected by dust storms locally known as ‘ANDHI’ adding to the discomfort. Sometimes these Andhis’ may be so forceful that they can disrupt the lives of the people by uprooting houses, trees, telephone and electricity poles, etc.
• Loo is the name given to another hot, dry wind that blows in the Northern Plains. It is very common in Punjab, Haryana, Western Uttar Pradesh and Bihar. It makes life miserable for the people. People prefer to stay indoors during the summer months. The heat wave takes its toll and many people die because of it. Kalbaisakhi or calamity of the month of Baisakh is a dry local wind of West Bengal, Assam, Bangladesh and parts of Orissa and Bihar during summer season. Originating from the Chhota Nagpur plateau and influenced by the westerlies, this warm wind moves eastwards and is responsible for heavy rain and hailstones in West Bengal, Assam and Orissa. These winds, also known as Norwesters, cause destruction to life and property many a time. Apart from its destructive effects like sudden rise in wind speed, lighting, thunder and hail the rainfall associated with the storm although small in amount, is extremely helpful for the pre-kharif crops like jute, Aus paddy, and a large number of vegetables and fruits. This is good for the tea crop in Assam and the jute and rice in West Bengal. In Assam these storms are called Bordolichilla. Also a sudden drop in temperature gives relief after the mid-day heat. Mango Showers occurs along the coast of Kerala. The showers prevent the mangoes from dropping prematurely from trees and are crucial for the mango cultivation in South India. Cherry Blossom or Coffee Showers is a local wind that blows over the interior Karnataka during the hot-weather season and is extremely good for coffee cultivation.

Answer : India needs to sustain 8% to 10% economic growth to eradicate poverty and meet its economic & human development goals. In such a scenario India faces dual challenges of meeting its energy needs and providing adequate energy of desired quality to users in a sustainable manner and at reasonable costs. To meet the new challenge India under the expert guidance of the Planning Commission formulated an Integrated Energy Policy (IEP), which was recently approved by the Cabinet.

• The most important feature of the IEP is that it seeks to make energy markets more competitive wherever possible besides calling for market-determined energy pricing and resource allocation policy. This is directed to reduce the impact of increasing financial burden on public sector oil companies. Market driven pricing policy will definitely help in bridging fiscal deficit by downsizing unnecessary POL subsidies.
• IEP also calls for transparent and targeted subsidy disbursal systems. Thus highly subsidized petroleum products will reach to the targeted section of the population and thereby check their black-marketing. It will reduce unnecessary pressure on public exchequer. IEP also aims at improved efficiencies across the energy chain. The policy also aims at optimal exploitation of domestic energy resources and exploring and acquiring energy assets abroad to attain energy security for the country.
• IEP is going to play a crucial role on the energy security needs of the country because for the first time government has realized the importance of an integrated energy policy. It envisions to reliably meeting the demand for energy services of all sectors including the lifeline energy needs of vulnerable households, in all parts of the country, with safe and convenient energy at the least cost in a technically efficient, economically viable and environmentally sustainable manner.

Answer : The fallout of the global financial crisis on the Indian economy has been palpable in the industry and trade sectors and has also permeated the services sector. While some segments, especially the export-oriented industries, suffered during the second half of the year, the Indian economy has withstood the adverse global economic situation and posted a growth rate of 6.7 per cent in 2008-09. The economy continues to face wide-ranging challenges- from improving its social and physical infrastructure to enhancing the productivity in agriculture and industry and addressing environmental concerns. Meeting these challenges will be critical for improving India's social and human development indicators and the quality of life.

• The Government responded by providing a substantial fiscal expansion in the form of tax relief to boost demand and increased expenditure on public projects to create employment and public assets. It increased its spending on the plan by nearly 1 percent of the GDP. There was an increase of nearly 2.5 per cent of GDP on non-plan expenditure. The Government renewed its efforts to increase infrastructure investments in telecommunications, power generation, airports, ports, roads and railways. The RBI took a number of monetary easing and liquidity enhancing measures including reduction in CRR, SLR and key policy rates. The Government also took specific measures on exports by extension of export credit for labour-intensive exports, improving the pre- and post-shipment credit availability, additional allocations for refund of terminal excise duty/CST and export-incentive schemes, and removal of export duty and export ban on certain items. The government has decided to relax the FRBM targets for 2008-09 to increase demand.

Answer : The Indian economy has reached in the orbit of high rate of economic growth. To integrate foreign investment with economic development following steps have been taken by the government:

• Government has removed 10% voting limit in banks.
• Higher ceiling in FDI in airport revamp ventures & real estate investment.
• Revisited foreign shareholding norms in telecom sector.
• Removal of unwarranted restrictions on hindrances to financial investments has already allowed FDI up to 51% with prior government approval in the retail trade of "single brand" products.

Foreign investment Policy:

• It has become an integral part of national development strategic for almost all the nations globally.
• Its global popularity, positive output in augmenting of domestic capital, productivity & empowerment, has made it an indispensable tool for initially economic growth for countries.
• India is evolving as one of the 'most favoured distinction' for FDI in Asia & pacific.
• It has displaced US as the second-most favored destination for FDI in the world after china according to AT Kearney's FDI confidence index.
• Chance in sectoral policy equity cap has been notified from time to time through press notes by the secretariat for industrial assistance in the department of industrial policy announcement by SIA are subsequently notified by RBI under FEMA.

Answer : “Protectionism” is the word that is being treated as the placebo for all the ‘financial-ills’ that has recently plagued the financial world. But paradoxically this concept propagated by the anti-globalization lobby is nothing more than the placebo and not the real cure for the ill. Actually the debacle in the financial world took place not due to financial liberalization but ironically to the “selfishly” driven and “asymmetric” openness in the world market. Actually prior to this meltdown there was speculator driven inflation in the asset prices of the USA market. In this context whole of the financial market should have the same status of financial scrutiny as the developed market in which the asset bubble was manufactured, and then this would have never happened.

• Globalization and liberalization also means that there should be no “arbitrage” that could be benefited by the traders in either information of regulation as far as trading is concerned. In fact developing countries like India should proceed in the irrevocable path of liberalization but the regulatory role of the government should also be periodically marked to the growing complexities. Financial liberalization means optimization but the regulation of the government should not be diluted.

• India in the context of “Doha Development Rounds” (DDR) has always been considered in the international arena of various summit meets as the biggest “impediment” of the talks going forward. India has evolved as the mouthpiece of all the developing nations that feel threatened by the pressurizing techniques of the First world nations. India is firstly emerging as a powerful member of the international arena. Consequently, in all the summit meets, she has always endeavored to speak for the developing nations including herself. Though in the present context more than half of the GDP comes from the services sector but it is also hard fact that more than three-fourth of population of nation belongs to peasantry. So, either it is G-20 or G-33 or for that matter G-77 India has always made its stand clear regarding the partiality of the developed nation in regard to the subsidy that they give to their farming community in the pretext of various “boxes”. She also understands as a mature partner of the international community that NAMA (Non Agricultural Market Acces) and AoA (Agreement on Agricultur) both are important for World trade but there must not be any sort of pressure tactics to gain more from the developing countries. Surely in this regard India has evolved as the antidote to pressure tactics of the First world nation.

Answer : Agricultural productivity in India remains low due to various institutional and infrastructural factors, institutional factors like land reforms, land consolidation, proper land tenure system is lacking in India. Moreover institutional shortcomings like absentee landlordism are prevailing in much part of rural India. It has grossly reduced the agricultural productivity in India.

• Infrastructural factors like hybrid seeds, proper irrigational facility, power supply, credit at low rate, proper food processing and storage facilities of other agricultural extension services are not reaching ground level due to various bottlenecks. So Indian agriculture is not able to adopt to modern realities. Due to land degradation, reduced water availability has further reduced the agricultural productivity.
• Moreover, investment in agriculture as per cent of GDP was 6% up to Sixth Plan period. Over the period of time agricultural investment has come down to 2-3%. So, agricultural production is stagnant for the past six years at around 210 MT.
• Indian agriculture is rain fed due to poor irrigational facility. As it is dependent on monsoon late arrival of monsoon, less rainfall, droughts floods affects agriculture in one or other part of India. As availability of land for agriculture is restricted, rain fed area should be concentrated to increase the agricultural productivity of India. Former Prime Minister (Manmohan Singh) has said that the Second Green Revolution will concentrate on rain fed cultivation to achieve food security.

Answer : Pros of Special Economic Zones:

• Increased inflow of foreign investment.
• Generates more employment brings in up-to-date technology
• Enriches FOREX reserves.
• Supports lot of ancillary industries.
• Enhances the export.
• Acts as growth engine for regional development

Cons:

• Revenue loss to the tune of Rs. 70,000 Crore per year due to tax holidays and rebates to the government.
• Fertile agricultural land is used for industrial purposes. It may affect the food security of the nation.
• Large tract of land maybe misused by real estate manipulators for commercial purposes. Because Built-in area is very less compared to the land allotted.
• According to ‘Bombay club’ to industrialists, the industries outside enters the ford of SEZ’s to enters the ford of SEZ’s avail tax benefits and no new investment is availed.

Answer : The Government of India has recently undertaken a comprehensive review of the FDI policy and associated procedure. Many rationalization measures have been undertaken, inter alia include, dispensing with the need of multiple approvals from Government and/or regulatory agencies that exist in certain sectors, and allowing FDI in new sectors.

India’s large market size and potential, the skilled labour force and low wage cost is the main key for attracting foreign investor.

According to the UNCTAD report China is performing much better than India for variety of reasons including opening up its economy in 1979 much earlier than India did in 1990’s. And also Chinese overseas contributing much more than Indians.

About 80 percent of fortune 500 companies have presence in china while 37 per cent of these firms outsource to India.

In India, the sectors attracting FDI are

Electrical equipments (including computer software & electronics)–17.4%

Telecommunications–10.58%

Transport Industry –9.82%

Service Sector -9.45%

Share of the top investing countries in India is,

Mauritius –37.18%

USA –15.25%

Japan –6.59%

India’s position in a UN agency’s inward foreign Direct Investment performance index has improved eight notches. The country’s rank on the index, which covers 141 countries for the year 2006, stood at 113, as against 121 in 2005.

In addition, the country also improved its position by nine places in the outward FDI performance index from 65 in 2005 to 56 in 2006.

However, India’s rank in the UNCTAD’sFDI potential index, which takes into account 12 social and economic factors, fell by two positions to 85 during 2005 against 83 in 2004.

Overseas Indian’s are fewer, more of professional group, unlike Chinese, after lack the family networks and connections and financial resources to invest in India.

Answer : The Doha ministerial conference which was held in 2001, adopted a comprehensive work programme, also called the Doha Development Agenda (DDA) launching negotiations on some issues and setting out additional parameters and time frames for the negotiations on agriculture and services that had commenced on 1 January 2000 in accordance with the built in mandates in the respective WTO Agreements.

• The Cancun Ministerial Conference 2003 was to take a stock of the progress in DDA negotiations, take necessary decisions and to provide further political guidance. But, prior to the Cancun Ministerial, the US and EC made a joint submission on the framework for modalities of negotiations on Agriculture that was based on their own perceptions and did not take into the account the concern of developing countries. This led to the formation of a coalition of developing countries now called the G-20, which has since played a very major role in shaping the negotiations on agriculture.
• The G-20 played a crucial role in the aftermath of the Cancun Ministerial Conference in the negotiations on agriculture. India has engaged in these negotiations to ensure that its core concerns and interests continue to be adequately addressed as negotiations proceed from one stage to the next.
• At Hong Kong, India was proactive in articulating in position on issues of concern to it and other developing countries and played a key role in further strengthening the developing country coalitions by bringing together G-20, “G-33 and G-90 group of countries.
• These developing countries accuses the rich nations of protecting their farmers through subsidies, and then dumping their goods on poor countries at knock down prices, undermining local farmers.
• The Minister’s meet held in Geneva on 21 July to 25 July, 2008, failed because both India and China could not reach an agreement on the issue. India with other G-33 members wanted an import surge of 110 percent over three-year base period to triggers SSM (special safeguard measures) while, US demanded for 150 percent.
• India attaches more importance to a rule-based multilateral trading system. India will continue to protect and pursue its national interests in these negotiations and work together with other WTO members.

Answer : ASIDE: Assurance to states for creating infrastructure for the development and growth of Exports.

• Exports have come to be regarded as an engine of economic growth in the wake of liberalization and structural reforms in the economy. A sustained growth in exports is, however, not possible in the absence of proper and adequate infrastructure as adequate and reliable infrastructure is essential to facilitate unhindered production, cut down the cost of production and make our exports internationally competitive.
• While the responsibility for promotion of exports and creating the necessary specialized infrastructure has largely been undertaken by the Central Government so far, it is increasingly felt that the States have to play an equally important role in this endeavour. The role of the State Governments is critical from the point of view of boosting production of exportable surplus, providing the infrastructural facilities such as land, power, water, roads connectivity, pollution control measures and a conducive regulatory environment for production of goods and services. It is therefore, felt that coordinated efforts by the Central Government in cooperation with the State Governments are necessary for development of infrastructure for exports promotion.

Objective: The objective of the scheme is to involve the states in the export effort by providing assistance to the State Governments for crating appropriate infrastructure for the development and growth of exports.

• States do not perceive direct gains from the growth in exports from the State. Moreover, the States do not often have adequate resources to participate in funding of infrastructure for exports. The proposed scheme, therefore, intends to establish a mechanism for seeking the involvement of the State Governments in such efforts through assistance linked to export performance.

Scheme: The Scheme shall provide an outlay for development of export infrastructure which will be distributed to the States according to pre-defined criteria. The existing EPIP, EPZ and CIB schemes shall be merged with the new scheme. The scheme for Export Development Fund (EDF) for the North East and Sikkim (implemented since 2000-2001) shall also stand merged with the new scheme. After the merger of the schemes in respect of EPIP, EPZ, CIB and EDF for NER and Sikkim with the new scheme, the ongoing projects under the schemes shall be funded by the States from the resources provided under the new scheme.

• The activities aimed at development of infrastructure for exports can be funded from the scheme provided such activities have an overwhelming export content and their linkage with exports is fully established.

Answer : Convertibility of a currency implies that a currency can be transferred into another currency without any limitations or any control. A currency is said to be fully convertible, if it can be converted into some other currency at the market price of that currency.

• At present, Indian rupee is partly convertible on current Account. That is convertibility in the case of transactions relating to exchange of goods and services, money transfer.
• In 1997, the Tarapore Committee on Capital Account Convertibility was constituted by the Reserve Bank. This committee indicated three preconditions for capital Account Convertibility. They are Fiscal consolidation, a mandated inflation target, strengthening of the financial system.
• During March 2006, Prime Minister said that India is moving towards fuller capital account convertibility. In response to this the Reserve Bank of India set up the Tarapore Committee to work out another roadmap for current account convertibility.
• Full currency convertibility of the Indian rupee means, can travel abroad and buy dollars over the counters, currency convertibility refers to the absence of any restriction on the holding of foreign currency by residentsand of the national currency by foreigners, and on free conversion between currencies. Can incur expenses abroad using the credit card and pay for the dollars (or pounds, or euros) expanded in rupees.
• This helps to invest in specified foreign shares and mutual funds. And also it attracts many foreign tourists, which can be contributed to the GDP.
• Therefore, fuller convertibility of Indian rupee helps to attract FDI and also helps Indian’s to invest abroad.

Answer : India has fallen five notches in the latest annual rankings of the Global Competitiveness Report released by the World Economic Forum. India was place 48 in the list of 131 economics covered under the Global Competitiveness Index (GCI) which tracks twelve parameters to come out with the rankings. Among the top emerging markets, India is second this year behind China.

• Last year India ranked 43 and was ahead of other BRIC markets. This year China, at 34, is the top ranked BRIC market. Russia at 58 and Brazil at 72 are behind India. Among the three sub-indices under GCI, India improved its ranking from 41 to 31 in ‘efficiency enhancers’ but dropped from 60 to 74 in ‘basic requirements’. It’s ranking on ‘innovation factors’ remained unchanged this year at 26.
• The quality of the business environment in India has improved tangibly in recent years, with increased efficiency of goods, labour and financial markets and greater innovations and sophistication of firm operations. However, a number of weaknesses persist that need to be addressed especially in the area of infrastructure quality. Moreover, dealing with shortcomings in the provision of health services and education will ensure that the benefits of economic growth are more broadly distributed.
• The neighbouring countries of India, Nepal’s GCI slips to 114 from 105, Pakistan is ranked at 92 which was at 83 in the last ranking and Sri Lanka became the only country to score ahead of earlier rank form 81 to 70.
• The ranking are calculated from both publically available data and the Executive Opinion Survey, a study conducted by World Economic Forum with its network of partner institutes in the countries covered by the report. With a record 11000 poll form these countries; this index is designed to capture a broad range of factors affecting an economy’s business climate. The report also included the listing of main strengths and weaknesses of countries which makes it possible to identify key priorities for policy reforms.
• GCI was developed for the World Economic Forum by Columbia University Professor Xavier Sala-i-Martin and originally introduced in 2004. The GCI is based on 12 pillars of competitiveness and includes Institutions, Infrastructure, Macroeconomic Stability, Health and Primary Education, Higher Education and Training, Goods Market Efficiency, Labour Market Efficiency, Financial Market Sophistication, Technological Readiness, Market Size, Business Sophistication and Innovation.

• Copyright is one of the creative Intellectual Property Rights and protects creative or artistic works. Copyright applies on literative, music, art, painting, etc.
• A Trademark is a type of intellectual property represented by a distinctive sign or indicator of some kind used by an individual, business organization or other legal entity to identify uniquely the source of its products or services to consumer.

• At present the increasing number of dirty slums has become the main problem of the town planning. From the official figures, it has become clear that in cities almost 1440 lakh people live in slums. 45% of the people in the slums do not have pure drinking water and sanitation system. Child mortality rate is high at such places, as well as various diseases and ill-nutrition exists. Due to these slums the facilities of the city and the beauty of the city are at great threat. The main reasons for these kinds of slums are the existing unemployment and reducing ownership of property in the villages. For the search of livelihood every year in lakhs people come from the villages to the cities. According to a survey, every year in Mumbai 3-4 lakh people and in Delhi 2.5-3 lakh people immigrate. These non-asset owners become a part of the outer city beside the roads or other cheap places. One more reason of the dirty slums is the alienation of the city and peoples' drive for economic development. In many parts of the country the scope for industrial developmental and business is very poor and people do not get to develop themselves at those places so they move towards the cities. On the other hand because of the fancy management of the town management development cannot take place. With the increase of population the scene of slums in the cities also increases.

Answer : In case of over-production of any goods their prices go down in the market even lower than the stipulated lowest prices. In such a condition, these kinds of goods are sold in foreign markets at thrown away prices some times. They are almost destroyed for the manufacturing country. This process is called dumping. Sometimes for the betterment of the producers and to stop falling prices of goods in the market dumping is done.

• The under-developed countries resort to dumping their additional produce in the developing countries like India. In such conditions, in India, to conserve the production of the regional farmers, a quantitative restriction is put and otherwise higher income tax is incurred. These days according to the recommendations of the World Trade Organisation, the quantitative restriction has been abolished and a huge decrease in income tax was also being done. In such a scenario, to solve the problem of dumping Indian Government has taken certain steps. For this under commerce ministry an organisation called "Directorate of Anti Dumping" has been established. This organisation keeps an eye on the matters related to dumping and various taxes. Under WTO, those countries which are influenced by dumping can adopt preventive measures. India has taken advantage and it has adopted the measures to provide preservation to its produce through "Anti Dumping Duty". Likewise to end the problem of dumping, India has started giving subsidy to its farmers so that they can increase their produce and the dumping of food stuff by the under developed countries can end. By counter veiling duty and special additional surcharges dumping can be checked.

Answer : Almost 60% of the labour power in India is associated with cultivation. A large number of Indian farmers are labour-intensive. In such conditions, farmers should be made able to invest on cultivation, land reform and increase in produce by providing loan. In India non-governmental businessmen, commercial banks etc. are providing loans to the farmers. Data tell us that the users of loan in the states of Punjab, Haryana, Andhra Pradesh, Maharashtra etc. are really increasing production. On the other hand, loans have been used less in the eastern states like Uttaranchal, Jharkhand, Orissa etc. As a result, crop production is also less in these states. In India during Green Revolution, agricultural loans were given importance. During 2005-2006 in agricultural sector Rs. 1,17,899 crore loans were made available. In the last 40 years the right use of agricultural loan made it possible to produce crops three times more. Here, emphasis should be given on the right use of loan and precautions should be taken so that incidents like suicide by the farmers on the spoiling of their crops, or incidents like not being able to gain properly by the production, and money lessness do not repeat.

• The provisions for the reforms regarding the agricultural loan have been made keeping in view that many marginal farmers do not get enough loan and many organisations' activities are also not efficient. In such conditions, agricultural loan cannot play its role accordingly in increasing agricultural production. The reconstruction of the village economies is important. In this way in India getting agricultural loan and increasing agricultural production have been developing.

Answer : Alternative source of energy like solar, wind, tidal, geothermal etc, are gradually been adapted and adopted, as the technology for efficiently harnessing these is being developed and the cost are adequately reduced. Such alternative sources of energy are renewable by nature and have also the advantage of generally producing energy in a non-polluting form. Incidentally India has vast potential to harness solar and wind energy. India’s North-West part and Eastern and Western coast have great potential of wind energy.

• Bio-diesel in the recent times has opened a promising prospect. Several R&D projects have been taken up in the country to develop technologies to convert different non-edible vegetable oils to bio-diesel. Oil from Jatropha plants have also been used as bio-diesel. Attempts are being made to launch an operational programme on the use of these bio-fuels in the transport sector. Field trial with ethanol blends in petrol and diesel has also been taken up in the country under several projects.
• Realising the need, the government has set up an expert committee on Integrated Energy Policy headed by Kirit Parikh. The committee lays emphasis on realization of full potential of hydro-energy and fast growth of nuclear energy. It also suggests starting several technology missions on solar technologies for thermal and photovoltaic and bio-fuel, as well as bio-gas gasification.

Answer : The Patent Amendment Act, passed by Parliament in 2005 brings the Indian Patents Act in full conformity with the intellectual property system in all respects. This replaced the ordinance promulgated on December 23, 2004 to meet WTO obligations from January 1, 2005. It may be pointed out that, earlier the patient Act had been amended twice in 1999 and 2002. In 2001 the provision of EMRs was introduced. This was a transitional arrangement till the introduction of TRIPS-mandated product patients applicable in pharma, agro-chemicals and food sectors. The 2002 amendment introduced 20 year duration for patents thus complying with TRIPS and substantially modifying compulsory licensing provisions. The main provisions of the Patent Amendment Act, 2005 are:

1. Extension of product patent protection to all fields of technology, i.e. drugs, food and chemicals.
2. The Act empowers the government to issue compulsory licenses for drugs whose price or production does not suit an existing public need.
3. It also allows the patent holders to challenge the license so that they can block general production of the drug.
4. Pre-grant and post-grant opposition clause has been provided.
5. The EMRs have been removed.
6. Embedded software can be patented.
7. It strengthens the provisions relating to national security to guard against patenting abroad of dual use technologies.

The government has clarified that the new patent regime will not affect the prices of 3500 life saving drugs available in the market. About 97 per cent of the drugs available in the market have been made off patent and are not to be patented in India. But the industry representatives feel that the new patent Act has not utilized all the flexibility for Doha Declaration and TRIPPs agreement. As for example, they think that in order to avoid repeated renewal of the patent, ‘ever greening’ should not be allowed and application for patenting of salts, isomorphs etc. need to be rejected. Once proper safeguard are put in place, the pharma industry can certainly be a provided ‘sunrise’ sector. What effect the Patent Act will have on India and its economy is being awaited anxiously.

Answer : Full convertibility of the currency means the local currency can be exchanged to foreign currency without any governmental control. Presently, the issue of capital account convertibility is in the discussion stage. Capital Account convertibility means the freedom to convert domestic financial assets at market determined rates. It can also imply conversion of overseas financial assets into domestic financial assets. Broadlyit would mean freedom to firms and residents to freely buy into overseas assets such as equity, bonds property and acquire ownership of overseas firms besides free repatriation of proceeds by foreign investors.

• The committee on capital account convertibility appointed in 1997 with Dr. Tarpore as chairman. The committee had provided a roadmap for the economy where most mental health programmes to move towards full convertibility, step by step, and the time frame was 1997-2000. The committee had also laid down certain pre-conditions for implementing the reforms. But nothing much happened during that phase. One of the main problems an economy which has opted for a free float has to contend with is the prospects of outflow of what is termed as speculative short term flows.

Answer : The fourth ministerial level talk, started in November 2001, is popularly known as ‘Doha Round’ of talks. In this round too the differences between developing and developed nations were continued. Although Developing countries had protested against the Agricultural Subsidy (given by the developed countries to promote their export), they favoured free flow of labour and capital. Developing Countries have been opposing agricultural subsidy from the very beginning of the talks because it rendered their agricultural products less competitive. The Doha Round failed to settle this issue. The second main issue of the Doha Round was free flow of labour and Capital, developing Countries are rich in cheap labour so they were in the favour of free flow of labourers, but Developed countries, fearing unemployment had not favoured this.

• Doha Round of talks also brought the disagreement on the issues related to TRIPS and environment to the fore. Thus it can be said that the Doha Round of WTO was a total failure.

Answer : The World Trade Organisation is increasing its role in determining the policies and points of the members developing economics to which India has not been an exception. By virtue of being the member of this important organisation India's policies are also guided by it, directly or indirectly. There have been many issues that explain the equation between India and WTO. Some of the significant issues with a wide range of coverage are: Intellectual property Rights, TRIPS Agreement, Agriculture Subsidies, the patent regime and its impact on the textile sector, the environment pollution, Anti-dumping policy etc.

• Besides the devaluation of rupee in 1991 and the changeover to market based exchange rate regime measures were aimed at enhancing the price competitiveness of exports. The norms governing foreign investment and foreign collaboration have also undergone significant changes which have a bearing on trade performance. Apart from these unilateral measures, the liberalisation of India's trade policy also reflects its commitments to the WTO.

Answer : The main sources of industrial finance in India are following:

• Industrial Development Bank of India: IDBI provides credit and other facilities for industrial development in the country. IDBI provides long term finance for Greenfield projects, as also for modernization, expansion and diversification. It has structured various products such as equipment finance, asset credit and corporate loans in order to cater to the diverse needs of its corporate clients.
• Industrial Finance Corporation of India Ltd. (IFCI Ltd.): IFCI's operations principally comprise project finance, financial services and corporate advisory services. Through its subsidiaries/associate companies, IFCI provides custodial and investor services, rating and venture capital services.
• Industrial Credit and Investment Corporation of India Limited (ICICI Ltd.): It played a facilitating role in consolidation in various sectors of the Indian industry, by funding mergers and acquisitions. The ICICI Group's financing and banking operations, both wholesale and retail, have been integrated into a single company effective May 2002.
• Industrial Investment Bank of India Limited: IIBI offers a variety of financial products such as project finance, short duration non-project asset-backed financing and working capital/other short-term loans to companies.
• Infrastructure Development Finance Company Limited: Infrastructure Development Finance Company Ltd. (IDFC), incorporated in 1997, was conceived as specialised institution to facilitate the flow of private finance to commercially viable infrastructure projects through innovative products and processes. Energy, telecommunications, information technology, integrated transportation, urban infrastructure and food and agri-business infrastructure constitute the current areas of operation of IDFC.
• Small Industries Development Bank of INDIA: SIDBI offers refinance, bills rediscounting, lines of credit and resource support mechanisms to route assistance to SSI sector through a network of banks and state-level financial institutions. SIDBI also offers direct finance for meeting specific requirements of SSI Sector. SIDBI undertakes a wide range of promotional and developmental activities for improving the inherent strengths of SSI units, creating employment opportunities and new avenues for economic development of rural poor.

Apart from these industries also gather finances through IPOs, foreign investment.

• Since the 'liberalisation' of the economy, the environment of PSUs has undergone substantial change. Given the stated objectives of government to divest and privatize, entry of private firms into markets earlier reserved for public sector, many PSUs would have responded to these changes in some manner. Currently the government is pursuing disinvestments, which is driven more by budgetary considerations. It is not yet clear as to how strong is the intention of the government to improve the task orientation and performance of PSUs through increased autonomy to the managers.

• The Phillips curve is a historical inverse relation and tradeoff between the rate of unemployment and the rate of inflation in an economy. Stated simply, the lower the unemployment in an economy, the higher the rate of change in wages paid to labour in that economy.

• Hundis referred to legal financial instruments evolved on the Indian sub-continent. These were used in trade and credit transactions as remittance instruments for the purpose of transfer of funds from one place to another.

• An economy is deemed to have a twin deficit if it has a current account deficit and a fiscal deficit. In effect, the economy is giving claims on domestic assets to foreigners in exchange for foreign made goods. Traditional macroeconomics predicts that persistent twin deficits will lead to currency devaluation/depreciation that can be severe and sudden.

• A free trade area is a zone where regulations have been removed but each member country can still maintain their individual customs on specific areas. Common market makes it simpler to trade between members countries. This benefits all members’ trade balance towards the rest of the world. By harmonizing customs, laws and rules in every member country it also reduces expensive control organizations and allow free movement of goods internally.

• A forward currency market is that locks in the price at which an entity can buy or sell a currency on a future date. Also known as "outright forward currency transaction", "forward outright" or "FX forward".

• A graph purporting to show the relation between tax rates and government income; income increases as tax rates increase up to an optimum beyond which income declines.

• A long-term loan issued in a currency other than that of the country or market in which it is issued. There is no withholding tax applied to interest payment. Euro-bonds are internationally underwritten and available in bearer form. They are cleared through Cedel and Euroclear and are traded crossborder.

• Disguised unemployment is a situation under which productivity of the working force is very low. This is because an excessive number of workers are employed than what is optimally desirable. If a small plot of land has a maximum capacity to employ six workers then if the actual number of workers attached to land exceeds this limit, some of the workers will be disgustedly unemployed.

• Nifty is an index of prices of a group of fifty stocks listed on the NSE. Nifty Junior is an index comprised of the next rung of 50 most liquid stocks after S&P CNX Nifty. In fact S&P CNX Nifty and Junior Nifty may be regarded as a basket of 100 most liquid stocks in India Stocks in Junior Nifty are filtered on their liquidity characterized by their impact cost and market value represented by their market capitalization. The stocks comprising S&P CNX Nifty and Junior Nifty are mutually exclusive i.e. a stock will never appear in both indexes at the same time.

• Rolling settlement involves shrinking the netting period to one day in Indian equity market. This is part of the historical progression that we have followed in India's equity market. The length of the netting period has gone from an undisciplined fortnight to a disciplined week, and with rolling period it now goes to a day. This means that trades net within the day. A person can buy 100 shares of ITC in the morning sell 100 shares of ITC in the evening, and have to deliver no shares to the clearing corporation. However, if there is a net sell position of 100 shares at closing time, then shares have to be delivered a few days later.

Answer : Energy Independence: As governments around the planet push for innovative technologies related to alternative energy, a new phrase has grown in popularity: energy independence. On a national level, the concept means to free a country from depending on other nations for energy needs. But what does it mean on a personal level? First, we need to define “independence.” The most appropriate definition classifies it as “freedom from the control, influence, support and aid of others.” Another way to view it is to be self-reliant.

India, the world’s fourth largest energy-consuming nation, imports 80% of its crude oil and 25% of its natural gas requirements. Where 300 million Indians are lacking access to electricity and where per-capita electricity consumption is one-fourth of the world’s average India’s energy demand is expected to more than double by 2035, from less than 700 million tonnes of oil equivalent (mtoe) today to around 1,500 mtoe, according to the oil ministry’s estimates, even as there is rapidly diminishing interest in the Indian hydrocarbon sector.

For achieving Energy independent India government needs

• to speed up implementation of new exploration programmes across the country
• to create enabling and conducive environment to promote investments, by making fiscal terms that are simple to administer
• by way of increasing domestic crude oil production
• ushering shale gas revolution and are spread over several sedimentary basins such as Cambay, Gondwana, Krishna-Godawari on-land, and Cauvery
• speedy implementation of Turkmenistan-Afghanistan-Pakistan-India (TAPI) Gas Pipeline Project
• by way of encouraging national oil companies to aggressively pursue equity oil and gas opportunities overseas.
• make India as a refinery hub

Answer : Ecotourism is defined as "responsible travel to natural areas that conserves the environment and improves the well-being of local people." Ecotourism is about uniting conservation, communities, and sustainable travel. This means that those who implement and participate in ecotourism activities should follow the following ecotourism principles:

1. The local community should be involved leading to the overall economic development of the area.
2. The likely conflicts between resource use for eco-tourism and the livelihood of local inhabitants should be identified and attempts made to minimize the same
3. The type and scale of eco-tourism development should be compatible with the environment and socio-cultural characteristics of the local community, and
4. It should be planned as a part of the overall area development strategy, guided by an integrated land-use plan avoiding inter-sectoral conflicts and ensuring sectoral integration, associated with commensurate expansion of public services.

It could be promoted in India by several measures:

• We should combat the environmental problems at tourist places by controlling the country's rate of development.
• The resort-development should conserve a section of the land to maintain natural environment.
• Tourism comprises complete system of nature which includes the man and his activities, wild life, mountains and valleys, rivers, forests, social and cultural system etc. So, the whole system requires an environmental and ecological preservation and should be promoted.

• Sethusamudram Shipping Canal Projects a proposed project that would link Palk Bay and the Gulf of Mannar between Tamilnadu in India and Sri Lanka by creating a shipping channel through the shallow sea called Sethusamudram and through a chain of islands collectively called Ram Sethu, Ramar Palam, and similar names. This would provide a continuously navigable sea route in and around the Indian Peninsula.
• The project involves digging a 44.9 nautical miles (51.7 mi; 83.2 km) long deepwater channel linking the shallow Palk Strait with the Gulf of Mannar. A few organisations are opposing damage to Adam's Bridge on religious, environmental and economical grounds. Many support the implementation of this project using one of five alternative alignments considered earlier without damaging the structure, which is sacred to Hindus.

Answer : In the initial period after the independence India concentrated more on economic growth and industrialisation of country since it was backward in development when compared to other countries in the world. In order to develop the nation it started exploiting the natural resource with the motive to develop the country and do welfare to the people without realising the environmental degradation and its impact on global warming and climate change.

• But it soon realized the importance of environment and related issues when raised in global forum like UN and it also participated in environmental issues. After the Stockholm convention in 1972,India took step forward in environment protection. Then it passed series of legislation to protect the environment degradation.
• In 1972, Indian parliament passed 'Water Pollution Act'; in 1976- 'Jhoom Farming Prevention Act; in 1972- 'Wild Life Act'; in 1981- 'Air Pollution Act'; and in 1986 'Environment Protection Act' which gives power to the Central Govt. to take necessary measures to protect the environment. All these laws are aimed at saving environment. Apart from these all industries have to get environment certificate, to the effect that they do not cause harm to it beyond the permitted level.

Answer : The Sick Industries Companies (Special Provisions) Act 1985 first defined industrial sickness. Industrial units are sick under two situations: (a) either it’s not worth (defined as paid up capital plus free reserves) is entirely eroded or (b) its accumulated losses are equal to or exceed the entire net worth of the company and it has suffered cash losses for the current and preceding financial years. A company which has eroded 50 per cent or more of its peak net worth during any of the preceding five financial years is termed incipiently sick.

The causes for sickness can be divided into two important categories—

(1) External causes- (a) Power cuts, (b) Erratic supply of inputs, (c) Demand and Credit restraints, and (d) Sudden changes in the government policies.

(2) Internal Reasons (i) Faults at the initial levels of planning and construction, (ii) Financial constraints (iii) In competence on the part of entrepreneurs (iv) labour and management problems (v) Age old, inefficient and defective machinery.

Various concessions and incentives are handed out to sick industrial units through government, banks and other policies.

1. Banks grant various concessions to sick units to rehabitate them e.g. (i) grant of additional working capital facilities to overcome shortage of working capital. (ii) Recovery of interest at reduced rates.
2. Government policy of taking over the management under the provisions of the Industries Development and Regulation Act. has not proved an effective instrument for revival of sick units.
3. Scheme for provision of margin money to sick units in small-scale sector at soft terms has been there since 1982.
4. liberalised margin money scheme was introduced in 1987 to assist SSI in their rehabilitation.
5. Industrial Reconstruction Bank of India was established in 1985 to receive and rehabitate sick units.
6. Board for Industrial and Financial Reconstruction (BIFR) was set up in 1987 under the SICA for determining the measures required to be taken in respect of sick units.

Efforts are on to improve upon SICA. The govt. is also taking steps to change the definition of sickness, set up recovery and winding tribunals, and making industrial practices at par with international standards to mitigate industrial sickness.

Answer : With the economic reforms restructuring Indian economy since 1991, external financial assistance has been coming in different fields like infrastructure development; poverty alleviation programmes; literacy campaigns; housing, employment generation, health care, etc.

• There was a time when India needed External Financial Assistance (EFA) even for importing food grains. Not anymore. With higher economic growth, India has in fact stopped taking EFA from all but a few countries viz. Japan, USA, U.K. Russia and E.U.
• Presently World Bank, Asian Development Bank etc. pump in billions of dollars in projects involving roads, electricity, rural development, providing potable water. Few years back IMF was helping India in the Balance of Payments (BoP) crisis (early 1990s).
• All this assistance goes on to build an efficient infrastructure economic and social which provides base for higher private investment both domestic and foreign. This will lead to sustainable economic growth and its convergence in balanced economic development.

Answer : (a) Physical Quality Life Index : Used to assess level of social development, given by Jim Grant, it is calculated using indices of adult literacy, Infant Mortality Rate and Life Expectancy.

(b) Difference between Absolute Poverty and RelativePoverty: When a person is deprived of basic minimum needs, it is termed as absolute poverty. According to UN Parameters earning less than $ 1 per day is treated as absolute poverty. Relative poverty is in relation to other strata of the society.

(c) Medical Tourism: India promoting itself as an effective, cheap destination for health and medical solutions especially providing super-specialty services in medicine.

• Golden Quadrilateral is a 5846 km long road project which aims to connect the four metros (Delhi, Mumbai, Kolkata and Chennai) via National Highways. 77 routes have been identified which will also connect major cities and ports. The existing National Highways are to be upgraded from 2-lanes to 4 lanes and even at certain places to 6 lanes. The initiative will result in colossal economic and social gains. It will give a big push to the road construction industry, lead to huge growth in cement and steel demands, boost trade and business, result in savings in vehicle operating costs and ensure faster, comfortable, smoother and safer road journeys. Most importantly, it will generate huge employment opportunities; it will also mean a big boost to the rural economy by way of providing direct and faster access from the hinterland to the main marketing centers in the metros and other towns.

Answer : WTO is now a specialised agency of the UNO. It succeeded and subsumed the General Agreement on Tariffs and Trade (GATT) and came into existence on January 1, 1995. The main objective of the WTO is the liberalisation of world trade.

India’s objections of its overall functioning were/are as follows:

• India and the developing countries, who were already under the burden of fulfilling the commitments undertaken through the Uruguay Round Agreements and who also perceived many of the new issues to be non-trade issues, resisted the introduction some new subjects into WTO.
• India pointed out the difficulties that developing countries have been facing in the implementation of the Marrakesh Agreement. India also opposed inclusion of Singapore issues.
• India resolutely opposed the inclusion of non-trade issues like labour standards, in the agenda of WTO- It also effectively created pressure for taking on board its implementation issues.
• India opposed the launch of a new round of WTO talks until implementation issues from the 1994 Uruguay Round agreement resolved.

Answer : The Indian economy since 1991 has been undergoing constant and drastic economic reforms. These reforms have resulted in a shift from the inward-oriented policy of the past to an outward-looking one. The trend towards a liberal economic policy had funded its full expression in the early 1990s with the Government of India announcing a series of packages of stabilisation and structural policy reforms. The current economic policy reforms seems to have been guided mainly by concerns regarding the globalisation of the Indian economy, in proving internal and external competitiveness, private sector participation and removal of inadequacies or constraints. At present, the plans focus on growth targets per capita income of GDP, and the development strategy is to be indirectly planning to promote the private sector.

Reforms undertaken to improve the Indian economy since 1991 is:

• Abolition of industrial and trade licensing.
• Removal of state monopolies, privatization and disinvestment.
• Liberalisation of financial and capital market.
• Liberal regime for FDI, portfolio investment, foreign technology
• Import institution and export of primary goods, no import bias
• Reduction and retionalisation of taxes and duties dispersion
• Sector-neutral monetary, fiscal and tariff policies
• Abolition of exchange control, full convertibility on current account.
• Abolition of all administered prices essential on goods except for few strategic sectors.
• Decentralisation sound institutional framework, degree of civil service reforms.
• Rationalisation of structure, and concessions being phased out.
• The removal of quantitative restrictions being phased out.
• The removal of quantitative restrictions on imports and a consistent decline in average and peak import tariffs.

These reforms probably led to the higher growth performance in the post-reform era. The overall growth in the post-reform era was accelerated by a relatively higher growth in the service sector. To some extent, during the first phase (1992-93 to 1996-97) the spurt in industrial activities and output could also be noticed. The growth rate of 6.1 per cent in real output during the post-reform period (i.e. 1992-93 to 2002-03) was slightly higher than the pre-reform decade of the eighties. This was achieved through competitiveness and efficiency gains. Recent statistics show that India’s external trade has increased significantly during the post-reform period. To be precise, the share of India’s export in world mercantile trade has increased from 0.52 per cent in 1990, to 0.8 per cent in 2002. During the reform period India’s exports have increased from US $18.1 billion in 1990-91 to US $52.8 billion in 2002-03, while India’s imports have increased from US $24.1 billion in 1990-91 to US $61.6 billion in 2002-03. The higher growth in India’s exports over imports has led to a decline of India’s trade deficit.

Answer : Important recommendations of the Narasimham Committee (1998) on Banking Sector are as follows:

• The committee has made out a strong case for a stronger banking system in the country especially in the context of Capital Account Convertibility (CAC) which would involve large inflows and outflows of capital and consequent complications for exchange rate management and domestic liquidity. For this purpose the committee has recommended the merger of strong banks which will have a multiplier effect on industry. The committee has however, cautioned the merger of strong and weak banks, as this may have a negative impact on the assets quality of the stronger bank. It has also supported that two or three large Indian banks be given international or global character.
• The setting up of small local banks which would be confined to states or cluster of districts in order to serve local trade, small industry, and agriculture.
• Higher capital adequacy requirements for banks and the setting up of an Asset Reconstruction Fund (ARF) to take over the bad debts of the banks.
• The committee has considered the issue of autonomous status of the Board for Financial Supervision of RBI and the need to segregate regulatory and supervisory function of RBI. It expressed the need for RBI to maintain in an arms’ length from those being regulated and hints at the need for withdrawing RBI nominee for bank boards.
• The committee has suggested the urgent need to review and amend the provisions of RBI Act, Banking Regulation Act, Bank Nationalisation Act, State Bank of India Act, etc. So, as to bring them in line with the current need of the banking sector.

Other recommendations relate to the need for computerisation process in public sector banks, professionalising and depoliticising bank board, review of recruitment procedures, training and remuneration policies.

Answer : After independence, India launched a series of economic plans for rapid expansion in agriculture, industry, transport and other infrastructure, with a view to increase production and employment, to reduce poverty and inequality of incomes and wealth and to establish a socialist society based on equality and justice. To bring about increase in agriculture, the Five Year Plans in India brought additional land under cultivation, expanded irrigation facilities and used increasingly chemical fertilisers and pesticides and high yielding hybrid seeds, etc. In the sphere of industries, new industries, new industries have been set up, existing industries have been expanded and technology is being continuously upgraded, Development of Agriculture and industry has been accompanied by development and expansion of infrastructure-namely of power, transport and communication, banking and finance, etc.

• At the same time, because of growing population and high degree of mechanisation, mindless and ruthless exploitation of natural resources, we have degraded our physical environment such as, soil, water, and biotic factors on which we all subsist, and on which our entire agricultural and industrial development depends. Rapid economic development is actually turning India into a vast Westland. Environmental degradation include: Land degradation & soil erosion, deforestation, pollution, destruction of habitat, water logging, overgrazing and ecological degradation, etc.

Answer : Road is the life-line of the economy. Road transports have grown as a prominent system of transportation of goods and people in the country. India has an extensive road network of more than 3.3 million km, making it one of the largest in the world. In spite of this, India has a lot of problem in road transport. About 50 per cent of Indian roads are not in good condition. Therefore, transportation on these roads is not possible in all seasons. As we know, road transport is of particular advantage to the farmers. Good roads help the farmer to move their product quickly to the mandis and towns. This assumes great importance in the context of green revolution. In absence of good and metalled road, during monsoon season, it is impossible for the villagers to move out of their villages.

In other hand, the total length of national highway in country is about 58,112 km. It stands about 2 per cent of the total roads and control about 40 per cent of transportation across the country. So, national highways have great load for transportation. It always faces congestion that restricted the fast transportation. Even many of the national highways are in very bad condition. Road transport has been experiencing very high cost of operation, partly because of heavy and numerous duties and taxes and partly because of bad roads. Bad roads are responsible for accidents, for heavy wear and tear of tires and other parts, high fuel consumption, etc. bad roads restricted the quick transportation and cause a negative effect on country’s economy.

The government activated the National Highway Authority of India (NHAI) to implement the policy of privatisation to cut down the procedural delays. NHDP merging the Golden Quadrilateral connecting Delhi-Mumbai-Chennai and Kolkata (5,952km) and the North-South and East-West corridors. Other initiatives are:

• Undertaking feasibility studies and detailed project reports for project costing up to Rs 100 crore can be approved by the minister of Surface Transport. Several other procedures have been simplified.
• A range of tax incentives have been announced to help plough in funds from the private sectors.
• The measures formulated to encourage private sector participation in the road sector include permission to the NHAI to fund equity in private or public companies. In case of Build-Operated-Transfer (BOT) project, the government will compensate entrepreneurs according to international norms in those cases where collection of tolls is hampered by either force majeure or policy risks.
• To attract private sector investment in the road sector provisions relating to foreign investment have been further liberalised.

Answer : Alternative energy sources refer to energy sources which are not based on the burning of fossil fuels or the splitting of atoms. The undesirable effects of pollution both from burning fossil fuels and from nuclear waste by products have given a fillip to the search of alternative energy sources.

Some of the possible alternatives are:

1. Solar Energy: It is one of the most resourceful sources of energy for the future. Solar energy is presently being used on a smaller scale in furnaces for homes and to heat up swimming pools. On a larger scale use, solar energy could be used to run cars, power plants and space ships.
2. Wind Energy: Wind Power is another alternative energy source that could be used without producing byproducts that are harmful to nature. Like solar power, harnessing the wind is highly dependent upon weather and location. The average wind velocity of Earth is around 9m/sec. And the power that could be produced when a wind mill is facing the wind of 10miles/hr is around 50 watts.
3. Geothermal Energy: Geothermal energy is an alternative energy source, although it is not resourceful enough to replace more than a minor amount of the future’s energy needs. Geothermal energy is obtained from the internal heat of the planet and can be used to generate steam to run a steam turbine. This in turn generates electricity, which is very useful form of energy.
4. Tidal Energy: Similar to the more conventional hydroelectric dam, the tidal process utilizes the natural motion of the tides to fill reservoirs, which are then slowly discharged through electricity.
5. Hydroelectricity: Hydroelectricity comes from the damming of rivers and utilizing the potential energy stored in the water. As the water stored behind a dam is released at high pressure, its kinetic energy is transferred onto turbine blades and used to generate electricity.

• The Agreement on Agriculture has only in theory favoured agriculture in developing countries, but in practice, its implementation has seriously affected agriculture in developing countries. According to the Agreement, developed countries agreed to reduce these subsidies by 20 per cent over six years and developing countries by 13 per cent over 10 years. However, developed countries under Green Box and Blue Box subsidies continue to support agriculture. Similar to domestic support subsidies, developing countries are not allowed to increase their negligible level of export subsidies while developed countries are allowed to maintain 64 per cent of their subsidy outlays on the base level. Consequently, agricultural imports from developed countries are available at much below the market price in the domestic economy.

• SDR is a type of international money created by the International Monetary Fund (IMF) and allocated to its member nations. SDRs are an international reserve asset, although they are only accounting entries. Subject to certain conditions of the IMF, a nation that has a balance of payments deficit can use SDRs to settle debts to another nation or to the IMF.

• According to RBI’s Act, it is mandatory for the scheduled banks to deposit at least 3 per cent of their deposit to the RBI. This reserve deposit is known as Cash Reserve Ratio (CRR). It may vary from3 per cent to 15 per cent. At present, CRR is 5 per cent.

• The concept of priority sector lending is mainly intended to ensure that assistance from the banking sector flows in an increasing manner to those sectors of the economy which, though accounting for a significant proportion of the national product, has not received adequate support of institutional finance in the past. RBI sets targets in terms of percentage (of total money lent by the Banks) to be lent to certain sectors, which in RBI’s perception would not have had access to organised lending market or could not afford to pay the interest at the commercial rate. The priority sectors are: agriculture, small industries, education, housing loans etc.

• Generally companies announce their loss or profit itself and pay taxes according to the Income Tax Act. Many companies have zero tax on its profit under Income Tax Act. To include this profit under tax network Minimum Alternative Tax (MAT) has been imposed in India.

• Business Process Outsourcing (BPO) is a process in which the work of one region or country has been completed by the outer or foreign country by a highly skilled person. For example, many works of US has been completed in India.

• Social justice mean equal development of all classes of society. For the social justice in Indian economy, mixed type of economy is accepted by India. The establishment of Public sectors is meant for social justice as well as development of the country.

Answer : The Human Development Index is a summary measure of human development. It measures average achievements of a State on the following three basic dimensions of human development:

Life and Health Life: This is measured by life expectancy at birth. Maximum and minimum value of life expectancy is considered to be 85 years and 25 years respectively. The life expectancy index is calculated by applying the following general formula.

• The value of the index calculated using this formula will lie between 0 and 1.
• Other two measures are adult literacy rate and decent standard of living.

• Mixed economy refers to that economic system in which both private and public sector co-exists. Indian economy is an example of a mixed economy. For the social, economical, political development mixed economy is necessary in India. Private sector invests only in those areas where they have profit but the public sector invests for the social and economical development of the society.

• The production of raw materials such as minerals, crops, are included in primary sector, the production of manufactured goods from raw material are included in secondary sector and service sectors are included in territory sector. During the period of 1950-2000, the contribution of primary sector in GDP is reduced from 56.1% to 23.8%, in secondary sector GDP increased from 11.7% to 22% and the contribution of territory sector increased from 32.6% to 54.1%.

• The SEBI was set up in 1988, was given statutory recognition in 1992. It is mandated to create conducive and smooth environment, which would facilitate mobilisation of adequate resources through the securities market and its efficient allocation. SEBI regulates the business in stock markets and other securities markets. SEBI promotes and regulates the self-regulatory organisation. Investor’s education and training of intermediaries of securities market are also promoted.

• It is a practice restored to by modern government of spending more money than it received in revenue. It is a policy of bridging a deficit between government’s expenditure and revenue deliberately budgeting for a deficit is called deficit financing. This was popularised by Prof. J.M. Keynes to deal with the depression and unemployment situations and to stimulate economic activity.

Answer : Prime Minister’s five point agenda for India’s development as a knowledge society are as follows:

1. Use Information technology to increase access to education and improve literacy in slums.
2. Provide for quality universal elementary education by 2010 and increase its reach, link higher education with industry and societal endeavours; increase IIT’s and IIM’s.
3. To increase employment–biotechnology promotion and application, promotion of knowledge based service industries, packaging and marketing of ancient scriptures, especially medicine and capacity building in R&D capabilities and application of technologies flowing from innovations need to be harnessed.
4. On knowledge protection–strengthening intellectual property rights, protection of microbial resources and native knowledge and culture and safeguarding against electronic attacks.
5. Set up Education Development Finance Corporation through private sector initiative; slacken government hold over universities in matters of setting the fee structure.

Answer : Since 1951, India has completed nine five year plans. Tenth plan is currently under execution. The guiding principles of India’s Five Year Plans are provided by the basic objectives of growth, employment, self-reliance and social justice. Apart from these basic objectives, each five year plan takes into account the new constraints and possibilities faced during the period and attempt to make the necessary directional changes and emphasis.

• At the time of the First Five Year Plan (1951-56) India was faced with three problems—influx of refugees, severe food shortage, and mounting inflation. India had also to correct the disequilibrium in the economy caused by the Second World War and partition of the country. Accordingly, the First Plan emphasized, as its immediate objectives the rehabilitation of refugees, rapid agricultural development so as to achieve food self-sufficiency in the shortest possible time and inflation control.
• The Second Plan (1956-61) was conceived in an atmosphere of economic stability. Agricultural targets fixed in the First Plan had been achieved. Poverty level had registered a fall and consequently, it was felt that the Indian economy had reached a stage where agriculture could be assigned a lower priority and a forward thrust made in the development of heavy and basic industries of the economy for a more rapid advance in future. The Third Plan (1961-66) gave top priority to agriculture but it also laid adequate emphasis on the development of basic industries, which were vitally necessary for rapid economic development of the country. However, because of India’s conflicts with China in 1962 and with Pakistan in 1965, the approach of the Third Plan was later shifted from development to defense and development. The Fourth Plan (1969-74) aimed at an average 5.5 percent growth rate in the national income and the provision of national minimum for the weaker sections of the community—the latter came to be known as the objectives of ‘growth with justice’ and “Garibi Hatao” (Poverty Removal).
• The Fifth Plan (1974-79) strategies launching a direct attack on the problem of unemployment, under-employment and massive low-end poverty. But this approach was eventually abandoned and final draft of the Fifth Plan prepared and launched D.P. Dhar proposed to achieve the two main objectives, viz., removal of poverty and attainment of self reliance. Through promotion of higher growth rate, better distribution of income and a very significant set-up in the domestic saving rate. The new Sixth Plan (1980-85) was launched with its inherent approach, attack on the problem of poverty by creating conditions of an expanding economy. The Seventh Plan (1985-90) sought to emphasize policies and programmes which would accelerate the growth in food grains production, increase employment opportunity and raise productivity—all these three immediate objectives were regarded central to the achievement of long term goals determined as far back as the First Plan itself. The Eight Plan (1992-97) was approved at a time the country was going through a severe economic crisis caused by a balance of payments, a rising debt burden, ever-widening budget deficits, amounting inflation and recession in industry. The Narasimha Rao Government initiated the process of fiscal reforms as also of economic reforms with a view to providing a new dynamism to the economic reforms.
• The Ninth Five Year Plan (1997-2002) was developed in the context of four important dimensions of state policy, viz. quality of life, and generation of productive employment, regional balance and self-reliance. The Ninth Plan focused on accelerated growth, recognising a special role for agriculture for its stronger poverty reducing and employment generating effects, which will be carried out over a 15 year period. And, finally the Tenth Plan (2002-07) provides an opportunity, at the start of the new millennium, to build upon the gains of the past and also to address the weaknesses that have emerged.

Answer : Task Force on Direct Taxes was set up under the chairmanship of shri Vijay L. Kelkar, to recommend measures for simplification and rationalisation of the taxes. Major recommendations were as follows.

Tax Administration

• Expansion of taxpayer services both qualitatively and quantitatively. Easy access to taxpayers through internet and e-mail and extension of facilities such as Tele-filing and Tele-refunds.
• Extension of PAN to cover all economic agents/citizens.
• Processing of all returns and issue of refunds within four months.
• Introduction of transparency and objectivity in the process of selection of cases.
• Establishment of a Tax Information Network on a build, operate and transfer basis to speed up the process of modernisation and consequent simplification and rationalisation of the scheme of tax deduction at source.
• Abolition of the requirement of obtaining a tax clearance certificate before leaving the country. Restriction of this requirement to proclaimed offenders.
• Enhance accountability of officers and staff.
• Empowering CBDT with appropriate administrative and financial powers.

Personal Income Tax

• Increase in exemption limit to Rs 1 Lakh for the general category of taxpayers. A higher exemption limit of Rs 1.50 lakh for widows and senior citizens.
• Introduction of a two rate personal income tax schedule — 20 percent up to an income of Rs 4 Lakh and 30 percent for income exceeding Rs 4 Lakh. Elimination of surcharge on personal income tax.

Elimination of standard deduction

• A tax rental agreement whereby states would authorise the Central Government to impose income tax on agricultural income and assign the proceeds to states.
• Elimination of tax incentives under section 88, 80L, and interest income under section 10.

Corporate Tax Reforms

• Reduction in corporate tax rate to 30 percent for domestic companies. Foreign companies to be taxed at 35%. Exemption from tax on dividends and capital gains from listed equity.
• The general rate of depreciation for plant and machinery to be reduced to 15 percent from the existing level of 25 percent.
• Elimination of minimum alternate tax.
• Removal of exemption under section 33AB, 33AC, 33B, 35, 35AC, 35CCA etc.
• Income of mutual funds derived from short term capital gains and interest to be taxed at a flat rate in the hands of the mutual funds.
• Others Abolition of wealth tax.

Answer : The Tenth Five Year Plan has kept on ‘ambitious’ objective of achieving 8 per cent per annum growth over the plan period. The plan itself admits that achieving this objective is bound to be a daunting task as the medium term performance of the economy over the past several years suggests that the ‘demonstrated growth potential’ is only about 6.5 percent.

In addition to the 8 per cent growth target, the Tenth Plan also aims at enhancement of human well being and identifies the following specific and monitorable targets for this purpose:

1. Reduction of poverty ratio by 5 percentage points by 2007 and by 15 percentage points by 2012.
2. Providing gainful and high-quality employment at least two addition to the labour force over the tenth plan period.
3. All children in school by 2003; all children to complete 5 years of schooling by 2007;
4. Reduction in gender gaps in literacy and wage rates by at least 50 per cent by 2007;
5. Reduction in the decadal rate of population growth between 2001 and 2011 to 16.2 percent;
6. Increase in literacy rate to 75 per cent within the plan period;
7. Reduction of infant mortality rate to 45 per 1000 live births by 2007 and to 28 by 2012;
8. Reduction of maternal mortality ratio to 2 per 1000 live birth by 2007 and to 1 by 2012;
9. Increase in forest and tree cover to 25 per cent to 2007 and 33 per cent by 2012;
10. All villages to have sustained access to potable drinking water within the plan period;
11. Cleaning of all major polluted rivers by 2007 and other notified stretches by 2012.

Answer : Capital controls are being removed selectively—in capital account transactions—though full convertibility of the Indian rupee has been permitted in the current account for quite some time now. The Union Budget 2002-2003 has made the non-resident schemes fully convertible. Other measures announced during the current year included a hike in foreign exchange allowance for individuals up to US $ 10,000 and permission to Indian citizens to maintain foreign currency deposit out of foreign exchange earned/retained from travel expenses. In view of the high level of foreign exchange reserves being held by the economy and the comfortable external sector scenario, capital controls were further liberalized with a view to introducing greater flexibility in capital account transactions. The measures include:

• Removal of the existing limit of US $ 20000 for remittance under the ESOP scheme.
• Discontinuation of limits on trade-related loans and advances by EEFC account holders, though the transactions will continue to be reportable to RBI.
• General permission to retain ADR/GDR proceeds abroad for future forex requirements.
• Permission to corporate, which have set up their branches and offices abroad, to acquire immovable property overseas for their business/staff residential purposes.
• Permission to listed Indian companies to invest abroad in companies listed in recognised overseas stock exchanges, and having at least 10 percent shareholding in a company listed on a recognised stock exchange in India on January 1 of the year of investment. Such investments should not exceed 25 per cent of Indian companies net worth as on the date of the last adudited balance sheet.
• Permission to mutual funds to invest abroad in companies which are listed on overseas stock exchanges, and which have at least 10 percent shareholding in a company listed on a recognised stock exchange in India on January 1 of the year of investment. The overall cap for investment abroad by mutual funds has been raised to US $ 1 billion.
• Apart from companies, individual’s are also permi­tted to invest abroad in companies. However, no investment limits have been fixed for individuals.

• Taxation coverage expanding to value addition at all stages of production and distribution chain refers to Value Added Tax. Introduction of VAT is expected to increase revenue buoyancy.

• It is landmark legislation that aims at promoting competition through prohibition of anti-competitive practices, abuse or dominance and through regulation of companies beyond a particular size. This Act will replace the MRTP Act.

• Shares are purchased back by the companies, from the market, in order to increase its assets, profit, return and finally to influence management practices.

• This scheme was launched on August 10, 2000 by the govt. for the people living below the poverty line. Under this scheme beneficiaries will have life security of Rs 20000 (in cases of natural death) and Rs 50000 (in case of accidental death) by paying an annual premium of Rs 200 only. Beneficiaries living below the poverty line will have to pay only Rs 100 as premium and the remaining amount of Rs 100 will be paid from the Social Security Fund of LIC.

• Under this scheme, public sector banks were directed to grant at least 1% of their total deposits of previous year to weaker sections of the society at a concessional interest rate of 4%. It was made a compulsion on the part of banks to allot at least 40% of their advances under this scheme to SC/ST people.

• Interest payments, central plans and defence are the three major items of expenditure of the government of India on revenue account.

Answer : As a concept, a growth center is a pattern of concentrated, higher-density, mixed-use development that:

• replicates and builds upon traditional patterns of development;
• is defined by an urban growth or infrastructure service area boundary;
• is planned to accommodate most anticipated growth in the community without resulting in widely scattered, low-density sprawl;
• is supported by public investment in infrastructure, within designated service areas;
• features a variety of land uses, including formal and informal public spaces; and
• supports walking, public transit, and alternative forms of transportation.

Perhaps most important, growth centers should have clearly delineated boundaries and exhibit densities of development that are higher than densities found outside delineated areas. An area simply designated for future development without appropriate design or density characteristics would not qualify, nor would an isolated tract of land proposed as a single purpose development, such as an industrial or office park. On the other hand, well-planned growth centers should incorporate and integrate in their overall design areas for civic, commercial, and industrial uses; residential neighborhoods; and parks and open space.

Application of Growth Center in regional Planning

Growth center planning really begins at the local level with the development or update of the municipal plan. Planning those results in state growth designation must include the following:

• Projections: One of the foundations of effective growth center planning is the development of realistic estimates of growth, projected over twenty years or more. These projections form the basis for determining how much area should be included within growth center boundaries and also the capacities of supporting infrastructure needed to accommodate planned densities of development within the designated area.
• Growth Center Design and Build-out: Local planners also need to determine how developing areas will be integrated into the overall pattern of development in ways that meet the definition and characteristics of a growth center described above.
• Rural Lands: Finally, the growth center plan should address ways to discourage development outside the delineated growth center to protect the rural character and working landscape of outlying lands.
• Implementation Program: The growth center plan should include an implementation program that documents how and when various steps in growth center development will be accomplished. The implementation program must include the adoption of local land use regulations that accommodate anticipated types and densities of development and a capital improvement program that schedules the financing and construction of supporting infrastructure.

Answer : In March 2002, a five year EXIM Policy was announced. A number of concessions have been offered to exporters focusing sharply on SEZs, Agri exports, industrial clusters, etc. These concessions aim at pushing export growth to 12%. The aim is to take India’s share in world trade to 1% from the current 0.6%.

SOPs for SEZs are following:

• Special incentive for existing 14 SEZs.
• SEZs permitted to setup overseas Banking units.
• SEZs can now access foreign funds at cheap global interest rates.
• Banks exempted from CRR and SLR.
• SEZ exempted from central sales tax.

For Agri Exports:

• QR to go except for Onion and Jute.
• Transport subsidy for fruit, Vegetable, Poultry and Dairy products. 20 Agri export zones (AEZ) for farm goods, processed products.
• To capture new markets in African countries.
• Farms exporting to the markets would be given export house status on export of Rs. 5 crore.
• Similar programme for Russia and Latin America.
• Apart from the above measures adoption of a new 8 digit commodity classification for exports and imports to reduce classification dispute between commerce and custom department and exporters.
• Abolition of duty exemption entitlement certificate (DEEC) book, a practice since 1975, in view of a lot of rent seeking activities between exportes and compact officials.
• In cottage and Handicraft export norms eased for duty remission and export house status for those who export Rs. 5 crore annually.
• In Gems and Jewellery—Zero duty import of rough diamond, abolition of licensing for such import etc.

Answer : Minimum Support Price is that price at which government is ready to purchase the crop from the farmers directly if crop price becomes lower than MSP. Its main objectives are:

• To prevent fall of prices in the situation of over production
• To protect the interest of farmers by ensuring them a minimum price for their crops in the situation of a price falls in the market.

The policy of minimum support price had its beneficial consequences like income security to farmer bringing investment into agriculture, building up buffers, a large network of FP shops, stabilizing Priceline and consumer welfare. At the same time it is also criticized for the 60 mt of cereal stock that the government buildup. Farmer chooses cereal over other crop as there is assured income. MSP also benefits only the farmers with surplus who make up a minority of the Indian farming community.

Answer : The new industrial policy announced in 1991 envisaged disinvestment of part of government share holdings in the case of selected public sector enterprises to provide financial discipline and improve the performance of public enterprises. The primary objectives of disinvestments are:

• Releasing the large amount of public resources locked up in non-strategic PSE, for redeployment in areas that are much higher on the social priority.
• Stemming further outflow of this scarce public resource.
• Reducing the public debt.
• It would expose the privatised company to market discipline, thus increasing their efficiency and productivity.
• disinvestment would result in wider distribution of wealth through offering of share to small investers and employees.
• Beneficial impact on capital market.

Some achievements so far:

• Disinvestment in government equity has been completed in about 50 PSUs, and 20,000 crores have been realised.
• Sales of modern food rose more than 90%
• Salaries went up by an average of Rs. 1600.
• BALCO employees saw salary hike by 20%.
• Since January 2000 the PSU index on the BSE rose by 75%.
• The effect on public debt and interest payments is also appreciable. Government borrows at 10% so the money raised will lessen the debt service ratio.

Answer : The union government has approved the removal of the requirement of licensing of dealers and restriction on storage and movement of wheat, rice, paddy, sugar, edible oil etc. placed under the Essential Commodities Act.

• The decision of the government involves the objective of freeing up markets. It may also appear that this could also be the beginning of a unified Pan-India market for agriculture produce.
• Facilitating free trade and movement of food grains would enable famous to get the best prices for their produce, achieve price stability and ensure availability of food grains in deficit areas.
• It is also in the interest of consumers, the lower income group. Such freedom for private trade in food grain is a prerequisite for the government’s proposed move to limit official procurement to the buffer stocking norm.
• Removal of quantitative ceiling may not translate into large scale expert of food grain but a window of opportunity is open to the private players to explore overseas markets.

• It is the difference between the revenue receipts plus certain non-debt capital receipts and the total expenditure loans. This indicates the total borrowing requirements of the government from all sources.

• Ad-valorem is imposed on a goods or service according to its monetary value while specific duties according to the weight, volume etc.

• The practice of justifying the utility in cost benefit terms of each government expenditure on projects. It involves a critical review of every scheme before a budgetary provision is made in its favour. Here every Re spent is result oriented.

Answer : Swarn Jayanti Gram Swaraj Yojana: Integrated Rural Development Programme (IRDP) and allied programmes such as Training of Rural youth for self employment (TRYSEM), DWACRA, Million Wells scheme, Sitra, and Ganga Kalyan yojna have been restructured in to a self employment programme called Swarna Jayanti Gram Swarojgar Yojna (SGSY) from April 1999 with the following objectives:

• (i) Focused approach to poverty alleviation (ii) Capitalising advantages of group lending and (iii) Overcoming the problems associated with multiplicity of programmes. The SGSY is conceived as a holistic programme of micro enterprises covering all aspects of self-employment which includes orgnising rural poor into self-help Groups (SHGs). It integrates various agencies-District Rural Development agencies, banks, Panchayati Raj institutions, Non-governmental Organization and other Semi-government organisations.
• The objective of SGSY is to bring the existing poor families above the poverty line by providing them income generating assets through a mix of bank credit and government subsidy and to ensure that an assisted family has a monthly income of at least Rs. 2000. Subsidy under SGSY is uniform at 30 per cent of the project cost subject to a maximum of Rs. 7500. In respect to scheduled castes and scheduled tribes, it is 50 per cent subject to a ceiling of Rs. 1.25 lakhs. There is no monetary limit on subsidy for irrigation projects. SGSY is funded by the centre and states in the ratio of 75:25.

Answer : In an underdeveloped economy low capital formation is considered as one of the major hurdles of rapid economic growth. Gross domestic capital formation is composed of two components—gross domestic saving and net capital inflow from abroad. Gross domestic saving (measured at current price) was 10.4 percent of GDP in 1950-51, it improved to 12.7 percent by 1970-71. Thereafter, there was rapid spurt in gross domestic saving and it improved to 21.2 percent by 1980-81. Since then, domestic saving effort fluctuated but rose to reach a level of 24.3 percent of GDP in 1990-91. Thus during nearly 42 years of planning, gross domestic saving rate has more than doubled—from 10.4 percent in 1950-51 to 23.9 percent of GDP in 1996-97. This may be treated as a success of our planning efforts towards mobilisation of savings.

Gross domestic capital formation is an index of the level of the investment in the economy. From this point of view, it can be stated that whereas gross domestic capital formation was 10.2 percent of GDP in 1950-51, it reached a level of 22.7 percent of GDP in 1996-97. Judged by international standards, India can legitimately claim that the rate of domestic saving and investment is fairly high.

Jagdish Bhagvati (1993) explaining the paradox of ‘high saving, low growth’ leading to the phenomenon of declining productivity, mentions: “the weak growth performance reflects, not a disappointing saving performance, but rather a disappointing productivity performance.” Enumerating the factors that stifled efficiency and growth, Bhagvati divided them into three major groups:

1. Extensive bureaucratic controls over production, investment and trade;
2. Inward looking trade and foreign investment policies; and
3. A substantial public sector going well beyond the conventional confines of public utilities and infrastructure.

The former two adversely affected the private sector’s efficiency. The last, with inefficient functioning of public sector enterprises, additionally impaired the public sector enterprises’ contribution to the economy. Together, the three sets of policy decisions broadly set strict limits to what India could get out of its investment. It would, therefore, be very prudent to mention that whereas it is important to raise the rate of saving in the economy, it is equally important to use those savings effectively in raising output. The efficiency of use of investment, whether it is made in public or private sector, will determine ICOR.

• Ever since 1991 when the Indian economy was liberalised, floodgates have opened for the so-called ‘white goods’ or consumer durables and electronic goods. Both foreign and indigenous entrepreneurs capitalised on the various sops and incentives to flood the market with consumer goods. The approval of FDI up to 51% as also trade flow, capital flow and technology flow helped in the rise of different brand names in the white goods sector- Whirlpool, Samsung, Thomson etc. to name a few. The cut-throat competition meant that prices were slashed and a whole lot of incentives offered to lure the consumer. As more and more companies joined in the fray a glut resulted. The major names in TV, fridge or washing machine production could absorb the shock but indigenous companies had to pay the price. The ‘middle class Indians’ is known for his consumer savvy mentality. However, though his desires never dry up, his bank account is limited. The demands for white goods rise steeply. The concerned companies eagerness to tap the market during this period results in over estimation and thus over production and what follows is Take two, one free schemes.

Answer : Although reduction of fiscal deficits was one of the major objectives of the reform process, a review of the fiscal deficits of both the centre and states level reveals that after remaining subdued at a moderate level, fiscal deficits again became larger towards the close of the nineties. The hurdles faced by the finance ministers of India in keeping the fiscal deficit below 3-4 percent of GDP are: growth of expenditure as a result of the recommendation of the fifth pay commission, rising trend of interest burden as a result of resort to higher borrowings, growth of subsidies and failure of the government to reduce them due to the pressure of powerful lobbies. On the revenue side, reduction of rate of taxes (personal and corporate taxes and excise and custom duties) did not result in more than proportionate increase in tax revenues. Regarding non tax revenues, investment in public sector undertakings yielded a rate of return, which was below the cost of funds.

• To lower the fiscal deficit, it would be necessary to (i) control administrative expenditure (ii) reduce subsidies on non merit goods (iii) improve cost recovery of services provided by the state (iv) undertake disinvestment of loss making enterprises (v) reduce public debt to scale down interest burden (vi) widen tax base through agricultural taxation and taxation of services and (vii) tighten tax administration to plug tax evasion.
• The government should pass Fiscal Responsibility Act so as to introduce fiscal discipline. However, the success of the Act will depend on the extent to which the governments at the centre and the state abide by its directions.

Answer : This year the UTI declared it’s lowest ever dividend of 10% in 21 years. The reason behind the present crisis is not of any immediate factor. For over a year or more US-64 and most of the scheme of the UTI has been under a cloud. Its investment decision, the management’s conduct and its accountability have been vigorously debated since the stock market crashed in March 2001. Why talk of year 2001 only, even in the year 1998-99, the Government of India bailed out the trust with Rs. 3,300 crore when the US-64 reserves turned negative. Anyhow the present imbroglio is mainly due to mismanagement of funds by the trustee. They went on investing in old economy instruments when technology media and telecom stocks were cheap and rising. UTI, finally, bought these information, communication, entertainment shares, when those were sky high. Secondly, heavy investment in equity and less in debt market brought disequilibrium in the ratio. Thirdly, the structure of US-64 scheme, unlike all other mutual funds is not based on entry or exit at or around net asset value. Lastly, UTI has always been used by all concerned, whether it is bureaucrats, or industrialist or brokers for their benefit.

• Suspension of sale and repurchase of US-64 for six months have left the common investors in a state of shock. The assurance by finance minister for probe and the dwindling scene present other doubts. Even the capital market friendly budget is unable to revive the whole scenario. Given the magnitude of the scheme and its import on the mutual fund industry and the capital market, the government must move in swiftly to restore investor’s trust and confidence which has been badly mauled in one stroke. The remedy in the end lies in delinking UTI from government interference. An independent professionally managed UTI can go a long way in retaining public trust through a transparent pricing of its schemes.

Answer : Vermicomposting is the process of growing earth-worms in various kinds of waste material and using the excretion of the earth-worms as manure which contains PNK. The earth-worm is useful in land reclamation, soil improvement and organic waste management. The earth-worm acts as waste controller, compost manufacturer and protein producers. They incorporate organic matter and turn over large amounts of soil by burrowing, feeding and casting. The agricultural wastes mainly include crop residues, stubbles and manures from domestic animals. These waste materials can be processed under vermicomposting programme in rural areas in order to produce the cheap organic fertilizers at site without any extra cost. The earthworms are environment friendly. They take up into their tissues a number of unwanted organic and inorganic chemicals.

• In India, studies show that one lakh earth-worms in 32 sq. ft. of containers have the potential to convert 300-600 kg. of nitrogenous waste into organic matter in less than a week. An experiment has shown that soil with worms drain better and is less prone to flooding and erosion. The earth-worm enriches the soil with oxygen and encourages aerobic micro-organisms. They enhance the water holding capacity of soil.
• Agricultural scientists say that due importance should be given to organic farming in order to step up agricultural yields on a sustainable basis. Organic farming is gaining in popularity world over recognising this reality; the Government of India has launched a National Programme for Organic products and Farming 2000.

• CRISIL (Credit Rating Information Services of India Limited) is the First Credit Rating Agency of the country which started its functioning since January 1988. This credit rating is meant only for debentures and not for equity issues.

• In budget proposals of 1994-95, then finance minister, Dr. Manmohan Singh declared the full convertibility of rupee in the current account which means—liberalising the access to foreign exchange for all current business transactions including travel, education and medical expenses etc.

• Providing industry status to agriculture mean all the infrastructural facilities that are being provided to industry should also be provided to agriculture. The main problem in providing the status is that after getting the industry status agriculture will be taxed.

• To accelerate the pace of white revolution ‘operation flood’ was introduced in the country. Operation Flood is world’s largest dairy development programme. It has made considerable progress in achieving its outlined objectives. India stands first in the world in milk production.

Answer : When the general price level starts an upward rising at a very fast pace, it is known as galloping inflation. Runaway inflation is the galloping inflation—the last and the most damaging state and stage of inflation.

• The “couple protection ratio” is the ratio of the couple having reproductive capacity to the total couple population. This is very useful to prepare population control policy. In India presently it shows a declining trend.

• The ‘human development index’ and ‘gender related development index’ both are indices used by UNDP for Human Development Report 2000. Human development index is most important index and shows human resource development where as GDI indicates status of women. India has been placed at 128th on HDI basis and at 108th place on GDI basis.

• As compared to the high demand for US($) dollar, its supply and availability with different nationals became very restricted for their products did not find ready acceptability in USA. So demand for dollar went far ahead of supply. It came to be called as hard currency while the other currencies by comparison came to be called as soft currencies.

• Rolling plan was first advocated by Gunnar Myrdal. It is an annual plan, a 5 year plan as well as a perspective plan. For example, if a plan is for the period say 1990-95, next year it will become for 1991-96, then next year for 1992-97 and so on. In India, it was first introduced by Janata Govt. in 1978 but it was abolished by Indira Govt. in 1980.

• Lorenz Curve shows the degree of inequalities of a frequency distribution in a graphical manner. 45” straight line would show perfect equality line. Such a line remains straight all through. The distribution would be unequal when the firm numbers in spite of being large employ less people while smaller number of firms employ large number. Plotting of such a line would be below the 45 degrees line and the degree of the curvature will be greater.

• Trickledown theory of development is the notion that development is purely an economic phenomenon in which rapid gains from the overall growth of GNP and per capita income would automatically bring benefits (i.e. trickle down) to the masses in the form of jobs and other economic opportunities.

• Misery index is the parameter of misery prevailing in economy and society. It is combination of inflation, unemployment and illiteracy. In recent days, it is widely used in planning process.

• India’s fertility rate has outnumbered the maternity rate with big margin which has led to population explosion from 1960’s to 1990’s especially in 80’s.
• Looking at our population growth rate, it is very much expected that we may outscore China and thus become world most popular country in coming 3 to 4 decades.
• With nearly 2.4% of land area of the globe we are sustaining around 16% of words population. This reflects our population–resource scenario of our country; we are sustaining huge population with little resource in our hand. This has affected our economic services have great demands in the world market. India has hugely benefited out of this IT sector, as the demands in this sector is accentuating greatly, largely due to the growing efficiency of Indian IT across the world. India’s foreign currency is also positively affected under the influence of IT sector. There is flow of FDI in this sector, providing required capital to make investment in domestic field.
• To enhance its IT efficiency, India is widening its expertiseness by opening new institutes like IIIT’s in several parts of the country.
• Due to its importance of IT sector, Indian government is making policies to help it grow by providing infrastructure to it. Favorable and liberal policies have been prepared to attract foreign companies to establish their base in India.
• Several Policies has been brought out to improve the IT industry in India. From 15th August, 2000, the Information Technology Act has been implemented. E-commerce and other services have been given legal back force through this Act.
• IT has brought many regions in India at the forefront on the map of IT world sector.

Answer : Following are the Criteria :-

• Place having Muncipality/Corporation/Cantonment with population above 5000.
• Density 400 persons/54 km.
• 75% of male working population engaged in non-agriculture sector.

Answer : The Seattle Millennium talks on the WTO failed to achieve targets which was supposed to achieve. Therefore it could not come out with any agreements on Global trade strategy. This failure can be attributed to the lack of mutual consensus among the four powerful developed economics, Japan, USA, Canada and the EU countries. They could not agree on various topics discussed in the round.

Few American Trade Unions and NGO’s put effort in inclusion of environmental measures among other related to trade, in discussion agreements, if any. Third world countries, inclusion India opposed some arbitrary demands of free trade by these developed economies which could have effect of breaking their domestic economics. They also tried to cover labour environment, competition and investment related policies and measures under the control of the WTO.

The failure of Seattle talk has the following implications for the Indian economy:

1. It may enhance India’s stature in international Platform. Developed Countries may search ways to convince to appease the India for her support or favour, development of our country.

• Large number of our population still remains unskilled, illiterate, which together brings hurdles their individual growth and altogether nation’s economic development.
• Country’s economic development thus is not able to follow the sustainable development path which is necessary in order to bring equity and rapid development in nation’s progress. About 26% of our population still lies under below poverty level. Country’s huge investment goes to ameliorate their condition through welfare programmes.
• Further with less skilled manpower, India is not able to utilize her Human resource to enhance economic development.
• Thus with less economic development, savings are less, which entails less investment and thus development.
• Infrastructure development and other facilities will also be affected due to population explosion.

2. Economical growth can be achieved by capital, resources and educated and skilled workers. Basic problems like shelter, foods etc. also do not allow people to get higher education and population’s large part remains under-productive.

3. This may have some effect on the amendments of the patent, copyright and other laws.

4. It may lead to continuous problems and disputes regarding to provisions of WTO.

5. It will help to spreading message among developed countries that their days of monopoly on world trade are gone. They cannot force or afford to leave developing countries isolated.

Answer : The (Revised) Targeted Public Distribution system aims at ameliorating the persons living under below poverty line. At present about 26% of population live under BPL. Revised, targeted public distributed system provides them food grains just at help prices of original one.

• In this centre will made available food grains to states at less prices who implement the scheme. 50% subsidy will be provided for such grain stock.
• There is also provision for double ration cards, green ration cards for those living below poverty line and red ration card for other families.
• The measures to consider who are below poverty line will be decided on the recommendation to the Lakdawala committee.
• This programme aims at providing food security, to the families who cannot afford to the market-rate.

Answer : Black money (or parallel economy) is like black dot on the Indian economy.

• It leads to huge loss of revenue to the country exchequer which would have brought investment in the economy. This black money comes into existence largely through tax-evasion. Due to less revenue collection, the government imposes more taxes and at higher rates. This eventually gives rise to a regressive tax structure.
• Existence of Black Money in an economy leads to Socio-economic disparity, creating huge gap between rich and poor. It leads to production of the goods for elite class at the cost of investment in expected or necessary areas.
• Large circulation of Black Money in the market in various forms promotes inflation in the economy.
• It sometimes violates foreign exchange regulation which leads to transfer of this money to foreign land.
• It also leads to corruption of administrative and political systems. This further breeds corruption thus vicious circle of corruption becomes ready.
• This affects the overall economic development process.

• India has followed a foreign policy on International peace and cooperation since its independence. India adopted Nehru ‘Panchsheel” as a cornerstone of its foreign policy, one of them is non-intervention principle.
• India respect sovereignty and integrity of every nation and do not interfere in the domestic matters of other nations and follows policy non-intervention.
• But the changing scenario of international politics led India to think again and reformulate its foreign policy. Even when the nations are demanding right to intervention on economic, political or strategic grounds, India has not abandoned ‘non-intervention’.
• India participated and signed international treaties and pacts, bilateral agreements with many countries, to maintain peace and cooperation.
• All these active efforts made India on emerging political leader in the world. For the recent example, even at the time of Kargil; India did not intervene into Pakistan and this strategy was praised all over the world.

Answer : Through this 'Industrial Policy of 1991' major changes have been introduced during the last few years is 'new' to Indian economy such as

• Industrial licensing system has been almost abolish. No license is required from the government.
• Producers are free to decide their scale and level of production.
• Whole of the economy has been left open to the private capital. Exclusive reservation for the public sector has been cut down to only areas of strategic importance.
• Doors have been left open for MNC's. These are given automatic approval.
• MRTP Act has been liberalised.
• Foreign exchange regulation has been almost totally dispensed with.
• Imports of almost all the goods are freely allowed without any restrictions.
• All price and distribution controls have been removed.
• Liberal incentives are being given to private enterprise to enter infrastructure industries.

In short, we can say, the economic policy in post - 1991 period has taken a U-turn. The new economic policy revolves around the following liberalisation, privatization and globalization (LPG) policy of Government.

Economic liberalisation after 1991 came to forefront giving greater freedom to economic agent to take their own decisions.

Thus, making a sharp departure from the Industrial Policy Resolution, 1956, the Government announced a new industry policy, heralding a new objectives to be set out by Indian economy.

Answer : The Multilateral Agreement on investment protection is provided to foreign investments in the country from its administrative and legal procedures. It is an agreement under the Multilateral Investment Guarantee Agency, an institute related to the World Bank.

This device helps to protect investors from currency convertibility and transfer related regulation in any country.

India joined as a member to this Agency in 1993 for attracting foreign investment in our economy for development. India and other developing countries require a big amount of capital for their economic growth. Investors would not be ready to invest their money if it is at any non-professional risk.

This agreement makes provision that such investments will be protected from any risk in foreign countries. To encourage investors, such guarantee is necessary but the agreement goes to the extent of providing counter guarantee by bilateral agreements among member states. The guarantee, not only for security of investment but for a profit, is beyond necessity.

In such condition, the developing countries would have adverse effect on their economy because the agreement provides that no interference, administrative or legal, should be there for the foreign investment. Such guarantee are not available to the domestic investors.

More and more investment, in the cover of such counter guarantee, will, of course, increase economic development in developing countries but will not protect domestic industries to complete with such foreign investors.

Answer : After Independence, India inherited shattered economy of having colonial features. Thus India had to start from a rudimentary economy. This brought planned development, as a tool for development which continued for the coming 50 years, after which depending on the changed scenario of world economy, development started taking the path of market led growth. In the early first half of Independent India development had to be based on socio-economic needs of the society. Socialistic pattern of development were chosen to follow as there was huge gap in the society based on economic and social disparity. This could not be erased out without adopting socialistic pattern of development based planned economy largely under state control. Development based on industrialisation and other factor has to be based on region identification depending upon its level of backwardness, in order to bring overall Balanced regional development.

After this half century of planning, now with the comming of LPG era (Liberalisation, globalisation and privitisation) economy is largely led by legislature. In PrimeMinisterial form ofgovernment, the PM is the head of the government who leads the government, takes all important decisions with the support of his ministers.

Influence of the PM in running the Government depends on his or her party's getting single majority and his personal caliber.

But the popularity of the Prime Ministerial from of government seems to be declining these decades, owing to lack of absolute majority to any party at the centre. They have to all with other parties to form the government. This weaken the position of the prime minister. He is not able to dominate or influence the Council of ministers and so the ministers works independently.

Emergence of various Regional parties are also the other reason of weakening of central government. As the Unstable government does not allow the PM to work independently.

Further 44th Amendment of the Constitution has made it mandatory for the PM to get advice of the Council of Ministers in writing, before advising the president for proclamation of Emergency.

All these factors has led to decline the proper and effective functioning of Prime Ministerial government market forces. This has to openness of economy. Thus one company is working many countries based on market economy. Since, 1991, our economy has also following the norm of globalisation.

But yet in country like India, Our wide social goals cannot be achieved through a market led economy. We must industrialise and grow in the direction which spreads benefits to all classes and not just to higher and elite classes. We need to change direction of planning so that to allow market forces, capitalist powers and at the same time our Objectives to sustain in parallel manner.

Answer : Poverty is multidimentional. It can be absolute or relative poverty.

Absolute Poverty is Poverty below breadline. Those who suffer from absolute poverty have no guarantee that will be able to meet the fundamental costs of livings as a human being. The world bank has set the norm of 1 dollar per day per person for this purpose. The absolute poverty line based on nutrition level, is defined as minimum requirement of

2400 calories per person/day for Rural Areas

2100 calories per person/day for Urban Areas.

Povertyis the greatest challenge of our time and we must find solution to mitigate the scourge by increasing in production, Agricultural Productivity, equitable distribution etc.

Government has evolved following measures to eradicate poverty.

(1)IRDP- Integrated Rural Development Project. Launched in 1980. The main objective was to bring some sort of employment to rural poor through local resources per se.

(2)DWCRA- Development of women and children in rural areas. started in 1982 with objective of providing proper self employment opportunities to the women of rural families, below poverty line in order that their living standards improve.

(3)TRYSEM- Training for rural youth for self employment - This programme is integral part of IRDP, Started by centre on 1929 to make rural youth self-employed through imparting technical assistance and business enterprise so that they could be raised above poverty line.

Answer : The Problem of Industrial Sickness in India is of growing concern because it wastes capital apart from decrease in employment.

Various committee appointed, found out many reasons for the Industrial Sickness. The important reasons are divided into-Internal and External reasons.

First one is associated with managerial ineffectiveness, which include poor control on key areas of operations and finance. Improper estimate of demand is another reason. Improper technology, wrong location of Industry, non-flexibility of fixed assets etc.

Defective capital Structure and Shortage ofworking capital is another reason.

Second reasons regarding external reasons area like High costs of manufacturing compared to Sales revenue, Non-availability of raw material, regular power, fuel etc.

Transportation bottlenecks, General recessionary from in the economy affecting the overall performance of industrial units, Adverse Policies and rules of government. The measures to over come these reasons of sickness can be suggested as under.

1. Effective and efficient management skills should be provided.
2. Technology should be upgraded.
3. Modernisation and Competitiveness.
4. Assessment of various factors of Loans etc. can be provided.
5. Liberal and helpful Policies of Government.

Answer : India inherited colonial economy at the time of her independence. Infrastructure at this stage was below the level from where effective growth could be carried out.

Thus Infrastructure bottlenecks both social and economic has been the cause of concern for economic development.

To achieve fast growth of economy, various factors are responsible, including Natural and Mineral resources, Capital, skill and technology, Liberal and Cooperative Government Policy and Infrastructure.

Except infrastructure, India is good with all other factors in India. Infrastructure for an industry includes transportation, raw-material, power, policies of government, services, resources etc. Due to lack of transportation, India's primary as well as secondary sector suffers with loss of financial losses. Goods are not able to reach its destination in time. Agricultural Produces are not able to reach its market in time, which inhibits the agricultural growth.

Further Power, electricity and fuels are other main set backs- which disturbs the economic growth in India. India currently need about 1 lakh MW power extra than what it currently entails, otherwise this will continue haunting the overall development of entire economic structure of the country.

Answer : The monetary policy in India is decided and declared by the Reserve bank of India. It decides measures to regulate Indian economy and directs it. In Indian economy, the flow of money and capital is rather less than required to the size of Indian population. India has layer budget deficits which needs to be financed, especially, be borrowing. Inflation rate is yet high and saving rate is, therefore, low. Due to all these measures, the RBI has to regulate Indian economy, at least to function well, rather than develop.

The money can be raised from market by Liberalising economy but yet the large part of Indian revenue is used in Interest Payment are the debt of Government.

These Limitation also put some checks against RBI to withhold itself to the limited extent of stabilization of economy.

Though the RBI Liberalised the Bank Rate and Cash Reserve Ratio in recent years to lead the economy by the rate of interest to some extent, but the fear of inflation is also there. Inflation has not been under control even after many efforts.

Generally, while being liberal, the economy gets a risk of distribution, as in, the latin American Countries and so till now, Indian Reserve Bank has not gone so far to take a risk to that extent.

But it has, as the Monetary Policies Show, decided to stabilise the economy first to make it sound from the base so that it does not full down in the greed of development.

Answer : Non-residential Indians are basically Indians but settled elsewhere in the world for one or another purpose. India has enough natural resource, much required for the economic development but has not enough capital to exploit them and progress the economy. For this, India depends, Largely, on Foreign investments.

After Liberalisation Policies introduced in 1990's, many NRI has invested in Indian economy considering its huge potential of growth. This investment were attached after manybeneficial schemes for them.

It helps Indian economic to raise foreign currency funds, develops varioussectors of industries, quality improvement through competitionand creating new opportunities in India. Now the government could divert its finance towards infrastructure and basic social factors.

Thus NRI's have been helpful in growth of Indian economy and development of Indian infrastructure apart from indirectly raising the standards of living of Indians.

Answer : Under development means under utilisation of at available resources of a particular region. There can be many lying cause of such under development.

In India suppose in agricultural development, many factors like small size of farms, lack of fertility, improper irrigation facilities, uncertain monsoon, unavailability of scientific knowledge and modern tool and machinery etc. are the main reasons for under-development of agriculture.

While in Industry sectors, lack of raw material, power availability, lack of capital, technological draw backs, mineral resources and infrastructural bottlenecks are the main set backs in development.

Sometime due to absence effective policies and allocation of appropriate funds, on the part of the Government, plays a rule in under development of a region.

Many environmental factors such as drought, flood, Cyclones etc. apart from Social factors like illiteracy and primitive cultural practices are responsible for development of various regions of India.

Answer : In 1962, the irrigation Commission declared about 1/3 of India as drought Prone. These parts are-

(1) Gujarat, Rajasthan etc. These are known for their arid and semi-arid zone of India, characteritising less than 40 cm rainfall annually.

(2) Parts of Maharashtra, Andhara Pradesh and Karnataka these parts fall on rain shadow of the western ghats and so amount of rainfall is less than wind- word side.

(3) Some districts of Tamil Nadu, U.P, Chotanagpur Kalahandi in Orissa Bastar in Chhatisgarh, Puruliya in West Bengal etc. are also declared as drought-prone. The norms fixed for such regionalisation of drought prone area are.

(1) Less than 10 cm rainfall in a year.

(2) Irrigation facility to less than 30% of cultivated area. Other norms taken into consideration are time span are amount of rainfall, the facilities of irrigation as an alternative to rainfall, frequency of crop failure.

Answer : At the time of independence, India's economic condition was not satisfactorily strong. India had no agriculture or industry at developed stage and had to rely upon imports from the world. But economic planning gave a good direction to Indian economy. At the time of 1950-51, India's foreign trade amounted only about 1200 crore rupee with comprising 1.78% of total foreign trade in the world but at the end of 1997-98, India's foreign trade amounted to total 284277 crore rupee, however comprising only 0.6% of the World Trade.

The Size of foreign trade of India and Value of it have increased during the period after Independence but its share in world trade has constantly decreased.

India's pattern of International trade has been constantly changing towards progressive indications. At the independence, India imported food grain, now it exports it. India had trade relation with developed countries but now our trade relations have developed with many other countries on regional especially based on regional basis.

Answer : Oil and it, products are used as the main sources of energy for about last one and half centuries through they dominated basically the twentieth century. Petrol, Diesel, kerosene, Nephta, Natural gas and other products are used as conventional sources of energy in industries, automobiles and production of electricity also.

Because we know that use of energy per capita indicates the economic level of a country and the life standard of its population. In twentieth century in the second and half mainly, oil got political importance also. The oil diplomacy was turned into the policy of oil supremacy. The gulf war of 1991 is its example.

In India, oil has been a big factor in budget to make economists think about its alternative. In India also, there is a huge reserve of oil but large population size and so its big demand. Of oil cannot be fulfilled by its domestic production, Indian government has to import and for that to pay a big amount of foreign currency for mitigating India's requirement of oil. But India, in fact cannot afford this expenditure without affecting its economy and so, it results in rising of inflation rate.

Some problems are faced by majority of the countries of the world. India is finding out its alternative source of energy.

It has been proved that natural. Gas can be used as the best alternative to oil. India has big reserve of natural gas. Oil and Natural gas Corporation has been constituted for exploration of oil and gas reserves in India and abroad. It has find out plenty of amount of natural gas in India. This natural gas when pressurized to turn into liquid form, can be used for domestic. Purposes in the form of L.P.G. This LPG is used for domestic purposes through cylinders and even by the facilities of pipe line in some parts like Ankleshwar, Baroda in Gujarat.

Compressed Natural Gas (CNG) has proved useful in automobile vehicles as fuel. This gas does not add to environmental pollution.

About oil, it can be said that, if used at the present rate, it would last only for a few decades, while natural gas reserve is comparatively of bigger amount. It therefore, shows that twentieth century was of oil, but twenty first century will be of natural gas.

Answer : After Independence, the social objective to equalize the distribution of wealth in India came in the form of land reforms so that poor rural farmers can be given land. The slogan to provide land to the tiller was to be materialized by government by policy. The Bhodan movement by Vinova Bhave had the aim of land reforms and constitutional laws in 9th schedule are related to its.

• The government introduced land reform programs which included and aimed at
• The elimination of intermediaries in agriculture.
• Introduction of Tenancy Reforms in such away that tenants would get maximum benefits and exploitation can be removed.
• to determine the ceiling of holdings per family and the surplus land to be distributed among landless farmers.
• to consolidate the land holdings to introduce modern technological uses in them.

Further the land reeling laws were enforced in 1950 and 1960, in various states and then again modified by the directions of the central government in 1972.

The tenancy reforms included measures like, regulation of land rent, to provide secure. Tenure to confirm ownership on tenants.

Thought all these programmes were aimed at providing enough security and had to farmers and to bring out them from the clutches of Zamindars.

But even after implementation of various laws pertaining to land reforms, there is not desired result.

Some political reasons are responsible for this failure to provide prosperity to farmers. For example, states implemented the laws related to ceiling of land after some time passed and during that period, Zamindars and landlords transferred their land to their family members and could easily escape from the provisions and so in fact nothing coming in the hands of farmers and tillers.

Them, too, the programme had noble aim, which has given result to some extent and if had been implemented efficiently, would have successfully eradicated poverty

Answer : Inflation is an economic phenomenon which adversely affects the economy if not controlled to some limit. Recently there is a pear in Indian economy of rising inflation rate which requires. To be controlled and for that the government has taken the following steps (at the time).

It targeted the limit of revenue Account deficit below 5 percent of GDP.

Increase and develop industrial production to raise supply according to the demands.

To increase industrial production, government liberalised laws related to and reduced prices of necessary raw materials and services.

Too-grain is a factor, responsible for the rise of inflation in India, to fulfill its demand, Various measures like import of wheat, oil seeds, opening market selling of India food corporation's stock of wheat and rice, regulating process etc. are taken in recent times.

To check and curtail black market, laws have been made stringent.

All these steps are necessary in the proper direction and according to the demand of time (In India, Inflation Rate at that time was about 3.7%)

Answer : To make women economically independent is necessary to raise social level of India for these aims, the government of India apart from various state governments has proposed various schemes in this direction, in last decade.

In 1992-93, a National women fund was proposed to meet requirements of lows to poor women for their economic upliftment.

In April 1989, Jawahar Rozgar Yojna was started for rural employment, increase an assistance to be implemented through Panchayati Raj. This scheme also delivered its funfists to women.

Mahila Samridhi Yojana on 2nd October, 1993 was aimed at developing saving habits among rural women and to proud them economic security through higher interest rate over their savings

Indira, Mahila Yojana in 1995 was started to create awareness among the women and made them available economic resources.

All these are the measures taken to achieve the goal of economic independence and self-reliance among women in the last decade.

Note: Before and after the decade of 1987-1997, many schemes in this line have been introduced, but not undaunhed in this question. Because it asks only those measures taken in last one decade (only those schemes, proposed in the last decade from 1997, is mentioned here, care should be taken to change according to the year of question)

Answer : A new industrial policy was introduced on 24th July 1991 which aimed and effected liberalization in economy, promotion of global trade via globalisation and to some extent provisions for private partnership.

For these major measures proposed were

Elimination of requirements of registration and licensing for establishing new Industry or expanding the existing units.

No requirement to get government's permission for foreign technical cooperation.

Raise the limits of foreign investment up to 51 percent from 40 percent in most priority sectors.

Except industries listed in the second schedule, all other industries were excluded form licensing process.

All Industrial sectors opened for private enterprises except Arms and ammunitions, nuclear energy, oil, coal, railway and some listed minerals

These steps are taken to boost the economical progress and industrial growth in India.

Answer : The tenth finance commission has proposed the scheme of devolution of taxes as a better way to manage the tax reforms in the present condition of Indian economy Based on 26% of centre and 3% of state parts in taxes, the new schemes proposes to consolidate all central taxes as an alternative by partly and separately dividing all taxes. The benefits from this scheme would that the centre can introduce tax reforms. Without going into question whether states have to be paid from them or not, Article 268 and 263 related to tax will come under this schemes so their potential explanation would be possible. More flexibility and reliability between centre-state relations will be developed under this system of transaction. When the question of distribution of takes will not arise, progress in taxation reforms will be possible cordially and efficiently. Without any political obstacles. All these advantages are seen from the implementation of "Alternative scheme of Declaration".

Answer : MODVAT implies modified value added. Tax introduced in 1986-87 budget to exclude the possibility of double taxcation. It is levied on final goods and it abolished tax on inputs and intermediate goods.

Answer : By providing mid-day meal, free of cost in schools. Run by Local bodies and government aided private primary schools, the government wanted to promote primary education in the country.

Answer : Every place which is either a Municipality or corporation or cantonment Board or an area with population above 5000, density above 400 persons per square km and above 75% of make working population engaged in non-agricultural activities.

Answer : In India, it can improve utilization of irrigation facilities and potentials, sustain productivity and increase production of agriculture.

Answer : with involvement of public, trees are planted on the waste tends of government, use of such forest products are allowed to society which can raise source of their income.

Answer : "growth with social justice and equality" by providing appropriate direction and balance to the socio economic development of the country is the main objective of the Ninth Five year plan.

Answer : Capital formation is the most important ingredient of growth and development, capital formation means the part of national income that is not used for consumption but is saved or spared to invest in some other productive sectors. If there is no capital formation or is slow, there can be no economic growth, because it requires capital to start any economic activity.

Without planning, based on market direct economy, we can achieve growth, or course, but only in those sectors where there is margin of higher and quick profit. Market led economy always tries to earn more and more profit. So, prices are higher of goods and services, in absence of regulation and control, sparing no money with people to save. No capital can be formed in public sector. Private sector which gains more profit, uses the same capital only in those sectors of economy which gives them easy, quick and more profits. Therefore, poverty alleviation, education rural and social development and like areas remain untouched in market based economy.

Which through planning important regulations can be imposed in the forms of requirements of licencing, higher taxes, quotas and so to reduce profit margin and money can be raised from such fields to be used for investment in other sectors which are quite necessary for development.

Even, tax structures can be formed and domestic savings can be used for investment in poverty eradication, social development, educational development, banking and other such fields to increase the standard of living. This can be made possible by raising capital through planning process in public sectors.

Answer : Decline in the value of a currency in comparison to another comes if the supply of the former is more than requirement (i.e. demand) and the demand of later increases than its supply, as a general principle. But many other facts and factors plays a role in real economy.

In 1995-96, Indian Rupee started to decline in its value vis-a-vis U.S. Dollar because of some specific reasons, some of which can be mentioned as:

Rumours of market, which gave way to hasty transactions in Rupee US Dollar.

• Increase in balance of trade deficit.
• Increased import from and reduced export to U.S.
• Import of petroleum rose very steeply in the recent period reducing reserve of U.S. dollars.
• Foreign investment by Indian exporters which did not bring the value of their exported goods to India.
• All these reasons played their proportional role in decline in value of Indian Rupee. The Reserve Bank of India had to take some corrective measures due to the drastically changing picture of currency market on account of quick and needless reactions of Indian businessmen contributing to the decline.
• If proposed some policy measures to increase export and decrease import.
• It released dollars to make sufficient availability in market.
• Proposed some restrictive measures on import.
• Invited and encouraged investments by NRIs in India with profitable terms.
• Supplemented supply of dollars in market by financing the deficit of dollars.

Answer : It was developed by Dr. Max O. Lorenze. It is a commutatives frequency curve showing the distribution of a variable such as population against an independent variable such as income. In this, cumulative percentage of income less than a given value are plotted against the cumulative percentage of persons. the curve, obtained is called after his name, as Larenz curve.

Answer : Ad-Valorem duty is based on value of goods or services, changing in rate with the price specific duty is fixed on Weight, Area etc.

Answer : MOU is Memorandum of Understanding. It means that the government has ageed with any organisation or nation or institution in any matter and its terms and conditions are clarified in the MOU.

Answer : Balance of trade is the whole picture of a country in total foreign trade, expect-import account condition. Balance of payments is related to the export-import difference in account of a country with any one particular country only.

Answer : India’s nuclear power plants are located at: Tarapur (Maharashtra), Kalpakkam

(Tamil Nadu), Kakaapar (Gujarat) Ravatbhata (Rajasthan), Narara (Uttar Pradesh).

Answer : Near the beginning and end of total solar aclipse, the thin slice of the sun visible appears broken up into beads of light. These lights are called 'Baily's Beads' after the British astronomer known is Baily who discovered them. They occur because the edge of the Moon is not smooth but jagged with mountain peaks.