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( From June2019 to March2020 )

Bullet Points for Prelims

Economy

June 2019 to March 2020

Current Economy

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Shared Economy • Sharing economy, also known as collaborative consumption or peer-to-peer-based

sharing, is a concept that highlights the ability of individuals to rent or borrow goods

rather than buy and own them→The ‘shared economy’ includes segments such as co-

working (Awfis, WeWork India), co-living (Stanza Living, OYO Life, Oxford Caps),

shared mobility (Uber, Ola, Shuttl) and furniture rental (Furlenco, Rentomojo.)

• Why in News?The shared economy in India is estimated to be an about $2 billion industry

by the end of the current year, according to a recent report by Maple Capital Advisors

Slowdown in

Indian Economy

Economic data Indicates that there is slowdown in Indian economy → GDP grew at 5% in

the first quarter of FY20 (which is slowest growth since the fourth quarter of FY13) → The

investment rate as measured by Gross Fixed Capital Formation (GFCF) as a per cent of

GDP is showing a declining trend→Saving: Saving declined from 32.7 per cent in 2011 to

29.3 per cent in 2018→Rural wage growth has declined from 27.7 per cent in FY14 to less

than 5 per cent in FY19→corporate wages have also exhibited a single-digit growth in

FY19 →Export: During the period from 2011-2018, exports as a per cent of GDP also

declined from 24.5 per cent to 19.6 per cent→Inflation: The inflation rate in the economy

has declined from 10.03 per cent in FY13 to 3.41 per cent in FY19

Govt Unveils

Package to Spur

Economic Growth

Finance minister has announced measures to revive growth, boost consumption and uplift

investor and consumer sentiment→Key announcements: Govt plans to bring offshore

rupee market to domestic market→ Govt to consult with RBI to enhance Credit default

swap options→CSR violation would be treated as a civil offence, not a criminal

offence→All pending GST refunds till now shall be paid in 30 days. Future GST refunds to be

paid in 60 days→BS-IV cars purchased till March 2020 to remain operational for the entire

period of registration→Scrappage policy to be announced soon→Govt withdraws angle tax

provision for startups and their investor→Laws to be amended to ensure one MSME

definition→From October 1, all Income Tax notices must be disposed off within 3

months→Additional liquidity to support Housing Finance Companies by National Housing

Board increased to Rs 30,000 crore→Govt to release Rs 70,000 crore upfront for PSBs

recapitalisation etc

India to be a $5

trillion economy

The road to a $5 trillion economy by 2025 is beset with many speed-breakers, the NITI Aayog

has warned the government→Essentially $5-trillion economy is the size of an economy as

measured by the annual Gross Domestic Product (GDP)→Apart from the monetary

definition, a $ 5 Trillion Economy calls for pulling all the economic growth levers—

investment, consumption, exports, and across all the three sectors

of agriculture, manufacturing and services→also means improving all three sectors of the

economy, India will more likely achieve its ambitious Sustainable Developmental Goals

(SDGs)→In 2014, India’s GDP was $1.85 trillion→ Today it is $2.7 trillion and India is the

sixth-largest economy in the world

7th Economic

Census(EC) -2019

Conducted by Ministry of Statistics and Programme Implementation (MoSPI)→ to provide

disaggregated information on various operational and structural aspects of all establishments in

the country→implemented by MoSPI in partnership with Common Service Centres, CSC e-

Governance Services India Limited, a Special Purpose Vehicle under the MEITY→ first EC

conducted in 1977 by CSO

National Income

June 2019 to March 2020

Current Economy

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Moody’s Ratings Different general credit ratings: AAA: Highest credit quality that denotes the lowest

expectations of default risk→AA+/AA/AA-: Very high credit quality→A+/A/A-: High

credit quality that denotes expectations of low default risk→BBB+/BBB/BBB-: Good credit

quality that indicates that expectations of default risk are currently low→BB+/BB/BB-:

indicates an elevated vulnerability to default risk, particularly in the event of adverse

changes in business or economic conditions over time→B+/B/B-: Indicates that material

default risk is present, but a limited margin of safety remains→CCC+/CCC/CCC-

: Substantial credit risk exists in this rating, where the default is a real possibility→CC: Very

high level of credit risk with a possibility of defaults→C: shows that a default or default-like

process has begun, or the issuer is in a standstill→DDD/RD/SD/DD/D: indicates that the issuer

has entered into bankruptcy filings, administration, receivership, liquidation or other formal

winding-up procedure or has ceased business

June 2019 to March 2020

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Prudential

Framework for

Resolution of

Stressed Assets

Issued by Reserve Bank of India→ gives lenders a breather from the one-day default

rule whereby they had to draw up a resolution plan (RP) for implementation within 180 days

of the first default→gives lenders (scheduled commercial banks, all-India financial institutions

and small finance banks) 30 days to review the borrower account on default→lenders may

also choose to initiate legal proceedings for insolvency or recovery→in cases where the RP is

to be implemented, all lenders have to enter into an inter-creditor agreement (ICA) for the

resolution of stressed assets during the review period to provide for ground rules for

finalisation and implementation of the RP in respect of borrowers with credit facilities from

more than one lender→in the case of borrowers in the Rs 1,500 crore and above but less

than Rs 2,000 crore category, January 1, 2020 has been set as the reference date for

implementing the RP→in the less than Rs 1,500 crore category, the RBI will announce the

reference date in due course.

Complaint

Management

System (CMS) by

RBI

Launched by the Reserve Bank of India→ CMS is a software application to facilitate RBI’s

grievance redressal process→ aims to improve customer experience in timely redressal of

grievances

Basel Norms An assessment of compliance with Basel Norms was recently conducted by the Regulatory

Consistency Assessment Programme (RCAP)→RCAP is part of the Basel committee→the

assessment focused on the completeness and consistency of the domestic regulations in force

on 7 June 2019, as applied to commercial banks in India, with the Basel large exposures

framework

Utkarsha 2022 Is a three- year road map for medium term objective to be achieved for improving regulation,

supervision of RBI→this medium-term strategy is in line with Global central banks’ plan to

strengthen regulatory and supervisory mechanism

Negative Rate

Policy

It was once considered only for economies with chronically low inflation such as Europe

and Japan –it is becoming a more attractive option for some other central banks to counter

unwelcome rises in their currencies→under a negative rate policy, financial institutions are

required to pay interest for parking excess reserves with the central bank→this

way, central banks penalise financial institutions for holding on to cash in hope of

prompting them to boost lending

RBI Regulatory

Sandbox

Reserve Bank of India has issued the final framework for regulatory sandbox in order to

enable innovations in the financial technology space→RBI will launch the sandbox for entities

that meet the criteria of minimum net worth of ₹25 lakh as per their latest audited balance

sheet→the entity should either be a company incorporated and registered in the country or

banks licensed to operate in India→while money transfer services, digital know-your customer,

financial inclusion and cybersecurity products are included, crypto currency, credit registry and

credit information have been left out

Advisory Board for

Banking Frauds

The Central Vigilance Commission (CVC) has constituted an ‘Advisory Board for Banking

Frauds (ABBF) to examine bank fraud of over ₹50 crore and recommend action→

Headquartered in Delhi, the Reserve Bank of India (RBI) to provide required secretarial

services, logistic and analytical support along with the necessary funding to the board→

Money & Banking

June 2019 to March 2020

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(ABBF) Composition: 4 members including chairman→ tenure would be for a period of two years

from 21st August, 2019

RBI Panel on

Economic Capital

Framework

Reserve Bank of India (RBI) to transfer of record Rs 1.76 lakh crore dividend and

surplus reserves to the government→In line with the recommendations of former RBI

governor Bimal Jalan-led panel constituted to decide size of capital reserves that the central

bank should hold→ The expert panel on RBI’s economic capital framework was formed to

address the issue of RBI reserves—one of the sticking points between the central bank and the

government

Rediscovering

Development Banks

To improve access to long-term finance, the government has proposed to establish an

organisation to provide credit enhancement for infrastructure and housing projects→ It is a

welcome initiative, but questions remain on its design → development banks are financial

institutions that provide long-term credit for capital-intensive investments spread over a long

period and yielding low rates of return, such as urban infrastructure, mining and heavy

industry, and irrigation systems→Development banks are also called as term-lending

institutions or development finance institutions

Merger of Banks Government plans to merge 10 public sector banks into four→This would take the number

of banks in the country from 27 in 2017 to 12→New mergers include: Punjab National

Bank, Oriental Bank of Commerce and United Bank of India will combine to form the

nation’s second-largest lender→ Canara Bank and Syndicate Bank will merge→Union Bank

of India will amalgamate with Andhra Bank and Corporation Bank → Indian Bank will merge

with Allahabad Bank

Bharat Bill

Payment System

(BBPS)

RBI has expanded the scope and coverage of Bharat Bill Payment System (BBPS) to include

all categories of billers who raise recurring bills and payments (except prepaid recharges)

as eligible participants, on a voluntary basis→at present, the facility of payment of recurring

bills through BBPS is available only in five segments i.e. direct to home (DTH), electricity,

gas, water and telecom→expansion of biller categories would increase the user base of Bharat

Bill Pay along with providing an efficient, cost-effective alternative to existing systems and

enhance consumer confidence and experience.

BHIM 2.0 Govt launches BHIM 2.0 with new functionalities, additional language support→Bharat

Interface for Money (BHIM) is a UPI based payment interface→Developed by National

Payments Corporation of India (NPCI)→Launched in December, 2016→New BHIM 2.0

contains: Donation’ gateway, increased transaction limits for high value transactions,

linking multiple bank accounts, offers from merchants, option of applying in IPO, gifting

money→ also supports three additional languages — Konkani, Bhojpuri and Haryanvi —

over and above the existing 13

Merchant Discount

Rate

It is a fee charged from a merchant by a bank for accepting payments from customers

through credit and debit cards in their establishments→MDR compensates the card issuing

bank, the lender which puts the PoS terminal and payment gateways such as Mastercard

or Visa for their services→MDR charges are usually shared in pre-agreed proportion between

the bank and a merchant and is expressed in percentage of transaction amount→ In a move that

may boost digital payments, businesses with an annual turnover of more than ₹50 crore

will have to mandatorily offer electronic mode of payments to their customers from 1

June 2019 to March 2020

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November→Besides, no charges or merchant discount rate (MDR) will be levied on either

customers or merchants

Urban Cooperative

Banks (UCBS)

Recently, RBI imposed restrictions on withdrawals from the Punjab and Maharashtra

Cooperative (PMC) Bank, one of the largest urban cooperative lenders→ Bank was put

under regulatory restriction under Section 35A of the Banking Regulation Act, for a

period of six months due to irregularities like fraudulent loans, excessive lending to Housing

Development & Infrastructure Ltd (HDIL) etc→ Co-operative banks were born out of the

concept of cooperative credit societies where members from a community band together to

extend loans to each other, at favourable terms→ UCBs are registered as cooperative

societies under the provisions of either the State Cooperative Societies Act of the State

concerned or the Multi State Cooperative Societies Act, 2002→are located in urban and

semi-urban areas

Acceptance

Development Fund

Recently, RBI announced setting up of Acceptance Development Fund to improve the last-

mile payments network in rural India to transact digitally→will be operationalized as a

bank-sponsored development fund solely to improve payment infrastructure in Indian

small towns and villages especially in Tier III to Tier VI centers, where most daily

transactions are in cash

Unified Payments

Interface (UPI)

It is a system that powers multiple bank accounts into a single mobile application (of any

participating bank), merging several banking features, seamless fund routing &

merchant payments into one hood→It also caters to the “Peer to Peer” collect request

which can be scheduled and paid as per requirement and convenience→ Each Bank provides its

own UPI App for Android, Windows and iOS mobile platform(s)

National Payments

Corporation of

India (NPCI)

It is an umbrella organisation for operating retail payments and settlement systems in

India→it is an initiative of Reserve Bank of India (RBI) and Indian Banks’ Association

(IBA) under the provisions of the Payment and Settlement Systems Act, 2007, for creating a

robust Payment and Settlement Infrastructure in India→it has been incorporated as a not for

profit company→in 2016 the shareholding was broad-based to 56 member banks to

include more banks representing all sectors

Rules Notified To

Bring Financial

Firms Under IBC

The Centre has issued rules that provide a framework for bringing ‘systemically important

financial service providers’ under the purview of the Insolvency and Bankruptcy Code

(IBC)→The Ministry of Corporate Affairs has notified the Insolvency and Bankruptcy

(Insolvency and Liquidation Proceedings of Financial Service Providers and Application to

Adjudicating Authority) Rules, 2019→These rules aim to provide a generic framework for

insolvency and liquidation proceedings of systemically important FSPs other than

banks→introduction of an interim framework for resolution of financial service providers

under the IBC is a timely and important step for resolution of financial service providers

permitting an interplay between regulators, creditors and the NCLT (National Company

Law Tribunal) for appropriate actions→These rules are likely to help out distressed shadow

banks and housing financiers, which have been battling a liquidity crunch for a year

Regulation on

Cooperative Banks

Soon

The government will, in the upcoming Winter Session of Parliament, seek to make

amendments in certain laws so as to bring the banking activities carried out by cooperative

societies under the purview of the Banking Regulation Act→Co-operative banks are financial

entities established on a co-operative basis and belonging to their members, means that the

customers of a co-operative bank are also its owners

June 2019 to March 2020

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Co-operative banks

in India

Broadly, co-operative banks in India are divided into two categories – urban and

rural→Rural cooperative credit institutions could either be short-term or long-term in

nature→Urban Co-operative Banks (UBBs) are either scheduled or non-scheduled.

Scheduled and non-scheduled UCBs are again of two kinds- multi-state and those operating in

single state →co-operative banks are registered under the States Cooperative Societies Act→

also come under the regulatory ambit of the Reserve Bank of India (RBI) under two laws,

namely, the Banking Regulations Act, 1949, and the Banking Laws (Co-operative Societies)

Act, 1955 →Dual Regulation of Urban Cooperative Bank: Urban Co-operative Banks are

regulated and supervised by State Registrars of Co-operative Societies (RCS) in case of

single-State co-operative banks and Central Registrar of Co-operative Societies (CRCS) in

case of multi-State co-operative banks and by the RBI

Punjab to create

land banks in rural

areas

With an aim to create land banks in rural areas to boost industrial development, the Punjab

Cabinet has given in-principle approval to amend the law for transfer of common village land

in rural areas to the state’s industry department→The amendment will facilitate gram

panchayats to promote development of villages by unlocking the value of ‘Shamlat’ or village

common land→The new rule would pave the way for transfer of ‘Shamlat’ land for

industrial projects to the industry department and state-owned Punjab Small Industries &

Export Corporation (PSIEC)→Shamlat land is one that does not come under habitation and

cultivation and is considered as consolidated land holdings for common use

RBI guidelines for

Payments banks’

SFB licence

RBI has announced the final guidelines for on-tap licencing of private sector SFBs→These

guidelines include:Payments banks can apply for conversion into small finance banks

(SFBs) after five years of operation→Promoter of a payments bank is eligible to set up an

SFB, provided that both banks come under the non-operating financial holding company

(NOFHC) structure→The minimum paid-up capital requirement for SFBs has been raised

from ₹100 crore to ₹200 crore→SFBs should be listed within three years of reaching a net

worth of ₹500 crore→They will be given scheduled bank status immediately upon

commencement of operations, and will have general permission to open banking outlets from

the date of commencement of operations→The promoter should hold a minimum of 40% of

the paid-up voting equity capital for five years→If the initial promoter shareholding is above

40%, it should be brought down to 40% within a period of five years, 30% within 10 years, and

15% in 15 years.

National Electronic

Funds Transfer

(NEFT)

RBI has extended the availability of NEFT round-the-clock on all the seven days of the week

— 24×7 basis — to facilitate beyond the banking hour fund transfer→RBI joins an elite club

of countries having payment systems which enable round the clock funds transfer and

settlement of any value→So far, Australia, Hong Kong, Mexico, Sweden, Turkey, the UK,

South Korea, Singapore, South Africa, and China have such payment system.

Operation Twist RBI to carry out US-style ‘Operation Twist’ to bring down interest rates→‘Operation Twist’

is when the central bank uses the proceeds from sale of short-term securities to buy long-

term government debt papers, leading to easing of interest rates on the long term papers

Open Market

Operations

They are conducted by the RBI by way of sale or purchase of government securities (g-

secs) to adjust money supply conditions→Central bank sells g-secs to suck out liquidity

from the system and buys back g-secs to infuse liquidity into the system→These operations

are often conducted on a day-to-day basis in a manner that balances inflation while helping

banks continue to lend.→The RBI uses OMO along with other monetary policy tools such as

June 2019 to March 2020

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repo rate, cash reserve ratio and statutory liquidity ratio to adjust the quantum and price of

money in the system→RBI carries out the OMO through commercial banks and does not

directly deal with the public

Deposit Insurance Ministry of Finance, IRDAI seek insurance for bank deposits above Rs 1 lakh→The requests

comes in the aftermath of the Punjab and Maharashtra Cooperative (PMC) Bank

scam→Deposit insurance is providing insurance protection to the depositor’s money by

receiving a premium→The government has set up Deposit Insurance and Credit Guarantee

Corporation (DICGC) under RBI to protect depositors if a bank fails→Every insured bank

pays premium amounting to 0.001% of its deposits to DICGC every year.

Merchant Discount

Rate • From January onwards, all companies with a turnover of Rs 50 crore or more need to

provide the facility of payment through RuPay Debit card and UPI QR code to their

customers, under which no MDR fee will be charged from customers as well as merchants

• What? It is a fee charged from a merchant by a bank for accepting payments from

customers through credit and debit cards in their establishments.

• MDR compensates the card issuing bank, the lender which puts the PoS terminal and

payment gateways such as Mastercard or Visa for their services→MDR charges are

usually shared in pre-agreed proportion between the bank and a merchant and is

expressed in percentage of transaction amount

Mani App • By RBI

• It is for visually challenged to identify currency notes

Small Finance

Banks • Reserve Bank of India granted ‘in-principle’ approval to Saharanpur-based Shivalik

Mercantile Cooperative Bank to convert into a Small Finance Bank (SFB), making it the

first such lender to have opted for the transition

• What? Small finance banks will primarily undertake basic banking activities of

acceptance of deposits and lending to unserved and underserved sections including

small business units, small and marginal farmers, micro and small industries and

unorganised sector entities →SFBs can distribute mutual funds, insurance products and

other simple third-party financial products→Lend 75% of their total adjusted net bank

credit to priority sector→Maximum loan size would be 10% of capital funds to single

borrower, 15% to a group→Minimum 50% of loans should be up to 25 lakhs→

Minimum paid-up capital would be Rs 100 cr→ Foreign shareholding capped at 74% of

paid capital, FPIs cannot hold more than 24%

Insolvency and

Bankruptcy Board

of India (Voluntary

Liquidation

Process)

Regulations, 2017

• Insolvency and Bankruptcy Board of India (IBBI) has notified the Insolvency and

Bankruptcy Board of India (Voluntary Liquidation Process) (Amendment)

Regulations, 2020 on 15th January 2020

• The aforesaid amendment provides that a liquidator shall deposit the amount of

unclaimed dividends, if any, and undistributed proceeds, if any, in a liquidation process

along with any income earned thereon into the Corporate Voluntary Liquidation Account

before submission of an application for dissolution of the corporate person→ It also

provides a process for a stakeholder to seek withdrawal from the Corporate Voluntary

Liquidation Account

June 2019 to March 2020

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Insurance Cover on

Bank FDs, Deposits

Increased to ₹5

Lakh

• In Budget 2020, finance minister has proposed to increase the limit of insurance cover in

case of bank failure on deposits to ₹5 lakh from ₹1 lakh→Proposal comes in the wake of

crisis at Mumbai-based urban cooperative bank, PMC Bank

• Deposit insurance is providing insurance protection to the depositor’s money by receiving

a premium→Government has set up Deposit Insurance and Credit Guarantee

Corporation (DICGC) under RBI to protect depositors if a bank fails→Every insured

bank pays premium amounting to 0.001% of its deposits to DICGC every year

Cooperative Banks

under RBI • Union Cabinet has approved to bring regulation of cooperative banks under Reserve

Bank of India→In order to achieve this, the Cabinet approved amendments to Banking

Regulation Act

• The amendments will apply to all urban co-operative banks and multi-state cooperative

banks →This was felt necessary in the wake of the recent Punjab & Maharashtra

Cooperative (PMC) Bank crisis

Cash Reserve Ratio • Reserve Bank of India has exempted banks from maintaining cash reserve ratio for

loans to retail and micro, small and medium enterprises for five years, if these loans are

extended between January 31 and July 31, 2020

• At present, CRR is 4% of net demand and time liabilities→Banks do not earn any

interest for maintaining CRR with the RBI

• What? It is a certain minimum amount of deposit that the commercial banks have to hold

as reserves with the central bank→It is either stored in the bank’s vault or is sent to the

RBI→If a central bank increases CRR then the available amount with the banks decreases

or comes down→CRR is used by RBI to wipe out excessive money from the system

Debts Recovery

Tribunals • Direct Tax Vivaad se Vishwas Bill, 2020 will now cover pending litigation in debt

recovery tribunals (DRTs) as well besides those in various courts and tribunals, the Union

cabinet said while approving the change to the bill

• What? DRTs were established to facilitate the debt recovery involving banks and other

financial institutions with their customers→Were set up after the passing of Recovery of

Debts due to Banks and Financial Institutions Act (RDBBFI), 1993 →Section 3 of the

RDDBFI Act empowers the Central government to establish DRTs→Appeals against

orders passed by DRTs lie before Debts Recovery Appellate Tribunal (DRAT)

• Powers and functions: It enforces provisions of the Recovery of Debts Due to Banks and

Financial Institutions (RDDBFI) Act, 1993 and also Securitization and Reconstruction of

Financial Assets and Enforcement of Security Interests (SARFAESI) Act, 2002→DRTs are

fully empowered to pass comprehensive orders and can travel beyond the Civil procedure

Code to render complete justice→ Debts Recovery Tribunal (DRT) can hear cross suits,

counter claims and allow set offs→However, it cannot hear claims of damages or

deficiency of services or breach of contract or criminal negligence on the part of the lenders

Recapitalisation of

RRBs • The Cabinet Committee on Economic Affairs has given its approval for continuation of

the process of recapitalization of Regional Rural Banks (RRBs) by providing minimum

regulatory capital to RRBs for another year beyond 2019-20, that is, up to 2020-21→This

is for those RRBs which are unable to maintain minimum Capital to Risk weighted

Assets Ratio (CRAR) of 9%, as per the regulatory norms prescribed by the Reserve Bank

of India

• Why this is necessary? A financially stronger and robust Regional Rural Banks with

improved CRAR will enable them to meet the credit requirement in the rural areas

• Background: Recapitalisation process of RRBs was approved by the cabinet in 2011 based

on the recommendations of a committee set up under the Chairmanship of K C

June 2019 to March 2020

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Chakrabarty→The National Bank for Agriculture and Rural Development

(NABARD) identifies those RRBs, which require recapitalisation assistance to maintain the

mandatory CRAR of 9% based on the CRAR position of RRBs, as on 31st March of every

year

RBI’s COVID-19

Economic Relief

Package

• Reserve Bank of India’s Monetary Policy Committee (MPC) has come out with its own

measures to help deal with economic fallout of COVID-19 pandemic→This was the first

time that the MPC met outside its bi-monthly meeting calendar

• Four steps taken by the RBI: Increase the liquidity in the system; Make sure the lower

policy rate is transmitted; Give a three-month window for a payback on all term loans; Take

steps to reduce volatility and provide stability and Measures announced and their impact

• Cut in repo rate: A big cut in the repo rate by 75 basis points (100 basis points make a

per cent, so three-quarters of a percentage point) to 4.4% →Cut in reverse repo rate: The

ratio has been cut by 90 bps to 4% → Moratorium on Repayments of Loans: RBI has

also allowed banks to defer payment of Equated Monthly Instalments (EMIs) on

home, car, personal loans as well as credit card dues for three months till May 31→The

RBI also allowed lending institutions, banks to defer interest on working capital

repayments by 3 months — a move aimed at addressing the distress among firms as

production is down→ Cut in Cash Reserve Ratio (CRR): RBI reduced the cash reserve

ratio (CRR) by a full percentage point down to 3% for a year →Targeted long-term

repo operations: RBI will lend money to banks (a total of ₹1 trillion) that can be

invested in bonds and other forms of lending instruments→Marginal standing facility

(MSF): ₹1.37 trillion will be made available under the emergency lending window called

the marginal standing facility (MSF)→Banks will now be able to borrow 3% of their

deposits under this window, up from the current 2%

Merger of Banks • The government has approved a scheme for the amalgamation of 10 state-owned banks

into four→After the process is complete, India will have 12 PSBs instead of 27 back in

2017

• New mergers include: Punjab National Bank, Oriental Bank of Commerce and United

Bank of India will combine to form the nation’s second-largest lender→Canara Bank and

Syndicate Bank will merge→Union Bank of India will amalgamate with Andhra Bank

and Corporation Bank→Indian Bank will merge with Allahabad Bank

• Why? Small banks can gear up to international standards with innovative products and

services with the accepted level of efficiency→PSBs, which are geographically

concentrated, can expand their coverage beyond their outreach→A better and optimum

size of the organization would help PSBs offer more and more products and services and

help in integrated growth of the sector→Consolidation also helps in improving the

professional standards→This will also end the unhealthy and intense competition going

on even among public sector banks as of now→In the global market, the Indian banks will

gain greater recognition and higher rating→The volume of inter-bank transactions will

come down, resulting in saving of considerable time in clearing and reconciliation of

accounts→This will also reduce unnecessary interference by board members in day to

day affairs of the banks→After mergers, bargaining strength of bank staff will become

more and visible etc

Additional Tier-1

Bonds • Association of Mutual Funds in India (AMFI) has written to the Reserve Bank of India

(RBI) and the Securities and Exchange Board of India (SEBI) to allow fund houses a

temporary write down of additional tier 1 bonds of Yes Bank to avoid a huge hit on the net

asset value of schemes that hold such bonds

• Implications: This assumes significance as many fund houses stand to lose thousands of

crores if the additional tier 1 bonds are completely written off

June 2019 to March 2020

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• Background: Under the Based III framework, banks’ regulatory capital is divided into

Tier 1 and Tier 2 capital→Tier 1 capital is subdivided into Common Equity (CET) and

Additional Capital (AT1)

• Additional Tier-1 bonds: They are a type of unsecured, perpetual bonds that banks issue

to shore up their core capital base to meet the Basel-III norms→Key features: These have

higher rates than tier II bonds→These bonds have no maturity date→The issuing bank

has the option to call back the bonds or repay the principal after a specified period of

time→The attraction for investors is higher yield than secured bonds issued by the same

entity→Individual investors too can hold these bonds, but mostly high net worth

individuals (HNIs) opt for such higher risk, higher yield investments→Given the higher

risk, the rating for these bonds is one to four notches lower than the secured bond series of

the same bank. For example, while SBI’s tier II bonds are rated AAA by Crisil, its tier I

long-term bonds are rated AA+.

• However, it has a two-fold risk: First, the issuing bank has the discretion to skip coupon

payment. Under normal circumstances it can pay from profits or revenue reserves in case of

losses for the period when the interest needs to be paid→Second, the bank has to maintain a

common equity tier I ratio of 5.5%, failing which the bonds can get written down→ In

some cases there could be a clause to convert into equity as well→Given these

characteristics, AT1 bonds are also referred to as quasi-equity

• How RBI can take over the regulation of any bank? There is an additional trigger in

Indian regulations, called the ‘Point of Non-Viability Trigger’ (PONV)→In a situation

where a bank faces severe losses leading to erosion of regulatory capital, the RBI can decide

if the bank has reached a situation wherein it is no longer viable→The RBI can then

activate a PONV trigger and assume executive powers→By doing so, the RBI can do

whatever is required to get the bank on track, including superseding the existing

management, forcing the bank to raise additional capital and so on→However, activating

PONV is followed by a write down of the AT1 bonds, as determined by the RBI

RBI Releases New

Guidelines for

Payment

Aggregators

• Capital requirements for payment aggregators has been reduced to Rs 15 crore at the

time of application for the licence→This needs to be increased to Rs 25 crore within

three years of operations→Existing non-bank entities offering payment aggregation

(PA) services shall apply for authorisation on or before June 30, 2021→Pure-play

payment gateway companies would be separated as an entity and would be identified as

technology service providers for banks and non-banks→PAs have also been asked to adhere

to strict security guidelines, adhere to all KYC (Know Your Customer) and AML (Anti

Money Laundering) rules→The guidelines have also mandated that PAs need to check

their merchant customers are not involved in selling of prohibited or fake items→The

central bank has also asked PAs to set up designated nodal offices to deal with customer

grievance→RBI has prohibited PAs from allowing online transactions to be done with

ATM pin as the second factor of authentication, which few payment gateway companies

were offering as a service

• Payment Aggregators: These are players who integrate with e-commerce companies

and connect them with banks→ They receive payments on behalf of these companies and

transfer the money to their accounts

• Background: Entities like Billdesk, CCAvenue, Firstdata, Razorpay, Cashfree, Paytm

Payment Gateway and others are offering payment services to ecommerce

companies→ Given the large scale adoption of digital payments and emergence of so many

players, the RBI expressed interest in regulating the space

Open Market

Operations (OMO) • Open market operations is the sale and purchase of government securities and treasury

bills by RBI or the central bank of the country

• Objective of OMO is to regulate the money supply in the economy→RBI carries out the

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OMO through commercial banks and does not directly deal with the public

Capital to Risk

Weighted Assets

Ratio (CRAR)

• CRAR also known as the Capital Adequacy Ratio (CAR) is the ratio of a bank’s capital

to its risk→It is a measure of the amount of a bank’s core capital expressed as a percentage

of its risk-weighted asset→It is decided by central banks and bank regulators to prevent

commercial banks from taking excess leverage and becoming insolvent in the process

• Basel III norms stipulated a capital to risk weighted assets of 8%→However, as per RBI

norms, Indian scheduled commercial banks are required to maintain a CRAR of 9%

Insolvency and

Bankruptcy Code,

2016 (IBC)

IBC has been enacted, which has provided for the taking over management of the affairs of

the corporate debtor at the outset of the corporate insolvency resolution process→Banking

Regulation Act, 1949 has been amended to provide for authorisation to RBI to issue

directions to banks to initiate the insolvency resolution process under IBC.

Securitisation and

Reconstruction of

Financial Assets

and Enforcement of

Security Interest

Act

Act has been amended, with provision for three months’ imprisonment in case the

borrower does not provide asset details and for the lender to get possession of mortgaged

property within 30 days.

External

Benchmark Rates

RBI has made it compulsory for banks to link their new floating rate home, auto and

MSME loans to an external benchmark from October 1 so that the borrowers can enjoy

lower rate of interest→ banks can choose from one of the four external benchmarks —

repo rate, three-month treasury bill yield, six-month treasury bill yield or any other

benchmark interest rate published by Financial Benchmarks India Private Ltd→at

present, interest rates on loans are linked to a bank’s marginal cost of fund-based

interest rate known as the Marginal Cost of Lending Rate (MCLR)

Facebook’s New

Cryptocurrency-

Libra

Facebook plans to roll out Libra for use in 2020→Libra it is a digital asset built by

Facebook and powered by a new Facebook-created version of blockchain, the encrypted

technology used by bitcoin and other cryptocurrencies→the currency will be serviced by a

collective of companies called the “Libra Association”→it functions as what is known as

a “stablecoin”, pegged to existing assets like the dollar or euro, in the aim of making it less

subject to the volatility that many cryptocurrencies experience→Libra Association is

described by Facebook as an independent, not-for-profit organisation based in

Switzerland.

Who are insured by

the Deposit

Insurance and

Credit Guarantee

Corporation

(DICGC)?

• The corporation covers all commercial and co-operative banks, except in Meghalaya,

Chandigarh, Lakshadweep and Dadra and Nagar Haveli→Besides, only primary

cooperative societies are not insured by the DICGC

• DICGC does not include the following types of deposits: deposits of foreign governments,

deposits of central/state governments, inter-bank deposits, deposits of the state land

development banks with the state co-operative bank, any amount due on account of any

deposit received outside India and any amount specifically exempted by the DICGC with

previous approval of RBI

Fugitive Economic

Offender

• A special court has declared diamond businessman Nirav Modi, the key accused in the $2

billion Punjab National Bank (PNB) fraud case a fugitive economic offender, under

provisions of the Fugitive Economic Offenders (FEO) Act, on a plea of the Enforcement

Directorate →The investigative agency can now confiscate properties of Nirav Modi

which are not directly related to the cases against him→Fugitive Economic Offender is a

person can be named an offender under the law if there is an arrest warrant against him or

her for involvement in economic offences involving at least Rs. 100 crore or more and has

fled from India to escape legal action.

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Core Investment

Companies (CICs)

Are non-banking financial companies with asset size of Rs 100 crore and above which carry

on the business of acquisition of shares and securities, subject to certain conditions→ allowed

to accept public funds, hold not less than 90% of their net assets in the form of investment in

equity shares, preference shares, bonds, debentures, debt or loans in group companies→ CICs

having asset size of below Rs 100 crore are exempted from registration and regulation from

the RBI, except if they wish to make overseas investments in the financial sector→ Reserve

Bank of India has constituted a six-member working group headed by Tapan Ray to

review the regulatory and supervisory framework for core investment companies

Public Funds Include public deposits, inter-corporate deposits, bank finance and all funds received whether

directly or indirectly from outside sources such as funds raised by issue of Commercial Papers,

debentures etc→ even though public funds include public deposits in the general course, it may

be noted that CICs/CICs-ND-SI cannot accept public deposits→the concept was coneptualised

in order to safeguard NBFCs which are formed for group investments from stringent RBI

procedures

Inverted Yield

Curve

Yield curve is a graph showing the relationship between interest rates earned on lending money

for different durations→Normally, someone who lent to the government or a corporation for

one year (by buying a one-year government or corporate bond) would expect to get a lower

interest rate than someone who lent for five or ten years, making the yield curve upward-

sloping→in the US in recent days the ten-year bond rate has fallen to the point at which the

ten-year rate is below the two-year rate – so the yield curve is inverted

Debenture

Redemption

Reserve (DRR)

It is a provision stating that any Indian corporation that issues debentures must create a

debenture redemption service in an effort to protect investors from the possibility of a

company defaulting→This provision was tacked onto the Indian Companies Act of 1956,

in an amendment introduced in the year 2000→Government has recently removed

Debenture Redemption Reserve requirement for Listed Companies, NBFCs and HFCs by

amending the Companies (Share Capital & Debentures) Rules→the measure has been

taken by the Government with a view to reducing the cost of the capital raised by companies

through issue of debentures and is expected to significantly deepen the Bond Market

Social Stock

Exchange &

Impact Investments

Finance Minister proposed a social stock exchange (SSE) under the regulatory ambit of the

Securities Exchange Board of India (SEBI) to support social enterprises and non-profits in

raising funds→ It is an electronic fundraising platform that allows investors to buy shares in

a social enterprise that has been vetted by the exchange → Impact Investment is the

investments made into businesses with the aim to make a measurable social, economic

and environmental impact while also generating a range of returns, from profit to publicity

Chit Funds

(Amendment) Bill,

2019

Makes amendments to the Chit Funds Act, 1982, to facilitate orderly growth of the Chit

Funds sector and remove bottlenecks being faced by the Chit Funds industry →Bill

additionally inserts ‘fraternity fund’ and ‘rotating savings and credit institution’ to this list.

→ Presence of subscribers through video-conferencing → Increase in foreman’s commission

(the ‘foreman’ is responsible for managing the chit fund) → Neither RBI nor SEBI regulates

the chit fund business. →Under the Chit Funds Act, 1982 all chit fund companies need to be

registered with respective state government

Money & Capital Markets (+NBFC)

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Exchange Traded

Funds

Further Fund Offer 2 (FFO 2) of Bharat 22 Exchange-Traded Fund (ETF), which is part

of the government’s divestment programme, will shortly open for subscription for anchor

investors and for non-anchor investors→ETFs are mutual funds listed and traded on stock

exchanges like shares→ Usually, ETFs are passive funds where the fund manager doesn’t

select stocks on your behalf. Instead, the ETF simply copies an index and endeavours to

accurately reflect its performance

BHARAT 22 It consists of 22 stocks of CPSE’s, PSB’s & strategic holding of SUUTI→ Bharat 22 is a

well diversified portfolio with 6 sectors (Basic Materials, Energy, Finance, FMCG, Industrials

& Utilities)→ICICI Prudential AMC will be the ETF Manager and Asia Index Private

Limited (JV BSE and S& P Global) will be the Index Provider

NBFC Liquidity

Norms

RBI has introduced ‘liquidity management framework’ for Non-Banking Financial

Companies (NBFCs)→ guidelines are applicable to all non deposit-taking NBFCs with an

asset size of ₹100 crore and above, systemically important Core Investment Companies and

all deposit-taking NBFCs irrespective of their asset size→this has come following liquidity

crunch among some NBFCs in meeting their recent repayment obligations after the collapse

of the Infrastructure Leasing and Financial Services (IL&FS) group→this was

necessary to strengthen their asset-liability management following the liquidity crisis faced

by these firms in the past year

Core Investment

Companies (CICs)

RBI panel proposes stricter rules for core investment companies→recommendations were

made by the Working Group to Review Regulatory and Supervisory Framework for Core

Investment Companies set up by the central bank on 3 July and headed by Tapan Ray, former

secretary of the corporate affairs ministry→CICs are non-banking financial companies with

asset size of ₹100 crore and above which carry on the business of acquisition of shares and

securities, subject to certain conditions

Alternative

Investment Funds

(AIFs)

Union Cabinet has approved the creation of an Alternative Investment Fund (AIF) of Rs.

25,000 crore to provide last-mile funding for stalled affordable and middle-income housing

projects across the country →As defined in Securities and Exchange Board of India

(Alternative Investment Funds) Regulations, 2012, AIFs refer to any privately pooled

investment fund, (whether from Indian or foreign sources), in the form of a trust or a

company or a body corporate or a Limited Liability Partnership (LLP) →does not include

funds covered under the SEBI (Mutual Funds) Regulations, 1996, SEBI (Collective

Investment Schemes) Regulations, 1999 or any other regulations of the Board to regulate

fund management activities

Moody’s ratings Global ratings agency Moody’s Investors Service has cut its outlook on the Government of

India’s ratings to negative from stable, but affirmed the Baa2 foreign-currency and local-

currency long-term issuer ratings and also affirmed India’s Baa2 local-currency senior

unsecured rating and its P-2 other short-term local-currency rating→this reflects increasing

risks that economic growth will remain materially lower than in the past, partly

reflecting lower government and policy effectiveness at addressing long-standing economic

and institutional weaknesses than Moody’s had previously estimated, leading to a gradual rise

in the debt burden from already high levels

June 2019 to March 2020

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First Fixed Income

Exchange Traded

Fund (ETF)

Centre is planning to launch India’s first fixed income Exchange Traded Fund

(ETF) comprising debt securities of large central public sector enterprises

(PSUs)→Features: the ETF is expected to have a size of Rs 15,000 crore to Rs 20,000 crore

→will comprise only AAA-rated papers of the PSU companies→provides a new option to

conservative investors to own securities of government-owned companies along with the

facility of overnight liquidity as ETF units will be listed on exchanges→it can comprise

corporate debt securities in the form of bonds, credit-linked note, debentures, promissory

notes as underlying instruments

Bharat Bond ETF

Government has approved the launch of Bharat Bond ETF, India’s first corporate bond

exchange traded fund, comprising debt of state-run companies→This move will allow retail

investors to buy government debt→Will provide retail investors easy and low-cost access to

bond markets, with smaller amount as low as ₹1,000→They will provide tax efficiency as

compared to bonds, as coupons (interest) from the bonds are taxed depending on the investor’s

tax slab→It will have a fixed maturity of three and ten years and will trade on the stock

exchanges→It will invest in a portfolio of bonds of state-run companies and other

government entities→It will track an underlying index on risk replication basis, matching

credit quality and average maturity of the index→The index will be constructed by an

independent index provider, National Stock Exchange

Partial Credit

Guarantee Scheme

It allows for purchase of high-rated pooled assets from financially-sound non-banking

financial companies (NBFCs) and housing finance companies (HFCs) by public sector

banks (PSBs)→The scheme would cover NBFCs and HFCs that might have slipped into

“SMA-0” category during the one-year period prior to August 1, 2018, and asset pools rated

“BBB+” or higher→The window for one-time partial credit guarantee offered by the

government would remain open till June 30, 2020 or till such date by which Rs 1 lakh crore

worth of assets get purchased by the banks, whichever is earlier→The Finance Minister

would have the power to extend the validity of the scheme by up to three months by taking

into account its progress→The proposed Government Guarantee support and resultant pool

buyouts will help address NBFCs/HFCs resolve their temporary liquidity or cash flow

mismatch issues

REIT and InvIT • The proposal in the Union Budget to tax dividend in the hands of unit holders/ investors

would hurt future InvITs and REITs, say real estate and infrastructure industry officials and

analysts

• How? Uncertainty in the tax regime would hurt the sentiment of foreign investors who

are already wary of the stability of tax regime in India→The resultant tax burden on the part

of investors will put at risk plans for raising about $100 billion with regard to INVITs and

REITs

• Infrastructure Investment Trusts (InvIT): It is like a mutual fund, which enables direct

investment of small amounts of money from possible individual/institutional investors in

infrastructure to earn a small portion of the income as return→They are similar to REIT but

invest in infrastructure projects such as roads or highways which take some time to

generate steady cash flows

• Real Estate Investment Trusts (REIT): It is roughly like a mutual fund that invests in

real estate although the similarity doesn’t go much further→The basic deal on REITs is that

you own a share of property, and so an appropriate share of the income from it will come

to you, after deducting an appropriate share of expenses

Masala Bonds • Asian Development Bank (ADB) has listed its 10-year masala bonds worth Rs 850 crore

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on the global debt listing platform of India INX→The proceeds would be used to

support local currency lending and investment in India

• India INX is the country’s first international exchange, located at International

Financial Services Centre, GIFT City in Gujarat→ ADB’s masala bonds are listed on

both Luxembourg exchange and India INX

• What? They are bonds issued outside India by an Indian entity or corporate→These

bonds are issued in Indian currency than local currency→Indian corporates usually

issue Masala Bonds to raise funds from foreign investors→As it is pegged into Indian

currency, if the rupee rates fall, investors bear the risk→First Masala bond was issued in

2014 by IFC for the infrastructure projects in India→Investors from outside of India who

would like to invest in Indian assets can invest in Masala bonds→ Indian entities like

HDFC, NTPC and Indiabulls Housing have raised funds via Masala Bonds

Bull and Bear

Markets • The terms bull and bear market are used to describe how stock markets are doing in

general—that is, whether they are appreciating or depreciating in value→A bull market is

a market that is on the rise and is economically sound, while a bear market is a market

that is receding, where most stocks are declining in value.

Blue Chip Stocks • Blue chip stocks are shares of very large and well-recognised companies with a long

history of sound financial performance →These stocks are known to have capabilities to

endure tough market conditions and give high returns in good market

conditions→Blue chip stocks generally cost high, as they have good reputation and are

often market leaders in their respective industries

Circuit Breaker in

Stock Market • In June 2001, the Securities and Exchange Board of India (SEBI) implemented index-

based market-wide circuit breakers

• Circuit breakers are triggered to prevent markets from crashing, which happens when

market participants start to panic induced by fears that their stocks are overvalued and

decide to sell their stocks→This index-based market-wide circuit breaker system applies

at three stages of the index movement, at 10, 15 and 20 per cent

• Implications: When triggered, these circuit breakers bring about a coordinated trading

halt in all equity and equity derivative markets nationwide

National

Investment and

Infrastructure

Fund (NIIF)

• Canada’s largest pension fund Canada Pension Plan Investment Board (CPPIB) has

agreed to invest about $600 million in National Investment and Infrastructure Fund

(NIIF) through the NIIF Master Fund→With CPPIB’s investment; NIIF Master Fund

now has $2.1 billion in commitments and has achieved its initially targeted fund

size→The government had set up the ₹40,000 crore NIIF in 2015 as an investment

vehicle for funding commercially viable greenfield, brownfield and stalled infrastructure

projects→The Indian government is investing 49% and the rest of the corpus is to be

raised from third-party investors such as sovereign wealth funds, insurance and pension

funds, endowments, etc→NIIF’s mandate includes investing in areas such as energy,

transportation, housing, water, waste management and other infrastructure-related sectors in

India.

Swap Ratio

• It is the ratio at which an acquiring company will offer its own shares in exchange for

the target company’s shares during a merger or acquisition

• How is it calculated? To calculate the swap ratio, companies analyze financial ratios

such as book value, earnings per share, profits after tax, and dividends paid, as well as

other factors, such as the reasons for the merger or acquisition→The current market

prices of the target and acquiring company’s stock are compared along with their respective

financial situations→ A ratio is then configured which states the rate at which the target

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company’s shareholders will receive acquiring company shares of stock for every one share

of target company stock they currently hold

• Context: Eight state-owned banks have announced swap ratios for the proposed mergers

National

Investment and

Infrastructure

Fund (NIIF)

• National Highways Authority of India (NHAI) signs MoU with National Investment

and Infrastructure Fund (NIIF) for funding highway projects→NIIF was set up in 2015

as an investment vehicle for funding commercially viable greenfield, brownfield and stalled

infrastructure projects

Merger of BSNL

and MTNL • Union Cabinet approves revival plan of BSNL and MTNL→revival plan includes:

allotment of spectrum for 4G services, debt restructuring by raising of bonds with

sovereign guarantee, reducing employee costs, monetisation of assets and in-principle

approval of merger of BSNL & MTNL

Infrastructure

Investment Trust

(InvIT)

• Cabinet authorises NHAI to set up Infrastructure Investment Trust and monetize National

Highway projects→National Highways Authority of India (NHAI) will set up

the InvIT(s) as per InvIT Guidelines issued by SEBI→Under InvIT, highway projects will

be bundled to form a special purpose vehicle (SPV) to be offered to investors→The SPV

would then be traded on the stock exchanges, and returns will be linked to the InvIT’s

performance in the capital market.

Three funds under

NIIF • These are: 1. Master Fund: Is an infrastructure fund with the objective of primarily

investing in operating assets in the core infrastructure sectors such as roads, ports,

airports, power etc→2. Fund of Funds: Managed by fund managers who have good track

records in infrastructure and associated sectors in India→ Some of the sectors of focus

include Green Infrastructure, Mid-Income & Affordable Housing, Infrastructure

services and allied sectors→3. Strategic Investment Fund: Is registered as an Alternative

Investment Fund II under SEBI in India→ The objective is to invest largely in equity

and equity-linked instruments→Will focus on greenfield and brownfield investments in

the core infrastructure sectors

Infrastructure

Investment Trust • Markets regulator SEBI has put in place a framework for the rights issue of units by

listed REIT and InvITs

• Guidelines: The issuer will have to disclose objects of the issue, related-party transactions,

valuation, financial details, review of credit rating and grievance redressal mechanism in the

placement document→Listed REIT and InvIT is allowed to make a rights issue of units

subject to several conditions including these investment vehicles obtaining in-principle

approval of the stock exchanges for listing of units proposed to be issued etc→With

regard to pricing, the investment manager on behalf of the REIT and InvIT, in consultation

with the lead merchant banker(s), will decide the issue price before determining the

record date→With regard to manner of issuance of unit, units shall be allotted in the

dematerialised form only and shall be listed on the stock exchange where the units of the

REIT and InvIT are listed

• Infrastructure Investment Trusts (InvIT): It is like a mutual fund, which enables direct

investment of small amounts of money from possible individual/institutional investors

in infrastructure to earn a small portion of the income as return→InvITs can be treated as

the modified version of REITs designed to suit the specific circumstances of the

infrastructure sector→Are similar to REIT but invest in infrastructure projects such as

roads or highways which take some time to generate steady cash flows

• Real Estate Investment Trusts (REIT): It is roughly like a mutual fund that invests in

real estate although the similarity doesn’t go much further→The basic deal on REITs is

that you own a share of property, and so an appropriate share of the income from it will

come to you, after deducting an appropriate share of expenses

Sovereign Gold

Bond Scheme • Government of India, in consultation with the RBI, has decided to issue Sovereign Gold

Bonds→these will be sold through Scheduled Commercial banks (except Small Finance

Banks and Payment Banks), Stock Holding Corporation of India Limited (SHCIL),

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designated post offices, and recognised stock exchanges (NSE and BSE)→scheme was

introduced in 2015 to help reduce India’s over dependence on gold imports

National Pension

Scheme • Pension Fund Regulatory and Development Authority (PFRDA) has now

permitted Overseas Citizen of India (OCI) to enrol in National Pension Scheme (NPS) at

par with Non-Resident Indians→NPS is a government-sponsored pension

scheme→was launched in January 2004 for government employees→however, in 2009, it

was opened to all sections→ allows subscribers to contribute regularly in a pension

account during their working life→ On retirement, subscribers can withdraw a part of the

corpus in a lumpsum and use the remaining corpus to buy an annuity to secure a regular

income after retirement→this system is managed by PFRDA (Pension Fund Regulatory

and Development Authority)→Any Indian citizen between 18 and 65 years can join

NPS→An NRI can join NPS→ However, the account will be closed if there is a change in

the citizenship status of the NRI

North East

Venture Fund

(NEVF)

• NEVF disbursed over Rs.18 crore to 12 start-ups till date

• What? Launched in September 2017→Set up by North Eastern Development

Finance Corporation Limited (NEDFi) in association with Ministry of Development

of North Eastern Region→It is a close ended fund with capital commitment of Rs

100 crore→It is the first dedicated venture capital fund for the North Eastern

Region→Objective: to contribute to the entrepreneurship development of the NER

and achieve attractive risk-adjusted returns through long term capital appreciation

by way of investments in privately negotiated equity/ equity related

investments→The investment under this schemer ranges from Rs. 25 lakh to Rs.10

crore per venture, which is long term in nature with investment horizon of 4-5 years

Electoral Bond

Scheme • State Bank of India (SBI) has been authorized to issue and encash Electoral

Bonds through its 29 Authorized Branches→Electoral bonds will allow donors to pay

political parties using banks as an intermediary→Although called a bond, the banking

instrument resembling promissory notes will not carry any interest→it will be a bearer

instrument, will not carry the name of the payee and can be bought for any value, in

multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh or Rs 1 crore. Need for InvITs

and REITs

• Infrastructure and real estate are the two most critical sectors in any developing

economy→ A well-developed infrastructural set-up propels the overall development of a

country→It also facilitates a steady inflow of private and foreign investments, and

thereby augments the capital base available for the growth of key sectors in an

economy→Given the importance of these two sectors in the country, and the paucity of

public funds available to stimulate their growth, it is imperative that additional channels of

financing are put in place

June 2019 to March 2020

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Fiscal Performance

Index (FPI)

Launched by Confederation of Indian Industry (CII)→aims to assess state and central

budgets

Public Finance

Management

System (PFMS)

Portal

Under pressure from the Centre, the Punjab Food and Civil Supplies Department has

directed all government procurement agencies to link the bank accounts of farmers with the

Public Finance Management System (PFMS) portal before the procurement of paddy

begins→this has angered the arhatiyas (commission agents), a large number of whom want the

government to roll back its decision→ it is an end-to-end solution for processing payments,

tracking, monitoring, accounting, reconciliation and reporting→administered by the

Department of Expenditure→ it provides platform for efficient management of funds

through tracking of funds and real time reporting of expenditure and receipts through treasury

and bank interface→is implemented by the Controller General of Accounts→PFMS is also

used for DBT payments under MGNREGA and other notified schemes of the Government of

India

State Budgets Recently, RBI released its annual study of state-level budgets→Key findings: Except during

2016-17, state governments have regularly met their fiscal deficit target of 3% of GDP→

However, most states ended up meeting the fiscal deficit target not by increasing their

revenues but by reducing their expenditure and increasingly borrowing from the

market→There has been a reduction in the overall size of the state budget in 2017-19→

→Also worrisome is that while states have met their fiscal deficits, the overall level of debt-to-

GDP has reached the 25% of GDP prudential mark→A slightly stringent criterion as

prescribed by the FRBM Review Committee and in line with the revised FRBM implied debt

target of 20 per cent will put most of the states above the threshold

India’s Fiscal

Deficit • Former Economic Affairs Secretary S C Garg has stated that the true fiscal deficit for

2018-19 is 4.7% →According to Garg, for the current financial year, too, the actual fiscal

deficit is likely to range between 4.5 per cent to 5 per cent of GDP

• Issue: Contrary to these views, the Indian government says, the fiscal deficit was just 3.4

per cent of the gross domestic product (GDP) for 2018-19→ For the current year, the

Union Budget presented in July expected the fiscal deficit to be 3.3 per cent of the

GDP→For long, it has been suspected that the official figures hide the true fiscal deficit.

That’s because some of the government’s expenditure was funded by the so-called “off-

budget” items→ As a result, while this extra expenditure did not figure in the official

calculations, it did mean that the true fiscal deficit or borrowing by the public sector was

higher than the level presented in the Budget

• Fiscal deficit: It is the difference between the Revenue Receipts plus Non-debt Capital

Receipts (NDCR) and the total expenditure→It is “reflective of the total borrowing

requirements of Government”

Kerala has Sought

Relaxation of

FRBM Rules

• To help fund the emergency relief package, Kerala proposes to borrow as much as ₹12,500

crore from the market in April itself and therefore the Chief Minister has urged the Centre

to provide Kerala with flexibility under the Fiscal Responsibility and Budget

Management (FRBM) Act so as to ensure that the State’s finances are not adversely

impacted in the rest of the financial year starting on April 1

• Background: Kerala was one of the earliest States to announce an economic package of

₹20,000 crore to mitigate the impact on livelihoods and overall economic activity from the

sweeping steps taken to battle the COVID-19 pandemic, including the latest 21-day

nationwide lockdown.

Public Finance

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• How does a relaxation of the FRBM work? The law does contain what is commonly

referred to as an ‘escape clause’→Under Section 4(2) of the Act, the Centre can exceed the

annual fiscal deficit target citing grounds that include national security, war, national

calamity, collapse of agriculture, structural reforms and decline in real output growth

of a quarter by at least three percentage points below the average of the previous four

quarters.

• FRBM Act 2003, establishes financial discipline to reduce fiscal deficit

Objectives of the

FRBM Act • FRBM Act aims to introduce transparency in India’s fiscal management systems→It

was enacted to introduce more equitable distribution of India’s debt over the years

• Key features: It made it mandatory for the government to place the following along with

the Union Budget documents in Parliament annually: Medium Term Fiscal Policy

Statement, Macroeconomic Framework Statement and Fiscal Policy Strategy Statement→ It

proposed that revenue deficit, fiscal deficit, tax revenue and the total outstanding

liabilities be projected as a percentage of gross domestic product (GDP) in the medium-

term fiscal policy statement→Amendments:The Act has been amended several times→In

2012, the government introduced a change and introduced the concept of effective revenue

deficit→This implies that effective revenue deficit would be equal to revenue deficit minus

grants to states for the creation of capital assets→In 2016, a committee under N K Singh

was set up to suggest changes to the Act→ According to the government, the targets set

under FRBM Act previously were too rigid

• N K Singh Committee’s recommendations: Targets: The committee suggested using

debt as the primary target for fiscal policy and that the target must be achieved by

2023→Fiscal Council: It proposed to create an autonomous Fiscal Council with a

chairperson and two members appointed by the Centre (not employees of the government at

the time of appointment)→Deviations: It suggested that the grounds for the government to

deviate from the FRBM Act targets should be clearly specified→Borrowings: According

to the suggestions of the committee, the government must not borrow from the RBI, except

when: The Centre has to meet a temporary shortfall in receipts, RBI subscribes to

government securities to finance any deviations and RBI purchases government

securities from the secondary market

Finance Bill

• Finance bill passed ahead of coronavirus lockdown

• What? As per Article 110 of the Constitution of India, the Finance Bill is a Money

Bill→The Finance Bill is a part of the Union Budget, stipulating all the legal amendments

required for the changes in taxation proposed by the Finance Minister→This Bill

encompasses all amendments required in various laws pertaining to tax, in accordance with

the tax proposals made in the Union Budget→The Finance Bill, as a Money Bill, needs to

be passed by the Lok Sabha→Post the Lok Sabha’s approval, the Finance Bill becomes

Finance Act

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Multilateral

Convention/MLI

India ratified Multilateral Convention to Implement Tax Treaty Related Measures to

Prevent Base Erosion and Profit Shifting (MLI)

Direct Tax Code The draft legislation of the new Direct Tax Code (DTC) was submitted by the task force,

headed by Akhilesh Ranjan, to the Government of India→ It will revise, consolidate and

simplify the structure of direct tax laws in India & will replace the Income-tax Act, 1961

(ITA), and other direct tax legislations like the Wealth Tax Act, 1957

Sabka Vishwas-

Legacy Dispute

Resolution Scheme,

2019

Target Audience: To be availed by large number of taxpayers for closing their pending

disputes relating to legacy Service Tax and Central Excise cases

Advance Pricing

Agreements (APAs)

Central Board of Direct Taxes (CBDT) has entered into 26 APAs in the first 5 months of

this financial year→APA is an agreement between a taxpayer and the tax authority

determining the Transfer Pricing methodology for pricing the tax payer’s international

transactions for future years→it provides certainty with respect to the tax outcome of the tax

payer’s international transactions

Corporate Income

Tax

Major changes have been announced in corporate income tax rates to revive growth in the

broader economy→this has been achieved through an ordinance– the Taxation Laws

(Amendment) Ordinance 2019→the changes include: Corporate tax rate to be 22 per cent

without exemptions, no Minimum Alternate Tax (MAT) applicable on such companies,

effective corporate tax rate after surcharge and cess to be 25.17 percent, to attract investment in

manufacturing, local companies incorporated after October 2019 and till March 2023, will pay

tax at 15 percent etc

Adjusted Gross

Revenue (AGR)

The Supreme Court has upheld the definition of Adjusted Gross Revenue (AGR) calculation

as stipulated by the Department of Telecommunications→this means that telecom

companies will have to pay up as much as Rs 92,642 crore to the government→AGR is the

usage and licensing fee that telecom operators are charged by the Department of

Telecommunications→It is divided into spectrum usage charges and licensing fees, pegged

between 3-5 percent and 8 percent respectively

Automatic

Exchange of

Information

(AEOI)

It is systematic and periodic transmission of “bulk” taxpayer information by the source

country to the residence country, which is possible under most of the Double Taxation

Avoidance Agreements (DTAAs) and Multilateral Convention on Mutual Administrative

Assistance in Tax Matters (MAC)→aims to reduce global tax evasion→It is to be carried out

under Common Reporting Standard (CRS) of OECD→AEOI is the exchange of information

between countries without having to request it

GST Council

Chairman of the 15th finance commission N.K. Singh has called for symmetry in the working

of the GST council and the finance commission→while the finance commission looks at the

projections of expenditure and revenue, the issue of GST rates exemptions, changes and

implementation of the indirect taxes are within the domain of the GST council→this leads

to unsettled questions on the ways to monitor, scrutinise and optimise revenue outcomes,

Taxation

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therefore, coordination among the two is necessary

GST Council

GST Council in its 38th meeting has voted for uniform rate of 28% on lotteries across the

country→To facilitate the setting up industrial parks, the Council has decided that all entities

with 20% ownership by central or state governments will be exempt from GST payable for

long-term land leases from January 1, 2020→Article 279 (1) of the amended Indian

Constitution states that the GST Council has to be constituted by the President within 60 days

of the commencement of the Article 279A→According to the article, GST Council will be a

joint forum for the Centre and the States→ It consists of the following members: Union

Finance Minister will be the Chairperson, as a member, the Union Minister of State will be

in charge of Revenue of Finance→The Minister in charge of finance or taxation or any

other Minister nominated by each State government, as members.

Telcos Seek Open

Court Hearing on

AGR

• Telecom companies, including Bharti Airtel and Vodafone Idea, have urged an open

court hearing of their petitions seeking a review of a Supreme Court judgment upholding

the recovery of past dues amounting to ₹1.47 lakh crore from them

• Issue: On October 24 last year, dealing a huge blow to telecom service providers, the

Court had upheld the Department of Telecom’s (DoT) move to recover AGR of about

₹92,000 crore from the telcos→Court dismissed the telecom service providers’

objection to the government’s formulation of AGR

• AGR is the usage and licensing fee that telecom operators are charged by the Department

of Telecommunications→It is divided into spectrum usage charges and licensing fees,

pegged between 3-5 percent and 8 percent respectively

Dividend

Distribution Tax • Finance minister said that Dividend Distribution Tax has been shifted to individuals

instead of companies

• What? It is a tax levied on dividends that a company pays to its shareholders out of its

profits→It is taxable at source, and is deducted at the time of the company distributing

dividends→Law provides for the DDT to be levied at the hands of the company, and not at

the hands of the receiving shareholder→However, an additional tax is imposed on the

shareholder, who receives over Rs. 10 lakh in dividend income in a financial year

Adjusted Gross

Revenue (AGR)

Issue

• Supreme Court has come down heavily on the Department of Telecommunications

(DoT) for issuing a notification last month that asked for no coercive action against

telecom companies even though they had not paid the adjusted gross revenue (AGR)

dues by the stipulated deadline of January 23→Court also initiated contempt proceedings

against the telecom companies for not paying the AGR dues

• Issue: Last year, the Supreme Court upheld the definition of Adjusted Gross Revenue

(AGR) calculation as stipulated by the Department of Telecommunications→The order

by the top court means that the telecom companies will have to immediately clear the

pending AGR dues, which amount to nearly Rs 1.47 lakh crore

• AGR: It is the usage and licensing fee that telecom operators are charged by the

Department of Telecommunications→It is divided into spectrum usage charges and

licensing fees, pegged between 3-5 percent and 8 percent respectively

• How is it calculated? As per DoT, the charges are calculated based on all revenues

earned by a telco – including non-telecom related sources such as deposit interests and

asset sales→Telcos, on their part, insist that AGR should comprise only the revenues

generated from telecom services

Country-by- • With Central Board of Direct Taxes(CBDT) notifying rules for furnishing “Country-by-

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Country (CbC)

Report

Country Report” (CbC) specifying information pertaining to all large multinational

enterprises (MNEs), the Finance Ministry has said that Joint Director of Income-tax

(Risk Assessment)-1 has been designated as the Income-tax Authority before whom

particulars of the parent entity and alternate reporting entity would be notified

• Background: Organisation for Economic Cooperation and Development (OECD) has

developed an Action Plan called “Base Erosion and Profit Shifting (BEPS) Action Plan

13” to ensure that a multinational enterprise would report its profit correctly where it is

earned.

• Country-by-Country (CbC) Report:Base Erosion and Profit Shifting (BEPS) Action 13

report (Transfer Pricing Documentation and Country-by-Country Reporting) provides

a template for multinational enterprises (MNEs) to report annually and for each tax

jurisdiction in which they do business the information set out therein→ This report is called

the Country-by-Country (CbC) Report→This information enables an enhanced level of

assessment of tax risk by both tax administrations

National Anti-

Profiteering

Authority (NAPA)

• Delhi High Court has stayed the National Anti-Profiteering Authority (NAPA) order

directing Johnson & Johnson to deposit over ₹230 crore it allegedly profiteered by not

passing on benefits of GST reduction in over 306 items, including baby products, through

commensurate price cut.

• NAPA: It has been constituted under Section 171 of the Central Goods and Services Tax

Act, 2017→ It is to ensure the reduction in rate of tax or the benefit of input tax credit

is passed on to the recipient by way of commensurate reduction in prices→ The Authority’s

core function is to ensure that the benefits of the reduction is GST rates on goods and

services made by GST Council and proportional change in the Input tax credit passed on to

the ultimate consumers and recipient respectively by way of reduction in the prices by

the suppliers

• Composition: It shall be headed by a senior officer of the level of a Secretary to the

Government of India and shall have four technical members from the Centre and/or the

States

• Powers and functions of the authority: In the event the National Anti-profiteering

Authority confirms the necessity of applying anti-profiteering measures, it has the power to

order the business concerned to reduce its prices or return the undue benefit availed

along with interest to the recipient of the goods or services→If the undue benefit cannot be

passed on to the recipient, it can be ordered to be deposited in the Consumer Welfare

Fund→In extreme cases the National Anti-profiteering Authority can impose a penalty on

the defaulting business entity and even order the cancellation of its registration under

GST

Base erosion and

profit shifting

(BEPS)

• It refers to the phenomenon where companies shift their profits to other tax

jurisdictions, which usually have lower rates, thereby eroding the tax base in India→India

in July 2019 ratified the international agreement to curb base erosion and profits shifting

(BEPS)– Multilateral Convention to Implement Tax Treaty Related Measures

• Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base

Erosion and Profit Shifting: The Convention is an outcome of the OECD/G20 BEPS

Project to tackle base erosion and profit shifting through tax planning strategies that exploit

gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations where

there is little or no economic activity, resulting in little or no overall corporate tax being

paid

Excise Duty • It refers to the taxes levied on the manufacture of goods within the country, as opposed to

custom duty that is levied on goods coming from outside the country→Not covered under

GST: In July 2017 the Centre introduced GST that subsumed a number of indirect taxes

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including excise duty→ This means excise duty, technically, does not exist in India except

on a few items such as liquor and petroleum

• Key facts: For the items and services outside the purview of GST, excise duty is a form of

indirect tax which is generally collected by a retailer or an intermediary from its

consumers and then paid to the government→The Central Board of Indirect Taxes and

Customs (CBEC) is responsible for collecting excise duty

States Asked to

Use Cess Fund to

Help

Construction

Workers

• Union government has asked all states to dip into the ₹52,000 crore Construction

Cess fund to give financial and allied benefits to the construction workers through

direct benefit transfer (DBT)→The central advise comes as Corona outbreak

spreads and the country is facing an unprecedented lockdown hampering livelihood

of millions of informal workers→The advisory comes under Section 60 of the

Building and Other Construction Workers (BOCW) Act, 1996→The amount to

be granted to construction workers may be decided by the respective state

governments and Union territories

Imported Inflation

When the general price level rises in a country because of the rise in prices of imported

commodities, inflation is termed as imported→the weakening of the domestic currency in

the past two months i.e. July and August 2019 may lead to imported inflation in the

country→Rise in prices of Oil and Gold lead to rise in the import bill of the country

Dearness

Allowance • Dearness allowance is a cost of living adjustment allowance paid to government

employees, public sector employees and pensioners and is calculated as a percentage of

basic salary to mitigate the impact of inflation→It can be basically understood as a

component of salary which is some fixed percentage of the basic salary, aimed at

hedging the impact of inflation

Inflation

June 2019 to March 2020

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Reciprocal Trade

Agreements

(RTAs)

Countries use bilateral/regional trade agreements to increase market access and expand

trade in foreign markets, these are called RTAs because members grant special advantages to

each other→these include many types of agreements, such as preferential arrangements, free

trade agreements, customs unions, and common markets

Financial Action

Task Force (FATF)

Pakistan was placed on the grey list by the FATF in June 2018 for failing to curb anti-terror

financing→ (FATF) is an inter-governmental body established in 1989 on the initiative of the

G7→Aims to set standards and promote effective implementation of legal, regulatory and

operational measures for combating money laundering, terrorist financing and other related

threats to the integrity of the international financial system→Grey list: countries that have

deficiencies in their AML/CTF regimes, but they commit to an action plan to address these

loopholes

100% FDI under

Automatic Route

for Coal Mining

Activities

The decision of 100% FDI under automatic route for coal mining activities including

associated processing, infrastructure in the coal sector will help in many ways

FDI in Palm oil

Plantation

100%

NIRVIK Scheme Export Credit Guarantee Corporation of India (ECGC) has introduced

‘NIRVIK’ scheme to ease the lending process and enhance loan availability for

exporters→features: Insurance cover guaranteed will cover up to 90 percent of the principal

and interest, increased cover will ensure that foreign and rupee export credit interest rates are

below 4 percent and 8 percent respectively for the exporters and the insurance cover will

include both pre and post-shipment credit

Electronic

Certificates of

Origin (CoO)

Ministry of Commerce & Industry launched a common digital platform for the issuance

of electronic Certificates of Origin (CoO)→it is an instrument which establishes evidence on

the origin of goods imported into any country→These certificates are essential for exporters

to prove where their goods come from and therefore stake their claim to whatever benefits

goods of Indian origin may be eligible for in the country of exports

Open general

export licences

(OGELs)

Government has approved issuance of two open general export licences (OGELs) for export

of certain parts and components as well as intra-company transfer of technology to select

countries→OGEL will be a one-time export licence to be granted to a company for a

specific period which will be two years initially→application for grant of OGEL will be

considered by the Department of Defence Production (DPP) on a case-to-case

basis→countries allowed under the OGELs are: Belgium, France, Germany, Japan, South

Africa, Spain, Sweden, UK, USA, Canada, Italy, Poland and Mexico→ items permitted

under OGEL include components of ammunition & fuse setting device without energetic and

explosive material; firing control & related alerting and warning equipment & related system;

and body protective items→complete aircraft or complete unmanned aerial vehicles

(UAVs) and any components specially designed or modified for UAVs are excluded under

this licence

External sector

June 2019 to March 2020

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Carpet Export

Promotion Council

(CEPC)

It is a non-profit making organization→Setup in 1982 by the Ministry of Textiles→Objective:

To promote export of carpets, all types of handmade / handmade knotted carpets, rugs, floor

coverings & other allied products from India→Indian Handmade Carpet Industry is ranked

number one in the international market achieved highest quantity both in terms of value and

production in the world market→ India possesses market share of around 35% of total world

import of handmade carpets

ICEDASH and

ATITHI for

improved customs

clearance

Two new IT Initiatives – ICEDASH and ATITHI have been launched for improved

monitoring and pace of customs clearance of imported goods and facilitating arriving

international passengers→ICEDASH is an Ease of Doing Business monitoring dashboard of

the Indian Customs helping the public see the daily Customs clearance times of import cargo at

various ports and airports→ATITHI app will facilitate hassle-free and faster clearance by

Customs at the airports and enhance the experience of international tourists and other visitors

at the airports

Trade Deficit India decided that it won’t sign the Regional Comprehensive Economic Participation

agreement→a key reason that India forwarded for declining to sign on was the existence of

trade deficits with many of the constituents of the RCEP→simply put, the trade “balance” of a

country shows the difference between what it earns from its exports and what it pays for its

imports→if this number is negative – the total value of goods imported by a country is more

than the total value of goods exported by that country – this is referred to as a “trade deficit”

India’s Free Trade

agreements with

ASEAN

A report, analysing the benefits of India’s free trade agreements with ASEAN has been

released→ prepared by the PHD Chamber of Commerce and Industry→Key

findings:Overall, India failed to benefit from free trade agreements (FTAs) with ASEAN→

In fact, India’s trade deficit had increased ever since the country entered into FTAs with

ASEAN→India’s net exports to countries without a trade agreement were only marginally

lower than its net exports to countries with FTAs→The imports from countries with trade

agreements were substantially higher, pushing India into a trade deficit

Import Duty on

Palm Oil Cut • India has cut import duty on crude palm oil (CPO) and refined, bleached and

deodorised (RBD) palm oil, and also moved RBD oil from the “free” to the “restricted” list

of imports.

• Issue: The move has been construed as retaliation against Malaysia’s Prime Minister

Mahathir bin Mohamad, who has criticised India’s internal policy decisions such as the

revocation of the special status for Jammu and Kashmir and the new citizenship

Act→Malaysia has also been sheltering since 2017 the Islamic preacher Zakir Naik, who

is wanted by India on charges of money laundering, hate speech, and links to terror

• Indonesia and Malaysia together produce 85% of the world’s palm oil, and India is among

the biggest buyers

• India needs palm oil as is the cheapest edible oil available naturally→Its inert taste makes

it suitable for use in foods ranging from baked goods to fried snacks→It stays relatively

stable at high temperatures, and is therefore suitable for reuse and deep frying→It is the

main ingredient in vanaspati (hydrogenated vegetable oil)

Directorate

General of Foreign

Trade (DGFT)

• It is an attached office of the Ministry of Commerce and Industry, formed in 1991→It is

involved in the regulation and promotion of foreign trade through regulation→ It has

been assigned the role of a “facilitator”→It also issues scrips/authorization to exporters and

June 2019 to March 2020

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monitors their corresponding obligations through its network of regional offices

Government

Imposes Curbs on

Drug Exports

• India has restricted the export of common medicines such as paracetamol and 25 other

pharmaceutical ingredients and drugs made from them, as it looked to prevent shortages

amid concerns of the COVID-19 outbreak turning into a pandemic.

• Drugs whose exports is restricted: Besides over-the-counter painkiller and fever reducer

paracetamol, drugs restricted for exports included common antibiotics metronidazole, those

used to treat bacterial and other infections, as well as vitamin B1 and B12 ingredients.

• Background: In February, the Department of Pharmaceuticals asked the DGFT to issue

orders restricting the export of 12 active pharmaceutical ingredients (APIs) and

formulations in the wake of the coronavirus outbreak

India’s Coal

Imports Rise • India’s thermal coal imports rose 12.6 percent to nearly 200 million tonnes in 2019→

This is the second straight year of growth in shipments of the fuel→Imports of coking coal

– used mainly in the manufacturing of steel – fell marginally, following two straight years

of increase

• Key facts: Coal is among the top five commodities imported by India, the world’s largest

consumer, importer and producer of the fuel

HSN Code • India not to allow imports without HSN code→ This will enable India’s exports to be

accepted globally due to the quality of goods and services

• What? Harmonised System, or simply ‘HS’→ It is a six-digit identification code→ Of the

six digits, the first two denote the HS Chapter, the next two give the HS heading, and the

last two give the HS subheading→Developed by the World Customs Organization

(WCO)→Called the “universal economic language” for goods→It is a multipurpose

international product nomenclature→The system currently comprises of around 5,000

commodity groups→HS Code is also known as HSN Code in India→ Goods are

classified into Harmonized System of Nomenclature or HSN

• Application: Widely used for taxation purposes by helping to identify the rate of tax

applicable to a specific product in a country that is under review→can also be used in

calculations that involve claiming benefits→are used to monitor and control the import

and export of commodities through: Customs tariffs, Rules of origin, Collection of internal

taxes, Monitoring of controlled goods (e.g., wastes, narcotics, chemical weapons, ozone

layer depleting substances, endangered species, wildlife trade), areas of Customs controls

and procedures, including risk assessment, information technology and compliance etc

•

Paris Convention

for the Protection

of Industrial

Property

• Khadi Village Industries Corporation is eyeing international trademark for ‘khadi’

under the Paris Convention for protection of industrial property

• Why? To prevent any product from masquerading as ‘khadi’ nationally or globally

• Regulations issued in 2013 by the ministry of micro, small and medium enterprises,

empower KVIC to grant ‘Khadi Mark’ registration and take royalties from any producer

using the Khadi mark

• Paris Convention→It is a multilateral treaty dealing with the protection of industrial

property in the widest sense→Administered by the World Intellectual Property

Organization (WIPO)

Most Favoured

Nation Status • What? A treatment accorded to a trade partner to ensure non-discriminatory trade

between two countries vis-a-vis other trade partners→It is the first clause in the General

Agreement on Tariffs and Trade (GATT) →Under WTO rules, a member country

cannot discriminate between its trade partners→ If a special status is granted to a trade

partner, it must be extended to all members of the WTO

• MFN at the same time allows some exemptions as well i.e. right to engage in Free Trade

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Agreements, members can give developing countries special and differential treatment

like greater market access, for e.g., special concession are in different forms like reduced

tariff rates from developing country imports, concessions that allows developing countries

to give subsidies to their production sectors etc

Surjit Bhalla

Committee on

Trade and Policy

• To boost India’s share and importance in global merchandise and services trade→ also

identifies tax reforms to boost export and investment channels for exports→ recommended

“Elephant Bonds” as a specialised security product providing funds towards Long Term

Infrastructure→ to carry out reforms in Financial Services Framework for making India

a Preferred Destination for financial services.

India-Russia

Strategic Economic

Dialogue (IRSED)

Established following a bilateral MoU signed between NITI Aayog and the Ministry of

Economic Development of the Russian Federation during the 19th edition of the Annual

India-Russia Bilateral Summit, which was held on October 5, 2018, in New Delhi→First India-

Russia Strategic Economic Dialogue was held in St. Petersburg in 2018

Global MPI 2019

Report

Prepared by the United Nations Development Programme (UNDP) and the Oxford Poverty

and Human Development Initiative→Multi-dimensional poverty(MPI) defines poor not only

on the basis of income, but on other indicators, including poor health, poor quality of work and

the threat of violence

Regional

Comprehensive

Economic

Partnership

(RCEP)

The 16-nation group led by ASEAN countries is making a push for India to sign the RCEP

Free Trade Agreement→RCEP is proposed between the 10 member states of ASEAN and

the 6 states with which ASEAN has existing FTAs (Australia, China, India, Japan, South

Korea and New Zealand)→aims to boost goods trade by eliminating most tariff and non-tariff

barriers→also seeks to liberalise investment norms and do away with services trade restrictions

G7 Bloc

The G7, originally G8, was set up in 1975 as an informal forum bringing together the

leaders of the world’s leading industrial nations→ The 45th Annual G7 Summit is being

held in the French town of Biarritz→ G7 Summit is an annual event where world leaders

from seven powerful economies of the world come together to discuss burning issues

happening around the globe→ The 2019 G7 Summit, presided over by France, will focus on

fighting inequality→ France has identified the following five objectives for the Summit:

promoting in particular gender equality; reducing environmental inequality; globalization;

taking action for peace; tapping into the opportunities created by digital technology and

artificial intelligence (AI)

Automatic

Exchange of

Information

(AEOI)

AEOI regime between Switzerland and India kicked off from September 1, 2019→under

this mechanism, India will start receiving information on all financial accounts held by

Indian residents in Switzerland, for the year 2018→AEOI is systematic and

periodic transmission of “bulk” taxpayer information by the source country to the residence

country, which is possible under most of the Double Taxation Avoidance Agreements

(DTAAs) and Multilateral Convention on Mutual Administrative Assistance in Tax

Matters (MAC)→It aims to reduce global tax evasion

Developing South Korea has said that it will no longer seek special treatment reserved for developing

International Institutions

June 2019 to March 2020

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Countries in the

WTO

countries by the World Trade Organization in future negotiations given its enhanced global

economic status→South Korea, Asia’s fourth-largest economy, has maintained its developing

country status as a member of the WTO since the body’s creation in 1995, mainly to guard its

agriculture industry→There are no WTO definitions of “developed” and “developing”

countries→members announce for themselves whether they are “developed” or

“developing” countries→however, other members can challenge the decision of a member to

make use of provisions available to developing countries→Developing country status in the

WTO brings certain rights→it ensures special and differential treatment (S&DT) or

provisions which allow them more time to implement agreements and commitments, include

measures to increase trading opportunities, safeguard their trade interests, and support to build

capacity to handle disputes and implement technical standards

Financial Action

Task Force (FATF)

Financial Action Task Force affiliate Asia Pacific Group (APG) places Pakistan on

Blacklist for failing to combat terrorism, money laundering and meeting the required global

standards→Pakistan was non-compliant in 32 of the 40 Compliance Parameters on Money

Laundering & Terror Financing and Pakistan was low in 10 of the 11 Effectiveness Parameters

Libra Despite several high-profile defections and intense criticism from US regulators and

politicians, Facebook officially launched Libra→Libra Association will govern the currency,

officially signed on 21 charter members at the organization’s inaugural meeting in

Geneva→Facebook says Libra is a “global currency and financial infrastructure”→ it is a

digital asset built by Facebook and powered by a new Facebook-created version of blockchain,

the encrypted technology used by bitcoin and other cryptocurrencies→currency will be

serviced by a collective of companies called the “Libra Association”→Libra Association

is an independent, not-for-profit organisation based in Switzerland

Sveriges Riksbank

Prize in Economic

Sciences

Received by Abhijit Banerjee, Esther Duflo and Michael Kremer “for their experimental

approach to alleviating global poverty”

IMF’s World

Economic Outlook

(WEO)

IMF’s 2019 World Economic Outlook (WEO) has been released→India retains its rank as the

world’s fastest-growing major economy, tying with China→ has a projected growth rate of

6.1 per cent for the current fiscal year, despite an almost one per cent cut in the

forecast→However, India’s economy is projected to pick up and grow by 7 per cent in the

2020 fiscal year

Asia-Pacific Trade

and Investment

Report 2019

Published by the United Nations Economic and Social Commission for Asia and the Pacific

(ESCAP) and the United Nations Conference on Trade and Development (UNCTAD)→Key

findings- Effects of NTMs: Non-tariff measures (NTMs) have increased in the past two

decades and are affecting trade as well sustainable development goals (SDGs) in Asian

countries→NTMs affect 58 per cent of the trade in Asia-Pacific and can have a direct impact

on the performance of trading partners→They can also impact issues such as health, safety,

environment, climate, public security and peace, which in turn, influence SDGs

Asian Development

Bank (ADB)

Government of India has signed a 190 million USD loan with ADB to upgrade road

transport in the state of Rajasthan→It is a regional development bank→established on 19

December 1966→headquartered — Manila, Philippines→official United Nations

Observer→it admits the members of the United Nations Economic and Social Commission

June 2019 to March 2020

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for Asia and the Pacific (UNESCAP) and non-regional developed countries

IMF Quotas As per the latest deal, members of the International Monetary Fund (IMF) agreed to maintain

its funding at $ 1 trillion but postponed changes to its voting structure→the deal is a

compromise with the U.S., the Fund’s largest shareholder, which has resisted changes to

the organisation’s voting structure as well as increases in its permanent resource base→It

will allow an extension of non-permanent, supplementary sources of funds – such as the New

Arrangement to Borrow (NAB), a renewable funding mechanism and bilateral borrowings

from countries – the IMF had entered into these after the 2008 financial crisis to increase its

lending ability→The agreement extended the bilateral borrowing facility by a year – to the end

of 2020 and a potential doubling of the NAB→the agreed package will leave IMF quotas (the

primary source of IMF funds), which determine voting shares, unchanged

WTO’s Dispute

Settlement

Mechanism and the

Appellate Body

WTO’s Appellate Body, set up in 1995, is a standing committee of seven members that

presides over appeals against judgments passed in trade-related disputes brought by WTO

members→Countries involved in a dispute over measures purported to break a WTO

agreement or obligation can approach the Appellate Body if they feel the report of the panel set

up to examine the issue needs to be reviewed on points of law→ Existing evidence is not re-

examined; legal interpretations are reviewed→It can uphold, modify, or reverse the legal

findings of the panel that heard the dispute→It has so far issued 152 reports and the reports,

once adopted by the WTO’s disputes settlement body, are final and binding on the parties

G20 • An informal group of 19 countries and the European Union along with representatives

of the IMF and the World Bank

• Genesis: Amid 2008 Financial Crisis the world saw the need for a new consensus-building

at the highest political level→ It was decided that the G20 leaders would begin meeting

once annually

• Members: The members of the G20 are Argentina, Australia, Brazil, Canada, China,

France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi

Arabia, South Africa, Turkey, the United Kingdom, the United States, and the European

Union

Global Microscope

on Financial

Inclusion Report

• Produced by Economist Intelligence Unit (EIU), the research and analysis division of The

Economist Group→report was first published in 2007 and was originally developed for

countries in Latin American and Caribbean regions but in 2009 it was expanded into a

global study→it is a benchmarking index that assesses enabling environment for

financial access in 55 countries across 5 categories→Five parameters across which

countries are assessed Government and Policy Support, Products and Outlets, Stability and

Integrity, Consumer Protection and Infrastructure

June 2019 to March 2020

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Competition

Commission of

India

CCI imposes penalty on pharma companies, trade associations for violating the provisions of

the Competition Act, 2002→ a statutory body responsible for enforcing the Competition

Act, 2002 and to promote and sustain competition. → Goal of CCI: to create and sustain fair

competition in the economy that will provide a ‘level playing field’ → Competition Act –

The Act prohibits anti-competitive agreements, abuse of dominant position by enterprises

and regulates combinations (acquisition, acquiring of control and M&A), which causes or

likely to cause an appreciable adverse effect on competition within India

National Anti-

Profiteering

Authority (NAA)

Tenure of NAA has been extended by 2 years→it has been constituted under Section 171 of

the Central Goods and Services Tax Act, 2017→aims to ensure the reduction in rate of

tax or the benefit of input tax credit is passed on to the recipient by way of commensurate

reduction in prices.

Regulatory

Sandbox

Insurance Regulatory and Development Authority of India (IRDAI) will soon allow the

use of regulatory sandbox (RS) to promote new, innovative products and processes in the

industry→it is a safe harbour, where businesses can test innovative products under relaxed

regulatory conditions→typically, participating companies release new products in a controlled

environment to a limited number of customers for a limited period of time

GOI Considering to

Break Coal India

into Separate

Listed Companies

to Improve its

Working

Department of Investment & Public Asset Management (DIPAM) had sent a proposal

→Coal India Limited is the dominant coal miner in the country→ It made up 83% of

domestic production and 63% of total coal supply (in tonnes) for fiscal year 2018-2019. → The

four units -- Mahanadi Coalfields, South Eastern Coalfields, Northern Coalfields and Central

Coalfields -- account for more than three-fourths of the company’s output, while constituting

less than half of its workforce

Marine Fisheries

Regulation and

Management

(MFRM) Bill 2019

Circulated in the public domain for discussion→ India has proposed it as per its obligation

under the United Nations Convention on the Law of the Sea (UNCLOS) 1982 and the

World Trade Organisation (WTO) agreements. → Covering the gap between centre and

state: Since fisheries is a state subject while fishing beyond the Territorial Sea up to the

limit of the EEZ, are in the Union list→ It proposes social security for fish workers → The

Bill prohibits fishing by foreign fishing vessels, thus nationalising EEZ → will ensure that the

ecological integrity of the maritime zones of India

Sugar Industry Union cabinet recently approved the creation of a buffer stock of 4mt of sugar → The

buffer stock will be created for one year from August 1, 2019, to July 31, 2020, for which

the government would be reimbursing the carrying cost of about ₹ 1,674 crore to participating

sugar mills. → aimed at increasing wholesale prices of sugar and improving cash flow to

sugar mills, which in turn will help mill owners to clear the dues of farmers. → will help

maintain demand-supply balance and to stabilize sugar prices.

Tourism Industry Prime Minister urged people to visit at least 15 tourist destinations within India by 2022→To

aid Economic Potential of Tourism for India → Swadesh Darshan Scheme- Under this

scheme fifteen thematic circuits have been identified for development → Prashad Scheme

(Pilgrimage Rejuvenation and Spiritual Augmentation Drive)- Under this, 25 sites have

been identified for development →Adopt of Heritage Scheme- whereby outsourcing of the

maintenance of some of the monuments have been done by the Ministry. →launched the

Authority & Industry

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'Incredible India 2.0' Campaign during 2017-18 to cover both major and emerging markets.

→ Organising and Participation in tourism related events such as Paryatan Parv, Bharat Parv

Government e

Marketplace (GeM)

GeM has signed a MoU with Federal Bank→will facilitate a cashless, paperless and

transparent payment system on the portal and would create an efficient procurement system

for government entities

Eligibility Criteria

for Grant of

Maharatna,

Navratna and

Miniratna Status

Government of India has accorded ‘Maharatna’ status to public sector undertaking’s

(PSU’s) Hindustan Petroleum Corporation Limited (HPCL) and Power Grid

Corporation→this will impart greater operational and financial autonomy thus enhancing

powers to their Boards to take financial decisions, the boards can also structure and implement

schemes relating to personnel as well as human resource management and training, holding

companies of a ‘Maharatna’ PSU are also empowered to float fresh equity, transfer assets,

divest shareholding in subsidiaries, but are subjected to condition that the delegation will only

be in respect of subsidiaries set up by holding company etc

Enterprise

Development

Centres (EDCs)

Union Ministry of micro, small and medium enterprises is planning to launch EDCs in

every district→ Aims at developing a cadre of indigenous entrepreneurs in the MSMEs,

the EDCs will be similar to incubators for start-ups→will be run by special purpose

vehicles in partnership with the private sector, business management organisations, local

industry associations→EDCs will offer credit facilitation and syndication, export promotion

and supplier inclusion as well

Atal Research &

Innovation for

Small Enterprises

(ARISE)

To stimulate innovation and research in the MSME industry

Industrial Relations

Code Bill, 2019

The bill has been introduced in Lok Sabha→the code proposes to amalgamate the Trade

Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946, and the

Industrial Disputes Act, 1947

HS code The Ministry of Commerce and Industry has allocated a separate Harmonised System (HS)

code for Khadi→Khadi is India’s signature handspun and handwoven cloth that was made

iconic by Mahatma Gandhi during the freedom struggle→the move is expected to boost

Khadi exports in the coming years →Harmonised System, or simply ‘HS’, is a six-digit

identification code→ developed by the World Customs Organization (WCO)→it is a

multipurpose international product nomenclature→HS code are used by Customs authorities,

statistical agencies, and other government regulatory bodies to monitor and control the import

and export of commodities

Business Immunity

Platform • Invest India has launched the Invest India Business Immunity Platform

• Business Immunity Platform: It is designed as a comprehensive resource to help

businesses and investors get real-time updates on India’s active response to COVID-19

(Coronavirus)→It is the active platform for business issue redressal, operating 24/7,

with a team of dedicated sector experts and responding to queries at the earliest

• Invest India is the National Investment Promotion and Facilitation Agency of India, set

up as a non-profit venture under the aegis of Department of Industrial Policy &

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Promotion, Ministry of Commerce and Industry→It facilitates and empowers all investors

under the ‘Make in India’ initiative to establish, operate and expand their businesses in

India→Operationalized in early 2010, Invest India is set up as a joint venture company

between the Department of Industrial Policy & Promotion (DIPP) (now renamed as

Department for Promotion of Industry and Internal Trade (DPIIT)), Ministry of Commerce

& Industry (35% equity), Federation of Indian Chambers of Commerce and Industry

(FICCI) (51% equity), and State Governments of India (0.5% each)

National

Productivity

Council (NPC)

• Is an autonomous, multipartite, non-profit organization with equal representation from

employers’ & workers’ organizations and Government, apart from technical & professional

institutions and other interests→ to promote productivity culture in India→ established in

1958 by Ministry of Industry→under the administrative control of the Department for

Promotion of Industry and Internal Trade→also implements the productivity promotion

schemes of the Government and carry out the programmes of the Tokyo based Asian

Productivity Organization (APO)

Consumer

Protection Act 2019

A new consumer protection law replacing the old 1986 law →A consumer is defined as a

person who buys any good or avails a service for a consideration →It covers transactions

through all modes including offline, and online through electronic means, teleshopping,

multi-level marketing or direct selling. → The Act defines “consumer rights” → Central

Consumer Protection Authority will be set up to promote, protect and enforce consumer

rights →Consumer Disputes Redressal Commissions will be set up at the District, State and

National levels for adjudicating consumer complaints. →Consumer Protection Councils will

be established at the district, state and national levels to render advise on consumer protection.

→Product liability means the liability of a product manufacturer, service provider or seller to

compensate for any harm caused, including: property damage, personal injury, illness, or death;

and mental agony or emotional harm accompanying these conditions.

•

National Financial

Reporting Authority

It is a body proposed in Companies Act 2013 for the establishment and enforcement of

accounting and auditing standards and oversight of the work of auditors→It would be an

overarching watchdog for auditing profession and once set up, the current powers of the

ICAI to act against erring chartered accountants will be vested with the new regulator→ Its

will extend to all listed companies as well as large unlisted public companies→Besides, the

government can refer other entities for investigation by the NFRA where public interest is

involved.

Market

Intervention Price

Scheme (MIPS)

The government is planning to procure almost 12 lakh metric tonnes of apples this season,

under the MIPS→it is a price support mechanism implemented on the request of State

Governments→it is for procurement of perishable and horticultural commodities in the

event of a fall in market prices→scheme is implemented when there is at least 10% increase

in production or 10% decrease in the ruling rates over the previous normal

year→Department of Agriculture & Cooperation is implementing the scheme

Agricultural and

Processed Food

Products Export

Development

Authority

(APEDA)

• 800 FPOs registered on Farmer Connect Portal of APEDA→Farmer Connect Portal has

been set up by APEDA on its website for providing a platform for Farmer Producer

Organisations (FPOs) and Farmer Producer Companies (FPCs) to interact with

exporters

• APEDA was established by the Government of India under the Agricultural and

Processed Food Products Export Development Authority Act 1985 → it replaced the

Agriculture

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Processed Food Export Promotion Council (PFEPC) →it is under the Ministry of

Commerce and Industries→aims to promote export of agricultural and processed food

products from India

Small Farmers’

Agri-Business

Consortium

(SFAC)

• Agricultural and Processed Food Products Export Development Authority (APEDA)

has signed an MoU with the Small Farmers Agribusiness Consortium (SFAC) to have a

better sync with their activities for the benefit of farmers

• Key facts: As per the MoU, both organisations will work towards capacity development,

outreach programs, awareness programs and workshops of various stakeholders→APEDA

will facilitate the certification of organic produce/areas by the FPCs assisted or identified

by SFAC

• SFAC: It was established as a Society in January 1994 to facilitate agri-business

ventures by catalysing private investment through Venture Capital Assistance (VCA)

Scheme in close association with financial institutions→Role of State SFACs is to

aggressively promote agribusiness project development in their respective States

• APEDA: It is an authority established under an act of Parliament and under the

administrative control of the Ministry of Commerce and Industry→It has been mandated

with the responsibility of export promotion and development of the scheduled products

viz. fruits, vegetables, meat products, dairy products, alcoholic and non-alcoholic beverages

etc→Is also entrusted with the responsibility to monitor import of sugar

“Silk Samagra”

through Central

Silk Board

• Focuses on improving quality and productivity of domestic silk thereby reducing the

country’s dependence on imported silk→assistance is extended to sericulture

stakeholders for the beneficiary oriented components like plantation with improved

Mulberry varieties, Irrigation, construction of rearing houses, r door to door service agents

for disinfection and input supply, support for improved reeling units like Automatic Reeling

units, support for post yarn facilities for quality silk and fabric production etc.

June 2019 to March 2020

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Healthy States,

Progressive India

Report

NITI Aayog

Corporate Social

Responsibility

President of India presents National Corporate Social Responsibility Awards→NCSRA has

been instituted by the Ministry of Corporate Affairs to recognize outstanding contribution in

the field of Corporate Social Responsibility (CSR)→CSR is the integration of socially

beneficial programs and practices into a corporation’s business model and culture→India is

one of the first countries in the world to make CSR mandatory for companies following an

amendment to the Companies Act, 2013 (Companies Act) in 2014

Maternal mortality

rate in India

A Special Bulletin on Maternal Mortality in India 2015-2017 from the Sample Registration

System has been released→Key facts:Maternal mortality ratio is measured as the number of

maternal deaths per lakh live births→it varies among the Indian states from a high of 229

per lakh in Assam to a low of 42 in Kerala→across the country, the maternal mortality ratio

has declined from 130 during 2014-2016 to 122 during 2015-17→Assam (229) is followed

by Uttar Pradesh (216), Madhya Pradesh (188), Rajasthan (186), Odisha (168), Bihar (165) and

Chhattisgarh (141)→according to the United Nations’ (UN) Sustainable Development Goals

(SDGs), the global target is to bring down the MMR to fewer than 70 maternal deaths per

100,000 live births by 2030

Patent Prosecution

Highway

programme

Union Cabinet has approved the proposal for adoption of Patent Prosecution Highway (PPH)

programme by the Indian Patent Office (IPO) under the Controller General of Patents,

Designs & Trade Marks, India (CGPDTM) with patent offices of various other interest

countries or regions→PPH will initially commence between Japan Patent Office (JPO) and

Indian Patent Office on pilot basis for a period of three years only→PPH is a set of initiatives

for providing accelerated patent prosecution procedures by sharing information between

some patent offices

Human

Development

Index(HDI)

Published by the United Nations Development Programme (UNDP)→it is a statistical tool

used to measure a country’s overall achievement in its social and economic dimensions based

on the health of people, their level of education attainment and their standard of living→It

is part of the Human Development Report→Other indices that form the part of the 2019

Report are: Inequality-adjusted Human Development Index (IHDI), Gender Development

Index (GDI), Gender Inequality Index (GII) and Multidimensional Poverty Index (MPI)

Latest Edition of

Periodic Labour

Force Survey

(PLFS)

Ministry of Statistics and Programme Implementation constituted PLFS under the

chairmanship of Amitabh Kundu→ unemployment rate (UR) is at its highest in both rural and

urban India since 1972→ unemployment rate among youth between 15 and 29 years has

risen sharply since 2011-12→UR in urban areas are higher than those in rural areas→ data

was collected by NSSO from July 2017 to June 2018

Skill development

through Rural Self

Employment and

Training Institutes

Will provide skilling, thereby enabling the trainee to take bank credit and start his/her own

Micro-enterprise→Launched by Ministry of Rural Development (MoRD) to provide skill

development under the National Rural Livelihoods Mission (NRLM)

Social Sector,Employment,Poverty

June 2019 to March 2020

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(RSETI)

New Code on

Wages

It seeks to define the norms for fixing minimum wages that will be applicable to workers of

organised and unorganised sectors, except government employees and MGNREGA

workers→Code on Wages will amalgamate the Payment of Wages Act, 1936, the Minimum

Wages Act, 1948, the Payment of Bonus Act, 1965, and the Equal Remuneration Act,

1976→as per the Bill, minimum wages will be linked only to factors such as skills and

geographical regions

National Skill

Development

Corporation

(NSDC)

It is a not-for-profit public limited company→ incorporated on July 31, 2008 →set up by

Ministry of Finance as Public Private Partnership (PPP) model. The Government of India

through Ministry of Skill Development & Entrepreneurship (MSDE) holds 49% of the share

capital of NSDC→ aims to promote skill development by catalyzing creation of large, quality

and for-profit vocational institutions→ provides funding to enterprises, companies and

organization to build scalable and profitable vocational training initiatives.

Randomised

Controlled Trial

New Economics Nobel laureates – Abhijit Banerjee, Esther Duflo and Michael Kremer –

are considered to be instrumental in using randomised controlled trials to test the effectiveness

of various policy interventions to alleviate poverty→RCTs allow economists and social science

researchers to isolate the individual impact that a certain factor alone has on the overall

event→For instance, to measure the impact that hiring more teachers can have on children’s

learning, researchers must control for the effect that other factors such as intelligence,

nutrition, climate, economic and social status etc., which may also influence learning

outcomes to various degrees, have on the final event→RCTS promise to overcome this

problem through the use of randomly picked samples

CMIE Report on

Joblessness

Centre for Monitoring Indian Economy (CMIE) has released a report on Unemployment in

India→Key findings:India’s unemployment rate in October rose to 8.5%, the highest level

since August 2016→Urban unemployment rate at 8.9%, is more than the rural

unemployment rate of 8.3% →Highest unemployment rate in Tripura and Haryana, at more

than 20% →Lowest in Tamil Nadu at 1.1% →Rajasthan saw its unemployment rate double

between September and October 2019

Emissions Trading

Scheme (ETS)

Launched in Surat by Gujarat Government, the Emissions Trading Scheme

(ETS) is a regulatory tool that is aimed at reducing the pollution load in an area

and at the same time minimising the cost of compliance for the industry→ETS is

a market in which the traded commodity is particulate matter emissions→it is also

being described as the world’s first market for trading in particulate matter

emissions

Carbon Pricing A Report of the High-Level Commission on Carbon Pricing and Competitiveness

by Carbon Pricing Leadership Coalition makes a strong case for carbon pricing→it

Sustainable Development

June 2019 to March 2020

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is an instrument that captures the external costs of greenhouse gas (GHG)

emissions - the costs of emissions that the public pays for, such as damage to crops,

health care costs from heat waves and droughts, and loss of property from flooding

and sea level rise - and ties them to their sources through a price, usually in the

form of a price on the carbon dioxide (CO2) emitted

Scheme for

Capacity Building

in Textile Sector

(SCBTS)-

SAMARTH

Skill development of the youth in the textile sector

Pradhan Mantri

Kaushal Vikas

Yojana (2016 –

2020)

Implemented by National Skill Development Corporation→Ministry of Skill Development

and Entrepreneurship→to encourage and promote skill development for the youth→aims to

benefit 10 million youth over the period of four years (2016- 2020)

India International

Skill Centres (IISC)

Program

Launched as a pilot operational in 14 centres in the country→ Ministry of Skill Development

and Entrepreneurship→To provide counselling and guidance along with Foreign

Employment Support for employment opportunities in the overseas market, information on

the required skill set, minimum wages etc. to the potential emigrants, Skill Testing &

certification aligned with employer standard, Incremental skill training & Pre-Departure

Orientation Training (PDOT) and to focus on emerging opportunities in all regions of the

world

Rashtriya Gokul

Mission

Funds have been mobilized under RGM for setting up of 21 Gokul Grams as Integrated

Cattle Development Centres→aims to conserve and develop indigenous bovine breeds→

RGM comes under the National Programme for Bovine Breeding and Dairy Development

(NPBBD).

Shyama Prasad

Mukherji Rurban

Mission (SPMRM)

Programme, designed to deliver catalytic interventions to rural areas on the threshold of

growth→aims to stimulate local economic development, enhance basic services, and create

well planned Rurban clusters

National Policy on

Biofuels – 2018

The policy on Biofuels approved by the Government envisages an indicative target of 20%

blending of ethanol in petrol and 5% blending of bio-diesel in diesel by 2030→it

categorises biofuels as “Basic Biofuels” viz. First Generation (1G) bioethanol & biodiesel

and “Advanced Biofuels” – Second Generation (2G) ethanol, Municipal Solid Waste (MSW)

to drop-in fuels, Third Generation (3G) biofuels, bio-CNG etc. to enable extension of

appropriate financial and fiscal incentives under each category

Pradhan Mantri

Ujjwala Yojana

7.23 Crore connections released under the scheme→ aims to provide LPG (liquefied

petroleum gas) connections to poor households→under the scheme, an adult woman

member of a below poverty line family identified through the Socio-Economic Caste

Government Schemes

June 2019 to March 2020

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(PMUY) Census (SECC) is given a deposit-free LPG connection with financial assistance of Rs 1,600

per connection by the Centre→eligible households will be identified in consultation with

state governments and Union territories→implemented by the Ministry of Petroleum and

Natural Gas

Atal Tinkering

Labs

With a vision to ‘Cultivate one Million children in India as Neoteric Innovators’, Atal

Innovation Mission ATLs in schools across India→objective: to foster curiosity, creativity

and imagination in young minds; and inculcate skills such as design mindset, computational

thinking, adaptive learning etc→AIM will provide grant-in-aid that includes a one-time

establishment cost of Rs. 10 lakh and operational expenses of Rs. 10 lakh for a maximum

period of 5 years to each ATL

Pradhan Mantri

Awas Yojana –

Urban

Houses sanctioned under PMAY(U) now stand at 83.62 lakhs→

Uttar Pradesh tops the list for Sanctioned Houses at 13 Lakhs→it was launched by the

Ministry of Housing and Urban Poverty Alleviation, in mission mode envisions provision

of Housing for All by 2022, when the nation completes 75 years of its Independence.

EQUIP Project Higher Education Department of the Union Ministry of Human Resource Development has

finalized and released a 5-year Vision Plan titled as Education Quality Upgradation and

Inclusion Programme (EQUIP)→it is meant to bridge the gap between policy and

implementation→the project is made to bring transformation in the higher education system in

the upcoming 5 years

National

Manufacturing

Competitiveness

Programme

(NMCP)

To support MSMEs in improving their competitiveness→Ministry of Micro, Small and

Medium Enterprises (MSMEs) implements Credit Linked Capital Subsidy-Technological

Up-gradation Scheme (CLCS-TUS) to support MSMEs in their technology up-gradation

endeavours.

Scheme for Trans-

disciplinary

Research for

India’s Developing

Economy

(STRIDE)

Approved by UGC→will provide support to research projects that are socially relevant, locally

need-based, nationally important and globally significant→to support research capacity

building as well as basic, applied and transformational action research that can contribute to

national priorities with focus on inclusive human development.

Pradhan Mantri

Gram Sadak

Yojana-lll

(PMGSY-III)

Involves consolidation of Through Routes and Major Rural Links connecting habitations to

Gramin Agricultural Markets (GrAMs), higher secondary schools and hospitals→proposes

to consolidate 1,25,000 km road length in the States→will also include Through Routes and

Major Rural Links that connect habitations to Gramin Agricultural Markets (GrAMs), higher

secondary schools and hospitals.

Mahila Kisan

Sashaktikaran

Pariyojana (MKSP)

Is a sub-component of Deendayal Antyodaya Yojana-National Rural Livelihood Mission

(DAY-NRLM)→ objective is to empower women by enhancing their participation in

agriculture and to create sustainable livelihood opportunities for them→funding support to the

tune of up to 60% (90% for North Eastern States) for such projects is provided by GoI.

June 2019 to March 2020

Current Economy

WriteToBeIAS.com Economy (Prelims) online

classes by CA Rahul Kumar

IAS 2020-21

Telegram https://t.me/writetobeias1 Youtube https://tinyurl.com/yx22y2yl Page 49

Pradhan Mantri

Kaushal Vikas

Yojana 2.0

(PMKVY 2.0)

To provide skilling to one crore people across the country in various sectors including

Agriculture→under Recognition of Prior Learning (RPL) component of PMKVY 2.0, up

skilling of farmers has been made via bridge course training in the job roles namely organic

grower, dairy farmer, pulses cultivator etc.

Atal Pension

Yojana

To create a universal social security system for all Indians, especially the poor, the under-

privileged and the workers in the unorganised sector→for all citizens of India between 18-40

years of age having a savings bank account in a bank or post-office.

Deendayal

Antyodaya Yojana

– National Rural

Livelihoods Mission

(DAY-NRLM)

Ministry of Rural Development→objective of organizing the rural poor women into Self

Help Groups (SHGs) and continuously nurturing and supporting them to take economic

activities till they attain appreciable increase in income over a period of time to improve their

quality of life and come out of abject poverty→aims to ensure that at least one woman

member from each rural poor household (about 9 crore) is brought into the fold of women

SHGs and their federations within a definite time frame

Trade

Infrastructure for

Export Scheme

(TIES)

It replaces a centrally sponsored scheme — Assistance to States for creating Infrastructure for

the Development and growth of Exports (ASIDE)→ to enhance export competitiveness by

bridging gaps in export infrastructure, creating focused export infrastructure and first-mile and

last-mile connectivity→would provide assistance for setting up and up-gradation of

infrastructure projects with overwhelming export linkages like the Border Haats, Land customs

stations, quality testing and certification labs, cold chains, trade promotion centres, dry ports,

export warehousing and packaging, SEZs and ports/airports cargo terminuses→Eligibility: The

Central and State Agencies, including Export Promotion Councils, Commodities Boards, SEZ

Authorities and Apex Trade Bodies recognised under the EXIM policy of Government of

India; are eligible for financial support under this scheme

Pradhan Mantri

Laghu Vyapari

Maan-dhan Yojana

2019

Assures a minimum of Rs.3,000 monthly pension to all small shopkeepers, retail traders and

self-employed persons after attaining 60 years of age→small shopkeepers, self-employed

persons and retail traders aged between 18-40 years and with GST turnover below Rs.1.5 crore

can enrol for pension scheme→ applicants should not be covered under the National Pension

Scheme, Employees’ State Insurance Scheme and the Employees’ Provident Fund or be an

Income Tax assessee

Pradhan Mantri

Fasal Bima Yojana

(PMFBY)

• When? Launched in 2016

• Merged schemes include National Agricultural Insurance Scheme (NAIS) and Modified

National Agricultural Insurance Scheme (MNAIS)

• Aim: To reduce the premium burden on farmers and ensure early settlement of crop

assurance claim for the full insured sum

• Coverage: It covers all food & oilseeds crops and annual commercial/horticultural

crops for which past yield data is available and for which requisite number of Crop

Cutting Experiments (CCEs) are being conducted under General Crop Estimation

Survey (GCES)→Premium: 2% for Kharif crops, 1.5% for Rabi crops and 5% for

commercial and horticultural crops