Economy Prelims Compendium - Chahal AcademyPage 2 AIIB • Asian Infrastructure Investment Bank (AIIB) is a China ledmultilateral development bank with a mission to improve social

PRELIMS

COMPENDIUM

Economic & SocialDevelopment

2019

Repo | Reverse Repo | MSF | MCLR

• Repo means repurchase obligations which are undertaken by the central bank by way of purchasing government securities from banks for a very short period generally overnight with an obligation that it will send them back to the banks. It means injection of liquidity by the central bank into the banking system for a very short period which may generally be overnight or 7 days repo or 14 days repo. When RBI increases Repo Rate the banks can borrow less at a lower cost and thus need to lend at higher rates resulting in hike of the interest rates in markets. It is termed as tight monetary policy stance.

• In Reverse Repo central bank sells the government securities to banks for a very short period with an obligation that it will buy them back after the defined short period. Thus here, it is the banks that deposit their short-term excess funds with the RBI and earn interest on it implying absorption of liquidity by the central bank. Both Repo and Reverse Repo are part of RBI’s Liquidity Adjustment Facility(LAF) through which it monitors the prevailing liquidity conditions in the economy on a constant basis.

• Marginal Standing Facility was introduced by RBI in 2011 as an emergency lending facility to banks when they cannot borrow under the Repo facility. Here RBI lends to banks mainly for overnight. The interest rate for MSF borrowing was originally set at one percent higher than the repo rate. However, RBI later lowered the difference between repo rate and MSF to 0.25%. The banks can borrow only upto 1 % of its liabilities from the RBI under MSF.

• Bank Rate is a long term rate (usually 3-6 months) whereas Repo Rate is essentially a short term rate ( 1 day, 7 days or 14 days). Bank Rate implies that RBI lends against Commercial Bills and Bills of Exchange whereas under Repo it lends against Government Bonds and Securities.

• Monetary Policy Committee of RBI to decides the benchmark key policy interest rates in the economy. The mandate of the committee is to maintain 4% annual inflation with an upper tolerance of 6 % and lower tolernace of 2 % under its inflation targeting framework. It is a 6-member committee with 3 members from RBI including the Governor and Deputy Governor. The other 3 members are decided by the Centre based on the recommendation of a panel headed by the Cabinet Secretary. The RBI Governor has a casting vote in case of a tie.

• Monetary transmission refers to the process by which a central bank’s monetary policy decisions are passed on, through financial markets, to businesses and households. If RBI increases the Repo Rate resulting in credit becoming expensive for banks then banks must pass the same rate to its customers. Currently banking lending rates are determined by the MCLR or marginal cost of lending rate. It was introduced in 2016 by replacing the base rate regime.

• MCLR actually describes the method by which the minimum interest rate for loans is determined by a bank. It is based on the marginal cost or the additional or incremental cost of arranging one more rupee to the borrower. The repo rate is a big factor in the calculation of the marginal cost of funds. So, any change in the repo rate brings a major change in the marginal cost of funds. The major difference between base rate and MCLR is that calculation of base rate is done as the bank saw fit however MCLR is to be calculated through a set formula. Both are determined internally by the banks themselves.

AIIB

• Asian Infrastructure Investment Bank (AIIB) is a China led multilateral development bank with a mission to improve social and economic outcomes in Asia and beyond. It was established as an alternative to World Bank. It is headquartered in Beijing. By investing in sustainable infrastructure and other productive sectors today, it aims to connect people, services and markets that over time will impact the lives of billions and build a better future.

• AIIB was proposed at an APEC summit in Bali in 2013 and started its operation in January, 2016 and has now grown to 84 approved members from around the world. Interestingly, USA is not a part of AIIB.

• India is the second largest shareholder of the Bank with 7.5% shareholding. China, Russia and Germany are 26.06%, 5.93% and 4.5% of shareholders.

• The Asian Infrastructure Investment Bank (AIIB) has approved $100 million investment in the National Infrastructure and Investment Fund (NIIF)

NIIF

• NIIF was set up in 2015 as an investment vehicle for funding commercially viable greenfield, brownfield and stalled projects in the infrastructure sector. It is India’s first sovereign wealth fund. It will invest in areas such as energy, transportation, housing, water, waste management and other infrastructure-related sectors in India.

• Its Governing Council is chaired by Finance Minister and has already been set up to act as an advisory council to the NIIF. The corpus of the fund is proposed to be around Rs40,000 crore, with the government investing 49% and the rest to be raised from third-party investors such as sovereign wealth funds, insurance and pension funds, endowments etc.

• It is registered as a category II alternative investment fund with SEBI.

Bharat-22

• Bharat 22 consists of 22 stocks of Central Public Sector Enterprises (CPSE), Public Sector Banks(PSB) & strategic holding of Specified Undertaking of Unit Trust Of India(SUUTI). It is a diversified ETF spanning six sectors Basic materials, Energy, Finance, Industrials, FMCG and Utilities

• The industrial sector has the maximum weightage and the minimum weightage is given to basic materials. It is the second ETF launched by Government of India.

• It is used as a tool of disinvestment by Government of India. • Exchange Traded Funds are the kind of instruments that track the value of some underlying assets and are like a

substitute for direct investment in that asset. They are technically mutual funds in terms of security but are more liquid as they can be traded on stock exchanges like shares. The underlying asset could be index, commodity, bonds or basket of assets.

• Like a mutual fund, ETFs trading value is based on Net Asset Value(NAV) of the underlying stocks that it represent. Their NAV changes daily as they are traded throughout the day unlike a mutual fund whose value is calculated once, only at the end of the day.

Purchasing Manager’s Index

• The Purchasing Managers' Index (PMI) is an indicator of the economic health both in the manufacturing and services sectors. It is derived from monthly surveys of private sector companies. The respondents are asked about changes in their perception of some key business variables from the month before. It is calculated

separately for the manufacturing and services sectors and then a composite index is constructed. But the manufacturing sector holds more importance. A reading above 50 indicates economic expansion, while a reading below 50 points shows contraction of economic activities.

GST council

• The Constitution (One Hundred and Twenty-Second Amendment) Bill, 2016, for introduction of Goods and Services tax in the country was introduced in the Parliament and got assent on 8th September, 2016, and the same has been notified as the Constitution (One Hundred and First Amendment) Act, 2016. As per Article 279A (1) of the amended Constitution, the GST Council has to be constituted by the President within 60 days of the commencement of Article 279A. Hence Goods & Services Tax Council is a constitutional body.

Members Chairperson The Union Finance Minister Member Union Minister of State in charge of Revenue or Finance Members Minister in charge of Finance or Taxation or any other Minister nominated by each

State Government including Delhi and Puducherry. • As per Article 279A of the Constitution, the GST Council is a joint forum of the Centre and the States. Decisions

are taken with at least three-fourth weighted majority voting for a resolution. The centre has one-third of the votes. The states together have two-third of the votes. The costs of the council are entirely borne by the Centre

Minimum Support Price

• Minimum Support Price (MSP) is a form of market intervention by the Government of India to insure agricultural producers against any sharp fall in farm prices. MSP is price fixed by Government of India to protect the farmers against excessive fall in price during bumper production years. Another purpose is to incentivize farmers to produce more crops so as to ensure food security in India.

• In case the market price for the commodity falls below the announced minimum price due to bumper production and glut in the market, government agencies purchase the entire quantity offered by the farmers at the announced minimum price.

• The minimum support prices are announced by the Cabinet Committee on Economic Affairs on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP). It is announced at the beginning of the sowing season of the crops.

• So prices are recommended by CACP for all products, food grains are procured by FCI and pulses and oilseeds are procured by NAFED.

• MSPs are announced for 22 crops in addition to Fair and Remunerative Price (FRP) for Sugarcane. The mandated crops are 14 crops of the kharif season, 6 rabi crops and two other commercial crops.

Crops under MSP Cereals (7) Paddy, Wheat, Barley, Jowar, Bajra, Maize, Ragi Pulses (5) Gram, Arhar/Tur, Moong, Urad, Lentil Oilseeds (8) Groundnut, Rapeseed/Mustard, Toria, Soyabean, Sunflower Seed,

Sesamum, Safflower Seed, Nigerseed Others Raw Cotton, Raw jute, Copra, De-husked coconut, Virginia flu cured

(VFC) tobacco, Sugarcane (Fair and remunerative price)

Payments Council of India (PCI)

• PCI is an apex non-governmental body representing companies in payments and settlement system. It was formed in 2013 under IAMAI (Internet and Mobile Association of India) to cater to the needs of digital payment industry in India.

• It was formed for representing various regulated non-banking payment industry players and to help resolve various industry level issues and barriers in payments and settlement system. It works with all its members to promote payments industry growth and support goal of ‘Cash to Less Cash Society’ and ‘Growth of Financial Inclusion’ which is also vision shared by Government of India and Reserve Bank of India (RBI). PCI works closely with regulators i.e. RBI, Finance Ministry and any similar government, departments, bodies or institutions to make ‘India a less cash society’.

Ravindra H Dholakia Committee

• 13-member committee headed by Ravindra Dholakia to upgrade the norms for computation of economic data in the backdrop of plans to revise the base year for GDP calculation. The Central Statistics Office (CSO) under the Ministry of Statistics and Programme Implementation (MOSPI) revises the base year of the macroeconomic indicators, as a regular exercise. This revision captures the structural changes in the economy and improves the quality and representativeness of the indices. The CSO had last updated the base year for GDP calculation to 2011-12 in January 2015, replacing the old series base year of 2004-05. Now the CSO plans to change the base year to 2017-18 for the calculation of GDP and IIP numbers from the current 2011-12. GDP • Gross domestic product (GDP) is the monetary value of all the final goods and services produced

within a country's borders in a specific time period. • The final goods are the ones that are ultimately “consumed’ by the consumers. For eg. wheat is

not a final good as it is used in making bread, here bread is the final good. • GDP includes all private and public consumption, government outlays, investments, private

inventories, paid-in construction costs and the foreign balance of trade (exports are added, imports are subtracted)

NDP • The net domestic product (NDP) is an annual measure of the economic output of a nation that is adjusted to account for depreciation.

• It is calculated by subtracting depreciation from GDP. • Depreciation is defined as the reduction in the value of an asset over time, due to wear and tear.

GNP • Gross national product (GNP) is an estimate of total value of all the final products and services turned out in a given period by the means of production owned by a country's residents.

• GNP is commonly calculated by taking the sum of personal consumption expenditures, private domestic investment, government expenditure, net exports and any income earned by residents from overseas investments, minus income earned within the domestic economy by foreign residents.

• The component that is added or subtracted to/from GDP to calculate GNP is termed as Net Factor Income From Abroad (NFIAD).

• In other words, GDP is the final value of goods and services of India while GNP is that of Indians.

NNP • Net national product (NNP) is the monetary value of finished goods and services produced by a country's citizens, overseas and domestically, in a given period, that is adjusted for depreciation.

• In other words, NNP is calculated by subtracting depreciation from GNP.

• A base year is the first of a series of years in an economic or financial index. It is typically set to an arbitrary level of 100. It is a benchmark with reference to which the national account figures such as gross domestic product

(GDP), gross domestic savings, gross capital formation are calculated. The base year must be a representative year and must not experience any abnormal incidents such as droughts, floods, earthquakes etc. It must be a year which is reasonably close to the year for which the national accounts statistics are being calculated.

• The base year has to be revised periodically in order to reflect the structural changes taking place within an economy, such as increasing share of services in GDP. The more frequently the base year can be updated, the more accurate the statistics will be. The current base year for WPI, CPI, GDP and IIP in India is fixed at 2011-12.

Directorate General of Trade Remedies(DGTR)

• The DGTR is the apex National Authority for administering all trade remedial measures including anti-dumping, countervailing duties and safeguard measures. It is a newly formed body created by merging two separate bodies handling anti-dumping and import safeguards in line with US International Trade Commission (USITC).

• The DGTR brings Directorate General of Anti-dumping and Allied duties (DGAD), Directorate General of Safeguards (DGS) and Safeguards (QR) functions of DGFT into its fold by merging them into one single national entity. The DGTR functions as an attached office of Department of Commerce. The recommendation of DGTR for imposition of Anti-dumping, countervailing & Safeguard duties are considered by the Department of Revenue.

Electoral Bond State Energy Efficiency Preparedness Index(SEEPI)

• The Bureau of Energy Efficiency (BEE) and Ministry of Power (MOP) launched the State Energy Efficiency Preparedness Index (SEEPI) wherein five states came in the top most category of ‘front runner’ states: Andhra Pradesh, Kerala, Maharashtra, Punjab and Rajasthan. The State Energy Efficiency Preparedness Index has 63 indicators across Building, Industry, Municipality, Transport, Agriculture and DISCOM with 4 cross-cutting indicators. States are categorised based on their efforts and achievements towards energy efficiency implementation, as ‘Front Runner’, ‘Achiever’, ‘Contender’ and ‘Aspirant’.

• It is a joint effort of the NITI Aayog and Bureau of Energy Efficiency(BEE), under ministry of power. It is released by Bureau of Energy Efficiency (BEE) and Alliance for an Energy Efficient Economy (AEEE). The required data is collected from the concerned state departments such as DISCOMs, Urban Development Departments, etc., with the help of State Designated Agencies (SDAs) nominated by the BEE.

iCRAFPT

• Recently, International Conference on Recent Advances in Food Processing Technology (iCRAFPT) got underway at Indian Institute of Food Processing Technology (IIFT), Thanjavur in Tamilnadu.

• India is world's second largest producer of food grains, fruits, and vegetables only next to China, but the processing level is less than 10% of the production base. In comparison, the US and China process 65 percent and 23 percent of their produce, respectively. The Indian food processing industry accounts for 32 per cent of the country’s total food market, one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth.

• The Indian food and grocery market is the world’s sixth largest, with retail contributing 70 per cent of the sales. The Indian Food processing Industry has grown by 11% in the last decade and is expected to reach $480 billion by 2020. The industry contributes to 14% of the country’s manufacturing GDP, 13% of exports and 6% of total industrial investment. The industry has a share of 11.6% in total employment and has a cropping intensity of 142%.

Exploration of Unconventional Hydrocarbons

• The Cabinet has approved the policy framework for exploitation and exploration of unconventional hydrocarbons including shale gas and coal bed methane (CBM). The difference between conventional and unconventional hydrocarbons has to do mostly with the ease the fuels can be extracted with. Conventional Oil and Gas is simply known as the traditional way or standard methods to drill for raw natural gas, crude oil, and petroleum.

• Conventional reservoirs typically have a hydrocarbon accumulation with a distinct oil-water or gas-water contact (due to natural segregation of these fluids via buoyancy). Conventional resources tend to be easier and less expensive to produce simply because they require no specialized technologies and can utilize common methods. In contrast to this, unconventional oil or gas resources are much more difficult to extract. Some of these resources are trapped in reservoirs with poor permeability and porosity, meaning that it is extremely difficult or impossible for oil or natural gas to flow through the pores and into a standard well. Coal-bed methane, tight-gas sandstone, ultra-deep water, drilling into high temperature/pressure reservoirs, and shale are all forms of unconventional oil and gas activities and/or production.

• New Exploration Licensing Policy (NELP) was a policy adopted by Government of India in 1997 indicating the new contractual and fiscal model for award of hydrocarbon acreages towards exploration and production. It was introduced to boost the production of oil and natural gas and providing level playing field for both public and private players. Agreement between government and contractor was governed by a Production Sharing Contract. Blocks were to be awarded through open international competitive bidding.

• Hydrocarbon Exploration and Licensing Policy (HELP) is a uniform licensing system which will cover all hydrocarbons, i.e. oil, gas, coal bed methane etc. under a single license and policy framework. Contracts are based on “biddable revenue sharing model”. An Open Acreage Licensing Policy is implemented whereby a bidder may apply to the Government seeking exploration of any block not already covered by exploration. The new policy also gives the investors the much-needed freedom in pricing and marketing for crude oil and natural gas. A concessional royalty regime is implemented for deep water and ultra-deep-water areas.

Financial Inclusion Index (FII)

• Financial inclusion may be defined as the delivery of banking services at an affordable cost, especially to the vast sections of disadvantaged and low-income group. In other words, it is the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low-income groups at an affordable cost. In the Indian subcontinent, the concept of financial inclusion was first familiarized in the year 2005 by the Reserve Bank of India by releasing the Annual Policy Statement.

• The annual FII was released by Department of Financial Services (DFS), Ministry of Finance. It will be measure of access and usage of basket of formal financial products and services that includes savings, remittances, credit, insurance and pension products.

• The Index has three measurement dimensions: o Access to financial services o Usage of financial services and o Quality

• It will serve as single composite index that will give snap shot of level of financial inclusion which will guide Macro Policy perspective.

Indian Post Payments Bank

• India Post Payments Bank (IPPB) is a financial service provider that will operate under the country’s postal department. The government-owned payments bank will be able to accept deposits of up to Rs. 1 lakh from customers. But they do not have the rights to use these funds to advance risky loans at higher interest rates. Nachiket mor committee gave recommendation for formation of payment banks in India.

• The primary goal is of achieving financial inclusion. India's age-old postal department has a wide network of branches across India. All the 1,55,000 post offices in the country are expected to be linked to the IPPB system soon. IPPB can thus offer savings, remittance, and payments services to the rural and unorganised sectors. IPPB's digital services are expected to make financial services more accessible even from remote locations. There is also a hope that the payments bank idea will help reinvigorate the postal system. IPPB will also focus on providing basic payments services such as social security payments, utility bill payments and money transfers. It will also provide access to third-party financial services such as mutual funds, insurance, pension, and loan products. IPPB has been set up as a 100% Government of India owned Public Limited Company under the Department of Posts.

Non Performing Assets (NPAs)

• A Non-performing asset (NPA) is defined as a credit facility in respect of which the interest and/or instalment of principal has remained ‘past due’ for a specified period of time. In simple terms, an asset is tagged as non-performing when it ceases to generate income for the lender. o NPA: the assets on which Interest/ Principle overdue for period of 90 days for banks and 120 days for NBFCs. o An agricultural loan granted for short duration crops will be treated as NPA if the installment of principal or

interest thereon remains overdue for two crop seasons. For longer duration crops, it is one crop season. o Sub-standard assets: Assets which has remained NPA for a period less than or equal to 12 months o Doubtful assets: An asset would be classified as doubtful if it has remained NPA for a period exceeding 12

months. o Loss assets: Loss assets are those where loss has been identified by the bank and remains uncollectable. o Special mention accounts (SMA): These are those accounts which show earlier signs to fall between standard

and sub-standard category. SMA 1 accounts are those where repayments have been overdue for between 31 and 60 days, while SMA 2 accounts are ones with a delay of between 61 and 90 days.

• Various steps taken by to tackle NPAs are: o Government has decided to infuse Rs. 2 lakh 11 thousand crores in public sector banks under its bank

recapitalization plan. o RBI has initiated Prompt Corrective Action (PCA) framework against some banks by monitoring of

certain performance indicators of the banks. o An umbrella scheme named as Indradhanush plan which includes seven elements has been initiated for

banking reforms. o Insolvency and Bankruptcy code, 2016(IBC) has also been passed by Parliament for speedy resolution of

companies and limited liability entities. o Government is also working towards consolidation of public sector banks with a view to create 3-4 global

sized banks and reducing the number of states – owned banks from 21 to about 10-12 under its alternative mechanism (AM).

o Merger of Bank of Baroda, Vijaya bank and Dena bank • The alternative mechanism is a method of government for fast tracking the decision making of some important

issues. The AM is headed by Finance Minister, and includes Roads Minister and the relevant administrative minister. Following work has been given to AM: o Merger of public sector banks, o Sale of minority stakes in Central Public Sector Enterprises (CPSEs), o Buyback offer of Oil India Limited,

o HPCL-ONGC deal.

Multidimensional Poverty Index (MPI)

• The global MPI covers 105 countries in total, home to 75% of the world’s population, or 5.7 billion people. Of this

proportion, 1.3 billion are identified as multidimensionally poor, and half of them are younger than 18 years old. 83% of the world’s poor live in South Asia and Africa. The latest data further reveals the vast majority of the multidimensional poor – 1.1 billion people – live in rural areas around the world, where poverty rates are four times higher than among those living in urban areas.

• India has pulled 271 million people out of poverty between 2005-06 and 2015-16 and halved its poverty rate from 55 % to 28 %. Among states, Jharkhand had the greatest improvement, with Arunachal Pradesh, Bihar, Chhattisgarh, and Nagaland only slightly behind.

• India follows low income poverty lines fixed by the Suresh Tendulkar committee (which submitted its report in 2009).

Global Competitiveness Index (GCI)

• The World Economic Forum’s Global Competitiveness Index 4.0 is a composite indicator that assesses the set of factors that determine an economy’s level of productivity - widely considered as the most important determinant of long-term growth. There is a total of 98 indicators in the index, derived from a combination of data from international organizations as well as from the World Economic Forum’s Executive Opinion Survey. These are organized into 12 pillars in the GCI 4.0, reflecting the extent and complexity of the drivers of productivity and the competitiveness ecosystem.

• These 12 pillars are: Institutions, Infrastructure, ICT adoption, Macroeconomic stability, Health, Skills, Product market, Labour market, Financial system, Market size, Business dynamism and Innovation capability.

• India was ranked 58th, up five places from 2017, with a score of 62.0 out of 140 economies. • The United States is the closest economy to the frontier of Global Competitiveness Index, the ideal state, where a

country would obtain the perfect score on every component of the index. It is followed by Singapore and Germany at second and third place consecutively.

Udyam Abhilasha

• SIDBI has launched a National Level Entrepreneurship Awareness Campaign, Udyam Abhilasha in 115 Aspirational Districts identified by NITI Aayog. Udyam Abhilasha is a National Level Entrepreneurship Awareness Campaign launched by Small Industrial Development Bank of India (SIDBI) on birth anniversary of Mahatma Gandhi. It is launched in 115 Aspirational Districts identified by NITI Aayog in 28 States and reaching to around 15,000 youth. The campaign would create and strengthen cadre of more than 800 trainers to provide entrepreneurship training to the aspiring youths across these districts thus encouraging them to enter the admired segment of entrepreneurs. These 115 districts account for more than 20% of the country's population and cover over 8,600 Gram panchayats.

• SIDBI has partnered with CSC e-Governance Services India Limited, a Special Purpose Vehicle, (CSC SPV) set up by the Ministry of Electronics & IT, Govt. of India for implementing the campaign through their CSCs. The

program has been designed to provide an introduction to entrepreneurship course specifically developed for youths. The training would cover below aspects: - o Each centre to have 30-35 students within an age group of 20-40 years (minimum qualification 8th pass), o Course duration: 15 Hours (3 hours per day), o Training would be delivered in a group with interactive sessions or may be customized as per SIDBI's

requirement.

Double Taxation Avoidance Agreement (DTAA)

• The DTAA, or Double Taxation Avoidance Agreement is a tax treaty signed between India and another country (or any two/multiple countries) so that taxpayers can avoid paying double taxes on their income earned from the source country as well as the residence country. At present, India has double tax avoidance treaties with more than 80 countries around the world.

• The need for DTAA arises out of the imbalance in tax collection on global income of individuals. If a person aims to do business in a foreign country, he/she may end up paying income taxes in both cases, i.e. the country where the income is earned and the country where the individual holds his/her citizenship or residence. For instance, if a person is moving to a different country from India while leaving income sources such as interest from deposits in here, then he/she will be charged interest by both India and the country of his/her current residence as per his/her consolidated global earnings. Such a scenario can have that person pay twice the tax over the same income.

• The basic benefit includes not having to pay double taxes on the same income. Other benefits could be: o Lower Withholding Tax (Tax Deduction at Source or TDS) o Tax credits o Exemption from taxes

• DTAAs are intended to make a country an attractive investment destination by providing relief on dual taxation. The primary idea behind DTAA agreements with various countries is to minimize the opportunity for tax evasion for tax payers in either or both of the countries between which the bilateral/multilateral DTAA agreement have been signed.

Base Erosion and Profit Sharing (BEPS)

• The BEPS (Base Erosion and Profit Shifting) initiative is an OECD effort, approved by the G20, to design a globally standardized rules to check tax avoidance practices by the MNCs so that there will be no tax base erosion. BEPS refers to 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. Although some of the schemes used are illegal, most are not. This undermines the fairness and integrity of tax systems because businesses that operate across borders can use BEPS to gain a competitive advantage over enterprises that operate at a domestic level. Moreover, when taxpayers see multinational corporations legally avoiding income tax, it undermines voluntary compliance by all taxpayers. BEPS is of major significance for developing countries due to their heavy reliance on corporate income tax, particularly from multinational enterprises.

• A tax haven is a country that offers foreign individuals and businesses little or no tax liability in a politically and economically static environment. Tax havens also share

limited or no financial information with foreign tax authorities. Tax havens do not require residency or business presence for individuals and businesses to benefit from their tax policies. Due to the globalization of business operations, an increasing number of U.S. corporations, including Microsoft, Apple and Alphabet, are keeping cash in offshore tax havens to minimize corporate taxes.

City Gas Distribution (CGD) projects

• A City Gas Distribution (CGD) network is the interconnected network of pipelines for supply of gas to domestic, industrial or commercial premises and CNG stations situated in a specified Geographical Area (GA). The CGD network is in keeping with what had been committed in 2015 at the Urja Sangam, a global meet on hydrocarbons.

• CGD sector has four distinct segments: o Compressed Natural Gas (CNG) predominantly used as auto-fuel o Piped Natural Gas (PNG) used in domestic households, o Commercial segments, and o Industrial segments.

• In order to streamline the authorization process Central Government had proposed to form a sectoral regulator, Petroleum and Natural Gas Regulatory Board (PNGRB) which was constituted under PNGRB Act, 2006. Now, PNGRB develops the plans for development of CGD networks in the country, invites bids and grants the authorization for development of such CGD networks.

• India had made a commitment in COP21 Paris Convention in December 2015 that by 2030, it would reduce carbon emission by 33% of 2005 levels. Natural gas, as domestic kitchen fuel, as fuel for transport sector as well as a fuel for industries and commercial units, can play a significant role in reducing carbon emission. Hence the Government is working to move towards the gas-based economy.

• Presently the share of gas in the country’s energy mix is just over 6% and the aim is to reach the 15% figure, while

the world average is 24%. Government of India has put thrust to promote the usage of environment friendly clean fuel i.e. natural gas as a fuel/feedstock across the country to move towards a gas-based economy. Accordingly, development of CGD networks has been focused to increase the availability of cleaner cooking fuel (i.e. PNG) and transportation fuel (i.e. CNG) to the citizens of the country. The expansion of CGD network will also benefit the industrial and commercial units by ensuring the uninterrupted supply of natural gas.

• The Petroleum and Natural Gas Regulatory Board (PNGRB) is a statutory body constituted under The Petroleum and Natural Gas Regulatory Board Act, 2006. The PNGRB was established to: o protect the interests of consumers and entities engaged in specified activities relating to petroleum, petroleum

products and natural gas, and o to promote competitive markets

MUDRA

• MUDRA stands for Micro Units Development and Refinance Agency. It is a public sector financial

institution in India which provides loans at low rates to micro-finance institutions and non-banking financial institutions which then provide credit to MSMEs. The Union Budget presented for FY 2015-16, announced the formation of MUDRA Bank. Accordingly, MUDRA was registered as a Company in March 2015 under the Companies Act 2013 and as a Non-Banking Finance Institution with the RBI on 07 April 2015.

• MUDRA has initially been formed as a wholly owned subsidiary of Small Industries Development bank of India (SIDBI) with 100% capital being contributed by it. The MUDRA bank was set up under the Pradhan Mantri MUDRA Yojana (PMMY) scheme. Mudra’s unique features include a Mudra Card which permits access to Working Capital through ATMs and Card Machines.

• The Pradhan Mantri Mudra Yojana (PMMY) is a flagship scheme of Government of India to “fund the unfunded” by bringing such enterprises to the formal financial system and extending affordable credit to them. It enables a small borrower to borrow from all Public Sector Banks such as PSU Banks, Regional Rural Banks and Cooperative Banks, Private Sector Banks, Foreign Banks, Micro Finance Institutions (MFI) and Non-Banking Finance Companies (NBFC) for loans up to Rs 10 lakhs for non-farm income generating activities. Mudra Loans are available for non-corporate, non-farm small/micro enterprises activities such as manufacturing, processing, trading or service sector and whose credit need is less than Rs 10 lakh and activities allied to agriculture such as Dairy, Poultry, Bee Keeping etc, are also covered. These loans are classified as MUDRA loans under PMMY. The scheme, which has a corpus of Rs 20,000 crore, can lend between Rs 50,000 and Rs 10 lakh to small entrepreneurs. Following are the types of loans provided under PMMY: o Shishu: covering loans up to 50,000/-, o Kishor: covering loans above 50,000/- and up to 5 lakhs, and o Tarun: covering loans above 5 lakh and up to 10 lakhs

• The interventions have been named 'Shishu', 'Kishor' and 'Tarun' to signify the stage of growth / development and funding needs of the beneficiary micro unit / entrepreneur and also provide a reference point for the next phase of graduation / growth to look forward to. There is no collateral and no processing fees for all kinds of PMMY loans.

• NBFC Mudra loans grew faster than banks. The year-on-year growth of loans to small businesses by NBFCs was faster this year than others as NBFC Mudra loans sanctions rose 396% from last fiscal compared with just 29% increase of Mudra loans by state-run banks.

Prompt Corrective Action

• To ensure that banks do not go bankrupt, RBI has put in place some trigger points to assess, monitor, control and take corrective actions on banks which are weak and troubled. These are the RBI suggested measures that should be a taken by banks when certain financial indicators like capital adequacy ratio and NPAs goes worsen beyond a level. RBI has issued a policy action guideline (first in May 2014 and revised effective from April 1, 2017) in the form of Prompt Corrective Action (PCA) Framework if a commercial bank’s financial condition worsens below a mark. The PCA framework is applicable only to commercial banks and not extended to co-operative banks, non-banking financial companies (NBFCs) and MFIs.

• The Reserve Bank has specified certain regulatory trigger points, as a part of prompt corrective action (PCA) Framework, in terms of three parameters, i.e.

capital to risk weighted assets ratio (CRAR), net non-performing assets (NPA) and Return on Assets (RoA). RBI initiates certain structured and discretionary actions in respect of banks hitting such trigger points.

National Cooperative Development Corporation (NCDC)

• The National Cooperative Development Corporation (NCDC) was established by an Act of Parliament in 1963 as a statutory Corporation under the Ministry of Agriculture & Farmers Welfare. It is an apex financial and development institution engaged exclusively for the co-operative sector in the country. Initially the functions of NCDC was planning, promoting and financing programmes for production, processing, marketing, storage, export and import of agricultural produce, food stuffs, certain other notified commodities e.g. fertilisers, insecticides, etc.

• Later, the NCDC Act was amended that broad based the area of operation of the Corporation to assist different types of cooperatives and to expand its financial base. NCDC is now able to finance projects in the rural industrial cooperative sectors and for certain notified services in rural areas like water conservation, irrigation and micro irrigation, agri-insurance, agro-credit, rural sanitation, animal health, etc. Loans and grants are advanced to State Governments for financing primary and secondary level cooperative societies and direct to the national level and other societies having objects extending beyond one State.

• NCDC represents India in the Network for the Development of Agricultural Cooperatives in Asia and the Pacific (NEDAC)

• NEDAC is a unique regional forum linking 21 apex cooperative organizations in 12 countries. It was set up in 1991 by the United Nations Food and Agriculture Organization (FAO)’s Regional Office for Asia and the Pacific, the International Cooperative Alliance (ICA) and the International Labour Organization (ILO) on the recommendation of the 1990 ICA regional conference of cooperative ministers. Initially with 10 cooperative organizations from nine Asian countries as members, NEDAC now has 21 cooperative member organizations in 12 countries. The NEDAC member organizations in Bangladesh, China, India, Indonesia, Japan, Malaysia, Mongolia, Nepal, Philippines, Republic of Korea, Sri Lanka and Thailand represent three million agricultural cooperatives which play a crucial role in improving the livelihoods of 150 million rural households.

Ease of Doing Business Index

• Ease of doing business is an index published by the World Bank. It was introduced in 2004. It is an aggregate figure that includes different parameters which define the ease of doing business in a country. It is computed by aggregating the distance to frontier scores of different economies.

• Distance to frontier shows the distance of each economy to the "frontier," which represents the highest performance observed on each of the indicators across all economies included since each indicator was included in the index.

• For each of the indicators that form a part of the statistic ‘Ease of doing business,’ a distance to frontier score is computed and all the scores are aggregated.

• The aggregated score becomes the Ease of doing business index. • New Zealand, Singapore, Denmark, Hong Kong and Korea are the top 5

performers. The U.S. ranks 8th, down from 6th last year. China and India — two economies with the largest populations — are among top 10 improvers this year. As per the latest report, Afghanistan had moved up the most, by 16 spots, from 183th in last year’s ranking to 167th this year. Djibouti and India are the only economies to make the 10 top most improved list for the second consecutive year.

Partial Credit Enhancement (PCE)

• Partial Credit Enhancement (PCE) is a method whereby a borrower or a bond issuer attempts to improve its debt or credit worthiness by securing a backing from a higher-rated entity, in this case a bank. Through such credit enhancements, the lender is provided with reassurance that the borrower will honour its repayment through additional collateral, insurance, or a third-party guarantee. It acts as a financial assistance to the issuer companies in order to enhance their credit ratings, which helps to attract more investors and fetch better terms.

• The PCE Guidelines is an initiative taken by the RBI in order to strengthen the corporate bond market, at times when it lacks sufficient depth and liquidity in India. This initiative shall not only boost bond financing, which shall thereby develop multiple financing options, but also ensure enough liquidity available to corporates.

• The PCE facility was guided by the Second Quarter Review of Monetary Policy 2013-14 that allowed banks to offer partial credit enhancements to corporate bonds by way of providing credit facilities and liquidity facilities to the corporates, and not by way of guarantee.

• However, taking into account the feedback received, banks later, from September 2015 were allowed to provide PCE to bonds issued by corporates /special purpose vehicles (SPVs) for funding all types of projects to the extent of 20% of the total bond issue size. This limit was however, revised to 50% of the bond issue size, with a limit up to 20% of the bond issue size for an individual bank, in August 2016. Corporate bonds whose pre-enhanced rating is BBB minus or better shall be eligible for PCE by banks. The PCE facility shall be made available at the time of bond issue and will be irrevocable. Such PCE shall not be extended in form of a guarantee.

SWIFT

• The Society for Worldwide Interbank Financial Telecommunication, or SWIFT, provides a network that enables financial institutions worldwide to send and receive information about financial transactions in a secure, standardized and reliable environment. SWIFT is a cooperative society under Belgian law owned by its member financial institutions with offices around the world. SWIFT is headquartered in Belgium, near Brussels. It does not facilitate funds transfer, rather it sends payment orders, which must be settled by correspondent accounts that the institutions have with each other.

• Each financial institution, to exchange banking transactions, must have a banking relationship by either being a bank or affiliating itself with one (or more) so as to enjoy those particular business features.

• SWIFT transports financial messages in a highly secure way but does not hold accounts for its members and does not perform any form of clearing or settlement

Blue Bond

• A blue bond is an innovative financial instrument used to finance ocean and marine-based projects that have positive economic, environmental and climate benefits. The blue bond concept is inspired by the green bond concept.

• Examples of eligible activities include fisheries management plans, stock rebuilding, improved value chains, aquaculture development and promotion of sustainable practices and education awareness programmes.

• Recently, the Seychelles blue bond was floated which was guaranteed by a US$5 million guarantee from the World Bank (IBRD) and a US$5 million concessional loan from the Global Environment Facility (GEF).

• Proceeds from the bond will support expansion of marine protected areas (MPAs) to 30 percent of the country’s exclusive economic zone (EEZ) and improved governance of priority fisheries.

NSEgoBID

• The National Stock Exchange of India (NSE) has launched its new mobile app and web-based platform NSEgoBID (Government Bond Investment Destination) for assisting retail investors in buying government securities.

• To make it easier for retail investors to invest in government bonds directly, the National Stock Exchange offers a mobile application and web-based platform — “NSE goBID” (Government Bond Investment Destination). “NSE goBID” and web-based platform for investing in government securities will be available to all investors registered with trading members of NSE.

• With the help of this newly launched app, retail investors get an option to invest in treasury bills (T-Bills) of 91 days, 182 days and 364 days and various government bonds from one year to almost 40 years.

Indian Wind Turbine Certification Scheme (IWTCS)

• The IWTCS is a consolidation of relevant National and International Standards (IS/IEC/IEEE), Technical Regulations and requirements issued by Central Electricity Authority (CEA), guidelines issued by MNRE and other international guidelines. It has also strived to incorporate various best practices from other countries to ensure the quality of the wind energy projects. The IWTCS is envisaged to assist and facilitate the following stakeholders: o Original Equipment Manufacturers (OEMs), o End Users -Utilities, State Nodal Authorities (SNAs), Developers, Independent Power Producers (IPPs),

Owners, Authorities, Investors and Insurers, o Certification Bodies, and o Testing Laboratories

Agriculture Export Policy, 2018

• India, with a large and diverse agriculture, is among the world’s leading producer of cereals, milk, sugar, fruits and vegetables, spices, eggs and seafood products. Indian agriculture continues to be the backbone of our society and it provides livelihood to nearly 50 per cent of our population.

• India is supporting 17.84 per cent of world’s population, 15% of livestock population with merely 2.4 per cent of world’s land and 4 per cent water resources. Hence, continuous innovation and efforts towards productivity, pre & post-harvest management, processing and value-addition, use of technology and infrastructure creation is an imperative for Indian agriculture.

• Various studies on fresh fruits and vegetables, fisheries in India have indicated a loss percentage ranging from about 8% to 18% on account of poor post-harvest management, absence of cold chain and processing facilities.

• The policy aims at doubling agricultural shipments to over $60 billion by 2022. The first ever ‘Agriculture Export Policy, 2018’ would help the government in achieving the target of doubling farmers’ income. The policy would focus on all aspects of agricultural exports including modernising infrastructure, standardisation of products, streamlining regulations, curtailing knee-jerk decisions, and focusing on research and development activities. It will also seek to remove all kinds of export restrictions on organic products. The policy has arrived at after consultation with state governments. States have also agreed to remove ‘mandi tax’ and reforms in Agriculture Produce Marketing Committee (APMC) norms. However, export policy for primary agricultural products, like onion, would review periodically on a case-to-case basis depending on price-supply situation.

• The objectives of the policy are: o To double agricultural exports from present ~US$ 30 Billion to ~US$ 60 Billion by 2022 and reach US$

100 Billion in the next few years thereafter, with a stable trade policy regime. o To diversify our export basket, destinations and boost high value and value added agricultural exports

including focus on perishables. o To promote novel, indigenous, organic, ethnic, traditional and non-traditional Agri products exports. o To provide an institutional mechanism for pursuing market access, tackling barriers and deal with sanitary

and phytosanitary issues. o To strive to double India’s share in world Agri exports by integrating with global value chain at the earliest. o Enable farmers to get benefit of export opportunities in overseas market.

FDI in E-commerce

• E-commerce is a type of business model, or segment of a larger business model, that enables a firm or individual to conduct business over an electronic network, typically the internet. E-Commerce is a methodology of modern business, which addresses the need of business organizations, vendors and customers to reduce cost and improve the quality of goods and services while increasing the speed of delivery. For example, Amazon, Flipkart, Snapdeal, etc. all comes under the e-commerce business model. E-commerce models can be broadly classified into following three models: o B2B – Business to Business, o B2C – Business to Consumer, and o C2C – Consumer to Consumer.

• The above-mentioned models can be subdivided into o Inventory base model of e-commerce, o Marketplace base model of e-commerce, and o Hybrid model of inventory based and market place model.

• In India, all the three type of e-commerce business models are followed. • A B2B model involves trading of goods and services between two corporate entities. A B2B model enables a

business to interact and trade with other organization i.e. business houses trade goods and services with other businesses. Both the parties strike a deal directly through electronic networks and exchange products, services, information, etc.

• In a B2C model, consumers get an opportunity to browse, select, customize and buy products online from a variety on online marketplace and portals. Sellers offer price cuts, discounts, shipping and delivery options, and online customer service through an electronic portal and allow for personalization and customization of products. This model is generally used by existing businesses for channel enhancement purposes and by small producers or retailers to set up an online internet-based store or surpass any entry barriers.

• Under this model, consumers sell directly to other consumers through online classified ads and auctions. A C2C model essentially involves financial interaction of non-business entities using the web. Consumers usually sell their personal possessions, second hand and homemade products, information services and freelance services to other consumers. Goods and services are generally sold at market determined prices and negotiations between parties are very common. C2C portals may or may not charge fees from its users.

• According to the FDI policy, “Inventory model of e commerce means an e commerce activity where inventory of goods and services is owned by e-commerce entity and is sold to the consumers directly.” The main feature of inventory model is that the customer buys the product from the ecommerce firm. He manages an inventory (stock of products), interfaces with customers, runs logistics and involves in every aspects of the business.

• According to the FDI policy guideline, “Marketplace model of e-commerce means providing of an information technology (IT) platform by an e-commerce entity on a digital and electronic network to act as a facilitator between buyer and seller.” Marketplaces are platforms that enable a large, fragmented base of buyers and sellers to discover price and transact with one another in an environment that is efficient, transparent and trusted. The main feature of the market place model is that the e-commerce firm like flipkart, snapdeal, amazon etc. will be providing a platform for customers to interact with a selected number of sellers. When an individual is purchasing a product from flipkart, he will be actually buying it from a registered seller in flipkart.

• In India 100% FDI is permitted in B2B e-commerce but none in retail e-commerce—i.e., business-to-consumer, or B2C was permitted earlier.

Freight Village

• A freight village is a designated area where facilities for various modes of transportation, distribution of goods and other logistics are available in a synchronized manner on a large scale. The main function of freight villages is management and utilization of various modes of transport, synergizing them and decongesting the existing mode of transportation. Freight villages are basically cargo aggregators which offer various logistic choices to a shipper/ cargo owner; i.e. choice of rail-road; rail-waterway; road-waterway. The choice is based on the optimal/ lowest logistic cost that can be derived by the shipper/ cargo owner. Delivery and coordination of various freight related activities under one roof ensures ease of doing business and makes it possible to realize high truck capacity due to which economic efficiency and activity of the enterprises on site can be improved.

• The government has gaven its nod to develop an Rs 156 crore freight village in Varanasi adjoining the inland waterways terminal on river Ganga that will boost the logistics industry in the holy city. The Varanasi freight village will be developed by the Inland Waterways Authority of India (IWAI). World Bank has taken the lead to put in place the project.

• Inland Waterways Authority of India (IWAI) is the statutory authority in charge of the waterways in India. Its headquarters is located in Noida, UP. It came into existence in October 1986 for development and regulation of inland waterways for shipping and navigation. The Authority primarily undertakes projects for development and maintenance of IWT infrastructure on national waterways through grant received from Ministry of Shipping.

TRAI

• The Telecom Regulatory Authority of India (TRAI) is a statutory body set up by the Government of India under section 3 of the Telecom Regulatory Authority of India Act, 1997. It is the regulator of the telecommunications sector in India. It also decides the tariffs in India. Earlier regulation of telecom services and tariffs was overseen by the Central Government.

• It consists of a Chairperson and not more than two full-time members and not more than two part-time members. TRAI's mission is to create and nurture conditions for growth of telecommunications in the country in a

manner and at a pace which will enable India to play a leading role in emerging global information society. One of the main objectives of TRAI is to provide a fair and transparent policy environment which promotes a level playing field and facilitates fair competition. In pursuance of above objective TRAI has issued from time to time a large number of regulations, orders and directives to deal with issues coming before it.

• It also provides the required direction to the evolution of Indian telecom market from a Government owned monopoly to a multi operator multi service open competitive market. TRAI regularly issues orders and directions on various subjects such as tariffs, interconnections, quality of service, Direct to Home (DTH) services and mobile number portability.

Flight and Maritime Connectivity Rules, 2018

• The Department of Telecom (DOT) has notified the rules for in-flight connectivity. • Indian and foreign airlines and shipping companies operating in the country can provide in-flight and maritime voice

and data services in partnership with a valid Indian telecom licence holder. The services can be provided by a valid telecom licence holder in India through domestic and foreign satellites having permission of the Department of Space.

• The in-flight and maritime connectivity (IFMC) can be provided using telecom networks on ground as well as using satellites. The airline can provide mobile communication service on the flight only after attaining a height of 3000 meters in the Indian airspace.

• This is to avoid interference with terrestrial mobile networks. A flight generally attains the altitude of 3,000 metres about four-five minutes after take-off.

• Internet services through onboard Wi-Fi should be made available only when electronic devices are permitted to be used only in flight or airplane mode, an announcement regarding this should be made when boarding is over and the aircraft is about to take-off. It would ensure that there is no encroachment on the scope of terrestrial Internet service provided by telecom service providers as well as practically there won’t be any appreciable discontinuity in the provisioning of Internet services to the fliers.

• TRAI had called for establishing a separate category of licence called in-flight connectivity (IFC) service provider.

Economic Capital Framework (ECF)

• The economic capital is the amount of risk capital, assessed on a realistic basis, which a firm or a bank requires to cover the risks that it is running such as market risk, credit risk, legal risk, and operational risk. It is the amount of money which is needed to secure survival in a worst-case scenario. Firms and financial services regulators should then aim to hold risk capital of an amount equal at least to economic capital. So far, since economic capital is rather a bank-specific or internal measure of available capital, there is no common domestic or global definition of EC. On the similar lines, RBI also has to maintain some amount of capital under its Economic Capital Framework (ECF).

• The Reserve Bank of India (RBI), in consultation with the government, has set up a six-member committee to review the economic capital framework of the central bank.

• RBI’s reserves has two material components to RBI’s reserves: o The Currency & Gold Revaluation Account (CGRA)

□ It makes up the biggest share — it was Rs 6.9 lakh crore in 2017-18 or 19% of its total assets. This represents

the value of gold and foreign currency that RBI holds on behalf of India. Simply put, variations in this represent the changing market value of these assets. Thus, the RBI notionally gains or losses on this count according to market movements.

□ For example, last year the CGRA increases by 30.5% largely because of the depreciation of the rupee against the US dollar and due to an increase in the price of gold. The Revaluation Reserves can be used as a cushion for unexpected losses and depends mainly upon the level of certainty that can be placed on estimates.

o The Contingency Fund (CF) or core reserves

□ It is only around 7% of its total assets and stood at 2.32 lakh crore in 2017-18. Core Reserves are considered

to be of highest quality and consists mainly of share capital and disclosed reserve. They are fully available to cover losses.

Fugitive Economic Offenders(FEO)Act 2018

• Under the Fugitive Economic Offenders(FEO)Act 2018, a fugitive economic offender is any individual against whom a warrant for arrest in relation to a scheduled offence has been issued by any court in India for which the value exceeds Rs.100 crore and who has either left India to avoid criminal prosecution, or who, being abroad, refuses to return to India to face criminal prosecution.

• If the special court is satisfied that an individual is a fugitive economic offender, it can direct the Central government to confiscate the proceeds of the crime in India or abroad, whether or not such property is owned by the fugitive economic offender, and any other property or benami property in India or abroad that is owned by the fugitive economic offender.

• While the confiscation of property within India should not be a problem for the Centre, confiscating properties abroad will require the cooperation of the respective country. The fugitive economic offender will also be disqualified from accessing the Indian judicial system for any civil cases.

Financial Action Task Force (FATF)

• The Financial Action Task Force (FATF), an intergovernmental body, was established in July 1989 by a Group of Seven (G-7) Summit in Paris, initially to examine and develop measures to combat money laundering. In October 2001, the FATF expanded its mandate to incorporate efforts to combat terrorist financing, in addition to money laundering.

• The FATF Secretariat is housed at the OECD headquarters in Paris. The FATF currently comprises 36 member jurisdictions and 2 regional organizations, representing most major financial centres in all parts of the globe, including India.

• The objectives of the FATF are 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.

• Starting with its own members, the FATF: o monitors countries' progress in implementing the FATF Recommendations; o reviews money laundering and terrorist financing techniques and counter-measures; and o promotes the adoption and implementation of the FATF Recommendations globally.

Soil Health Card (SHC)

• Soil Health Card (SHC) is a Government of India's scheme promoted by the Department of Agriculture & Co-operation under the Ministry of Agriculture and Farmers' Welfare.

• It is being implemented through the Department of Agriculture of all the State and Union Territory Governments. • The scheme was launched by the Government of India in February 2015 with a budget amount of ₹568 crore.

Under the scheme soil health cards are provided to all farmers so as to enable the farmers to apply appropriate recommended dosages of nutrients for crop production and improving soil health and its fertility.

• SHC is a printed report that a farmer will be handed over for each of his holdings. It contains the status of his soil with respect to 12 parameters, namely N,P,K (Macro-nutrients) ; S (Secondary- nutrient) ; Zn, Fe, Cu, Mn, Bo (Micro - nutrients) ; and pH, EC, OC (Physical parameters).

• Based on this, the SHC will also indicate fertilizer recommendations and soil amendment required for the farm. Soil samples will be drawn in a grid of 2.5 ha in irrigated area and 10 ha in rain- fed or un-irrigated area. Uniform approach in soil testing adopted for each of the 12 parameters. GPS enabled soil sampling to create a systematic database and allow monitoring of changes in the soil health over the years. It will be made available once in a cycle of 3 years, which will indicate the status of soil health of a farmer’s holding for that particular period.

Strategy for New India @ 75

• Niti Aayog has unveiled its ‘Strategy for New India @ 75′ document with an aim to accelerate growth to 9-10 per cent and make the country a $4-trillion economy by 2022-23.

• The purpose of the document, ‘Strategy for New India @ 75’, is to define clear objectives for 2022-23 in a diverse range of 41 areas that recognize:

o the progress already made; o and challenges that remain; o identify binding constraints in specific sectors; o and suggest the way forward for achieving the stated objectives.

• It is an attempt to bring innovation, technology, enterprise and efficient management together, at the core of policy formulation and implementation.

• It will also encourage discussion and debate, and invite feedback for further refining the policy approach. • The Aayog had earlier planned to come out with three documents --3-year action agenda, seven-year medium-term

strategy paper and 15-year vision document. • The Aayog has already come out with the 3 year action agenda last year.

SDG India Index

• The SDG India Index, which was developed in collaboration with the Ministry of Statistics & Programme Implementation (MoSPI), Global Green Growth Institute and United Nations in India, was launched by NITI Aayog. NITI Aayog has the twin mandate to oversee the implementation of SDGs in the country, and also promote Competitive and Cooperative Federalism among States and UTs. The SDG India Index acts as a bridge between these mandates.

• The SDG India Index tracks progress of all States and UTs on 62 Priority Indicators selected by NITI Aayog, which in turn is guided by MoSPI’s National Indicator Framework comprising 306 indicators and based on multiple-round consultations with Union Ministries/Departments and States/UTs. The Index spans 13 out of 17 SDGs. Progress on SDGs 12, 13 & 14 could not be measured as relevant State/UT level data were not available and SDG 17 was left out as it focuses on international partnerships.

• A composite score was computed between the range of 0-100 for each State and UT based on their aggregate performance across 13 SDGs, which indicates average performance of State/UT towards achieving 13 SDGs & their respective targets. If a State/UT achieves a score of 100, it signifies that it has achieved the 2030 national targets.

• According to the SDG India Index, the nation as a whole has a score of 57, showing the country has reached a little beyond the halfway mark in meeting the sustainable development goals.

• Kerala’s overall top score (69) is attributed to its strong performance in providing good health, reducing hunger, achieving gender equality and providing quality education.

• Himachal Pradesh ranks high with a similar overall score in providing clean water and sanitation, reducing inequalities and preserving the mountain ecosystem.

• Tamil Nadu has a score of 68. It topped the states in poverty reduction. • Among Union territories, Chandigarh takes the lead with a score of 68 on account of its track record in providing

clean water and sanitation. • Performance in providing quality education has also helped Chandigarh achieve the high score. • Gender equality, however, is an area all states and the nation as a whole need to improve upon. • The toppers in gender equality, Sikkim and Union territories Andaman and Nicobar Islands and Chandigarh have

crossed the half way mark in reaching the goals. • Jharkhand, Odisha and Nagaland are also among the states that have a lot more ground to cover in the overall

rankings.

International Year of Millets

• The Food and Agriculture organization (FAO) Council has approved India’s proposal to observe an International Year of Millets in 2023.

• Millets are a group of highly variable small-seeded grasses, widely grown around the world as cereal crops or grains for fodder and human food.

• Millets are important crops in the semiarid tropics of Asia and Africa (especially in India, Mali, Nigeria, and Niger), with 97% of millet production in developing countries.

• The crop is favoured due to its productivity and short growing season under dry, high-temperature conditions. Jowar, Ragi, Bajra and other coarse cereals all come under the millets. The government of India had in 2018 renamed jowar, bajra, ragi and other millets as “Nutri Cereals”, dispensing with the nomenclature “coarse cereals”.

• These are preferred over rice and wheat because of their better quality protein, balanced mix of amino acids and high content of crude fibre and essential minerals, including iron, zinc and phosphorus. Their intake can, therefore, redress widely prevalent micronutrient deficiencies, especially among women and children. The scourges like anaemia (iron deficiency), pellagra (niacin paucity) and vitamin B-complex inadequacy can be

overcome through millets. Modern day challenges like obesity and diabetes can also be countered with these grains because these are free of gluten and contain dietary fibre and antioxidants.

• This apart, millets can conveniently be grown in un-irrigated, less fertile and marginal lands tilled predominantly by the resource-poor small and marginal farmers. They can withstand harsh conditions and are climate change-resilient with meagre carbon and water footprint. Besides, their farming does not involve much expense on cash inputs like fertilisers and pesticides. The risk of crop failure is very low. While wheat and rice have played a notable role in strengthening food security to combat hunger, millets can extend it to nutritional security to tackle the menace of hidden hunger or undernourishment.

• The Food and Agriculture Organization (FAO) is specialized agency of the United Nations that leads international efforts to defeat hunger. It is an intergovernmental organization having 194 Member Nations, two associate members and one member organization, the European Union. Headquartered in Rome, Italy, FAO is present in over 130 countries. FAO’s goal is to achieve food security for all and make sure that people have regular access to enough high-quality food to lead active, healthy lives.

Street Light National Programme (SLNP)

• Street Light National Programme is an initiative of the Government to promote energy efficiency in the country. The Programme which was launched on 5th January 2015, aims to replace 1.34 crore conventional street lights with energy efficient LED lights by March, 2019. SLNP is being implemented by Energy Efficiency Services Limited (EESL), a joint venture company of Public Sector Undertakings (PSUs) under Ministry of Power. While LED usage addresses the need for affordable energy-efficient infrastructure, the future- readiness of India’s street lights also needed to be addressed, leading EESL to adopt “smart light” deployment. These “smart lights” are connected through a web-based monitoring system that enables remote operations and additional operational savings.

• To bring in mass-scale transformation, EESL has adopted a unique strategy by joining hands with states, municipal bodies and Urban Local Bodies (ULBs). Under the programme, EESL replaces the conventional street lights with LEDs at its own costs, with no upfront investment by the municipalities, thereby making their adoption even more attractive. Over a period, EESL is repaid through the consequent reduction in energy and maintenance cost of the municipality.

• A seven-year contract with the local bodies guarantees a minimum energy saving of typically 50% and provides free replacements and maintenance of lights at no additional cost to the civic partners. EESL’s business model has enabled a new paradigm that is attractive, scalable and has overcome barriers preventing the replacement of street lights. For instance, the Centralized Control and Monitoring System (CCMS) for remote operation and supervising have mitigated the lack of monitoring mechanism and warranties against technical defects.

• Energy Efficiency Services Limited (EESL) is a joint venture of four national Public-Sector Undertakings: o NTPC Limited, o Power Finance Corporation Limited, o Rural Electrification Corporation Limited, and o POWERGRID Corporation of India Limited. • EESL leads the market-related activities of the National Mission for Enhanced Energy Efficiency

(NMEEE), one of the eight national missions under the Prime Minister’s National Action Plan on Climate Change (NAPCC).

Suresh Mehta Committee

• The Insurance Regulatory and Development Authority of India (IRDAI) set up Suresh Mathur Committee to review regulatory framework on micro insurance, and to recommend measures to increase demand for such products. It was formed because of less than desired offtake of micro insurance products despite of their inherent benefits in the country. India was seen to be an exciting market and a pioneer in micro insurance sector in world, but its market penetration remains low.

• It is a 13-member panel chaired by IRDAI’s Executive Director Suresh Mathur, and comprises of representatives from IRDAI, life, general and health insurance companies in public and private sectors and NGOs.

• Its task is to suggest product designs with customer-friendly underwriting, such as easy premium payment methods and simple claims settlement procedures.

• It will suggest about if there is any change in distribution structure, including mobile-based and technology driven solutions and on creating effective awareness programmes.

• Their recommendations are to submitted within three month time frame. • IRDAI created a special category of insurance policies called micro-insurance policies (a General or Life Insurance

policy with a sum assured of Rs 50,000 or less) to promote insurance coverage among economically vulnerable sections of society. The micro-insurance is defined and enabled by IRDAI Micro-insurance Regulations, 2005.

World Economic Outlook 2019

• World Economic Outlook 2019 has been released by the International Monetary Fund. • The report has made the following forecasts: • The global growth will be 3.3% in 2019, down from 3.6% in 2018 and 4% in 2017. • The reduced growth rates are attributed to lower global expansion in the second half of 2018 caused by U.S.-China

trade tensions, macroeconomic stress in Turkey and Argentina, tighter credit policies in China and financial tightening plus normalisation of monetary policy in advanced economies. Global growth is expected to level out at 3.6% over the medium term beyond 2020. The growth would be driven by a moderation in expansion in advanced countries (caused by weak productivity growth and slow labour force growth) and the stabilisation of emerging market expansion at 2020 levels.

• Growth is expected to steady at 4.8% over the medium term For emerging markets and developing countries. The emerging markets and developing countries are growing faster than advanced economies. Their contribution to global growth is expected to increase from 76% to 85% over the next five years.

• India’s economy will grow 7.1% in 2019-20 and is expected to accelerate to 7.3% growth this fiscal and to 7.5% in 2021-22. All the estimates are 0.2 percentage points less than its previous assessment in January.

• India’s growth is expected to stabilize at 7.75% over the medium term, driven by structural reforms and the easing of infrastructure bottlenecks.

• IMF suggests reforms to hiring and dismissal regulations to help incentivise job creation and absorb the country’s large demographic dividend.

Indian Accounting Standards

• Indian Accounting Standards (Ind AS) is a set of accounting norms developed by Indian authorities, which converge with the International Financial Reporting Standards (IFRS). Urban Cooperative Banks (UCBs) and Regional Rural Banks (RRBs) shall not be required to apply Ind AS and shall continue to comply with the existing Accounting Standards.

• The Reserve Bank of India (RBI) has deferred the implementation of new accounting rules, Indian Accounting Standards (Ind AS) for banks till further notice. This is the second extension provided by the RBI. Earlier in April 2018, RBI had postponed the implementation of IndAS by the banks by one year.

• This delay in the implementation of Ind AS will give banks more time to prepare for the expected credit-loss model

Sandbox

• A Sandbox is a framework set up by a regulator that allows FinTech start-ups to conduct live experiments in a controlled environment under supervision.

• The Reserve Bank of India (RBI) will be issuing guidelines soon for the fintech companies to test their new products on a small group of users before scaling up.

• This regulatory sandbox will help fintech companies to launch innovative products at a lower cost and in less time and enable fintech companies to conduct live or virtual testing of their new products and services.

• Sandbox will provide a well-defined space for the companies to develop new products. It allows for experimenting with their products and fintech solutions. In case of failure, the consequences would be contained and the reasons will be analysed for betterment.

Global Energy Transition Index 2019

• The Global Energy Transition index 2019 report has been released by the World Economic Forum (WEF).

• The index compares the energy sectors of 115 countries and analyses their readiness for energy transition.

• The index benchmarks the countries energy systems based on an “energy triangle”, comprised of energy security and access, economic development and growth, environmental sustainability and how well they are set-up to succeed in the future.

• Sweden has topped the index and is followed by Switzerland and Norway in the top three. China is ranked even lower than India in the 82nd position.

• India has moved up two places to rank 76th and the report states that India is amongst the countries with high pollution levels and has a relatively high CO2 intensity in its energy system.

Price: Rs. 30 Published on: 25.04.2019

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Economy Prelims Compendium - Chahal AcademyPage 2 AIIB • Asian Infrastructure Investment Bank (AIIB) is a China ledmultilateral development bank with a mission to improve social