mohitsharmagk.files.wordpress.com · Web viewPOVERTY ALLEVIATION IN INDIA. Overview. Poverty is widespread in India. India has about 33% of the world’s poor. 42% of India’s

POVERTY ALLEVIATION IN INDIAOverview

o Poverty is widespread in India. o India has about 33% of the world’s pooro 42% of India’s population falls below the poverty line (BPL) of $1.25 per day, having reduced from 60% in

1980o Over the past decades the Government has initiated multiple poverty alleviation programmes that have helped

substantially reduce poverty, prevent famines and increase literacy in the country

National Rural Employment Guarantee Scheme (NREGS)o Launched 2006o The NREGA aims at two objectives: employment and rural developmento Provides a legal guarantee for employment of 100 days every year to adult members of rural

households, who are willing to do unskilled manual labour for public workso Provides statutory minimum wage of Rs 60 per dayo Applies to all rural households, whether or not they are BPLo The NREGA stipulates that works must be targeted towards a specific set of rural development activates like

water conservation, afforestation, flood control, etcIntegrated Rural Development Programme (IRDP)

o Launched in 1978o Aims to provide self employment in various activities in primary, secondary and tertiary sectors of the

economy. Supported activities include sericulture, animal husbandry, weaving, handicrafts, services, businesses etc

o Merged with the Swarna Jayanti Gram Swarozgar Yojana in 1999Prime Minister’s Rozgar Yojana

o Introduced 1993o Aims to provide self employment for educated unemployed youth by setting up microenterpriseso Under the scheme, every selected educated unemployed youth 18-35 years old and having family income

below Rs 24,000 is given loan up to Rs 1 lakh for opening his own enterprises

Swarnajayanti Gram Swarjgar Yojana (SGSY)o Launched 1991o The SGSY is a self employment programme that focuses on poverty alleviationo Promotes self help groups, development of micro enterprises by providing bank credit and government subsidyo Includes 50% benefit to SC/ST, 40% for women and 3% for disabled

Sampoorna Grameen Rozgar Yojana (SGRY)o Launched 2001o Provides wage employment in rural areas, thereby ensuring food security, creation of durable community,

social and economic infrastructureo Implementation through Panchayati Raj system

Swarna Jayanti Shahri Rozgar Yojana (SJSRY)o Launched 1997o Aims to provide gainful employment to the urban unemployed poor through encouraging the setting

up self employment ventures or provision of wage employmento Contains two special schemeso The Urban Self Employment Programmeo Urban Wage Employment Programme

o SJSRY is a merged programme consisting of erstwhile schemes like Urban Basic Services, Nehru Rozgar Yojana, and PM’s Integrated Urban Poverty Eradication Programme

o Provides reservations for women (30%), disabled (3%) and SC/ST on the strength of local populationIndira Awaas Yojana (IAY)

o Launched 1996o The IAY is a scheme that provides for construction of houses and money to be given to poor

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FOREIGN TRADE IN INDIAOverview

o In 1950, India’s share in total world trade was 1.78 %. By 2002 this had dropped to 0.8 %o India has a total foreign trade of around USD 489 billion. Of this imports accounted for USD 303 billion and

exports USD 185 billiono Based on 2008-2009 data, India’s largest trading partner is the UAE (total trade USD 48 billion)o India exports the maximum to UAE (USD 24 billion) and imports the most from the People’s Republic of China

(USD 32 billion)o Foreign trade in India falls under the purview of the Department of Commerce under the Ministry of Commerce

and IndustryTop trading partners

Rank CountryExports

(USD billion)

Imports(USD

billion)

Total trade(USD

billion)

1 UAE 24.4 23.8 48.2

2 PRC 9.3 32.4 41.8

3 USA 21.1 18.5 39.7

4 Saudi Arabia 5.1 19.9 25.0

5 Germany 6.3 12.0 18.3Special Economic Zones (SEZ)

o India was one of the first countries in Asia to recognize the effectiveness of Export Processing Zones (EPZ)o The first Export Processing Zone (EPZ) in Asia was established in Kandla (Gujarat) in 1965o The Special Economic Zone (SEZ) Policy was announced in 2000o The main objectives of SEZs areo Generation of additional economic activityo Promotion of goods and serviceso Promotion of investment from domestic and foreign sourceso Creating of employment opportunitieso Development of infrastructure facilities

o SEZs function under the Department of Commerce (Ministry of Commerce and Industry)

S. No. SEZ Location Type

1 Kandla SEZ Gujarat Multi product

2 SEEPZ Mumbai Electronics, gems and jewellery

3 Noida SEZ Uttar Pradesh Multi product

4 MEPZ Chennai Multi product

5 Cochin SEZ Kerala Multi product

6 Falta SEZ West Bengal Multi product

7 Visakhapatnam SEZ Andhra Pradesh Multi productTrade Agreements

Agreement Contracting parties Notes

Agreement of Cooperation with

India, Nepal Established in 2009The agreement aims to restrict and


Nepal to control unauthorised trade

prevent unlawful activitiesrelating to traffic in narcotics, foreign

exchange etc

Agreement on South Asia Free Trade Area (SAFTA)

India, Pakistan, Sri Lanka,

Nepal, Bhutan, Bangladesh,

Maldives

Established in 2007Afghanistan, which became SAARC

member in 2007, is set to become latest SAFTA member

India, Pakistan, Sri Lanka are categorised Non-Least Developed Contracting States (NLDCS)

Bhutan, Bangladesh, Nepal, Maldives are Least Developed Contracting States (LDCS)

NDLCS to reduce tariffs for LDCS products to 0-5 % in 3 years from contract

Asia Pacific Trade Agreement (APTA)

Bangladesh, China,

India, South Korea, Sri Lanka

Established 2005

Comprehensive Economic Cooperation Agreement

between the Republic of India and the Republic of

Singapore

India, Singapore

India Chile Preferential Trade Agreement (PTA) India, Chile

Signed 2005India offers tariff preference of 10-50 %

on 178 tariff lines (including meat, fish, salt, iodine,

Copper, chemicals, leather, newsprint, paper, wool, wood etc)

Chile offers preference of 10-100 % on 296 tariff lines (includes agricultural products, chemicals,

pharmaceuticals, dyes and resins, plastic, rubber, leather, textiles, footwear, industrial products)

India Afghanistan PTA India, Afghanistan

Afghanistan grants preferential tariff to 8 products from India including black tea, ayurvedic and

Homeopathic medicine, other medicine, sugar, cement

India grants preferential tariff to 38 products from Afghanistan, mainly agricultural products like

dry fruits


India Bhutan Trade Agreement India, Bhutan

India Korea CEPA India, South Korea

India MERCOSUR PTA India, MERCOSUR

MERCOSUR is a trading bloc in Latin America that comprises Brazil, Argentina, Uruguay and Paraguay

MERCOSUR offers tariff concession on 452 products

India offers tariff concession on 450 products

The major products covered in Indian offer list are meat products, chemicals, dyes and pigments,

raw hides and skins, leather, wool, cotton, glass, iron and steel, machinery, optical and photographic

equipmentThe major products in MERCOSUR offer

list include food, organic chemicals, pharmaceuticals, essential oils,

plastics, rubber, tools and implements, machinery

India Sri Lanka FTA India, Sri Lanka

FINANCIAL MARKETS IN INDIA

Overviewo India’s financial market is one of the oldest in the world

o It is considered the fastest growing and strongest among emerging economies

o Financial markets in India are under the purview of the Capital Markets Division of the Department of

Economic Affairs of the Ministry of Financeo The markets in India are regulated by the Securities and Exchange Board of India (SEBI)

o The PAN is the sole identification number for all transactions in securities markets

o Although there are more than 25 stock exchanges in the country, the Bombay Stock Exchange and the

National Stock Exchange account for a large majority of securities exchanges

GOVERNMENTAL REGULATORY BODIES

Securities and Exchange Board of India (SEBI)o Established 1992, headquarters Mumbai

o Functions under the Department of Economic Affairs, Ministry of Finance

o SEBI is the regulator for financial markets in India

o SEBI has regional offices in New Delhi, Kolkata, Chennai and Ahmadabad

o The main responsibilities of SEBI include protection of interests of investor, and the development and

regulation of securities markets


o SEBI has three main functions

o Legislative functions: it drafts regulations and policies for financial markets

o Executive functions: conducts investigations and enforces action

o Judicial functions: passes rulings and orders and arbitrates disputes

Forward Markets Commission (FMC)

o Established 1953, headquarters Mumbai

o Functions under the Ministry of Consumer Affairs, Food and Public Distribution

o The FMC is the chief regulator of forwards and futures markets in India

o The main functions of the FMC include

o Advice the Union Government on matters relating to forward markets

o To monitor and regulate forward markets

o Collect and publish information relating to forward markets

o The FMC currently allows futures trading in specific spices, edible oils, pulses, energy products and metals

o These forwards and futures exchanges in commodities are performed at specialised commodity

exchanges in the country

IMPORTANT STOCK EXCHANGES IN INDIA

Bombay Stock Exchange (BSE)o Established 1875, location Mumbai

o The BSE is the oldest stock exchange in Asia

o The BSE is the largest stock exchange in India (in terms of market capitalization)

o In terms of the number of listed companies, the BSE is the largest stock exchange in the world (with

over 4500 listed companies)

o The key index of the BSE is the SENSEX (BSE Sensitive Index). It is a composite measure of the

performance of 30 key listed companies

National Stock Exchange (NSE)

o Established 1992, location Mumbai

o The NSE is the second largest stock exchange in India (after BSE)

o In terms of number of trades in equity, it is the largest stock exchange in India and the third largest in

the worldo The NSE is also the second fastest growing stock exchange in the world

o The NSE is owned by a set of financial institutions, banks and insurance companies. There are at least two

foreign investors in NSE: NYSE Euronext and Goldman Sachso The NSE’s key index is the Nifty


INSURANCE IN INDIA

Overviewo The first insurance company in India was the Oriental Life Insurance Company, founded in Calcutta 1818.

However, it is now defunct

o The first Indian insurance company was the Bombay Mutual Life Assurance Society, founded 1870

o The oldest existing insurance company is the National Insurance Company, founded 1906

o Insurance was nationalised in 1956 and then opened up to private sector in 1999.

o Currently the government allows 26% FDI in the insurance sector

o The largest life insurance company in India is the Life Insurance Corporation

o Insurance falls under the purview of the Department of Financial Services, Ministry of Finance

Nationalisation of insuranceo Life insurance in India was nationalised by the Life Insurance Corporation Act 1956

o All 245 life-insurance companies in India at the time were merged to form the Life Insurance Corporation (LIC).

o The General Insurance Business Act 1972 nationalised general insurance companies

o The existing 100 general insurance companies were amalgamated into the General Insurance Corporation of

India (GIC).

GOVERNMENT BODIES IN INSURANCE

All government bodies in insurance function under the Ministry of Finance unless otherwise noted

Life Insurance Corporation (LIC)o Established 1956, headquarters Mumbai

o The LIC is the largest life insurance company in India and also the nation’s largest investor

o It funds close to 25% of the government’s expenses

o The LIC owns the following subsidiaries

o Life Insurance Corporation of India International: provides USD denominated policies to NRIs

o LIC Nepal

o LIC Lanka

o LIC Housing Finance

General Insurance Corporation (GIC)o Established 1972, headquarters Mumbai

o The GIC is a holding company for four subsidiary companies

o Oriental Insurance Company Ltd (New Delhi)

o New India Assurance Company Ltd (Mumbai)

o National Insurance Corporation Ltd (Kolkata)

o United India Insurance Company Ltd (Chennai)

o The GIC is the sole re-insurance company in India

o The GIC covers insurance for the entire spectrum of the economy from shoes to aircraft, from agricultural wells

to oil wells, from chemical manufactures to satellite launches etc


Insurance Regulatory and Development Authority of india (IRDA)o Established 2000, headquarters Hyderabad

o The IRDA was set up to protect the interests of policy holders, and to regulate the growth of the insurance

industry

o Some of the functions of the Authority include

o Regulate investment of funds by insurance companies

o Regulate maintenance of margin of solvency

o Adjudicate disputes between insurers and intermediaries

Agriculture Insurance Company (AIC)o Established 2003, headquarters New Delhi

o The AIC is promoted by the GIC and NABARD

o The AIC is under administrative control of Ministry of Finance, but under operative control of Ministry of

Agriculture

o The AIC offers area based and weather crop insurance schemes to farmers

o It is one of the largest agriculture insurance companies in the world

POLICIES AND PROGRAMMES

Social Security Schemeo A Social Security Fund (SSF) was set up in 1988-89 for providing social security through group insurance

schemes to the weaker sections of society

o The SSF is administered by the LIC

o The SSF provides up to Rs 5000 on death from natural causes and Rs 25,000 upon death/disability due to

accident

Janashree Bima Yojana (JBY)o The Janashree Bima Yojana was launched in 2000

o The JBY is a group insurance scheme. The minimum membership of the group should be 25 persons

o The JBY is administered by the LIC

o The JBY provides for insurance protection to rural and urban poor. The scheme covers BPL people and above

poverty line people who belong to certain identified occupational groups

o The scheme provides for cover of Rs 20,000 on natural death. The scheme also provides pension of Rs 200

Aam Aadmi Bima Yojana (AABY)o Launched in 2007

o Provides insurance to the head of the family of rural landless households

o Covers natural death and accidental death/disability

o The scheme also provides additional benefit of scholarships for max two children between 9th and

12th standards

o Administered by the LIC

Universal Health Insurance Scheme (UHIS)

o The UHIS is meant to improve access of health care to poor families

o Scheme provides for reimbursement of medical expenses, death and compensation due to loss of earning

capacity


o The UHIS targets only BPL families

National Agriculture Insurance Scheme (NAIS)

o Launched in 1999

o Protects farmers against losses due to natural calamities such as flood, drought, pestilence etc

o Scheme is implemented by the Agriculture Insurance Company (AIC)

o The Scheme is available to all farmers irrespective of the size of their land holdings

o The Scheme covers all food crops and oil seeds. It also covers some commercial and horticultural crops

o The scheme has until now covered more than 1.3 million farmers and 211 million hectares of land

Pilot Weather Based Crop Insurance Scheme (WBCIS)

o Launched in 2007, on a pilot basis

o The WBCIS aims to cover farmers against anticipated crop failure due to adverse weather conditions

o The scheme is based on the fact that weather parameters can affect crop yield even when the farmer has

taken all care to ensure a good harvest

o The payouts are based on historical data that determine weather thresholds/triggers beyond which crop losses

are expected

o The WBCIS is implemented by the AIC

o The scheme is currently being implemented on 30 major crops including horticultural crops

o Currently the scheme covers more than 110,000 farmers and 1.4 million hectares of land


BANKING IN INDIAOverview

o Organized banking in India originated in the late 18th centuryo The State Bank of India, headquartered in Mumbai, is the largest bank in Indiao Currently, India has 88 Scheduled Banks – 27 public sector banks, 31 private banks and 38 foreign bankso The public sector banks hold over 75% of banking assets in the country, followed by private banks (18.2%) and

foreign banks (6.5%)o Central banking in India is the responsibility of the Reserve Bank of Indiao Banking in India is the responsibility of the Department of Financial Services, Ministry of Financeo Currently there are 170 scheduled commercial banks, which includes 91 regional rural banks, 19 nationalised

banks, 8 banks in the SBI group and the IDBIo There are 4 non-scheduled commercial banks in the country

History of banking in Indiao The oldest banks in India were the General Bank of India and the Bank of Hindustan, both founded in

1786. However both banks are now defuncto The oldest existing bank in India is the State Bank of India. The origins of the SBI go back to the Bank of

Calcutta (founded 1806, renamed Bank of Bengal in 1809)o The Bank of Madras was established in 1843 and the Bank of Bombay in 1868o The Bank of Bengal, Bank of Bombay and Bank of Madras merged to form the Imperial Bank of India in

1921. The Imperial Bank of India was renamed the State Bank of India in 1955. Although a normal commercial bank, the Imperial Bank of India also functioned as a central governmental until 1935

o The Reserve Bank of India was established in 1935o The oldest joint stock bank is the Allahabad Bank, established in 1865. o The first entirely Indian joint stock bank was the Oudh Commercial Bank (Faizabad, 1881). However, it failed in

1958. The next oldest is the Punjab National Bank (Lahore, 1895)o The Dakshina Kannada and Udipi districts of Karnataka (called South Canara), is known as the Cradle

of Indian Banking

o Nationalisation of bankso The Government of India nationalised 14 of the largest banks in 1969o This achieved by an ordinance to the effect in July 1969. This was formalized by the Banking Companies

(Acquisition and Transfer of Undertaking) Bill 1969o The banks that were nationalized in 1969 were: Allahabad Bank, Bank of Baroda, Bank of India, Bank of

Maharastra, Canara Bank, Central Bank of India, Dena Bank, Indian Bank, Indian Overseas Bank, Punjab National Bank, Syndicate Bank, UCO Bank, Union Bank of India and United Bank of India

o In 1980, six more banks were nationalized. The banks that were nationalized in 1980 were: Andhra Bank, Corporation Bank, Oriental Bank of Commerce, Punjab and Sind Bank, New Bank of India and Vijaya Bank

o In 1993, the New Bank of India was merged with Punjab National Bank. There are 19 nationalized banks in operation today

o Following this, the GoI controlled about 91% of the banking business in India

RESERVE BANK OF INDIAOverview

o The Reserve Bank of India is the central bank of Indiao It was established in 1935 and nationalised in 1949. Its headquarters was initially Calcutta, but moved to

Bombay in 1937. It is currently headquartered in Mumbai.o The first Governor of the RBI was Sir Osborne Smith. The current Governor of the RBI is Dr. Duvvuri

Subbaraoo The RBI functions under the provisions of the Reserve Bank of India Act 1934


Objectiveso Maintain price stabilityo Ensure adequate flow of credito Protect depositor’s interestso Provide cost-effective banking services to the publico Facilitate external trade and paymento Promote development of foreign exchange market in Indiao Provide supplies of currency notes and coins in the country

Functionso Formulates, implements and monitors monetary policieso Regulates operations of banking and financial services sector in the countryo Manages the Foreign Exchange Management Act 1999o Issues, exchanges and destroys currency notes and coinso Perform promotional functions to support national objectiveso Acts as banker to banks by maintaining accounts of all scheduled bankso Acts as banker to the Central and state governments

List of RBI GovernorsS. No.

Governor Tenure Notes

1Sir Osborne Smith

1935-1937First Governor of the RBI

Did not sign any bank notes

2 Sir James Taylor 1937-1943Governor during WWII

Started the practice of signing bank notes

3Sir C D Deshmukh

1943-1949

First Indian Governor of RBI

Oversaw Independence & PartitionRepresented India at the Bretton Woods

Conference 1944Served as Minister of Finance 1950-1956

4 Sir Benegal Rama 1949-1957 Longest serving Governor


RaoWas Indian Ambassador to USA prior to RBIWitnessed commencement of Five Year Plans, and

transformation of Imperial Bank of India to SBI

5K G Ambegaonkar

Jan 1957 – Feb 1957

Did not sign any bank notes

6 H V R Iyengar 1957-1962Witnessed introduction of decimal coinage

Variable cash reserve ration (CRR) introduced

7 P C Bhattacharya 1962-1967

8 L K Jha 1967-1970Witnessed nationalization of banks (1969)

Appointed as Ambassador to US in 1970

9 B N AdarkarMay 1970 – June 1970

Served as India’s Executive Director at the IMF

10 S Jagannathan 1970-1975

Witnessed oil shock, expansion of banking services, shift to floating rates

Relinquished office to serve as Executive Director at IMF

11 N C Sen GuptaMay 1975 – Aug 1975

12 K R Puri 1975-1977

13 M NarasimhanMay 1977 – Nov 1977

Only Governor to be appointed from the Reserve Bank cadre

Chairperson of Committee on Financial System (1991) and Committee on Banking Sector Reforms (1998)

Served as Executive Director for India at the World Bank and the IMF

14 Dr. I G Patel 1977-1982

Served as Secretary at the United Nations Development Programme (UNDP)

Witnessed demonetisation of high denomination bank notes and “gold auctions”

Witnessed nationalization of six banks (1980)Secured IMF’s Extended Fund Facility (1981).

This was the largest arrangement of the IMF at the time


15Dr. Manmohan Singh

1982-1985Witnessed comprehensive legal reforms in banking sector

16 A GhoshJan 1985 – Feb 1985

17 R N Malhotra 1985-1990Served as Executive Director of IMF prior to RBI

Made efforts to develop money markets

18 S Venkitaraman 1990-1992

Managed balance of payments crisis

Adopted IMF’s stabilisation programmeSupervised devaluation of the RupeeWitnessed launch of economic reforms

19 Dr. C Rangarajan 1992-1997

Ushered in unprecedented central bank activism

Introduced comprehensive measures to strengthen and improve efficiency of banking sector

Establishment of unified exchange rateCap on automatic finance by the Bank to the

Government

20 Dr. Bimal Jalan 1997-2003Represented India on the Executive Boards of the IMF and World Bank prior to RBI

21 Dr Y V Reddy 2003-2008 Executive Director to IMF prior to RBI

22 Dr. D Subbarao 2008-Present

Prior to RBI, he has been

o Secretary to the PM’s Economic Advisory Council (2005-2007)

o Lead economist in the World Bank (1999-2004)o Finance Secretary to the Government of Andhra

Pradesh (1993-1998)o Joint Secretary, Dept. of Economic Affairs (1988-1993)

STATE BANK OF INDIAo The State Bank of India is derived from the Imperial Bank of India (1921), which was nationalised in

1955o The State Bank of India is the oldest bank in India. It traces its ancestry to the Bank of Calcutta, founded in

1806.o It is headquartered in Mumbaio The State Bank of India is also the largest bank in India. It has a market share of about 20% in deposits

and advanceso The State Bank Group consists of the SBI and its subsidiary banks viz. State Bank of Indore, State Bank of

Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala, State Bank of Travancore

o The SBI is one of the Big Four Banks in India, along with ICICI Bank, Axis Bank and HDFC Bank


o The SBI was ranked as the 29th most reputable company in the world by Forbes in 2009

CATEGORIES OF BANKS IN INDIA

Structure of banking in India. Number of banks given in bracketso Commercial Bankso Commercial banks are those that cater to the regular banking and financial needs of the publico Commercial banks include public sector banks and private sector banks.Public sector banks include

the State Bank Group and other nationalised banks, while private sector banks include Indian banks and foreign banks

o Cooperative Bankso Cooperative banking is retail and commercial banking organised on a cooperative basis. Cooperative banks

include credit unions, savings and loans associations and building societies and cooperativeso Cooperative banks operate on the principles of cooperation – mutual help, democratic decision making and

open membershipo They are governed by controls of the RBI as well as state governments.Cooperative banks in general

operate under the Cooperative Credit Societies Act 1904, but large Urban Cooperative Banks operate under the Banking Regulation Act 1949

o Cooperative banks in India are the primary financiers of agricultural activities, small scale industries and self-employed workers

o Cooperative banks in India were first established in the late 19th century, following the success of such banks in Britain and Germany

o The Anyonya Cooperative Bank Ltd. (ABCL) was the first cooperative bank in India. It was established Vithal Laxman (aka Bhausaheb Kavthekar) in 1889 under the name Anyonya Sahayakari Mandali Cooperative Bank Ltd. The bank closed functioning in March 2008 following an order by the RBI. Re-opening is under consideration

o Regional Rural Bankso Regional Rural Banks (RRBs) were first established in 1975o Initially five RRBs were established at Moradabad (UP), Gorapkhpur (UP), Bhiwani (Haryana), Jaipur

(Rajasthan), Malda (WB). Currently there are 91 RRBso RRBs exist in all states except Goa and Sikkimo The share of RRBs in agricultural credit is around 5%

o Scheduled Bankso Scheduled Banks are those banks that have been included in Second Schedule of the RBI Act 1934o Scheduled Banks must fulfil two conditionso The paid up capital and collected funds of the bank must not be less than Rs 5 lakhso Any activity of the bank should not adversely affect the interest of deposition

o Scheduled Banks enjoy the following benefits


http://en.wikipedia.org/wiki/File:Scheduled_banking_structure_in_India.png

o They are eligible for obtaining loans on Bank Rate from the RBIo They acquire membership of the clearing house

o Scheduled Banks include commercial banks, cooperative banks and regional rural bankso There are around 302 Scheduled Banks in operation

o Non-Scheduled Bankso Non-Scheduled Banks are those that are not included in the list of Scheduled Bankso They have to follow the Cash Reserve Ratio (CRR) condition. However, they are not compelled to deposit

these funds with the RBIo They can avail loans from the RBI only under emergencies, and not for daily activitieso There are only 4 Non-Scheduled Banks in operation

o GOVERNMENT ENTITIES IN BANKING1. Small Industries Development Bank of India (SIDBI)

1. Established in 1990, headquarters Lucknow2. The main objective of the SIDBI is to aid the growth and development of micro, small and medium scale

industries in India3. It provides direct credit to micro, small and medium enterprises, supports microfinance institutions and

refinancing to state level finance bodies2. Industrial Development Bank of India (IDBI)

1. Established in 1964, headquarters Mumbai2. The IDBI is the tenth largest development bank in the world. It is one of India’s largest public sector bank3. Its main objective is to provide credit and other banking facilities to industries in India4. However, in 2004 the IDBI was re-designated as a commercial bank, following the Industrial Development

Bank (Transfer of Undertaking and Repeal) Act 2003, and renamed IDBI Ltd5. Following this, the commercial banking division, IDBI Bank was merged into IDBI

3. Industrial Finance Corporation of India (IFCI)1. The IFCI is the first development finance institution in the country to cater to the needs of Indian industry2. Established 1948, headquarters New Delhi3. The IFCI was established to provide long term low interest credit to corporate borrowers4. In 1993, the IFCI was re-registered as a commercial company under the Indian Companies Act 1956, and

renamed IFCI Ltd4. National Bank for Agricultural and Rural Development (NABARD)

1. Partly owned by the RBI2. Established 1982, headquarters Mumbai3. NABARD serves as the apex development bank in India for economic activities in rural areas4. The main objective of NABARD is to facilitate credit flow for agriculture and small scale industries5. NABARD provides refinance to State Cooperative Agriculture and Rural Development Banks (SCARDBs),

State Cooperative Banks (SCBs), Regional Rural Banks (RRBs), Commercial Banks and other financial institutions approved by the RBI

6. NABARD coordinates the rural financing activities of all institutions engaged in developmental work7. NABARD has 28 regional offices (state capitals), one Sub Office (in Port Blair) and one Special Cell (in

Srinagar)8. NABARD is famous for its Self Help Group (SHG) Bank Linkage Programme, which serves as an

important tool for microfinance5. National Housing Bank (NHB)

1. Wholly owned subsidiary of the RBI2. Established in 1987, headquarters New Delhi3. Established mainly to provide long term finance to individual households

6. Export-Import Bank of India (EXIM Bank)1. Established 1981, headquarters Mumbai2. The main objective of the EXIM Bank is to provide financial assistance to exporters and importers with a

view to promoting the country’s international trade3. It acts as the apex financial institution for financing foreign trade in India

7. Bharatiya Reserve Bank Note Mudran Private Ltd (BRBNMPL)1. Wholly owned subsidiary of the RBI


2. Established in 1995, headquarters Bangalore3. Main function is to augment the product of bank notes to meet demand4. The company manages two presses: Mysore and Salboni (West Bengal)

8. Deposit Insurance and Credit Guarantee Corporation (DICGC)1. Wholly owned subsidiary of the RBI2. Established in 1962, headquarters Mumbai3. India was one of the first countries to provide deposit insurance4. Main objective is to provide insurance to depositors against collapse and bankruptcy of banks5. Provides deposit insurance coverage up to Rs 100,000

HOUSING IN INDIAOverview

o Majority of Indian have per capita housing space less than 10 x 10 square feet. Average rural per capita space is 103 sq ft and urban per capita space is 117 sq ft

o Dharavi (in Mumbai) is the largest slum in India. It comprises around 600,000-1 million people in a 0.67 sq mile area. Dharavi is one of the most densely populated areas of the world

o Housing is a state subject. However, the Union Government is responsible for formulation of policies and programmes

o Central-level policies are implemented by the Ministry of Housing and Urban Poverty Alleviation

Urbanization in Indiao Urban settlements in India are those settlementso That have a minimum population of 5000 ando Have 75% of the male population engaged in non-agricultural activities ando Have a population density of at least 400 persons per sq km

o Further, all towns having a Municipal Corporation, Municipal Council or Cantonment Board are classified as urban

o As per Census 2001, India’s urban population was 286 million (28% of total population)o The number of cities with population more than 1 million is 35o With 49.76% of population living in urban areas, Goa is the most urbanized state in India. Himachal

Pradesh is the least urbanized (9.30%)

POLICIES AND PROGRAMMESAll policies/programmes under the purview of the Ministry of Housing and Urban Poverty Alleviation unless

otherwise noted

National Urban Housing and Habitat Policy 2007o The main aim of the policy is Affordable Housing for Allo Objectives of the Policy includeo Urban planning including urban local bodies, rural-urban balance and Mass Rapid Transit Systems

(MRTS)o Affordable housing including development of housing infrastructure, technological modernization and

subsidies for economically weaker sectionso Increased flow of funds from government and private financial sourceso Spatial incentives including relaxation of Floor Area Ratio and more efficient use of space by

construction of high-rise buildingso Special provisions for minorities and women

Jawaharlal Nehru National Urban Renewal Mission (JNNURM)


o Launched in 2005o It is a massive city modernization programmeo Applies to 63 cities in Indiao Provides City Development Plans (CDP) for addressing infrastructure gaps relating to water, sanitation,

housing and roadso Includes the following sub-missionso Basic Services for the Urban Poor (BSUP): provides seven services to low income settlements i.e.

security of tenure, affordable housing, water, sanitation, health, education, social securityo Integrated Housing and Slum Development Programme (IHSDP): provides the seven services to cities

other Mission cities

Interest Subsidy Scheme for Housing the Urban Poor (ISSHUP)o Launched in 2009o Applies to Economically Weaker Sections (EWS) and Low Income Group (LIG)o The scheme aims to encourage the poor to avail loan facilities through commercial banks/HUDCO for

construction of housingo Provides a 5% subsidy in interest paymento Envisages construction of 310,000 dwelling units in the country

Swarna Jayanti Shahari Rozgar Yojana (SJSRY)o Launched in 1991o Aims to provide gainful employment to urban unemployedo Promotes setting up self-employment ventures and wage employment prospectso Sponsored jointly by Central and state governments (75:25 ratio)

Integrated Low Cost Sanitation Scheme (ILCS)o Launched in 1980, revised in 2003o ILCS scheme launched to eliminate dry latrines in India, which involve carrying of sewage on the heads of

scavengerso The Employment of Manual Scavengers and Construction of Dry Latrines (Prohibition) Act 1993 seeks

to remove this unsanitary and restore human dignity of scavengerso Aims includeo Construct/convert low-cost sanitation units through sanitary two-pit pour flush latrineso Construct news latrines for EWS households having no latrines

o The scheme covers all towns, but only EWS householdso Funded by the Centre (75%), state (15%) and beneficiary (10%)o The main target of the scheme is to convert 600,000 dry latrines by March 2010

GOVERNMENTAL BODIES AND OFFICESAll bodies/offices under the purview of the Ministry of Housing and Urban Poverty Alleviation unless otherwise

noted

National Buildings Organization (NBO)o Established in 1954o Headquarters in New Delhio The NBO is primarily tasked with collection, collation, analysis and dissemination of statistics relating to

housing and constructiono Data collected by the NBO includes construction activity, building permits/completion certificates, prices of

building materials and wages etco The NBO also conducts training courses for personnel engaged in housing statistics at the state level

Building Materials and Technology Promotion Council (BMTPC)o Established in 1990o Headquarters in New Delhi


o The Council provides proven innovative technologies for entrepreneurs interested in setting up manufacturing units in construction materials

o Objectives includeo develop and operationalise a comprehensive and integrated approach for technology development, transfer

and investment promotiono promote environment-friendly and energy-efficient materials and construction practices

Hindustan Prefab Limited (HPL)o Established in 1953o Public Sector Undertaking functioning under the Ministry of Housing and Urban Poverty Alleviationo Located in New Delhio HPL provides civil engineering services such as conventional construction as well prefab materialso HPL pioneered the production of pre-stressed concrete railway sleeperso HPL is the first company in India to produce precast pre-stressed concrete railway bridge girders

Housing and Urban Development Corporation Limited (HUDCO)o Established in 1970o HUDCO is a Public Sector Enterprise under the Ministry of Housing and Urban Poverty Alleviationo Headquartered in New Delhio HUDCO’s focus is on the social aspects of housing and infrastructure development, with preferential access to

disadvantagedo One in every 16 houses in the country has availed of HUDCO’s assistanceo Objectives of HUDCO includeo Provide long term finance for housing constructiono To finance or undertake the establishment of new or satellite townso To finance or undertake the establishment of industrial enterprises of building materials

PUBLIC FINANCE IN INDIAOverview

o Public finance in India comes under the purview of the Ministry of Financeo The Ministry of Finance has four departmentso Department of Economic Affairso Department of Expenditureo Department of Revenueo Department of Company Affairs

o The Ministry of Finance prepares the budget for the following governmentso Union Governmento Union Territorieso Various states, when under President’s rule

Repositories of public finance1. Consolidated Fund of India

1. Consists of all revenue received, loans raised and money received in repayment of loans by the Union Government

2. All expenditure incurred by Government is incurred from the Consolidate Fund3. No money can be withdrawn from this fund except under the authority of Parliament

2. Public Account India1. Consists of all other receipts such as deposits , service funds and remittances2. Usually consists of funds that don’t belong to the government, and need to be paid back3. Disbursements from the Public Account do not need authorization of Parliament

3. Contingency Fund of India1. Contains funds for meeting unforeseen needs including supplementary Demand for Grants


2. The Contingency Fund is placed at the disposal of the President to enable Government to meet urgent unforeseen expenditure

3. Funds released from the Contingency Fund are released pending authorization from Parliament

Sources of Revenueo Main sources of revenue are customs duties, excise duties, service tax, corporate and income taxeso Non-tax revenues consist of interest receipts (including interest paid by Railways), dividend and profitso For states, revenue is mainly from taxes and duties levied by the state governments, share of taxes levied by

Union, and grants received from the Uniono For local body finance, the primary sources are property taxes, octroi and terminal taxes

Sources of expenditure1. Non-plan expenditure

1. Revenue expenditure: it consists of interest payments, defence revenue expenditure, subsidies, debt relief to farmers etc, and grants to states and Union Territories

2. Capital expenditure: include defence capital expenditure, loans to public sector enterprises, loans to state governments and UTs, and loans to foreign governments

2. Plan expenditure1. Includes agriculture, rural development, irrigation and flood control, energy, industry, minerals, transport,

communications etc

Union Budgeto The Union Budget is a statement of financial position of the Union Governmento The objectives of the Budget includeo Coordination of resourceso Economic stabilityo Management of public enterpriseso Definition of economic policy

o The first Budget was presented in 1860o The Railway Budget was separated from the General Budget in 1921. However, the Railway Budget is a part

of the General Budget, just prepared and presented separatelyo The first Union Budget of independent India was presented by R K Shanmukham Chetty in Nov 1947o The Budget is presented on the last working day of February, and must be passed by Parliament before it can

come into effect on April 1 (the start of the financial year)

o Kelkar Commissiono The 13th Finance Commission, with Vijay Kelkar as Chairman was constituted in Nov 2007o The Finance Commission is ordained by Article 280 of the Constitutiono The main recommendations of the Kelkar Commission includeo Senior citizens and widows to have exception limit on income tax of Rs 150,000o Three types of income tax slabs: up to Rs 1 lakh (no tax), Rs 1-4 lakh (20% tax), Above Rs 4 lakh (30% tax)o Abolition of dividend tax and long term capital gaino Income tax on agriculture to be withdrawno Higher duty of 150% for specific agro products and demerit goodso Complete exemption of custom duty for life saving drugs, equipment, and defence related goods

Taxeso Direct taxes are those taxes in which the burden of tax cannot be shifted from the person on whom it

has been levied. Eg: income tax, property taxo Indirect taxes are those taxes in which the burden of tax can be shifted. Eg: sales tax, excise duty,

entertainment taxo Indirect taxes are the larger source of revenue for the governmento The ratio of revenue from direct to indirect taxes is usually around 40:60o The largest revenue of the government comes from excise duty


Value Added Taxo By definition, VAT is a tax levied on the value added at each stage of production and distribution

process. It is an ideal form of consumption taxation since the value added by a firm represents the difference between its receipts and cost of purchased inputs

o Value Added Tax (VAT) is a general tax on commodities to replace sales tax, surcharge and other entry level taxes levied by the states and Union Territories

o VAT is levied on sale of all taxable goods. VAT is not levied if sales of goods are not made in the course of furtherance of business

o VAT is collected in stages: tax paid on purchases (input tax) is rebated against tax payable on sales (output tax). The concept of second sale or resale tax is done away with

o VAT can be computed using one of three techniqueso Subtraction method: tax rate is applied to the difference between the value of the output and the cost of the

inputo Addition method: the value added is computed by adding all payments that is payable to the factors of

products (wages, interest payments etc)o Tax credit method: this entails the set off of the tax paid on inputs from tax collected on sales

o India uses the tax credit method for VAT computationo Advantages of VAT includeo Tax evasion becomes difficult. Businesses compelled to keep proper record of purchases and sales, and

keep a trail of invoiceso Avoids problem of undervaluingo Increase in revenue as tax net widenso Uniformity in tax regime avoids confusiono Permits easy and effective targeting of tax rates, as a result of which exports can be zero-ratedo Parity with tax structures in other countries

SMALL SCALE INDUSTRIES IN INDIAOverview

o The small scale industrial sector in India is divided into three categories: micro, small and medium. Together, they are known as Micro, Small and Medium Enterprises (MSME)

o Micro scale sector: industries in which in the investment in plant and machinery is under Rs. 25 lakh. For service enterprises, this limit is Rs. 10 lakh

o Small scale sector: industries in which the investment in plant and machinery is between Rs 25 lakh and Rs. 5 crore. For service enterprises, this limit is Rs 10 lakh – Rs 2 crore

o Medium scale sector: industries in which the investment in plant and machinery is between Rs. 5 crore and Rs 10 crore.For services enterprise, Rs. 2 crore – Rs. 5 crore

o The MSME sector in India employs about 60 million people, it is the second largest sector in terms of employment (after agriculture)

o MSME sector accounts for 45% of industrial output and 40% of exportso The MSME sector in India falls under the purview of the Ministry of Micro, Small and Medium

Enterprises. This Ministry was formed by the merger of the Ministry of Small Scale Industries and Ministry of Agro and Rural Industries in 2007

o Registration of an industrial unit as a micro, small or medium scale enterprise is voluntary. However, benefits such as power and tax subsidies can only be obtained if registered

o Registration is done by the Directorate or Commissioner of Industries for the respective states

GOVERNMENTAL ORGANISATIONS IN THE MSME SECTOR1. Micro, Small and Medium Enterprises Development Organisation (MSME-DO)

1. Established in 1954, headquarters New Delhi


2. Also known as the Office of the Development Commissioner MSME3. It is the apex body for assisting the government for formulating and implementing policies for the

MSME sector4. The MSME-DO provides facilities for managerial consulting, technology upgradation, quality and

infrastructure improvement, and human resources training and development5. Functions under the Ministry of MSME

2. National Small Industries Corporation (NSIC)1. Established in 1955, headquarters New Delhi2. Helps in the fostering, aiding and promotion of growth of MSME3. Focuses on the commercial aspects of operation4. Provides services in the areas of material procurement, product marketing, technology acquisition, improved

management practices etc5. Functions under the Ministry of MSME

3. Khadi and Village Industries Commission (KVIC)1. Established in 1956, headquarters New Delhi2. Provides employment opportunities in rural areas by promotion and development of khadi and village

industries3. Functions under the Ministry of MSME

4. Coir Board1. Established in 1953, headquarters Cochin2. First coir industry in India was established by James Darragh in Alleppey in 18593. Is responsible for formulation and implementation of schemes for the promotion and development of coir

industry in India4. Primary coir exports include coir mats, coir textiles and coir pith5. The Coir Board functions under the Ministry of MSME

5. Small Industries Development Bank of India (SIDBI)o Established in 1990o Objectives include the promotion, financing and development of small scale industrieso SIDBI was ranked among the top 30 development banks in the world by the The Banker,

Londono SIDBI functions under the Ministry of Finance

EDUCATIONAL INSTITUTES FOR THE MSME SECTORThe Government has established three national level Entrepreneurship Development Institutes. These

institutes develop training modules, undertake research and provide consultancy services for the MSME sector. All these institutes function under the Ministry of MSME

Institute Location

Established

National Institute for Micro, Small and Medium Enterprises (NIMSME)

Hyderabad 1960

National Institute of Entrepreneurship and Small Business Development (NIESBUD) Noida 1983

Indian Institute of Entrepreneurship (IIE) Guwahati 1993

Keywords: India, ias, upsc, civil service, study material, general studies, free

PROGRAMMES FOR THE MSME SECTORSome of the important programmes are highlighted in this section. For a complete list of schemes and

programmes see here and here

1. Cluster Development Initiative (CDI)


http://www.laghu-udyog.com/schemes/sidoscheme.htm

http://www.msme.gov.in/msme_schemes.htm

1. Clusters are defined as sectoral and geographical concentrations of enterprises that share common opportunities and threats

2. Clusters facilitate the development of inter-firm cooperation to promote local production and collective learning

3. Clusters account for over 60% of manufactured exports from India4. India has over 400 clusters of Small and Medium Enterprises (SME) and 2000 artisan clusters5. The CDI in India is supported by the Cluster Development Programmer of the United Nations

Industrial Development Organisation (UNIDO)6. The CDI is a programme implemented by the Ministry of MSME

2. National Manufacturing Competitiveness Programme (NMCP)1. Launched in 20052. Aims to increase competitiveness in the face of liberalization and moderation of tariff rates3. Implemented by the National Manufacturing Competitiveness Council functioning under the Ministry of

MSME3. Scheme of Fund for Regeneration of Traditional Industries (SFURTI)

1. Launched in 20052. Aims to achieve comprehensive development of clusters of khadi, village and coir industries3. Implemented by the KVIC and the Coir Board

4. Rajiv Gandhi Udyami Mitra Yojana (RGUMY)1. Launched in 20082. Aims to provide support and assistance to first-time entrepreneurs3. Helps in dealing with various procedural and legal formalities required for the establishment of the enterprise4. Implemented by the Ministry of MSME

INDUSTRIAL POLICIES AND PROGRAMMES IN INDIAOverview

o Industrial policies and programmes in India fall under the purview of the Ministry of Heavy Industry and Public Enterprises, and the Ministry of Commerce and Industry

o The Ministry of Heavy Industry and Public Enterprise contains two departments:o Department of Heavy Industrieso Department of Public Enterprises

o The Ministry of Commerce and Industry has two departments:o Department of Commerceo Department of Industrial Policy and Promotion

o Most industrial policies thus fall under the Department of Heavy Industries and the Department of Industrial Policy and PromotionCompulsory licensing

o The government requires compulsory licenses for certain specified industrieso This licensing is mainly on account of environmental and strategic concernso Industries requiring compulsory licensing includeo Alcoholic drinkso Cigars and cigarettes made from tobacco and tobacco substituteso Aerospace and defence equipmento All items related to use of atomic energyo Explosiveso Hazardous chemicals

o In addition to the above, certain items are reserved for manufacture by small scale industries only. Non-small scale industries are required to obtain licenses and undertake an export obligation of 50%

o Drugs and pharmaceuticals were taken off the compulsory list in 2005

INDUSTRIAL POLICIESAutomobile Policy

1. Objectives of the policy includeo Emerge as a global source for automobile components


o Establish an international hub for manufacture of small passenger cars, and a key centre for tractors and two-wheelers

o Ensure a transition to open trade at minimal risk to the economyo Assist development of vehicles using alternative energy sourceso Development of safety and environment standards at par with international standards

2. The Policy assures automatic approval for FDI up to 100%3. Used vehicles imported into the country to meet environmental standards4. The Policy is implemented by the Department of Heavy Industry, Ministry of Industry and Public

EnterprisesIndustrial Policy

o Launched in 1991o Implemented by Department of Industrial Policy and Promotion, Ministry of Commerce and Industryo Objectives includeo Maintain sustained growtho Enhance gainful employmento Optimal utilization of human resourceso Attain international competitiveness

o The Policy enshrines the liberalisation of industrial licensing policyo The Policy enshrines the establishment of Software Technology Parks (STP) and Electronic Hardware

Technology Parks (EHTP)FDI Policy

o India has one of the most liberal FDI policies among developing countrieso FDI up to 100% is allowed in the automatic route in all activities except the following, which require prior

approvalo Prohibited sectorso Industries that require a compulsory licenseo Proposals in which the foreign collaborator has an existing collaboration in the same fieldo Acquisition of shares in an Indian company in the financial services sector

o In the automatic route, no governmental approval is requiredo FDI in activities not covered under the automatic route, approval from Government in required. Such

approvals are granted by the Foreign Investment Promotion Boardo Sectors prohibited for FDI includeo Gambling and bettingo Lotteryo Atomic energyo Retail tradingo Agriculture (except Horticulture, animal husbandry) and plantations (except tea plantations)

North East Industrial and Investment Promotion Policy (NEIIP)o Launched in 2007o Implemented by Department of Industrial Policy and Promotion, Ministry of Commerce and Industryo Covers Arunachal Pradesh, Assam, Manipur, Mizoram, Nagaland, Meghalaya, Tripura and Sikkimo Major initiatives include subsidy for infrastructure expansion (25%), exemption from income tax and excise

duty (100%)o Industries covered by the Policy includeo Serviceso Bio technologyo Power generation

o The nodal agency for the Policy is the North East Industrial Development Finance Corporation (NEDFi)

INDUSTRIAL PROGRAMMES AND SCHEMESIndian Leather Development Programme (ILDP)

o Launched in 2007o Implemented by Department of Industrial Policy and Promotion, Ministry of Commerce and Industryo Objectives of the programme includeo Augmentation of raw material baseo Enhancement of capacity


o Addressing environmental concernso Global marketing of Indian leather

o Activities covered under the scheme includeo Modernisation of machineryo Hardware and IT solutionso Worker safetyo Environmental and waste management

Industrial Infrastructure Upgradation Schemeo Launched in 2001o Implemented by Department of Industrial Policy and Promotion, Ministry of Commerce and Industryo Central government to sponsor 75% of expenditureo Activities covered under the scheme includeo Physical infrastructure (such as road, water etc)o Effluent treatment, waste disposalo IT infrastructureo R&D infrastructureo Quality and benchmarking infrastructureo Marketing infrastructure

Industrial Park Schemeo Launched in 2002o Implemented by Department of Industrial Policy and Promotion, Ministry of Commerce and Industryo Envisages the establishment ofo Industrial model towns for the development of industrial infrastructureo Industrial parks with facilities for industrial purposeso Growth Centres, to act as hubs for industrial activity in the under developed areas

INDUSTRY IN INDIAAUTOMOBILE INDUSTRYOverview

o Indian automobile industry is the ninth largest in the worldo Annual production of over 2.3 million unitso India is the 4th largest exporter of automobiles in Asia, behind Japan, South Korea and Thailand

About Maruti Indiao Established as Maruti Udyog Limited in Feb 1981o Market leader, credited for bringing an automobile revolution in Indiao First Managing Direct was R.C. Bhargavao In May 2007, the GoI sold its share in the enterprise, and no longer has a stake in the companyo Two manufacturing facilities: Gurgaon and Manesar (near New Delhi)

About REVA Indiao Largest produced electric car in the worldo Introduced in India in 2001o Manufactured in Bangaloreo Travels 80 km on a 8 hour charge for a running cost of Rs 0.40 per km

Automobile companies and their bases

Company Headquarters In India

Audi Germany Aurangabad

BMW Germany Madras

Chevrolet USA Pune


Fiat Italy Pune (joint with Tata Motors), Madras

Ford USA Madras

Honda Japan Noida

Hyundai South Korea Madras

Mercedes-Benz Germany Pune

Mitsubishi Japan Thiruvallur (TN)

Nissan Japan Madras

Renault France Nasik (with Mahindra), Madras (with Nissan)

Skoda (owned by VW) Czech Republic Aurangabad

Toyota Japan Bangalore

Volkswagen Germany Pune

PHARMACEUTICALS INDUSTRYOverview

o India is in position to meet 70% of drug demand internallyo Important drugs produced in India include penicillin, flumeguine, pefloxacin, ramipiril etco Public sector companies in the pharmaceutical sector include Indian Drugs and Pharmaceuticals, Hindustan

Antibiotics Ltd.,o Over 60% of bulk drugs exported

History of pharmaceutical sectoro First pharmaceutical company in India was the Bengal Chemical and Pharmaceutical Works

established in Calcutta in 1930o First public sector pharma company was Hindustan Antibiotics Ltd. founded in Pimpri (Maharashtra) in

1954. It was also the first company in India to launch a recombinant DNA product, Hemax, in 1993o Patents Act 1970 made pharmaceutical sector unsuitable for foreign companies thereby encouraging Indian

companieso In Jan 1995, government amended the Patent Act to reinstate product patents for the first time since 1972o This was in compliance of the WTO’s Trade Related Aspects of Intellectual Property Rights (TRIPS)

agreementBiotechnology

o India’s biotech industry accounted for 2% of the $41 bn global biotech marketo India has the third largest biotech industry in the Asia-Pacific region and eleventh largest in the worldo Biotech sector is made up primarily of small startup firmo Government established Department of Biotechnology under the Ministry of Science and Education in 1986o Ministry of Science and Technology also launched Biotechnology Parks Society of India to provide tax breaks

and dedicated infrastructureo Government allows 100% FDI in biotechnology

Important names in the pharmaceutical sector

Company Key people Headquarters Notes


Ranbaxy Atul Sobti Gurgaon Largest pharmaceutical company in India

Dr. Reddy’sAnji Reddy

GV PrasadHyderabad Second largest in India

Nicholas Piramal Ajay Piramal Bombay

Cipla YK Hamied Bombay

Oldest in India

World’s largest producer of anti-retroviral (AIDS) drugs

Pioneered AIDS treatment drug (now standard)

BioconKiran Mazumdar-

ShawBangalore India’s leading biotechnology company

Serum Institute of Inida

Cyrus Poonawalla Pune

Fifth largest vaccine maker in the World

World’s largest maker of measles and DTP vaccines

Serum vaccines immunize 50% of world’s children

Currently manufacturing vaccine for swine flu

OTHER INDUSTRIES1. Steel industryo India is the 8th largest producer of steel in the worldo It is the 2nd largest producer of sponge irono However, India continues to be a heavy importer of steel from abroado Tata Steel in Jamshedpur was the first steel plant in India and Asia (1907)o First government-established steel plant in India in Rourkela (1953) in collaboration with

Germanyo India is the fifth largest producer of steel in the world (China is the first)o Bhilai steel plant is the only producer of steel rails in India

2. Fertilizer industryo India is the 3rd largest producer of nitrogenous fertilizers in the worldo However, India still imports substantial amounts of fertilizerso first fertilizer plant was a Single Super Phosphate plant at Ranipat (TN) in 1906

3. Textile Industryo It is the single largest industry in Indiao Employs 17% of the workforceo Accounts for 20% of India’s industrial output and 30% of exportso Indian textile industry is the second largest in the world (behind China)o India is one of the largest producers of cotton in world o

AGRICULTURE IN INDIAHighlights

o India is ranked second worldwide in farm outputo Agriculture accounts for 16.6% of GDPo Agriculture employs 60% of the workforceo India has the world’s largest cattle populationo Largest producer of milk, cashews, coconut, tea, ginger, turmeric and black peppero Second largest producer of wheat, rice, sugar, groundnut and inland fisho Third largest producer of tobaccoo India accounts for 10% of world fruit production


o Largest producer of banana and sapotaKeywords

Green Revolution in Indiao Use of high yield seeds along with increased used of fertilizers and irrigation leading to dramatic increase in

productiono Implemented mainly in Punjab, Haryana, western UP 1965-1980o Increased food grain production by 4 times, milk 6 times, eggs 27 timeso Requires large investment in equipment and enormous quantities of watero Padma Vibhushan awarded to Dr. Norman Borlaug in 2006 for instituting the Green Revolution. He is

considered the Father of the Green Revolution. He also won the Nobel Peace Prize in 1970

AGRICULTURAL CREDIT AND INSURANCEKisan Credit Card

o Launched in 1998 to provide short-term credito Simple, flexible procedureso Helps buy seeds and fertilizers at farmer’s convenienceo Operated by major nationalized bankso Includes personal accident insurance coverage

K

National Agricultural Insurance Scheme (NAIS) / Rashtriya Krishi Bima Yojana (RKBY)o Launched in 2008o Provides insurance coverage in the event of failure of crop due to natural causes, pests and diseaseso Covers food crops, oilseeds, sugarcane, cotton and potatoo Joint programme of Central and State governmentso 50% subsidy for small and medium farmerso Implemented by Agriculture Insurance Company of India (combination of NABARD and other nationalized

insurance companies)Keywords: civil services, study material, general studies, Indian economy

Livestock Insurance Schemeo Launched in 2005o Provides protection to farmers and cattle rearers against loss due to animal deatho Covers crossbred and high yielding cattle and buffaloeso Fully funded by the Central governmento 50% subsidyo Implemented by livestock development boards of each state

Keywords: civil services, study material, general studies, Indian economy

Rainfall Insurance / Varsha Bimao Launched in 2004o Provides protection against anticipated shortfall in crop yield due to deficit rainfallo Implemented by Agriculture Insurance Company of India Ltd. (AIC)


Weather Based Crop Insurance Scheme (WBCIS)o Launched in 2003o Provides protection against loss due to adverse weather conditions including rainfall, frost, temperature etco Jointly funded by Central and State governmentso Up to 50% subsidy


Rainfall Insurance Scheme for Coffee Growers (RISC)


o Launched in 2009o Protects against loss due to deficit rainfall during blossom and backing periods and excess rains during

monsoon periodo Covers Robusta/Arabica variety of coffee in Karnataka, Kerala, TNo Funded by the Coffee Board (Central government)o 50% subsidyo Implemented by AIC

AGRICULTURAL SCHEMES AND PROGRAMMESAll programmes fall under the purview of the Ministry of Agriculture unless otherwise noted.

National Food Security Missiono Launched in Aug 2007o Objectives:o To increase production of wheat, rice and pulses on a sustainable basis to ensure food security of the

countryo Restore soil fertilityo Employment generationo Enhance farm-level economy

o Seeks to disseminate improved technologies and farm practiceso Central Govt. provides 50% subsidyo Three components: NFSM Rice, NFSM Wheat, NFSM Pulseso Targeted increase in production: Rice 10 million tonnes, Wheat 8 m t, Pulses 2 m to Structure:o Chairman: Minister of Agricultureo Members: Secretaries of Dept of Agriculture and Cooperation, Finance, Adviser Planning Commission,

Agriculture CommissionerKeywords:, civil services, study material, general studies, Indian economy

National Horticulture Missiono Launched in 2005o Objective: provide growth of horticulture and enhance horticulture productiono Promotes use of technology to farmers for high-tech horticulture cultivationo Promotes diversification from traditional crops to plantations, orchards, vineyards etco Funded by Central (85%) and State (15%) governmentso Structureo Chairman: Minister of Agricultureo Members: Ministers of Commerce, Health, Finance, Food Processing, Industries, Panchayati Raj, Science &

Technology, Rural DevelopmentKeywords:

civil services, study material, general studies, Indian economy

National Agriculture Development Program (NADP) / Rashtriya Krishi Vikas Yojana (RKVY)o Launched in 2007o Objectives:o To incentivise states to increase their investment in agricultureo To provide flexibility and autonomy to states in agricultural planningo To maximise returns for farmerso To reduce yield gaps in important crops

o Fully funded by the Central government, executed by the State governmentso Areas of focuso Integrated development of food cropso Agriculture mechanizationo Soil health and productivityo Horticultureo Animal husbandryo Use of technology

Keywords: ias, upsc, civil services, study material, general studies, Indian economy


Agricultural Debt Waiver and Debt Relief Scheme 2008o Launched in 2008o Covers direct loans by certain commercial banks, rural banks and cooperativeso For small and marginal farmers the entire eligible amount shall be waivedo For other farmers there will be a one time settlement under which the farmer will be relieved of 25% of the loan

amounto Implemented by NABARD and RBI


Agri Clinics and Agri Business Centres Schemeo Launched in 2002o Agriclinics provide expert services and advice to farmers on cropping practices, technology dissemination,

crop protection, market trends, clinical services for animal health etc.o Agribusiness

Centres provide input supply, farm equipment on hire etco Objectiveso To make available supplementary sources of input and services to farmerso To provide gainful employment to agriculture graduateso To create agriculture entrepreneurs

o Example projects:o Soil and water testingo Pest control serviceso Micro irrigation systemso Seed processing unitso Hatcheries, apiarieso Setting up of IT kiosks in rural areas

o Financial support from NABARDKeywords: ias, upsc, civil services, study material, general studies, Indian economy

National Commission on Farmerso Constituted in 2004o Chairman Dr. M.S. Swaminathan (instrumental in Green Revolution in India)o Submitted final report in 2006o Suggests measure to enhance productivity, profitability and sustainability of farming in different regions of the

countryo Suggests measures to attract and retain youth in the agriculture sectoro Suggests medium term strategy for food and nutrition securityo Resulted in the National Policy for Farmers – 2007


National Policy for Farmers – 2007o Focus on economic well being of farmers rather than just productiono Efficiency of water use and maximizing yield per unit of watero Drought code, flood code and good weather codeo Use of technology to increase productivityo Agricultural credit and insuranceo Support services for womeno Setting up of farm schoolso Gyan Chaupals to harness the help of ITo Community foodgrain bankso National social security system for farmerso Cabinet Committee on Food Security to be constituted

Five Year Plans in IndiaFive Year Plan Duration Focus Highlights of the plan period


I 1951 – 1956 Agriculture o Rapid population growtho Bhakra and Hirakud damso Five IIT’s establishedo UGC established

II 1956 – 1961 Industrialization

Socialism

o Bhilai, Durgapur, Rourkela steel millso Atomic Energy Commission establishedo Tata Institute of Fundamental Research

III 1961 – 1966 Defence

Price stabilization

o India-China war 1962o India-Pakistan war 1965o Panchayat elections startedo State electricity and education boards formed

IV 1969 – 1974 Growth

Stability

Self-reliance

o India-Pakistan war 1971o Green Revolutiono Bank nationalizationo Pokhran nuclear test

V 1974 – 1978 Poverty alleviation

Self-reliance

o Govt. enters power generation and transmission

VI 1980 – 1985 Industrialization

Information Tech.

o National highways launchedo Price controls eliminatedo Family planning expanded

VII 1985 – 1989 Increasing employment

Growth

Modernisation

No FYP 1989-1992. Annual plans 1990-1992

Balance of payments crisis 1991

Launch of economic reforms under P.V. Narasimha Rao

VIII 1992 – 1997 Human development

Industrial modernisation

Population control

o India joins WTO Jan 1995

IX 1997 – 2002 Employment

Food security

Continued liberalization

X 2002 – 2007 Education

Health

Environment

o GDP growth over 8%

XI 2007 – 2012 Education

Health

Environment

Infrastructure

o Currently ongoing

Land Systems and Reforms in IndiaLand Systems

1. Zamindari Systemo Government collect land tax through the intermediary of a zamindar


o Land assigned to zamindar who bid the highest tax rate. Farmers lose ownership of lando Farmers pay tax to zamindar in casho No remissions granted due to lost produce (due to weather etc)o Zamindari system implemented primarily in North India, especially Bengal, U.P., and Central Provinces and

Beraro Attributed as a consequence of the Permanent Settlement under Lord Cornwallis

2. Ryotwari Systemo Government collects land tax directly from farmers (called “ryots”)o Land belongs to farmer, farmer pays fixed amount to governmento Remissions granted lost produce (due to weather etc)o Ryotwari system implemented in Madras, Bombay, Assam and Burmao Attributed to Sir Thomas Munro, Governor of Madras

Land Reforms1. Land Reforms Act 1955o All share croppers to have permanent use rightso Such rights to be inheritableo Croppers to pay legal share of crop to landlord

2. Land reforms in Keralao Introduced Land Reforms Ordinance in 1957o Set absolute ceiling on land ownership. Tenants and hut dwellers receive claim on excess lando Fixity of tenure and protection from eviction

3. Land reforms in West Bengalo Initiated Operation Barga in 1978o Registered sharecroppers (”bargadars”) and educated them about cultivation rightso Bargadar rights made hereditary. Bargadars to receive fair share of crop (50-75%)o Land Ceiling Act: redistribution of ceiling-surplus land


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mohitsharmagk.files.wordpress.com · Web viewPOVERTY ALLEVIATION IN INDIA. Overview. Poverty is widespread in India. India has about 33% of the world’s poor. 42% of India’s