Adda Eco

STUDY NOTES OF ECONOMIC & SOCIAL ISSUE FOR

RBI GRADE B 2017 PHASE 2 EXAM

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INDEX Contents PREFACE ..................................................................................................................................... 4 A Brief on India: Important Facts to Learn ..................................................................... 5 Chapter 1: Growth and Development ............................................................................... 7 Chapter 2: Measurement of growth: National Income and per capita income ... 9 Chapter 3: Poverty Alleviation and Employment Generation in India................ 13 Chapter 4: Sustainable Development ............................................................................. 16 Chapter 5: Economic Reforms in India........................................................................... 20 Chapter 6: Industrial and Labour Policy ....................................................................... 25 Chapter 7: Monetary and Fiscal Policy ........................................................................... 27 Chapter 8: Privatization/Disinvestment ....................................................................... 34 Chapter 9: Role of Economic Planning. .......................................................................... 36 Chapter 10: Globalization-Opening up of the Indian Economy ............................. 48 Chapter 11: Balance of Payments, Export-Import Policy......................................... 49 Chapter 12: International Economic Institutions – IMF & World Bank ............ 53 Chapter 13: Human Development – Social Sectors in India, Health and Education. ................................................................................................................................ 56 Chapter 14: A Brief on Economic Survey 2016-17 .................................................... 62 Chapter 15: FDI in India ...................................................................................................... 76 Chapter 16: Financial Statements & Ratios & Price Of Bond .................................. 78 Chapter 17: PRICE OF BOND AND NPV ........................................................................... 90 Chapter 17: Indian Economy Current Affairs .............................................................. 93 Chapter 19: Government Schemes Launched Recently ......................................... 101

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PREFACE Banking examinations have evolved a lot from 2016, with changes in pattern now bank recruitment exams are dynamic in lieu of their conventional hold. During this year we have evolved the study material for all bank examinations weather it is SBI PO, SBI Clerk, IBPS PO, IBPS Clerk, IBPS RRB, NIACL, NICL, RBI Grade B Officer and Assistant and now we provide you the new edition which caters to the need for ever-progressing demands and pattern of all Banking recruitment examinations. The aim of this book is to help students learn and understand the basics and concepts related to Socio and Economic Studies which will help them to maximize their scores in the upcoming RBI Officer Grade-B Phase-II competitive examination. Overall the book is designed and categorised into proper sections of topics expected to be asked in the RBI Grade B exam with almost every topic explained in a simple manner to reinforce the concepts in student’s mind covering all important finance and management topics that are being asked in the current scenario of bank exams. The objective is to provide students with the study material for Socio and Economic section for RBI Grade-B Phase-II examination and encourage them to be prepared to face toughest questions with a proper strategy. The pattern and topics included in this edition are at par with the previous year pattern and new difficulty level to equip candidates with basic knowledge of what to expect in RBI Grade-B 2017. Our ultimate aim was to help students develop de rigueur skills for success with proper approach. We hope that our readers will appreciate our efforts and this book. Any comments or suggestion for further improvements are welcome wholeheartedly.

Team Adda247

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A Brief on India: Important Facts to Learn Demographic profile Population: 1,326,801,000 Population Growth Rate: 1.2 per cent (2015) Literacy: Total population: 74.04 per cent (provisional data-2011 census) Male: 82.14 per cent Female: 65.46 per cent Life expectancy: 66.9 years (men), 69.9 years (women) (2015 – WHO 2016 Report) Economic Profile • Gross Domestic Product (GDP) Composition by Sector (2016 Estimate) o Services: 45.4 per cent o Industry: 29.8 per cent o Agriculture: 16.5 per cent • Forex Reserves: US$ 366.78 billion as on March 17, 2017. • Gross Fixed Capital Formation (GFCF) at current prices: Gross Fixed Capital Formation (GFCF) at current prices stood at Rs 8,797.63 billion (US$ 135.36 billion) in the fourth quarter of 2016. • Value of Exports: India's exports stood at US$ 29.23 billion in March 2017. • Share of Top Investing Countries FDI Equity Inflows: Mauritius (34 per cent), Singapore (16 per cent), UK (8 per cent), Japan (8 per cent), USA (6 per cent), Netherlands (6 per cent) (as in December 2016) • Major Sectors Attracting Highest FDI Equity Inflows: Services Sector (18 per cent), Construction Development (8 per cent), Computer Software and Hardware (7 per cent), 5

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Telecommunications (7 per cent), Automobile (5 per cent), Drugs and Pharmaceuticals (4 per cent), Chemical (4 per cent), Trading (4 per cent) (as in December 2016) Transportation in India Airports: Airports Authority of India (AAI) manages 125 airports in the country, which includes 18 international aerodromes, 78 domestic ones and 26 civil enclaves at defence airfields. ailways: The Indian Railways network is spread over 108,706 km, with 12,617 passenger and 7,421 freight trains each day from 7,172 stations plying 23 million travellers and 3 million tonnes (MT) of freight daily. Roadways: India’s road network of 4.87 million km is the second largest in the world. With the number of vehicles growing at an average annual pace of 10.16 per cent, Indian roads carry about 65 per cent of freight and 85 per cent of passenger traffic. Waterways: 14,500 km

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Chapter 1: Growth and Development Economic Growth Continuous increase in the total volume of goods and services produced by a nation over a long period of time. Economic Development = Economic Growth + desired changes in the distribution of national income and other technical and institutional changes. If economic growth: helps in increasing the standard of living i.e. the per capita real income helps in eliminating poverty, unemployment & inequalities of income leads to implementation of better techniques of production positive change towards work and life, etc; then it has led to economic development. Thus, Economic Development=Economic Growth + Qualitative changes in the economy Qualitative changes in economy includes: improvement in the level of living reduction in inequality rise in efficiency improvement in techniques fast growth of industrial sector positive changes in attitudes generating institutional changes development of technology, etc.

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Points on Indian Economy Low level of Income Predominance of Agriculture Capital Deficiency Technological Backwardness Inadequate infrastructural facilities High rate of growth of population High rate of illiteracy . High Infant Mortality rate Tradition bound attitude towards work and life

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Chapter 2: Measurement of growth: National Income and per capita income Economic growth is the change- increase or decrease, in the value of goods and services produced by an economy. If it is positive, it means an increase in the output and the income of a country. Measuring Growth Measures of national income and output are used in economics to estimate the value of goods and services produced in an economy. Some of the common measures are Gross National Product (GNP) and Gross Domestic Product (GDP). National Income Accounting GDP is defined as the total market value of all final goods and services produced within the country in a given period of time usually a calendar year or financial year. GDP can be real or nominal. Nominal GDP refers to the current year production of final goods and services valued at current year prices. Real GDP refers to the current year production of goods and service valued all base year prices. Base year prices are Constant prices. In estimating GDP, only final marketable goods and services are considered. Gains from resale are excluded but the services provided by the agents are counted. Similarly, transfer payments (pensions, scholarships etc) are excluded as there is income received but no good or service produced in return. Market Price and Factor Cost Market price refers to the actual transacted price and it includes indirect taxes; custom duty, excise duty, sales tax, service tax etc. Factor cost refers to the actual cost of the Various factors of 9

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production includes government grants and subsidies but it excludes indirect taxes. Relationship between market price and factor cost. GNP at factor cost = GNP at market price - indirect taxes + subsidies GDP at factor cost = GDP at market price - indirect taxes + subsidies Factor Costs Factor costs are the actual production costs at which goods and services are produced by the firms and industries in an economy. They are really the costs of all the factors of production such as land, labour, capital, energy, raw materials like steel etc. that are used to produce & given quantity of output in an economy. Transfer Payments Transfer payment refers to payments made by government to individuals for which there no economic activity is produced in return by these individuals. Examples of transfer are scholarship, pension. GDP/GNP Calculation: Three Approaches There are three different ways to measure GDP: Product Method, Income Method and Expenditure Method. 1. The Product/Output Method: In this method, the value of all goods and services produced in different industries during the year is added up. This is also known as the value added method to GDP or GDP at factor cost by industry of origin. The following items are included in India in this: 10

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agriculture and allied services; mining; manufacturing, construction, electricity, gas and water supply; transport, communication and trade; banking and insurance, real estates and ownership of dwellings and business services; and public administration and defense and other services (or government services). In other words, it is the sum of gross value added. 2. The Income Method: The people of a country who produce GDP during a year receive incomes from their work. Thus GDP by income method is the sum of all factor incomes: Wages and Salaries (compensation of employees) + Rent + Interest + Profit. 3. Expenditure Method: This method focuses on goods and services produced within the country during one year. GDP by expenditure method includes: (1) Consumer expenditure on services and durable and nondurable goods (C), (2) Investment in fixed capital such as residential and nonresidential building, machinery, and inventories (I), (3) Government expenditure on final goods and services (G), (4) Export of goods and services produced by the people of country (X), (5) Less imports (M). That part of consumption, investment and government expenditure which is spent on imports is subtracted from GDP. Similarly, any imported component, such as raw materials, which is used in the manufacture of export goods, is also excluded. Thus GDP by expenditure method at market prices = C+ I + G + (X – M), where (X-M) is net export which can be positive or negative. 11

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Net Domestic Product (NDP): NDP is the value of net output of the economy during the year. The value of this capital consumption is some percentage of gross investment which is deducted from GDP. Thus Net Domestic Product = GDP at Factor Cost – Depreciation. Final Goods Final goods are goods that are ultimately consumed rather than used in the production of another good. Differences between GDP and GNP The two are related. The difference is that GNP includes net foreign income. GNP adds net foreign investment income compared to GDP. GDP shows how much is produced within the boundaries of the country by both the citizens and the foreigners. It is the market value of all the output produced in the territory of a nation in one year. In contrast, GNP is a measure of the value of the output produced by the “nationals” of a country- both with-in the geographical boundaries and outside. NNP = GNP - Depreciation National Income is calculated by deducting indirect taxes from Net National Product and adding subsidies. National Income (NI) is the NNP at factor cost. NI = NNP - Indirect Taxes + Subsidies Per Capita Income Per Capita Income is per capita GDP: GDP divided by mid year population of the corresponding year. 12

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Chapter 3: Poverty Alleviation and Employment Generation in India The Indian Constitution and five-year plans state social justice as the primary objective of the developmental strategies of the government. The First Five Year Plan (1951-56), “the urge to bring economic and social change under present conditions comes from the fact of poverty and inequalities in income, wealth and opportunity”. The Second Five Year Plan (1956-61) also pointed out that “the benefits of economic development must accrue more & more to the relatively less privileged classes of society”. The government’s approach to poverty reduction was of three dimensions. The first one is growth-oriented approach. It is based on the expectation that the effects of economic growth — rapid increase in gross domestic product and per capita income — would spread to all sections of society and will trickle down to the poor sections also. It was felt that rapid industrial development and transformation of agriculture through green revolution in select regions would benefit the underdeveloped regions and the more backward sections of the community. Expanding self-employment programmes and wage employment programmes are being considered as the major ways of addressing poverty. Examples of self-employment programmes are Rural Employment Generation Programme (REGP), Prime Minister’s Rozgar Yojana (PMRY) and Swarna Jayanti Shahari Rozgar Yojana (SJSRY). The first programme aims at creating self-employment opportunities in urban areas. The Khadi and Village Industries Commission was implementing it. Under this 13

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programme, one can get financial assistance in the form of bank loans to set up small industries. The educated unemployed from low-income families in rural and urban areas can get financial help to set up any kind of enterprise that generates employment under PMRY. SJSRY mainly aims at creating employment opportunities—both self-employment and wage employment— in urban areas. Swarnajayanti Gram Swarozgar Yojana (SGSY) has now been restructured as National Rural Livelihoods Mission (NRLM). A similar programme called National Urban Livelihoods Mission has also been in place for urban poor. In August 2005, the Parliament passed a new Act to provide guaranteed wage employment to every rural household whose adult volunteer is to do unskilled manual work for a minimum of 100 days in a year. This Act is known as Mahatma Gandhi National Rural Employment Guarantee Act. Under this Act all those among the poor who are ready to work at the minimum wage can report for work in areas where this programme is implemented. The third approach to addressing poverty is to provide minimum basic amenities to the people. India was among the pioneers in the world to envisage that through public expenditure on social consumption needs — provision of food grains at subsidised rates, education, health, water supply and sanitation—people’s living standard could be improved. Programmes under this approach are expected to supplement the consumption of the poor, create employment opportunities and bring about improvements in health and education. Three major programmes that aim at improving the food and nutritional status of the poor are Public Distribution System, Integrated Child Development Scheme and Midday Meal Scheme. Pradhan 14

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Mantri Gram Sadak Yojana, Pradhan Mantri Gramodaya Yojana, Valmiki Ambedkar Awas Yojana are also attempts in the same direction. Also, The government also has a variety of other social security programmes to help a few specific groups. National Social Assistance Programme is one such programme initiated by the central government. Under this programme, elderly people who do not have anyone to take care of them are given pension to sustain themselves. Poor women who are destitute and widows are also covered under this scheme. The government has also introduced a few schemes to provide health insurance to poor people. Note: The per capita consumption expenditure level which meets the average per capita daily requirement of 2,400 calories in rural areas and 2,100 calories in urban areas, along with a minimum of nonfood expenditure, is called poverty line or absolute poverty.

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Chapter 4: Sustainable Development "Development that meets the needs of the present without compromising the ability of future generations to meet their own needs, improved living standard for all, better protected and managed ecosystem and a safer, more prosperous future ". On 1 January 2016, the 17 Sustainable Development Goals (SDGs) of the 2030 Agenda for Sustainable Development — adopted by world leaders in September 2015 at an historic UN Summit — officially came into force. Over the next fifteen years, with these new Goals that universally apply to all, countries will mobilize efforts to end all forms of poverty, fight inequalities and tackle climate change, while ensuring that no one is left behind. The SDGs, also known as Global Goals, build on the success of the Millennium Development Goals (MDGs) and aim to go further to end all forms of poverty. The new Goals are unique in that they call for action by all countries, poor, rich and middleincome to promote prosperity while protecting the planet. They recognize that ending poverty must go hand-in-hand with strategies that build economic growth and addresses a range of social needs including education, health, social protection, and job opportunities, while tackling climate change and environmental protection.

The 17 SDGs are as follows:

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Goal 1: No Poverty No Poverty - End poverty in all its forms everywhere Goal 2: Zero Hunger Zero Hunger - End hunger, achieve food security and improved nutrition and promote sustainable agriculture Goal 3: Good Health and Well-being Good Health and Well-being - Ensure healthy lives and promote well-being for all at all ages. Goal 4: Quality Education Quality Education - Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all Goal 5: Gender Equality Gender Equality - Achieve gender equality and empower all women and girls. Goal 6: Clean Water and Sanitation 17

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Clean Water and Sanitation - Ensure availability and sustainable management of water and sanitation for all. Goal 7: Affordable and Clean Energy Affordable and Clean Energy - Ensure access to affordable, reliable, sustainable and modern energy for all. Goal 8: Decent Work and Economic Growth Decent Work and Economic Growth - Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all. Goal 9: Industry, Innovation and Infrastructure Industry, Innovation and Infrastructure - Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation. Goal 10: Reduced Inequalities Reduced Inequalities - Reduce income inequality within and among countries. Goal 11: Sustainable Cities and Communities Sustainable Cities and Communities - Make cities and human settlements inclusive, safe, resilient and sustainable. Goal 12: Responsible Consumption and Production Responsible Consumption and Production - Ensure sustainable consumption and production patterns. Goal 13: Climate Action 18

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Climate Action - Take urgent action to combat climate change and its impacts by regulating emissions and promoting developments in renewable energy. Goal 14: Life Below Water Life Below Water - Conserve and sustainably use the oceans, seas and marine resources for sustainable development. Goal 15: Life on Land Life on Land - Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss. Goal 16: Peace, Justice and Strong Institutions Peace, Justice and Strong Institutions - Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels. Goal 17: Partnerships for the Goals Partnerships for the Goals - Strengthen the means of implementation and revitalize the global partnership for sustainable development.

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Chapter 5: Economic Reforms in India India agreed to the conditionalities of World Bank and IMF and announced the New Economic Policy (NEP). NEP consisted of wide ranging economic reforms. The thrust of the policies was towards creating a more competitive environment in the economy and removing the barriers to entry and growth of firms. This set of policies can broadly be classified into two groups: the stabilisation measures and the structural reform measures. In simple words, this means that there was a need to maintain sufficient foreign exchange reserves and keep the rising prices under control. On the other hand, structural reform policies are long-term measures, aimed at improving the efficiency of the economy and increasing its international competitiveness by removing the rigidities in various segments of the Indian economy. The government initiated a variety of policies which fall under three heads viz., liberalisation, privatisation and globalisation. Reforms Under Liberalisation Deregulation of Industrial Sector: In India, regulatory mechanisms were enforced in various ways: (i) industrial licensing under which every entrepreneur had to get permission from government officials to start a firm, close a firm or to decide the amount of goods that could be produced (ii) private sector was not allowed in many industries (iii) some goods could be produced only in small scale industries and (iv) controls on price fixation and distribution of selected industrial products. 20

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The reform policies introduced in and after 1991 removed many of these restrictions. Industrial licensing was abolished for almost all but product categories — alcohol, cigarettes, hazardous chemicals, industrial explosives, electronics, aerospace and drugs and pharmaceuticals. The only industries which are now reserved for the public sector are defence equipments, atomic energy generation and railway transport. Financial Sector Reforms: Financial sector includes financial institutions such as commercial banks, investment banks, stock exchange operations and foreign exchange market. The financial sector in India is regulated by the Reserve Bank of India (RBI). The RBI decides the amount of money that the banks can keep with themselves, fixes interest rates, nature of lending to various sectors etc. One of the major aims of financial sector reforms is to reduce the role of RBI from regulator to facilitator of financial sector. The reform policies led to the establishment of private sector banks, Indian as well as foreign. Foreign Institutional Investors (FII) such as merchant bankers, mutual funds and pension funds are now allowed to invest in Indian financial markets. Tax Reforms Tax reforms are concerned with the reforms in government’s taxation and public expenditure policies which are collectively known as its fiscal policy. There are two types of taxes: direct and indirect. Direct taxes consist of taxes on incomes of individuals as well as profits of business enterprises. Another component of reforms in this area is simplification. In order to encourage better compliance on the part of taxpayers many procedures have been simplified and the rates also substantially lowered. 21

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Foreign Exchange Reforms The first important reform in the external sector was made in the foreign exchange market. In 1991, as an immediate measure to resolve the balance of payments crisis, the rupee was devalued against foreign currencies. This led to an increase in the inflow of foreign exchange. It also set the tone to free the determination of rupee value in the foreign exchange market from government control. Trade and Investment Policy Reforms Liberalisation of trade and investment regime was initiated to increase international competitiveness of industrial production and also foreign investments and technology into the economy. The aim was also to promote the efficiency of the local industries and the adoption of modern technologies. In order to protect domestic industries, India was following a regime of quantitative restrictions on imports. This was encouraged through tight control over imports and by keeping the tariffs very high. These policies reduced efficiency and competitiveness which led to slow growth of the manufacturing sector. The trade policy reforms aimed at (i) dismantling of quantitative restrictions on imports and exports (ii) reduction of tariff rates and (iii) removal of licensing procedures for imports. Privatisation It implies shedding of the ownership or management of a government owned enterprise. Government companies are converted into private companies in two ways 22

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(i) by withdrawal of the government from ownership and management of public sector companies and or (ii) by outright sale of public sector companies. Privatisation of the public-sector enterprises by selling off part of the equity of PSEs to the public is known as disinvestment. The purpose of the sale, according to the government, was mainly to improve financial discipline and facilitate modernisation. It was also envisaged that private capital and managerial capabilities could be effectively utilised to improve the performance of the PSUs. GLOBALISATION Globalisation is generally understood to mean integration of the economy of the country with the world economy, it is a complex phenomenon. It is an outcome of the set of various policies that are aimed at transforming the world towards greater interdependence and integration. It involves creation of networks and activities transcending economic, social and geographical boundaries. Globalisation attempts to establish links in such a way that the happenings in India can be influenced by events happening miles away. It is turning the world into one whole or creating a borderless world. Outsourcing: This is one of the important outcomes of the globalisation process. In outsourcing, a company hires regular service from external sources, mostly from other countries, which was previously provided internally or from within the country (like legal advice, computer service, advertisement, security — each provided by respective departments of the company). 23

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As a form of economic activity, outsourcing has intensified, in recent times, because of the growth of fast modes of communication, particularly the growth of Information Technology (IT). Sum Up In the domestic economy, major reforms were undertaken in the industrial and financial sectors. Major external sector reforms included foreign exchange deregulations and import liberalisation. Globalisation is the outcome of the policies of liberalisation and privatisation. It means an integration of the economy of the country with the world economy. Outsourcing is an emerging business activity. The objective of the WTO is to establish a rule based trade regime to ensure optimum utilisation of world resources.

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Chapter 6: Industrial and Labour Policy Industrial Policy The Industrial Policy Resolution of 1948 defined the broad contours of the policy delineating the role of the State in industrial development both as an entrepreneur and authority. This was followed by comprehensive enactment of Industries (Development & Regulation) Act, 1951 (referred as IDR Act) that provides for the necessary framework for implementing the Industrial Policy and enables the Union Government to direct investment into desired channels of industrial activity inter alia through the mechanism of licensing keeping with national development objectives and goals. The main objectives of the Industrial Policy of the Government are (i) to maintain a sustained growth in productivity; (ii) to enhance gainful employment; (iii) to achieve optimal utilisation of human resources; (iv) to attain international competitiveness; and (v) to transform India into a major partner and player in the global arena. To achieve these objectives, the Policy focus is on deregulating Indian industry; allowing freedom and flexibility to the industry in responding to market forces; and providing a policy regime that facilitates and fosters growth. Economic reforms initiated since 1991 envisages a significantly bigger role for private initiatives. INDIAN LABOR POLICY HIGHLIGHTS It has been evolving towards maintaining industrial peace as well as promoting labor welfare and provides for, a framework for employee-employer relationship conciliation mechanism for high investment projects creating new jobs 25

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social security for workers long term settlements prioritization of fund allocation labor reforms amendments to labor judiciary amendments to industrial dispute Act more labor sectors covered under minimum wages Act enforcement of child labor Act enhance medical facilities for workers providing robust industrial training habilitation for displaced workers modern functioning of employment exchanges

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Chapter 7: Monetary and Fiscal Policy Monetary Policy What is Monetary Policy? Monetary policy refers to the policy of the central bank with regard to the use of monetary instruments under its control to achieve the goals specified in the Act. Reserve Bank of India (RBI) is vested with the responsibility of conducting monetary policy. This responsibility is explicitly mandated under the Reserve Bank of India Act, 1934. Objective of Monetary Policy The primary objective is to maintain price stability while keeping in mind the objective of growth. In May 2016, RBI Act, 1934 was amended to provide a statutory basis for the implementation of the flexible inflation targeting framework. The amended RBI Act also provides for the inflation target to be set by the Government of India, in consultation with the Reserve Bank, once in every five years. Accordingly, the Central Government has notified in the Official Gazette 4 per cent Consumer Price Index (CPI) inflation as the target for the period from August 5, 2016 to March 31, 2021 with the upper tolerance limit of 6 per cent and the lower tolerance limit of 2 per cent. The monetary policy framework aims at setting the policy (repo) rate based on an assessment of the current and evolving macroeconomic situation; and modulation of liquidity conditions to anchor money market rates at or around the repo rate. What is MPC? Section 45ZB of the amended RBI Act, 1934 provides for an empowered six-member monetary policy committee (MPC) to be 27

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constituted by the Central Government. The Members of the current MPC are as follows: 1. Governor of RBI – Chairperson, ex officio; 2. Deputy Governor of RBI, in charge of Monetary Policy – Member, ex officio; 3. One officer of RBI to be nominated by the Central Board – Member, ex officio; 4. Shri Chetan Ghate, Professor, Indian Statistical Institute (ISI) – Member; 5. Professor Pami Dua, Director, Delhi School of Economics – Member; and 6. Dr. Ravindra H. Dholakia, Professor, Indian Institute of Management, Ahmedabad – Member. (Members referred to at 4 to 6 above, will hold office for a period of four years or until further orders, whichever is earlier.) The MPC determines the policy interest rate required to achieve the inflation target. RBI's Monetary Policy Department (MPD) assists the MPC in formulating the monetary policy. Financial Markets Operations Department (FMOD) operationalises the monetary policy, mainly through day-to-day liquidity management operations. Instruments of Monetary Policy Repo Rate: The (fixed) interest rate at which the Reserve Bank provides overnight liquidity to banks against the collateral of government and other approved securities under the liquidity adjustment facility (LAF). Reverse Repo Rate: The (fixed) interest rate – currently 50 bps below the repo rate – at which the Reserve Bank absorbs liquidity, 28

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on an overnight basis, from banks against the collateral of eligible government securities under the LAF. The LAF consists of overnight as well as term repo auctions. The aim of term repo is to help develop the inter-bank term money market, which in turn can set market based benchmarks for pricing of loans and deposits, and hence improve transmission of monetary policy. Marginal Standing Facility (MSF): A facility under which scheduled commercial banks can borrow additional amount of overnight money from the Reserve Bank by dipping into their Statutory Liquidity Ratio (SLR) portfolio up to a limit [currently two per cent of their net demand and time liabilities deposits (NDTL)] at a penal rate of interest, currently 50 basis points above the repo rate. This provides a safety valve against unanticipated liquidity shocks to the banking system. Bank Rate: It is the rate at which the Reserve Bank is ready to buy or rediscount bills of exchange or other commercial papers. The Bank Rate is published under Section 49 of the Reserve Bank of India Act, 1934. This rate has been aligned to the MSF rate and, therefore, changes automatically as and when the MSF rate changes alongside policy repo rate changes. Cash Reserve Ratio (CRR): The average daily balance that a bank shall maintain with the Reserve Bank as a share of such per cent of its NDTL that the Reserve Bank may notify from time to time in the Gazette of India.

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Statutory Liquidity Ratio (SLR): The share of NDTL that banks shall maintain in safe and liquid assets, such as, unencumbered government securities, cash and gold. Changes in SLR often influence the availability of resources in the banking system for lending to the private sector. Open Market Operations (OMOs): These include both outright purchase and sale of government securities for injection and absorption of durable liquidity, respectively. Market Stabilisation Scheme (MSS): This instrument for monetary management was introduced in 2004. Surplus liquidity of a more enduring nature arising from large capital inflows is absorbed through sale of short-dated government securities and treasury bills. The cash so mobilised is held in a separate government account with the Reserve Bank. Other Points to look at Under the amended RBI Act, the monetary policy making is as under: a) The MPC is required to meet at least four times in a year. b) The quorum for the meeting of the MPC is four members. c) Each member of the MPC has one vote, and in the event of an equality of votes, the Governor has a second or casting vote. d) Once in every six months, the Reserve Bank is required to publish a document called the Monetary Policy Report to explain: i. the sources of inflation; and ii. the forecast of inflation for 6-18 months ahead.

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Fiscal Policy Fiscal policy deals with the government policy concerning changes in the taxation and expenditure overheads and components, while Monetary policy, deals with the changes in the factors and instruments that affect the supply of money in the economy and the rate of interest. The government of India deals with fiscal policy (through Annual Budget and other timely interventions), while RBI is responsible for execution of monetary policy. Types of Fiscal Policy Neutral Fiscal Policy: This implies a balanced budget where (Government spending = Tax revenue). Contractionary (restrictive) Fiscal policy: This policy involves raising taxes or cutting government spending, so that (Government spending < Tax revenue) it cuts up on the aggregate demand (thus, economic growth) and to reduce the inflationary pressures. Expansionary Fiscal Policy: It is generally used for giving stimulus to the economy ,i.e., to speed up the rate of GDP growth or during a recession when growth in national income is not sufficient enough to maintain the present standards of living. A tax cut and/or an increase in government spending would be implemented to stimulate economic growth and lower unemployment rates. Instruments of Fiscal Policy Reduction of Govt. Expenditure Increase in Taxation Imposition of new Taxes Wage Control Rationing 31

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Public Debt Increase in savings Maintaining Surplus Budget Other measures of Fiscal Policy Increase in Imports of Raw materials Decrease in Exports Increase in Productivity Provision of Subsidies Use of Latest Technology Rational Industrial Policy PUBLIC REVENUES The income of the Government through all sources is called public income or public revenue. Public revenue refers to income of a Government from all sources raised, in order to meet public expenditure. Public revenue consists of taxes, revenue from administrative activities like fines, fees, income from public enterprises, gifts and grants. Public Receipts includes public revenue plus the receipts from public borrowings, the receipts from sale of public assets & printing & issuing new currency notes. It includes other sources of public income along with public revenue. Public Revenue can be classified as Tax Revenue and Non -Tax Revenue. PUBLIC EXPENDITURE Public Expenditure refers to Government Expenditure. It is incurred by Central and State Governments. The Public Expenditure is incurred on various activities for the welfare of the people and also for the economic development. 32

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Capital and Revenue Expenditure: Capital Expenditure of the Government refers to that expenditure which results in creation of fixed assets. They are in the form of investment. They add to the net productive assets of the economy. Capital Expenditure is also known as development expenditure as it increases the productive capacity of the economy. It is investment expenditure and a non-recurring type of expenditure. Revenue expenditures are current or consumption expenditures incurred on civil administration, defense forces, public health and, education, maintenance of Government machinery etc. This type of "expenditure is of recurrent type which is incurred year after year. Plan and Non - Plan Expenditure The plan expenditure is incurred on development activities outlined in ongoing five year plan. Plan expenditure is incurred on Transport, rural development, communication, agriculture, energy, social services,etc. The non - plan expenditure is incurred on those activities, which are not included in five-year plan. PUBLIC DEBT Public debt refers to Government debt. It refers to Government borrowings from individuals, financial institutions, organizations and foreign countries. If revenue collected through taxes and other sources is not adequate to cover expenditure, the Government may resort to borrowings. Thus public debt is one of the instruments to cover deficits in budget.

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Chapter 8: Privatization/Disinvestment Facts related to Disinvestment Total disinvestment proceeds during the Current Financial Year 2017-18 is Rs. 1,195.46 crore (as on 9th May, 2017) The CPSE with the highest market capitalisation is Oil & Natural Gas Corp.Ltd. at Rs. 2,27,212.43 crore (BSE) and Rs. 2,27,148.26 crore (NSE) (as on 31st May, 2017) CPSEs constitute 11.78% and 11.90% of the total market capitalisation of companies listed at BSE and NSE respectively (as on 31st May, 2017) VSNL was the first CPSE to be divested by way of a Public Offer in 1999-00 Disinvestment During FY 2017-18 NAME OF CPSES

% OF GOIS SHARES DISINVESTED

GOIS SHAREHOLDING POST DISINVESTMENT

HCL

.07

82.88%

NALCO

9.2125

65.38%

Disinvestment During FY 2016-17 34

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Chapter 9: Role of Economic Planning. Economic Planning is the making of major economic decisions. What and how is to be produced and to whom it is to be allocated – by the conscious decision of a determinate authority, on the basis of a comprehensive survey of the economic system as a whole. Following are the characteristic features of economic planning: Fixation of definite socio-economic targets; Prudent efforts to achieve these targets within a given time period; Existence of a central planning authority; Complete knowledge about the economic resources of the country; Efficient utilization of limited resources to get maximum output and welfare. What is the Need of Planning? To Increase the rate of Economic Development. To eradicate Unemployment. To Improve and Strengthen Market Mechanism. Fair progress of the Economy which includes: a) Progress of Agricultural and Industrial sectors. b) Progress of Money and Capital Market. c) Progress in Infrastructure. Five Years Plans in India The main features of First five year plan (1951-1956) To reconstruct the economy that was damaged due to repercussion effect of partition of India and 2nd world war. 36

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Construction of the roads, extending the transport and communication facilities and constructing the irrigation and water electricity projects were given priority which helps in proper growth and development of the country. Community development program was launched in 1952. It plans to constitute administrative and organizational set up necessary for enforcing the development programmes. To introduce the mechanism in the economy this helps in checking the Inflationary pressure. To enhance the capacity of production in the economy. To improve the food availability in the country. Under the first-year plan provision was made to spend a sum of Rs. 2378 crore. But the actual expenditure amounted to Rs.1960 crore. In this plan agriculture was given highest priority. Target growth rate was 2.1% in the plan period. But this plan was more than a success, achieve annual compound growth rate of 3.6% because of good harvest of last two years. The Main features of Second Five year plan (1956-1961) Model prepared by Professor P.C. Mahalanobis is being used in this plan. The fundamental objective of this plan was to initiate and accelerate the process of industrialization in a country. Hydroelectric power projects and five steel power plants were established in Durgapur,Rourkela and Bhilai. The actual growth rate achieved in this plan was 4.2% as compared to the target rate, which was 4.5%. To increase the annual capital investment rate from 7% to 11% by 1960-61. Expansion in employment opportunities.

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During the plan period, per capita income growth rate was only 1.9% per annum but the growth rate of national income was 4.27% in the same period. The atomic energy commission in department of atomic energy was established on March 1st 1958. The main stress was on the development of heavy industries which helps in the fast progress of industrialization in the country. The Main Features of Third Five Year Plan (1961-1966) To push up the economy to the take off stage of development and self-sustaining growth in the country is the basic objective of this plan. To attain more than 5% annual growth rate. National income should grow at 30%. Per capita income should grow at annual level of 17%. A target of 6%annual growth rate for foodgrains and 14% annual growth rate target was fixed for industrial production. The actual achieved growth rate of national income was 2.5%, against the target of 5% per annum. The actual growth rate of per capita was only 0.2% per annum. This plan miserably fails due to war with China and Pakistan during this plan period. Drought was faced by India which also plays its role in the failure of plan. It also aims at expanding the basic good industries to follow up the industrialization process in the economy. It ensures the proper utilization of all resources which are available to the country.

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Three annual plans (plan holiday 1966-1969) The fourth plan was scheduled to begin from April 1, 1966, but due failure of the third plan, production in various sector became stagnant. In 1966 the government of India declared devaluation of rupees but favorable results could not be obtained. During this period, the main focus was on the agricultural activities. The transition period of agriculture begins in 1966 when green revolution takes place in the country. High yielding varieties of seeds is being used in the production of rice, wheat, jowar, bajra, and maize to enhance their productivity level. For efficient use of this technique better irrigation facility, fertilizers, pesticides have being developed in the country. The growth target was not set for these three years but the actual growth rate was 3.9%. In this plan economy tries to overcome from the failure faced by the country during third plan. After absorbing the shocks of third plan period it tries to make a way out for growth and development in the country. The Main Features Of Fourth Five Year Plan (1969-1974) The two principal objectives of 4th plan were sustainable growth and self-dependence. To achieve these two objectives certain targets were laid down -: To ensure growth rate of 5.7% for economic development of the country. In agriculture 5% and in industrial production 8% to 10% growth target is set. To develop backward areas and to remove the regional imbalances. 39

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Regulation and control over the money supply for the purpose of stabilizing the prices in the economy. Maintaining the buffer stock so that problem of food crises does not arises in the country. Family planning programmes was introduced during this plan period, for improving the living standard and to keep a check on population growth in the country. To create employment opportunities for reducing the involuntary unemployment. To establishes the economic equality. Production of commodities of general consumption has been increased. During the fourth plan, the annual growth rate of national income (1993-94 prices) was only 3.8% lower than the target growth. The annual growth rate of industrial production was only 4% which was lower than the target growth rate. In 1971 India’s war with Pakistan and liberation war in Bangladesh hampers the industrial development because the funds which are supposed to be used for industrial development are utilized on after war effort. Prices increased about 61%. Nationalisation of 14 banks and first under ground nuclear test was also performed during this period. The Main Features of Fifth Five Year Plan (1974-1979) The fifth plan was structured by DD Dhar. The basic objectives of the plan were ‘removal of poverty’ (Garibi Hatao) and selfdependence National programmes for essential needs in which supply of drinkable water, education at primary level, provide medical help to rural households, and electrification of the villages and cleanliness of the suburbs were included. 40

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In this plan more emphasis is placed on the policy of import substitution and export promotion for the betterment of the people of the country. There should be optimum collection and distribution system to provide benefits to the weaker section of the country. For reducing the regional and social inequalities various fiscal policies and institutional measures have been introduced by the government. Production of commodities of general use which plays important role in day to day life was emphasized. Many programs were introduced in the plan period on social welfare. The target growth rate was 4.4% but the actual growth rate achieved was 4.7%. When the janta government came into power, this plan was closed in 1978 one year before its closing period which is in 1979. Rolling Plan (1978 – 1980) After fifth plan ended before its time period, there are two phases of sixth plan. When Janta government in power the plan for (1978-1983) were introduced but this plan lapses before its time period because the congress came into power and terminated the plan and a new plan was introduced in the country for the period of (1980-1985). Rolling plan is plan by Janta government for two years which is (19781980). In 1979-1980 growth rate was -5.2 %( negative). The Main Features Of Sixth Five Year Plan (1980-1985) The first phase of sixth plan was introduced by Janta government but it was abandoned by the congress and a new Sixth plan was introduced for the period 1980-1985. 41

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Increase in national income, modernization of technology, rapid development of the domestic sources of energy and stress on the efficient use of the energy resources. Ensure continuous decrease in poverty and unemployment. Minimum need programme was introduced for the qualitative improvement in the living standard of the poor people of the country. Stress on minimization of regional disparities. To ensure the participation of all categories of people in development process by adopting institutional strategies. Family planning methods was adopted for population control. 5.2% was the growth target but the economy has achieved the growth rate of 5.7%. The Main Features Of Seventh Five Year Plan (1985-1990) This plan emphasis on self-dependence on foodgrains production, increase in the rate of employment, with special focus on social justice. The major objectives was to establish a social system based on equality and justice, to encourage self reliance by export promotion and import substitution, energy protection and development of non traditional energy sources, ecological and environmental protection. The growth rate of 5.8% was achieved in the economy during the plan as compared to the target growth rate which was 5.0%. Annual Plan (1990-1992) Due to political changes at the centre the government was not able to introduce the eighth plan on the scheduled time. Balance of payments account is worsening during this time. 42

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Inflation rate in 1991 was at high level specially prices of food items increases rapidly in this year. The government was under the danger of falling into the debt trap. The growth rate of 3.4% was achieved during this period. The Main Features Of Eighth Five Year Plan (1992-1997) Human development in various aspects is the basic motto of eighth plan. Priorities were given in the plan to create sufficient employment opportunities, to impose restrictions on population explosion by seeking people’s cooperation, to make provision for primary health care facilities and vaccination in all the villages to cover entire population, to strengthen the basic infrastructure (energy, transport, communication, irrigation,) in order to support the development process. The average annual growth rate in agricultural and ailed activities has been estimated at 3.9% while the target was 3.5%. During the 8th plan the services like trading, hotels, transport and communication made a good progress. The inflation rate based in whole sale price index was come down to 3.8% which was 16.3% in 1991. The fiscal deficit during 1990-1991 was 8.3% of GDP but during the plan period it came down to 5.23%. The plan has achieved a growth rate of 5.8% but the target was set to the level of 5.6% in the economy. The Main Features Of Ninth Five Year Plan (1997-2002) The main focus of the ninth plan was ‘growth with equity and distributive justice’ In order to achieve this objective following four fields were identified -: 43

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Quality of life – To ensure a better life to the poor people, measures for poverty elimination and providing minimum basic services were adopted which help in creating assets and integrate these people for the development of the country. Private investors are interested only in profits so they generally do not participate in basic service sector. The state takes the responsibility of this sector to improve the quality of life of the people in the country. Employment promotion-It focused in creating job opportunities by developing technology in various sectors. To break the vicious circle of poverty national employment assurance scheme is introduced in this period. Regional imbalances – For removing regional imbalance, the speed of industrialization in the less developed area was given priority in the ninth plan. Self- dependence – In order to achieve self-dependence the following areas are given priority-: i) To ascertain the balance of payment. ii) To check the burden of foreign debt and also give measure to curtail them. iii) Proper utilization and protection of natural resources. iv) To attain self-sufficiency in foodgrains and technology. v) To increase dependence on non- debt income for the purpose of development. The economy was only able to achieve the growth rate of 5.5% as compared to the target which was set to 6.5%. The Main Features Of Tenth Five Year Plan (2002-2007) The main focus of the Tenth Five-Year Plan was: Universal access to primary education by 2007. 44

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15% in poor blocks and 25% in normal blocks is the essential amount required to extend the funds of gram-sabha during 10th plan. Food for work programme in place of employment programmes. For improving the conditions of the poor people especially agricultural labor great stress is given to agricultural sector. Sectors like real estate, transport small scale industries, transport, IT-enabled services should grow at the accelerated rate during the 10thplan period to get high job opportunities in these sectors of the economy. Maternal mortality rate (MMR) should be reduced to twenty per thousand live births at the end of 2007 and to ten per thousand live births at the end of 2012. Infant mortality rate (IMR) should be reduced to forty five per thousand live births by 2007 and to twenty eight per thousand live births at the end of 2012. The target growth rate was 8.1% but the economy was able to achieve only 7.8%. The Main Features of Eleventh Five Year Plan (2007-2012) The basic components of this plan include broad based improvement in life of weaker /backward section of the society like SCs/STs, other backward classes (OBCs) etc. Major objectives of 11th plan are as follows -: Manufacturing sector is targeted to grow at 12% Total fertility rate stands at 2.1 with the completion of the plan. Reduce anemia among women and girls by 50%with completion of the plan. It ensures the electricity connection to the rural people. Create 58 million new work opportunities. Ten percent decrease in the headcount ratio of poverty. 45

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33% share in government schemes belongs to the female members of the country. Treatment of water waste by the end of 2011-2012. Efficiency of energy should be increased to 20% by 2016-2017. Educational unemployment should be below 5%. Increase of 20% in the real wage rate of those workers who are unskilled. Five percent increase in forest and tree cover. The target growth rate was 8.1% but the economy in this period achieves a growth rate of 7.9%. The Main Features of Twelfth Five Year Plan (2012-2017) The basic components are to enhance the capacity for rapid growth in various sectors of the economy. The main objectives of the plan -: Real GDP must grow at the rate of 8%. Agriculture sector must grow at the rate of 4%. Manufacturing sector must grow at the rate of 7.1%. Industrial sector must grow at the rate of 7.6%. Service sector must grow at the rate of 9%. On an average the states of the country grows at a rate which is more than the rate of growth in 11th plan. Head count ratio of consumption poverty to be reduced by 10 percentage points over the preceding estimates by the end of twelfth five-year plan. Employment opportunities around 50 million in sectors other than agricultural. On completion of 12th plan mean years of schooling should be seven years.

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Reduce infant mortality rate (IMR) to 25 per 1000 live births and maternal mortality rate to 1 per 1000 live births, and child sex ratio (0-6) to 950 by the end of twelfth five-year plan. Reduce total fertility rate to 2.1 by the end of twelfth five-year plan. Increase rural tele density to 70 percent with the completion of twelfth five-year plan. Eastern and western freight corridors must be completed by the end twelfth five-year plan. Technology and innovation is the key of higher productivity so the resources should be moved towards this direction. Funds should be allocated to provide adequate transport infrastructure to minimize the cost of transportation. Increase the banking services so that every household enjoy the facility of banking. Direct cash payment method came in place of subsidies so that it will help in keeping the track of government money. To over the food and nutritional insecurities steps taken for sustainable growth in agricultural sector. One million hectare increase in green cover. Various measures should be taken to improve the health indicators.

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Chapter 10: Globalization-Opening up of the Indian Economy

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Chapter 11: Balance of Payments, Export-Import Policy What is Balance of Payments (BoP)? Balance of payments (BoP) record the transactions in goods, services, and assets between residents of a country with the rest of the world for a specified time period. There are two main accounts in the BoP – the current account and the capital account. The current account records exports and imports in goods and services and transfer payments. When exports exceed imports, there is a trade surplus and when imports exceed exports there is a trade deficit. Trade in services denoted as invisible trade (because they are not seen to cross national borders). Transfer payments are receipts which the residents of a country receive ‘for free’, without having to make any present or future payments in return. They consist of remittances, gifts and grants. They could be official or private. The balance of exports and imports of goods is referred to as the trade balance. Adding trade in services and net transfers to the trade balance, we get the current account balance. The capital account records all international purchases and sales of assets such as money, stocks, bonds, etc. Current account deficit is the excess of total imports of goods, services and transfers over total exports of goods, services and transfers. This situation makes a country debtor to the rest of the world. Differentiate between balance of trade and current account balance. Balance of trade Current account balance It is the difference It is the difference between the values between the values of of exports and imports of goods, 49

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exports and imports of services and unilateral transfers of a goods of a country. country. 1. Export of goods Export and import of goods, export 2. Import of goods and import of services, unilateral transfers. It records transactions It records the transactions related to related to visible items visible items (goods) as well as (i.e. goods) only. invisible items (services) and unilateral transfers. What is EXIM Policy? Exim Policy or Foreign Trade Policy is a set of guidelines and instructions established by the DGFT in matters related to the import and export of goods in India. It is regulated by the Foreign Trade Development and Regulation Act, 1992. DGFT (Directorate General of Foreign Trade) is the main governing body in matters related to Exim Policy. The main objective of the Foreign Trade (Development and Regulation) Act is to provide the development and regulation of foreign trade by facilitating imports into, and augmenting exports from India. Highlights of the Foreign Trade Policy (Exim Policy) 2015-20 Earlier there were 5 different schemes (Focus Product Scheme, Market Linked Focus Product Scheme, Focus Market Scheme, Agri. Infrastructure Incentive Scrip, VKGUY) for rewarding merchandise exports with different kinds of duty scrips with varying conditions. Now all these schemes have been merged into a single scheme, namely Merchandise Export from India

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Scheme (MEIS) and there would be no conditionality attached to the scrips issued under the scheme. Served From India Scheme (SFIS) has been replaced with Service Exports from India Scheme (SEIS). SEIS shall apply to ‘Service Providers located in India’ instead of ‘Indian Service Providers’. The rate of reward under SEIS would be based on net foreign exchange earned. Duty credit scrips to be freely transferable and usable for payment of custom duty, excise duty and service tax. Business leaders who have excelled in international trade and have successfully contributed to country’s foreign trade are proposed to be recognized as Status Holders and given special treatment and privileges to facilitate their trade transactions, in order to reduce their transaction costs and time. The criteria for export performance for recognition of status holder have been changed from Rupees to US dollar earnings. Manufacturers who are also Status Holders will be enabled to self-certify their manufactured goods as originating from India with a view to qualify for preferential treatment under different Preferential Trading Agreements [PTAs], Free Trade Agreements [FTAs], Comprehensive Economic Cooperation Agreements [CECAs] and Comprehensive Economic Partnerships Agreements [CEPAs] which are in operation. Specific Export Obligation under EPCG scheme, in case capital goods are procured from indigenous manufacturers, which is currently 90% of the normal export obligation has been reduced to 75%. It is proposed to have Online inter-ministerial consultations for approval of export of SCOMET items, Norms fixation, Import

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Authorisations, Export Authorisation, in a phased manner, with the objective to reduce time for approval. EOUs, EHTPs, STPs have been allowed to share infrastructural facilities among themselves. Inter unit transfer of goods and services have been allowed among EOUs, EHTPs, STPs, and BTPs. EOUs have been allowed facility to set up Warehouses near the port of export. Validity of SCOMET export authorisation has been extended from the present 12 months to 24 months. Normal export obligation period under advance authorization is 18 months. Export obligation period for export items falling in the category of defence, military store, aerospace and nuclear energy shall be 24 months from the date of issue of authorization. Goods falling in the category of handloom products, books / periodicals, leather footwear, toys and customized fashion garments, having FOB value up to Rs.25000 per consignment (finalized using e-Commerce platform) shall be eligible for benefits under FTP. Calicut Airport, Kerala and Arakonam ICD, Tamil Nadu have been notified as registered ports for import and export. India has already extended duty free tariff preference to 33 Least Developed Countries (LDCs) across the globe. Government has already recognized 33 towns as export excellence towns. It has been decided to add Vishakhapatnam and Bhimavaram in Andhra Pradesh as towns of export excellence (Product Category– Seafood).

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Chapter 12: International Economic Institutions – IMF & World Bank A Brief on IMF The International Monetary Fund (IMF) is an organization of 189 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. Formed in 1944 at the Bretton Woods Conference primarily by the ideas of Harry Dexter White and John Maynard Keynes, it came into formal existence in 1945 with 29 member countries and the goal of reconstructing the international payment system. Membership: 189 countries Headquarters: Washington, D.C. Original aim of IMF: promote international monetary cooperation; facilitate the expansion and balanced growth of international trade; promote exchange stability; assist in the establishment of a multilateral system of payments; and make resources available (with adequate safeguards) to members experiencing balance of payments difficulties. What is SDR? A new plan of international reserves, known as SDRs was established in 1969. The SDRs have only limited use as a reserve asset. Its main function is to serve as the unit of a/c of the IMF. 53

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SDRs (also known as ‘paper gold’) are allocated to member countries in proportion to their subscription to the IMF. SDR is neither a currency, nor a claim. Rather, it is a potential claim on the freely usable currencies of the IMF. SDR is an international unit of currency. The quotas of the member countries with the Fund are now valued in terms of SDRs. SDR is an interest bearing source of finance, i.e., countries holding SDRs receive interest, and the ones drawing on them pay interest. A Brief on World Bank Group The World Bank is like a cooperative, made up of 189 member countries. Established in 1944, the World Bank Group is headquartered in Washington, D.C. The World Bank Group has set two goals for the world to achieve by 2030: a) End extreme poverty by decreasing the percentage of people living on less than $1.90 a day to no more than 3% b) Promote shared prosperity by fostering the income growth of the bottom 40% for every country The World Bank Group is one of the world’s largest sources of funding and knowledge for developing countries. Its five institutions share a commitment to reducing poverty, increasing shared prosperity, and promoting sustainable development. The institutions are: IBRD: The International Bank for Reconstruction and Development IDA: The International Development Association 54

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IFC: The International Finance Corporation MIGA: The Multilateral Investment Guarantee Agency ICSID: The International Centre for Settlement of Investment Disputes Note: Dr. Jim Yong Kim became the 12th President of the World Bank Group on July 1, 2012. A Brief on World Bank It is an international financial institution that provides loans to countries of the world for capital programs. It comprises two institutions: the International Bank for Reconstruction and Development (IBRD), and the International Development Association (IDA). The World Bank is a component of the World Bank Group.

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Chapter 13: Human Development – Social Sectors in India, Health and Education.

Healthcare Industry in India Healthcare comprises hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance and medical equipment. The overall Indian healthcare market is worth around US$ 100 billion and is expected to grow to US$ 280 billion by 2020, a Compound Annual Growth Rate (CAGR) of 22.9 per cent. Healthcare delivery, which includes hospitals, nursing homes and diagnostics centres, and pharmaceuticals, constitutes 65 per cent of the overall market. The Healthcare Information Technology (IT) market which is valued at US$ 1 billion currently is expected to grow 1.5 times by 2020. The Indian medical tourism industry is pegged at US$ 3 billion per annum, with tourist arrivals estimated at 230,000. The Indian medical tourism industry is expected to reach US$ 6 billion by 2018, with the number of people arriving in the country for medical treatment set to double over the next four years. 56

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With greater number of hospitals getting accredited and receiving recognition, and greater awareness on the need to develop their quality to meet international standards, Kerala aims to become India's healthcare hub in five years. The hospital and diagnostic centres attracted Foreign Direct Investment (FDI) worth US$ 4.09 billion between April 2000 and September 2016, according to data released by the Department of Industrial Policy and Promotion (DIPP). Government Initiatives ❖ In the Union Budget 2017-18, the overall health budget increased from INR 39,879 crore (US$ 5.96 billion) (1.97% of total Union Budget) to INR 48,878 crore (US$ 7.3 billion) (2.27% of total Union Budget). In addition, the Government of India made following announcements in the Union Budget 2017-18: Harmonise policies and rules for the medical devices industry to encourage local manufacturing and move towards improving affordability for patients. Modify the Drugs and Cosmetics Act to promote generics and reduce the cost of medicines. Set up two new All India Institute of Medical Sciences (AIIMS) in Gujarat and Jharkhand. Convert 1.5 lakh sub centres in Indian villages to health and wellness centres Set short and medium term targets for key health indicators and bring down the Maternal Mortality Rate to 100 by 2018-2020 and Infant Mortality Rate to 28 by 2019. Prepare action plans to eliminate Kala Azar and Filariasis by 2017, leprosy by 2018, measles by 2020 and tuberculosis (TB) by 2025. 57

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The Government of India plans to set up a single window approval system for innovation in medical research, in order to grant permission/approvals within 30 days from the date of application to Indian innovation projects who have applied for global patent. ❖ The Union Cabinet has approved signing of an agreement with the World Health Organisation (WHO) under which WHO will develop technical documents on traditional medicines which is expected to lead to better acceptance of Indian systems of medicines at an international level. ❖ A unique initiative for healthcare 'Sehat' (Social Endeavour for Health and Telemedicine) has been launched at a government run Common Service Centre (CSC) to empower rural citizens by providing access to information, knowledge, skills and other services in various sectors through the intervention of digital technologies and fulfilling the vision of a ‘Digital India’. Education Sector in India India holds an important place in the global education industry. The country has more than 1.4 million schools with over 227 million students enrolled and more than 36,000 higher education institutes. India has become the second largest market for e-learning after the US. The sector is currently pegged at US$ 2-3 billion, and is expected to touch US$ 40 billion by 2017. The distance education market in India is expected to grow at a Compound Annual Growth Rate (CAGR) of around 34 per cent# during 2013-14 to 2017-18. The aim of the government to raise its current gross enrolment ratio to 30 per cent by 2020 will also boost the growth of the distance education in India. 58

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In FY 2015-16, the education market was worth about US$ 100 billion and is expected to reach US$ 116.4 billion in FY 2016-17. Currently, higher education contributes 59.7 per cent of the market size, school education 38.1 per cent, pre-school segment 1.6 per cent, and technology and multi-media the remaining 0.6 per cent. India’s higher education system is the largest in the world enrolling over 70 million students while in less than two decades, India has managed to create additional capacity for over 40 million students. The total amount of Foreign Direct Investments (FDI) inflow into the education sector in India stood at US$ 1,383.62 million from April 2000 to December 2016, according to data released by Department of Industrial Policy and Promotion (DIPP). Government Initiatives The Union Budget 2017-18 has made the following provisions for the education sector: a) The Budget has pegged an outlay of Rs 79,685.95 crore (US$ 11.952 billion) for the education sector for financial year 201718, up from Rs 72,394 crore (US$ 10.859 billion) in 2016-17—a 9.9 per cent rise. b) The Government of India has allocated around Rs 17,000 crore (US$ 2.55 billion) towards skilling, employment generation, and providing livelihood to millions of youth, in order to boost the Skill India Mission. The Government of India and the World Bank have signed a US$ 201.50 million International Development Association (IDA) credit agreement for the Third Technical Education Quality Improvement Programme (TEQIP III), aimed at improving the 59

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efficiency, quality and equity of engineering education across several focus states. Mr Radha Mohan Singh, Union Minister of Agriculture and Farmers Welfare, has announced that the Central Government will open at least one Krishi Vigyan Kendra in all districts of the country, which will provide advanced agriculture technical assistance to the farmers near their farms itself. The Ministry of Shipping has sanctioned Rs 10 crore (US$ 1.5 million) as part of the first instalment to the Gujarat Maritime Board under the Sagarmala project, which will be used for capacity building and safety training of 20,000 workers involved in the ship recycling activities at Alanag- Sosiya recycling yard in Bhavnagar district in Gujarat. The Ministry of Skill Development and Entrepreneurship has launched the Pradhan Mantri Yuva Yojana, which will provide entrepreneurship education and training to over 700,000 students in 5 years through 3,050 institutes. The Cabinet Committee on Economic Affairs has approved opening of one Jawahar Navodaya Vidyalaya (JNV) in each of the 62 uncovered districts with an outlay of Rs 2,871 crore (US$ 430.6 million), which is expected to benefit over 35,000 students in rural areas and provide direct permanent employment to 2,914 individuals. The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved 'Pradhan Mantri Gramin Digital Saksharta Abhiyan' (PMGDISHA) to make 60 million rural households digitally literate. The outlay for this project is Rs 2,351.38 crore (US$ 353.70 million) to usher in digital literacy in rural India by March, 2019.

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Prime Minister Mr Narendra Modi launched the Skill India initiative – ‘Kaushal Bharat, Kushal Bharat’. Under this initiative, the government has set itself a target of training 400 million citizens by 2022 that would enable them to find jobs. The initiatives launched include various programmes like: Pradhan Mantri Kaushal Vikas Yojana (PMKVY), National Policy for Skill Development and Entrepreneurship 2015, Skill Loan scheme, and the National Skill Development Mission. PMKVY is the flagship program under the Skill India Initiative and it includes incentivising skill training by providing financial rewards on completion of training to the participants. The Union Government plans to set up skill development centres across India with an investment of Rs 12,000 crore (US$ 1.8 billion) to create job opportunities for 10 million individuals by 2020 under PMKVY, as per Mr Bandaru Dattatreya, Minister of Labour and Employment. National Policy for Skill Development and Entrepreneurship 2015 is India’s first integrated program to develop skill and promote entrepreneurship simultaneously. The Union Government plans to provide Rs 7,000 crore (US$ 1.05 billion) to states to spend on skill development, and thereby accelerate the ambitious task of skilling 500 million Indians by 2022, and encourage creation of an ecosystem of entrepreneurs. Skill Loan Scheme is designed to disburse loans of Rs 5,000 (US$ 75.3) to Rs 150,000 (US$ 2,260) to 3.4 million Indians planning to develop their skills in the next five years.

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Chapter 14: A Brief on Economic Survey 2016-17 What is Economic Survey? It’s a flagship annual document of the Ministry of Finance, Government of India, Economic Survey 2016–17 reviews the developments in the Indian economy over the previous 12 months, summarizes the performance on major development programmes, and highlights the policy initiatives of the government and the prospects of the economy in the short to medium term. This document is presented to both houses of Parliament during the Budget Session. Finance Minister Shri Arun Jaitley presented Economic Survey 2016-17 in the Parliament. It says that the rupee performed better than most of the other emerging market economies. The Indian Economy has sustained a macro-economic environment of relatively lower inflation, fiscal discipline and moderate current account deficit coupled with broadly stable rupee-dollar exchange rate. The survey state that such a sustenance is despite continuing global sluggishness. • As per the advance estimates released by the Central Statistics Office, the growth rate of GDP at constant market prices for the year 2016-17 is placed at 7.1 per cent, as against 7.6 per cent in 2015-16. This estimate is based mainly on information for the first seven to eight months of the financial year. • Fixed investment (gross fixed capital formation) to GDP ratio (at current prices) is estimated to be 26.6 per cent in 2016-17, vis-àvis 29.3 per cent in 2015-16. 62

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• There is a likelihood that Indian economy may recover back to 6 ¾ per cent to 7 ½ per cent in 2017-18.

Fiscal • Indirect taxes grew by 26.9 per cent during April-November 2016. • The strong growth in revenue expenditure during AprilNovember 2016 was boosted mainly by a 23.2 per cent increase in salaries due to the implementation of the Seventh Pay Commission and a 39.5 per cent increase in the grants for creation of capital assets. FISCAL DEFICIT 2015-16 fiscal deficit, seen at 3.9 per cent of GDP, seems achievable. Credibility and optimality argue for adhering to 3.5 per cent of GDP fiscal deficit target.

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Prices • The headline inflation as measured by Consumer Price Index (CPI) remained under control for the third successive financial year. The average CPI inflation declined to 4.9 per cent in 201516 from 5.9 per cent in 2014-15 and stood at 4.8 per cent during April-December 2015. • Inflation based on Wholesale Price Index (WPI) declined to (-) 2.5 per cent in 2015-16 from 2.0 per cent in 2014-15 and averaged 2.9 per cent during April-December 2016. • Inflation is repeatedly being driven by narrow group of food items, of these pulses continued to be the major contributor of food inflation. • The CPI based core inflation has remained sticky in the current fiscal year averaging around 5 per cent.

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Trade • The trend of negative export growth was reversed somewhat during 2016-17 (April-December), with exports growing at 0.7 per cent to US$ 198.8 billion. During 2016-17 (April-December) imports declined by 7.4 per cent to US$ 275.4 billion. • Trade deficit declined to US$ 76.5 billion in 2016-17 (AprilDecember) as compared to US$ 100.1 billion in the corresponding period of the previous year. • The current account deficit (CAD) narrowed in the first half (H1) of 2016-17 to 0.3 per cent of GDP from 1.5 per cent in H1 of 2015-16 and 1.1 per cent in 2015-16 full year. • Robust inflows of foreign direct investment and net positive inflow of foreign portfolio investment were sufficient to finance CAD leading to an accretion in foreign exchange reserves in H1 of 2016-17. • In H1 of 2016-17, India’s foreign exchange reserves increased by US$ 15.5 billion on BoP basis. 65

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•

During 2016-17 so far, the rupee has performed better than most of the other emerging market economies.

External Debt • At end-September 2016, India’s external debt stock stood at US$ 484.3 billion, recording a decline of US$ 0.8 billion over the level at end-March 2016. • Most of the key external debt indicators showed an improvement in September 2016 vis-à-vis March 2016. The share of short-term debt in total external debt declined to 16.8 per cent at end-September 2016 and foreign exchange reserves provided a cover of 76.8 per cent to the total external debt stock.

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CURRENT ACCOUNT DEFICIT As 2016-17 current account deficit seen around 1-1.5 per cent of GDP. BANKING & CORPORATE SECTOR Estimated capital requirement for banks around 1.8 trillion rupees by 2018-19. Proposes to make 700 billion rupees available via budgetary allocations during current and succeeding years in banks. Agriculture

• Agriculture sector is estimated to grow at 4.1 per cent in 2016-17 as opposed to 1.2 per cent in 2015-16; the higher growth in agriculture sector is not surprising as the monsoon rains were much better in the current year than the previous two years. • The total area coverage under Rabi crops as on 13.01.2017 for 2016-17 is 616.2 lakh hectares which is 5.9 per cent higher than that in the corresponding week of last year. 67

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• The area coverage under wheat as on 13.01.2017 for 2016-17 is 7.1 percent higher than that in the corresponding week of last year. The area coverage under gram as on 13.01.2017 for 2016-17 is 10.6 percent higher than that in the corresponding week of last year

Industry • Growth rate of the industrial sector is estimated to moderate to 5.2 per cent in 2016-17 from 7.4 per cent in 2015-16. During AprilNovember 2016-17, a modest growth of 0.4 per cent has been observed in the Index of Industrial Production (IIP).

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• The eight core infrastructure supportive industries, viz. coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity registered a cumulative growth of 4.9 per cent during April-November 2016-17 as compared to 2.5 per cent during April-November 2015-16. The production of refinery products, fertilizers, steel, electricity and cement increased substantially, while the production of crude oil, natural gas fell during April-November 2016-17. Coal production attained lower growth during the same period. • The performance of corporate sector (Reserve Bank of India, January 2017) highlighted that the growth of sales grew by 1.9 per cent in Q2 of 2016-17 as compared to near stagnant growth of 0.1 per cent in Q1 of 2016-17. Growth in net profit registered a 69

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remarkable growth of 16.0 per cent in Q2 of 2016-17 as compared to 11.2 per cent in Q1 of 2016-17. Services • Service sector is estimated to grow at 8.9 per cent in 2016-17, almost the same as in 2015-16. It is the significant pick-up in public administration, defence and other services, boosted by the payouts of the Seventh Pay Commission that is estimated to push up the growth in services. Social Infrastructure, Employment and Human Development • The Parliament has passed the “Rights of Persons with Disabilities Act, 2016”. The Act aims at securing and enhancing the rights and entitlements of Persons with Disabilities. The Act has proposed to increase the reservation in vacancies in government establishments from 3 per cent to 4 per cent for those persons with benchmark disability and high support needs. One Liners based on the Economic Survey 1. According to the Economic Survey, CPI based core inflation remained stable in the current fiscal year (2016-17) averaging around what per cent? Answer. 5 per cent 2. As per the Survey, the total area coverage under Rabi crops as on 13.01.2017 for 2016-17 is? Answer. 616.2 lakh hectares 3. As per the Survey, the growth rate of GDP at constant market prices for the year 2016-17 is placed at? Answer. 7.1 per cent 70

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4. The Fixed investment (Gross Fixed Capital Formation) to GDP ratio (at current prices) in the year 2016-17 is estimated at? Answer. 26.6 per cent 5. As per the survey, the GDP growth at constant prices for the year 2017-18 to be expected between? Answer. 6.75 % to 7.5%

6. As per the survey, Indirect taxes during April-November 2016 grew by? Answer. 26.9 per cent 7. As per the survey, Inflation based on Wholesale Price Index (WPI) averaged to what percent during April-December 2016? Answer. 2.9 per cent 8. As per the Survey, the exports growth rate during AprilDecember 2016-17 is? 71

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Answer. 0.7 per cent (Imports declined by 7.4 per cent to US$ 275.4 billion) 9. What is the amount of trade deficit during April-December 2016-17, as per the Economic Survey 2016-17? Answer. US$ 76.5 billion 10. In the Economic survey, it is given that Agriculture sector is estimated to grow at how much percent in 2016-17? Answer. 4.1 per cent

11. In the Economic survey, it is given that Growth rate of the industrial sector in 2016-17 is estimated at? Answer. 5.2 per cent

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12. As per the survey, during April-November 2016-17 the growth rate of the eight core infrastructure supportive industries, viz. coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity is? Answer. 4.9 per cent 13. In the Economic survey, it is given that Service sector is estimated to grow at how much percent in 2016-17? Answer. 8.9 per cent 14. As per the survey, the current account deficit in the year 201617 seen at around how much percent of GDP? 73

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Answer. 1-1.5 per cent 15. What is the estimated capital requirement for banks by 201819, as per the survey? Answer. Around 1.8 trillion rupees Abbreviations based on the Economic Survey 2016-17 1. AMRUT: Atal Mission for Rejuvenation and Urban Transformation 2. CFPI: Consumer Food Price Index 3. CPI- IW: Consumer Price Index for Industrial Workers 4. CPI-AL: Consumer Price Index for Agricultural Labour 5. CRIS: Centre for Railway Information System 6. CSO: Central Statistics Office 7. DCRF: Debt Consolidation and Reconstruction Facility 8. DIPP: Department of Industrial Policy & Promotion 9. FRBM: Fiscal Responsibility and Budget Management Act 10. FRL: Fiscal Responsibility Legislation 11. FSI: Floor Space Index 12. GDP: Gross Domestic Product 13. GSDP: Gross State Domestic Product 14. HRIDAY: Heritage City Development and Augmentation Yojana 15. IMR: Infant Mortality Rate 16. JNNURM: Jawaharlal Nehru National Urban Renewal Mission 17. MNDWI: Modified Normalized Difference Water Index 18. NASA: National Aeronautics and Space Administration 19. NITI: National Institution for Transforming India 20. NRSA: National Remote Sensing Agency 21. PPP: Purchasing Power Parity 74

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22. UDAY: Ujwal DISCOM Assurance Yojana 23. UN: United Nations 24. UNICEF: United Nations Children's Fund 25. USGS: United States Geological Survey

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Chapter 15: FDI in India Foreign direct investment (FDI) is a major source of non-debt financial resource for the economic development of India. Foreign companies invest in India to take advantage of relatively lower wages, special investment privileges such as tax exemptions, etc. The government has taken many initiatives in recent years such as relaxing FDI norms across sectors such as defence, PSU oil refineries, telecom, power exchanges, and stock exchanges, among others. The World Bank has stated that private investments in India is expected to grow by 8.8 per cent in FY 2018-19 to overtake private consumption growth of 7.4 per cent, and thereby drive the growth in India's gross domestic product (GDP) in FY 201819. According to Department of Industrial Policy and Promotion (DIPP), the total FDI investments India received during April 2016-March 2017 rose 8 per cent year-on-year to US$ 60.08 billion. Data indicates that the services sector attracted the highest FDI equity inflow of US$ 8.69 billion, followed by telecommunications, and computer software and hardware. During April 2016-March 2017, India received the maximum FDI equity inflows from Mauritius (US$ 15.73 billion), followed by Singapore (US$ 8.71 billion), Japan (US$ 4.71 billion), Netherlands (US$ 3.37 billion), and USA (US$ 2.38 billion). Government Initiatives The Union Cabinet has approved raising of bonds worth Rs 2,360 crore (US$ 365.63 million) by the Indian Renewable Energy Development Agency (IREDA), which will be used in various renewable energy projects in FY 2017-18. 76

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The Ambassador of Japan to India, Mr Kenji Hiramatsu, has conveyed Government of Japan's inclination to invest and offer any other feasible support for various ongoing as well as upcoming development and infrastructure projects in the NorthEastern region of India. The Government of India plans to scrap the Foreign Investment Promotion Board (FIPB), which would enable the foreign investment proposals requiring government approval to be cleared by the ministries concerned, and thereby improve the ease of doing business in the country. The Government of India has approved 100 per cent foreign direct investment (FDI) in other financial services carried out by non-banking finance companies (NBFCs), which is expected to attract more foreign capital into the country. The Department of Industrial Policy and Promotion (DIPP) has allowed 100 per cent foreign direct investment (FDI) in asset reconstruction companies (ARC) under automatic route, which will help to tackle the issue of declining asset quality of banks. The government has also raised FDI cap in insurance from 26 per cent to 49 per cent through a notification issued by the DIPP. The limit is composite in nature as it includes foreign investment in the form of foreign portfolio investment, foreign institutional investment, qualified foreign investment, foreign venture capital investment, and non-resident investment. India’s cabinet cleared a proposal which allows 100 per cent FDI in railway infrastructure, excluding operations. Though the initiative does not allow foreign firms to operate trains, it allows them to invest in areas such as creating the network and supplying trains for bullet trains etc. 77

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Chapter 16: Financial Statements & Ratios & Price Of Bond A financial statement is an organised collection of information or data prepared as per certain acceptable accounting norms and procedures. These include the following: 1. A balance sheet, 2. A trading & manufacturing and profit & loss account (or income statement) 3. A funds flow statement. 4. A cash flow statement. BALANCE SHEET A balance sheet can be defined as a statement of assets and liabilities / financial position of a business concern on a given date say March 31. Liabilities are the resources (sources of funds) which the business mobilises to acquire assets for earning income. Assets are the tools with the help of which, income in a business is earned. The total of liabilities would always be equal to the total of assets. The assets and liabilities are divided into certain convenient groups for the purpose of proper analysis of the statements. LIABILITIES Owned funds Proprietor’s capital or paid-up share capital Reserves Long Term or Deferred Liabilities (where funds are available to business for a period exceeding 12 months) 78

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Debentures Term loans raised from banks and financial institutions Current liabilities or Short-term Liabilities (where fund are available to business for a period up to 12 months) Short term borrowings from banks and/or others Unsecured loans including commercial paper repayable within 12 months Deposits from public maturing within one year. Sundry trade creditors (called creditors or payable also) or bills payables Expenses payable such as for wages, salaries, rent and other expenses payable. Interest and other charges. Statutory liabilities such as provident fund dues, provision for taxation, sales tax, excise, obligations towards workers considered as statutory. Miscellaneous current liabilities such as provision for dividends, bonus, liabilities for expenses, gratuity, other provisions, any other payments dues. Contingent Liabilities These liabilities are not shown in the body of balance sheet but are recorded as a footnote. These are also called off-balance sheet items because of this reason. They are called contingent because their possibility of becoming a funded liability or not, depends upon the fulfillment or non-fulfillment of certain conditions. These liabilities include: Pending law suits. Claims against the organisation not acknowledged as debt. Guarantees given by the organisation on behalf of others. 79

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Letters of Credit issued by the banks on behalf of the organisation. Guarantees issued by banks on behalf of the organisation. Taxes and duties under dispute with the Govt. Bills and cheques discounted by banks, in case these have already been accounted for on cash basis. ASSETS Assets are the properties owned by a business and are acquired to use them for generation of income through operations. Fixed Assets or Block Assets These are the assets which are of relatively permanent nature and they are not disposed off within a short period. The examples are land, buildings and structures, machinery, tools and equipment of all type, vehicles, furniture and fixtures, capital work in progress. Advances against fixed assets and other assets of long term nature, which will become fixed assets after some time, are part of Non-current Assets. Current Assets These are the assets which are required by the business for the purpose of re-sale and are re-circulating and arise out of usual business dealings. They are held temporarily for subsequent conversion into cash maximum within a period of 12 months. The following types of assets could be classified as current assets: Cash and bank balances Investments in quoted/tradable Govt. and other trustee securities and fixed deposits with banks, 80

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Receivables (or bills receivables or book debts or debtors or sundry debtors) arising out of sales. Instalments of deferred receivables due within one year, Raw materials and components, Stock-in-process including semi-finished goods, Finished goods including goods in transit, Pre-paid expenses, Advances for purchase of raw materials, components and consumable spares and other advances, Other current assets which fulfill the criteria of being called a Current Asset. Intangible Assets Certain assets in business don’t have any physical presence or in other words these are just book entries created with certain specific objectives. In order to account for the cost incurred on such expenses, they are shown as assets in the books, a few examples of which may be as under: Goodwill, Patents, Copyrights, Trade marks, etc. PROFIT AND LOSS ACCOUNT A statement which takes care of all the revenue earned (whether received or not) and the expenditure incurred (whether paid or not), and resultant profit or loss is known as profit or loss account’ or ‘revenue statement’. Whenever the income is more than expenses, the result is profit (and vice-versa). A Profit and loss account is divided generally in three parts : 81

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a: A trading and manufacturing account;(for trading concerns only trading account), b: A profit and loss account, c: Profit and loss appropriation account. Objective of calculation of various Ratio Liquidity To evaluate the liquidity position of the firm. ratios Leverage To evaluate the strength of the firm to raise long ratios term loans on the strength of their own net worth Activity ratios To examine the efficiency with which the assets are being used Profitability To understand as to how profitable is the business ratios LIQUIDITY RATIOS The ratio which indicate the liquidity of the firm are current ratio, acid test ratio or quick ratio and net working capital. Current Ratio The current ratio is the relationship between the current assets and current liabilities. It can be worked out as under: Current assets / Current liabilities Acid Test or Quick Ratio The quick ratio is the ratio between quick current assets and current liabilities. Quick assets include cash/bank balances + receivables upto 6 months + quickly realisable securities such as govt. securities or quickly marketable/quoted shares and bank fixed deposits. 82

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It can be worked out as under: liabilities

Quick assets / Current

Net working capital It can be worked out as Current assets minus Current Liabilities. LEVERAGE OR SOLVENCY RATIOS Debt-Equity Ratio The ratio is important one since it shows the dependence of the unit on outside long term finance. It can be worked out as under: Long term outside liabilities/Tangible net worth (Here long term outside liabilities are liabilities of long term nature and tangible net worth is total of capital and reserves and surplus reduced by intangible assets) Higher the ratio, more the pressure on the liquidity, when repayment of liabilities falls due. Lower the debt equity of a firm compared to another firm, the better it is. Debtor Service Coverage Ratio (DSCR) The ratio explains the relationship between the funds available for servicing the long term outside liabilities. This ratio is used for judging repayment capacity and fixing the repayment schedules for term loans in banks and financial institutions. It could be worked out: net profit + depreciation + annual amount of interest charged (or chargeable) on the long term liabilities / annual amount of interest charged (or chargeable) on the long term liabilities + annual amount of instalment payable on the long term liabilities. 83

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Note: Tangible net worth = Net worth less intangible assets Tangible assets = Total assets less intangible assets ACTIVITY RATIOS These ratios measure the efficiency of the organisation in using the available funds, particularly the funds raised on short term basis. The following ratios could be worked out: Inventory turnover: Sales / Average stocks (average of opening and closing stocks) Debtor turnover: Sales / average debtors (average of opening and closing receivables) Fixed assets turnover: Sales / Fixed assets. Current assets/ working capital turnover Net sales / average working capital i.e. current assets Debtors’ velocity or debt collection period Average Book-debts / sales × 12 Creditors’ velocity or Creditor’s payment period Average creditors/ purchases × 12 PROFITABILITY RATIOS Return on investment or capital employed The ratio can be worked out as under: Profit / Investment (or capital employed) × 100 Return on equity The ratio can be worked out as under: Net profits / owned funds (or tangible net worth) × 100 84

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Gross Profit & Net Profit Ratio The gross profit is considered to be the surplus of sales over the cost of goods sold and the ratio can be worked out as under: Gross Profit / Net Sales × 100 The net profit is the surplus of gross profit after meeting other expenses. The ratio can be worked out as under: Net profit* / Sales × 100 *The net profit could be before or after tax. Operating Profit ratio The ratio is worked out as under: Operating Profit / Sales × 100 where the operating profit represents profit minus net other income or profit from un-related activity. EFFECT OF FLOW OF FUNDS When the increase in long term sources is more than increase in long term uses: Liquidity surplus/net working capital position would improve Current ratio and quick ratio will improve When the increase in long term sources is less than increase in long term uses: Liquidity surplus/net working capital position would decline Current ratio and quick ratio will deteriorate When increase in short term sources is more than increase in short term uses: Liquidity surplus/net working capital position would decline Current ratio and quick ratio will deteriorate 85

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When the increase in short term sources is less than increase in short term uses: Liquidity surplus/net working capital position would improve Current ratio and quick ratio will improve BREAK EVEN POINT ANALYSIS It is that level of activity, where the total revenue cost (comprising of fixed revenue cost and variable revenue cost) is equal to the total sale value or where there is not loss or no profit. Important terms in BEP Contribution = Selling price per unit less variable cost per unit or total sales less total variable cost. Fixed cost: Those costs which do not change with level of sale. They remain constant irrespective of no. of units produced/sold. Example – depreciation, rents etc. these do not include fixed assets. Variable cost: Costs which vary directly with level of turnover/production and include costs such as cost of raw material, packing material, power and fuel, wages of labour etc. These costs would increase with increase in the volume of sale and would come down with the decline in the level of sales. Margin of Safety: No. of units above the break-even units. FORMAT OF BALANCE SHEET FOR RATIO ANALYSIS Liabilities Rs Assets Rs. Net worth/ Equity Fixed Assets • Share capital/partners’ • (Such as land and capital/paid-up building, plant capital/owners funds machinery etc.) 86

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• Reserves (General Reserve, Capital Reserve, Revaluation Reserve and Other Reserves) (These funds are brought in by the promoters as their investment in business or generated by and retained in business) Long term liabilities • Term Loan (Banks or Institutions) • Debentures/ Bonds • Unsecured Loans • Fixed Deposits • Other Long Term Liabilities (Only those liabilities to be taken which are not due for payment within 12 months from date of the balance sheet) Short term (or Current) Liabilities • Bank working capital limits such as cash credit, over draft, bills, export credit. 87

• Original value • Less deprecation • Net value or book value or written down value • (These are purchased for long term use and are depreciated every year) Non-Current Assets • Investment of long term nature in shares, govt. securities, associate or sister firms or companies. • Old stocks or old /disputed book debts • Long term security deposits. • Other misc. assets which are not current or fixed assets Intangible Assets • Patents, good will, debit balance of P & L account, preliminary or preoperative expensive Current Assets • Cash/Bank balance including fixed deposits with banks • Marketable/quoted govt. or other securities meant Adda247 | No. 1 APP for Banking & SSC Preparation Website: store.adda247.com | Email: [email protected]

• Sundry/trade creditors/creditors/bills payable • Short duration loans or deposits • Expenses payable • Previsions against various items • Other Current Liabilities (Only those liabilities to be taken which are due for payment within 12 months from date of the balance sheet) Total

for sale • Book debts / Sundry debtors / debtors / receivables / bills receivables (which are outstanding for short time) • Stocks / inventory (such as raw material, stock in process, finished goods, stores and spares meant for consumption) • Advance payment of taxes, pre-paid expenses • Other assets of current nature Total

Summary of Interpretation of Various Ratios Name of the When do we consider When do we consider Ratio improvement? deterioration? Current Ratio When ratio increases When ratio decreases Quick Ratio When ratio increases When ratio decreases Net Working When ratio increases When ratio decreases Capital Debt Equity When ratio decreases When ratio increases Ratio Debt Service When ratio increases When ratio decreases Coverage Stock Turnover When ratio increases When ratio decreases 88

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Working Capital turnover Debtors Velocity Return on equity Return on investment

89

When ratio increases

When ratio decreases

When ratio decreases When ratio increases

When ratio increases When ratio decreases

When ratio increases

When ratio decreases

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Chapter 17: PRICE OF BOND AND NPV Future Value of Rupee FV= P(1+i)n Here: FV = Future Value of a Rupee P = Principal I = interest rate per year n = number of years Present value of a Rupee (PVD) PV= FV/(1+i)n Here:

PV = Present Value FV = Future Value i = interest rate per time period n = number of time periods Interest Rate of a Discount (IRD) 1 n

FV i=( ) −1 PV Future Value of an Ordinary Annuity (FVOA) (1 + i)n − 1 FVOA = A ∗ i Here A= Annuity

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Future Value of an Annuity Due (FVAD) (1 + r)n − 1 = (1 + r)×P [ ] r Present Value of an Annuity (Summation Notation) n A PVA = ∑ (1 + i)k k=1

Present value of an Annuity (PVA) 1 − (1 + r)−n PVA = P [ ] r Present Value Annuity Payment i A = PV ∗ 1 − (1 + i)−n Formula for the monthly payment of a loan. A = monthly payment, or annuity payment. PV = Present value, or the amount of the loan. Nominal Yield Formula Annual Interest Payment Nominal Yield = Par Value Current Yield Formula Annual Interest Payment Current Yield = Current Market Price of Bond

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Approx. YTM Percentage Formula F−P C+ n Approx. YTM % = F+P 2 C = Coupon/Interest Payment F = Face Value P = Price n = YTM Effective Interest Rate of a Discounted Bond n

i= √

FV −1 PV

i = interest rate per compounding period n = number of compounding periods FV = Future Value PV = Present Value

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Chapter 17: Indian Economy Current Affairs To enhance the passengers experience by upgrading existing fleet of coaches with better furnishing, aesthetics & amenities and better safety features with a view to provide a safe and comfortable travel, Minister of Railways Shri Suresh Prabhakar Prabhu has launched MISSION RETRO-FITMENT. The Mission is an ambitious program to upgrade the level of furnishing & amenities in the coaches of Indian Railways. This is one of the largest-retro fitment project in the world as Indian Railways’ 40,000 coaches will be refurbished and retrofitted in the next five years. This Mission Retrofitment is an endeavour to provide better travel experience as the interiors of the coaches. Retirement fund body EPFO has enrolled over 82 lakh new subscribers under its Employees' Enrolment Campaign 2017 started on January 1 this year. Under the scheme, the employers got the opportunity to file the declaration of unregistered employees under the EPFO Act, with a nominal fine of Re 1 per annum on account of damages. Retail inflation for the month of May hit another series-low, coming down to 2.18 per cent. Food prices entered a deflationary zone in May, with the Consumer Food Price Index at minus 1.05 percent. The GST Council reduced the rates for 66 items and expanded the scope of the composition scheme for the benefit of small traders, manufacturers, and restaurateurs. Insulin, pickles, printers, agarbattis, school bags, and cashew nuts are among the 66. Those were among 133 items whose rates were reviewed following industry representation. The IndusInd Bank has entered into an agreement with Overseas Private Investment Corp. (OPIC) to raise $225 million loan to 93

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support expansion of its micro, small and medium enterprise lending programmes across India. At least 25% of the proposed facility will support women entrepreneurs and reach to populations who previously had no access to banking facility. India announces mounting a National Mission on advanced ultra-supercritical technologies for cleaner coal utilisation at a total cost of US $ 238 million and setting up of two Centres of Excellence on Clean Coal Technologies at US $5 million each. The announcement was made at the 2nd Mission Innovation Ministerial and 8th Clean Energy Ministerial at Beijing, China. The ‘DigiYatra’ is an industry-led initiative co-ordinated by the Ministry in line with the Prime Minister Shri Narendra Modi’s Digital India’s vision to transform the nation into a digitally empowered society. This follows Air Sewa which brings together all the stakeholders on a common platform for handling customer grievances and disseminating real-time data. ‘DigiYatra’ initiative aims to bring together entire industry to develop a digital ecosystem that will deliver Indian customers a seamless, consistent and paperless service experience at every touch point of their journey. Union Minister of Urban Development Shri M.Venkaiah Naidu inaugurated the 9th foundation day of The Foundation for Restoration of National Values (FRNV). Swachh Bharat’ is the theme of the event. He said that 33,76,793 Individual Household Toilets and 1,28,946 Community Toilet Seats have so far been built. The Minister said that 688 cities have been so far declared Open Defecation free (ODF) and 531 of them have been independently verified and certified as ODF. Andhra Pradesh and Gujarat have declared all cities and towns as ODF. He also said that 100% Door to Door collection and transport of 94

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Municipal Solid Waste has been achieved in 43,200 wards out of the total 81,015 urban wards. The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved the proposed Memorandum of Understanding (MoU) between Export-Import Bank of India (EXIM Bank) and Export-Import Bank of Korea (KEXIM) for export credit of USD 9 billion for infrastructural development in India and for the supply of goods and services as part of projects in third countries. Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, has given its approval for development of four laning from 'end of Pandoh Bypass to Takoli' section of National Highway (NH)-21 in Himachal Pradesh. The total length of the road to be developed is approximately 19 kms. Mr B P Kanungo, Deputy Governor of the RBI, has verified that over 82.7 per cent of the currency has already been remonetised so far, which is around 108 per cent in volume terms. Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, has given its approval to: issue 13,90,00,000 fresh equity shares of Indian Renewable Energy Development Agency (IREDA) of Rs.10 each to the public on book-building basis through the IPO & issue shares to retail investors and IREDA employees at a discount of 5% on the issue price of each equity share. The Public issue of equity will enable IREDA to increase its equity base which will help them raise more debt resources for funding RE projects. Central Board of Direct Taxes (CBDT) notified a series of exemptions to the anti-abuse provision introduced in the Finance Act 2017 to curtail money laundering through securities 95

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transactions. The provision was aimed at preventing the misuse of long-term capital gains (LTCG) tax exemption through such transactions. The bona fide acquisition of securities on which the securities transaction tax (STT) is not paid, including employee stock options (ESOPs), foreign direct investment and courtapproved transactions, will be exempt from LTCG tax. Financial technology start-up Quiklo (Olmec Technologies Pvt. Ltd), which provides loans to students for buying consumer durables such as phones and laptops, has launched an education finance service. As part of the new service, consumers, essentially students, can avail loans to pay course fees or even test preparation fees. India has surpassed China to secure the top position among 30 developing countries on ease of doing business. The 2017 Global Retail Development Index (GRDI), ranks the top 30 developing countries for retail investment worldwide. The GRDI, titled ‘The Age of Focus’, ranks China in second place. Twenty Four (24) States have passed the State GST (SGST) Act as on 5th June, 2017 while 7 States viz. Meghalaya, Punjab,Tamil Nadu, Kerala, Karnataka, Jammu & Kashmir and West Bengal have yet to pass the State GST (SGST) Act . Minister of Road Transport & Highways and Shipping Shri Nitin Gadkari launched INAM-Pro + in New Delhi. INAM-Pro+ is an upgraded version of INAM-Pro, the web portal designed by National Highways and Infrastructure Development Corporation Ltd (NHIDCL). The portal facilitated comparison of price, availability of materials etc. and made it very convenient for the prospective buyers to procure cement at reasonable rates in a transparent manner. This reduced the time and effort in

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preparation of proposals and bid submissions, and helped increase efficiency in procurement of construction materials. RBI has permitted foreign institutional investors (FIIs)/foreign portfolio investors (FPIs) to raise their stake from 24 per cent to 49 per cent in telecom infrastructure company, Tejas Networks. The government has met its fiscal deficit target of 3.5 per cent of gross domestic product for 2016-17. From official data, the deficit in absolute terms was Rs. 5.35 lakh crore; the budgeted estimate had been Rs 5.34 lakh crore. As a percentage of GDP (at current prices) of Rs 151.8 lakh crore, that comes to 3.52 per cent. Total expenditure was Rs 19.75 lakh crore; the budgeted estimate of Rs 20.14 lakh crore. Plan spending was Rs 5.72 lakh crore, compared with estimates of Rs 5.84 lakh crore; non-Plan expenditure was Rs 14.03 lakh crore, as against the budgeted estimate of Rs 14.3 lakh crore. Total receipts for 2016-17 were Rs 13.8 lakh crore, compared with budgeted estimates of Rs 14.8 lakh crore. Tax revenue showed a positive trend, partly due to increased compliance after demonetisation. It was Rs 11.02 lakh crore; the budget estimate was Rs 10.89 lakh crore. Total non-debt capital receipts were Rs 63,503 crore, compared with budgeted estimates of Rs 56,571 lakh crore. Non-tax revenue was Rs 2.74 lakh crore; the budget estimate was Rs 3.34 lakh crore. Asian Development Bank (ADB) and Punjab National Bank (PNB) sign $100 million loan to finance Solar Rooftop projects. This is the first tranche loan of the $500 million multi tranche finance facility Solar Rooftop Investment Program (SRIP) approved by ADB in 2016. Credit rating agency Moody’s Investors Service projected India’s economy to accelerate to grow at 7.5% in 2017-18 and 7.7% in

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2018-19 as the government has been able to limit the negative impact of last year’s demonetisation on the economy. World Bank has projected economic activity to accelerate to 7.2% in 2017-18 against the government’s estimate of 7.1%. The subscribers base under the Atal Pension Yojana (APY) has reached about 53 Lakhs. At present 235 Banks and Department of Post are involved with the implementation of the scheme. The Atal Pension Yojana became operational from 1st June, 2015 and is available to all the citizens of India in the age group of 18-40 years. Under the scheme, a subscriber would receive a minimum guaranteed pension of Rs.1000 to Rs. 5000 per month, depending upon his contribution, from the age of 60 years. Startup India was launched by the Government of India on 16th January, 2016 to build a strong eco-system for nurturing innovation and Startups in the country to drive economic growth and generate large scale employment opportunities. In order to promote entrepreneurship, the Government of India has amended the definition of a Startup. The following significant changes have been made to the definition of Startups – a) Age of Startup increased: An entity shall be considered as a Startup up to seven years from the date of its incorporation/ registration (from earlier 5 years). However, in the case of Startups in the Biotechnology sector, the period shall be up to ten years from the date of incorporation/ registration. b) No Letter of Recommendation required: No letter of recommendation from an incubator/industry association shall be required for either recognition or tax benefits. c) Potential of Job and Wealth Creation: The scope of definition has been broadened to include scalability of business model with potential of employment generation or wealth creation. 98

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Union Minister of State (IC) for Power, Coal, New & Renewable Energy and Mines, Shri Piyush Goyal launched the Saral Eindhan Vitaran Application (SEVA), developed in-house by Coal India Limited (CIL) for power sector consumers. SEVA is a part of ‘Digital India’ initiative, which is aimed at increasing the Consumer Connect as well as the Transparency and Accountability in Coal dispatch. Foreign direct investment inflows hit an all-time high of $60.1 billion in 2016-17, as the Narendra Modi government eased rules to lure global conglomerates to set up shop in sectors such as defence and railways. The Union Minister of Finance, Shri Arun Jaitley, officially launched the Portal of Operation Clean Money (https://www.cleanmoney.gov.in) in New Delhi. The Operation Clean Money was initiated by the Income Tax Department (ITD) on the 31st January, 2017 with the launch of e-verification of large cash deposits made during 9th November to 30th December 2016. In the first phase, around 18 lakh persons were identified in whose case, cash transactions did not appear in line with the tax payer’s profile. India moved up 73 spots to rank 26th in the World Bank's list of electricity accessibility in 2017 from the 99th position in 2014, stated Mr Piyush Goyal. The government has electrified 13,000 villages so far out of the total 18,452 villages and is targeting electrification of all villages by 2019, within 1,000 days. Union Agriculture and Farmers Welfare Minister launch e-Krishi Samvad, an online interface. e-Krishi Samvad is internet-based interface and is a unique platform that will provide direct and effective solutions to the problems faced by farmers and stakeholders in the agriculture sector. He said that people can 99

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directly connect to the ICAR website http://icar.org.in and get the appropriate solutions from the subject matter specialists and institutes through web or SMS. e-Krishi Samvad is useful to get information pertaining to welfare and development of agricultural stakeholders. National Highways Authority of India launched its first overseas Masala bond at the London Stock Exchange. International Finance Corp. (IFC) is planning to invest as much as $200 million in India’s largest mortgage lender Housing Development Finance Corp. Ltd (HDFC). The World Bank’s private-sector investment arm said it will invest by buying fiveyear non-convertible debentures (NCDs) or masala bonds. The Indian economy is expected to grow at 7.2 per cent in FY 2017-18 and 7.7 per cent in FY 2018-19, supported by fading problem of cash shortage and progress in resolving the supplyside bottlenecks, according to a report by the IMF. The Indian economy will grow by 7.4 per cent in FY 2017-18 and by 7.6 per cent in FY 2018-19 on the back of an improving business environment created by reforms like the Goods and Services Tax (GST) and the new bankruptcy law as per the Asian Development Bank (ADB). Securities and Exchange Board of India (Sebi) announced the much-awaited commodity market reform of permitting exchanges to launch options contracts. The move would deepen the domestic commodity market and provide farmers and other participants a new hedging tool, in a more cost-effective manner. Sebi also announced a single-licence regime, allowing stockbrokers to deal in commodities and vice versa.

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Chapter 19: Government Schemes Launched Recently Centre launches IDCF to reduce child deaths due to diarrhoea The Ministry of Health and Family Welfare has launched the Intensified Diarrhea Control Fortnight (IDCF) in order to intensify efforts to reduce child deaths due to diarrhoea. Through this initiative, the Ministry will mobilize health personnel, State Governments and other stakeholders to prioritize investment in control of diarrhea, one of the most common childhood illnesses. It aims to create mass awareness about the most effective and lowcost diarrhoea treatment— a combination of Oral Rehydration Salt (ORS) solution and Zinc tablets. Nearly 12 crores under 5-children will be covered during the program across the country. ASHA worker would undertake distribution of ORS packets to households with under-five children in her village. ORS-Zinc Corners will be set-up at health care facilities and non-health facilities such as Schools and Anganwadi centres. Note: An estimated 1.1 million children die each year in India, including approximately 1.1 lakh deaths due to diarrhoea. Dr. Jitendra Singh announced, “Hill Area Development Programme” for Northeast Union Minister of State (IC) for Development of North Eastern Region (DoNER), MoS PMO, Personnel, Public Grievances, Pensions, Atomic Energy and Space, Dr Jitendra Singh announced the launch of, “Hill Area Development Programme” (HADP) for Northeast in Imphal (Manipur). He also stated that the hilly areas of Manipur, Tripura and Assam have a distinct geo-physical entity and are lagging in 101

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socio-economic development. As a result of peculiar topography, there is a wide gap between the hill and valley districts in terms of infrastructure, quality of roads, health and education etc. The programme is inspired with a serious research and deliberation. He also observed that hill areas are less developed compared to the plain areas. Not only this, he cited figures to state that out of 80 districts of Northeast, 3 districts of hilly areas, which ranked lowest in the composite district infrastructure index, belonged to Manipur and these were namely, Tamenglong, Chandel and Churachandpur. The Hill Area Development Programme is aimed at giving a focused attention to the lesser developed hilly areas and will be initiated on a pilot basis in the hilly districts of Manipur. NITI-Aayog-launched-SATH-programme NITI Aayog has launched SATH, a program providing ‘Sustainable Action for Transforming Human capital’ with the State Governments. The vision of the program is to initiate transformation in the education and health sectors. It addresses the need expressed by states for technical support from NITI. SATH aims to identify and build three future ‘role model’ states for health systems. NITI will work in close collaboration with their state machinery to design a robust roadmap of intervention, develop a program governance structure, set up monitoring and tracking mechanisms, hand-hold state institutions through the execution stage and provide support on a range of institutional measures to achieve the end objectives.

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The program will be implemented by NITI along with McKinsey & Company and IPE Global consortium, who were selected through a competitive bidding process. To select the three model states, NITI defined a three-stage process – expression of interest, presentations by the states and assessment of commitment to health sector reforms. NITI invited all states and UTs to participate in the program. The program will be launched in the three selected states after the signing of MoUs. Shri J P Nadda launched Skill for Life, Save a Life initiative to promote skill development in the health sector Shri J P Nadda, Union Minister for Health and Family Welfare launched the ‘Skill for Life, Save a Life’ initiative. The Initiative’ aims to upscale the quantity and quality of trained professionals in the healthcare system. Under this initiative various courses are planned to be initiated targeting specific competencies for healthcare professionals as well as for general public. Shri Nadda informed that the curriculum has been designed by National Institute of Health and Family Welfare (NIHFW) and AIIMS, Delhi. The Health Minister highlighted that in India 1,324 accidents occur on roads every day and a life is lost every 4 minutes and measures taken in the first 10 minutes can save a life. It was thus announced that the Ministry is initiating its’ ‘Skill a Life, Save a Life’ program by launching First Responder course for professionals as well as general public, to be conducted in Central and State government training institutes across the country in each district, to empower every single citizen of the 103

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country to be the first person to provide first aid and initial care in case of an emergency. This program will provide trained and skilled people by broadening the base to include the community. Through such programs, we create a mass of ‘first responder’ who complements the specialists/experts to fill vacuum of adequate trained professionals,” Shri Mishra added. Telangana launched single-woman pension scheme, first in India Telangana government has recently launched the single-women pensions scheme across the state. Single women will be given Rs 1,000 per month. It is the first such scheme in India. The government had also increased the Kalyana Laxmi and Shaadi Mubarak scheme amount from Rs50,116 to Rs75,116. Govt launches ‘eSanad’ for online document verification Human Resource Development Ministry and the External Affairs Ministry launched an online verification portal 'e-sanad' to make the document verification process easier for students who planning to study abroad. 'e-Sanad' is an initiative of the Ministry of External Affairs (MEA), in association with two other ministries with the help of Central Board of Secondary Education (CBSE). CBSE repository of documents like mark-sheets and migrations certificates, has been integrated with e-Sanad. CBSE becomes the first Board to partner with MEA for e-Sanad. Govt launched new campaign called Darwaza Band The centre launched an aggressive new campaign titled 'Darwaza Band' to promote toilet use and freedom from open defecation across the country's villages. 104

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The campaign produced by the MDWS under Swachh Bharat Mission. The 'Darwaza Band' campaign has been supported by the World Bank and is being rolled out countrywide immediately. It is designed to encourage behaviour change in men who have toilets but are not using them. Amitabh Bachhan & Ms Anushka Sharma are the part of this campaign. The campaign focuses on the need to shift people’s paradigm from ‘open’ to ‘closed’ especially for men. Uttar Pradesh Govt. launches JE vaccination drive in 38 districts In Uttar Pradesh, a massive immunisation drive has been launched in 38 districts to eradicate Japanese Encephalitis (JE). Chief Minister Yogi Adityanath has launched the drive from Kushinagar district. The government also launched a toll-free number to get or provide any information about encephalitis. The number is 18001805544. President Pranab Mukherjee launched 'Selfie with Daughter' mobile app President Pranab Mukherjee launched the 'Selfie with Daughter' mobile application, aimed at raising awareness about female foeticide and sex selection. The President urged people to take photographs with their daughters and upload them to make the campaign a success. Civil Aviation Ministry to roll out ‘DigiYatra’ for air travellers Ministry of Civil Aviation added the Digital experience for Air Travellers through DigiYatra Platform.

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This initiative will transform the flying experience for passengers and position Indian Aviation amongst the most innovative air networks in the world. The initiative aims to bring together entire industry to develop a digital ecosystem that will deliver Indian customers a seamless, consistent and paperless service experience at every touch point of their journey. The initiative envisages providing airline travellers in India, a pioneering ‘digitally unified flying experience’ across all stages of their journey. The platform will be built on 4 key pillars, like Connected Passengers, Connected Airports, Connected Flying and Connected Systems. Health Secretary inaugurates ‘Vatsalya – Maatri Amrit Kosh’ Shri C K Mishra, Secretary (Health and Family Welfare) inaugurated the ‘Vatsalya – Maatri Amrit Kosh’, a National Human Milk Bank and Lactation Counselling Centre at the Lady Hardinge Medical College, Delhi. This would be the largest human milk bank and lactation counselling centre available under the public sector in North India. With this donor human milk bank, all newborns in and around Delhi will have access to life saving human milk regardless of the circumstances of their birth. “Vatsalya – Maatri Amrit Kosh” is established in collaboration with the Norwegian government, Oslo University and Norway India Partnership Initiative (NIPI). Mothers Absolute Affection (MAA) programme was launched to create awareness regarding breastfeeding as being the most cost-effective way of enhancing the child’s immunity. 106

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“Vatsalya – Maatri Amrit Kosh” is a national human milk bank and lactation counseling centre that will collect, pasteurize, test and safely store milk that has been donated by lactating mothers and make it available for infants in need. This facility will protect, promote and support breastfeeding of their own healthy mothers by providing lactation support to mothers through dedicated lactation counsellors. TRAI launches three new apps Telecom Regulatory Authority of India recently launched three new apps to help customers rate quality of services, speed and performance. The three new apps are Mycall app, MySpeed app and 'Do not disturb (DND 2.0)' app. The apps are being launched with the motive that there is more transparency between the consumers and the service providers. The MyCall app, is an Android application for crowdsourced voice call quality monitoring. MySpeed app will enable TRAI to obtain test-data from users in all service areas, without any action by the users. The DND service app will enable users to register their mobile number under DND to avoid unsolicited commercial communication/ telemarketing calls/SMS. Road ministry launches online platform INAM PRO+ for infra raw material Minister for road transport and highways Nitin Gadkari has launched 'INAM PRO+'. It is an e-commerce platform for construction and infrastructure raw material for government and private procurement. The website 'inampro.nic.in' launched by the National Highways and Infrastructure Development Corporation (NHIDCL), a road ministry public sector undertaking, will act as a repository of all raw materials suppliers and manufacturers in the 107

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country from where people and construction companies, along with public sector companies, can buy construction material at competitive rates. Prakash Javadekar launches UGC App to fight ragging Union Human Resource Development Minister Shri Prakash Javadekar launched an Anti-Ragging Mobile App introduced by the University Grants Commission (UGC) in New Delhi. This mobile app will help students register complaints to counter the menace of ragging. This app will work on android system on which students can log in and register their complaints immediately. Piyush Goyal launches mobile app 'SEVA' for quick tracking of coal dispatch Union Minister of State (IC) for Power, Coal, New & Renewable Energy and Mines, Shri Piyush Goyal launched the Saral Eindhan Vitaran Application (SEVA), developed in-house by Coal India Limited (CIL) for power sector consumers. SEVA is a part of ‘Digital India’ initiative, which is aimed at increasing the Consumer Connect as well as the Transparency and Accountability in Coal dispatch. By using this app the common man would be able to hold the Government accountable for the coal linkage allocations and would be able to check any pilferage or inefficiencies in coal consumption for power generation. This would lead to rationalization of coal linkages and finally reduction in the power prices in the country. Shri Bandaru Dattatreya launches EPFOs Citizens Charter 2017 & e-court management system 108

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Minister of State for Labour & Employment(IC), Shri Bandaru Dattatreya launched EPFO’s Citizens’ Charter 2017 and e-court management system in Bangalore. Citizens’ Charter 2017 is an attempt to bring transparency and accountability on the part of EPFO and make service delivery system and grievance redressal mechanism more efficient so that it delivers goods and services to its all stakeholders in a time bound manner with a reduced timeline from earlier timeline of 30 days. The timeline in case of claim settlements is 10 days and 15 days in case of grievance redressal management. The citizens’ charter has been launched with the vision of social security coverage to all employees as well as implementation of policies for benefit of all stakeholders with adequate support level of social security. EPFO e-court Management System has been launched with the objective of having a transparent and electronic case management system which will cater to aspirations of all stakeholders – the employers, the employees, litigants and CBT. It is a step towards paperless court system wherein court procedure of EPF & MP Act, 1952 and EPFAT will take place in a digital environment. Election Commission of India Launches National Contact Centre Election Commission of India launched National Contact Centre with a toll-free No. 1800111950. Now any citizen from any part of the country can call on the toll-free in English or Hindi with any query or complaint at any time of the day. Callers can enquire on subjects such as elections, voting dates, EPIC, electoral roll, online registration etc. and lodge a 109

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complaint by simply dialing in to the toll free no. Not only this, executives also make outbound calls for educating the electors and spreading voter awareness. The National Contact Centre is operated on a National Grievance Redressal System Software. The Contact Centre is Commission’s step forward towards bringing about electoral reforms where citizens and officials are empowered to monitor and report any anomaly or violation of ECI instructions in the field before, during or post elections. Each state and UT will also soon setup and operationalize dedicated State Contact Centre (SCC) and District Contact Centre (DCC) to ensure seamless flow of information across the contact centers for handling issues/ query from citizens. ICT 2025 is about setting up core IT infrastructure and process to consolidate multitude of election process and functions. Digitalization is the key strategy in ICT 2025. It is the strategy of adopting recent technologies and consolidating existing technologies in IT to make the most of the digital resources available in the Election ecosystem. CCEA approves new coal linkage policy 2017 CCEA chaired by the Prime Minister Shri Narendra Modi, has approved the signing of Fuel Supply Agreement (FSA) with the Letter of Assurance (LoA) holders. Allocation of linkages for power sector shall be based on auction of linkages or through Power Purchase Agreement (PPA) based on competitive bidding of tariffs except for the State and the Central Power Generating companies and the exceptions provided in Tariff Policy, 2016. Coal drawal will be permitted against valid Long Term PPAs and to be concluded Medium Term PPAs. 110

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The approved framework ensures that all projects with linkages are supplied coal as per their entitlement. This will ensure the rights of coal supplies for FSA holders and signing of FSA with LoA holders. The salient features of the SHAKTI are as follows: TPPs having LoA shall be eligible to sign FSA after ensuring that the plants are commissioned, respective milestones met, all specified conditions of the LoA fulfilled within specified timeframe and where nothing adverse is detected against the LoA holders and the TPPs are commissioned before 31.03.22. TPPs, part of 78000 MW, that could not be commissioned by 31.03.15 shall now be eligible for coal drawal if the plants are commissioned before 31.03.22. Actual coal supplies to all TPPs shall be to the extent of long term PPAs or medium term PPAs to be concluded in future. PM Modi launches river conservation project in Madhya Pradesh PM Narendra Modi launched the Narmada Seva Mission for the conservation of the crucial river, which is a lifeline of Madhya Pradesh. Narmada river captured the attention of the nation when it became the center of a decades-long struggle to stop the raising of the Sardar Sarovar Dam. Cabinet approves National Steel Policy 2017 Union Cabinet chaired by the PM Shri Narendra Modi has given its approval for National Steel Policy (NSP) 2017. It seeks to enhance domestic steel consumption & ensure high quality steel production & create a technologically advanced & globally competitive steel industry. The NSP 2017 aims to achieve 300 million tonnes of steelmaking capacity by 2030. 111

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Key features of the NSP 2017: 1. Create self-sufficiency in steel production by providing policy support & guidance to private manufacturers, MSME steel producers, CPSEs 2. Encourage adequate capacity additions, 3. Development of globally competitive steel manufacturing capabilities, 4. Cost-efficient production 5. Domestic availability of iron ore, coking coal & natural gas, 6. Facilitating foreign investment 7. Asset acquisitions of raw materials & 8. Enhancing the domestic steel demand. Cabinet approves New Central Sector Scheme – SAMPADA CCEA chaired by the Prime Minister Shri Narendra Modi has given its approval for re-structuring the schemes of the Ministry of Food Processing Industries (MoFPI) under new Central Sector Scheme – SAMPADA (Scheme for Agro-Marine Processing and Development of Agro-Processing Clusters) for the period 2016-20 coterminous with the 14th Finance Commission cycle. SAMPADA with an allocation of Rs. 6,000 crore is expected to leverage investment of Rs. 31,400 crore, handling of 334 lakh MT agro-produce valuing Rs. 1,04,125 crore, benefit 20 lakh farmers and generate 5,30,500 direct/ indirect employment in the country by the year 2019-20. The objective of SAMPADA is to supplement agriculture, modernize processing and decrease agri-waste. SAMPADA is an umbrella scheme incorporating ongoing schemes of the Ministry like Mega Food Parks, Integrated Cold Chain and Value Addition Infrastructure, Food Safety and 112

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Quality Assurance Infrastructure, etc. and also new schemes like Infrastructure for Agro-processing Clusters, Creation of Backward and Forward Linkages, Creation / Expansion of Food Processing & Preservation Capacities. The SAMPADA is a comprehensive package to give a renewed thrust to the food processing sector in the country. It includes new schemes of Infrastructure for Agro-processing Clusters, Creation of Backward and Forward Linkages and Creation / Expansion of Food Processing & Preservation Capacities. The implementation of SAMPADA will result in creation of modern infrastructure with efficient supply chain management from farm gate to retail outlet. It will create huge employment opportunities especially in the rural areas. It will also help in reducing wastage of agricultural produce, increasing the processing level, availability of safe and convenient processed foods at affordable price to consumers and enhancing the export of the processed foods. HRD Minister Prakash Javadekar launched Vidya-Veerta Abhiyan Union Human Resource Development Minister Prakash Javadekar launched 'Students for soldiers- a nationwide Vidya-Veerta Abhiyan' to encourage Universities to display portraits of Param Veer Chakra-decorated soldiers. The aim of this Abhiyan is to instill a sense of patriotism & nationalism among students. Centre launches 'One IP- Two Dispensaries' & 'Aadhaar Based Online Claim Submission' Schemes Minister of State (I/C) for Labour & Employment, Shri Bandaru Dattatreya launched two schemes “One IP- Two Dispensaries” & 113

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“Aadhaar based Online Claim Submission” on the occasion of International Labour Day (1st May). Under One IP- Two Dispensaries scheme has given an option to an Insured Person (IP) to choose two dispensaries, one for self & another for the family through an employer. Under Aadhaar based Online Claim Submission scheme all EPF Members who have activated their Universal Account Number (UAN) & seeded their KYC (Aadhaar) with EPFO will be able to apply for PF final settlement, Pension withdrawal benefit & PF part withdrawal from their UAN Interface directly. Law Minister Ravi Shankar Prasad launches Probono Services, Legal Aid Schemes, Nyaya Mitra Minister of Law & Justice Ravi Shankar Prasad inaugurated three welfare initiatives of the Department of Justice. The services launched are1. Pro-bono legal services- Through the Pro bono legal services, lawyers who want to provide legal services free of cost can register themselves on a web-based platform. 2. Tele-law service- It aims to connect marginalized communities with lawyers through video conferencing facilities, to be set up at Common Service Centres (CSCs). 3. Nyaya Mitra Project- It aims to reduce pendency in lower courts, with a special focus on cases which are more than ten years old. UP govt, Centre sign MoU for 'Power for All' scheme Uttar Pradesh government and the Centre have signed an MoU for the 'Power for All' scheme in the state. The aim of this scheme is to ensure 24-hour quality power supply in the state by October 2018 and electric connection to every house and agriculture field by 114

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2019. With the signing of 'Power for All' agreement government also introduced UJALA Scheme under which consumers were distributed Quality based energy saving LED bulbs, tube lights and fans at a cheaper rate. Prakash Javadekar launched RUSA Portal, Mobile App Union Minister of Human Resource Development Shri Prakash Javadekar launched the unique portal and mobile app of Rashtriya Uchchatar Shiksha Abhiyan (RUSA), a body under the aegis of the Ministry of Human Resource Development here in New Delhi. The Govt. have inaugurated 17 facilities created under Rashtriya Ucchatat Shiksha Abiyan (RUSA) in one go in 14 states”. Under the concept of RUSA the quality of education can go up by improving the research labs infrastructure and creating smart class rooms and various other programmes by which the quality enhancement and value addition to the students happen. The portal is a one-stop for States’ Higher Education Plans, decision of the States’ Higher Education Councils and details of the resources under this scheme. RUSA is the Centrally Sponsored Scheme (CSS) of the Department of Higher Education, MHRD which aims to provide strategic central funding to State Higher Education Departments and Institutions and achieve the broad objectives of access, equity and excellence.

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Pradhan Mantri Mudra Yojana tops target for 2016-17, loans cross target of Rs 1.8 lakh crore Loans extended under the Pradhan Mantri Mudra Yojana (PMMY) during 2016-17 have crossed the target of Rs 1,80,000 crore for 201617. Sanctions currently stand at Rs 1,80,087 crore with final data still awaited from some of the smaller non-banking lenders. The Union Budget has announced a target of Rs. 2.44 lakh crore for Mudra Loans during 2017-18. Rajnath Singh launches Akshay Kumar’s portal ‘Bharat Ke Veer’ Union Home Minister, Shri Rajnath Singh inaugurated the web portal and mobile application named “Bharat ke Veer”. The portal is an IT based platform, with an objective to enable willing donors to contribute towards the family of a braveheart who sacrificed his/her life in line of duty. The amount so donated will be credited to the account of ‘Next of Kin’ of those Central Armed Police Force/Central Para Military Force soldiers. Union Home Minister said that the martyr’s family should get a support of minimum Rs. one crore and the Government would meet the gaps, if any. This website is technically supported by National Informatics Centre (NIC) and powered by State Bank of India. To ensure maximum coverage, a cap of 15 lakh rupees is imposed and the donors would be alerted if the amount exceeds, so that they can choose to divert part of the donation to another braveheart account or to the “Bharat Ke Veer” corpus. Note: Valour Day is celebrated on 9th April in remembrance of an act of unparalleled bravery displayed by a small contingent of CRPF personnel, pitted against a full-fledged infantry 116

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brigade of Pakistani Army, trying to overrun their post, at Sardar Post, Rann of Kutch, Gujarat on April 09, 1965. Madhya Pradesh CM launches 'MP e-nagarpalika' app The Madhya Pradesh government has launched an app named ‘MP e-nagarpalika’ to provide various municipal services online. The mobile app was launched by state Chief Minister Shivraj Singh Chouhan. This app would offer 378 services like online payment of property tax, seeking building permission, birth/ marriage/death certificates etc. It will also register complaints related to garbage, water, streetlights etc. Union Textiles Minister launches PowerTex India Scheme Government has launched PowerTex India, a comprehensive scheme for powerloom sector development, simultaneously at over 45 locations in the country. The scheme was launched in Bhiwandi, Thane district, Maharashtra The comprehensive scheme has the following components: In-situ Upgradation of Plain Powerlooms Group Workshed Scheme (GWS) Yarn Bank Scheme Common Facility Centre (CFC) Pradhan Mantri Credit Scheme for Powerloom Weavers Solar Energy Scheme for Powerlooms Facilitation, IT, Awareness, Market Development and Publicity for Powerloom Schemes Tex Venture Capital Fund Grant-in-Aid and Modernisation & Upgradation of Powerloom Service Centres (PSCs) 117

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Government launched two mobile apps- echallan and mParivahan The government has launched two mobile apps, echallan and mParivahan, that provide access to various services and information, and enable citizens to report any traffic violation or road accident. 'eChallan' is an integrated enforcement solution to manage traffic violations through an Android-based mobile app and back-end web application, for use by the Transport Enforcement Wing and Traffic Police. 'mParivahan' is an empowering app for the citizen which provides access to various services, information and utilities related to the transport sector, bring convenience to citizen and transparency in the system and is already available for free download from Google playstore. Union Petroleum Ministry launches MoPNG e Seva Minister of State for Petroleum and Natural Gas, Shri Dharmendra Pradhan launched MoP&NG e-Seva. It is a dedicated grievances redressal platform on Social Media for all queries and grievances relating to Oil and Gas Sector. Govt approves 1.17 lakh more affordable houses under Pradhan Mantri Awas Yojana Ministry of Housing and Urban Poverty Alleviation approved construction of 1,17,814 affordable houses for the benefit of urban poor in six States at a total cost of Rs.5,773 cr for which central assistance of Rs.1,816 cr has been approved, under the Prime Minister’s Awas Yojana (Urban). Madhya Pradesh has been sanctioned a total of 27,475 new houses for 43 cities and towns at a total cost of Rs.1,713 cr for which central assistance of Rs.412 cr has been approved. These 118

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include 20,971 houses under Beneficiary Led Construction (BLC) component of PMAY(Urban) and 6,504 houses under Affordable Housing in Partnership (AHP) component. Under BLC, beneficiaries are assisted to build own houses on the land available with them or take up improvement works for increasing living space and other amenities. Under AHP, State Government provides the land to house urban poor. Under both these components, central assistance of Rs.1.50 lakh is provided for each beneficiary. Note: Madhya Pradesh has been sanctioned 2,09,036 houses and is closely behind Tamil Nadu which is leading in implementation of PMAY(Urban) with the maximum of 2,27,700 houses sanctioned. With this, total number of houses being taken up for construction for the benefit of urban poor under PMAY(Urban) has gone up to 17,60,507 with total project cost of Rs.96,018 cr for which central assistance of Rs.27,714 cr has been approved. Solar Energy Scheme for Small Powerloom Units The Government has approved a new scheme to provide financial assistance or capital subsidy to small powerloom units, for installation of Solar Photo Voltaic (SPV) plant, in order to alleviate the problem of power cut and shortages faced by decentralized powerloom units in India. Under the Solar Energy Scheme, the plants have two options: a) On-Grid Solar Power Plant where power cut/shortage is negligible and power tariff is high. b) Off-Grid Solar Power Plant in areas where there is power shortage & on-grid power is not continuously available.

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Govt launches new scheme for developing export linked infrastructure The government has launched a new scheme Trade Infrastructure for Export Scheme (TIES) for developing export linked infrastructure in states with a view to promote outbound shipments. TIES seeks to bridge the infrastructure gap and provide forward and backward linkages to units engaged in trade activities. The scheme, to be implemented from April 1, would have a budgetary allocation of Rs 600 crore for three years with an annual outlay of Rs 200 crore. It will be implemented from 2017-18 till 2019-20. The objective of the proposed scheme is to enhance export competitiveness by bridging gaps in export infrastructure, creating focused export infrastructure, first mile and last mile connectivity for export-oriented projects and addressing quality and certification measures. The Central and State Agencies, including Export Promotion Councils, Commodities Boards, SEZ Authorities and Apex Trade Bodies recognised under the EXIM policy of Government of India; are eligible for financial support under this scheme.

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