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Crux of Indian Economy for IAS Prelims 2020 Book

Economy Current Affairs for January, February & March 2020

Iran withdraw from 2015 Nuclear deal (05-01-2020)

Iran announced that it is fully withdrawing from the 2015 nuclear deal, just days after US President Donald Trump ordered a strike that killed its top military leader, Maj. Gen. Qassem Soleimani in Baghdad. On July 14, 2015, the United States and its partners in the P5 + 1 (China, France, Germany, Russia, and the United Kingdom, coordinated by the European Union’s High Representative) reached a Joint Comprehensive Plan of Action (JCPOA) with Iran that will verifiably prevent Iran from acquiring a nuclear weapon and ensure that Iran’s nuclear program will be exclusively peaceful. Under the JCPOA, Iran will receive phased sanctions relief once the International Atomic Energy Agency (IAEA) verifies that Iran has implemented key nuclear-related commitments described in the JCPOA.

President Donald Trump withdrew the United States from the agreement in May 2018, saying it failed to address Iran’s ballistic missile program and its role in regional wars. The United States reimposed sanctions and moved to wipe out Iran’s oil exports, prompting Iran to resume some of its nuclear activities. The United States' European allies have tried to salvage the deal despite Trump's decision to withdraw.

Mandatory Hallmarking of Gold Jewellery and Gold Artifacts in India (15-01-2020)

Govt has made Hallmarking of Gold Jewellery and Gold Artefacts mandatory in the country w.e.f. 15-1-2021 giving a year’s time for its implementation. This will make it compulsory for all the jewellers selling Gold jewellery and artefacts to register with BIS & sell only hallmarked Gold jewellery & artefacts. Only three grades namely 14,18 and 22 carats for gold jewellery and artefacts, as prescribed in Indian Standard IS: 1417: 2016 can be hallmarked. The caratage is marked on jewelry in addition to fineness for convenience of consumers, e.g. for 22 carat jewelry, 22K will be marked in addition to 916, for 18 carat jewelry, 18K will be marked in addition to 750 and for 14 carat jewelry, 14K will be marked in addition to 585. Hallmark on Gold Jeweler now has following four marks:

Purity in carat and Assay centre’s Jewellers identification BIS Mark Fineness (e.g.22K916) identification mark mark Purpose of making hallmarking mandatory for Gold Jewelry and Artefacts is to ensure that consumers are not cheated while buying gold ornaments and get the purity as marked on the ornaments and corruption is removed. One-year implementation period will ensure that Jewelers registration process can be completed and jewelers/retailers get time for clearing their old/existing stock and also so that additional Assaying and Hallmarking centres centres can be set up by private entrepreneurs at various locations where demand arises and priority shall be given to districts where such centres are not present. As on 31st December 2019, there are 892 Assaying and Hallmarking centres spread in 234 District locations across the country and so far 28,849 jewelers have been registered by Bureau of Indian Standards (BIS). BIS (Hallmarking) Regulations, 2018 were notified w.e.f. 14.06.2018. BIS is running a hallmarking scheme for gold jewelry since April 2000. The BIS Act 2016 has enabling provisions under Section 14 & Section 16 for mandatory hallmarking of Gold jewellery & artefacts by the Central Government.

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Viability Gap Funding by Govt. in Infrastructure Projects

Infrastructure projects, often have high social but an unacceptable commercial rate of return. These are generally characterised by substantial investments, long gestation periods, fixed returns, etc. that make it essential that Government supports infrastructure financing, through appropriate financial instruments and incentives. The Guidelines for Financial Support to PPPs in Infrastructure under the Viability Gap Funding scheme were notified by Ministry of Finance, Department of Economic Affairs dated January 23, 2006 The Scheme aims to ensure wide spread access to infrastructure provided through the PPP framework by subsidising the capital cost of their access. Meeting the funding gap to make economically essential projects commercially viable would obviate the need for Government funding for such projects and allow private sector participation in the projects, thus facilitating private sector efficiencies in infrastructure development. Viability Gap Funding (VGF) means financial support in the form of grants, one time or deferred, to infrastructure projects undertaken through public private partnerships with a view to make them commercially viable. VGF to be provided shall be in the form of a capital grant at the stage of project construction. The amount of VGF shall be equivalent to the lowest bid for capital subsidy, but subject to a maximum of 20% of the total project cost. In case the sponsoring Ministry/State Government/statutory entity proposes to provide any assistance over and above the said VGF, it shall be restricted to a further 20% of the total project cost.

India hosts the 14th Conference of Parties (COP14) to the UN Convention to Combat Desertification (UNCCD)

(02-09-2020)

Union Minister for Environment, Forest & Climate Change (MoEF&CC), Shri Prakash Javadekar and Executive Secretary, UN Convention to Combat Desertification (UNCCD), Mr.IbrahimThiaw jointly inaugurated the 14th Conference of Parties (COP14) to UNCCD at India Expo Centre & Mart, Greater Noida. “This year, India being the global host for COP 14 will take over the COP Presidency from China for the next two years till 2021. India is privileged to be among the select few countries to have hosted the COP of all three Rio conventions on climate change, biodiversity and land. Through hosting COP 14, India will highlight its leadership in navigating the land management agenda at global level. Addressing the Inaugural session of the Conference, the Environment Minister who is also the elected COP President for next two years, expressed India’s resounding commitment to finding a long-term solution for minimizing the impact of desertification and land degradation. United Nations Convention to Combat Desertification (UNCCD) was adopted in Paris on 17 June 1994 and ratified by 196 countries & European Union. India ratified the UNCCD Convention on 17th December 1996. This convention can be called as “Mother convention” of the other two Rio Conventions that emerged as a major outcome of the 1992 Rio Earth Summit viz. United Nations Framework Convention on Climate Change (UNFCCC) and Convention on Biological Diversity (CBD).

Revised Voluntary Retention Route (VRR) for Investments by Foreign Portfolio Investors (FPIs) (23-01-2020)

The Reserve Bank, in consultation with the Government of India and Securities and Exchange Board of India (SEBI), introduces a separate channel, called the ‘Voluntary Retention Route’ (VRR), to enable FPIs to invest in debt markets in India. Broadly, investments through the Route will be free of the macro-prudential and other regulatory norms applicable to FPI investments in debt markets, provided FPIs voluntarily commit to retain a required minimum percentage of their investments in India for a period. Participation through this Route will be entirely voluntary. The revised VRR scheme shall be open for allotment from January 24, 2020 as per the following details:-

The investment limit under VRR has been increased to ₹ 1,50,000 crores.

The minimum retention period shall be three years.

Investment limits shall be available ‘on tap’ and allotted on ‘first come, first served’ basis.

The ‘tap’ shall be kept open till the limit is fully allotted.

FPIs may apply for investment limits online to Clearing Corporation of India Ltd. (CCIL) through their respective custodians.



Yes Bank Ltd Crisis (18-03-2020)

Yes Bank Ltd. placed under Moratorium (05-03-2020) The financial position of Yes Bank Ltd. (the bank) has undergone a steady decline largely due to inability of the bank to raise capital to address potential loan losses and resultant downgrades, triggering invocation of bond covenants by investors, and withdrawal of deposits. The bank has also experienced serious governance issues and practices in the recent years which have led to steady decline of the bank. The Reserve Bank has been in constant engagement with the bank’s management to find ways to strengthen its balance sheet and liquidity. Since a bank and market led revival is a preferred option over a regulatory restructuring, the Reserve Bank made all efforts to facilitate such a process and gave adequate opportunity to the bank’s management to draw up a credible revival plan, which did not materialise. In the meantime, the bank was facing regular outflow of liquidity. After taking into consideration these developments, the Reserve Bank came to the conclusion that in the absence of a credible revival plan, and in public interest and the interest of the bank’s depositors, it had no alternative but to apply to the Central Government (Ministry of Finance) for imposing a moratorium under section 45 of the Banking Regulation Act, 1949. Accordingly, the Central Government has imposed moratorium effective from 05-03-2020 for a period of 30 days. The Reserve Bank assures the depositors of the bank that their interest will be fully protected and there is no need to panic. In terms of the provisions of the Banking Regulation Act, the Reserve Bank will explore and draw up a scheme in the next few days for the bank’s reconstruction or amalgamation and with the approval of the Central Government, put the same in place well before the period of moratorium of thirty days ends so that the depositors are not put to hardship for a long period of time. Govt restricted withdrawals limit to Rs 50,000 per depositor till April 3 due to poor financial health. Supersession of the Board of Directors - Appointment of Administrator - Yes Bank Ltd (05-03-2020) In exercise of the powers conferred under 36ACA of the Banking Regulation Act 1949, the Reserve Bank has, in consultation with Central Government, superseded the Board of Directors of Yes Bank Ltd. for a period of 30 days owing to serious deterioration in the financial position of the Bank. This has been done to quickly restore depositors’ confidence in the bank, including by putting in place a scheme for reconstruction or amalgamation. Shri Prashant Kumar, ex-DMD and CFO of State Bank of India has been appointed as the administrator under Section 36ACA (2) of the Act. Cessation of Moratorium On 13 March 2020, the Union Cabinet approved the “Yes Bank Limited Reconstruction Scheme, 2020" and moratorium issued by Govt of India dated March 5, 2020 has ended w.e.f. Wednesday, March 18, 2020, 18:00 hours. Current administrator Prashant Kumar was appointed Managing director and CEO.

Punjab and Maharashtra Cooperative Bank Crisis (23-03-2020)

In September 2019, the RBI had restricted operations of the PMC Bank for six months after a multi-crore scam (default on repayment of loan by Housing Development & Infrastructure Limited) came to light. Punjab and Maharashtra Cooperative Bank Limited, Mumbai, Maharashtra, a Multi-State Urban Cooperative Bank was placed by RBI under All-Inclusive Directions under sub-section (1) of Section 35 A read with Section 56 of the Banking Regulation Act, 1949 with effect from close of business on September 23, 2019 in the interest of depositor protection for a period of 6 months. The Directions were necessitated on account of major financial irregularities, failure of internal control and systems of the bank and wrong/under-reporting of its exposures under various Off-site Surveillance reports to RBI that came to the Reserve Bank’s notice recently. Therefore, the Board of the bank has also been superseded under sub sections (1) and (2) of Section 36 AAA read with Section 56 of the Banking Regulation Act, 1949 and Jai Bhagwan Bhoria as the Administrator has been appointed.


https://rbidocs.rbi.org.in/rdocs/content/pdfs/21655005032020.pdf


The Directions were modified from time to time, the last being on November 5, 2019 as a result of which 78 per cent of the depositors of the bank were in a position to withdraw their entire account balance. Reserve Bank has been closely monitoring the situation and has been holding regular meetings with the Administrator and the Advisory Committee of the bank. The Reserve Bank has also been, directly and through the Administrator, discussing with various authorities on expeditious sale of securities and recoveries of loans. Due to various factors including legal processes, tangible outcomes are taking some time. It must be noted that unlike in the case of commercial banks, the Reserve Bank has no powers to draw up an enforceable scheme of reconstruction of a cooperative bank. Nevertheless, in the interest of the depositors and the stability of the cooperative banking sector, the Reserve Bank of India, in consultation with various stakeholders and authorities, is trying to work out a scheme for revival of the bank. In order to take this forward, it is considered necessary to extend the aforesaid Directions for a further period of three months. Accordingly, it is hereby notified for the information of the public that the validity of the aforesaid Directive dated September 23, 2019, as modified from time to time, has been extended for a further period of three months from March 23, 2020 to June 22, 2020, subject to review. The bank will continue to undertake banking business with restrictions till further notice/instructions. Co-Operative banks Co-Operative banks are an important part of the financial system. Despite of being a Bank registered under the Banking Regulation Act 1949, these institutions are necessarily " the Co-Operative societies and are registered under the State Co-Operative Societies Act." The Co-Operative Banks were established over 100 years ago and were brought under the purview of Reserve Bank of India, by amending the Banking Regulation Act 1949 Reserve Bank of India conducts regular inspection of Co-Operative banks. Co-Operative banks have dual regulatory mechanism (RBI and State Govt) which restrict the ability of the Reserve Bank in handling the weaknesses of entities in the sector. Banking Regulation (Amendment) Bill, 2020 The Banking Regulation (Amendment) Bill, 2020 was introduced in Lok Sabha by the Minister of Finance, Ms. Nirmala

Sitharaman, on March 3, 2020 to bring cooperative banks under the regulatory mechanism of Reserve Bank of India.

The government has taken this move in the wake of the Punjab and Maharashtra Co-operative (PMC) Bank crisis.

The Bill seeks to amend the Banking Regulation Act, 1949, with regard to cooperative banks. It is proposed to bring the co-operative banks on par with the developments in the banking sector through better management and proper regulation of co-operative banks with a view to ensure that the affairs of the co-operative banks are conducted in a manner that protects the interests of the depositors. It is further proposed to strengthen the co-operative banks by increasing professionalism, enabling access to capital,

improving governance and ensuring sound banking through the Reserve Bank of India.

Seventh Bi-monthly Monetary Policy Statement, 2019-20 Resolution of the Monetary Policy Committee (MPC)

Reserve Bank of India (27-03-2020)

On the basis of an assessment of the current and evolving macroeconomic situation, the Monetary Policy Committee (MPC) at its meeting decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 75 basis points to 4.40 per cent from 5.15 per cent with immediate effect. Accordingly, the marginal standing facility (MSF) rate and the Bank Rate stand reduced to 4.65 per cent from 5.40 per cent. Reverse repo rate under the LAF stands reduced by 90 basis points to 4.0 per cent. The MPC also decided to continue with the accommodative stance as long as it is necessary to revive growth and mitigate the impact of coronavirus (COVID-19) on the economy, while ensuring that inflation remains within the target. These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth.



COVID-19 – Regulatory Package by RBI (27-03-2020)

Moratorium on Term Loans In respect of all term loans (including agricultural term loans, retail and crop loans), all commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies) (“lending institutions”) are permitted to grant a moratorium of three months on payment of all instalments falling due between March 1, 2020 and May 31, 2020. The repayment schedule for such loans as also the residual tenor, will be shifted across the board by three months after the moratorium period. Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period. Instalments will include the following payments falling due from March 1, 2020 to May 31, 2020: (i) principal and/or interest components; (ii) bullet repayments; (iii) Equated Monthly instalments (EMI); (iv) credit card dues. Deferment of Interest on Working Capital Facilities In respect of working capital facilities sanctioned in the form of cash credit/overdraft (“CC/OD”), lending institutions are permitted to defer the recovery of interest applied in respect of all such facilities during the period from March 1, 2020 upto May 31, 2020 (“deferment”). The accumulated accrued interest shall be recovered immediately after the completion of this period. Cash Reserve Ratio As a one-time measure to help banks tide over the disruption caused by COVID-19, RBI has decided to reduce the cash reserve ratio (CRR) of all banks by 100 basis points to 3.0 per cent of net demand and time liabilities (NDTL) with effect from the reporting fortnight beginning March 28, 2020. This reduction in the CRR would release primary liquidity of about ₹ 1,37,000 crore uniformly across the banking system in proportion to liabilities of constituents rather than in relation to holdings of excess SLR. This dispensation will be available for a period of one year ending on March 26, 2021. Furthermore, taking cognisance of hardships faced by banks in terms of social distancing of staff and consequent strains on reporting requirements, it has been decided to reduce the requirement of minimum daily CRR balance maintenance from 90 per cent to 80 per cent effective from the first day of the reporting fortnight beginning March 28, 2020. This is a one-time dispensation available up to June 26, 2020. Marginal Standing Facility Under the marginal standing facility (MSF), banks can borrow overnight at their discretion by dipping up to 2 per cent into the Statutory Liquidity Ratio (SLR). In view of the exceptionally high volatility in domestic financial markets which bring in phases of liquidity stress and to provide comfort to the banking system, RBI has decided to increase the limit of 2 per cent to 3 per cent with immediate effect. This measure will be applicable up to June 30, 2020. This is intended to provide comfort to the banking system by allowing it to avail an additional ₹ 1,37,000 crore of liquidity. Targeted Long Term Repos Operations (TLTROs) The onset and rapid propagation of COVID-19 in India has ignited large sell-offs in the domestic equity, bond and forex markets. With the intensification of redemption pressures, liquidity premia on instruments such as corporate bonds, commercial paper and debentures have surged. Combined with the thinning of trading activity with the COVID outbreak, financial conditions for these instruments, which are used, inter alia, to access working capital in the face of the slowdown in bank credit, have also tightened. In order to mitigate their adverse effects on economic activity leading to pressures on cash flows, it has been decided that the Reserve Bank will conduct auctions of targeted term repos of up to three years tenor of appropriate sizes for a total amount of up to ₹ 1,00,000 crore at a floating rate linked to the policy repo rate. Liquidity availed under the scheme by banks has to be deployed in investment grade corporate bonds, commercial paper, and non-convertible debentures over and above the outstanding level of their investments in these bonds as on March 27, 2020. Banks shall be required to acquire up to fifty per cent of their incremental holdings of eligible instruments from primary market issuances and the remaining fifty per cent from the secondary market, including from mutual funds and non-banking finance companies. Deferment of Implementation of Net Stable Funding Ratio (NSFR) As part of reforms undertaken in the years following the global financial crisis, the Basel Committee on Banking Supervision (BCBS) had introduced the Net Stable Funding Ratio (NSFR) which reduces funding risk by requiring banks



to fund their activities with sufficiently stable sources of funding over a time horizon of a year in order to mitigate the risk of future funding stress. Banks in India were required to maintain NSFR of 100 per cent from April 1, 2020. RBI has decided to defer the implementation of NSFR by six months from April 1, 2020 to October 1, 2020. Deferment of Last Tranche of Capital Conservation Buffer The capital conservation buffer (CCB) is designed to ensure that banks build up capital buffers during normal times (i.e., outside periods of stress) which can be drawn down as losses are incurred during a stressed period. As per Basel standards, the CCB was to be implemented in tranches of 0.625 per cent and the transition to full CCB of 2.5 per cent was set to be completed by March 31, 2020. Considering the potential stress on account of COVID-19, it has been decided to further defer the implementation of the last tranche of 0.625 per cent of the CCB from March 31, 2020 to September 30, 2020.

Establishment of Defence Corridors at Tamil Nadu (02-03-2020)

In pursuance to the Union Budget announcement (2018-19), it has been decided to set up two Defence Industrial Corridors in the Country, one in Uttar Pradesh and another in Tamil Nadu. Setting up of Tamil Nadu Defence Industrial Corridor would catalyse indigenous production of defence and aerospace related items, thereby reducing our reliance on imports and promoting export of these items to other countries. This will lead to generation of direct & indirect employment opportunities and growth of private domestic manufacturers including Micro, Small and Medium Enterprises (MSMEs) and start-ups.

Cabinet approves the Foreign Direct Investment policy on Civil Aviation (04-03-2020)

To permit foreign investment upto 100% by those NRIs, who are Indian Nationals, in case of M/s Air India Ltd., the Union Cabinet, chaired by the Prime Minister, Shri Narendra Modi has approved to amend the extant FDI Policy to permit Foreign Investment (s) in M/s Air India Ltd by NRIs, who are Indian Nationals, upto to 100% under automatic route. Benefits: In light of the proposed strategic disinvestment of 100% of M/s Air India Ltd. by the Government of India, M/s Air India Ltd. will have no residual Government ownership and will be completely privately owned, it has been decided that foreign investment in M/s Air India Ltd be brought on a level playing field with other scheduled airline operators. The amendment in FDI policy will permit foreign investment in M/s Air India Ltd at par with other Scheduled Airline Operators i.e. upto 100% in M/s Air India Ltd by those NRIs, who are Indian Nationals. Background: FDI is a major driver of economic growth and a source of non-debt finance for the economic development of the country. The FDI policy is reviewed on an ongoing basis, with a view to attract larger volumes of foreign investment inflows into the country. Government has put in place an investor friendly policy on FDI, under which FDI up to 100% is permitted on the automatic route in most sectors/activities. FDI policy provisions have been progressively liberalized across various sectors in the recent past to make India an attractive investment destination. These reforms have contributed to India attracting record FDI inflows in the recent past. FDI inflows in India stood at US $ 45.15 billion in 2014-15 and have consistently increased since then. FDI inflows increased to US $ 55.56 billion in 2015-16, US $ 60.22 billion in 2016-17, US $ 60.97 billion in 2017-18 and the country registered its highest ever FDI inflow of US $ 62.00 billion (provisional figure) during the last Financial Year 2018-19. Global FDI inflows have been facing headwinds for the last few years. As per UNCTAD’s World Investment Report 2019, Global Foreign Direct Investment (FDI) flows slid by 13% in 2018 to US $1.3 trillion in the previous year, that is the third consecutive annual decline. Despite the dim global picture, India continues to remain a preferred and attractive destination for Global FDI flows. However, it is felt that the country has the potential to attract far more Foreign Investment which can be achieved, inter-alia, by further liberalizing and simplifying the FDI policy regime.



Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman unveiled EASE 3.0, the Public Sector

Bank (PSB) Reforms Agenda 2020-21 for smart, tech-enabled banking (26-02-2020)

EASE 3.0 sets the agenda and roadmap for FY21 for their transformation into digital and data-driven NextGen Banking of the Future for an aspiring India. With EASE 1.0 and 2.0 laying a firm foundation of robust banking and institutionalised systems, PSBs are set to transform into digital- and data-driven NextGen banks. EASE 3.0 emphasizes on the use of digital, analytics & AI, FinTech partnerships across customer service, convenient banking, end-to-end digitalised processes for loan sourcing and processing, analytics-driven risk management as well as decision support systems for HR. PSB Reforms EASE Agenda is a common reform agenda for PSBs aimed at institutionalizing clean and smart banking. It was launched in January 2018. Key Reform Action Points in EASE 3.0 include:

Dial-a-loan: Digitally-enabled doorstep facilitation for initiation of retail and MSME loans. Customers will have the facility to register loan requests through digitally-enabled channels

Customer-need driven credit offers by larger PSBs to existing customers through analytics, e.g., for EMI on expenses like holidays/school-fees/jewellery/consumer durables, home loan takeovers, loan-against-property post home loan closure, working capital enhancement based on sales jump

Partnerships with FinTechs and E-commerce companies for customer-need driven credit offers

Credit@click: End-to-end digitalised, time-bound retail and MSME lending by larger PSBs, leveraging Account Aggregators, FinTechs and PSBloansin59minutes.com

Cash-flow-based MSME credit by larger PSBs, using FinTech, Account Aggregator and other third-party data and transactions-based underwriting models

Tech-enabled agriculture lending

Palm banking: End-to-end digitalised delivery of a full bouquet of financial services in regional languages and with industry-best service quality

EASE Banking Outlets: On-the-spot banking at frequently visited places such as train stations, bus stands, malls, hospitals, etc. through paperless and digitally-enabled banking outlets and kiosks

India assumes presidency of UN body on Migratory Species for 3 years (17-02-2020)

The Thirteenth Meeting of the Conference of the Parties to the Convention on the Conservation of Migratory Species of Wild Animals (CMS COP13) was held in Gandhinagar (Gujarat). India assumed COP Presidency for the next three years with a focus on Collaborative Approach to tackle Biodiversity Issues. The Convention on Migratory Species (CMS) is an intergovernmental treaty, concluded under the aegis of the United Nations Environmental Programme (UNEP) in 1979 in Bonn, Germany, concerned with the conservation of wildlife and habitats on a global scale and in particular terrestrial, aquatic and avian migratory species throughout their range. CMS provides a global platform for the conservation and sustainable use of migratory animals and their habitats. CMS brings together the States through which migratory animals pass, the Range States, and lays the legal foundation for internationally coordinated conservation measures throughout a migratory range. As the only global convention specializing in the conservation of migratory species, their habitats and migration routes, CMS complements and co-operates with a number of other international organizations, NGOs and partners in the media as well as in the corporate sector. Migratory species of wild animals move from one habitat to another during different times of the year, due to various factors such as food, sunlight, temperature, climate, etc. The movement between habitats, can sometimes exceed thousands of kilometers/miles for some migratory birds and mammals. A migratory route will typically have nesting sites, breeding sites, availability of preferred food and requires the availability of suitable habitat before and after each migration. India has four biodiversity hotspots – Eastern Himalayas, Western Ghats, Indo Myanmar landscape and Andaman and Nicobar Islands and home to as many as 500 species of migratory birds from across the globe. India is home to several migratory species of wildlife including snow leopard, Amur falcons, bar headed Geese, black necked cranes, marine turtles, dugongs, humpbacked whales, etc.


https://www.cms.int/cop13/

https://en.wikipedia.org/wiki/Bonn

https://en.wikipedia.org/wiki/Germany


FATF decides to retain Pakistan in 'Grey List (21-02-2020)

The global money laundering and terror financing watchdog Financial Action Task Force (FATF) decided continuation of Pakistan in the 'Grey List' and warned the country that stern action will be taken if it fails to check the flow of money to terror groups. The decision was taken at the Financial Action Task Force's plenary in Paris. The plenary has noted that Pakistan addressed only a few of the 27 tasks given to it in controlling funding to terror groups like the Lashkar-e-Taiba (LeT), the Jaish-e-Mohammad (JeM) and the Hizbul Mujahideen, which are responsible for a series of attacks in India. The FATF said, Pakistan has to swiftly complete its full action plan by June 2020. If Pakistan fails to comply with the FATF directives, there is every possibility that the global body may put the country in the 'Black List' along with North Korea and Iran. With Pakistan's continuation in the 'Grey List', it will be difficult for the country to get financial aid from the International Monetory Fund, the World Bank, the Asian Development Bank and the European Union, thus further enhancing problems for the nation which is in a precarious financial situation. Pakistan was placed on the 'Grey List' by the FATF in June 2018 and was given a plan of action to complete by October 2019 or face the risk of being placed on the 'Black List' (i.e. High-Risk Jurisdictions subject to a Call for Action). High-risk jurisdictions or Black list High-risk jurisdictions have significant strategic deficiencies in their regimes to counter money laundering, terrorist financing, and financing of proliferation. For all countries identified as high-risk, the FATF calls on all members and urges all jurisdictions to apply enhanced due diligence, and in the most serious cases, countries are called upon to apply counter-measures to protect the international financial system from the ongoing money laundering, terrorist financing, and proliferation financing (ML/TF/PF) risks emanating from the country. This list is often externally referred to as the “black list”. Presently, North Korea and Iran are in black list.

About FATF The FATF is an international policy-making body that sets international anti-money laundering standards and counter-terrorist financing measures. History of the FATF In response to mounting concern over money laundering, the Financial Action Task Force on Money Laundering (FATF) was established by the G-7 Summit that was held in Paris in 1989. Recognising the threat posed to the banking system and to financial institutions, the G-7 Heads of State or Government and President of the European Commission convened the Task Force from the G-7 member States, the European Commission and eight other countries. Members There are currently 39 members of the FATF; 37 jurisdictions and 2 regional organisations (the Gulf Cooperation Council and the European Commission). These 39 Members are at the core of global efforts to combat money laundering and terrorist financing. There are also 31 international and regional organisations which are Associate Members or Observers of the FATF and participate in its work. Indian is a member. Although the Gulf Cooperation Council (GCC) is a full Member of the FATF, the individual Member countries of the GCC (of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) are not. As an FATF Member, the GCC is committed to implementing the anti-money laundering (AML) and counter-terrorist financing (CFT) measures agreed to by the FATF Members. FATF's plenary meetings The FATF's plenary year begins in July and ends in June. During a plenary year, the FATF holds three plenary meetings. The plenary meetings usually take place in October, February and June of each year. The FATF and the OECD The FATF and the OECD are separate organisations. Although the member countries overlap to a large degree, there are several countries which are members of the FATF and not the OECD, and vice versa. However, the FATF Secretariat (currently 40 people) is housed administratively at the OECD Headquarters in Paris.



Public Enterprises Survey 2018-19 Tabled in Parliament (10-02-2020)

The Public Enterprises Survey -2018-19 was tabled in both the Houses of Parliament. The Department of Public Enterprises (DPE), Ministry of Heavy Industries & Public Enterprises, Government of India brings out the Public Sector Enterprises Surveyon the performance of Central Public Sector Enterprises (CPSEs) every year. As per the Survey 2018-19, there were total 348 CPSEs as on 31st March,2019 out of which 249 were operational. Remaining 86 CPSEs were under construction and 13 CPSEs were under closure or liquidation. The highlights of the performance of CPSEs, during 2018-19 are given below: Total paid up capital in all CPSEs as on 31.3.2019 stood at Rs. 2,75,697crore as compared to Rs. 2,53,977 crore as on 31.3.2018, showing a growth of 8.55%. Total financial investment in all CPSEs stood at Rs.16,40,628crore as on 31.3.2019 compared to Rs.14,31,008 crore as on 31.3.2018, recording a growth of 14.65%. Capital Employed in all CPSEs stood at Rs. 26,33,956 crore on 31.3.2019 compared to Rs.23,57,913 crore as on 31.3.2018 showing a growth of 11.71 %. Total gross revenue from operation of all CPSEs during 2018-19 stood at Rs. 25,43,370 crore compared to Rs. 21,54,774 crore in the previous year showing a growth of 18.03 %. Total income of all CPSEs during 2018-19 stood at Rs. 24,40,748 crore compared to Rs. 20,32,001 crore in 2017-18, showing a growth of 20.12%. Profit of 178 profit making CPSEs stood at Rs. 1,74,587 crore during 2018-19 compared to Rs. 1,55,931crore in 2017-18 showing a growth in profit by 11.96%. Loss of 70 loss making CPSEs stood at Rs.31,635 crore in 2018-19 compared to Rs. 32,180 crore in 2017-18 showing decrease in losses by 1.69 %. Overall net profit of operating CPSEs during 2018-19 stood at Rs. 1,42,951 crore as compared to Rs. 1,23,751 crore during 2017-18 showing a growth in overall profit of 15.52%. Reserves & Surplus of CPSEs stood at Rs. 9,93,328 crore as on 31.03.2019 as compared to Rs. 9,26,906 crore as on 31.03.2018, showing an increase by 7.17%. Net worth of all CPSEs went from Rs.11,15,552 crore as on 31.03.2018 to Rs. 12,08,758 crore as on 31.03.2019 showing an increase of 8.36 %. Contribution of CPSEs to Central Exchequer by way of excise duty, customs duty, GST, corporate tax, interest on Central Government loans, dividend and other duties and taxes stood at Rs. 3,68,803 crore in 2018-19 as against Rs. 3,52,361 crore in 2017-18, showing an increase of 4.67%. Foreign exchange earnings of 79 CPSEs through exports of goods and services stood at Rs. 1,43,377 crore in 2018-19 against Rs. 98,714 crore in 2017-18, showing an increase of 45.24%. Foreign exchange expenditure of 144 CPSEs on imports and royalty, know-how, consultancy, interest and other expenditure stood at Rs.6,64,914crore in 2018-19 against Rs. 5,22,256 crore in 2017-18 showing an increase of 27.32%.

USTR Updates List of Developing Countries under US CVD Law. India was removed from the list (10-02-2020)

The Office of the United States Trade Representative (USTR) issued a Notice in the Federal Register updating its list of countries designated as developing or least-developed under U.S. counter-vailing duty laws. India was removed from the list. Federal law specifies certain differential treatment for imports from developing or least-developed countries.



Cabinet approves Mega Consolidation in Public Sector Banks {PSBs} with effect from 1.4.2020 (04-03-2020)

The Union Cabinet, chaired by the Prime Minister, Shri Narendra Modi has approved the mega consolidation of ten PSBs into four which include the – (a) Amalgamation of Oriental Bank of Commerce and United Bank of India into Punjab National Bank (b) Amalgamation of Syndicate Bank into Canara Bank (c) Amalgamation of Andhra Bank and Corporation Bank into Union Bank of India (d) Amalgamation of Allahabad Bank into Indian Bank The amalgamation would be effective from 1.4.2020 and would result in creation of seven large PSBs with scale and national reach with each amalgamated entity having a business of over Rupees Eight lakh crore. The Mega consolidation would help create banks with scale comparable to global banks and capable of competing effectively in India and globally. Greater scale and synergy through consolidation would lead to cost benefits which should enable the PSBs enhance their competitiveness and positively impact the Indian banking system. In addition, consolidation would also provide impetus to amalgamated entities by increasing their ability to support larger ticket-size lending and have competitive operations by virtue of greater financial capacity. The adoption of best practices across amalgamating entities would enable the banks improve their cost efficiency and risk management, and also boost the goal of financial inclusion through wider reach. Further, with the adoption of technologies across the amalgamating banks, access to a wider talent pool, and a larger database, PSBs would be in a position to gain competitive advantage by leveraging analytics in a rapidly digitalising banking landscape.

PM CARES FUND (28-03-2020)

Keeping in mind the need for having a dedicated national fund with the primary objective of dealing with any kind of emergency or distress situation, like posed by the COVID-19 pandemic, and to provide relief to the affected, a public charitable trust under the name of ‘Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund’ (PM CARES Fund)’ has been set up. Prime Minister is the Chairman of this trust and its Members include Defence Minister, Home Minister and Finance Minister. This fund will enable micro-donations as a result of which a large number of people will be able to contribute with smallest of denominations. Bank Account has been opened in SBI for accepting donations. Taxation and other Laws (Relaxation of Certain Provisions) Ordinance, 2020 amended the provisions of the Income-tax Act to provide the same tax treatment to PM CARES Fund as available to Prime Minister National Relief Fund. Therefore, the donation made to the PM CARES Fund shall be eligible for 100% deduction under section 80G of the IT Act. Further, the limit on deduction of 10% of gross income shall also not be applicable for donation made to PM CARES Fund. As the date for claiming deduction u/s 80G under IT Act has been extended up to 30.06.2020, the donation made up to 30.06.2020 shall also be eligible for deduction from income of FY 2019-20. Hence, any person including corporate paying concessional tax on income of FY 2020-21 under new regime can make donation to PM CARES Fund up to 30.06.2020 and can claim deduction u/s 80G against income of FY 2019-20 and shall also not lose his eligibility to pay tax in concessional taxation regime for income of FY 2020-21.

Direct Tax Vivad se Vishwas Scheme, 2020

The ‘Vivad se Vishwas’ Scheme was announced during the Union Budget, 2020, to provide for dispute resolution in respect of pending income tax litigation. The objective of Vivad se Vishwas is to inter alia reduce pending income tax litigation, generate timely revenue for the Government and benefit taxpayers by providing them peace of mind, certainty and savings on account of time and resources that would otherwise be spent on the long-drawn and vexatious litigation process.



Reserve Bank announces the opening of first cohort under the Regulatory Sandbox (04-11-2019)

The Reserve Bank announces the opening of first cohort under the Regulatory Sandbox (RS) with ‘Retail Payments’, as its theme. The adoption of ‘Retail Payments’ as the theme is expected to spur innovation in digital payments space and help in offering payment services to the unserved and underserved segment of the population. Migration to digital modes of making a payment can obviate some of the costs associated with a cash economy and can give customers a friction-free experience. The innovative products/services which, among others, shall be considered for inclusion under RS are as follows: Mobile payments including feature phone based payment services - General innovation in mobile payment services has focussed on or supported app-based access, limited to smartphones and such devices. There is a need to innovate payment services for feature phones to provide the necessary thrust towards enhanced adoption of digital payments by various strata of society. Offline payment solutions - Consumer behaviour has been driving growth of digital payment systems as more and more consumers are embracing mobile technology. Though mobile internet speed has risen, connectivity issues remain unresolved in large areas. Therefore, providing an option of off-line payments through mobile devices for furthering the adoption of digital payments is required. Contactless payments - Contactless payments, while decreasing the time taken for payment checkout, also ease payments for small ticket payment transactions. Tokenisation technologies often form the basis of facilitating seamless e-commerce experiences fuelled by mobile and other connected devices. The rapid growth in devices provides a significant opportunity for payments through any form factor and anywhere. “Enabling Framework for Regulatory Sandbox’ was placed on RBI website on August 13, 2019. (refer page no 62 of Crux) RS usually refers to live testing of new products or services in a controlled/test regulatory environment. Objective of the RS is to foster responsible innovation in financial services, promote efficiency and bring benefit to consumers. Feedback from customers, as end users, educates both the regulator and the innovator as to what costs and benefits might accrue to customers from these innovations.. If any concerns arise, during the sandbox period, appropriate modifications can be made before the product is launched in the broader market. The target applicants for entry to the RS, are FinTech companies including startups, banks, financial institutions and any other company partnering with or providing support to financial services businesses. Regulatory Sandbox Cohorts and Product/Services/Technology The RS may run a few cohorts (end-to-end sandbox process), with a limited number of entities in each cohort testing their products during a stipulated period. The RS shall be based on thematic cohorts focussing on financial inclusion, payments and lending, digital KYC, etc. The cohorts may run for varying time periods but should ordinarily be completed within six months. An indicative list of innovative products/services/technology which could be considered for testing under RS are: 1. Innovative Products/Services

Retail payments

Money transfer services

Marketplace lending

Digital KYC

Financial advisory services

Wealth management services

Digital identification services

Smart contracts

Financial inclusion products

Cyber security products 2. Innovative Technology

Mobile technology applications (payments, digital identity, etc.)

Data Analytics

Application Program Interface (APIs) services

Applications under block chain technologies

Artificial Intelligence and Machine Learning applications


https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=47869


Insurance Regulatory and Development Authority of India (IRDAI) approves 16 proposals under Regulatory

Sandbox (31-03-2020)

The period of approval is from 1st May, 2020 to 31st October, 2020. Earliar on 14th January 2020, IRDAI approved 33 proposals under Regulatory Sandbox for a period from 01st February, 2020 to 31st July, 2020. IRDAI had issued IRDAI (Regulatory Sandbox) Regulations, 2019 in July 2019. RS usually refers to live testing of new products or services in a controlled/test regulatory environment.

Cabinet gives in-principle approval for setting up a new Major Port at Vadhavan in Maharashtra (05-02-2020)

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has given its 'in-principle' approval for setting up a Major Port at Vadhavan near Dahanu in Maharashtra. Total cost of the project is likely to be Rs.65,544.54 crore. Vadhavan port will be developed on "land lord model". A Special Purpose Vehicle (SPV) will be formed with Jawaharlal Nehru Port Trust (JNPT) as the lead partner with equity participation equal to or more than 50% to implement the project. The SPV will develop the port infrastructure including reclamation, construction of breakwater, besides establishing connectivity to the hinterland. All the business activities would be undertaken under PPP mode by private developers. Maharashtra has India's largest container port at JNPT which caters to the hinterland of Maharashtra, North Karnataka, Telangana and secondary hinterland of Gujarat, Madhya Pradesh, Rajasthan, NCR, Punjab and Uttar Pradesh. There is a need for a deep draft port that will accommodate the largest Container Ships in the world and also cater to the spill over traffic from JNPT port once its planned capacity of 10 million TEUs (Twenty-Foot Equivalent Units). is fully utilized. JNPT and Mundra, the two largest container handling ports of the country (for mid size container ships only), have drafts of 15 M and 16 M respectively, while the world's largest container handling modern deep draft ports require a draft of 18M-20M. The Vadhavan port has a natural draft of about 20 meters close to the shore, making it possible for it to handle bigger vessels at the port. Development of Vadhavan port will enable call of container vessels of 16,000-25,000 TEUs capacity, giving advantages of economies of scale & reducing logistics cost. The ever increasing size of container ships makes it imperative that a deep draft container port in West Coast of India is developed.

IOCL signs first Term contract for importing Russian crude oil to India (05-02-2020)

The Minister of Petroleum & Natural Gas and Steel, Shri Dharmendra Pradhan and Mr Igor Sechin, CEO and Chairman of Rosneft witnessed the signing of the first-ever Term Contract between IOCL and Rosneft for importing 2 Million Metric Tonnes of Urals grade crude oil during the year 2020 to India. Sourcing of Russian crude oil through long term contracts is a part of India’s strategy for diversifying the country’s crude oil supplies from non-OPEC countries, and a part of the five-year roadmap for bilateral cooperation in the hydrocarbons sector that was signed during Hon’ble Prime Minister Shri Narendra Modi’s visit to Vladivostok last September. The addition of Russia as a new source for crude oil imports by India’s largest refiner will go a long way in mitigating the risks arising out of geo-political disruptions. The new arrangement would also usher in price stability and energy security for India, which is witnessing robust growth in demand for petroleum products. It will also open up the avenues for other PSU oil refiners to enter into similar term contracts for import of Russian crude oil. The crude oil, being sourced under the contract, will be loaded in Suezmax vessels at Novorossiysk port of Russia and will come to India, bypassing Straits of Hormuz.



Central Government Notifies National Startup Advisory Council (21-01-2020)

The Central Government has notified the structure of the National Startup Advisory Council to advise the Government on measures needed to build a strong ecosystem for nurturing innovation and startups in the country to drive sustainable economic growth and generate large scale employment opportunities. The individual names will be notified later. The Council will suggest measures to foster a culture of innovation amongst citizens and students in particular, promote innovation in all sectors of economy across the country, including semi-urban and rural areas, support creative and innovative ideas through incubation and research and development to transform them into valuable products, processes or solutions to improve productivity and efficiency and create an environment of absorption of innovation in industry. It will also suggest measures to facilitate public organizations to assimilate innovation with a view to improving public service delivery, promote creation, protection and commercialization of intellectual property rights, make it easier to start, operate, grow and exit businesses by reducing regulatory compliances and costs, promote ease of access to capital for startups, incentivize domestic capital for investments into startups, mobilize global capital for investments in Indian startups, keep control of startups with original promoters and provide access to global markets for Indian startups. The National Startup Advisory Council will be chaired by Minster for Commerce & Industry. The Council will consist of the non-official members, to be nominated by Central Government, from various categories like founders of successful startups, veterans who have grown and scaled companies in India, persons capable of representing interests of investors into startups, persons capable of representing interests of incubators and accelerators and representatives of associations of stakeholders of startups and representatives of industry associations. The term of the non-official members of the Startup Advisory Council will be for a period of two years. The nominees of the concerned Ministries/Departments/Organisations, not below the rank of Joint Secretary to the Government of India, will be ex-officio members of the Council. Joint Secretary, Department for Promotion of Industry and Internal Trade will be the Convener of the Council.

Finance Minister announces Rs 1.70 Lakh Crore relief package under Pradhan Mantri Garib Kalyan Yojana for

the poor to help them fight the battle against Corona Virus (26-03-2020)

Following are the components of the Pradhan Mantri Garib Kalyan Package: — I. Insurance scheme for health workers fighting COVID-19 in Government Hospitals and Health Care Centres

Safai karamcharis, ward-boys, nurses, ASHA workers, paramedics, technicians, doctors and specialists and other health workers would be covered by a Special insurance Scheme.

Any health professional, who while treating Covid-19 patients, meet with some accident, then he/she would be compensated with an amount of Rs 50 lakh under the scheme.

All government health centres, wellness centres and hospitals of Centre as well as States would be covered.

Under this scheme approximately 22 lakh health workers would be provided insurance cover to fight this pandemic.

II. PM Garib Kalyan Ann (अन्न) Yojana

Government of India would not allow anybody, especially any poor family, to suffer on account of non-availability of foodgrains due to disruption in the next three months.

80 crore individuals, i.e, roughly two-thirds of India’s population would be covered under this scheme.

Each one of them would be provided double of their current entitlement over next three months.

This additionality would be free of cost. Pulses: To ensure adequate availability of protein to all the above mentioned individuals, 1 kg per family, would be provided pulses according to regional preferences for next three months. These pulses would be provided free of cost by the Government of India. III. Benefit to farmers: The first instalment of Rs 2,000 due in 2020-21 will be front-loaded and paid in April 2020 itself under the PM KISAN Yojana. It would cover 8.7 crore farmers. IV. Cash transfers: Help to Poor:



A total of 20.40 crores PMJDY women account-holders would be given an ex-gratia of Rs 500 per month for next three months. Gas cylinders: Under PM Garib Kalyan Yojana, gas cylinders, free of cost, would be provided to 8 crore poor families (beneficiaries of the Pradhan Mantri Ujjwala Yojana) for the next three months. Help to low wage earners in organised sectors:

Wage-earners below Rs 15,000 per month in businesses having less than 100 workers are at risk of losing their employment.

Under this package, government proposes to pay 24 percent of their monthly wages into their PF accounts for next three months.

This would prevent disruption in their employment. Support for senior citizens (above 60 years), widows and Divyang: There are around 3 crore aged widows and people in Divyang category who are vulnerable due to economic disruption caused by COVID-19. Government will give them Rs 1,000 to tide over difficulties during next three months. MNREGA Under PM Garib Kalyan Yojana, MNREGA wages would be increased by Rs 20 (i.e. from 182 to 202) with effect from 1 April, 2020. Wage increase under MNREGA will provide an additional Rs 2,000 benefit annually to a worker. This will benefit approximately 13.62 crore families. V. Self-Help groups: Women organised through 63 lakhs Self Help Groups (SHGs) support 6.85 crore households. Limit of collateral free lending would be increased from Rs 10 to Rs 20 lakhs. VI. Other components of PM Garib Kalyan package Organised sector: Employees’ Provident Fund Regulations will be amended to include Pandemic as the reason to allow non-refundable advance of 75 percent of the amount or three months of the wages, whichever is lower, from their accounts. Families of four crore workers registered under EPF can take benefit of this window. Building and Other Construction Workers Welfare Fund: Welfare Fund for Building and Other Constructions Workers has been created under a Central Government Act. There are around 3.5 Crore registered workers in the Fund. State Governments will be given directions to utilise this fund to provide assistance and support to these workers to protect them against economic disruptions. The fund is having unutilized amount of Rs. 52000 Cr. For BOCW act, refer page no 102 of Crux District Mineral Fund The State Government will be asked to utilise the funds available under District Mineral Fund (DMF) for supplementing and augmenting facilities of medical testing, screening and other requirements in connection with preventing the spread of CVID-19 pandemic as well as treating the patients affected with this pandemic. The fund is having unutilized amount of around Rs. 23500 Cr. About DMF The Mines and Minerals (Development & Regulation) Amendment Act, 2015, mandated the setting up of District Mineral Foundations (DMFs) by State Govt. in all districts in the country affected by mining related operations. Miners will have to contribute an amount equal to 10% (30% for mines allocated prior to 12.01.2015) of the royalty payable by them to the DMFs Central Government on 17-09-2015 announced the launch of the Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY) to provide for the welfare of areas and people affected by mining related operations, using the funds generated by District Mineral Foundations (DMFs).



Parliament passed the Recycling of Ships Bill 2019 (09-12-2019)

Parliament passed a landmark “The Recycling of Ships Bill 2019’’ for Safe and Environmentally Sound Recycling of Ships in India.

Earliar, India has acceded to Hong Kong International Convention of International Maritime Organization (an UN Specialised agency of which India is a member) for Safe and Environmentally Sound Recycling of Ships, 2009 on 28th November, 2019.

The existing Shipbreaking Code (revised), 2013 and the provisions of the Hong Kong Convention, 2009 are dovetailed in this Bill.

India is a leader in the global ship recycling industry with a share of over 30 per cent of the global market. With the enactment of this bill, India will set global standards for safe and sound environmentally-friendly recycling of Ships, as well as ensure adequate safety of the yard workers.

The Recycling of Ships Act, 2019 restricts and prohibits the use or installation of hazardous materials, which applies irrespective of whether a shipis meant for recycling or not.

Under this Act, ship recycling facilities are required to be authorized and ships shall be recycled only in such authorized ship recycling facilities. This Act also provides that ships shall be recycled in accordance with a ship-specific recycling plan. Ships to be recycled in India shall be required to obtain a Ready for Recycling Certificate in accordance with the Hong Kong Convention.

The Act imposes a statutory duty on ship recyclers to ensure safe and environmentally sound removal and management of hazardous wastes fromships. Appropriate penal provisions have been introduced in the Act to deter any violation of statutory provisions. Benefits The ship-recycling industry is a labour-intensive sector. This bill will pave the way for more global ships to enter into Indian Shipyards for recycling and boost employment and business opportunities also.

It will raise the brand value of our Ships Recycling Yards located at Alang in Gujarat, Mumbai Port, Kolkata Port & Azhikkal in Kerela.

10% of country’s Secondary steel needs, as an outcome of Recycling of Ships, will be met in an eco-friendly manner.

Moody changed Outlook on India’s Baa2 rating from stable to negative (i.e. Rating may be lowered) on risk of

lower economic growth (08-11-2019)

Moody’s Investor Services (A Global Credit Rating agency) said that Despite government measures to help reduce the depth and duration of India’s slowdown in economic growth, prolonged financial stress among rural households, weak job creation, and a credit crunch among non-bank financial institutions have increased the probability of a more entrenched slowdown.

If nominal GDP growth does not return to higher rates, the government will face significant constraints in narrowing its budget deficit and preventing a rise in debt. About Credit rating Credit rating is an assessment of the probability of default on payment of interest and principal on a debt instrument. It is not a recommendation to buy, sell or hold a debt instrument. Rating only provides an additional input to the investor and the investor is required to make his own independent and objective analysis before arriving at an investment decision. Big Three credit rating agencies of the World controlling approximately 95% of the ratings business Standard and Poor’s (S&P) (based in US) Moody’s Investor Services, (based in US) Fitch Ratings, (based in US & UK i.e dual HQ)

These Credit ratings agencies were criticized after the global financial crisis of 2008, when they were exposed after the collapse of highly rated banks and other institutions.

Uses and Impact of Credit Rating Sovereign ratings gives investors insight into the level of risk associated with investing in a particular country including political risks.



Ratings play a critical role in determining the interest rate on loan. High credit rating means an assurance about the safety of the money and that it will be paid back with interest on time. Higher the credit rating, lower will the rate of interest.

From a company’s or a government’s perspective, a better rating helps raise funds at a cheaper rate. The agencies do this on a continuous basis, either upgrading or downgrading the rating based on performance, prospects, or events likely to have an impact on the balance sheet of a company or on the fiscal position of a government.

Rating upgrade will improve foreign debt inflows and in turn strengthen the rupee, instilling confidence in the economy.

Rating upgrade would reduce the cost of capital for Indian companies and that investors who were earlier restricted would be able to invest in India.

The rating upgrade indicates that the international rating agencies are viewing country's macro economic management in a positive light. It will send a positive signal about Indian economy to all the potential investors across the globe.

Rating downgrade may influence foreign investors to pull out of money from Indian Market. Rupee will weaken. Borrowing cost will be increased for Indian companies.

Credit Rating Scale-Investment Grade

Moody's S&P Fitch Credit worthiness

Aaa AAA AAA Extremely strong capacity to meet financial commitments. Highest rating.

Aa1 AA+ AA+

Very strong capacity to meet financial commitments Aa2 AA AA

Aa3 AA− AA−

A1 A+ A+ Strong capacity to meet financial commitments, but somewhat susceptible to adverse economic conditions and changes in circumstances.

A2 A A

A3 A− A−

Baa1 BBB+ BBB+ Adequate capacity to meet financial commitments, but more subject to adverse economic conditions. Considered lowest investment-grade by market participants.

Baa2 BBB BBB

Baa3 BBB− BBB−

A bond is considered investment grade if its credit rating is BBB- or higher by Fitch Ratings or S&P, or Baa3 or higher by Moody's. Generally they are bonds that are judged by the rating agency as likely enough to meet payment obligations that banks are allowed to invest in them. Speculative Grade (Vulnerable to adverse business, financial and economic conditions) Ba1, BB+, B1, B+, Caa, CCC, C, D etc

Bonds that are not rated as investment-grade bonds are known as high yield bonds or as junk bonds. India’s Credit Rating India is in lowest investment-grade. On 16th November,2017 Moody upgraded the Government of India rating from Baa3 to Baa2 with stable outlook. S&P rating is BBB- with Stable outlook from 26-09-2014. Fitch rating is BBB- with Stable outlook from 12-06-2013. Finance Ministry responds to Moody’s change in outlook India continues to be among the fastest growing major economies in the world, India’s relative standing remains unaffected. IMF in their latest World Economic Outlook has stated that Indian Economy is set to grow at 6.1% in 2019, picking up to 7% in 2020.

As India’s potential growth rate remains unchanged, assessment by IMF and other multilateral organizations continue to underline a positive outlook on India.

The Government has undertaken series of financial sector and other reforms to strengthen the economy as a whole.

Government of India has also proactively taken policy decisions in response to the global slowdown. These measures would lead to a positive outlook on India and would attract capital flows and stimulate investments.

The fundamentals of the economy remain quite robust with inflation under check and bond yields low. India continues to offer strong prospects of growth in near and medium term.

India has become a better place to do business now, which can be reflected in the latest rankings released by the World Bank in its latest Doing Business Report (DBR, 2020). India has recorded a jump of 14 positions against its rank of 77 in 2019 to be placed now at 63rd rank among 190 countries assessed by the World Bank.


https://en.wikipedia.org/wiki/Moody%27s

https://en.wikipedia.org/wiki/Standard_%26_Poor%27s

https://en.wikipedia.org/wiki/Fitch_Ratings

https://en.wikipedia.org/wiki/Bond_(finance)

https://en.wikipedia.org/wiki/Fitch_Group

https://en.wikipedia.org/wiki/Standard_%26_Poor%27s

https://en.wikipedia.org/wiki/Moody%27s

https://en.wikipedia.org/wiki/Junk_bonds


What India should do to improve its Rating The growth slowdown and its effects on the fiscal deficit and borrowings are the main worries.

Improve the Tax collection.

Stimulate GDP Growth

Reduce Debt to GDP ratio (Target for 2019-20 is 50.3%. As per FRBM Act Target is 40% by 31-03-2025)

Reduce the Fiscal Deficit (Target for 2019-20 is 3.8% of GDP. As per FRBM Act Target is 3% by 31-03-2021) BRICS Rating Agency At 8th BRICS Summit held in Goa in 2016, BRICS nations agreed to set up an independent BRICS Rating Agency based on market-oriented principles, in order to further strengthen the global governance architecture. India had first mooted the idea of having such an agency for the BRICS (Brazil, Russia, India, China, South Africa) grouping, which could solve impediments for the emerging market economies posed by the present credit rating agency market dominated by S&P, Moody’s and Fitch.

India expressed concerns over methodologies of the big three global agencies saying that these are constraining growth in emerging nations.

Cabinet approves strategic disinvestment of CPSEs (20-11-2019)

The Cabinet Committee on Economic Affairs, chaired by Prime Minister Shri Narendra Modi has accorded 'In-principle' approval for strategic disinvestment in select CPSEs as per the details below: Bharat Petroleum Corporation Ltd. (BPCL) Strategic disinvestment of Government of India shareholding of 53.29% along with transfer of management control to a strategic buyer.

Shipping Corporation of India Ltd. (SCI) Strategic disinvestment of Government of India shareholding of 63.75% in Shipping Corporation of India Ltd along with transfer of management control to a strategic buyer.

Container Corporation of India Ltd. (CONCOR) Strategic disinvestment of Government of India shareholding of 30.8% (out of 54.8% equity presently held by the Government of India) along with transfer of management control to a strategic buyer.

Tehri Hydro Development Corporation India Limited (THDCIL) Strategic disinvestment of Government of India shareholding of 74.23% in THDCIL along with transfer of management control to an identified CPSE strategic buyer, namely, NTPC.

North Eastern Electric Power Corporation Limited (NEEPCO) Strategic disinvestment of Government of India shareholding of 100% in NEEPCO along with transfer of management control to an identified CPSE strategic buyer, namely, NTPC. These all are profit making PSUs. As per Public Enterprises Survey 2017-18, Profit of Profit making CPSEs (184 CPSEs) stood at Rs. 1,59,635 crore during 2017-18. Loss of loss incurring CPSEs (i.e. 71 CPSEs) stood at Rs. 31,261 crore in 2017-18. Dividend declared/paid by CPSEs in the year 2017-18 stood at Rs.76,578 crore. Government Company or PSU As per Section 2(45) of Companies act 2013, Government company” means any company in which not less than fifty one per cent (51%) of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government company; Features of Disinvestment Policy

promote public ownership of CPSEs

pursuing disinvestment through minority stake sale in listed CPSEs, the Government will retain majority shareholding, i.e. at least 51 per cent of the shareholding and management control of the Public Sector Undertakings;

Strategic disinvestment by way of sale of substantial portion of Government shareholding in identified CPSEs upto 50 per cent or more, alongwith transfer of management control. Strategic Disinvestment Strategic Disinvestment "Strategic disinvestment would imply the sale of substantial portion of the Government share holding of a central public sector enterprise (CPSE) of upto 50%, or such higher percentage as the competent authority may determine, along with transfer of management control."



Main objective for Setting up the Public Sector Enterprises To help in the rapid economic growth and industrialisation of the country and create the necessary infrastructure for economic development;

2nd Five Year Plan (1956-61) stated very clearly that 'the adoption of socialist pattern of society as the national objective, as well as the need for planned and rapid development, require that all industries of basic and strategic importance, or in the nature of public utility services, should be in the public sector. Other industries, which are essential and require investment on a scale, which only the state, in the present circumstances, could provide, have also to be in the public sector. The state has, therefore, to assume direct responsibility for the future development of industries over a wider area '.

The Second Plan further emphasized that ' the public sector has to expand rapidly. It has not only to initiate developments which the private sector is either unwilling or unable to undertake, it has to play the dominant role in shaping the entire pattern of investment in the economy, whether it makes the investments directly or whether these are made by the private sector. The private sector has to play its part within the framework of the comprehensive plan accepted by the community.' Need for privatisation of PSEs Strategic Disinvestment is guided by the basic economic principle that the Government should discontinue its engagement in manufacturing/producing goods and services in sectors where the competitive markets have come of age, and such entities would most likely perform better in the private hands due to various factors e.g. technology up-gradation and efficient management practices; and would thus add to the GDP of the country.

In India for almost four decades the country was pursuing a path of development in which public sector was expected to be the engine of growth. However, the public sector had overgrown itself and their shortcomings started manifesting in the shape of low capacity utilization and low efficiency due to over manning and poor work ethics, over capitalisation due to substantial time and cost overruns, inability to innovate, take quick and timely decisions, large interference in decision making process etc.

Prior to 1991, a large number of industries were reserved for the public sector.

It has been widely observed that the PSEs have no commercial motivation. They often face shortage of funds. They generally survive on monopolistic profits. Apart from all this, the increasing integration of the Indian financial, capital and foreign exchange markets with global markets, starting with the economic reforms of July 1991 and the recent WTO Agreements, have exposed the public sector to market forces, as a result of which it now finds itself unable to stand on its own feet without State support.

Disinvestment would expose the privatised companies to market discipline, thereby forcing them to become more efficient and survive or cease on their own financial and economic strength. They would be able to respond to the market forces much faster and cater to their business needs in a more professional manner.

The resources unlocked by the strategic disinvestment of these CPSEs would be used to finance the social sector/developmental programmes of the Government benefiting the public. The unlocked resources would form part of the budget and the usage would come to scrutiny of the public. It is expected that the strategic buyer/ acquirer may bring in new management/technology/investment for the growth of these companies and may use innovative methods for their development.

It is often suggested that weak and sick PSEs should be privatised first, and the profit making PSEs need not be touched. However, the logic / rationale for privatising or not privatising a PSE is not based on whether it is making profit or loss but whether it is in a strategic sector or in a non-strategic sector, and whether the taxpayers' money can be saved from the commercial risks by transferring the risk to the private sector wherever the private sector is willing to step in and assume such risks.

Government presence in such non-strategic sectors not only distorts competitive dynamics for private players, it also results in consumers and taxpayers bearing the brunt of inefficient PSU operations.

In many areas, e.g., the telecom and civil aviation sector, the end of public sector monopoly and privatisation has brought to consumers greater satisfaction by way of more choices, as well as cheaper and better quality of products and services. The disadvantages of sale of minority stakes by the Government:

Lower realisations because management control is not transferred.

The minority sales also give a wrong impression that the main objective of the Government is to obtain funds for reducing its fiscal deficit, and not to improve performance or governance. Why Union oppose disinvestments Fear of Job security and Job cut More responsibility and accountability Longer working hour Fear of Wage cut



However, In the companies privatised till now, no labour retrenchment has taken place. Whenever, rationalization has been undertaken, a VRS package at least equal to that offered by the PSU before privatisation is offered.

At the time of privatisation, suitable provisions are made in the Share Holders’ Agreement (SHA) to protect employee interest. “Best efforts” clause is also incorporated in SHA mentioning the benefits given by the Government to the members of SC/ST, physically challenged person and other socially disadvantaged categories of the society stating that the Strategic Partner shall use its best efforts to cause the company to provide adequate job opportunities to such persons.

In most of the privatised companies better working conditions have been provided. Training, use of computers and other employee welfare measures have been introduced.

They’ve also yielded convincing success stories like Hindustan Zinc’s, which has seen increase in its profits since its takeover by Vedanta in 2002. Disinvestment target Centre has set Rs 1,05,000 crore disinvestment target for 2019-20. Achievement is Rs. 50,298.64 Cr till date.

World Economic Forum Annual Meeting 2020 (21-24th January 2020)

Theme of 2020 meeting is “Stakeholders for a Cohesive and Sustainable World” The World Economic Forum Annual Meeting in Davos-Klosters, Switzerland is the foremost creative force for engaging the world's top leaders in collaborative activities to shape the global, regional and industry agendas at the beginning of each year. It will bring together 3,000 participants from around the world, and aim to give concrete meaning to “stakeholder capitalism”, assist governments and international institutions in tracking progress towards the Paris Agreement and the Sustainable Development Goals, and facilitate discussions on technology and trade governance.

Stakeholder Capitalism

It says that purpose of a corporation is not just to create financial return to its shareholders, but to create benefits to all of its stakeholders—customers, employees, suppliers, communities, and shareholders. Shareholder capitalism, currently the dominant model, first gained ground in the United States in the 1970s, and expanded its influence globally in the following decades. Its rise was not without merit. During its heyday, hundreds of millions of people around the world prospered, as profit-seeking companies unlocked new markets and created new jobs. Yes, shareholder capitalism has delivered economic growth with many important benefits, but it’s also left a path of environmental and social destruction for future generations to grapple with. Many realize this form of capitalism is no longer sustainable. To uphold the principles of stakeholder capitalism, companies will need new metrics. For starters, a new measure of “shared value creation” should include “environmental, social, and governance” (ESG) goals as a complement to standard financial metrics.

Circular Economy

The global population is expected to reach close to 9 billion people by 2030 – inclusive of 3 billion new middle-class consumers.This places unprecedented pressure on natural resources to meet future consumer demand. A circular economy is an industrial system that is restorative or regenerative by intention and design. It replaces the end-of-life concept with restoration, shifts towards the use of renewable energy, eliminates the use of toxic chemicals and aims for the elimination of waste through the superior design of materials, products, systems and business models. Nothing that is made in a circular economy becomes waste, moving away from our current linear ‘take-make-dispose’ economy. Only 9% of the global economy is circular at present. The circular economy, which promotes the elimination of waste and the continual safe use of natural resources, offers an alternative that can yield up to $4.5 trillion in economic benefits to 2030.



Bank of England's Governor fears A Liquidity Trap (08-01-2020)

The global economy is heading towards a “liquidity trap” that could undermine central banks’ efforts to avoid a future recession according to Mark Carney, governor of the Bank of England. Interest rates in the world (as on 01-04-2020) US 0.25% Australia 0.25% Canada 0.25% Britain 0.10% Japan -0.10% (i.e. negative interest rates) China 4.05% India 4.40% Liquidity trap is a situation in which conventional monetary policies become impotent, because nominal interest rates are at or near zero to avoid a recession. Central banks lowers the interest rates to encourage borrowing, spending, and investment. When interest rates drop to near zero, the central bank wants the public to take your money out of savings accounts

and either spend it or invest it. Since the nominal interest rate is close or equal to zero hence monetary authority (Centrak bank) is unable to stimulate the economy through reduction in interest rates. In this case, Governments should use fiscal policy tools like tax cuts or boosts to public spending to combat a future recession. Negative Interest Rates Under a negative rate policy, financial institutions are required to pay interest for parking excess reserves with the central bank. That way, central banks penalise financial institutions for holding on to cash in hope of prompting them to boost lending. Aside from lowering borrowing costs, advocates of negative rates say they help weaken a country’s currency rate by making it a less attractive investment than that of other currencies. A weaker currency gives a country’s export a competitive advantage and boosts inflation by pushing up import costs.

Country-by-Country Report

In order to ensure that a multinational enterprise would report its profit correctly where it is earned, the Organisation for Economic Cooperation and Development (OECD) had developed an Action Plan called “Base Erosion and Profit Shifting (BEPS) Action Plan 13”. Under BEPS Action Plan 13, all large multinational enterprises (MNEs) are required to prepare a country-by-country (CbC) report with aggregate data on the global allocation of income, profit, taxes paid and economic activity among tax jurisdictions in which they operate. In essence, CbC Report is an annual return that breaks down key elements of the financial statements by jurisdiction. A CbC report provides local tax authorities visibility to revenue, income, tax paid and accrued, employment, capital, retained earnings, tangible assets and activities of the concerned MNE. This CbC report is used as a corroborating material by Income tax Authorities in carrying out revenue risk assessment.

Fifteenth Finance Commission constitutes Group on Defence and Internal Security (13-02-2020)

Shri N.K. Singh, Chairman, Fifteenth finance Commission - Chairman. The mandate of the Group on Defence and Internal Security will be ‘to examine whether a separate mechanism for funding of defence and internal security ought to be set up, and if so, how such a mechanism could be operationalised.’



Fifteenth Finance Commission constitutes High Level Expert Group on Agriculture Exports (17-02-2020)

The Fifteenth Finance Commission has decided to constitute a High Level Expert Group on Agriculture Exports in pursuance of its ToR i.e, to recommend measurable performance incentives for States to encourage ari exports as well as to promote crops to enable high import substitution. Shri Sanjiv Puri, Chairman and Managing Director, ITC, is the Chairman of this group.

Fifteenth Finance Commission constitutes Committee to Review Fiscal Consolidation Roadmap of the

General Government (19-03-2020)

The Terms of Reference of the Committee are –

The Committee shall make recommendations on the definition of deficit and debt for the Central government, overall states, the General Government and public sector enterprises by considering all explicit and measurable liabilities of the sovereign and by bringing in consistency between the definition of debt (stock) and deficit (flow).

The Committee shall also lay down the principles for arriving at the debt of the general government debt and consolidated public sector with appropriate netting to avoid double-counting.

The Committee shall define contingent liabilities, provide quantifiable measures of such liabilities, wherever possible, and specify conditions under which “contingent” liabilities become “explicit” liabilities of the public sector.

Based on the above definition, the Committee shall review the current status of deficit and debt at different levels.

Based on the above, the Committee shall recommend a debt and fiscal consolidation roadmap for FY21-FY25 for the Central Government, overall States and General Government and attempt building up scenarios for public sector enterprises.

The Committee will be chaired by Chairman Sh. N. K. Singh. Analytical and data support to the Committee will be provided by a team from National Institute of Public Finance & Policy, New Delhi. The Economic Division of the Finance Commission Secretariat shall facilitate and support the working of the Committee.

Union Minister of Food Processing Industries launched Market Intelligence and Early Warning System

(MIEWS) Web Portal (26-02-2020)

Smt. Harsimrat Kaur Badal, Union Minister of Food Processing Industries, launched the MIEWS Web Portal for ‘real time monitoring’ of prices of tomato, onion and potato (TOP) and for simultaneously generating alerts for intervention under the terms of the Operation Greens(OG) scheme.

The portal would disseminate all relevant information related to TOP crops such as Prices and Arrivals, Area, Yield and Production, Imports and Exports, Crop Calendars, Crop Agronomy, etc in an easy to use visual format.

MIEWS system is designed to provide advisories to farmers to avoid cyclical production as well as an early warning in situations of gluts.

For decision makers, the MIEWS system will help in

monitoring of supply situation for timely market intervention,

assist in rapid response in times of glut to move produce from glut regions to deficit/consuming regions and

providing inputs for export/import decision making.

5th Edition of Raisina Dialogue 2020

The Raisina Dialogue is a multilateral conference committed to addressing the most challenging issues facing the global community.

Every year, global leaders in policy, business, media and civil society are hosted in New Delhi to discuss cooperation on a wide range of pertinent international policy matters.

The Dialogue is structured as a multi-stakeholder, cross-sectoral discussion, involving heads of state, cabinet ministers and local government officials, as well as major private sector executives, members of the media and academics.

The conference is hosted by the Observer Research Foundation in collaboration with the Government of India, Ministry of External Affairs.



Cabinet approves scheme for “Remission of Duties and Taxes on Exported Products (RoDTEP)” to boost

exports Scheme for enhancing Exports to International Markets (13-03-2020)

The Cabinet Committee on Economic Affairs, chaired by Prime Minister Shri Narendra Modi, has given its approval for introducing the Scheme for Remission of Duties and Taxes on Exported Products (RoDTEP) under which a mechanism would be created for reimbursement of taxes/ duties/ levies, at the central, state and local level, which are currently not being refunded under any other mechanism, but which are incurred in the process of manufacture and distribution of exported products. This scheme is going to give a boost to the domestic industry and Indian exports providing a level playing field for Indian producers in the International market so that domestic taxes/duties are not exported. Under the Scheme an inter-ministerial Committee will determine the rates and items for which the reimbursement of taxes and duties would be provided. In line with “Digital India”, refund under the Scheme, in the form of transferable duty credit/electronic scrip will be issued to the exporters, which will be maintained in an electronic ledger. The Scheme will be implemented with end to end digitization. The refunds under the RoDTEP scheme would be a step towards “zero-rating” of exports, along with refunds such as Drawback and IGST. This would lead to cost competitiveness of exported products in international markets and better employment opportunities in export oriented manufacturing industries. Salient features: At present, GST taxes and import/customs duties for inputs required to manufacture exported products are either exempted or refunded. However, certain taxes/duties/levies are outside GST, and are not refunded for exports, such as, VAT on fuel used in transportation, Mandi tax, Duty on electricity used during manufacturing etc. These would be covered for reimbursement under the RoDTEP Scheme. As and when the rates under the RoDTEP Scheme are announced for a tariff line/ item, the Merchandise Exports from India Scheme (MEIS) benefits on such tariff line/item will be discontinued. RoDTEP scheme is WTO compliant.

Minister of Petroleum and Natural Gas & Steel Shri Dharmendra Pradhan launches PURVODAYA in steel

sector (11-01-2020)

Purvodaya in steel sector is aimed at driving accelerated development of Eastern India through establishment of integrated steel hub in Kolkata, West Bengal. Eastern states of India (Odisha, Jharkhand, Chhattisgarh, West Bengal) and Northern part of Andhra Pradesh collectively hold approx. 80% of the country’s iron ore, 100% of coking coal and significant portion of chromite, bauxite and dolomite reserves. There is presence of major ports such as Paradip, Haldia, Vizag, Kolkata etc., with >30% of India’s major port capacity. In India’s march towards a $5 trillion economy, the 5 Eastern states can play a major role where steel sector can become the catalyst. This Eastern belt has the potential to add more than 75% of the country’s incremental steel capacity envisioned by the National Steel Policy. It is expected that out of the 300 MT capacity by 2030-31, over 200 MT can come from this region alone, driven by Industry 4.0. The proposed Integrated Steel Hub, encompassing Odisha, Jharkhand, Chhattisgarh, West Bengal and Northern Andhra Pradesh, would serve as a torchbearer for socio-economic growth of Eastern India. The objective of this hub would be to enable swift capacity addition and improve overall competitiveness of steel producers both in terms of cost and quality. The Integrated Steel Hub would focus on 3 key elements: 1. Capacity addition through easing the setup of Greenfield steel plants 2. Development of steel clusters near integrated steel plants as well as demand centres. 3. Transformation of logistics and utilities infrastructure which would change the socio-economic landscape in the East Growth of steel industry through such a hub would lead to significant employment opportunities across the entire value chain and will play a significant role in overall socio-economic growth of Eastern India, thus reducing the disparity between the East and other regions of the country.



WMA Limit for Government of India for the first half of the Financial Year 2020-21 (April 2020 to September

2020) (31-03-2020)

RBI, in consultation with the Government of India, decided that the limits for Ways and Means Advances (WMA) for the first half of the financial year 2020-21 (April 2020 to September 2020) will be ₹ 1,20,000 crore. The Reserve Bank may trigger fresh floatation of market loans when the Government of India utilises 75 per cent of the WMA limit. The Reserve Bank retains the flexibility to revise the limit at any time, in consultation with the Government of India, taking into consideration the prevailing circumstances. The interest rate on WMA/overdraft will be: WMA: Repo Rate Overdraft: Two percent above the Repo Rate

Publications/Reports/Index

Women, Business and the Law 2020 World Bank

Gender Parity Index UNESCO

Global Social Mobility Index World Economic Forum

Gender Social Norms Index UN Development Programmme

World Population Prospects UN

Global Investment Trend Monitor report United Nations Conference on Trade and Development (UNCTAD)

World Air Quality Report 2019 IQAir

A Future for the World's Children’ Report

World Health Organization (WHO), UN Children’s Fund (UNICEF) and The Lancet

Worldwide Educating for the Future Index (WEFFI)

The Economist Intelligence Unit

Global Talent Competitiveness Index INSEAD, Google and ADECCO GROUP

Our Future on Earth 2020 Future Earth

Freedom in the World 2020 report Freedom House

Deposit Insurance and Credit Guarantee Corporation (DICGC) increases the insurance coverage for

depositors in all insured banks to ₹ 5 lakh (04-02-2020)

With a view to providing a greater measure of protection to depositors in banks the Deposit Insurance and Credit Guarantee Corporation, a wholly owned subsidiary of the Reserve Bank of India, has raised the limit of insurance cover for depositors in insured banks from the present level of ₹1 lakh to ₹5 lakh per depositor with effect from February 4, 2020 with the approval of Government of India.

Govt brings masks and hand sanitizers under the Essential Commodities Act, 1955 (13-03-2020)

In view the ongoing outbreak of COVID-19 (Corona Virus) and concern of the logistics for COVID-19 management particularly during last couple of weeks and that masks (2 ply & 3 ply surgical masks, N95 masks) and hand sanitizers have been noted to be either not available with most of the vendors in the market or are available with great difficulty at exorbitant prices, Government has notified an Order under the Essential Commodities Act to declare these items as Essential Commodities up to 30th June, 2020 by amending the Schedule of the Essential Commodities Act, 1955. It has also issued an advisory under the Legal Metrology Act. Under the E.C Act, after discussions with the manufacturers, States can ask them to enhance their production capacity of these items, to make the supply chain smooth, while under the L.M. Act the States can ensure sale of both the items

at MRP. The decision would empower the Government and States/UTs to regulate production, quality, distribution etc. of masks (2 ply & 3 ply surgical masks, N95 masks) and hand sanitizers and to smoothen the sale and availability of these items and carry out operations against orders speculators etc. and those involved in over pricing, blackmarketing etc. It will enhance the availability of both the items to the general people at reasonable prices or under MRP.


https://en.wikipedia.org/wiki/World_Economic_Forum

https://www.drishtiias.com/important-institutions/drishti-specials-important-institutions-international-institution/world-health-organization-who

https://www.drishtiias.com/important-institutions/drishti-specials-important-institutions-international-institution/unicef-1

https://www.drishtiias.com/important-institutions/drishti-specials-important-institutions-international-institution/unicef-1


Prices of Alcohols used in manufacturing hand sanitizers capped under the Essential Commodities Act, 1955

(19-03-2020)

In view the ongoing outbreak of COVID-19 (Corona Virus) and concern of the logistics for COVID 19 management particularly during last couple of weeks and that prices of the alcohol used in manufacturing the hand sanitizers have been exorbitantly increased by the producers of such alcohol, Government has notified an Order under the Essential Commodities Act to declare price cap prevailing as on 05.03.2020 on the above alcohols up to 30th June, 2019. It has also notified that the raw materials used in manufacture of essential commodities are also essential commodities under the E.C Act. States can now ask the manufactures of these alcohols not to increase the prices of their produce without concurrence of the Central Government.

CCEA approves Creation of National Technical Textiles Mission (26-02-2020)

The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, has given its approval to set up a National Technical Textiles Mission with a total outlay of Rs 1480 Crore, with a view to position the country as a global leader in Technical Textiles. The Mission would have a four year implementation period from FY 2020-21 to 2023-24. Technical textiles are textiles materials and products manufactured primarily for technical performance and functional properties rather than aesthetic characteristics. Technical Textiles are futuristic and nice segment of textiles, which are used for various applications ranging from agriculture, roads, railway tracks, sportswear, health on one end to bullet proof jacket, fire proof jackets, high altitude combat gear and space applications on other end of spectrum. The Mission will have four components: Component -l (Research, Innovation and Development) with outlay of Rs. 1000 Crore. This component will promote both (i) fundamental research at fibre level aiming at path breaking technological products in Carbon Fibre, Aramid Fibre, Nylon Fibre, and Composites and (ii) application based research in geo-textiles, agro-textiles, medical textiles, mobile textiles and sports textiles and development of biodegradable technical textiles. Component -II (Promotion and Market Development) Indian Technical Textiles segment is estimated at USD 16 Billion which is approximately 6% of the 250 Billion USD global technical textiles market. The penetration level of technical textiles is low in India varying between 5-10% against the level of 30-70% in developed countries. The Mission will aim at average growth rate of 15-20% per annum taking the level of domestic market size to 40-50 Billion USD by the year 2024; through market development, market promotion, international technical collaborations, investment promotions and 'Make in India' initiatives. Component - III (Export Promotion) The component aims at export promotion of technical textiles enhancing from the current annual value of approximately Rs.14000 Crore to Rs.20000 Crore by 2021-22 and ensuring 10% average growth in exports per year upto 2023-24. An Export Promotion Council for Technical Textiles will be set up for effective coordination and promotion activities in the segment. Component- IV (Education, Training, Skill Development) Education, skill development and adequacy of human resources in the country is not adequate to meet the technologically challenging and fast growing technical textiles segment. The Mission will promote technical education at higher engineering and technology levels related to technical textiles and its application areas covering engineering, medical, agriculture, aquaculture and dairy segments. Skill development will be promoted and adequate pool of highly skilled manpower resources will be created for meeting the need of relatively sophisticated technical textiles manufacturing units. The Mission will focus on usage of technical textiles in various flagship missions, programmes of the country including strategic sectors. The use of technical textiles in agriculture, aquaculture, dairy, poultry, etc. JalJivan Mission; Swachch Bharat Mission; Ayushman Bharat will bring an overall improvement in cost economy, water and soil conservation, better agricultural productivity and higher income to farmers per acre of land holding in addition to promotion of manufacturing and exports activities in India. The use of geo-textiles in highways, railways and ports will result in robust infrastructure, reduced maintenance cost and higher life cycle of the infrastructure assets. A Mission Directorate in the Ministry of Textiles headed by an eminent expert in the related field will be made operational. The Mission Directorate will not have any permanent employment and there will be no creation of building infrastructure for the Mission purpose. The Mission will move into sunset phase after four years period.



Cabinet approves the Constitution of an empowered “Technology Group” (19-02-2020)

The Union Cabinet, chaired by the Prime Minister, Shri Narendra Modi has approved constitution of a 12-Member Technology Group with the Principal Scientific Adviser to Government of India as its Chair. This Group is mandated to render timely policy advice on latest technologies; mapping of technology and technology products; commercialisation of dual use technologies developed in national laboratories and government R&D organisations; developing an indigenisation road map for selected key technologies; and selection of appropriate R&D programs leading to technology development. Major Impact The Technology Group will :-

1. render the best possible advice on technology to be developed for a technology supplier and the technology procurement strategy;

2. develop in-house expertise in aspects of policy and use of emerging technologies; and 3. ensure sustainability of public sector technology developed/being developed at PSUs, national labs and research

organisations. Implementation strategy and targets The three pillars of the work of the Technology Group include:

1. Policy Support; 2. Procurement Support; and 3. Support on Research and Development proposals.

Background In the technology sector, five important issues were: (a) silo-centric approaches to development of technology (b) technology standards either not developed or applied, leading to sub-optimal industrial development (c) dual use technologies not being optimally commercialised (d) R&D programs not aligned to efforts at technology development (e) need for mapping of technologies important for applications in society and industry. The Constitution of Technology Group is an effort at addressing the above problems.

Ministry of Finance clarified that spread of corona virus should be considered as a case of natural calamity

and Force Majeure clause (FMC) may be invoked (19-02-2020)

A Force Majeure (FM) means extraordinary events or circumstance beyond human control such as an event described as an act of God (like a natural calamity) or events such as a war, strike, riots, crimes (but not including negligence or wrong-doing, predictable/ seasonal rain and any other events specifically excluded in the clause). An FM clause in the contract frees both parties from contractual liability or obligation when prevented by such events from fulfilling their obligations under the contract. An FM clause does not excuse a party's non-performance entirely, but only suspends it for the duration of the FM. The firm has to give notice of FM as soon as it occurs and it cannot be claimed ex-post facto. Indian Railways has decided that the period from 22.03.2020 to 14.04.2020 shall be treated under “Force Majeure”. During this period no demurrage, wharfage, stacking, stabling, detention and ground usage charge shall be leviable. Ministry of Shipping on 24th March, 2020, issued an advisory to all Major Port Trusts for invoking “Force Majeure” clause on Port activities and Port operations for Exemptions/Remissions on penalties, demurrages charges, fee, rentals levied on any Port user for any delay in Berthing/Loading/Unloading operations or evacuation/arrival of cargo caused due to lockdown measures from 22nd March, 2020 to 14th April, 2020.

India Pavilion at COP-25 in Madrid, Spain celebrating “150 Years the Mahatma” (03-12-2019)

Secretary, Ministry of Environment Forest &Climate Change (MoEFCC), Shri C.K. Mishra inaugurated the India Pavilion at the 25th session of Conference of Partiesunder the UN framework convention of Climate Change (UNFCCC COP25), in Madrid, Spain. In his address, Secretary, MoEFCC said that this year India is celebrating 150 years of the birth anniversary of Father of the Nation, Mahatma Gandhi. The India Pavilion has been designed to depict this theme, in particular Mahatma Gandhi’s life and messages around sustainable living.



National Launch of 10 Year Rural Sanitation Strategy (2019-2029) (27-09-2019)

The Department of Drinking Water and Sanitation (DDWS), Ministry of Jal Shakti, GoI launched the 10 Year Rural Sanitation Strategy (2019-2029), which focus on sustaining the sanitation behavior change that has been achieved under the Swachh Bharat Mission Grameen (SBM-G), ensuring that no one is left behind, and increasing access to solid and liquid waste management. Since the launch of the SBM-G in 2014, over 10 crore toilets have been built in rural areas; over 5.9 lakh villages, 699 districts, and 35 States/UTs have declared themselves Open Defecation Free (ODF). This strategy has been prepared by DDWS, in consultation with State Governments and other stakeholders, and it lays down a framework to guide local governments, policy makers, implementers and other relevant stakeholders in their planning for ODF Plus, where everyone uses a toilet, and every village has access to solid and liquid waste management.

India’s ranking in the Global Competitiveness Index 2019 has fallen by 10 ranks (09-10-2019)

Minister of Commerce and Industry, Piyush Goyal, in a written reply in the Lok Sabha said that India’s ranking in the Global Competitiveness Index has fallen by 10 ranks partly as a consequence of a relatively small decline in score but more significantly due to faster improvements of several countries earlier ranked close to India. The GCI brought out by the World Economic Forum involved performance review of 141 countries. India was placed on 68th position (Last year 58th Position). However, India ranked high on innovation (35th), financial sector (40th), and macro-economic stability (43rd). On innovation, India was well ahead of most emerging economies and on par with several advanced economies.

The Supreme Court set aside RBI circular prohibiting entities regulated by it from dealing in virtual currencies

(04-03-2020)

SC said that RBI has not come out with a stand that any of the entities regulated by it namely, the nationalized banks/scheduled commercial banks/cooperative banks/NBFCs has suffered any loss or adverse effect directly or indirectly, on account of the interface that the VC exchanges had with any of them. Even consistent stand of RBI is that they have not banned VCs. RBI circular On April 6, 2018, RBI circular said that entities regulated by the RBI shall not deal in virtual currencies (VCs), including Bitcoins, or provide services for facilitating any person or entity in dealing with or settling VCs. Such services include maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them and transfer / receipt of money in accounts relating to purchase/ sale of VCs. Regulated entities which already provide such services shall exit the relationship within three months from the date of this circular.

US and China signed Phase One Trade Deal (15-01-2020)

World’s two biggest economies US and China have signed Phase One trade deal in Washington DC. China pledged to boost US imports by $200bn above 2017 levels over the 2020-21 two-year period and strengthen intellectual property rules. The US agreed to halve some of the new tariffs it had imposed on China. US-China trade war US-China trade war began in 2018 when US President Donald Trump raised import tariff on Chinese goods accusing China of unfair trading practices and intellectual property theft. US concern is growing trade deficit with China, theft of intellectual property, and the forced transfer of American technology to China. The ongoing dispute has disrupted trade flows, dampened global economic growth and unnerved investors.


https://www.thehindu.com/news/national/cryptocurrencies-will-boost-illegal-transactions-rbi-to-sc/article24476582.ece

https://en.wikipedia.org/wiki/Donald_Trump


RBI released the National Strategy for Financial Inclusion 2019-2024 (10-01-2020)

The National Strategy for Financial Inclusion for India 2019-2024 has been prepared by RBI under the aegis of the Financial Inclusion Advisory Committee and is based on the inputs and suggestions from Government of India, other Financial Sector Regulators viz., Securities Exchange Board of India (SEBI), Insurance Regulatory and Development Authority of India (IRDAI) and Pension Fund Regulatory and Development Authority of India (PFRDA). The National Strategy for Financial Inclusion 2019-2024 sets forth the vision and key objectives of the financial inclusion policies in India to help expand and sustain the financial inclusion process at the national level through a broad convergence of action involving all the stakeholders in the financial sector. The strategy aims to provide access to formal financial services in an affordable manner, broadening & deepening financial inclusion and promoting financial literacy & consumer protection. The document highlights the major issues that act as impediments to financial inclusion and comes up with a set of recommendations and action plans to support sustainable financial inclusion over the next 5 years. Seven of the Seventeen United Nations Sustainable Development Goals (SDG) of 2030 view financial inclusion as a key enabler for achieving sustainable development worldwide by improving the quality of lives of poor and marginalized sections of the society.

Financial inclusion Financial inclusion has been defined as “the process of ensuring access to financial services, timely and adequate credit for vulnerable groups such as weaker sections and low-income groups at an affordable cost”. (Committee on Financial Inclusion - Chairman: Dr C Rangarajan, RBI, 2008) Financial inclusion is increasingly being recognized as a key driver of economic growth and poverty alleviation the world over. There has been a growing evidence on how financial inclusion has a multiplier effect in boosting overall economic output, reducing poverty and income inequality at the national level. Access to formal finance can boost job creation, reduce vulnerability to economic shocks and increase investments in human capital. Without adequate access to formal financial services, individuals and firms need to rely on their own limited resources or rely on costly informal sources of finance to meet their financial needs and pursue growth opportunities. Financial inclusion of women is particularly important for gender equality and women’s economic empowerment. With greater control over their financial lives, women can help themselves and their families to come out of poverty; reduce their risk of falling into poverty; eliminate their exploitation from the informal sector; and increase their ability to fully engage in measurable and productive economic activities. India began its financial inclusion journey as early as in 1956 with the nationalisation of Life Insurance companies. This was followed by nationalisation of banks in 1969 and 1980. The general insurance companies were nationalised in 1972. A strong leadership (either a visionary or charismatic) is a prerequisite to drive financial inclusion in a mission mode. Pradhan Mantri Jan Dhan Yojana (PMJDY) Launched in August 2014, it was a watershed in the financial inclusion movement in the country. The programme leverages on the existing large banking network and technological innovations to provide every household with access to basic financial services, thereby bridging the gap in the coverage of banking facilities.

Key Recommendations 1. Universal Access to Financial Services Every village to have access to a formal financial service provider within a reasonable distance of 5 KM radius. Digital infrastructure in the country needs to be expanded through better networking of bank branches, Business Correspondent outlets, Micro ATM, PoS terminals and stable connectivity etc. coupled with electricity.

2. Providing Basic Bouquet of Financial Services Every adult who is willing and eligible needs to be provided with a basic bouquet of financial services that include a Basic Savings Bank Deposit Account, credit, a micro life and non-life insurance product, a pension product and a suitable investment product. 3. Access to Livelihood and Skill Development The new entrant to the financial system, if eligible and willing to undergo any livelihood/ skill development programme, may be given the relevant information about the ongoing Government livelihood programmes thus helping them to augment their skills and engage in meaningful economic activity and improve income generation.



Through adequate coordinated and collaborative effort between the banks, Government and Skill Development Agencies, new entrants to financial sector may be provided requisite information on the ongoing skill development programmes and livelihood missions of the Government. 4. Financial Literacy and Education Customers need to be explained in simple language the nature of the product, its suitability to their requirements and the cost vis-à-vis return. Financial literacy enables a customer to have necessary awareness about the available products, ability to choose the right product and available mechanism for grievance redressal. Emphasis is now on to increase the financial awareness among various vulnerable groups in the society viz., women, youth, children, elderly, small entrepreneurs, etc. who require handholding. 5. Customer Protection and Grievance Redressal There should be a strong regulatory and legal framework aimed at protecting the interests of the customers, promoting fair practices and curbing market manipulations. With the emerging risks from digital financial services due to the incidents of cloning, hacking, phishing, vishing, SMiShing, pharming, malware etc. a strong customer protection architecture is vital. Data Protection and Information/Cyber Security are also the new frontiers that needs to be addressed under the customer protection framework A robust customer grievance redressal mechanism at different levels helps banks in timely redressal of grievances. 6. Effective Co-ordination There needs to be a focused and continuous coordination between the key stakeholders viz. Government, the Regulators, financial service providers, Telecom Service Regulators, Skills Training institutes etc. to make sure that the customers are able to use the services in a sustained manner. A review on the action taken on the recommendations may be conducted in March 2021 and accordingly, course corrections may be introduced.

Supreme Court dismisses AGR review petitions filed by telecom companies (16-01-2020)

The Supreme Court had its 24th October, 2019 judgement upheld the Department of Telecom (DoT) definition of Adjusted Gross Revenue (AGR), on which it calculates licence fee on telecom operators. As per the DoT definition, AGR includes non-core revenue also like Interest and dividend income, profit on sale of any investment or fixed assets. The dispute between DoT and the Telecom operators was mainly on the definition of AGR. The DoT argued that AGR includes all revenues (before discounts) from both telecom and non-telecom services. Telecom companies claimed that AGR should comprise just the revenue accrued from core services and not dividend, interest income or profit on sale of any investment or fixed assets. The order dealt a blow to the telecom sector which is already facing severe financial stress and competition. Telecom companies to pay around Rs 1,47,000 crore dues including interest and penalties. Vodafone-Idea is the worst hit by the verdict with over ₹53,000 crore dues. Airtel has dues of over ₹35,500 crore, While Tata Teleservices, which has sold its consumer mobility business to Airtel, faces dues of nearly ₹14,000 crore. SC verdict may force Vodafone-Idea to shut shop, as the company has already made huge investments and there is not much to gain from its operations, due to steep competition from Reliance Jio and Airtel. Kumar Mangalam Birla, Chairman, Vodafone-Idea, had also recently said that Vodafone may have to shut shop if the government does not agree to provide relief in the AGR case.

Alternative Investment Fund or AIF

Alternative Investment Fund or AIF means any fund established or incorporated in India which is a privately pooled investment vehicle which collects funds from sophisticated investors, whether Indian or foreign, for investing it in accordance with a defined investment policy for the benefit of its investors. AIF is not permitted to make an invitation to the public to subscribe to its securities. An AIF under the SEBI (Alternative Investment Funds) Regulations, 2012 can be established or incorporated in the form of a trust or a company or a limited liability partnership or a body corporate. Most of the AIFs registered with SEBI are in trust form.



Second Advance Estimates of National Income and Expenditures of GDP, 2019-20 (28-02-2020)

Full Form: Private Final Consumption Expenditure (PFCE) Government Final Consumption Expenditure (GFCE) Gross Fixed Capital Formation (GFCF) Change in stocks (CIS) Note: Private Consumption expenditure has been the major driver of GDP growth, accounting for nearly 60% of the total GDP.

( At 2011- 12 Prices) (₹ crore)

Item 2017-18 2018-19 2019-20 Percentage change over previous year

S.No ( 2nd RE ) (1st RE) (2nd AE) 2018-19 2019-20

Domestic Product

1 GVA at Basic Prices 12,074,413 12,803,128 13,434,606 6.0 4.9

2 Net Taxes on Products 1,100,747 1,178,298 1,249,229 7.0 6.0

3 GDP (1+2) 13,175,160 13,981,426 14,683,835 6.1 5.0

4 NDP 11,686,409 12,372,051 12,995,082 5.9 5.0

Final Expenditures

5 PFCE 7,379,819 7,908,057 8,330,242

6 GFCE 1,343,222 1,478,565 1,623,700

7 GFCF 4,061,195 4,460,967 4,433,674

8 CIS 215,795 264,415 270,122

9 Valuables 192,661 169,734 192,629

10 Exports of Goods and Services 2,601,777 2,922,543 2,866,580

11 Imports of Goods and Services 3,078,132 3,342,777 3,159,868

12 Discrepancies 458,823 119,923 126,756

13 GDP 13,175,160 13,981,426 14,683,835

Rates to GDP

14 PFCE 56.0 56.6 56.7

15 GFCE 10.2 10.6 11.1

16 GFCF 30.8 31.9 30.2

17 CIS 1.6 1.9 1.8

18 Valuables 1.5 1.2 1.3

19 Exports of Goods and Services 19.7 20.9 19.5

20 Imports of Goods and Services 23.4 23.9 21.5

21 Discrepancies 3.5 0.9 0.9

22 GDP 100.0 100.0 100.0

National Product

23 GNI 13,029,307 13,829,068 14,522,931 6.1 5.0

24 NNI 11,540,556 12,219,693 12,834,178 5.9 5.0

Per Capita Income, Product and Final Consumption

25 Population (in million) 1314 1327 1341 1.0 1.1

26 Per Capita GDP (₹) 100,268 105,361 109,499 5.1 3.9

27 Per Capita GNI (₹) 99,158 104,213 108,299 5.1 3.9

28 Per Capita NNI(₹) 87,828 92,085 95,706 4.8 3.9

29 Per Capita PFCE(₹) 56,163 59,594 62,120 6.1 4.2



Second Advance Estimates of GVA at Basic Prices by Economic Activity (28-02-2020)

Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY)

Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY) was announced on 25th September 2014. DDU-GKY is a part of the National Rural Livelihood Mission (NRLM). DDU-GKY is the demand-driven placement-linked skill training initiative of the Ministry of Rural Development,Government of India (MoRD), uniquely aimed at rural poor youth between 15 and 35 years of age,with the purpose to create income diversity in poor families and help rural youth realize their career aspirations. India has approximately 55 million rural youth between the age group of 15-35 yrs. who are below poverty line and with 16.16 million persons entering into the working age each year, there is a need for them to be skilled, reskilled and up-skilled. However, it is estimated that only 4.69% of the total workforce in India has undergone formal skill training as compared to 68% in UK, 75% in Germany, 52% in USA, 80% in Japan and 96% in South Korea. On the other side, there is a demand of 109.73 million skilled manpower by 2022 in twenty-four key sectors. Therefore DDU-GKY seeks to fill this gap by imparting specific set of Modular Employable Skills (MES) needed to access full time jobs in the formal sector. DDU-GKY is being undertaken as PPP Project all over the country through Project Implementing Agencies (PIAs) registered with the Ministry of Rural Development. Skill development through Rural Self Employment and Training Institutes (RSETI) enable the trainee to take Bank credit and start his/her own Micro-enterprise.

Prime Minister Shri Narendra Modi launches 10,000 Farmers Producer Organisations all over the country at

Chitrakoot (29-02-2020)

Nearly 86% of farmers are small and marginal with average land holdings in the country being less than 1.1 hectare. These small, marginal and landless farmers face tremendous challenges during agriculture production phase such as for access to technology, quality seed, fertilizers and pesticides including requisite finances. They also face tremendous challenges in marketing their produce due to lack of economic strength. FPOs help in collectivization of such small, marginal and landless farmers in order to give them the collective strength to deal with such issues. Members of the FPO will manage their activities together in the organization to get better access to technology, input, finance and market for faster enhancement of their income.

(At 2011-12 prices) (₹ crore)

Industry 2017-18 2018-19 2019-20

Percentage change over previous year

( 2nd RE ) (1st RE) ( 2nd AE) 2018-19 2019-20

1. Agriculture, Forestry & Fishing 1,828,329 1,872,339 1,940,811 2.4 3.7

2. Mining & Quarrying 366,496 345,069 354,748 -5.8 2.8

3. Manufacturing 2,190,791 2,316,643 2,336,365 5.7 0.9

4. Electricity, Gas, Water Supply & other Utility Services

274,104 296,560 310,275 8.2 4.6

5. Construction 962,009 1,020,314 1,050,533 6.1 3.0

6. Trade, Hotels, Transport, Communication and Services related to Broadcasting

2,309,860 2,488,049 2,627,439 7.7 5.6

7. Financial, Real Estate & Professional Services

2,609,016 2,786,855 2,989,960 6.8 7.3

8. Public Administration, Defence and other Services

1,533,809 1,677,298 1,824,473 9.4 8.8

GVA at Basic Prices 12,074,413 12,803,128 13,434,606 6.0 4.9



Brief of the Scheme: In the Union Budget 2019-20, the Government announced formation of 10,000 new Farmer Producer Organisation (FPOs) to ensure economies of scale for farmers over the next five years. currently there are around 6,000 Farmer Producer Organisations (FPOs) existing in the country. A new Central Sector Scheme titled "Formation and Promotion of Farmer Produce Organizations (FPOs)" to form and promote 10,000 new FPOs with a total budgetary provision of Rs. 4496.00 crore for five years (2019-20 to 2023-24) with a further committed liability of Rs. 2369.00 crore for period from 2024-25 to 2027-28 towards handholding of each FPO for five years from its aggregation and formation. Initially there will be three implementing Agencies to form and promote FPOs, namely Small Farmers Agri-business Consortium (SFAC), National Cooperative Development Corporation (NCDC) and National Bank for Agriculture and Rural Development (NABARD). States may also, if so desire, nominate their Implementing Agency in consultation with Department of Agriculture Cooperation and Farmers Welfare (DAC&FW). FPOs will be formed and promoted through Cluster Based Business Organizations (CBBOs) engaged at the State/Cluster level by implementing agencies. There will be a National Project Management Agency (NPMA) at SFAC for providing overall project guidance, data compilation and maintenance through integrated portal and Information management and monitoring. Initially the minimum number of members in FPO will be 300 in plain area and 100 in North East & hilly areas. However, DAC&FW may revise the minimum number of membership based on experience/need with approval of Union Agriculture Minister. Priority will be given for formation of FPOs in aspirational districts in the country with at least one FPO in each block of aspirational districts. FPOs will be promoted under "One District One Product" cluster to promote specialization and better processing, marketing, branding & export by FPOs. There will be a provision of Equity Grant for strengthening equity base of FPOs. There will be a Credit Guarantee Fund of up to Rs. 1,000.00 crore in NABARD with equal contribution by DAC&FW and NABARD and Credit Guarantee Fund of Rs.500.00 crore in NCDC with equal contribution by DAC&FW and NCDC for providing suitable credit guarantee cover to accelerate flow of institutional credit to FPOs by minimizing the risk of financial institutions for granting loan to FPOs.

Updates: 6 members Monetary policy committee (MPC) (Page no 45 of Crux)

Deputy Governor of RBI, in charge of Monetary Policy (Dr. Michael Debabrata Patra) One officer of the Reserve Bank of India to be nominated by the Central Board (Dr Janak Raj)

Updates: External Benchmark Based Interest Rate (Page no 51 of Crux) (26-02-2020)

Subsequent to the introduction of an external benchmark system, the monetary policy transmission has improved in respect of the sectors where new floating rate loans have been linked to the external benchmarks.

With a view to further strengthening monetary policy transmission, RBI has decided that all new floating rate loans to the Medium Enterprises extended by banks from April 01, 2020 shall be linked to the external benchmarks.

Updates: Agriculture Credit to farmers (Page no 69 of Crux)

Agriculture Credit Target for 2019-20 was fixed at Rs 13,50,000 crore. Union Budget 2020-21 has set target of Rs. 15 lakh crore for the year 2020-21.

Updates: Foreign Trade Policy 2015-2020 extended for one year (Page no 140 of Crux)

The present Policy which came into force on 1st April, 2015, is for 5 years and has validity upto 31st March, 2020. In view of the unprecedented current situation arising out of the pandemic Novel COVID-19, the Govt. has decided to continue relief under various export promotion schemes by granting extension of the existing Foreign Trade Policy by another one year i.e. up to 31st March, 2021.



Updates: E-Invoice System under GST (Page No 101 of Crux)

The dates for implementation of e-invoicing and QR Code extended to 01.10.2020.

Updates: Priority Sector Lending (Page no 69 of Crux)

In order to boost credit to the needy segment of borrowers, RBI has decided that bank credit to registered NBFCs (other than MFIs) for on-lending will be eligible for classification as priority sector under respective categories for FY 2020-21.

Updates: G20 virtual summit coordinated by the Saudi G20 Presidency (Page no 199 of Crux)

An Extraordinary Virtual G20 Leaders' Summit was convened on 26 March 2020 to discuss the challenges posed by the outbreak of the COVID-19 pandemic and to forge a global coordinated response. Earlier, PM Modi had a telephonic conversation with the Crown Prince of Saudi Arabia on this subject. The extraordinary G20 Summit was a culmination of the Finance Ministers and Central Bank Governors Meeting and G20 Sherpas Meeting on the COVID-19 pandemic. At the meeting, G20 Leaders agreed to take all necessary measures to contain the pandemic and protect people. They also supported strengthening of the WHO's mandate in the fight against pandemics, including delivery of medical supplies, diagnostic tools, treatments, medicines and vaccines. Leaders also committed to use all available policy tools to minimize the economic and social cost of the pandemic and to restore global growth, market stability and strengthening resilience. G20 countries committed to inject over USD 5 trillion into the global economy to counter the social and economic impact of COVID-19. Leaders also agreed to contribute to the WHO led COVID-19 Solidarity Response Fund on a voluntary basis.

Updates:Generalized System of Preferences-GSP Benefits to India (Page no 144 of Crux) (13-03-2020)

USA terminated preferential tariff benefits being granted to India under its Generalized System of Preferences scheme from June 5, 2019. The details of GSP benefits that India got from U.S. during last five years from January 2014 to May 2019 in terms of dollars and percentage is given below;

(in USD million)

2015 2016 2017 2018 2019 (Jan-May)

India’s exports to USA with GSP benefits

4622.30 4746.74 5765.97 6347.40 2860.57

India’s total exports to USA 40,273.26 41,607.13 45,923.30 51,441.42 53,853.41

GSP Benefits (in terms of percent)

11% 11% 13% 12% 5%

India availed U.S.GSP benefits on 1945 tariff lines / products in the year 2018. The details of GSP tariff lines exported by India to U.S. since withdrawal of GSP in terms of dollars and in terms of percentage given below:

(in USD million)

Tariff lines Pre- GSP withdrawal Post GSP withdrawal

2018 (Jun-Dec) 2019 (Jun-Dec) % Growth

1945 5201.77 5470.90 5%

India’s exports to the U.S. which were under the GSP lines have shown an increase of 5% in the period of June- Dec 2019 as compared to the corresponding period of previous year, i.e. June- Dec 2018 - when GSP benefits were available. There is no impact on foreign trade.



Miscellaneous

1. RBI Governor launched the “Mobile Aided Note Identifier (MANI)”, a mobile application for aiding visually impaired persons to identify the denomination of Indian Banknotes. (01-01-2020)

2. As per World Steel Association data, India became the second largest steel producer of crude steel after China in 2018 and 2019, by replacing Japan. Steel being a deregulated sector, the Government does not set any annual targets for steel production. Decision on quantity of steel production is taken by individual companies based on commercial considerations and market requirements. (05-02-2020)

Combined Geo-Scientist 2020 Which one of the following countries in Asia established the first Export Processing Zone (EPZ) in 1965? (a) China (b) India

(c) South Korea (d) Japan Combined Geo-Scientist 2020 Which one of the following statements about the Finance Commissions, periodically established by the Government of India, is NOT true? (a) It recommends distribution of taxes between the Union and the states (b) It recommends the principles governing the grants-in-aid of revenues of states (c) It recommends measures to augment the consolidated fund of a state (d) It recommends measures regarding the salary of government employees

Combined Geo-Scientist 2020 The ‘head count ratio’ relates to which one of the following? (a) The poverty line

(b) Millennium development goals (c) Food insecurity (d) Population growth Combined Geo-Scientist 2020 Which one of the following countries was ranked 1st in the IMD World Competitiveness ranking 2019? (a) Singapore (b) USA

(c) India (d) Switzerland CISF 2020 Where is the headquarters of the ASEAN (Association of South East Asian Nations) located? (a) Dhaka (b) Bangkok (c) Kuala Lumpur (d) Jakarta

CISF 2020 The East-West Corridor National Highway connects which of the following? (a) Silchar to Porbandar

(b) Jorhat to Jaisalmer (c) Agartala to Ahmedabad (d) Itanagar to Mapusa CDS 2020 Match List-I with List-II and select the correct answer using the code given below the Lists: List-I (Market structure) List-II (Characteristic)

A. Perfect competition 1. Only one producer selling one commodity B. Monopoly 2. Few producers selling similar or almost similar products C. Monopolistic competition 3. Many producers selling differentiated products D. Oligopoly 4. Many producers selling similar products

Code：

(a) A B C D 4 3 1 2 (b) A B C D 4 1 3 2

(c) A B C D 2 1 3 4 (d) A B C D 2 3 1 4



CDS 2020 BRICS Summit, 2020 will be hosted by (a) India (b) China (c) Russia

(d) Brazil CDS 2020 The formulation of policy in respect to Intellectual Property Rights (IPRs) is the responsibility of (a) the Ministry of Law and Justice (b the Department of Science and Technology (c) the Department for Promotion of Industry and Internal Trade

(d) the Ministry of Human Resource Development CDS 2020 Who among the following is Chairman of the Economic Advise Council to the Prime Minis (EAC-PM)? (a) Ratan P. Watal (b) Bibek Debroy

(c) Ashima Goyal (d) Saijid Chinoy CDS 2020 Which of the following are considered to be the four pillars of human development? (a) Equity, inclusion, productivity and empowerment (b) Equity, productivity, empowerment and sustainability

(c) Productivity, gender, inclusion and equity (d) Labour, productivity, inclusion and equity

Ans The Four Pillars of Human Development Equity refers to making equal access to opportunities available to everybody. The opportunities available to people must be equal irrespective of their gender, race, income and in the Indian case, caste. Yet this is very often not the case and happens in almost every society. Sustainability means continuity in the availability of opportunities. To have sustainable human development, each generation must have the same opportunities. All environmental, financial and human resources must be used keeping in mind the future. Misuse of any of these resources will lead to fewer opportunities for future generations. Productivity here means human labour productivity or productivity in terms of human work. Such productivity must be constantly enriched by building capabilities in people. Ultimately, it is people who are the real wealth of nations. Therefore, efforts to increase their knowledge, or provide better health facilities ultimately leads to better work efficiency. Empowerment means to have the power to make choices. Such power comes from increasing freedom and capability. Good governance and people-oriented policies are required to empower people. The empowerment of socially and economically disadvantaged groups is of special importance. CDS 2020 Recently the Reserve Bank of India has imposed limitations, initially for a period of six months, on the withdrawal of amount by account holders of which one of the following banks? (a) IndusInd Bank (b) Dhanlaxmi Bank (c) Punjab and Maharashtra Cooperative Bank (d) South Indian Bank

CDS 2020 In September 2019, which one of the following travel giants declared itself bankrupt? (a) Expedia (b) Cox & Kings (c) SOTC (d) Thomas Cook

CDS 2020 Which one of the following is not correct about Repo rate? (a) It is the interest rate charged by the Central Bank on overnight loan. (b) It is the interest rate paid by the commercial banks on overnight borrowing. (c) It is the interest rate agreed upon in the loan contract between a commercial bank and the Central Bank. (d) It is the cost of collateral security.

CDS 2020 The cast reserve ratio refers to (a) the share of Net Demand and time liabilities that banks have to hold as liquid assets (b) the share of Net Demand and time liabilities that banks have to hold as balances with the RBI

(c) the share of Net demand and time liabilities that banks have to hold as part of their cash reserves (d) the ratio of cash holding to reserves of banks



CDS 2020 Which one of the following is not an objective of the MGNREGA? (a) Providing up to 100 days of skilled labour in a financial year

(b) Creation of productive assets (c) Enhancing livelihood security (d) Ensuring empowerment to women

Ans MGNREGA aims at enhancing livelihood security in rural areas by providing at least 100 days of guaranteed wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work.

MGNREGA Scheme is administered by ministry of Rural Development CDS 2020 Which one of the following is not a type of commercial agriculture? (a) Dairy farming (b) Grain farming (c) Livestock ranching (d) Intensive subsistence agriculture

Ans Types of Farming Farming can be classified into two main types. These are subsistence farming and commercial farming.

Subsistence Farming This type of farming is practised to meet the needs of the farmer’s family. Traditionally, low levels of technology and household labour are used to produce on small output.

Subsistence farming can be further classified as intensive subsistence and primitive subsistence farming.

In intensive subsistence agriculture the farmer cultivates a small plot of land using simple tools and more labour. Climate with large number of days with sunshine and fertile soils permit growing of more than one crop annually on the same plot. Rice is the main crop. Other crops include wheat, maize, pulses and oilseeds. Intensive subsistence agriculture is prevalent in the thickly populated areas of the monsoon regions of south, southeast and east Asia.

Primitive subsistence agriculture includes shifting cultivation and nomadic herding.

Shifting cultivation is practised in the thickly forested areas of Amazon basin, tropical Africa, parts of southeast Asia and Northeast India. These are the areas of heavy rainfall and quick regeneration of vegetation. A plot of land is cleared by felling the trees and burning them. The ashes are then mixed with the soil and crops like maize, yam, potatoes and cassava are grown. After the soil loses its fertility, the land is abandoned and the cultivator moves to a new plot. Shifting cultivation is also known as ‘slash and burn’ agriculture.

Nomadic herding is practised in the semi-arid and arid regions of Sahara, Central Asia and some parts of India, like Rajasthan and Jammu and Kashmir. In this type of farming, herdsmen move from place to place with their animals for fodder and water, along defined routes. This type of movement arises in response to climatic constraints and terrain. Sheep, camel, yak and goats are most commonly reared. They provide milk, meat, wool, hides and other products to the herders and their families. Commercial Farming In commercial farming crops are grown and animals are reared for sale in market. The area cultivated and the amount of capital used is large. Most of the work is done by machines. Commercial farming includes commercial grain farming, mixed farming and plantation agriculture

In commercial grain farming crops are grown for commercial purpose. Wheat and maize are common commercially grown grains. Major areas where commercial grain farming is pracised are temperate grasslands of North America, Europe and Asia. These areas are sparsely populated with large farms spreading over hundreds of hectares. Severe winters restrict the growing season and only a single crop can be grown.

In mixed farming the land is used for growing food and fodder crops and rearing livestock. It is practised in Europe, eastern USA, Argentina, southeast Australia, New Zealand and South Africa.

Plantations are a type of commercial farming where single crop of tea, coffee, sugarcane, cashew, rubber, banana or cotton are grown. Large amount of labour and capital are required. The produce may be processed on the farm itself or in nearby factories. The development of a transport network is thus essential for such farming. Major plantations are found in the tropical regions of the world. Rubber in Malaysia, coffee in Brazil, tea in India and Sri Lanka are some examples.

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