Indian economy

Meghalaya Human Development Index

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Meghalaya Human  Development  Index

The State of Meghalaya is situated on the north east of India. It extends for about 300 kilometres in length and about 100 kilometres in breadth. It is bounded on the north by Goalpara, KamrupandNowgong districts, on the east by KarbiAnglong and North Cachar Hills districts, all of Assam, and on the south and west by Bangladesh.

Meghalaya is subject to vagaries of the monsoon. The average annual rainfall is about 2600 mm over western Meghalaya, between 2500 to 3000 mm over northern Meghalaya and about 4000 mm over south-eastern Meghalaya. There is a great variation of rainfall over central and southern Meghalaya. Meghalaya Human Development Index

Meghalaya is basically an Agricultural State with about 80% of its total population depending entirely on Agriculture for their livelihood. Rainfall varies from place to place and from altitude to altitude. The amount of rainfall over Cherrapunjee and Mawsynram is quite heavy. During the last two decades, it has ranged from 11,995 mm to 14,189 mm in Cherrapunjee and over Mawsynram it was 10,689 mm to 13,802 mm.

HUMAN DEVELOPMENT INDEX:-

The Human Development Index (HDI) is a comparative measure of quality of life. It mainly comprise three components:-

  1. A long and healthy life: Life expectancy at birth.
  2. Education index: Mean years of schooling and Expected years of schooling.
  3. A decent standard of living: GNI per capita (PPP US$)for countries worldwide. It is a standard means of measuring well-being, especially child welfare.
    It is used to distinguish whether the country is a developed, a developing or an under-developed country, and also to measure the impact of economic policies on quality of life.

                                   According to Global Hunger Index – 2017, only 9.6 per cent of our children, between 6 and 23 months of age, receive adequate diet and 97 million children in India are underweight! Thus Indian economy is going to face a gigantic problem of unhealthy and unskilled work-force in the future, which will further degrade our resources into liabilities. Ironically, according to a study, two-thirds of food to feed 600 million poor Indians is lost as  hungry millions do not have enough purchasing power to buy the same. Now, government itself can buy it from farmers with minimum support price (MSP). It will certainly stop the incidence of farmers’ suicides. The excess food can then be distributed to students in addition to the midday meal. This will attract more students to school and address the issues like illiteracy, school dropout, child labour, hunger and malnutrition.

In the Human Development Index (HDI) of India for the year 2011, Meghalaya is ranked 26th with 0.585(Medium) HDI value.

Measures of HDI indicators for Meghalaya:-

  1. Mizoram per capita income in 2009-10:- Rs 35,323,
  2. Literacy according 2011 census :-84% (24th rank),the male literacy rate is 77.2 per cent and the female literacy rate is 73.8 per cent. In 2011-12, the state had a total of 43,102 teachers in lower primary & upper primary schools, 4,621 teachers in secondary schools and 526 teachers in higher secondary schools.
  3. Education index of Meghalaya :- 0.512,(28th rank).

Meghalaya, among the eight North Eastern States, is ranked 7th, only above Assam which has 0.534 HDI value in 2011.
Meghalaya’s first HDI report “Meghalaya Human Development Report 2008” was published in 2009, and has been the sole report since to indicate the health of the State to the world.The report clearly indicated that the rate of development in Meghalaya is slower than in most of the state and hence, been lagging behind while many states have improved their ranking.
The report highlighted that the health sector is poor and East Khasi Hills tops in HDI and GDI among the districts followed by West Garo Hills.
The report seemed to highlight Meghalaya being significantly behind in almost all sectors in comparison all other states while it failed to furnish full details, which could make it possible to make better comparisons.
Even then, a new report is yet to be furnished.

State-wise HDI score and rank 1992-93 to 2005-06 for north east states:-

  HDI Rank HDI Rank
States 1992-93 1992-93 2005-06 2005-06
Arunachal Pradesh 0.130 8 0.082 8
Assam 0.450 2 0.472 2
Manipur 0.372 3 0.440 4
Meghalaya 0.176 7 0.208 7
Mizoram 0.657 1 0.622 1
Nagaland 0.332 4 0.292 6
Sikkim 0.327 5 0.462 2
Tripura 0.269 6 0.439 5

 

Meghalaya Trade & Commerce

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Meghalaya Trade & Commerce

The basic objective of economic reforms was to improve productivity growth and competitiveness in the Indian manufacturing sector. These reforms were aimed at making Indian manufacturing sector more efficient and technologically up to date, with the expectation that these changes would enable Indian manufacturing sector to achieve higher and sustainable growth. The government started to deregulate the Indian economy with a liberalization programme, focused on the investment pattern, trade policies, the financial sector, taxation and public enterprises.

In recent times, Industrialization has become the catch word of the midtwentieth century and industrial development of the under developed countries or developing countries like India. One of the great world crusades of our times, the Less Developed Countries (LDCs) hope to find in it a solution their problems of poverty, insecurity, overpopulation, backwardness, illiteracy etc. They consider it a panacea for all the evils of their social and economic life. In fact, the essence of economic development of an LDC like India consists essentially in the growth of industrialization.

Realizing the importance of industrialization, once Pt. Jawaharlal Nehru rightly remarked, “Real progress must ultimately depend on industrialization”. His vision was to see India in the group of developed nations of the world and industrialization was the only key to restructure the economy and to achieve sustained growth. Indian economy is a basically an agriculture based economy. It has been evident from the experience of the most of advanced countries that growth based upon agriculture sector will not be sustainable growth.

After studying such behavior of terms of trade they made their belief that for the agriculture based economies terms of trade would always become unfavorable in long run because;

  1. a) The income elasticity of export-goods of agricultural countries is low, while the income elasticity of import-goods is very high. As in case of domestic demand, the demand for agricultural products in other countries, in particular advance countries, is very low. In fact, developed countries have surpluses in agriculture products for exports. As against this, the demand for the import of manufactured goods by LDCs is very intense; and
  2. b) With the advancement of technology, input-output coefficients are declining and most of primary products which were used as raw material are replaced by the industrial cheaper raw material.

On the other hand, if we develop only tertiary sector and ignore industrial sector then there may be tendency of inflation in the economy and this inflation may lead to deceleration economic growth. Therefore, industrialization is the only method to achieve sustained economic growth. Moreover, economic history demonstrates that to eliminate a country’s techno-economic backwardness it is necessary to develop the industrial sector and then to diversify it over a wide range of area and activities. Industrialization is a process of economic organization characterized by rapid setting up of industries and has invariably been the accompaniment of economic development. Nevertheless, economic development should not be treated synonymous with industrialization because industrialization is only a part of the whole process of economic development.

 

TRADE

Meghalaya is dominantly depend on agriculture and commercial forest industry. The major crops of Meghalaya are potatoes, rice, maize, pineapples, bananas, papayas, spices, etc.

In addition to the central government’s incentives for investments in the northeast region, the state offers a host of industrial incentives. The natural resources, policy incentives and infrastructure in the state favour investments in the tourism, hydroelectric power, manufacturing and mining sectors. Mineral, horticulture, electronics, IT, agro-processing and tourism have been identified as the thrust sectors for industrial development. The state has abundant natural resources, which offer significant avenues for investment. About 14 per cent (3,108 square kilometres) of Meghalaya is covered by bamboo forests and the state is one of the leading bamboo producers in the country.

The Commerce & Industries Department of Meghalaya & its constituent unit, Meghalaya Industrial Development Corporation, are jointly responsible for the development of industrial infrastructure in the state

Meghalaya has an established tradition of high-quality weaving. Around 15, 900 families are involved in handloom activities in the state. There are eight handloom production centres, 24 handloom demonstration – cum – production centres, 24 weaving training centres and a state –level handloom training institute (Mendipathar, East Garo Hills) in the state.

Meghalaya, with abundant deposits of coal, limestone, kaolin feldspar, quartz, granite, industrial clay and uranium and a small deposit base of sillimanite, bauxite, base metals and apatite has great industrial potential.

Meghalaya has a climate that supports agricultural and horticultural activities. The state offers potential for investment in these areas.

Meghalaya Tax and economic reforms

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Meghalaya Goods and Service Tax:

The Meghalaya government introduced in the state assembly, the Meghalaya Goods and Services Tax Bill, 2017.  GST will abolish all the taxation related disputes between the States and this will make Indian economy more strong. It was the highest tax reforms of state and centre as well.

The Meghalaya government demanded the following amendments —

  • The GST Council accepted that green arecanut will be tax-free while processed arecanut or ‘supari’ will be taxed at 5 per cent only. So is also the case with dry fish in which the Council has agreed to bring down the tax from 12 per cent to 5 per cent
  • The other issues Meghalaya government had demanded was the reduction from Rs 50,000 to Rs 10,000 where a purchaser is not required to give his details in the invoice.

Goods and Services Tax (GST) is a comprehensive indirect tax on manufacture, sale, and consumption of goods and services throughout India. GST would replace respective taxes levied by the central and state governments.

What is GST?

  • It is a destination-based taxation system.
  • It has been established by the 101st Constitutional Amendment Act.
  • It is an indirect tax for the whole country on the lines of “One Nation One Tax” to make India a unified market.
  • It is a single tax on supply of Goods and Services in its entire product cycle or life cycle i.e. from manufacturer to the consumer.
  • It is calculated only in the “Value addition” at any stage of a goods or services.
  • The final consumer will pay only his part of the tax and not the entire supply chain which was the case earlier.
  • There is a provision of GST Council to decide upon any matter related to GST whose chairman in the finance minister of India.

What taxes at center and state level are incorporated into the GST?

At the State Level

  • State Value Added Tax/Sales Tax
  • Entertainment Tax (Other than the tax levied by the local bodies)
  • Octroi and Entry Tax
  • Purchase Tax
  • Luxury Tax
  • Taxes on lottery, betting, and gambling

At the Central level

  • Central Excise Duty
  • Additional Excise Duty
  • Service Tax
  • Additional Customs Duty (Countervailing Duty)
  • Special Additional Duty of Customs

Benefits of GST

For Central and State Governments

  • Simple and Easy to administer: Because multiple indirect taxes at the central and state levels are being replaced by a single tax “GST”. Moreover, backed with a robust end to end IT system, it would be easier to administer.
  • Better control on leakage: Because of better tax compliance, reduction of rent seeking, transparency in taxation due to IT use, an inbuilt mechanism in the design of GST that would incentivize tax compliance by traders.
  • Higher revenue efficiency: Since the cost of collection will decrease along with an increase in the ease of compliance, it will lead to higher tax revenue.

For the Consumer

  • The single and transparent tax will provide a lowering of inflation.
  • Relief in overall tax burden.
  • Tax democracy that is luxury items will be taxed more and basic goods will be tax-free.

For the Business Class

  • Ease of doing business will increase due to easy tax compliance.
  • Uniformity of tax rate and structure, therefore, better future business decision making and investments by the corporates.
  • Removal of cascading effects of taxes.
  • Reduction in transactional cost will lead to improved competitiveness.
  • Gain to the manufacturer and exporters.
  • It is expected to raise the country GDP by 2% points.

GST Council

  • It is the 1st Federal Institution of India, as per the Finance minister.
  • It will approve all decision related to taxation in the country.
  • It consists of Centre, 29 states, Delhi and Puducherry.
  • Centre has 1/3rd voting rights and states have 2/3rd voting rights.
  • Decisions are taken after a majority in the council.

Supporting Laws to implement GST

For the implementation of GST, apart from the Constitution Amendment Act, some other statutes are also necessary. Recently 5 supporting laws to the GST were recommended by the council. 4 for the bills should be passed by the parliament, while the 5th one should be passed by respective state legislatures. The details are given below.

  • The Central Goods and Services Tax Bill 2017 (The CGST Bill).
  • The Integrated Goods and Services Tax Bill 2017 (The IGST Bill).
  • The Union Territory Goods and Services Tax Bill 2017 (The UTGST Bill).
  • The Goods and Services Tax (Compensation to the States) Bill 2017 (The Compensation Bill).
  • And a state GST will be passed by the respective state legislative assemblies.
  • Tax slabs are decided as 0%, 5%, 12%, 18%, 28% along with categories of exempted and zero rated goods for different types of goods and services.
  • Further, a cess would be levied on certain goods such as luxury cars, aerated drinks, pan masala and tobacco products, over and above the rate of 28% for payment of compensation to the States.
  • However, which goods and services fall into which bracket is still an enormous task to be completed by the GST council.
  • Highest tax slab is pegged at 40%.

DEMONETIZATION AND CASHLESS ECONOMY

What is Demonetization?

  • It is a financial step where in a currency unit’s status as a legal tender is declared invalid.
  • This is usually done when old currency notes are to be replaced with the news ones.
  • The 500 and 1000 rupee notes seized to be a legal tender from 8 November, 2016.

A brief past

  • Demonetisation was earlier done in 1978 When the government demonetised Rs. 1000, Rs. 5000 and Rs. 10000 notes.
  • This was done under the High Denomination Bank Note (Demonetisation) Act, 1978.
  • The difference between 1978 and 2016 Demonetisation is that the currency in circulation (of the higher denomination) is higher in 2016 than was in 1978.
  • The current demonitization has been done by government under section 26(2) of the Reserve Bank of India Act.

 

Implications of Demonetization

  • A parallel black economy would collapse.
  • Of the Rs 17 lakh crore of total currency in circulation in the country, black money is estimated at mind-boggling Rs 3 lakh crore.
  • Counterfeit currency: Death blow to the counterfeit Indian currency syndicate operating both inside and outside the country.
  • On Employment: a large part of the Indian economy is still outside the banking system. So, the cash shortage will hurt the informal sector that does most of its transactions in cash.
  • On elections: It will reduce the Vote-for-Note politics making elections more clean and transparent.
  • On Economy:
  • First, it will bring more borrowings to the exchequer, improve inflation outlook and increase India’s gross domestic product (GDP).
  • Second, it will revive investment opportunities and give a fillip to infrastructure and the manufacturing sector.
  • Third, it will help reduce interest rates and lower income tax rate.
  • Real estate cleansing: An unexpected dip in land and property prices.
  • On Higher Education: will become more reachable as the black money from ‘high capitation fees’ is discouraged.
  • On security:
  • Terror financing: Terror financing is sourced through counterfeit currency and hawala transactions.
  • Kashmir unrest: The four-month-long unrest in Kashmir valley is on a backburner
  • North-East insurgency and Maoists: Black money is the oxygen for Maoists collected through donations, levy and extortions. The illicit money is used to purchase arms and ammunition

Economic Reforms:

The basic objective of economic reforms was to improve productivity growth and competitiveness in the Indian manufacturing sector. These reforms were aimed at making Indian manufacturing sector more efficient and technologically up to date, with the expectation that these changes would enable Indian manufacturing sector to achieve higher and sustainable growth. The government started to deregulate the Indian economy with a liberalization programme, focused on the investment pattern, trade policies, the financial sector, taxation and public enterprises.

In recent times, Industrialization has become the catch word of the midtwentieth century and industrial development of the under developed countries or developing countries like India. One of the great world crusades of our times, the Less Developed Countries (LDCs) hope to find in it a solution their problems of poverty, insecurity, overpopulation, backwardness, illiteracy etc. They consider it a panacea for all the evils of their social and economic life. In fact, the essence of economic development of an LDC like India consists essentially in the growth of industrialization.

Realizing the importance of industrialization, once Pt. Jawaharlal Nehru rightly remarked, “Real progress must ultimately depend on industrialization”. His vision was to see India in the group of developed nations of the world and industrialization was the only key to restructure the economy and to achieve sustained growth. Indian economy is a basically an agriculture based economy. It has been evident from the experience of the most of advanced countries that growth based upon agriculture sector will not be sustainable growth.

After studying such behavior of terms of trade they made their belief that for the agriculture based economies terms of trade would always become unfavorable in long run because;

  1. a) The income elasticity of export-goods of agricultural countries is low, while the income elasticity of import-goods is very high. As in case of domestic demand, the demand for agricultural products in other countries, in particular advance countries, is very low. In fact, developed countries have surpluses in agriculture products for exports. As against this, the demand for the import of manufactured goods by LDCs is very intense; and
  2. b) With the advancement of technology, input-output coefficients are declining and most of primary products which were used as raw material are replaced by the industrial cheaper raw material.

On the other hand, if we develop only tertiary sector and ignore industrial sector then there may be tendency of inflation in the economy and this inflation may lead to deceleration economic growth. Therefore, industrialization is the only method to achieve sustained economic growth. Moreover, economic history demonstrates that to eliminate a country’s techno-economic backwardness it is necessary to develop the industrial sector and then to diversify it over a wide range of area and activities. Industrialization is a process of economic organization characterized by rapid setting up of industries and has invariably been the accompaniment of economic development. Nevertheless, economic development should not be treated synonymous with industrialization because industrialization is only a part of the whole process of economic development.

Some of the major initiatives taken by the government to promote Meghalaya as an investment destination are:

  • Under budget 2016-17, the state government proposed allocation of US$ 1.98 million for various art and cultural programs for the development, augmentation and preservation of cultural heritage of the state.
  • Under budget 2016-17, the state government proposed an allocation of US$ 103.42 million for development of education sector in the state.
  • Under the annual budget 2015-16, an investment of US$ 0.29 million has been approved by the Meghalaya State Medicinal Plants Board to increase the production of medicinal plants.
  • The state government has also proposed an outlay of US$ 32.13 million to improve power supply in the state and associated services, power losses in urban areas, etc., under the Restructured Accelerated Power Development and Reforms Programme.
  • An investment of US$ 3.98 million was proposed to be invested for the development of roads and bridges in the state and US$ 54.66 million was proposed for the improvement of the agriculture sector of the state under the 12th Five Year Plan (2012-2017).
  • The state is focusing on developing water harvesting and distribution infrastructure to increase the level of mechanisation in the horticulture sector.
  • Hydroelectric power projects with a total capacity of 687 MW have been proposed to be set up in Meghalaya. All these projects are projected to be operational by 2016-17.
  • The state government is inviting investments in this area through the PPP mode. Independent power producers (IPPs) are also being invited to develop hydro projects in Meghalaya; this provides immense potential for investment.

Meghalaya Planned Development

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Meghalaya Planned Development

Planned Development: Meaning and Necessity

When Independence came, India had a slender industrial base. Millions of her rural people suffered under the weight of a traditional agrarian structure. A long period of economic stagnation, against the background of increasing pressure of population, followed by the burdens of the Second World War, had weakened the Indian economy, so the states. There was widespread poverty. The partition of the country had uprooted millions of people and dislocated economic life. Productivity in agriculture and industry stood at a low level. In relation to needs the available domestic savings were altogether meagre. The promise of freedom could only be redeemed if the economic foundations were greatly strengthened. The Constitution established equal rights of citizenship, and these had now to be expressed through rising levels of living and greater opportunities for the bulk of the people. It was essential to rebuild the rural economy, to lay the foundation of industrial and scientific progress, and to expand education and other social services. These called for planning on a national scale, encompassing all aspects of economic and social life, for efforts to mobilise resources, to determine priorities and goals and to create a widespread outlook of change and technological progress. Thus, planned development was the means for securing with the utmost speed possible, a high rate of growth, reconstructing the institutions of economic and social life and harnessing the energies of the people to the tasks of national development.

To provide the good life to the four hundred million people of India and more is a vast undertaking, and the achievement of this goal is far off. But no lesser goal can be kept in view, because each present step has to be conditioned by the final objective. Behind the plans that are drawn up is the vision of the future, even as the Indian people had a vision of freedom and independence during the long years of their national struggle, and there is faith and confidence in that future. Fully conscious of existing difficulties the people have also the conviction that these difficulties will be overcome. The experience of the last ten years of planning and the large social and economic changes that have already taken place have brought a conviction that India/State can look forward with assurance to sustained economic progress. Even in this ancient land, for so long governed by tradition, the winds of change are blowing and affecting not only the dweller in the city but also the peasant in his field. At each stage, new conflicts and new challenges arise. They have to be met with courage and confidence. There is an excitement in this changing face of India as the drama of India’s development plans unfolds itself.

The more immediate problem is to combat the curse of poverty, with all the ills that it produces, and it is recognised that this can only be done by social and economic advancement, so as to build up a technologically mature society and a social order which offers equal opportunities to all citizens. This involves basic social and economic changes and the replacing of the old traditional order by a dynamic society. It involves not only the acceptance of the temper and application of science and modern technology, but also far-reaching changes in social customs and institutions. To some extent, recognition of this twofold aspect of change has been present in the Indian mind for generations past. Gradually it has taken more concrete shape and has become the basis for planning.

In the Constitution the basic objectives were set forth as “The Directive Principles of State Policy”. Among those ‘Directive Principles’ were those

“The State shall strive to promote the welfare of the people by securing and protecting, as effectively as it may, a social order in which justice, social, economic and political, shall inform all the institutions of national life”.

Further that—

“The State shall, in particular, direct its policy towards securing—

  • that the citizens, men and women equally, have the right to an adequate means of livelihood;
  • that the ownership and control of the material resources of the community are so distributed as best to sub serve the common good;
  • that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment.”

These general principles were given a more precise direction in December, 1954, when Parliament adopted the ‘socialist pattern of society’ as the objective of social and economic policy. This concept, which embodies the values of socialism and democracy and the approach of planned development, involved no sudden change, and had its roots deep in India’s struggle for freedom.

The leading features of the pattern of development envisaged in the Five Year Plans may be briefly stated. The basic objective is to provide sound foundations for sustained economic growth, for increasing opportunities for gainful employment and improving living standards and working conditions for the masses. In the scheme of development, the first priority necessarily belongs to agriculture; and agricultural production has to be increased to the highest levels feasible. The Five Year Plans provide for a comprehensive and many-sided effort to transform the peasant’s outlook and environment. The growth of agriculture and the development of human resources alike hinge upon the advance made by industry. Not only does industry provide the new tools, but it begins to change the mental outlook of the peasant. There can be no doubt that vast numbers of the peasantry today in India are undergoing this change of outlook as they use new tools and experiment with new methods of agriculture. Even the coming of the bicycle in large numbers to the villages of India is not only a sign of higher standards, but is a symbol of new and changing attitudes. Agriculture and industry must be regarded as integral parts of the same process of development. Through planned development, therefore, the growth of industry has to be speeded and economic progress accelerated. In particular, heavy industries and machine-making industries have to be developed, the public sector expanded and a large and growing cooperative sector built up. The public sector is expected to provide specially for the further development of industries of basic and strategic importance or in the nature of public utility services, other industries being also taken up by Government to the extent necessary. State trading has also to be undertaken on an increasing scale according to the needs of the economy. In brief, in the scheme of development, while making full use of all available agencies, the public sector is expected to grow both absolutely and in comparison and at a faster rate than the private sector.

The meaning of the term Meghalaya refers to ‘abode of clouds’. Meghalaya is one of the seven sister states of India and with Arunachal Pradesh, Assam, Manipur, Mizoram, Nagaland and Tripura, for the north-eastern India. Meghalaya is also known as Meghalaya Plateau.

Listed below are some incredible facts about the fastest growing state, Meghalaya:

  • Meghalaya was created as an autonomous State by virtue of Assam Reorganisation (Meghalaya) Act, 1969 and North East Areas (Reorganisation) Act, 1971
  • Meghalaya has rich deposits of limestone, coal, uranium, etc and has an area spread of 22,429 square kilometres
  • Meghalaya has seen some of the largest downfalls in poverty in India. In Meghalaya, the percentage of population below the poverty line was 17.1 percent in 2009-10 which fell to 11.9 percent in 2011-12
  • Meghalaya has the second-lowest unemployment rate in India, after Gujarat, with 0.4 percent in rural areas and 2.8 percent in urban areas as per the record of 2011-12
  • Mawlynnong in Meghalaya is the cleanest village in India
  • The eight north-eastern states, seven sister states and the eighth being Sikkim, are the fastest growing states in India. According to a research by IndiaSpend, by reducing their dependence on agriculture and allied activities, and increasing the rate of education, the state has been prospering for years

 

 

Miscellaneous Facts:

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Miscellaneous Facts:

 

  1. India’s GDP per Capita 622 (US $ PPP). It is 684 US $ for Pakistan.

 

  1. The top 3 countries with external debt are Brazil (235 billion $), China (193 billion $) & Russia (175 billion $). India is 9th with 112 billion $.

 

  1. Functional employment occurs when people change from one job to another & there is an interval. This can happen even in a situation of full employment. Structural employment happens when jobs exist for qualified persons but the unemployed do not have the matching qualifications. It also occurs when labour is available, but factors of production are missing. Cyclical unemployment arises out of cycles of recession. Disguised unemployment is when people are employed but their marginal productivity is zero.

 

  1. The CSO is responsible for estimating the national income. It is assisted by the National Sample Survey Organization (NSSO) which conducts large scale surveys.

 

  1. The tenth plan has taken the figure of 26% population below poverty line for planning purposes. Out of the total 75% are in rural areas & 25% in urban areas. Orissa (47.5%) has the highest proportion followed by Bihar (42.6%), M.P & Assam.

 

  1. WPI is a weighted average of indices covering 477 commodities & is a measure of inflation on an economy wide scale. Services do not figure in this. Base year is 1993-94. CPI is computed separately for three groups viz industrial workers (260 commodities), Urban non-manual employees (180 commodities) & agricultural labourers (60 commodities).

 

  1. The GDP deflator is arrived at by dividing the GDP at current prices by GDP at constant prices in terms of base year prices (1993-94). This indicates how much growth in GDP is due to price rise & how much due to increase in output.

 

  1. In WTO terminology, subsidies in general are identified by “boxes” which are given the colours of traffic lights: green (permitted), amber (slow down — i.e. be reduced), red (forbidden). For agriculture, all domestic support measures considered to distort production and trade (with some exceptions) fall into the amber box. In order to qualify for the “green box”, a subsidy must not distort trade, or at most cause minimal distortion. It includes amount spent on research, disease control, infrastructure & food security. Blue box subsidies are held to be trade distorting & include direct payment to farmers to limit production & certain government assistance to encourage agriculture & rural development in developing countries.

 

  1. Tobin tax is the suggested tax (within 0.1% to 0.25%) on all trade of currency across borders intended to put a penalty on short-term speculation in currencies leading to crisis (Eg. Asian Crisis).

 

 

 

 

 

 

 

  1. In 1972, 107 companies operating in the general insurance business were nationalized into four groups – NIC, United India Insurance Company, Oriental Insurance Company & New India Insurance Company with GIC as the holding company. These companies can compete against each other in all areas except aviation & crop insurance which are the monopoly of GIC.

 

  1. IRDA act 1999 has ended the monopoly of LIC/GIC in the insurance sector.

 

  1. The only two national stock exchanges of India are NSE & OTECI (Over the counter exchange of India). BSE is a regional stock exchange.

 

  1. At present the value of SDR is fixed in relation to a basket of five currencies – US dollar, German mark, British pound, French frank & Japanese yen.

 

  1. Current Account Convertability – the holders of domestic currency have the right to convert the currency into foreign exchange for any current account purpose such as travel, tourism, trade. Transactions like those in assets are not permissible unless there capital account convertability.

 

  1. Ceteris Paribus – ‘Other things remaining equal’. ‘Ad Valorem’ means as per value. Laffer Curve – hypothesis that when the tax rate is raised the revenue realized tends to fall. Monopsony – single buyer as opposite of monopoly where there is a single seller. Lorenz curve shows graphical representation of income distribution. The Phillips curve illustrates the relationship between inflation and unemployment.

 

  1. Bretton Woods Agreement led to the establishment of World Bank & IMF. More developed a country greater would be its dependence on direct tax.

 

  1. MODVAT (modified value added tax) was introduced in India in 1986 (MODVAT was re-named as CENVAT w.e.f. 1-4-2000). Increase in RBI credit to the government during a year represents Monetised deficit.

 

  1. A high fiscal deficit leads to adverse effects on BoP, rise in interest rates & a high cost economy.

 

  1. The reverse repo rate is the rate at which banks park their short-term excess liquidity with the RBI, while the repo rate is the rate at which the RBI pumps in short-term liquidity into the system

 

  1. PNB is the oldest existing commercial bank in India. India’s short term debt is less than 10 % of India’s total debt.

 

  1. The title of World Development Report 2005 is “A Better Investment Climate For Everyone”.

 

  1. The 12th financial commission recommendation would be applicable for the period 2005-2010. Minimum Alternate Tax is a tax on zero tax companies.

 

  1. Press Note 18 requires that a foreign company in a joint venture with an Indian company cannot get into other wholly owned ventures without the domestic partner’s permission.

 

 

 

 

 

 

 

  1. Domestic Commercial Banks contribute to the Rural Infrastructure Development fund to the extent of their shortfall in their lending to the priority sector lendings.

 

  1. Capital adequacy ratio affects assets of banks, its share capital & its investment. International Finance Corporation essentially provides loans to boost private sector investment of member countries.

 

  1. Zero-based Budgeting requires that a program be justified from the ground up each fiscal year. ZBB is especially encouraged for Government budgets because expenditures can easily run out of control if it is automatically assumed what was spent last year must be spent this year

 

  1. The main source of revenue for the Union government in ascending order of importance are income tax, custom duties, corporate tax & excise duties.

 

  1. Prevention of Money Laundering act is applicable to drug trafficking, mafia, gun running etc. Maintaining its increasing trend since 1990-91, except in 1998-99, the share of direct taxes in central tax revenues increased from 19.1 per cent in 1990-91 to 43.3 per cent in 2004-05 (RE) and further to 47.9 per cent 2005-06 (BE).

 

  1. Trade Related Investment measures (TRIMS) under WTO apply that no restrictions will be imposed on foreign investment in any sector; all restrictions on foreign companies will be scrapped; Imports of raw materials by foreign companies are to be allowed freely.

 

  1. Participatory Notes (P-Notes) refers to investment in Indian securities by unregulated FIIs & Hedge funds. NCLT will replace the role of Company law board, BIFR & High courts. Fiduciary issue is the paper currency not backed by gold or silver.

 

 

Essential Extra Reference:

 

  • Various Schemes launched by the government

 

  • Capex in various sectors- telecom etc.

 

  • Export Import Value with trade in Merchandise

Commissions/Committees & Their Purpose

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  Commissions/Committees & Their Purpose
Arjun Sen Gupta   Public Sector Enterprise Autonomy
Committee        
Rangarajan Committee   Disinvestment of PSUs & Balance of Payments.
Malhotra Committee   Insurance Sector & its regulation. Follow up led to setting up of IRDA.
Madhukar Committee   Gold exchange traded fund implementation.
L.C. Gupta Committee   Derivatives in India Model
Naresh Chandra Committee   Corporate Audit & Governance
JJ Irani Committee   Company Law
B. Bhattacharya Committee   Committee on pension reforms
Rakesh Mohan Committee   Small saving & Administered interest rates
Vijay Kelkar Committee   FRBM  (fiscal responsibility & budget management) Act implementation
S.P. Gupta Committee   Generation of Employment opportunities in the 10th plan.
Raghvan Committee   Replacement of MRTP act by competition act.
Eradi Panel   Industrial Insolvency.
M.S. Verma   Restructuring weak banks
Lakdawala Committee   Estimating Poverty line in India
Montek Singh Ahuluwalia   Power Sector reforms
Rakesh Mohan Committee   Development of Infrastructure in India
Abid Hussain Committee   Small Scale Sector
Jha Committee   MODVAT
Vasudev Committee   NBFC
Omkar Goswami Committe   Industrial Sickness
G.V. Ramakrishna   Disinvestment Commission
Arvind Virmani   Import Tariff Reform
Vaghul Committee   Money Markets India reforms

 

FERA   FEMA
Violation of FERA was a criminal offence. Violation of FEMA is a civil wrong.
Offences under FERA were not compoundable. Offences under FEMA are compoundable.
Penalty was 5 times the amount involved. Penalty is 3 times the sum involved.
Citizenship was a criteria to determine residential Stay in India for more than 182 days is the
status of a person under FERA. criteria to decide residential status.
There was only one Appellate Authority namely There are two appellate authorities namely
Foreign Exchange Regulation Appellate Board. 1. Special Director (Appeals) and
  2. Appellate Tribunal for Foreign Exchange.

 

 

 

 

 

Fiscal Responsibility & Budget Management (FRBM) Act 2003

 

  • The revenue deficit as a ratio of GDP should be brought down by 0.5 per cent every year and eliminated by 2007-08;

 

  • The fiscal deficit as a ratio of GDP should be reduced by 0.3 per cent every year and brought down to 3 per cent by 2007-08;

 

  • The total liabilities of the Union Government should not rise by more than 9 per cent a year;

 

  • The Union Government shall not give guarantee to loans raised by PSUs and State governments for more than 0.5 per cent of GDP in the aggregate;

 

Population Policy 2000

 

The immediate objective of the NPP 2000 is to address the unmet needs for contraception, health care infrastructure, and health personnel, and to provide integrated service delivery forbasic reproductive and child health care. To bring the TFR to replacement levels by 2010. Stable population by 2045 at a level consistent with sustainable economic growth.

National Socio-Demographic Goals for 2010

 

  1. Address the unmet needs for basic reproductive and child health services, supplies and infrastructure.

 

  1. Make school education up to age 14 free and compulsory, and reduce drop outs at primary and secondary school levels to below 20 percent for both boys and girls.

 

  1. Reduce infant mortality rate to below 30 per 1000 live births.
  2. Reduce maternal mortality ratio to below 100 per 100,000 live births.

 

  1. Achieve universal immunization of children against all vaccine preventable diseases.

 

  1. Promote delayed marriage for girls, not earlier than age 18 and preferably after 20 years of age.
  2. Achieve 80 percent institutional deliveries and 100 percent deliveries by trained persons.

 

  1. Achieve universal access to information/counseling, and services for fertility regulation and contraception with a wide basket of choices.

 

  1. Achieve 100 per cent registration of births, deaths, marriage and pregnancy.

 

  1. Contain the spread of Acquired Immunodeficiency Syndrome (AIDS), and promote greater integration between the management of reproductive tract infections (RTI) and sexually transmitted infections (STI) and the National AIDS Control Organisation.

 

  1. Prevent and control communicable diseases.

 

  1. Integrate Indian Systems of Medicine (ISM) in the provision of reproductive and child health services, and in reaching out to households.

 

  1. Promote vigorously the small family norm to achieve replacement levels of TFR.

 

  1. Bring about convergence in implementation of related social sector programs so that family welfare becomes a people centred programme.
  Selected Terms
Revenue Deficit Difference between revenue expenditure & revenue receipts
Budget Deficit Difference between total expenditure & revenue receipts
Fiscal Deficit Budget deficit plus non debt creating capital receipts
Primary Deficit Fiscal deficit – Interest Payments.
FIPB Foreign Investment Promotion Council
MIGA Multilateral Investment Guarantee Agency

 

 

Four Modes of Services under GATT

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  Four Modes of Services under GATT
Mode 1 Cross border trade, which is defined as delivery of a service from the territory of one
  country into the territory of other country;
Mode 2 Consumption abroad – this mode covers supply of a service of one country to the service
  consumer of any other country;
Mode 3 Commercial  presence  –  which  covers  services  provided  by  a  service  supplier  of  one
  country in the territory of any other country, and
Mode 4 Presence of natural persons – which covers services provided by a service supplier of one
  country through the presence of natural persons in the territory of any other country

 

 

 

 

 

 

 

 

Direct & Indirect Taxes

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    Direct & Indirect Taxes
  Direct Tax   Indirect Tax  
  Corporation Tax   Excise Duties  
  Income Tax   Service Tax  
  Interest Tax   Central Value Added Tax (Vat)  
  Expenditure Tax   Sales Tax  
  Wealth Tax   Property Tax  
  Gift Tax   Octroi  
  Estate Duty   Customs Duties  
  Land Revenue   Stamp Duties

Components of Money Supply

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    Components of Money Supply  
M1 Consists of currency with the public (ie notes & coins in circulation minus cash with the banks)
  plus demand deposits with the bank (deposits which can be withdrawn without notice) plus
  other deposits with RBI (usually negligible). Also called narrow money
M2 M1 + saving deposits + Certificate of Deposits (CDs) + term deposits maturing within a year.
M3 M2 + term deposits with maturity more than a year + term borrowing of banking system. Also
  known as broad money.
L1 M3 + all Deposits with the Post Office Savings Banks (excluding National Savings Certificates)
L2 L1 + Term Deposits with Term Lending Institutions and Refinancing Institutions (FIs) + Term
  Borrowing by FIs+ Certificates of Deposit issued by FIs; and
L3 L2 + Public Deposits of Non-Banking Financial Companies

 

Organizations & Their Survey/Reports

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Organizations & Their Survey/Reports

1. World Economic & Social Survey U. N
2. World Investment Report UNCTAD
3. Global Competitiveness Report World Economic Forum
4. World Economic Outlook IMF
5. Business Competitive Index World Economic Forum
6. Green Index World Bank
7. Business Confidence Index NCAER
8. Poverty Ratio Planning Commission
9. Economic Survey Ministry of Finance
10. Wholesale Price Index Ministry of Industry
11. National Account Statistics CSO
12. World Development Indicator World Bank
13. Overcoming Human Poverty UNDP
14. Global Development Report World Bank

 

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