Policy for Adequate Autonomy to Companies

In its endeavour to ease the process for FDI applications, Government launched a new secured FIPB website namely
http://fipb.gov.in in 2015. Website offers increased portfolio services to applicants in an efficient manner and also allows
more transparent way of business to keep applicant informed on the current status of their applications.
The efforts of the Government have yielded results and FDI during 2014-15 is US $44,877 million as compared to US
$36,046 million in 2013-14. To further boost the investment environment and to bring in foreign investments in the country,
the Government has brought in FDI related reforms and liberalization. The salient measures are:
No approval required for eligible investment in Limited Liability Partnerships.
Special treatment applicable for investment by non-resident Indians on non-repatriation basis through companies,
partnerships, trusts etc.
No approval required for foreign investment by way of share swap; new sectors opened up for foreign investment,
including plantations, duty free shops and ownership in real estate for purposes of leasing.
Foreign shareholding limits increased in many sector including broadcasting and airline services.
Investment in certain sectors including defence, broadcasting and airline services, now under automatic route.
Full fungibility for portfolio investment in private banking sector.
Conditions attached to FDI relaxed in certain sectors, including removal of restriction on e-commerce by manufacturers and
removal of minimum land and capitalization requirement for construction development sector.
Present FDI Policy and other Press Notes are available at DIPP website namely http://dipp.nic.in.
This was stated by Shri Jayant Sinha, Minister of State in the Ministry of Finance in written reply to a question in Lok Sabha
today.
Reforms in Tax Rates
The details of the tax rates of the major countries of Asia have been taken from the KPMG Report on Global Rates, 2015
and are mentioned below:
Country
Afghanistan
Bangladesh
China
India
Japan
Kazakhstan
Malaysia
Pakistan
Singapore
Srilanka

Corporate
20
27.5
25
34.61
33.06
20
25
33
17
28

Individual Income
----30
45
33.91
50.84
10
25
--20
24

In view of above, the Indian tax rates for direct taxes are higher than the average tax rate among Asian countries.
As far as Indirect Taxes are concerned, tax to GDP ratio during Financial Year 2014-15 was 4.4%.
Tax rates are higher because of exemptions and deductions provided for in the Income Tax Act, 1961. Taking into
account the revenue foregone on account of these exemptions and deductions, the effective rate of corporate tax works out to
be around 23%.
Proposal to bring reforms in tax rates to reduce the burden of tax payers is under consideration of the Government. In
the Budget Speech 2015, it was stated that the Corporate Tax rate would be reduced from 30% to 25% over the next four
years along with phasing out of exemptions and deductions.

This was stated by Shri Jayant Sinha, Minister of State in the Ministry of Finance in written reply to a question in
Lok Sabha today
In order to provide Food Security, in the current Agriculture Scenario, India has to Focus on Supplies which are
timely and Uninterrupted and Affordable for the Poor
57 % of Households had Calorie intake below 2160 KCal/Consumer unit/day
Average Protein intake Per Capita per day Rises Steadily
India Has the Second Highest Number of Undernourished People which Warrants Immediate Attention
The Economic Survey 2015-16 presented here today in the Parliament by the Union Finance Minister Shri
Arun Jaitley emphasizes that the main aim of food management policy is to provide food security to the population.
Providing food security entails making food available at affordable prices at all times, without interruptions. In order to
provide food security, in the current agriculture scenario, India has to focus on supplies which are timely and uninterrupted
and affordable for the poor. Though Indias GDP growth has been impressive and the agricultural production has also
increased over the past few decades, hunger and starvation still persist among the poorer section of the population. There has
been moderation of inflation including food inflation during the last two years, but more needs to be achieved by freeing up
markets, augmenting supply of food and leveraging the use of IT.
According to the data of the 66th round of the National Sample Survey (2009-10), the average dietary energy intake
per person per day was 2147 Kcal for rural India and 2123 Kcal for urban India. As per the Report of Nutritional Intake in
India, 2011-12 (NSSO, 68th round), among the bottom 5 per cent of rural population ranked by Monthly Per Capita
Expenditure (MPCE), 57 per cent of households had calorie intake below 2160 Kcal/consumer unit/day. The average protein
intake per capita per day rises steadily with MPCE level in rural India from 43 gm for the bottom 5 per cent of population
ranked by MPCE to 91 gm for the top 5 per cent, and in urban India from 44 gm for the bottom 5 per cent to about 87 gm for
the top 5 per cent.
Economic Survey 2015-16 states that India has the second highest number of undernourished people at 194.6
million person (FAO, State of Food Insecurity in the World, 2015) which warrants immediate attention. Moreover, with 27
per cent of the population below the poverty line, the rise in prices of food impacts the poor adversely, with a greater
proportion of their household incomes being spent on food. Therefore, along with provision of food subsidy, stability in
agricultural commodity prices is essential for making poorer sections food secure.
There is a strong correlation between stability in agricultural production and food security. Volatility in agricultural
production impacts food supplies and can result in spikes in food prices, which adversely affect the lowest income of the
population.
With a large number of people who remain undernourished and the issues of volatility in agricultural prices,
Economic Survey 2015-16 states that India has one of the largest scheme of food schemes in the World to ensure food
security. There is entitlement feeding programs like the Integrated Child Development Scheme (ICDS) (All Children under
six, pregnant and lactating mothers) and MDMS (Mid Day Meal Schemes), food subsidy programmes like the Targeted
Public Distribution System, Annapurna ( 10 Kgs of free food grain for destitute poor) and the Employment Programmes
like Mahatama Gandhi National Rural Employment Guarantee Scheme (100 days of employment at minimum wages) to
ensure food security.
India Ranks First in Milk Production, Accounting for 18.5 Per Cent of World Production
India Recording A Growth of 6.26 % whereas World Milk Production Increases by 3.1 %
Per Capita Availability of Milk in India has Increased from 176 grams per day in 1990-91 to 322 grams per day by
2014-15
Egg and Fish Production has also Registered an Increasing trend over the Years
Production of Fish During the Last Quarters of 2015-16 has also shown an Increasing Trend and is Estimated at 4.79
MT

The Economic Survey 2015-16 presented today in the Parliament by the Union Finance Minister Shri Arun Jaitley
emphasizes that the Indian agricultural system is predominantly a mixed crop-livestock farming system, with the livestock
segment supplementing farm incomes by providing employment, draught animals and manure. India ranks first in milk
production, accounting for 18.5 per cent of world production, achieving an annual output of 146.3 million tones during
2014-15 as compared to 137.69 million tonnes during 2013-14 recording a growth of 6.26 per cent. Whereas, the Food and
Agriculture Organization (FAO) has reported a 3.1 per cent increase in world milk production from 765 million tones in
2013 to 789 million tones in 2014.
The per capita availability of milk in India has increased from 176 grams per day in 1990-91 to 322 grams per day
by 2014-15. It is more than the world average of 294 grams per day during 2013. This represents a sustained growth in
availability of milk and milk products for the growing population Dairying has become an important secondary source of
income for millions of rural households engaged in agriculture. The success of the dairy industry has resulted from the
integrated co-operative system of milk collection, transportation, processing and distribution, conversion of the same to milk
powder and products, to minimize seasonal impact on suppliers and buyers, retail distribution of milk and milk products,
sharing of profits with the farmer, which are ploughed back to enhance productivity and needs to be emulated by other farm
produce/producers.
In the poultry segment, the Governments focus, besides framing suitable policies for enhancing commercial
poultry production, is for strengthening the family poultry system, which addresses livelihood issues. Both egg and fish
production has also registered an increasing trend over the years. Egg production was around 78.48 billion eggs in 2014-15,
while poultry meat production was estimated at 3.04 MT. Fisheries constitute about 1 per cent of the GDP of the country
and 5.08 per cent of agriculture GDP. The total fish production during 2014-15 was 10.16 MT, an production during the last
quarters of 2015-16 has also shown an increasing trend and is estimated at 4.79 MT( Provisional). There is increasing
significance of poultry and livestock products in the context of diversifying farm and non-farm activities in the
agriculture sector to increase livelihood security.
Impressive strides made in the power sector in the last two years: addition of record generation capacity, moves
towards one market in power, reform of discoms and development of renewable energy
Time is ripe for industries to absorb excess generation capacity through Open Access to energize Make in India
A progressive tariff structure can reduce costs for the poor without unduly burdening the rich
The Economic Survey notes that sweeping changes have been made in the power sector in the last two years. 2014-15
witnessed the highest ever increase in generation capacity of 26.5 GW compared to the average annual addition of around 19
GW over the past five years. Capacity enhancements have brought down the peak electricity defecit to its lowest ever level
of 2.4%. Central and state governments have come together to address problems related to the health of distribution
companies and the debt overhang problem via the Ujwal DISCOM Assurance Yojna (UDAY).
The Survey states that renewable energy targets have been revised from 32 GW to 175 GW to give a policy push to the
renewable sector and sustainable development. Grid parity for solar generation is on its way to becoming a reality with
auctions under the National Solar Mission resulting in all time low tariff of Rs. 4.34 per KWh.
The Survey points out that the complexity of the tariff structure because of different tarriffs for different sectors prevents
economic actors from responding sufficiently to price signals. Simplification in tariffs may improve transparency and yield
consumption and collection efficiency along with governance benefits.
Further, the Survey states that the debt overhang of discoms has traditionally been a major bottleneck for the power sector.
The States with highest losses are those where tariffs fail to cover the costs of electricity supply. Several states are now
attempting to close this gap under the UDAY scheme.
Power sectors impact on Make in India
The Economic Survey notes that the electricity supply and its quality impacts industrial outpout. The electricity tariffs are
unusually high for Indian industry, especially when quality is taken into account. The use of diesel generators in on the rise to
protect against uneven power supply with total capacity around 72 GW and growing at the rate of 5 GW per year. High tariffs
and erratic supply have led to a slow but steady decline in the growth of industrial electricity purchases from utilities and a
gradual transition towards captive generation.
The compund annual growth rate (CAGR) of captive power generation between 2006-07 and 2014-15 is 9.3% compared to
4.6% for electricity procured from utilities. This could be exacerbated in the coming years as decline in oil prices and costs
of renewable energy alternatives may prompt a further shift to captive power.

Need of making India One Market in Power Providing Open Access

The Survey states that steps have been taken towards Making One India in the power sector. The Open Access (OA)
policy introduced under the Electricity Act 2003, which allows consumers with electricity load above 1 MW to procure
electricity directly from electricity markets was the first step towards discovering a single market price for power around the
country. Power Exchanges were set up in 2008 to operationalize the OA policy and create a national electricity market where
price discovery occurs through competitive bidding. Increases in cross subsidy and additional surcharges for purchasing
electricity from power exchanges, have acted as significant barriers, though they are key to balancing DISCOMS.
The power generation capacity has increased while the financial ability of discoms to purchase electricity has diminished.
This has resulted in current power plant load factors reaching their lowest mark at around 60% as The Survey notes that the
time is ripe to allow industries with higher power demands to absorb excess generation capacity through Open Access to
energize Make in India.
Progressivity in tariff rates to reduce burden on the poor
The Economic Survey says that Indias domestic power tariff schedules have greater scope for progressivity. It discusses the
need to balance greater revenue collection with greater welfare allocations. It suggests that the tariffs for the poor can be
reduced while covering costs and without unduly burdening those better off. Cross-subsidization will occur within the
residential consumers itself i.e. rich consumers with high consumption intensity within the residential sectors subsidise
prices for consumers with lower consumption due to differential demand price elasticities.
Making Investments in Maternal Nutrition and Sanitation and Changing Social Norms to Enhance their Effectiveness
can help to Exploit Indias Demographic Dividend
The National Food Security Act and Swachh Bharat are part of the Governments Policy Agenda to Improve
Maternal and Early Life Health
The Economic Survey 2015-16 presented today in the Parliament by the Union Finance Minister Shri Arun Jaitley highlights
that relatively low cost maternal and early life health and nutrition programs offer very high returns on investments.
Investments in maternal, nutrition and sanitation and enhancing their effectiveness by changing social norms can help India
exploit its demographic dividend.
The Survey pointed out that early life conditions affect cognitive development. A healthy mother is more likely to give birth
to a healthy baby. Further, returns to human capital investments vary with the age of the child, being highest for programs
that target young children and in-utero health. Programs targeting younger children are also relatively cheaper investments.
The Survey suggests that early life investments are thus a real opportunity for fiscal and capacity constrained governments.
The Survey notes three things with regards to height for age of children in India
There has been a gradual improvement in both rural and urban India. The children surveyed during the RSCO 2013-14
round are on average taller than those surveyed during NFHS 2005-06.
There is a persistent rural-urban height gap.
India remains a negative outlier with children being on average two standard deviation shorter than the healthy average.
The Survey identifies neo-natal mortality as an important indicator of in-utero nutrition. Out of all infants to die in India,
70% die in the first month. A leading cause of this is low birth weight. Underweight women at the beginning of pregnancy
are far more likely to have low birth weight babies. 42.2% of Indian women are underweight at the beginning of pregnancy
in contrast to 35% of non-pregnant women of child bearing age being underweight. The Survey says that thus, pregnant
women are more likely to be underweight. Additionally, Indian women do-not gain enough weight during pregnancy. Women
in India gain 7 kgs. during pregnancy compared to the WHO recommended figure of 12.5-18 kgs.
Another reason for poor maternal health is that social norms accord young women low status in joint households. This results
in stark within-household nutritional differential.
Investing in maternal health could become a top policy priority of the government. The National Food Security Act 2013,
legislating a universal cash entitlement for pregnant women of at least Rs. 6000 is a promising opportunity to improve
nutrition during pregnancy. The Survey recommended pairing cash transfers with education about pregnancy weight gain.

The Survey identifies open defecation as a source of early life disease in India. According to WHO and UNICEF joint
monitoring program, 61% of rural Indians defecated in the open in 2015. The Survey notes that income constraints may not
be the main determinants of open defecation. Evidence suggests that open defecation leads to child stunting, diarrhoea and
environmental enteropathy. Households who do-not defecate in the open have higher height for age scores.
The Survey notes the vital importance of the Prime Ministers Swachh Bharat Mission in raising the profile of the problem of
open defecation. In the last year alone, the government has built over 80 lakh toilets. The Survey says that the next challenge
in rural India is behavioral.
The Survey says that the breast-feeding example illustrates how some investments by the state can lead to tangible changes
in social norms in a relatively short period of time. Programs like Janani Suraksha Yojana and other schemes under the
Integrated Child Development Scheme delivered via Anganwadi program has increased the proportion of breast feeding
mothers to 62%. The Survey says that creating a nudge unit within government is a useful way of changing norms.
Agriculture Sector needs a Transformation to ensure Sustainable Livelihoods for the Farmers and Food Security
Economic Survey Emphasizes to Improved Productivity in Agriculture
Disbursal of Subsidy on Fertilizers should Shift to DBT
Fixed Amount of Subsidy in the case of P And K Fertilizer Subsidy
There needs to be a Shift to Demand-Driven Agricultural Advisory Services
The Economic Survey 2015-16 presented today in the Parliament by the Union Finance Minister Shri Arun Jaitley stressed
on the declining growth in agriculture, owing to two consecutive drought years and due to decline in production and area
sown of major crops.The agriculture sector needs a transformation to ensure sustainable livelihoods for the farmers and food
security for the population. The transformation in agriculture has to be steered by raising productivity in agriculture, by
investing in efficient irrigation technologies, and efficient use of all inputs. Economic Survey 2015-16 emphasizes that to
improve productivity in agriculture in India needs to be guided by followings:
(i)

Irrigation

To raise the productivity of agriculture in India there is need to expand the acreage under irrigation along with
adoption of appropriate technologies for efficient utilization of water through suitable pricing. First, adoption of irrigation
technologies which improve efficiency in the use of water is imperative in a scenario where flood irrigation has resulted in
wastage of water. Second, focus on efficient irrigation technologies is owing to climate change and indiscriminate wastage
of water in agriculture and other uses. Having more crop per drop through motto to improve productivity in agriculture
which can ensure food and water security in the future.
Net irrigated Area to Total cropped area in India
As per the latest available data on irrigation, the all India percentage distribution of net irrigated are to the
total cropped area during 2012-13 was 33.9 per cent. There is regional disparity in irrigated farming, with net irrigated area
to Total cropped area at more than 50 per cent in the states of Punjab, Tamil Nadu and Uttar Pradesh, while it is at less than
50 per cent in the remaining States. There is need to scope for increasing the coverage of irrigated area across the country
to increase productivity in agriculture.
There is need to arrest the declining trend in efficient utilization of irrigation potential and also reverse it in the next
two three years. A larger share of funds available under the Mahatama Gandhi National Rural Employment Guarantee Act
(MGNEREGA)/ other employment generating schemes need to be deployed for creating and maintenance of community
assets including de-silting and repair of tanks and other water bodies that are used for irrigation.
Efficiency in Irrigation
Achieving efficiency in the use of irrigation systems will be the main determinant of agriculture productivity.
The conventional systems of irrigation have become on-viable in many parts of India due to increasing shortages of water,
wastage of water through over irrigation, and concerns of salination of soil as per Task force on Agriculture (NITI Aayog,
2015). The introduction of efficient irrigation technologies which are both economically and technically efficient like drip

and sprinkler irrigation can improve water use efficiency , reduce costs of production by reducing labour costs and power
consumption.
Water Productivity
Water productivity at the all India level is very low and needs to be enhanced through tapping, harvesting and
recycling water, efficient on-farm water management practices, mirco-irrigation (MI), use of waste water and resource
conservation technologies. The overall irrigation efficiency of the major and medium irrigation projects in India is
estimated at around 38 per cent. Efficiency of the surface irrigation system can be improved from about 35-40 per cent to
around 60 per cent and that of groundwater from about 65-70 per cent to 75 per cent.
Mechanization
The level of farm mechanization in India requires more to be done in terms of introduction of better equipment for
each farming operation in order to reduce drudgery, to improve efficiency by saving on time and labor, improve productivity,
minimize wastage and reduce labor costs for each operation. With shortage of labour for agriculture operations owing to rural
urban migration, shift from agriculture to services and rise in demand for labor in non- farm activities, there is need to use
labour for agriculture operation judiciously, which makes a strong case for mechanization of farming. The overall level of
mechanization in farming is below 50 per cent in the case of majority of the farming operations in India. With increasing
fragmentation of landholdings and low rates of tractor penetration among small farmers, there is need for a market in tractor
rentals, akin to cars and road construction equipment, driven by private participation. With suitable mobile and internet
applications, manufacturers of tractors along with other stakeholders need to deliberate on this, since it will also increase
demand for tractors.
The promotion of appropriate farm equipment which are durable, light weight and low cost, region, crop and
operation specific using indigenous/ adapted technologies need to be made available for small and marginal farmers to
improve productivity.
The basic inputs for increasing productivity in agriculture is seed. It is estimated that the quality for seed accounts
for 20-25 per cent of productivity (DAC&FW, 2015).
The issues that require immediate attention are:
(i)

Affordability:

Seeds which are open pollinated verities can be developed by farmers from their own harvested crops. However,
for high-yielding hybrid verities, the farmer has to depend on the market for each crop.\
(ii)

Availability:

Another concern is shortage in the supply of quality seeds. While there is a demand for banning non-certified
seeds, certification per-se does not ensure quality seeds Ideally, facilitating more players (private and public) and
competition in the market for seeds would improve availability of quality seeds at lower/comprehensive prices.
(iii)

Research and technology for seed development.

Inadequate research and genetic engineering has been a constraint in the development of seeds/ seeds technology
in major crops during the past few decades in India. There is need to encourage development of seeds/ seed technologies
in both private and public sectors to initiate another round of Green revaluation. This development should cover a all
agriculture segments/ corps-cereals, coarse cereals, fruits and vegetables, pulses, oilseeds, animal husbandry and pisciculture
simultaneously.
(iv)

GM crops and seeds:

Concerns about affordability of hybrids and GM seeds, environmental and ethical issues in cultivation of
GM crops, risk to the food chain, dieses spread and cross pollination have resulted in their non-introduction . These issues
needs to be debated, tested, evaluated, so that introduction of hybrids is facilitated in the next six months. The adoption of
hybrid and HYV seeds is one definite pathway to raising productivity in Indian agriculture.
Fertilizers

Fertilizers is a critical and expensive input required to improve agricultural output. To facilitate and promote
the use of fertilizers in order to improve productivity, the Government has been providing fertilizer subsidy to farmers.
The fertilizer subsidy is around 10 per cent of the total agriculture GDP in 2013-14.
There is a need to rationalize fertilizer subsidy in an input, crop and region neutral format and minimize diversions.
The disbursal of subsidy on fertilizers should shift to DBT, the benefits of which will be maximized, if all controls (including
imports) on the fertilizer industry/outputs are lifted simultaneously. In the case of P and K fertilizer subsidy, with the Nutrient
Based Subsidy (NBS) scheme, a fixed amount of subsidy will be given on each grade based on their content.
Crop-responsive, balanced use of fertilizers:
It is important to facilitate the optimal use of fertilizers depending on the soil health and fertility status. Linking the
soil health card to provide profile of the soil and fertilizer on the basis of the same profile utilizing fertilizer, even if not
subsidized can improve the yield of crops.
Micro nutrients and organic fertilizers:
Indian soils show deficiency of micro nutrients like boron, zinc, copper and iron in most parts of the country, which
limits crop yields and productivity. According to agronomic trails conducted by the Indian Council of Agricultural Research
(ICAR), fertilizers which supplement micro nutrients the range of 0.3 to 0.6 ton per ha. The micro nutrient deficiency can
be overcome if there is expansion of the use of organic fertilizer. Moreover, it is cheaper for small farmers to adopt and use
organic composting and manure. This can help improve and retain soil fertility. With 67 % of Indian soil characterized by
low organic carbon, there is great scope for enhancing the use of organic fertilizers.
Nutrient Management:
Judicious use of chemical fertilizers, bio-fertilizers and locally available organic manures like farmyard manure,
compost, vermin compost and green manure based on soil testing is necessary to maintain soil health and productivity.
Regional disparity in fertilizer consumption:
There are wide regional disparities in the consumption of fertilizers. These disparities in fertilizer consumption may
be attributed to the availability of irrigation facilities in the high consuming state since irrigation is a requirement for
proper absorption of fertilizers. I is necessary to reduce the disparities through appropriate soil-testing faculties and policy
measures.
Pesticides:
In India, the farmers crop yield losses range from 15 to 25 per cent owing to the presence of weeds, pests, diseases
and rodents. However, the use of pesticides without following proper guidelines, use of sub standard pesticides and lack of
awareness about pesticides use are key concerns in India. These practices have give rise to pesticide residues being found in
food products in India, posing major threats to the environment and human beings.
Farmers need to be educated about the classification of insecticides on rte basis of their toxicity. They should also
be advised whether specific pesticides are suitable for aerial application.
Being environment friendly, non-toxic and cost effective, bio-pesticides need to be promoted among small farmers
to improve productive in agriculture. There is need to address the problem of availability of credit on several fronts. In
respect of high interest rates, DBT may be considered to replace subvention of interest rates. The intermediation and
refinance model to promote agricultural credit needs to be revisited and replaced with DBT that shall subsidize the interest
paid by the farmer, instead of subsidizing refinance to financial institutions.
The ratio of agricultural credit to agricultural GDP has increased from 10 per cent in 1999-2000 to around 38 per
cent by 2012-13. However, the share of long-term credit in agriculture or investment credit has declined from 55 per cent
in 2006-07 to 39 per cent in 201-12. The decline in needs to be arrested and reversed.
The regional disparity in the distribution of agriculture credit also needs or be addressed. In India, farmers can avail
of crop loans up to Rs. 3lakh at 7k per cent interest and the effective rate of interest has been lowered to 4 per cent during
2015-16 for those who repay their loans promptly. These measures help farmers tide over short-term contingencies and price
shocks which may affect their seasonal operations.

The small and marginal farmers with Kisan Credit Cards (KCCs) can also avail the benefit of interest subvention
scheme extended for a further period of up to six months (post-harvest) against Negotiable Warehouse Receipts (NWRs) at
the same rate as available to crop loan to discourage distress sale of corps by small farmers.
Agriculture Extension Services
Agriculture extension services constitute another key input which can improve productivity in agriculture by
providing timely advisory services to farmers to adopt best practices, technology, meet with contingencies, market
information etc. In India, though there are multiple agencies offering agricultural advisory services, lack of functional
autonomy, rigid hierarchal structures leading to lack of innovative methods of providing extension services and
coordination failures at multiple levels have resulted in inefficient deliver of extension services.
There needs to be a shift to demand-driven agricultural advisory services that will cater to farmer, region and cropspecific needs. This can be done through a virtual connect, using IT (mobile and internet), integration of agricultural
extension services with all stakeholders, their respective hierarchy, extension services in other villages, blocks, agro
climate regions, largely for sharing of information, suppliers of inputs, agro-processors, markets and their activity,
especially price.
Positive Changes Sweeping Power Sector
Survey Suggests Possibility of Achieving Reasonably Greater Progressivity in Tariff Structures with Lower Tariffs for
the Poor
New Paradigm of Surplus Power Sets Stage for Continuing Reforms for Powering One India
Since the present government came to the power , the Economic Survey 2015-16 tabled in the Parliament here today by the
Finance Minister Shri Arun Jaitley states that the several sweeping changes have taken place in the power sector which are as
follows:

There has been record addition to generation capacity. 2014-15 marked the highest ever increase in generation
capacity: 26.5 GW, much higher than the average annual addition of around 19 GW over the previous five years.
Capacity enhancements in the power sector are unprecedented. These measures have helped to reduce Indias peak
electricity deficit to 2.4 per cent, the lowest ever.
There has been a comprehensive initiative to improve the health and performance of power distribution companies
UDAY, the Ujwal DISCOM Assurance Yojana
Indian Railways is attempting to shift to open access for power purchase.
Renewables have received a major policy push. Targets have been revised from 32 Gigawatts to 175 Gigawatts by
2022. In the latest round of auction under the National Solar Mission, tariff reached an all time low of Rs. 4.34
/KWh.
Tantalising signs of moving to One Market in Power are becoming evident.

Notwithstanding these major successes, the Economy Survey observes that the complexity of the Power Sector is such
that daunting challenges remain. In particular :

Complexity of tariff schedules prevents economic actors from responding sufficiently to price signals.

Average tariffs in some cases are set below the average cost of supplying electricity.

High industrial tariffs and variable quality of electricity adversely affects Make in India

Price and non-price barriers come in the way of single-nationwide electricity prices through open access.

Determination of progressive tariff schedules for domestic consumers.

The Survey discussed some longer term policy issues for the power sector which are as follows:Power tariff schedules are currently complex. For example, in certain states there are separate tariffs for poultry farms,
pisciculture, wetland farms (above and below a certain size), mushroom and rabbit farms, etc. By contrast, other energy
products are characterised by a single priceor at most a few pricesacross end users.

Given high tariffs on industry, firms may be shifting from purchasing electricity from utilities to generating their
own power.
o 47 per cent of firms report using a diesel generator
o Between 2006-07 and 2014-15, electricity procurement from utilities grew by 4.6 per cent annually, slower
than the 9.3 per cent growth in self-generation.

Cross-subsidy surcharges and non-price regulatory measures are key tools for balancing DISCOMS equity and
access considerations, but they may also hinder the creation of a nationwide electricity market.
Compared to other developing countries, Indias domestic power tariff schedules have greater scope for
progressivity. Increases in tariffs for rich households can be achieved while maintaining or reducing tariffs for the
poor.

The Economic Survey 2015-16 suggests that the new paradigm of surplus power sets the stage for continuing these reforms
so that India can become one market in power; the burden on industry can be relieved, allowing it to become internationally
competitive as envisaged in Make in India; tariffs can be made simple and transparent, avoiding proliferating end-use
charges; and by taking advantage of the possibility of greater progressivity in rate-setting, charges for the poor could be
reduced while generating more revenues.
In all of this, State Governments and State Regulators will have a key role to play, with helpful facilitation from the centre.
The power sector is a perfect crucible for making effective the cooperative-competitive federalism experiment that is now
India, the Survey adds.
Reform Package of the Fertilizer Sector
The Economic Survey 2015-16 presented here today in the Parliament by the Union Finance Minister Shri Arun Jaitley
emphasizes that the Government budgeted Rs. 73,000 crore- about 0.5 per cent of GDP- on fertilizer subsidies in 2015-16.
Nearly 70 per cent of this amount was allocated to urea, the most commonly used fertilizer, making it the largest subsidy
after food.
Distortions in urea are the result of multiple regulations. These distortions feed upon each other, and together create an
environment that leads to a series of adverse outcomes.
Firstly, urea is only subsidized for agricultural uses. Subsidies like this violate what we call the One Product- One Price
principle. Black market effects are aggravated by further regulation- canalization.
Secondly, the black market hurts small and marginal farmers more than large farmers since a higher percentage of them are
forced to buy urea from the black market.
Thirdly, some of the urea subsidy goes to sustaining inefficient domestic production instead of going to the small farmer.
A reform package would address each of the problems identified above- the three leakages and skewed mix of fertilizer usewith the primary aim of benefiting the small farmer.
First, decimalizing urea imports- which would increase the number of importers and allow greater freedom in import
decision- would allow fertilizer supply to respond flexibly and quickly to changes in demand. This would be timely as
climatic fluctuations are making it much more difficult for governments to forecast agriculture conditions and centrally
manage supply.
Second, bringing urea under the Nutrient Based Subsidy program currently in place for DAP (Diammonium Phosphate) and
MOP (Muriate of Potash) would allow domestic producers to continue receiving fixed subsidies based on the nutritional
content of their fertilizer, while deregulating the market would allow domestic producers to charge market prices. This would
encourage fertilizer manufactures to be efficient, as they could then earn greater profits by reducing costs and improving urea
quality. And this in turn would benefit farmer.
Economic Survey 2015-16 states that the case for implementing direct transfers in fertilizers is to reduce leakages to the
black market. The governments policy of neem-coating urea is a step in exactly this direction. Neem-coating makes it more
difficult for black marketers to divert urea to industrial consumers. Technology could be further used to curtail leakages and
improve targeting of fertililzer subsidies. Fertilizer is a good sector to pursue JAM (Jan Dhan, Aadhaar, Mobile) because of a
key similarity with the successful LPG experience: the centre controls the fertilizer supply chain.
The relatively low levels of last-mile financial inclusion in much of rural India also suggest that it would be risky to replace
subsidized fertilizer with cash, due to beneficiaries weak connection to the banking system.
Universal subsidy with cap on number of bags
A preferred option would be to set a cap on the number of subsidized bags each household can purchase and require
biometric authentication at the point of sale (POS). Requiring biometric authentication would make it harder to conduct
large-scale diversion. Imposing a cap on the total number of subsidized bags each farmer can purchase would improve

targeting. Small farmers would still be able to get all their urea at subsidized prices but large farmers may have to pay market
prices for some f of the urea the buy.
Economic Survey 2015-16 further states that the Fertilizer subsidies are very costly, accounting for about 0.8 per cent of
GDP. They encourage urea overuse, which damages the soil, undermining rural incomes, agricultural productivity, and
thereby economic growth. Reform of the fertilizer sector would not only help farmers and improve efficiency in the sector.
Decimalizing imports will ensure timely availability of fertilizes, and universal Direct Benefit Transfer (DBT) to farmers
based on biometric identification with physical off take can reduce diversion of urea.
Despite Difficult Global Environment, India is Likely to be the Fastest Growing Major Economy in the World in
2016, says Economic Survey 2015-16
Addressing the Twin Balance Sheet Challenge,
Economic Survey Emphasizes on Recalibration of Growth Expectations;
La Nina To Positively Impact the Agriculture
Economic Survey 2015-16 tabled in Parliament here today by the Union Finance Minister Shri Arun Jaitley stresses that
Indias economy is stable and it continues to be the land of opportunity. Economic Survey states that Indias macro-economy
is robust, and it is likely to be the fastest growing major economy in the world in 2016. This performance reflects the
implementation of meaningful reforms like bringing transparency in regulatory decisions, liberalizing FDI, major crop
insurance programmes, financial inclusion via Jan Dhan Yojana, JAM and power sector reforms. At the same time India also
faces huge challenges such as exploiting demographic dividend through major investments in health and education,
addressing the challenges of climate change and agriculture.

Review of major developments1. The growth rate of GDP at constant market prices is projected to increase to 7.6% in 2015-16 from 7.2% in 201415(CSO)

2.

The CPI- New series inflation has fluctuated around 5.5% while the WPI has been in negative territory since
November 2014.

3.

Foreign exchange reserves have risen to US $ 351.5 (Feb-2016)

4.

Net FDI inflows have risen to US $ 27.7 Billion (April-December2015-16)

The fiscal sector registered three striking successes: ongoing fiscal consolidation, improved indirect tax collection and
improved quality of spending at all levels of government. The government will be able to meet its fiscal deficit target of
3.9% of GDP. Direct tax revenue grew by 10.7%, while indirect tax revenue showed the growth by 10.7% (without
Additional Revenue Measures). Also, a shift in the quality of spending from revenue to investment and towards social
sectors has been observed.
India stands out internationally as an investment proposition. Indias Rational Investor Ratings Index (RIRI) shows that
India compares favorably with peer countries in the BBB investment grade and almost matches the performance of Agrade countries.
External Challenges
As per Economic Survey India is facing an unusually challenging and weak external environment. India needs to prepare
itself for a major currency readjustment in Asia in the wake of a similar adjustment in China. Also it needs to address low
growth in emerging markets due to capital controls to curb outflows of capital. In order to balance weak foreign demand,
India needs to activate its domestic sources of demand to maintain growth momentum.
The Twin Balance Sheet Problem
The Twin Balance Sheet (TBS) problem implies the impaired financial positions of the public sector banks along with
some large corporate houses. It is a major impediment to private investment and so to a full-fledged economic recovery.
As per economic Survey, Non performing assets (NPA) has been rising since 2010. The situation is not sustainable; a
decisive solution is needed.
Economic survey points out that resolving the TBS challenge comprehensively would require 4Rs: recognition,
recapitalization, resolution and reform. Banks must value their assets close to true value (recognition). Their capital
position must be safeguarded via infusions of equity (recapitalization). The NPAs in the corporate sector must be sold
(resolution). And future incentives for the private sector and corporate must be set right to avoid repetition of the
problem (reform).

Some steps have already been taken. The government launched the Indradhanush scheme for phased recapitalization of
banks. The RBI also initiated the 5:25 and SDR schemes to incentivize banks to rehabilitate stressed assets. Most
importantly, such moves need to be initiated jointly and cooperatively between the government and the RBI.
Recalibrating Growth Expectations
Indias long run potential GDP growth is substantial, about 8 to 10%. Since indias exports of manufactured goods and
services now constitute about 18% of GDP, its actual growth will depend upon global growth and demand. Reflecting
Indias growing globalization, a 1 percentage point decrease in the world growth rate is now associated with a 0.42
percentage point decrease in Indian growth rates. So, if the world economy remains weak, Indias growth will face
considerable headwinds. Hence Economic survey points out that in the current global environment, there needs to be a
recalibration of growth expectations and consequently of the standards of assessment.
Positive Impact of La-Nina
El Nino, an abnormal warming of the Pacific waters near Ecuador and Peru affects agricultural production in India. The
2015 El Nino has been the strongest since 1997. But if it is followed by a strong La Nina, there could be a much better
harvest in 2016-17.An extended and strong El Nino explains why India had a deficient south monsoon and dry winters
impacting both Kharif and Rabi crops. As per the data given in Economic Survey, some of the strongest El Nino years
were followed by La Nina episodes resulting in bumper harvests. This kind of possibility cannot be ruled out in 2016 as
well. La Nina conditions are expected to develop before June- September. So La Nina is unlikely to deliver its full
bounty until late in Kharif season.

Fiscal Deficit target of 3.9% for 2015-16 seems Achievable, says the Economic Survey
Coming Year expected to be a Challenging one from the Fiscal point of view

The Economic survey 2015-16 states that the fiscal deficit target of 3.9 per cent for the year 2015-16 seems achievable. This
assessment is based on pattern of revenue and expenditure in the first 9 months of the current financial year, inspite of the
challenges posed by a lower than projected nominal GDP growth. Significant increase in revenue receipts, led by buoyant
indirect tax collection, higher level of capital expenditure on the plan side, lower level of subsidies and enhanced untied

resources transferred to the states following the acceptance of recommendations of the 14th Finance Commission, are some
of the salient developments of the fiscal performance in 2015-16 so far.
The performance of indirect taxes in the first 9 months indicates that the budget estimates are likely to be achieved and
possibly exceeded, partly on account of measures taken by the government to enhance revenue by raising excise duty on
petroleum product. Besides, severd major measures were initiated on both indirect and direct taxes in 2015-16.
On the issue of the subsidies, the Economic Survey states that the rationalization and reprioritization of subsidies through
better targeting would play a vital role in fiscal consolidation and in targeting expenditure more towards inclusive
development. The total subsidy bill as a proportion of GDP is expected to be below 2% of GDP as per budget estimates for
2015-16. The 1.7% decline in majors subsidies was due to a near 44.7% decline in petroleum subsidy during April
December 2015 while other major subsidies- Food and Fertilizer-increased by 10.4% and 13.7% respectably during the
period.
Quoting the data released by the Controller General of Accounts, the Economic Survey states that the fiscal deficit of the
Union Government at end December 2015, as percentage of Budget Estimate is lower than in the corresponding period of
the last year. The benign fiscal outcome so far in the year has been due to improved tax buoyancy and prudent expenditure
management with assistance from the decline in oil price. The other notable highlights of the current year have been
increased tax devolution to the states, achieving the highest increase in capital expenditure in the last six year and decline in
majors subsidies.
The robust growth in gross tax revenue in the first three quarter of the year was aided by the 34.8% growth in indirect taxes,
with union excise duties growing by about 68%. Di
Spreading Jam across Indias Economy
The Economic Survey 2015-16 presented here today in the Parliament by the Union Finance Minister Shri Arun Jaitley
emphasizes that JAM Trinity Jan dhan, Aadhaar, Mobile- can help government to implement large-scale, technologyenabled and real-time Direct Benefit Transfers (DBTs) to improve economic lives of Indias poor. First variety of JAMPAHAL scheme of transferring LPG subsidies via DBT -has reduced leakages by 24 per cent. Economic Survey suggests that
while deciding where next to spread JAM, policymakers should consider the challenges of beneficiary identification,
distributor opposition and beneficiary financial inclusion. Spreading JAM to other areas will reduce leakages and provide
more fiscal space to the Government.
JAM Components:
Economic Survey divides JAM into three components1.

Identification or First-Mile: Identification of beneficiaries by government

2.

Transfer or Middle-Mile: Transfer of fund to beneficiaries by government

3.

Access or Last-Mile: Access of fund by beneficiaries

Identification:
First-mile deals with identification of beneficiary. This layer has issues of ghost and duplicate names due to administrative
and political discretion and use of pre-Aadhaar database. It is easier to implement the JAM for universal scheme than
targeted one as identification will be easier. Identification of household-individual connection is important to note here as
some schemes target at household level like JDY and some at individual level like Aadhaar. Aadhaar can help in better
identification of the beneficiaries.
Transfer:
Middle-mile deals with the challenges of payment where government transfer benefits to the banks. But lack of bank
accounts and its information with government put hindrances in the middle-layer connectivity. Main issue in this layer is of
within-government coordination and dealing with supply chain interest groups. Jan Dhan can help beneficiaries to have bank
accounts.
Access:
Last-mile layer faces issues of lesser Bank penetration, mostly in rural areas. It deals with actual transfer of money from
Bank to Beneficiary accounts. It also deals with issues of exclusion of genuine beneficiaries. Mobile can inform about
benefits and also allow easier fund transfer.
Where next to spread JAM?
Economic Survey argues that policymakers should decide where to apply JAM based on two considerations of1.

Amount of leakages and,

2.

Control of the central government.

If amount of the leakages in a given scheme/area is huge then it can be next target for introduction of JAM as subsidies with
higher leakages will have larger returns from introducing JAM. Similarly control of central government will reduce
administrative challenges of co-ordination and political challenges of opposition by interest groups.
Based on these two criteria- leakages and central government control-Survey suggests fertilizer subsidies and withingovernment transfers as two most promising areas for introduction of the JAM.
JAM Preparedness Index:
Further economic survey has formulated JAM-Preparedness Indices for Urban and Rural areas in each state. It uses Aadhaar
penetration, basic bank account penetration and Banking Correspondents (BC) density as indicators for the indices. It has
also prepared Biometrically Authenticated Physical Update or BAPU-Preparedness Index, using Aadhaar penetration and
Point of Sale machines as indicators, for each state and has compared Rural-JAM Preparedness Index with BAPUPreparedness Index. It has found that many states are having higher scores in BAPU-Preparedness Index as compared to
Rural JAM-Preparedness Index. Thus it suggests use of BAPU as short-term solution to reduce the leakages in these states,
till states are well prepared for introduction of the JAM.
Conclusion:
Introduction of DBT in LPG and MGNREGS have proved that use of JAM can considerably reduce leakages, reduce idle
funds, lower corruption and improve ease of doing business with the government. Despite huge improvements in financial
inclusion due to Jan Dhan, JAM Preparedness indicators suggest that there is still long way to go. Center can invest in lastmile financial inclusion via further improving BC networks and promoting the spread of the mobile money. In the meantime
models like BAPU can be used as an alternative to reduce the leakages.
Labour Force participation Rate higher in Rural Areas than Urban Areas, significantly lower for females than males:
Economic Survey
Women account for 57% of employment given under MGNREGA in the Current Financial Year
1.75 lakh Rural Youth trained under Deen Dayal Upadhyaya Grameen Kaushalya Yojana during 2015-16
The Economic Survey (2015-16) states that the proportion of economically active population (15-59 years) has increased
from 57.7 per cent to 63.3 per cent during 1991 to 2013, as per Sample Registration System (SRS) data for 2013.

As per the Economic Survey, the employment growth in the organized sector (Public and Private combined) increased by
2% in 2012 over 2011, while it increased by only 1% in 2011 over 2010. The annual growth rate of employment for the
private sector was 4.5 % in 2012 over 2011 whereas the public sector registered a marginal growth of 0.4 % in the same year.
The Fourth Annual Employment-Unemployment Survey conducted by the Labour Bureau during the period January 2014 to
July 2014 has shown that the Labour Force Participation Rate (LFPR) is 52.5 % for all persons. However, the LFPR for rural
areas stands at 54.7% which is much greater than that for rural areas i.e. 47.2 %. The LFPR for women is significantly lower
than that for males in both rural and urban areas. As per the Survey, the Unemployment Rate is 4.7 % in rural areas and 5.5%
in urban areas. The total unemployment rate reported is 4.9% as per the Labour Bureau Survey. These figures are much
higher than the all India unemployment rates of the National Sample Survey Office (NSSO, 2012-11) which reported
unemployment rate of 2.3% for rural areas, 3.8% for Urban Areas and 2.7% for India as a whole.

The Government has taken several measures including Labour reforms to improve the employment situation in the country
as well as employment conditions for women. Some of the recent Labour reforms include the Payment of Bonus
(Amendment) Act 2015, National Career Services Portal, Shram Suvidha Portal and Universal Account Number Facility.
The National Policy on Skill Development and Entrepreneurship 2015 aims to ensure Skilling on a large Scale at a Speed
with high Standards and promote a culture of innovation based entrepreneurship to ensure sustainable livelihoods. The
Pradhan Mantri Kaushal Vikas Yojana (PMKVY) proposes to cover 24 lakh Indian youth with meaningful, industry relevant,
Skill Based Training under which 5.32 lakh persons have already been enrolled. Of this number, 4.38 lakh have successfully
completed training throughout India.
In addition, the Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY), a placement-linked skill development
scheme for rural youth who are poor, as a skilling component of the National Rural Livelihood Mission (NRLM) has also
been launched. During 2015-16, against a target of skilling 1.78 lakhs candidates under the DDU-GKY, a total of 1.75 lakh
have already been trained and 0.60 lakh placed till November 2015.
With a view to increasing the scope of employability among differently-abled persons, the Government has launched a
National Action Plan (NAP) for skill training. The plan has target of skilling 5 lakh differently-abled persons in next three
years. Plans are also on the anvil to extend the NAP with an online skill-training platform with a target of 5 lakh every year.
Under Mahatma Gandhi National Rural Employment Guarantee Scheme, about 3.63 crore households have been provided
employment of 134.96 crore person days during the Current Financial Year (as on 01.01.2016). Of this, 76.81 crore person
days or 57% were availed of by women.

The Survey has expressed concern at the reported low rates of workforce participation for females. The level of financial
inclusion of women in terms of number of women with bank accounts still remains low in India. However, it is noteworthy
that there are women achievers in the financial sector, with leading nationalized banks and financial institutions headed by
women, says the Economic Survey.
The Time Use Survey (TUS) being conducted in select states on a pilot basis has revealed the hidden contribution of women
to the economy in the form of unpaid work. PUS is proposed to be extended to all states to design gender sensitive policies
for employment and to make womens work visible, says the Survey.

Economic Survey 2015-16 highlights need for more investment in Human Capital, expresses concern at declining
educational outcomes, emphasizes importance of improving efficiency in delivery of services in the health sector.
The Economic Survey 2015-16, presented in the Parliament today by the Union Finance Minister Shri Arun Jaitley, states
that the social infrastructure scenario in the country reflects gaps in access to education, health and housing amenities.
Inclusive growth in India requires bridging gaps in educational outcomes and improved health attainments across the
population.
As India capitalizes on the demographic dividend, Economic Survey 2015-16 states that increasing investment in human
capital is a key requirement to improve productivity of the population says the Economic Survey. The Economic Survey
2015-16 states that the total expenditure on Social Services including Education, Health, Social Security, Nutrition, Welfare
of SC/ST/OBC etc. during 2014-15 (RE) was 7 % of GDP while it was 6.5% during 2013-14.
On the education front, the declining educational outcomes reflected in lower reading levels in both public and private sector
schools are areas of concern. According to Annual Status of Education Report (ASER) 2014, there is sharp decline between
2007 to 2014 in the number of children in Standard V who can read a textbook of Standard II, in both government and
private schools.
Economic Survey 2015-16 states that the Gender Parity Index (2013-14 Provisional) however, shows an improvement in
girls education, with parity having been achieved between girls and boys at almost all levels of education. The Government
has taken several steps to provide education to underprivileged, vulnerable and marginalized people such as SCs, STs, other
Backward Classes (OBC) including Minorities and other Economically Backward Classes through various programmes of
education. Digital Gender Atlas for Advancing Girls Education in India was launched last year to help identify lowperforming geographic pockets for girls, particularly from marginalized groups. A number of scholarship schemes to
encourage enrolment and learning levels among different groups are in operation. National Scholarship Portal, a single
window system for various types of scholarship schemes administered by different Ministries/Departments has been
introduced under Direct Benefit Transfer (DBT) mode. During 2015-16, about 90 lakh Minority students are to be benefited
under the Pre-matric, Post-matric and Merit-cum-Means scholarship schemes, while about 23.21 lakh SC students benefited
under Pre-matric, 56.30 lakh under Post-matric and 3354 under the Rajiv Gandhi National Fellowship including the Top
Class Education scholarship scheme are to be assisted.

Another aspect of human capital is the health attainments of the population. The expenditure on health as a percentage of
total expenditure on social services increased from 18.6% in 2013-14 to 19.3% in 2014-15 (RE) and 19.5% in 2015-16 (BE).
The Economic Survey reports that the under five mortality has declined from 126 in 1990 to 49 in 2013. As per NFHS-4,
the percentage of children fully immunized in the age group (12-23 months) is above 80 per cent in Sikkim and West Bengal.
All the 12 states surveyed have more than 50 per cent children fully immunized. Similarly under Mission Indradhanush, 352
districts of the country have been covered with 20.8 lakh children and 5.8 lakh pregnant women immunized in the first phase.
17.2 lakh children and 5.1 lakh pregnant women have been immunized in the second phase and 17 lakh children and 4.8 lakh
pregnant women immunized in the third phase of the Mission Indradhanush.
Besides continuing support to existing interventions, initiatives such as Rashtriya Bal Swasthya Karyakram (RBSK) and
Rashtriya Kishor Swasthya Karyakram (RKSK) have been launched in 2013 and 2014 respectively under the NHM to
provide comprehensive health care. Considering the rising incidence of Non-Communicable Diseases (NCSs), the
Government of India has initiated an integrated National Programme for Prevention and Control of Cancers, Diabetes,
Cardiovascular Diseases and Stroke (NPCDCS) jointly by the Ministry of Health and Family Welfare and Ministry of
AYUSH (Ayurveda, Yoga, Unani, Siddha and Homeopathy) on pilot basis in six districts.
Economic Survey 2015-16 states that the immunization coverage of children, health of pregnant women, declining role of
public health delivery systems and the lack of adequate skilled personnel are the main challenges in the health sector at
present. Health and access to sanitation/housing amenities are closely related issues which can improve the productivity and
living environment of the population to a great extent. There are persistent regional disparities in access to housing and
sanitation facilities with some States lagging behind with less than 25 per cent coverage in sanitation facilities.
The Way Forward
The Economic Survey 2015-16 points out the need to focus on the quality of education in both the public and private sectors.
There is need for professionally qualified and trained teachers to improve educational outcomes. To strengthen the delivery
of public health services and infrastructure facilities, both public investments and leveraging of private investments are
necessary. The adoption of technology platforms and innovative models by leveraging Jan-Dhan-Aadhaar-Mobile (JAM)
scheme can improve the efficiency in delivery of services.
2015 - Landmark Year for India in Climate Change Initiatives: Economic Survey 2015-16;
India plays important role in adoption of Paris Agreement and Launch of International Solar Alliance
Economic Survey 2015-16 tabled in Parliament here today by the Union Finance Minister Shri Arun Jaitley states that the
year 2015 has been a landmark year for India in terms of climate change initiatives both nationally and internationally. At the
International level, India played a crucial role in the climate change talks and agreement under United Nations Framework
Convention on Climate (UNFCCC) in Paris in December 2015, and the launch of International Solar Alliance. India also
submitted its ambitious Intended Nationally Determined Contributions (INDC) to the UNFCCC on 2nd October 2015. The
Economic Survey which was tabled today in the Parliament by the Union Finance Minister Shri Arun Jaitley has listed down,
along with these achievements, the various other contributions and initiatives taken by India in dealing with climate change
and promoting sustainable development.
Economic Survey 2015-16 further states that India has played an important role in the 21st Conference of Parties (COP 21)
under the UNFCCC and adoption of the Paris Agreement in December 2015. The Paris Agreement sets a roadmap for all
nations in the world to take actions against climate change in the post-2020 period. Also, Prime Minister Shri Narendra Modi
played a leading role at COP 21 in the launch of the International Solar Alliance (ISA), and also volunteered to host its
Secretariat. ISA will provide a special platform for mutual cooperation among 121 solar-resource-rich countries in the
world.
Economic Survey highlights that as on 4 January 2016, with 1593 out of 7685 projects registered under Clean Development
Mechanism (CDM) of UNFCCC, India has the second highest number of projects registered under CDM which further
shows its commitment to fighting climate change.
Economic Survey notes that in the domestic front, India has continued to take ambitious targets in its actions against climate
change. As a part of its contributions to global climate change mitigation efforts, India announced its Intended Nationally
Determined Contributions (INDC) which including other efforts has set itself an ambitious target of reducing its emissions
intensity of its GDP by 33-35 percent by 2030, compared to 2005 levels, and of achieving 40 percent cumulative electric
installed capacity from non-fossil fuel-based energy resources by 2030.
Apart from the National Action on Climate Change (NAPCC), a new mission on Climate Change and Health is currently
under formulation and a National Expert Group on Climate Change and Health has been constituted. The Economic Survey

also talks about the National Mission on Coastal Areas (NMCA) for integrated coastal resource management and the
proposed waste-to energy mission which are the other major components of Indias domestic actions against climate change.
Economic Survey also talks about the National Adaptation Fund for Climate Change (NAFCC) which has been established
with a budget provision of Rs 350 crore for the year 2015-16 and 2016-17, and the National Clean Energy Fund (NCEF)
which is supported by the cess on coal. The Survey notes that India is one of the few countries around the world to have a
carbon tax in the form of a cess on coal.
Economic Survey 2015-16 further points out the progress on the renewable energy front in India by highlighting the
ambitious targets of achieving 40 percent cumulative electric capacity from non-fossil fuel-based energy resources by 2030.
Underlining Indias commitment to clean energy the first Renewable Energy Global Investment Meet and Expo (REINVEST) was organized in Feb 2015 to provide a platform for the global investment community to connect with
stakeholders in India.
Another ambitious program of the government is the Development of Solar cities Program under which 56 solar cities
projects have been approved. The Economic Survey further lists the National Offshore Wind Energy Policy 2015 to help in
offshore wind energy development, as yet another major renewable energy policy
FTAs leading to increased Imports and Exports
Since the mid- 2000s Indias Free Trade Agreements have doubled to about 42 today. They have increased trade with FTA
countries more than would have happened otherwise. Increased trade has been more on the import than export side, because
India maintains relatively high tariffs and hence had larger tariff reductions than its FTA partners.
In case of the ASEAN FTA, the country has benefitted on both sides of trade flows with a statistically significant 33 per cent
increase in exports and 79 per cent increase in imports.
The trade increases have been much greater with the ASEAN than other FTAs and they have been greater in certain
industries, such as metals on the import side. On the export side, FTAs have led to increased dynamism in apparels,
especially in ASEAN markets.
The overall effect on trade of an FTA is positive and statistically significant. The cumulative effect between the year of the
FTA and 2013 on trade with ASEAN, Japan, and Korea is approximately equal to 50 per cent. Indias increased trade with
FTA countries is not due to diversion of imports from more efficient non- FTA countries.
On the import side, a ten per cent reduction in FTA tariffs for metals and machinery increased imports by 1.4 per cent and 2.1
per cent respectively, compared to other products from FTAs or all products from Non-FTA countries.
In the current contest of slowing demand and excess capacity with threats of circumvention of trade rules, progress on FTAs,
if pursues, must be combined with strengthening Indias ability to respond with WTO-consistent measures such as antidumping and conventional duties and safeguard measures. Analytical and other preparatory work must begin in earnest to
prepare India for a mega-regional world.
Renaming of MUDRA Bank
The Union Cabinet has approved the conversion of MUDRA Ltd into MUDRA (SIDBI) Bank as, a wholly owned subsidiary
of SIDBI to carry out the following functions:
i) Refinance operations,
ii) Support services with focus on portal management, data analysis etc,
iii) Any activity entrusted/advised by Government of India
MUDRA Ltd, has been functional since April 8, 2015. It has written to Reserve Bank of India for conveying concurrence for
the conversion of the Company to MUDRA (SIDBI) Bank Ltd.
This was stated by Shri Jayant Sinha, Minister of State in the Ministry of Finance in written reply to a question in Lok Sabha
today.

Chapter 5 Mother and Child

relatively low-cost maternal and early-life health and nutrition programs offer very high returns on investment
because: (i) the most rapid period of physical and cognitive development occurs in the womb, so in utero and earlylife health conditions significantly affect outcomes in adulthood; and (ii) the success of subsequent interventions
schooling and trainingare influenced by early-life development.

countries with better maternal and infant health at takeoff grew faster over the subsequent 20 years. This
relationship is robust and consistent with other evidence2. The governments investment in skills trainingthrough
schemes like the Deen Dayal Uphadyay Grameen Kaushalya Yojanatertiary education, and schooling should all
thus be seen as investments in the productivity of tomorrows worker.

Thus skill begets skill, as Nobel Laureate James Heckman wrote.

Iodine supplementation is relatively cheaper compared to improving teacher quality or re-designing institutions to
raise school accountability, and also arguably requires less service delivery capacity from the state.

Height is a good proxy for earlylife conditions, and a predictor of later-life outcomes, because both height and
cognitive development are partly determined by earlylife environment and net nutrition. cores over time in urban and
rural India. Three things are noteworthy: first, there has been improvement over time in both urban and rural India:
children surveyed during the RSOC 2013- 14 round are on average taller than those surveyed during NFHS 2005-06.
Second, there is a persistent rural-urban height gap which has not closed over the past decade. Third, despite the
progress made, India remains a negative outlierour children are on average 2 standard deviations shorter than the
healthy average.

India has a high neonatal mortality rate. Out of all the infants who die in India, 70 per cent die in the first month. A
leading cause of this is low birth weight. 42.2 per cent of Indian women are underweight at the beginning of
pregnancy. Another reason for poor maternal health is that social norms accord young women low status in joint
households. A recent study shows that children of younger brothers in joint family households are significantly more
likely to be born underweight than children of their older brother. This is attached in part to the lower status of
younger daughter-in-laws in families.

Improving maternal health india

The National Food Security Act of 2013 legislated a universal cash entitlement for pregnant women of at least 6,000
rupees. the cash transfer could be paired with education about how much weight a woman should gain during
pregnancy and why weight gain during pregnancy is important. The cash transfer should be given in a single, lumpsum payment early in pregnancy to avoid delays, reduce administrative costs, and ensure that it is possible for the
household to spend the money on better food during pregnancy.

According to WHO and UNICEF Joint Monitoring Programme estimates, 61 per cent of rural Indians defecate in the
open in 2015, compared with only 32 per cent of rural people in sub-Saharan Africa.

Research suggests that rural Indian households reject the types of latrines promoted by the World Health
Organization and the Indian government partly because their pits needed to be emptied every few years, which is
also associated with severe forms of social exclusion and oppression.

Open defecation spreads germs into the environment, and therefore makes growing children sick. One form of this
sickness is diarrhoea, which robs growing children of the food that they eat. Another resulting disease could be
environmental enteropathy, a chronic inflammatory response of the intestines to repeated exposure to the germs
spread by open defecation; it reduces the ability of childrens intestines from absorbing nutrition.

Addressing the open defication

Prime Ministers Swachh Bharat Mission, which has raised the profile of the pressing problem of open defecation
especially in rural India, and has committed to ending it as quickly.

UNs Sustainable Development Goals commit to ending open defecation worldwide by 2030.

Historically, open defecation in India has declined by about one percentage point per year.

Evidence from a variety of sources shows that the next challenge in rural India is behavioural. Going forward, it is
important to understand barriers to toilet adoption in rural India and promote latrine use.

conclusIon: what other hIghreturn Investments can the government make?

Early life interventions can be an important policy tool for improving the health and human capital.

Janani Suraksha Yojana and other schemes under the Integrated Child Development Scheme that are delivered via
Anganwadi programmes. The proportion of breast feeding mothers is now 62 per cent, with the largest
improvements in the worst states.

The government has recognised the importance of influencing social norms in a wide variety of sectorspersuading
the rich to give up subsidies they do not need, reducing social prejudices against girls, educating people about the
health externalities of defecating in the open, and encouraging citizens to keep public spaces clean.