Current Economy Crux (Prelims) by CA Rahul Kumar IAS Prelims 2020

June 2019 to March 1. DIADEMY.
COM Economy (Prelims) online

2020 classes by CA Rahul
Current Economy Kumar IAS 2020-21
Current Economy Crux (Prelims)

By CA Rahul Kumar
Diademy.com
IAS Prelims 2020
Part 1
(Period – June 2019 to March2020)
(Note –
1. Economic Survey 2019-20 Summary notes have already been provided. For the prelims exam you should go
through Vol 2 carefully and practice relevant MCQs too
2. To get the maximum benefit, you should go through these current affairs along with “350+ Current
Economy MCQs” available on telegram channel https://t.me/DIADEMY.COM
3. Current affairs for the month of April and May 2020 will be provided in part 2 onwards. Follow our telegram
channel for this.
4. Join our Youtube channel for live sessions & Videos on discussion on these current issues
https://tinyurl.com/yx22y2yl
5. All key words are colour coded to ensure faster revision during the exam time
6. Sources used for this compilation are
a. The Hindu & Indian express Newspaper

b. P.I.B.
c. Yojana magazine
Telegram https://t.me/DIADEMYIAS Youtube https://tinyurl.com/yx22y2yl Page 1

June 2019 to March 1. DIADEMY.COM Economy (Prelims) online
Index
National Income
1. Shared Economy
2. Slowdown in Indian Economy
3. Government Unveils package to spur Economic Growth
4. India to be a $5 trillion economy
5. 7th Economic Census (EC)- 2019
6. Moody’s Ratings
Money and Banking

1. Prudential Framework for Resolution of Stressed Assets
2. Complaint Management System (CMS) by RBI
3. Basel Norms
4. Utkarsha 2022
5. Negative Rate Policy
6. RBI Regulatory Sandbox
7. Advisory Board for Banking Frauds (ABBF)
8. RBI Panel on Economic Capital Framework
9. Rediscovering Development Banks
10. Merger of Banks
11. Bharat Bill Payment System (BBPS)
12. BHIM 2.0
13. Merchant Discount Rate
14. Urban Cooperative Banks (UCBS)
15. Acceptance Development Fund
16. Unified Payment Interface (UPI)
17. National Payments Corporation of India (NPCI)
18. Rules Notified to bring Financial Firms under IBC
19. Regulation on Cooperative Banks Soon
20. Cooperative banks in India
21. Punjab to create land banks in rural areas
22. RBI guidelines for payments Banks’ SFB Licence
23. National Electronic Funds Transfer (NEFT)
24. Operation Twist
25. Open Market Operations
26. Deposit Insurance
27. Merchant Discount Rate
28. Mani App
29. Small Financial Banks
30. Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017
31. Insurance Cover on Bank FDs, Deposits increased to Rs 5 Lakh
32. Cooperative Banks under RBI
33. Cash Reserve Ratio
34. Debts Recovery Tribunal
35. Recapitalisation of RRBs
36. Merger of Banks
37. Additional Tier-1 Bonds
38. RBI Releases New Guidelines for Payment Aggregators
39. Open Market Operations (OMO)
40. Capital to Risk Weighted Assets Ratio (CRAR)

41. Fugitive Economic Offender

42. Who are insured by the deposit
43. Insurance and Credit Guarantee Corporation (DICGC)
44. Facebook’s New Cryptocurrency- Libra
45. RBI’s COVID-19 Economic Relief Package
Money and Capital Markets (+NBFC)

1. Core Investment Companies (CICs)
2. Public Funds
3. Inverted Yield Curve
4. Debenture Redemption Reserve (DRR)
5. Social Stock Exchange & Impact Investments
6. Chit Funds (Amendment) Bill 2019
7. Exchange Traded Funds
8. BHARAT 22
9. NBFC Liquidity Norms
10. Core Investment Companies (CICs)
11. Alternative Investment Companies (AIFs)
12. Moody’s Ratings
13. First Fixed Income Exchange Traded Fund (ETF)
14. Bharat Bond ETF
15. Partial Credit Guarantee Scheme
16. REIT and InvIT
17. Masala Bonds
18. Bull and Bear Markets
19. Blue Chip Stocks
20. Circuit Breaker in Stock Market
21. National Investment and Infrastructure Fund (NIIF)
22. Merger of BSNL and MTNL
23. Infrastructure Investment Trust (InvIT)
24. Three Funds under NIIF
25. Infrastructure Investment Trust
26. National Investment and Infrastructure Fund (NIIF)
27. Swap Ratio
28. Sovereign Gold Bond Scheme
29. National Pension Scheme
30. Need for InvITs and REITs
31. North East Venture Fund (NEVF)
Public Finance
1. Fiscal Performance Index (FPI)
2. Public Finance Management System (PFMS) Portal
3. State Budgets
4. India’s Fiscal Deficit
5. Objectives of the FRBM Act
6. Kerala has Sought Relaxation of FRBM Rules
7. Finance Bill
Taxation
1. Multilateral Convention/ MLI
2. Direct Tax Code
3. Sabka Vishwas- Legacy Dispute Resolution Scheme, 2019

4. Advance Pricing Agreements (APAs)

5. Corporate Income Tax
6. Adjusted Gross Revenue (AGR) issue
7. Automatic Exchange of Information (AEOI)
8. GST Council
9. GST Council
10. Dividend Distribution Tax
11. Country-by-Country (CbC) Report
12. National Anti-Profiteering Authority (NAPA)
13. Base erosion and profit shifting (BEPS)
14. Excise Duty
15. States Asked to Use Cess Fund to Help Construction Workers
Inflation
1. Imported Inflation
2. Dearness Allowance
External Sector
1. Reciprocal Trade Agreements (RTAs)
2. Financial Action Task Force (FATF)
3. 100% FDI under Automatic Route for Coal Mining Activities
4. FDI in Palm Oil Plantation
5. FDI in Palm Oil Plantation
6. NIRVIK Schemes
7. Electronic Certificates of Origin (CoO)
8. Open General Export Licences(OGELs)
9. Carpet Export Promotion Council (CEPC)
10. ICEDASH and ATITHI for improved customs clearance
11. Trade Deficit
12. India’s Free Trade Agreement with ASEAN
13. Import Duty on Palm Oil Cut
14. Directorate General of Foreign Trade (DGFT)
15. Government Imposes Curbs on Drug Exports
16. India’s Coal Imports Rise
17. Most Favoured Nation Status
18. HSN Code
19. Global Microscope on Financial Inclusion Report
20. Surjit Bhalla Committee on Trade and Policy
International Institutions
1. India- Russia Strategic Economic Dialogue (IRESD)
2. Global MPI 2019 Report
3. Regional Comprehensive Economic Partnership (RCEP)
4. G7 Bloc
5. Automatic Exchange of Information (AEOI)
6. Developing Countries in the WTO
7. Financial Action Task Force (FATF)
8. Libra
9. Sveriges Riksbank Prize in Economic Sciences
10. IMFs World Economic Outlook (WEO)
11. Asia- Pacific Trade and Investment Report 2019
12. Asian Development Bank (ADB)

13. IMF Quotas

14. WTO’s Dispute Settlement Mechanism and the Appellate Body
15. G20
Industry
1. Competition Commission of India
2. National Anti- Profiteering Authority (NAA)
3. Regulatory Sandbox
4. GOI considering to Break Coal India into Separate Listed Companies to Improve its working
5. Marine Fisheries Regulation and Management (MFRM) Bill 2019
6. Sugar Industry
7. Tourism Industry
8. Government e Marketplace (GeM)
9. Eligibility Criteria for Grant of Maharatna, Navratna and Miniratna Status
10. Enterprise Development Centres (EDCs)
11. Atal Research and Innovation for Small Enterprises (ARISE)
12. Industrial Relations Code Bill, 2019
13. HS Code
14. Business Immunity Platform
15. National Productivity Council (NPC)
16. Consumer Protection Act, 2019
17. National Financial Reporting Authority
18. Paris Convention for the Protection of Industrial Property
Agriculture
1. Market Intervention Price Scheme (MIPS)
2. Agricultural and Processed Food Products Export Development Authority (APEDA)
3. Small Farmers’ Agri-Business Consortium (SFAC)
4. Minimum Support Price (MSP) for Minor Forest Produce (MFP)
5. “Silk Samagra” through Central Silk Board
Social Sector, Employment and Poverty

1. Healthy States, Progressive India Report
2. Corporate Social Responsibility
3. Maternal Responsibility rate in India
4. Patent Prosecution Highway Programme
5. Human Development Index (HDI)
6. Latest edition of Periodic Labour Force Survey (PLFS)
7. Skill Development through Rural Self Employment and Training Institutes (RSETI)
8. New Code on Wages
9. National Skill Development Corporation (NSDC)
10. Randomised controlled trial
11. CMIE Report on Joblessness
Sustainable Development
1. Emission Trading Scheme (ETS)
2. Carbon Pricing
Government Schemes
1. Electoral Bond Scheme
2. Scheme for Capacity Building in Textile Sector (SCBTS)- SAMARTH
3. Pradhan Mantri Kaushal Vikas Yojana (2016-2020)

4. India International Skill Centres (IISC)Program

5. Rashtriya Gokul Mission
6. Shyama Prasad Mukherji Rurban Mission (SPMRM)
7. National Policy on Biofuels- 2018
8. Pradhan Mantri Ujjwala Yojana (PMUY)
9. Atal Tinkering Labs
10. Pradhan Mantri Awas Yojana- Urban
11. EQUIP Project
12. National Manufacturing Competitiveness Programme (NMCP)
13. Scheme for Trans-disciplinary Research for India’s Developing Economy (STRIDE)
14. Pradhan Mantri Gram Sadak Yojana- III (PMGSY-III)
15. Mahila Kisan Sashktikaran Pariyojana (MKSP)
16. Pradhan Mantri Kushal Vikas Yojana 2.0 (PMKVY 2.0)
17. Atal Pension Yojana
18. Deenadayal Antyodaya Yojana- National Rural Livelihoods Mission (DAY-NRLM)
19. Trade Infrastructure for Export Scheme (TIES)
20. Pradhan Mantri Laghu Vyapari Maan-dhan Yojana 2019
21. Pradhan Mantri Fasal Bima Yojana (PMFBY)

National Income
Shared Economy • Sharing economy, also known as collaborative consumption or peer-to-peer-based

sharing, is a concept that highlights the ability of individuals to rent or borrow goods
rather than buy and own them→The ‘shared economy’ includes segments such as co-
working (Awfis, WeWork India), co-living (Stanza Living, OYO Life, Oxford Caps),
shared mobility (Uber, Ola, Shuttl) and furniture rental (Furlenco, Rentomojo.)
• Why in News?The shared economy in India is estimated to be an about $2 billion industry
by the end of the current year, according to a recent report by Maple Capital Advisors
Slowdown in Economic data Indicates that there is slowdown in Indian economy → GDP grew at 5% in
Indian Economy the first quarter of FY20 (which is slowest growth since the fourth quarter of FY13) → The
investment rate as measured by Gross Fixed Capital Formation (GFCF) as a per cent of
GDP is showing a declining trend→Saving: Saving declined from 32.7 per cent in 2011 to
29.3 per cent in 2018→Rural wage growth has declined from 27.7 per cent in FY14 to less
than 5 per cent in FY19→corporate wages have also exhibited a single-digit growth in
FY19 →Export: During the period from 2011-2018, exports as a per cent of GDP also
declined from 24.5 per cent to 19.6 per cent→Inflation: The inflation rate in the economy
has declined from 10.03 per cent in FY13 to 3.41 per cent in FY19

Govt Unveils Finance minister has announced measures to revive growth, boost consumption and uplift
Package to Spur investor and consumer sentiment→Key announcements: Govt plans to bring offshore
Economic Growth rupee market to domestic market→ Govt to consult with RBI to enhance Credit default
swap options→CSR violation would be treated as a civil offence, not a criminal
offence→All pending GST refunds till now shall be paid in 30 days. Future GST refunds to be
paid in 60 days→BS-IV cars purchased till March 2020 to remain operational for the entire
period of registration→Scrappage policy to be announced soon→Govt withdraws angle tax
provision for startups and their investor→Laws to be amended to ensure one MSME
definition→From October 1, all Income Tax notices must be disposed off within 3
months→Additional liquidity to support Housing Finance Companies by National Housing
Board increased to Rs 30,000 crore→Govt to release Rs 70,000 crore upfront for PSBs
recapitalisation etc
India to be a $5 The road to a $5 trillion economy by 2025 is beset with many speed-breakers, the NITI Aayog
trillion economy has warned the government→Essentially $5-trillion economy is the size of an economy as
measured by the annual Gross Domestic Product (GDP)→Apart from the monetary
definition, a $ 5 Trillion Economy calls for pulling all the economic growth levers—
investment, consumption, exports, and across all the three sectors
of agriculture, manufacturing and services→also means improving all three sectors of the
economy, India will more likely achieve its ambitious Sustainable Developmental Goals
(SDGs)→In 2014, India’s GDP was $1.85 trillion→ Today it is $2.7 trillion and India is the
sixth-largest economy in the world
7th Economic Conducted by Ministry of Statistics and Programme Implementation (MoSPI)→ to provide
Census(EC) -2019 disaggregated information on various operational and structural aspects of all establishments in
the country→implemented by MoSPI in partnership with Common Service Centres, CSC e-
Governance Services India Limited, a Special Purpose Vehicle under the MEITY→ first EC
conducted in 1977 by CSO
Moody’s Ratings Different general credit ratings: AAA: Highest credit quality that denotes the lowest
expectations of default risk→AA+/AA/AA-: Very high credit quality→A+/A/A-: High
credit quality that denotes expectations of low default risk→BBB+/BBB/BBB-: Good credit
quality that indicates that expectations of default risk are currently low→BB+/BB/BB-:
indicates an elevated vulnerability to default risk, particularly in the event of adverse
changes in business or economic conditions over time→B+/B/B-: Indicates that material
default risk is present, but a limited margin of safety remains→CCC+/CCC/CCC-
: Substantial credit risk exists in this rating, where the default is a real possibility→CC: Very
high level of credit risk with a possibility of defaults→C: shows that a default or default-like
process has begun, or the issuer is in a standstill→DDD/RD/SD/DD/D: indicates that the issuer
has entered into bankruptcy filings, administration, receivership, liquidation or other formal
winding-up procedure or has ceased business

Money & Banking
Prudential Issued by Reserve Bank of India→ gives lenders a breather from the one-day default
Framework for rule whereby they had to draw up a resolution plan (RP) for implementation within 180 days
Resolution of of the first default→gives lenders (scheduled commercial banks, all-India financial institutions
Stressed Assets and small finance banks) 30 days to review the borrower account on default→lenders may
also choose to initiate legal proceedings for insolvency or recovery→in cases where the RP is
to be implemented, all lenders have to enter into an inter-creditor agreement (ICA) for the
resolution of stressed assets during the review period to provide for ground rules for
finalisation and implementation of the RP in respect of borrowers with credit facilities from
more than one lender→in the case of borrowers in the Rs 1,500 crore and above but less
than Rs 2,000 crore category, January 1, 2020 has been set as the reference date for
implementing the RP→in the less than Rs 1,500 crore category, the RBI will announce the
reference date in due course.
Complaint Launched by the Reserve Bank of India→ CMS is a software application to facilitate RBI’s
Management grievance redressal process→ aims to improve customer experience in timely redressal of
System (CMS) by grievances
RBI
Basel Norms An assessment of compliance with Basel Norms was recently conducted by the Regulatory
Consistency Assessment Programme (RCAP)→RCAP is part of the Basel committee→the
assessment focused on the completeness and consistency of the domestic regulations in force
on 7 June 2019, as applied to commercial banks in India, with the Basel large exposures
framework
Utkarsha 2022 Is a three- year road map for medium term objective to be achieved for improving regulation,
supervision of RBI→this medium-term strategy is in line with Global central banks’ plan to
strengthen regulatory and supervisory mechanism
Negative Rate It was once considered only for economies with chronically low inflation such as Europe
Policy and Japan –it is becoming a more attractive option for some other central banks to counter
unwelcome rises in their currencies→under a negative rate policy, financial institutions are
required to pay interest for parking excess reserves with the central bank→this
way, central banks penalise financial institutions for holding on to cash in hope of
prompting them to boost lending
RBI Regulatory Reserve Bank of India has issued the final framework for regulatory sandbox in order to
Sandbox enable innovations in the financial technology space→RBI will launch the sandbox for entities
that meet the criteria of minimum net worth of ₹25 lakh as per their latest audited balance
sheet→the entity should either be a company incorporated and registered in the country or
banks licensed to operate in India→while money transfer services, digital know-your customer,
financial inclusion and cybersecurity products are included, crypto currency, credit registry and
credit information have been left out
Advisory Board for The Central Vigilance Commission (CVC) has constituted an ‘Advisory Board for Banking
Banking Frauds Frauds (ABBF) to examine bank fraud of over ₹50 crore and recommend action→
Headquartered in Delhi, the Reserve Bank of India (RBI) to provide required secretarial
services, logistic and analytical support along with the necessary funding to the board→

(ABBF) Composition: 4 members including chairman→ tenure would be for a period of two years
from 21st August, 2019
RBI Panel on Reserve Bank of India (RBI) to transfer of record Rs 1.76 lakh crore dividend and
Economic Capital surplus reserves to the government→In line with the recommendations of former RBI
Framework governor Bimal Jalan-led panel constituted to decide size of capital reserves that the central
bank should hold→ The expert panel on RBI’s economic capital framework was formed to
address the issue of RBI reserves—one of the sticking points between the central bank and the
government
Rediscovering To improve access to long-term finance, the government has proposed to establish an
Development Banks organisation to provide credit enhancement for infrastructure and housing projects→ It is a
welcome initiative, but questions remain on its design → development banks are financial
institutions that provide long-term credit for capital-intensive investments spread over a long
period and yielding low rates of return, such as urban infrastructure, mining and heavy
industry, and irrigation systems→Development banks are also called as term-lending
institutions or development finance institutions
Merger of Banks Government plans to merge 10 public sector banks into four→This would take the number
of banks in the country from 27 in 2017 to 12→New mergers include: Punjab National
Bank, Oriental Bank of Commerce and United Bank of India will combine to form the
nation’s second-largest lender→ Canara Bank and Syndicate Bank will merge→Union Bank
of India will amalgamate with Andhra Bank and Corporation Bank → Indian Bank will merge
with Allahabad Bank
Bharat Bill RBI has expanded the scope and coverage of Bharat Bill Payment System (BBPS) to include
Payment System all categories of billers who raise recurring bills and payments (except prepaid recharges)
(BBPS) as eligible participants, on a voluntary basis→at present, the facility of payment of recurring
bills through BBPS is available only in five segments i.e. direct to home (DTH), electricity,
gas, water and telecom→expansion of biller categories would increase the user base of Bharat
Bill Pay along with providing an efficient, cost-effective alternative to existing systems and
enhance consumer confidence and experience.
BHIM 2.0 Govt launches BHIM 2.0 with new functionalities, additional language support→Bharat
Interface for Money (BHIM) is a UPI based payment interface→Developed by National
Payments Corporation of India (NPCI)→Launched in December, 2016→New BHIM 2.0
contains: Donation’ gateway, increased transaction limits for high value transactions,
linking multiple bank accounts, offers from merchants, option of applying in IPO, gifting
money→ also supports three additional languages — Konkani, Bhojpuri and Haryanvi —
over and above the existing 13
Merchant Discount It is a fee charged from a merchant by a bank for accepting payments from customers
Rate through credit and debit cards in their establishments→MDR compensates the card issuing
bank, the lender which puts the PoS terminal and payment gateways such as Mastercard
or Visa for their services→MDR charges are usually shared in pre-agreed proportion between
the bank and a merchant and is expressed in percentage of transaction amount→ In a move that
may boost digital payments, businesses with an annual turnover of more than ₹50 crore
will have to mandatorily offer electronic mode of payments to their customers from 1

November→Besides, no charges or merchant discount rate (MDR) will be levied on either

customers or merchants
Urban Cooperative Recently, RBI imposed restrictions on withdrawals from the Punjab and Maharashtra
Banks (UCBS) Cooperative (PMC) Bank, one of the largest urban cooperative lenders→ Bank was put
under regulatory restriction under Section 35A of the Banking Regulation Act, for a
period of six months due to irregularities like fraudulent loans, excessive lending to Housing
Development & Infrastructure Ltd (HDIL) etc→ Co-operative banks were born out of the
concept of cooperative credit societies where members from a community band together to
extend loans to each other, at favourable terms→ UCBs are registered as cooperative
societies under the provisions of either the State Cooperative Societies Act of the State
concerned or the Multi State Cooperative Societies Act, 2002→are located in urban and
semi-urban areas
Acceptance Recently, RBI announced setting up of Acceptance Development Fund to improve the last-
Development Fund mile payments network in rural India to transact digitally→will be operationalized as a
bank-sponsored development fund solely to improve payment infrastructure in Indian
small towns and villages especially in Tier III to Tier VI centers, where most daily
transactions are in cash
Unified Payments It is a system that powers multiple bank accounts into a single mobile application (of any
Interface (UPI) participating bank), merging several banking features, seamless fund routing &
merchant payments into one hood→It also caters to the “Peer to Peer” collect request
which can be scheduled and paid as per requirement and convenience→ Each Bank provides its
own UPI App for Android, Windows and iOS mobile platform(s)
National Payments It is an umbrella organisation for operating retail payments and settlement systems in
Corporation of India→it is an initiative of Reserve Bank of India (RBI) and Indian Banks’ Association
India (NPCI) (IBA) under the provisions of the Payment and Settlement Systems Act, 2007, for creating a
robust Payment and Settlement Infrastructure in India→it has been incorporated as a not for
profit company→in 2016 the shareholding was broad-based to 56 member banks to
include more banks representing all sectors
Rules Notified To The Centre has issued rules that provide a framework for bringing ‘systemically important
Bring Financial financial service providers’ under the purview of the Insolvency and Bankruptcy Code
Firms Under IBC (IBC)→The Ministry of Corporate Affairs has notified the Insolvency and Bankruptcy
(Insolvency and Liquidation Proceedings of Financial Service Providers and Application to
Adjudicating Authority) Rules, 2019→These rules aim to provide a generic framework for
insolvency and liquidation proceedings of systemically important FSPs other than
banks→introduction of an interim framework for resolution of financial service providers
under the IBC is a timely and important step for resolution of financial service providers
permitting an interplay between regulators, creditors and the NCLT (National Company
Law Tribunal) for appropriate actions→These rules are likely to help out distressed shadow
banks and housing financiers, which have been battling a liquidity crunch for a year
Regulation on The government will, in the upcoming Winter Session of Parliament, seek to make
Cooperative Banks amendments in certain laws so as to bring the banking activities carried out by cooperative
Soon societies under the purview of the Banking Regulation Act→Co-operative banks are financial
entities established on a co-operative basis and belonging to their members, means that the
customers of a co-operative bank are also its owners

Co-operative banks Broadly, co-operative banks in India are divided into two categories – urban and
in India rural→Rural cooperative credit institutions could either be short-term or long-term in
nature→Urban Co-operative Banks (UBBs) are either scheduled or non-scheduled.
Scheduled and non-scheduled UCBs are again of two kinds- multi-state and those operating in
single state →co-operative banks are registered under the States Cooperative Societies Act→
also come under the regulatory ambit of the Reserve Bank of India (RBI) under two laws,
namely, the Banking Regulations Act, 1949, and the Banking Laws (Co-operative Societies)
Act, 1955 →Dual Regulation of Urban Cooperative Bank: Urban Co-operative Banks are
regulated and supervised by State Registrars of Co-operative Societies (RCS) in case of
single-State co-operative banks and Central Registrar of Co-operative Societies (CRCS) in
case of multi-State co-operative banks and by the RBI
With an aim to create land banks in rural areas to boost industrial development, the Punjab
Punjab to create Cabinet has given in-principle approval to amend the law for transfer of common village land
land banks in rural in rural areas to the state’s industry department→The amendment will facilitate gram
areas panchayats to promote development of villages by unlocking the value of ‘Shamlat’ or village
common land→The new rule would pave the way for transfer of ‘Shamlat’ land for
industrial projects to the industry department and state-owned Punjab Small Industries &
Export Corporation (PSIEC)→Shamlat land is one that does not come under habitation and
cultivation and is considered as consolidated land holdings for common use
RBI has announced the final guidelines for on-tap licencing of private sector SFBs→These
RBI guidelines for guidelines include:Payments banks can apply for conversion into small finance banks
Payments banks’ (SFBs) after five years of operation→Promoter of a payments bank is eligible to set up an
SFB licence SFB, provided that both banks come under the non-operating financial holding company
(NOFHC) structure→The minimum paid-up capital requirement for SFBs has been raised
from ₹100 crore to ₹200 crore→SFBs should be listed within three years of reaching a net
worth of ₹500 crore→They will be given scheduled bank status immediately upon
commencement of operations, and will have general permission to open banking outlets from
the date of commencement of operations→The promoter should hold a minimum of 40% of
the paid-up voting equity capital for five years→If the initial promoter shareholding is above
40%, it should be brought down to 40% within a period of five years, 30% within 10 years, and
15% in 15 years.
National Electronic RBI has extended the availability of NEFT round-the-clock on all the seven days of the week
Funds Transfer — 24×7 basis — to facilitate beyond the banking hour fund transfer→RBI joins an elite club
(NEFT) of countries having payment systems which enable round the clock funds transfer and
settlement of any value→So far, Australia, Hong Kong, Mexico, Sweden, Turkey, the UK,
South Korea, Singapore, South Africa, and China have such payment system.
Operation Twist RBI to carry out US-style ‘Operation Twist’ to bring down interest rates→‘Operation Twist’
is when the central bank uses the proceeds from sale of short-term securities to buy long-
term government debt papers, leading to easing of interest rates on the long term papers
Open Market They are conducted by the RBI by way of sale or purchase of government securities (g-
Operations secs) to adjust money supply conditions→Central bank sells g-secs to suck out liquidity
from the system and buys back g-secs to infuse liquidity into the system→These operations
are often conducted on a day-to-day basis in a manner that balances inflation while helping
banks continue to lend.→The RBI uses OMO along with other monetary policy tools such as

repo rate, cash reserve ratio and statutory liquidity ratio to adjust the quantum and price of
money in the system→RBI carries out the OMO through commercial banks and does not
directly deal with the public
Deposit Insurance Ministry of Finance, IRDAI seek insurance for bank deposits above Rs 1 lakh→The requests
comes in the aftermath of the Punjab and Maharashtra Cooperative (PMC) Bank
scam→Deposit insurance is providing insurance protection to the depositor’s money by
receiving a premium→The government has set up Deposit Insurance and Credit Guarantee
Corporation (DICGC) under RBI to protect depositors if a bank fails→Every insured bank
pays premium amounting to 0.001% of its deposits to DICGC every year.
Merchant Discount • From January onwards, all companies with a turnover of Rs 50 crore or more need to
Rate provide the facility of payment through RuPay Debit card and UPI QR code to their
customers, under which no MDR fee will be charged from customers as well as merchants
• What? It is a fee charged from a merchant by a bank for accepting payments from
customers through credit and debit cards in their establishments.
• MDR compensates the card issuing bank, the lender which puts the PoS terminal and
payment gateways such as Mastercard or Visa for their services→MDR charges are
usually shared in pre-agreed proportion between the bank and a merchant and is
expressed in percentage of transaction amount
Mani App • By RBI

• It is for visually challenged to identify currency notes
Small Finance • Reserve Bank of India granted ‘in-principle’ approval to Saharanpur-based Shivalik
Banks Mercantile Cooperative Bank to convert into a Small Finance Bank (SFB), making it the
first such lender to have opted for the transition
• What? Small finance banks will primarily undertake basic banking activities of
acceptance of deposits and lending to unserved and underserved sections including
small business units, small and marginal farmers, micro and small industries and
unorganised sector entities →SFBs can distribute mutual funds, insurance products and
other simple third-party financial products→Lend 75% of their total adjusted net bank
credit to priority sector→Maximum loan size would be 10% of capital funds to single
borrower, 15% to a group→Minimum 50% of loans should be up to 25 lakhs→
Minimum paid-up capital would be Rs 100 cr→ Foreign shareholding capped at 74% of
paid capital, FPIs cannot hold more than 24%
Insolvency and • Insolvency and Bankruptcy Board of India (IBBI) has notified the Insolvency and
Bankruptcy Board Bankruptcy Board of India (Voluntary Liquidation Process) (Amendment)
of India (Voluntary Regulations, 2020 on 15th January 2020
Liquidation • The aforesaid amendment provides that a liquidator shall deposit the amount of
Process) unclaimed dividends, if any, and undistributed proceeds, if any, in a liquidation process
Regulations, 2017 along with any income earned thereon into the Corporate Voluntary Liquidation Account
before submission of an application for dissolution of the corporate person→ It also
provides a process for a stakeholder to seek withdrawal from the Corporate Voluntary
Liquidation Account

Insurance Cover on • In Budget 2020, finance minister has proposed to increase the limit of insurance cover in
Bank FDs, Deposits case of bank failure on deposits to ₹5 lakh from ₹1 lakh→Proposal comes in the wake of
Increased to ₹5 crisis at Mumbai-based urban cooperative bank, PMC Bank
Lakh • Deposit insurance is providing insurance protection to the depositor’s money by receiving
a premium→Government has set up Deposit Insurance and Credit Guarantee
Corporation (DICGC) under RBI to protect depositors if a bank fails→Every insured
bank pays premium amounting to 0.001% of its deposits to DICGC every year
Cooperative Banks • Union Cabinet has approved to bring regulation of cooperative banks under Reserve
under RBI Bank of India→In order to achieve this, the Cabinet approved amendments to Banking
Regulation Act
• The amendments will apply to all urban co-operative banks and multi-state cooperative
banks →This was felt necessary in the wake of the recent Punjab & Maharashtra
Cooperative (PMC) Bank crisis
Cash Reserve Ratio • Reserve Bank of India has exempted banks from maintaining cash reserve ratio for
loans to retail and micro, small and medium enterprises for five years, if these loans are
extended between January 31 and July 31, 2020
• At present, CRR is 4% of net demand and time liabilities→Banks do not earn any
interest for maintaining CRR with the RBI
• What? It is a certain minimum amount of deposit that the commercial banks have to hold
as reserves with the central bank→It is either stored in the bank’s vault or is sent to the
RBI→If a central bank increases CRR then the available amount with the banks decreases
or comes down→CRR is used by RBI to wipe out excessive money from the system
Debts Recovery • Direct Tax Vivaad se Vishwas Bill, 2020 will now cover pending litigation in debt
Tribunals recovery tribunals (DRTs) as well besides those in various courts and tribunals, the Union
cabinet said while approving the change to the bill
• What? DRTs were established to facilitate the debt recovery involving banks and other
financial institutions with their customers→Were set up after the passing of Recovery of
Debts due to Banks and Financial Institutions Act (RDBBFI), 1993 →Section 3 of the
RDDBFI Act empowers the Central government to establish DRTs→Appeals against
orders passed by DRTs lie before Debts Recovery Appellate Tribunal (DRAT)
• Powers and functions: It enforces provisions of the Recovery of Debts Due to Banks and
Financial Institutions (RDDBFI) Act, 1993 and also Securitization and Reconstruction of
Financial Assets and Enforcement of Security Interests (SARFAESI) Act, 2002→DRTs are
fully empowered to pass comprehensive orders and can travel beyond the Civil procedure
Code to render complete justice→ Debts Recovery Tribunal (DRT) can hear cross suits,
counter claims and allow set offs→However, it cannot hear claims of damages or
deficiency of services or breach of contract or criminal negligence on the part of the lenders
Recapitalisation of • The Cabinet Committee on Economic Affairs has given its approval for continuation of
RRBs the process of recapitalization of Regional Rural Banks (RRBs) by providing minimum
regulatory capital to RRBs for another year beyond 2019-20, that is, up to 2020-21→This
is for those RRBs which are unable to maintain minimum Capital to Risk weighted
Assets Ratio (CRAR) of 9%, as per the regulatory norms prescribed by the Reserve Bank
of India
• Why this is necessary? A financially stronger and robust Regional Rural Banks with
improved CRAR will enable them to meet the credit requirement in the rural areas
• Background: Recapitalisation process of RRBs was approved by the cabinet in 2011 based
on the recommendations of a committee set up under the Chairmanship of K C

Chakrabarty→The National Bank for Agriculture and Rural Development

(NABARD) identifies those RRBs, which require recapitalisation assistance to maintain the
mandatory CRAR of 9% based on the CRAR position of RRBs, as on 31st March of every
year
RBI’s COVID-19 • Reserve Bank of India’s Monetary Policy Committee (MPC) has come out with its own
Economic Relief measures to help deal with economic fallout of COVID-19 pandemic→This was the first
Package time that the MPC met outside its bi-monthly meeting calendar
• Four steps taken by the RBI: Increase the liquidity in the system; Make sure the lower
policy rate is transmitted; Give a three-month window for a payback on all term loans; Take
steps to reduce volatility and provide stability and Measures announced and their impact
• Cut in repo rate: A big cut in the repo rate by 75 basis points (100 basis points make a
per cent, so three-quarters of a percentage point) to 4.4% →Cut in reverse repo rate: The
ratio has been cut by 90 bps to 4% → Moratorium on Repayments of Loans: RBI has
also allowed banks to defer payment of Equated Monthly Instalments (EMIs) on
home, car, personal loans as well as credit card dues for three months till May 31→The
RBI also allowed lending institutions, banks to defer interest on working capital
repayments by 3 months — a move aimed at addressing the distress among firms as
production is down→ Cut in Cash Reserve Ratio (CRR): RBI reduced the cash reserve
ratio (CRR) by a full percentage point down to 3% for a year →Targeted long-term
repo operations: RBI will lend money to banks (a total of ₹1 trillion) that can be
invested in bonds and other forms of lending instruments→Marginal standing facility
(MSF): ₹1.37 trillion will be made available under the emergency lending window called
the marginal standing facility (MSF)→Banks will now be able to borrow 3% of their
deposits under this window, up from the current 2%
Merger of Banks • The government has approved a scheme for the amalgamation of 10 state-owned banks
into four→After the process is complete, India will have 12 PSBs instead of 27 back in
2017
• New mergers include: Punjab National Bank, Oriental Bank of Commerce and United
Bank of India will combine to form the nation’s second-largest lender→Canara Bank and
Syndicate Bank will merge→Union Bank of India will amalgamate with Andhra Bank
and Corporation Bank→Indian Bank will merge with Allahabad Bank
• Why? Small banks can gear up to international standards with innovative products and
services with the accepted level of efficiency→PSBs, which are geographically
concentrated, can expand their coverage beyond their outreach→A better and optimum
size of the organization would help PSBs offer more and more products and services and
help in integrated growth of the sector→Consolidation also helps in improving the
professional standards→This will also end the unhealthy and intense competition going
on even among public sector banks as of now→In the global market, the Indian banks will
gain greater recognition and higher rating→The volume of inter-bank transactions will
come down, resulting in saving of considerable time in clearing and reconciliation of
accounts→This will also reduce unnecessary interference by board members in day to
day affairs of the banks→After mergers, bargaining strength of bank staff will become
more and visible etc
Additional Tier-1 • Association of Mutual Funds in India (AMFI) has written to the Reserve Bank of India
Bonds (RBI) and the Securities and Exchange Board of India (SEBI) to allow fund houses a
temporary write down of additional tier 1 bonds of Yes Bank to avoid a huge hit on the net
asset value of schemes that hold such bonds
• Implications: This assumes significance as many fund houses stand to lose thousands of
crores if the additional tier 1 bonds are completely written off
• Background: Under the Based III framework, banks’ regulatory capital is divided into
Tier 1 and Tier 2 capital→Tier 1 capital is subdivided into Common Equity (CET) and
Additional Capital (AT1)
• Additional Tier-1 bonds: They are a type of unsecured, perpetual bonds that banks issue
to shore up their core capital base to meet the Basel-III norms→Key features: These have
higher rates than tier II bonds→These bonds have no maturity date→The issuing bank
has the option to call back the bonds or repay the principal after a specified period of
time→The attraction for investors is higher yield than secured bonds issued by the same
entity→Individual investors too can hold these bonds, but mostly high net worth
individuals (HNIs) opt for such higher risk, higher yield investments→Given the higher
risk, the rating for these bonds is one to four notches lower than the secured bond series of
the same bank. For example, while SBI’s tier II bonds are rated AAA by Crisil, its tier I
long-term bonds are rated AA+.
• However, it has a two-fold risk: First, the issuing bank has the discretion to skip coupon
payment. Under normal circumstances it can pay from profits or revenue reserves in case of
losses for the period when the interest needs to be paid→Second, the bank has to maintain a
common equity tier I ratio of 5.5%, failing which the bonds can get written down→ In
some cases there could be a clause to convert into equity as well→Given these
characteristics, AT1 bonds are also referred to as quasi-equity
• How RBI can take over the regulation of any bank? There is an additional trigger in
Indian regulations, called the ‘Point of Non-Viability Trigger’ (PONV)→In a situation
where a bank faces severe losses leading to erosion of regulatory capital, the RBI can decide
if the bank has reached a situation wherein it is no longer viable→The RBI can then
activate a PONV trigger and assume executive powers→By doing so, the RBI can do
whatever is required to get the bank on track, including superseding the existing
management, forcing the bank to raise additional capital and so on→However, activating
PONV is followed by a write down of the AT1 bonds, as determined by the RBI
RBI Releases New • Capital requirements for payment aggregators has been reduced to Rs 15 crore at the
Guidelines for time of application for the licence→This needs to be increased to Rs 25 crore within
Payment three years of operations→Existing non-bank entities offering payment aggregation
Aggregators (PA) services shall apply for authorisation on or before June 30, 2021→Pure-play
payment gateway companies would be separated as an entity and would be identified as
technology service providers for banks and non-banks→PAs have also been asked to adhere
to strict security guidelines, adhere to all KYC (Know Your Customer) and AML (Anti
Money Laundering) rules→The guidelines have also mandated that PAs need to check
their merchant customers are not involved in selling of prohibited or fake items→The
central bank has also asked PAs to set up designated nodal offices to deal with customer
grievance→RBI has prohibited PAs from allowing online transactions to be done with
ATM pin as the second factor of authentication, which few payment gateway companies
were offering as a service
• Payment Aggregators: These are players who integrate with e-commerce companies
and connect them with banks→ They receive payments on behalf of these companies and
transfer the money to their accounts
• Background: Entities like Billdesk, CCAvenue, Firstdata, Razorpay, Cashfree, Paytm
Payment Gateway and others are offering payment services to ecommerce
companies→ Given the large scale adoption of digital payments and emergence of so many
players, the RBI expressed interest in regulating the space
Open Market • Open market operations is the sale and purchase of government securities and treasury
Operations (OMO) bills by RBI or the central bank of the country
• Objective of OMO is to regulate the money supply in the economy→RBI carries out the
OMO through commercial banks and does not directly deal with the public
Capital to Risk • CRAR also known as the Capital Adequacy Ratio (CAR) is the ratio of a bank’s capital
Weighted Assets to its risk→It is a measure of the amount of a bank’s core capital expressed as a percentage
Ratio (CRAR) of its risk-weighted asset→It is decided by central banks and bank regulators to prevent
commercial banks from taking excess leverage and becoming insolvent in the process
• Basel III norms stipulated a capital to risk weighted assets of 8%→However, as per RBI
norms, Indian scheduled commercial banks are required to maintain a CRAR of 9%
Insolvency and IBC has been enacted, which has provided for the taking over management of the affairs of
Bankruptcy Code, the corporate debtor at the outset of the corporate insolvency resolution process→Banking
2016 (IBC) Regulation Act, 1949 has been amended to provide for authorisation to RBI to issue
directions to banks to initiate the insolvency resolution process under IBC.
Securitisation and Act has been amended, with provision for three months’ imprisonment in case the
Reconstruction of borrower does not provide asset details and for the lender to get possession of mortgaged
Financial Assets property within 30 days.
and Enforcement of
Security Interest
Act
External RBI has made it compulsory for banks to link their new floating rate home, auto and
Benchmark Rates MSME loans to an external benchmark from October 1 so that the borrowers can enjoy
lower rate of interest→ banks can choose from one of the four external benchmarks —
repo rate, three-month treasury bill yield, six-month treasury bill yield or any other
benchmark interest rate published by Financial Benchmarks India Private Ltd→at
present, interest rates on loans are linked to a bank’s marginal cost of fund-based
interest rate known as the Marginal Cost of Lending Rate (MCLR)
Facebook’s New Facebook plans to roll out Libra for use in 2020→Libra it is a digital asset built by
Cryptocurrency- Facebook and powered by a new Facebook-created version of blockchain, the encrypted
Libra technology used by bitcoin and other cryptocurrencies→the currency will be serviced by a
collective of companies called the “Libra Association”→it functions as what is known as
a “stablecoin”, pegged to existing assets like the dollar or euro, in the aim of making it less
subject to the volatility that many cryptocurrencies experience→Libra Association is
described by Facebook as an independent, not-for-profit organisation based in
Switzerland.
Who are insured by • The corporation covers all commercial and co-operative banks, except in Meghalaya,
the Deposit Chandigarh, Lakshadweep and Dadra and Nagar Haveli→Besides, only primary
Insurance and cooperative societies are not insured by the DICGC
Credit Guarantee • DICGC does not include the following types of deposits: deposits of foreign governments,
Corporation deposits of central/state governments, inter-bank deposits, deposits of the state land
(DICGC)? development banks with the state co-operative bank, any amount due on account of any
deposit received outside India and any amount specifically exempted by the DICGC with
previous approval of RBI
• A special court has declared diamond businessman Nirav Modi, the key accused in the $2
Fugitive Economic billion Punjab National Bank (PNB) fraud case a fugitive economic offender, under
Offender provisions of the Fugitive Economic Offenders (FEO) Act, on a plea of the Enforcement
Directorate →The investigative agency can now confiscate properties of Nirav Modi
which are not directly related to the cases against him→Fugitive Economic Offender is a
person can be named an offender under the law if there is an arrest warrant against him or
her for involvement in economic offences involving at least Rs. 100 crore or more and has
fled from India to escape legal action.

Money & Capital Markets (+NBFC)
Core Investment Are non-banking financial companies with asset size of Rs 100 crore and above which carry
Companies (CICs) on the business of acquisition of shares and securities, subject to certain conditions→ allowed
to accept public funds, hold not less than 90% of their net assets in the form of investment in
equity shares, preference shares, bonds, debentures, debt or loans in group companies→ CICs
having asset size of below Rs 100 crore are exempted from registration and regulation from
the RBI, except if they wish to make overseas investments in the financial sector→ Reserve
Bank of India has constituted a six-member working group headed by Tapan Ray to
review the regulatory and supervisory framework for core investment companies
Public Funds Include public deposits, inter-corporate deposits, bank finance and all funds received whether
directly or indirectly from outside sources such as funds raised by issue of Commercial Papers,
debentures etc→ even though public funds include public deposits in the general course, it may
be noted that CICs/CICs-ND-SI cannot accept public deposits→the concept was coneptualised
in order to safeguard NBFCs which are formed for group investments from stringent RBI
procedures
Inverted Yield Yield curve is a graph showing the relationship between interest rates earned on lending money
Curve for different durations→Normally, someone who lent to the government or a corporation for
one year (by buying a one-year government or corporate bond) would expect to get a lower
interest rate than someone who lent for five or ten years, making the yield curve upward-
sloping→in the US in recent days the ten-year bond rate has fallen to the point at which the
ten-year rate is below the two-year rate – so the yield curve is inverted
Debenture It is a provision stating that any Indian corporation that issues debentures must create a
Redemption debenture redemption service in an effort to protect investors from the possibility of a
Reserve (DRR) company defaulting→This provision was tacked onto the Indian Companies Act of 1956,
in an amendment introduced in the year 2000→Government has recently removed
Debenture Redemption Reserve requirement for Listed Companies, NBFCs and HFCs by
amending the Companies (Share Capital & Debentures) Rules→the measure has been
taken by the Government with a view to reducing the cost of the capital raised by companies
through issue of debentures and is expected to significantly deepen the Bond Market
Social Stock Finance Minister proposed a social stock exchange (SSE) under the regulatory ambit of the
Exchange & Securities Exchange Board of India (SEBI) to support social enterprises and non-profits in
Impact Investments raising funds→ It is an electronic fundraising platform that allows investors to buy shares in
a social enterprise that has been vetted by the exchange → Impact Investment is the
investments made into businesses with the aim to make a measurable social, economic
and environmental impact while also generating a range of returns, from profit to publicity
Chit Funds Makes amendments to the Chit Funds Act, 1982, to facilitate orderly growth of the Chit
(Amendment) Bill, Funds sector and remove bottlenecks being faced by the Chit Funds industry →Bill
2019 additionally inserts ‘fraternity fund’ and ‘rotating savings and credit institution’ to this list.
→ Presence of subscribers through video-conferencing → Increase in foreman’s commission
(the ‘foreman’ is responsible for managing the chit fund) → Neither RBI nor SEBI regulates
the chit fund business. →Under the Chit Funds Act, 1982 all chit fund companies need to be
registered with respective state government

Exchange Traded Further Fund Offer 2 (FFO 2) of Bharat 22 Exchange-Traded Fund (ETF), which is part
Funds of the government’s divestment programme, will shortly open for subscription for anchor
investors and for non-anchor investors→ETFs are mutual funds listed and traded on stock
exchanges like shares→ Usually, ETFs are passive funds where the fund manager doesn’t
select stocks on your behalf. Instead, the ETF simply copies an index and endeavours to
accurately reflect its performance
BHARAT 22 It consists of 22 stocks of CPSE’s, PSB’s & strategic holding of SUUTI→ Bharat 22 is a
well diversified portfolio with 6 sectors (Basic Materials, Energy, Finance, FMCG, Industrials
& Utilities)→ICICI Prudential AMC will be the ETF Manager and Asia Index Private
Limited (JV BSE and S& P Global) will be the Index Provider
NBFC Liquidity RBI has introduced ‘liquidity management framework’ for Non-Banking Financial
Norms Companies (NBFCs)→ guidelines are applicable to all non deposit-taking NBFCs with an
asset size of ₹100 crore and above, systemically important Core Investment Companies and
all deposit-taking NBFCs irrespective of their asset size→this has come following liquidity
crunch among some NBFCs in meeting their recent repayment obligations after the collapse
of the Infrastructure Leasing and Financial Services (IL&FS) group→this was
necessary to strengthen their asset-liability management following the liquidity crisis faced
by these firms in the past year
Core Investment RBI panel proposes stricter rules for core investment companies→recommendations were
Companies (CICs) made by the Working Group to Review Regulatory and Supervisory Framework for Core
Investment Companies set up by the central bank on 3 July and headed by Tapan Ray, former
secretary of the corporate affairs ministry→CICs are non-banking financial companies with
asset size of ₹100 crore and above which carry on the business of acquisition of shares and
securities, subject to certain conditions
Alternative Union Cabinet has approved the creation of an Alternative Investment Fund (AIF) of Rs.
Investment Funds 25,000 crore to provide last-mile funding for stalled affordable and middle-income housing
(AIFs) projects across the country →As defined in Securities and Exchange Board of India
(Alternative Investment Funds) Regulations, 2012, AIFs refer to any privately pooled
investment fund, (whether from Indian or foreign sources), in the form of a trust or a
company or a body corporate or a Limited Liability Partnership (LLP) →does not include
funds covered under the SEBI (Mutual Funds) Regulations, 1996, SEBI (Collective
Investment Schemes) Regulations, 1999 or any other regulations of the Board to regulate
fund management activities
Moody’s ratings Global ratings agency Moody’s Investors Service has cut its outlook on the Government of
India’s ratings to negative from stable, but affirmed the Baa2 foreign-currency and local-
currency long-term issuer ratings and also affirmed India’s Baa2 local-currency senior
unsecured rating and its P-2 other short-term local-currency rating→this reflects increasing
risks that economic growth will remain materially lower than in the past, partly
reflecting lower government and policy effectiveness at addressing long-standing economic
and institutional weaknesses than Moody’s had previously estimated, leading to a gradual rise
in the debt burden from already high levels

First Fixed Income Centre is planning to launch India’s first fixed income Exchange Traded Fund
Exchange Traded (ETF) comprising debt securities of large central public sector enterprises
Fund (ETF) (PSUs)→Features: the ETF is expected to have a size of Rs 15,000 crore to Rs 20,000 crore
→will comprise only AAA-rated papers of the PSU companies→provides a new option to
conservative investors to own securities of government-owned companies along with the
facility of overnight liquidity as ETF units will be listed on exchanges→it can comprise
corporate debt securities in the form of bonds, credit-linked note, debentures, promissory
notes as underlying instruments
Government has approved the launch of Bharat Bond ETF, India’s first corporate bond
exchange traded fund, comprising debt of state-run companies→This move will allow retail
Bharat Bond ETF investors to buy government debt→Will provide retail investors easy and low-cost access to
bond markets, with smaller amount as low as ₹1,000→They will provide tax efficiency as
compared to bonds, as coupons (interest) from the bonds are taxed depending on the investor’s
tax slab→It will have a fixed maturity of three and ten years and will trade on the stock
exchanges→It will invest in a portfolio of bonds of state-run companies and other
government entities→It will track an underlying index on risk replication basis, matching
credit quality and average maturity of the index→The index will be constructed by an
independent index provider, National Stock Exchange
It allows for purchase of high-rated pooled assets from financially-sound non-banking

Partial Credit
financial companies (NBFCs) and housing finance companies (HFCs) by public sector
Guarantee Scheme
banks (PSBs)→The scheme would cover NBFCs and HFCs that might have slipped into
“SMA-0” category during the one-year period prior to August 1, 2018, and asset pools rated
“BBB+” or higher→The window for one-time partial credit guarantee offered by the
government would remain open till June 30, 2020 or till such date by which Rs 1 lakh crore
worth of assets get purchased by the banks, whichever is earlier→The Finance Minister
would have the power to extend the validity of the scheme by up to three months by taking
into account its progress→The proposed Government Guarantee support and resultant pool
buyouts will help address NBFCs/HFCs resolve their temporary liquidity or cash flow
mismatch issues
REIT and InvIT • The proposal in the Union Budget to tax dividend in the hands of unit holders/ investors
would hurt future InvITs and REITs, say real estate and infrastructure industry officials and
analysts
• How? Uncertainty in the tax regime would hurt the sentiment of foreign investors who
are already wary of the stability of tax regime in India→The resultant tax burden on the part
of investors will put at risk plans for raising about $100 billion with regard to INVITs and
REITs
• Infrastructure Investment Trusts (InvIT): It is like a mutual fund, which enables direct
investment of small amounts of money from possible individual/institutional investors in
infrastructure to earn a small portion of the income as return→They are similar to REIT but
invest in infrastructure projects such as roads or highways which take some time to
generate steady cash flows
• Real Estate Investment Trusts (REIT): It is roughly like a mutual fund that invests in
real estate although the similarity doesn’t go much further→The basic deal on REITs is that
you own a share of property, and so an appropriate share of the income from it will come
to you, after deducting an appropriate share of expenses
Masala Bonds • Asian Development Bank (ADB) has listed its 10-year masala bonds worth Rs 850 crore

on the global debt listing platform of India INX→The proceeds would be used to
support local currency lending and investment in India
• India INX is the country’s first international exchange, located at International
Financial Services Centre, GIFT City in Gujarat→ ADB’s masala bonds are listed on
both Luxembourg exchange and India INX
• What? They are bonds issued outside India by an Indian entity or corporate→These
bonds are issued in Indian currency than local currency→Indian corporates usually
issue Masala Bonds to raise funds from foreign investors→As it is pegged into Indian
currency, if the rupee rates fall, investors bear the risk→First Masala bond was issued in
2014 by IFC for the infrastructure projects in India→Investors from outside of India who
would like to invest in Indian assets can invest in Masala bonds→ Indian entities like
HDFC, NTPC and Indiabulls Housing have raised funds via Masala Bonds
Bull and Bear • The terms bull and bear market are used to describe how stock markets are doing in
Markets general—that is, whether they are appreciating or depreciating in value→A bull market is
a market that is on the rise and is economically sound, while a bear market is a market
that is receding, where most stocks are declining in value.
Blue Chip Stocks • Blue chip stocks are shares of very large and well-recognised companies with a long
history of sound financial performance →These stocks are known to have capabilities to
endure tough market conditions and give high returns in good market
conditions→Blue chip stocks generally cost high, as they have good reputation and are
often market leaders in their respective industries
Circuit Breaker in • In June 2001, the Securities and Exchange Board of India (SEBI) implemented index-
Stock Market based market-wide circuit breakers
• Circuit breakers are triggered to prevent markets from crashing, which happens when
market participants start to panic induced by fears that their stocks are overvalued and
decide to sell their stocks→This index-based market-wide circuit breaker system applies
at three stages of the index movement, at 10, 15 and 20 per cent
• Implications: When triggered, these circuit breakers bring about a coordinated trading
halt in all equity and equity derivative markets nationwide
• Canada’s largest pension fund Canada Pension Plan Investment Board (CPPIB) has
National agreed to invest about $600 million in National Investment and Infrastructure Fund
Investment and (NIIF) through the NIIF Master Fund→With CPPIB’s investment; NIIF Master Fund
Infrastructure now has $2.1 billion in commitments and has achieved its initially targeted fund
Fund (NIIF) size→The government had set up the ₹40,000 crore NIIF in 2015 as an investment
vehicle for funding commercially viable greenfield, brownfield and stalled infrastructure
projects→The Indian government is investing 49% and the rest of the corpus is to be
raised from third-party investors such as sovereign wealth funds, insurance and pension
funds, endowments, etc→NIIF’s mandate includes investing in areas such as energy,
transportation, housing, water, waste management and other infrastructure-related sectors in
India.
Swap Ratio • It is the ratio at which an acquiring company will offer its own shares in exchange for
the target company’s shares during a merger or acquisition
• How is it calculated? To calculate the swap ratio, companies analyze financial ratios
such as book value, earnings per share, profits after tax, and dividends paid, as well as
other factors, such as the reasons for the merger or acquisition→The current market
prices of the target and acquiring company’s stock are compared along with their respective
financial situations→ A ratio is then configured which states the rate at which the target

company’s shareholders will receive acquiring company shares of stock for every one share
of target company stock they currently hold
• Context: Eight state-owned banks have announced swap ratios for the proposed mergers
National • National Highways Authority of India (NHAI) signs MoU with National Investment
Investment and and Infrastructure Fund (NIIF) for funding highway projects→NIIF was set up in 2015
Infrastructure as an investment vehicle for funding commercially viable greenfield, brownfield and stalled
Fund (NIIF) infrastructure projects
Merger of BSNL • Union Cabinet approves revival plan of BSNL and MTNL→revival plan includes:
and MTNL allotment of spectrum for 4G services, debt restructuring by raising of bonds with
sovereign guarantee, reducing employee costs, monetisation of assets and in-principle
approval of merger of BSNL & MTNL
Infrastructure • Cabinet authorises NHAI to set up Infrastructure Investment Trust and monetize National
Investment Trust Highway projects→National Highways Authority of India (NHAI) will set up
(InvIT) the InvIT(s) as per InvIT Guidelines issued by SEBI→Under InvIT, highway projects will
be bundled to form a special purpose vehicle (SPV) to be offered to investors→The SPV
would then be traded on the stock exchanges, and returns will be linked to the InvIT’s
performance in the capital market.
Three funds under • These are: 1. Master Fund: Is an infrastructure fund with the objective of primarily
NIIF investing in operating assets in the core infrastructure sectors such as roads, ports,
airports, power etc→2. Fund of Funds: Managed by fund managers who have good track
records in infrastructure and associated sectors in India→ Some of the sectors of focus
include Green Infrastructure, Mid-Income & Affordable Housing, Infrastructure
services and allied sectors→3. Strategic Investment Fund: Is registered as an Alternative
Investment Fund II under SEBI in India→ The objective is to invest largely in equity
and equity-linked instruments→Will focus on greenfield and brownfield investments in
the core infrastructure sectors
Infrastructure • Markets regulator SEBI has put in place a framework for the rights issue of units by
Investment Trust listed REIT and InvITs
• Guidelines: The issuer will have to disclose objects of the issue, related-party transactions,
valuation, financial details, review of credit rating and grievance redressal mechanism in the
placement document→Listed REIT and InvIT is allowed to make a rights issue of units
subject to several conditions including these investment vehicles obtaining in-principle
approval of the stock exchanges for listing of units proposed to be issued etc→With
regard to pricing, the investment manager on behalf of the REIT and InvIT, in consultation
with the lead merchant banker(s), will decide the issue price before determining the
record date→With regard to manner of issuance of unit, units shall be allotted in the
dematerialised form only and shall be listed on the stock exchange where the units of the
REIT and InvIT are listed
• Infrastructure Investment Trusts (InvIT): It is like a mutual fund, which enables direct
investment of small amounts of money from possible individual/institutional investors
in infrastructure to earn a small portion of the income as return→InvITs can be treated as
the modified version of REITs designed to suit the specific circumstances of the
infrastructure sector→Are similar to REIT but invest in infrastructure projects such as
roads or highways which take some time to generate steady cash flows
• Real Estate Investment Trusts (REIT): It is roughly like a mutual fund that invests in
real estate although the similarity doesn’t go much further→The basic deal on REITs is
that you own a share of property, and so an appropriate share of the income from it will
come to you, after deducting an appropriate share of expenses
Sovereign Gold • Government of India, in consultation with the RBI, has decided to issue Sovereign Gold
Bond Scheme Bonds→these will be sold through Scheduled Commercial banks (except Small Finance
Banks and Payment Banks), Stock Holding Corporation of India Limited (SHCIL),

designated post offices, and recognised stock exchanges (NSE and BSE)→scheme was
introduced in 2015 to help reduce India’s over dependence on gold imports
National Pension • Pension Fund Regulatory and Development Authority (PFRDA) has now
Scheme permitted Overseas Citizen of India (OCI) to enrol in National Pension Scheme (NPS) at
par with Non-Resident Indians→NPS is a government-sponsored pension
scheme→was launched in January 2004 for government employees→however, in 2009, it
was opened to all sections→ allows subscribers to contribute regularly in a pension
account during their working life→ On retirement, subscribers can withdraw a part of the
corpus in a lumpsum and use the remaining corpus to buy an annuity to secure a regular
income after retirement→this system is managed by PFRDA (Pension Fund Regulatory
and Development Authority)→Any Indian citizen between 18 and 65 years can join
NPS→An NRI can join NPS→ However, the account will be closed if there is a change in
the citizenship status of the NRI
North East • NEVF disbursed over Rs.18 crore to 12 start-ups till date
Venture Fund • What? Launched in September 2017→Set up by North Eastern Development
(NEVF) Finance Corporation Limited (NEDFi) in association with Ministry of Development
of North Eastern Region→It is a close ended fund with capital commitment of Rs
100 crore→It is the first dedicated venture capital fund for the North Eastern
Region→Objective: to contribute to the entrepreneurship development of the NER
and achieve attractive risk-adjusted returns through long term capital appreciation
by way of investments in privately negotiated equity/ equity related
investments→The investment under this schemer ranges from Rs. 25 lakh to Rs.10
crore per venture, which is long term in nature with investment horizon of 4-5 years
Electoral Bond • State Bank of India (SBI) has been authorized to issue and encash Electoral
Scheme Bonds through its 29 Authorized Branches→Electoral bonds will allow donors to pay
political parties using banks as an intermediary→Although called a bond, the banking
instrument resembling promissory notes will not carry any interest→it will be a bearer
instrument, will not carry the name of the payee and can be bought for any value, in
multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh or Rs 1 crore.
Need for InvITs • Infrastructure and real estate are the two most critical sectors in any developing
and REITs economy→ A well-developed infrastructural set-up propels the overall development of a
country→It also facilitates a steady inflow of private and foreign investments, and
thereby augments the capital base available for the growth of key sectors in an
economy→Given the importance of these two sectors in the country, and the paucity of
public funds available to stimulate their growth, it is imperative that additional channels of
financing are put in place

Public Finance
Fiscal Performance Launched by Confederation of Indian Industry (CII)→aims to assess state and central
Index (FPI) budgets
Public Finance Under pressure from the Centre, the Punjab Food and Civil Supplies Department has
Management directed all government procurement agencies to link the bank accounts of farmers with the
System (PFMS) Public Finance Management System (PFMS) portal before the procurement of paddy
Portal begins→this has angered the arhatiyas (commission agents), a large number of whom want the
government to roll back its decision→ it is an end-to-end solution for processing payments,
tracking, monitoring, accounting, reconciliation and reporting→administered by the
Department of Expenditure→ it provides platform for efficient management of funds
through tracking of funds and real time reporting of expenditure and receipts through treasury
and bank interface→is implemented by the Controller General of Accounts→PFMS is also
used for DBT payments under MGNREGA and other notified schemes of the Government of
India
State Budgets Recently, RBI released its annual study of state-level budgets→Key findings: Except during
2016-17, state governments have regularly met their fiscal deficit target of 3% of GDP→
However, most states ended up meeting the fiscal deficit target not by increasing their
revenues but by reducing their expenditure and increasingly borrowing from the
market→There has been a reduction in the overall size of the state budget in 2017-19→
→Also worrisome is that while states have met their fiscal deficits, the overall level of debt-to-
GDP has reached the 25% of GDP prudential mark→A slightly stringent criterion as
prescribed by the FRBM Review Committee and in line with the revised FRBM implied debt
target of 20 per cent will put most of the states above the threshold
India’s Fiscal • Former Economic Affairs Secretary S C Garg has stated that the true fiscal deficit for
Deficit 2018-19 is 4.7% →According to Garg, for the current financial year, too, the actual fiscal
deficit is likely to range between 4.5 per cent to 5 per cent of GDP
• Issue: Contrary to these views, the Indian government says, the fiscal deficit was just 3.4
per cent of the gross domestic product (GDP) for 2018-19→ For the current year, the
Union Budget presented in July expected the fiscal deficit to be 3.3 per cent of the
GDP→For long, it has been suspected that the official figures hide the true fiscal deficit.
That’s because some of the government’s expenditure was funded by the so-called “off-
budget” items→ As a result, while this extra expenditure did not figure in the official
calculations, it did mean that the true fiscal deficit or borrowing by the public sector was
higher than the level presented in the Budget
• Fiscal deficit: It is the difference between the Revenue Receipts plus Non-debt Capital
Receipts (NDCR) and the total expenditure→It is “reflective of the total borrowing
requirements of Government”
Kerala has Sought • To help fund the emergency relief package, Kerala proposes to borrow as much as ₹12,500
Relaxation of crore from the market in April itself and therefore the Chief Minister has urged the Centre
FRBM Rules to provide Kerala with flexibility under the Fiscal Responsibility and Budget
Management (FRBM) Act so as to ensure that the State’s finances are not adversely
impacted in the rest of the financial year starting on April 1
• Background: Kerala was one of the earliest States to announce an economic package of
₹20,000 crore to mitigate the impact on livelihoods and overall economic activity from the
sweeping steps taken to battle the COVID-19 pandemic, including the latest 21-day
nationwide lockdown.

• How does a relaxation of the FRBM work? The law does contain what is commonly
referred to as an ‘escape clause’→Under Section 4(2) of the Act, the Centre can exceed the
annual fiscal deficit target citing grounds that include national security, war, national
calamity, collapse of agriculture, structural reforms and decline in real output growth
of a quarter by at least three percentage points below the average of the previous four
quarters.
• FRBM Act 2003, establishes financial discipline to reduce fiscal deficit
Objectives of the • FRBM Act aims to introduce transparency in India’s fiscal management systems→It
FRBM Act was enacted to introduce more equitable distribution of India’s debt over the years
• Key features: It made it mandatory for the government to place the following along with
the Union Budget documents in Parliament annually: Medium Term Fiscal Policy
Statement, Macroeconomic Framework Statement and Fiscal Policy Strategy Statement→ It
proposed that revenue deficit, fiscal deficit, tax revenue and the total outstanding
liabilities be projected as a percentage of gross domestic product (GDP) in the medium-
term fiscal policy statement→Amendments:The Act has been amended several times→In
2012, the government introduced a change and introduced the concept of effective revenue
deficit→This implies that effective revenue deficit would be equal to revenue deficit minus
grants to states for the creation of capital assets→In 2016, a committee under N K Singh
was set up to suggest changes to the Act→ According to the government, the targets set
under FRBM Act previously were too rigid
• N K Singh Committee’s recommendations: Targets: The committee suggested using
debt as the primary target for fiscal policy and that the target must be achieved by
2023→Fiscal Council: It proposed to create an autonomous Fiscal Council with a
chairperson and two members appointed by the Centre (not employees of the government at
the time of appointment)→Deviations: It suggested that the grounds for the government to
deviate from the FRBM Act targets should be clearly specified→Borrowings: According
to the suggestions of the committee, the government must not borrow from the RBI, except
when: The Centre has to meet a temporary shortfall in receipts, RBI subscribes to
government securities to finance any deviations and RBI purchases government
securities from the secondary market
Finance Bill • Finance bill passed ahead of coronavirus lockdown
• What? As per Article 110 of the Constitution of India, the Finance Bill is a Money
Bill→The Finance Bill is a part of the Union Budget, stipulating all the legal amendments
required for the changes in taxation proposed by the Finance Minister→This Bill
encompasses all amendments required in various laws pertaining to tax, in accordance with
the tax proposals made in the Union Budget→The Finance Bill, as a Money Bill, needs to
be passed by the Lok Sabha→Post the Lok Sabha’s approval, the Finance Bill becomes
Finance Act

Taxation
Multilateral India ratified Multilateral Convention to Implement Tax Treaty Related Measures to
Convention/MLI Prevent Base Erosion and Profit Shifting (MLI)
Direct Tax Code The draft legislation of the new Direct Tax Code (DTC) was submitted by the task force,
headed by Akhilesh Ranjan, to the Government of India→ It will revise, consolidate and
simplify the structure of direct tax laws in India & will replace the Income-tax Act, 1961
(ITA), and other direct tax legislations like the Wealth Tax Act, 1957
Sabka Vishwas- Target Audience: To be availed by large number of taxpayers for closing their pending
Legacy Dispute disputes relating to legacy Service Tax and Central Excise cases
Resolution Scheme,
2019
Advance Pricing Central Board of Direct Taxes (CBDT) has entered into 26 APAs in the first 5 months of
Agreements (APAs) this financial year→APA is an agreement between a taxpayer and the tax authority
determining the Transfer Pricing methodology for pricing the tax payer’s international
transactions for future years→it provides certainty with respect to the tax outcome of the tax
payer’s international transactions
Corporate Income Major changes have been announced in corporate income tax rates to revive growth in the
Tax broader economy→this has been achieved through an ordinance– the Taxation Laws
(Amendment) Ordinance 2019→the changes include: Corporate tax rate to be 22 per cent
without exemptions, no Minimum Alternate Tax (MAT) applicable on such companies,
effective corporate tax rate after surcharge and cess to be 25.17 percent, to attract investment in
manufacturing, local companies incorporated after October 2019 and till March 2023, will pay
tax at 15 percent etc
Adjusted Gross The Supreme Court has upheld the definition of Adjusted Gross Revenue (AGR) calculation
Revenue (AGR) as stipulated by the Department of Telecommunications→this means that telecom
companies will have to pay up as much as Rs 92,642 crore to the government→AGR is the
usage and licensing fee that telecom operators are charged by the Department of
Telecommunications→It is divided into spectrum usage charges and licensing fees, pegged
between 3-5 percent and 8 percent respectively
Automatic It is systematic and periodic transmission of “bulk” taxpayer information by the source
Exchange of country to the residence country, which is possible under most of the Double Taxation
Information Avoidance Agreements (DTAAs) and Multilateral Convention on Mutual Administrative
(AEOI) Assistance in Tax Matters (MAC)→aims to reduce global tax evasion→It is to be carried out
under Common Reporting Standard (CRS) of OECD→AEOI is the exchange of information
between countries without having to request it
GST Council Chairman of the 15th finance commission N.K. Singh has called for symmetry in the working
of the GST council and the finance commission→while the finance commission looks at the
projections of expenditure and revenue, the issue of GST rates exemptions, changes and
implementation of the indirect taxes are within the domain of the GST council→this leads
to unsettled questions on the ways to monitor, scrutinise and optimise revenue outcomes,

therefore, coordination among the two is necessary
GST Council GST Council in its 38th meeting has voted for uniform rate of 28% on lotteries across the
country→To facilitate the setting up industrial parks, the Council has decided that all entities
with 20% ownership by central or state governments will be exempt from GST payable for
long-term land leases from January 1, 2020→Article 279 (1) of the amended Indian
Constitution states that the GST Council has to be constituted by the President within 60 days
of the commencement of the Article 279A→According to the article, GST Council will be a
joint forum for the Centre and the States→ It consists of the following members: Union
Finance Minister will be the Chairperson, as a member, the Union Minister of State will be
in charge of Revenue of Finance→The Minister in charge of finance or taxation or any
other Minister nominated by each State government, as members.
Telcos Seek Open • Telecom companies, including Bharti Airtel and Vodafone Idea, have urged an open
Court Hearing on court hearing of their petitions seeking a review of a Supreme Court judgment upholding
AGR the recovery of past dues amounting to ₹1.47 lakh crore from them
• Issue: On October 24 last year, dealing a huge blow to telecom service providers, the
Court had upheld the Department of Telecom’s (DoT) move to recover AGR of about
₹92,000 crore from the telcos→Court dismissed the telecom service providers’
objection to the government’s formulation of AGR
• AGR is the usage and licensing fee that telecom operators are charged by the Department
of Telecommunications→It is divided into spectrum usage charges and licensing fees,
pegged between 3-5 percent and 8 percent respectively
Dividend • Finance minister said that Dividend Distribution Tax has been shifted to individuals
Distribution Tax instead of companies
• What? It is a tax levied on dividends that a company pays to its shareholders out of its
profits→It is taxable at source, and is deducted at the time of the company distributing
dividends→Law provides for the DDT to be levied at the hands of the company, and not at
the hands of the receiving shareholder→However, an additional tax is imposed on the
shareholder, who receives over Rs. 10 lakh in dividend income in a financial year
Adjusted Gross • Supreme Court has come down heavily on the Department of Telecommunications
Revenue (AGR) (DoT) for issuing a notification last month that asked for no coercive action against
Issue telecom companies even though they had not paid the adjusted gross revenue (AGR)
dues by the stipulated deadline of January 23→Court also initiated contempt proceedings
against the telecom companies for not paying the AGR dues
• Issue: Last year, the Supreme Court upheld the definition of Adjusted Gross Revenue
(AGR) calculation as stipulated by the Department of Telecommunications→The order
by the top court means that the telecom companies will have to immediately clear the
pending AGR dues, which amount to nearly Rs 1.47 lakh crore
• AGR: It is the usage and licensing fee that telecom operators are charged by the
Department of Telecommunications→It is divided into spectrum usage charges and
licensing fees, pegged between 3-5 percent and 8 percent respectively
• How is it calculated? As per DoT, the charges are calculated based on all revenues
earned by a telco – including non-telecom related sources such as deposit interests and
asset sales→Telcos, on their part, insist that AGR should comprise only the revenues
generated from telecom services
Country-by- • With Central Board of Direct Taxes(CBDT) notifying rules for furnishing “Country-by-

Country (CbC) Country Report” (CbC) specifying information pertaining to all large multinational
Report enterprises (MNEs), the Finance Ministry has said that Joint Director of Income-tax
(Risk Assessment)-1 has been designated as the Income-tax Authority before whom
particulars of the parent entity and alternate reporting entity would be notified
• Background: Organisation for Economic Cooperation and Development (OECD) has
developed an Action Plan called “Base Erosion and Profit Shifting (BEPS) Action Plan
13” to ensure that a multinational enterprise would report its profit correctly where it is
earned.
• Country-by-Country (CbC) Report:Base Erosion and Profit Shifting (BEPS) Action 13
report (Transfer Pricing Documentation and Country-by-Country Reporting) provides
a template for multinational enterprises (MNEs) to report annually and for each tax
jurisdiction in which they do business the information set out therein→ This report is called
the Country-by-Country (CbC) Report→This information enables an enhanced level of
assessment of tax risk by both tax administrations
National Anti- • Delhi High Court has stayed the National Anti-Profiteering Authority (NAPA) order
Profiteering directing Johnson & Johnson to deposit over ₹230 crore it allegedly profiteered by not
Authority (NAPA) passing on benefits of GST reduction in over 306 items, including baby products, through
commensurate price cut.
• NAPA: It has been constituted under Section 171 of the Central Goods and Services Tax
Act, 2017→ It is to ensure the reduction in rate of tax or the benefit of input tax credit
is passed on to the recipient by way of commensurate reduction in prices→ The Authority’s
core function is to ensure that the benefits of the reduction is GST rates on goods and
services made by GST Council and proportional change in the Input tax credit passed on to
the ultimate consumers and recipient respectively by way of reduction in the prices by
the suppliers
• Composition: It shall be headed by a senior officer of the level of a Secretary to the
Government of India and shall have four technical members from the Centre and/or the
States
• Powers and functions of the authority: In the event the National Anti-profiteering
Authority confirms the necessity of applying anti-profiteering measures, it has the power to
order the business concerned to reduce its prices or return the undue benefit availed
along with interest to the recipient of the goods or services→If the undue benefit cannot be
passed on to the recipient, it can be ordered to be deposited in the Consumer Welfare
Fund→In extreme cases the National Anti-profiteering Authority can impose a penalty on
the defaulting business entity and even order the cancellation of its registration under
GST
Base erosion and • It refers to the phenomenon where companies shift their profits to other tax
profit shifting jurisdictions, which usually have lower rates, thereby eroding the tax base in India→India
(BEPS) in July 2019 ratified the international agreement to curb base erosion and profits shifting
(BEPS)– Multilateral Convention to Implement Tax Treaty Related Measures
• Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base
Erosion and Profit Shifting: The Convention is an outcome of the OECD/G20 BEPS
Project to tackle base erosion and profit shifting through tax planning strategies that exploit
gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations where
there is little or no economic activity, resulting in little or no overall corporate tax being
paid
Excise Duty • It refers to the taxes levied on the manufacture of goods within the country, as opposed to
custom duty that is levied on goods coming from outside the country→Not covered under
GST: In July 2017 the Centre introduced GST that subsumed a number of indirect taxes
including excise duty→ This means excise duty, technically, does not exist in India except
on a few items such as liquor and petroleum
• Key facts: For the items and services outside the purview of GST, excise duty is a form of
indirect tax which is generally collected by a retailer or an intermediary from its
consumers and then paid to the government→The Central Board of Indirect Taxes and
Customs (CBEC) is responsible for collecting excise duty
States Asked to • Union government has asked all states to dip into the ₹52,000 crore Construction
Use Cess Fund to Cess fund to give financial and allied benefits to the construction workers through
Help direct benefit transfer (DBT)→The central advise comes as Corona outbreak
Construction spreads and the country is facing an unprecedented lockdown hampering livelihood
Workers of millions of informal workers→The advisory comes under Section 60 of the
Building and Other Construction Workers (BOCW) Act, 1996→The amount to
be granted to construction workers may be decided by the respective state
governments and Union territories
Inflation
Imported Inflation When the general price level rises in a country because of the rise in prices of imported
commodities, inflation is termed as imported→the weakening of the domestic currency in
the past two months i.e. July and August 2019 may lead to imported inflation in the
country→Rise in prices of Oil and Gold lead to rise in the import bill of the country
Dearness • Dearness allowance is a cost of living adjustment allowance paid to government

Allowance employees, public sector employees and pensioners and is calculated as a percentage of
basic salary to mitigate the impact of inflation→It can be basically understood as a
component of salary which is some fixed percentage of the basic salary, aimed at
hedging the impact of inflation
External sector
Reciprocal Trade Countries use bilateral/regional trade agreements to increase market access and expand
Agreements trade in foreign markets, these are called RTAs because members grant special advantages to
(RTAs) each other→these include many types of agreements, such as preferential arrangements, free
trade agreements, customs unions, and common markets
Financial Action Pakistan was placed on the grey list by the FATF in June 2018 for failing to curb anti-terror
financing→ (FATF) is an inter-governmental body established in 1989 on the initiative of the
G7→Aims to set standards and promote effective implementation of legal, regulatory and

Task Force (FATF) operational measures for combating money laundering, terrorist financing and other related
threats to the integrity of the international financial system→Grey list: countries that have
deficiencies in their AML/CTF regimes, but they commit to an action plan to address these
loopholes
100% FDI under The decision of 100% FDI under automatic route for coal mining activities including
Automatic Route associated processing, infrastructure in the coal sector will help in many ways
for Coal Mining
Activities
FDI in Palm oil 100%

Plantation
NIRVIK Scheme Export Credit Guarantee Corporation of India (ECGC) has introduced
‘NIRVIK’ scheme to ease the lending process and enhance loan availability for
exporters→features: Insurance cover guaranteed will cover up to 90 percent of the principal
and interest, increased cover will ensure that foreign and rupee export credit interest rates are
below 4 percent and 8 percent respectively for the exporters and the insurance cover will
include both pre and post-shipment credit
Electronic Ministry of Commerce & Industry launched a common digital platform for the issuance
Certificates of of electronic Certificates of Origin (CoO)→it is an instrument which establishes evidence on
Origin (CoO) the origin of goods imported into any country→These certificates are essential for exporters
to prove where their goods come from and therefore stake their claim to whatever benefits
goods of Indian origin may be eligible for in the country of exports
Open general Government has approved issuance of two open general export licences (OGELs) for export
export licences of certain parts and components as well as intra-company transfer of technology to select
(OGELs) countries→OGEL will be a one-time export licence to be granted to a company for a
specific period which will be two years initially→application for grant of OGEL will be
considered by the Department of Defence Production (DPP) on a case-to-case
basis→countries allowed under the OGELs are: Belgium, France, Germany, Japan, South
Africa, Spain, Sweden, UK, USA, Canada, Italy, Poland and Mexico→ items permitted
under OGEL include components of ammunition & fuse setting device without energetic and
explosive material; firing control & related alerting and warning equipment & related system;
and body protective items→complete aircraft or complete unmanned aerial vehicles
(UAVs) and any components specially designed or modified for UAVs are excluded under
this licence
Carpet Export It is a non-profit making organization→Setup in 1982 by the Ministry of Textiles→Objective:

Promotion Council To promote export of carpets, all types of handmade / handmade knotted carpets, rugs, floor
(CEPC) coverings & other allied products from India→Indian Handmade Carpet Industry is ranked
number one in the international market achieved highest quantity both in terms of value and
production in the world market→ India possesses market share of around 35% of total world
import of handmade carpets
ICEDASH and Two new IT Initiatives – ICEDASH and ATITHI have been launched for improved
ATITHI for monitoring and pace of customs clearance of imported goods and facilitating arriving
improved customs international passengers→ICEDASH is an Ease of Doing Business monitoring dashboard of

clearance the Indian Customs helping the public see the daily Customs clearance times of import cargo at
various ports and airports→ATITHI app will facilitate hassle-free and faster clearance by
Customs at the airports and enhance the experience of international tourists and other visitors
at the airports
Trade Deficit India decided that it won’t sign the Regional Comprehensive Economic Participation
agreement→a key reason that India forwarded for declining to sign on was the existence of
trade deficits with many of the constituents of the RCEP→simply put, the trade “balance” of a
country shows the difference between what it earns from its exports and what it pays for its
imports→if this number is negative – the total value of goods imported by a country is more
than the total value of goods exported by that country – this is referred to as a “trade deficit”
India’s Free Trade A report, analysing the benefits of India’s free trade agreements with ASEAN has been
agreements with released→ prepared by the PHD Chamber of Commerce and Industry→Key
ASEAN findings:Overall, India failed to benefit from free trade agreements (FTAs) with ASEAN→
In fact, India’s trade deficit had increased ever since the country entered into FTAs with
ASEAN→India’s net exports to countries without a trade agreement were only marginally
lower than its net exports to countries with FTAs→The imports from countries with trade
agreements were substantially higher, pushing India into a trade deficit
Import Duty on • India has cut import duty on crude palm oil (CPO) and refined, bleached and
Palm Oil Cut deodorised (RBD) palm oil, and also moved RBD oil from the “free” to the “restricted” list
of imports.
• Issue: The move has been construed as retaliation against Malaysia’s Prime Minister
Mahathir bin Mohamad, who has criticised India’s internal policy decisions such as the
revocation of the special status for Jammu and Kashmir and the new citizenship
Act→Malaysia has also been sheltering since 2017 the Islamic preacher Zakir Naik, who
is wanted by India on charges of money laundering, hate speech, and links to terror
• Indonesia and Malaysia together produce 85% of the world’s palm oil, and India is among
the biggest buyers
• India needs palm oil as is the cheapest edible oil available naturally→Its inert taste makes
it suitable for use in foods ranging from baked goods to fried snacks→It stays relatively
stable at high temperatures, and is therefore suitable for reuse and deep frying→It is the
main ingredient in vanaspati (hydrogenated vegetable oil)
Directorate • It is an attached office of the Ministry of Commerce and Industry, formed in 1991→It is
General of Foreign involved in the regulation and promotion of foreign trade through regulation→ It has
Trade (DGFT) been assigned the role of a “facilitator”→It also issues scrips/authorization to exporters and
monitors their corresponding obligations through its network of regional offices
Government • India has restricted the export of common medicines such as paracetamol and 25 other
Imposes Curbs on pharmaceutical ingredients and drugs made from them, as it looked to prevent shortages
Drug Exports amid concerns of the COVID-19 outbreak turning into a pandemic.
• Drugs whose exports is restricted: Besides over-the-counter painkiller and fever reducer
paracetamol, drugs restricted for exports included common antibiotics metronidazole, those
used to treat bacterial and other infections, as well as vitamin B1 and B12 ingredients.
• Background: In February, the Department of Pharmaceuticals asked the DGFT to issue
orders restricting the export of 12 active pharmaceutical ingredients (APIs) and
formulations in the wake of the coronavirus outbreak
India’s Coal • India’s thermal coal imports rose 12.6 percent to nearly 200 million tonnes in 2019→
Imports Rise This is the second straight year of growth in shipments of the fuel→Imports of coking coal
– used mainly in the manufacturing of steel – fell marginally, following two straight years
of increase
• Key facts: Coal is among the top five commodities imported by India, the world’s largest
consumer, importer and producer of the fuel
HSN Code • India not to allow imports without HSN code→ This will enable India’s exports to be
accepted globally due to the quality of goods and services
• What? Harmonised System, or simply ‘HS’→ It is a six-digit identification code→ Of the
six digits, the first two denote the HS Chapter, the next two give the HS heading, and the
last two give the HS subheading→Developed by the World Customs Organization
(WCO)→Called the “universal economic language” for goods→It is a multipurpose
international product nomenclature→The system currently comprises of around 5,000
commodity groups→HS Code is also known as HSN Code in India→ Goods are
classified into Harmonized System of Nomenclature or HSN
• Application: Widely used for taxation purposes by helping to identify the rate of tax
applicable to a specific product in a country that is under review→can also be used in
calculations that involve claiming benefits→are used to monitor and control the import
and export of commodities through: Customs tariffs, Rules of origin, Collection of internal
taxes, Monitoring of controlled goods (e.g., wastes, narcotics, chemical weapons, ozone
layer depleting substances, endangered species, wildlife trade), areas of Customs controls
and procedures, including risk assessment, information technology and compliance etc
•
Paris Convention • Khadi Village Industries Corporation is eyeing international trademark for ‘khadi’
for the Protection under the Paris Convention for protection of industrial property
of Industrial • Why? To prevent any product from masquerading as ‘khadi’ nationally or globally
Property • Regulations issued in 2013 by the ministry of micro, small and medium enterprises,
empower KVIC to grant ‘Khadi Mark’ registration and take royalties from any producer
using the Khadi mark
• Paris Convention→It is a multilateral treaty dealing with the protection of industrial
property in the widest sense→Administered by the World Intellectual Property
Organization (WIPO)
Most Favoured • What? A treatment accorded to a trade partner to ensure non-discriminatory trade
Nation Status between two countries vis-a-vis other trade partners→It is the first clause in the General
Agreement on Tariffs and Trade (GATT) →Under WTO rules, a member country
cannot discriminate between its trade partners→ If a special status is granted to a trade
partner, it must be extended to all members of the WTO
• MFN at the same time allows some exemptions as well i.e. right to engage in Free Trade
Agreements, members can give developing countries special and differential treatment
like greater market access, for e.g., special concession are in different forms like reduced
tariff rates from developing country imports, concessions that allows developing countries
to give subsidies to their production sectors etc
Surjit Bhalla • To boost India’s share and importance in global merchandise and services trade→ also
Committee on identifies tax reforms to boost export and investment channels for exports→ recommended
Trade and Policy “Elephant Bonds” as a specialised security product providing funds towards Long Term
Infrastructure→ to carry out reforms in Financial Services Framework for making India
a Preferred Destination for financial services.

International Institutions
India-Russia Established following a bilateral MoU signed between NITI Aayog and the Ministry of
Strategic Economic Economic Development of the Russian Federation during the 19th edition of the Annual
Dialogue (IRSED) India-Russia Bilateral Summit, which was held on October 5, 2018, in New Delhi→First India-
Russia Strategic Economic Dialogue was held in St. Petersburg in 2018
Global MPI 2019 Prepared by the United Nations Development Programme (UNDP) and the Oxford Poverty
Report and Human Development Initiative→Multi-dimensional poverty(MPI) defines poor not only
on the basis of income, but on other indicators, including poor health, poor quality of work and
the threat of violence
Regional The 16-nation group led by ASEAN countries is making a push for India to sign the RCEP
Comprehensive Free Trade Agreement→RCEP is proposed between the 10 member states of ASEAN and
Economic the 6 states with which ASEAN has existing FTAs (Australia, China, India, Japan, South
Partnership Korea and New Zealand)→aims to boost goods trade by eliminating most tariff and non-tariff
(RCEP) barriers→also seeks to liberalise investment norms and do away with services trade restrictions
G7 Bloc The G7, originally G8, was set up in 1975 as an informal forum bringing together the
leaders of the world’s leading industrial nations→ The 45th Annual G7 Summit is being
held in the French town of Biarritz→ G7 Summit is an annual event where world leaders
from seven powerful economies of the world come together to discuss burning issues
happening around the globe→ The 2019 G7 Summit, presided over by France, will focus on
fighting inequality→ France has identified the following five objectives for the Summit:
promoting in particular gender equality; reducing environmental inequality; globalization;
taking action for peace; tapping into the opportunities created by digital technology and
artificial intelligence (AI)
Automatic AEOI regime between Switzerland and India kicked off from September 1, 2019→under
Exchange of this mechanism, India will start receiving information on all financial accounts held by
Information Indian residents in Switzerland, for the year 2018→AEOI is systematic and
(AEOI) periodic transmission of “bulk” taxpayer information by the source country to the residence
country, which is possible under most of the Double Taxation Avoidance Agreements
(DTAAs) and Multilateral Convention on Mutual Administrative Assistance in Tax
Matters (MAC)→It aims to reduce global tax evasion
Developing South Korea has said that it will no longer seek special treatment reserved for developing
Countries in the countries by the World Trade Organization in future negotiations given its enhanced global
WTO economic status→South Korea, Asia’s fourth-largest economy, has maintained its developing
country status as a member of the WTO since the body’s creation in 1995, mainly to guard its
agriculture industry→There are no WTO definitions of “developed” and “developing”
countries→members announce for themselves whether they are “developed” or
“developing” countries→however, other members can challenge the decision of a member to
make use of provisions available to developing countries→Developing country status in the
WTO brings certain rights→it ensures special and differential treatment (S&DT) or
provisions which allow them more time to implement agreements and commitments, include
measures to increase trading opportunities, safeguard their trade interests, and support to build

capacity to handle disputes and implement technical standards
Financial Action Financial Action Task Force affiliate Asia Pacific Group (APG) places Pakistan on
Task Force (FATF) Blacklist for failing to combat terrorism, money laundering and meeting the required global
standards→Pakistan was non-compliant in 32 of the 40 Compliance Parameters on Money
Laundering & Terror Financing and Pakistan was low in 10 of the 11 Effectiveness Parameters
Libra Despite several high-profile defections and intense criticism from US regulators and
politicians, Facebook officially launched Libra→Libra Association will govern the currency,
officially signed on 21 charter members at the organization’s inaugural meeting in
Geneva→Facebook says Libra is a “global currency and financial infrastructure”→ it is a
digital asset built by Facebook and powered by a new Facebook-created version of blockchain,
the encrypted technology used by bitcoin and other cryptocurrencies→currency will be
serviced by a collective of companies called the “Libra Association”→Libra Association
is an independent, not-for-profit organisation based in Switzerland
Sveriges Riksbank Received by Abhijit Banerjee, Esther Duflo and Michael Kremer “for their experimental
Prize in Economic approach to alleviating global poverty”
Sciences
IMF’s World IMF’s 2019 World Economic Outlook (WEO) has been released→India retains its rank as the
Economic Outlook world’s fastest-growing major economy, tying with China→ has a projected growth rate of
(WEO) 6.1 per cent for the current fiscal year, despite an almost one per cent cut in the
forecast→However, India’s economy is projected to pick up and grow by 7 per cent in the
2020 fiscal year
Asia-Pacific Trade Published by the United Nations Economic and Social Commission for Asia and the Pacific
and Investment (ESCAP) and the United Nations Conference on Trade and Development (UNCTAD)→Key
Report 2019 findings- Effects of NTMs: Non-tariff measures (NTMs) have increased in the past two
decades and are affecting trade as well sustainable development goals (SDGs) in Asian
countries→NTMs affect 58 per cent of the trade in Asia-Pacific and can have a direct impact
on the performance of trading partners→They can also impact issues such as health, safety,
environment, climate, public security and peace, which in turn, influence SDGs
Asian Development Government of India has signed a 190 million USD loan with ADB to upgrade road
Bank (ADB) transport in the state of Rajasthan→It is a regional development bank→established on 19
December 1966→headquartered — Manila, Philippines→official United Nations
Observer→it admits the members of the United Nations Economic and Social Commission
for Asia and the Pacific (UNESCAP) and non-regional developed countries
IMF Quotas As per the latest deal, members of the International Monetary Fund (IMF) agreed to maintain
its funding at $ 1 trillion but postponed changes to its voting structure→the deal is a
compromise with the U.S., the Fund’s largest shareholder, which has resisted changes to
the organisation’s voting structure as well as increases in its permanent resource base→It
will allow an extension of non-permanent, supplementary sources of funds – such as the New
Arrangement to Borrow (NAB), a renewable funding mechanism and bilateral borrowings
from countries – the IMF had entered into these after the 2008 financial crisis to increase its
lending ability→The agreement extended the bilateral borrowing facility by a year – to the end

of 2020 and a potential doubling of the NAB→the agreed package will leave IMF quotas (the
primary source of IMF funds), which determine voting shares, unchanged
WTO’s Dispute WTO’s Appellate Body, set up in 1995, is a standing committee of seven members that
Settlement presides over appeals against judgments passed in trade-related disputes brought by WTO
Mechanism and the members→Countries involved in a dispute over measures purported to break a WTO
Appellate Body agreement or obligation can approach the Appellate Body if they feel the report of the panel set
up to examine the issue needs to be reviewed on points of law→ Existing evidence is not re-
examined; legal interpretations are reviewed→It can uphold, modify, or reverse the legal
findings of the panel that heard the dispute→It has so far issued 152 reports and the reports,
once adopted by the WTO’s disputes settlement body, are final and binding on the parties
G20 • An informal group of 19 countries and the European Union along with representatives
of the IMF and the World Bank
• Genesis: Amid 2008 Financial Crisis the world saw the need for a new consensus-building
at the highest political level→ It was decided that the G20 leaders would begin meeting
once annually
• Members: The members of the G20 are Argentina, Australia, Brazil, Canada, China,
France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi
Arabia, South Africa, Turkey, the United Kingdom, the United States, and the European
Union
Global Microscope • Produced by Economist Intelligence Unit (EIU), the research and analysis division of The
on Financial Economist Group→report was first published in 2007 and was originally developed for
Inclusion Report countries in Latin American and Caribbean regions but in 2009 it was expanded into a
global study→it is a benchmarking index that assesses enabling environment for
financial access in 55 countries across 5 categories→Five parameters across which
countries are assessed Government and Policy Support, Products and Outlets, Stability and
Integrity, Consumer Protection and Infrastructure
Industry
Competition CCI imposes penalty on pharma companies, trade associations for violating the provisions of
Commission of the Competition Act, 2002→ a statutory body responsible for enforcing the Competition
India Act, 2002 and to promote and sustain competition. → Goal of CCI: to create and sustain fair
competition in the economy that will provide a ‘level playing field’ → Competition Act –
The Act prohibits anti-competitive agreements, abuse of dominant position by enterprises
and regulates combinations (acquisition, acquiring of control and M&A), which causes or
likely to cause an appreciable adverse effect on competition within India
National Anti- Tenure of NAA has been extended by 2 years→it has been constituted under Section 171 of
Profiteering the Central Goods and Services Tax Act, 2017→aims to ensure the reduction in rate of
Authority (NAA) tax or the benefit of input tax credit is passed on to the recipient by way of commensurate
reduction in prices.
Regulatory Insurance Regulatory and Development Authority of India (IRDAI) will soon allow the

Sandbox use of regulatory sandbox (RS) to promote new, innovative products and processes in the
industry→it is a safe harbour, where businesses can test innovative products under relaxed
regulatory conditions→typically, participating companies release new products in a controlled
environment to a limited number of customers for a limited period of time
GOI Considering to Department of Investment & Public Asset Management (DIPAM) had sent a proposal
Break Coal India →Coal India Limited is the dominant coal miner in the country→ It made up 83% of
into Separate domestic production and 63% of total coal supply (in tonnes) for fiscal year 2018-2019. → The
Listed Companies four units -- Mahanadi Coalfields, South Eastern Coalfields, Northern Coalfields and Central
to Improve its Coalfields -- account for more than three-fourths of the company’s output, while constituting
Working less than half of its workforce
Marine Fisheries Circulated in the public domain for discussion→ India has proposed it as per its obligation
Regulation and under the United Nations Convention on the Law of the Sea (UNCLOS) 1982 and the
Management World Trade Organisation (WTO) agreements. → Covering the gap between centre and
(MFRM) Bill 2019 state: Since fisheries is a state subject while fishing beyond the Territorial Sea up to the
limit of the EEZ, are in the Union list→ It proposes social security for fish workers → The
Bill prohibits fishing by foreign fishing vessels, thus nationalising EEZ → will ensure that the
ecological integrity of the maritime zones of India
Sugar Industry Union cabinet recently approved the creation of a buffer stock of 4mt of sugar → The
buffer stock will be created for one year from August 1, 2019, to July 31, 2020, for which
the government would be reimbursing the carrying cost of about ₹ 1,674 crore to participating
sugar mills. → aimed at increasing wholesale prices of sugar and improving cash flow to
sugar mills, which in turn will help mill owners to clear the dues of farmers. → will help
maintain demand-supply balance and to stabilize sugar prices.
Tourism Industry Prime Minister urged people to visit at least 15 tourist destinations within India by 2022→To
aid Economic Potential of Tourism for India → Swadesh Darshan Scheme- Under this
scheme fifteen thematic circuits have been identified for development → Prashad Scheme
(Pilgrimage Rejuvenation and Spiritual Augmentation Drive)- Under this, 25 sites have
been identified for development →Adopt of Heritage Scheme- whereby outsourcing of the
maintenance of some of the monuments have been done by the Ministry. →launched the
'Incredible India 2.0' Campaign during 2017-18 to cover both major and emerging markets.
→ Organising and Participation in tourism related events such as Paryatan Parv, Bharat Parv
Government e GeM has signed a MoU with Federal Bank→will facilitate a cashless, paperless and
Marketplace (GeM) transparent payment system on the portal and would create an efficient procurement system
for government entities
Eligibility Criteria Government of India has accorded ‘Maharatna’ status to public sector undertaking’s
for Grant of (PSU’s) Hindustan Petroleum Corporation Limited (HPCL) and Power Grid
Maharatna, Corporation→this will impart greater operational and financial autonomy thus enhancing
Navratna and powers to their Boards to take financial decisions, the boards can also structure and implement
Miniratna Status schemes relating to personnel as well as human resource management and training, holding
companies of a ‘Maharatna’ PSU are also empowered to float fresh equity, transfer assets,
divest shareholding in subsidiaries, but are subjected to condition that the delegation will only
be in respect of subsidiaries set up by holding company etc

Enterprise Union Ministry of micro, small and medium enterprises is planning to launch EDCs in
Development every district→ Aims at developing a cadre of indigenous entrepreneurs in the MSMEs,
Centres (EDCs) the EDCs will be similar to incubators for start-ups→will be run by special purpose
vehicles in partnership with the private sector, business management organisations, local
industry associations→EDCs will offer credit facilitation and syndication, export promotion
and supplier inclusion as well
Atal Research & To stimulate innovation and research in the MSME industry
Innovation for
Small Enterprises
(ARISE)
Industrial Relations The bill has been introduced in Lok Sabha→the code proposes to amalgamate the Trade
Code Bill, 2019 Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946, and the
Industrial Disputes Act, 1947
HS code The Ministry of Commerce and Industry has allocated a separate Harmonised System (HS)
code for Khadi→Khadi is India’s signature handspun and handwoven cloth that was made
iconic by Mahatma Gandhi during the freedom struggle→the move is expected to boost
Khadi exports in the coming years →Harmonised System, or simply ‘HS’, is a six-digit
identification code→ developed by the World Customs Organization (WCO)→it is a
multipurpose international product nomenclature→HS code are used by Customs authorities,
statistical agencies, and other government regulatory bodies to monitor and control the import
and export of commodities
Business Immunity • Invest India has launched the Invest India Business Immunity Platform
Platform • Business Immunity Platform: It is designed as a comprehensive resource to help
businesses and investors get real-time updates on India’s active response to COVID-19
(Coronavirus)→It is the active platform for business issue redressal, operating 24/7,
with a team of dedicated sector experts and responding to queries at the earliest
• Invest India is the National Investment Promotion and Facilitation Agency of India, set
up as a non-profit venture under the aegis of Department of Industrial Policy &
Promotion, Ministry of Commerce and Industry→It facilitates and empowers all investors
under the ‘Make in India’ initiative to establish, operate and expand their businesses in
India→Operationalized in early 2010, Invest India is set up as a joint venture company
between the Department of Industrial Policy & Promotion (DIPP) (now renamed as
Department for Promotion of Industry and Internal Trade (DPIIT)), Ministry of Commerce
& Industry (35% equity), Federation of Indian Chambers of Commerce and Industry
(FICCI) (51% equity), and State Governments of India (0.5% each)
National • Is an autonomous, multipartite, non-profit organization with equal representation from

Productivity employers’ & workers’ organizations and Government, apart from technical & professional
Council (NPC) institutions and other interests→ to promote productivity culture in India→ established in
1958 by Ministry of Industry→under the administrative control of the Department for
Promotion of Industry and Internal Trade→also implements the productivity promotion
schemes of the Government and carry out the programmes of the Tokyo based Asian
Productivity Organization (APO)
Consumer A new consumer protection law replacing the old 1986 law →A consumer is defined as a
Protection Act 2019 person who buys any good or avails a service for a consideration →It covers transactions

through all modes including offline, and online through electronic means, teleshopping,
multi-level marketing or direct selling. → The Act defines “consumer rights” → Central
Consumer Protection Authority will be set up to promote, protect and enforce consumer
rights →Consumer Disputes Redressal Commissions will be set up at the District, State and
National levels for adjudicating consumer complaints. →Consumer Protection Councils will
be established at the district, state and national levels to render advise on consumer protection.
→Product liability means the liability of a product manufacturer, service provider or seller to
compensate for any harm caused, including: property damage, personal injury, illness, or death;
and mental agony or emotional harm accompanying these conditions.
•
National Financial It is a body proposed in Companies Act 2013 for the establishment and enforcement of
Reporting Authority accounting and auditing standards and oversight of the work of auditors→It would be an
overarching watchdog for auditing profession and once set up, the current powers of the
ICAI to act against erring chartered accountants will be vested with the new regulator→ Its
will extend to all listed companies as well as large unlisted public companies→Besides, the
government can refer other entities for investigation by the NFRA where public interest is
involved.
Agriculture
Market The government is planning to procure almost 12 lakh metric tonnes of apples this season,
Intervention Price under the MIPS→it is a price support mechanism implemented on the request of State
Scheme (MIPS) Governments→it is for procurement of perishable and horticultural commodities in the
event of a fall in market prices→scheme is implemented when there is at least 10% increase
in production or 10% decrease in the ruling rates over the previous normal
year→Department of Agriculture & Cooperation is implementing the scheme
Agricultural and • 800 FPOs registered on Farmer Connect Portal of APEDA→Farmer Connect Portal has
Processed Food been set up by APEDA on its website for providing a platform for Farmer Producer
Products Export Organisations (FPOs) and Farmer Producer Companies (FPCs) to interact with
Development exporters
Authority • APEDA was established by the Government of India under the Agricultural and
(APEDA) Processed Food Products Export Development Authority Act 1985 → it replaced the
Processed Food Export Promotion Council (PFEPC) →it is under the Ministry of
Commerce and Industries→aims to promote export of agricultural and processed food
products from India
Small Farmers’ • Agricultural and Processed Food Products Export Development Authority (APEDA)
Agri-Business has signed an MoU with the Small Farmers Agribusiness Consortium (SFAC) to have a
Consortium better sync with their activities for the benefit of farmers
(SFAC) • Key facts: As per the MoU, both organisations will work towards capacity development,
outreach programs, awareness programs and workshops of various stakeholders→APEDA
will facilitate the certification of organic produce/areas by the FPCs assisted or identified
by SFAC
• SFAC: It was established as a Society in January 1994 to facilitate agri-business
ventures by catalysing private investment through Venture Capital Assistance (VCA)
Scheme in close association with financial institutions→Role of State SFACs is to
aggressively promote agribusiness project development in their respective States
• APEDA: It is an authority established under an act of Parliament and under the
administrative control of the Ministry of Commerce and Industry→It has been mandated

with the responsibility of export promotion and development of the scheduled products
viz. fruits, vegetables, meat products, dairy products, alcoholic and non-alcoholic beverages
etc→Is also entrusted with the responsibility to monitor import of sugar
“Silk Samagra” • Focuses on improving quality and productivity of domestic silk thereby reducing the
through Central country’s dependence on imported silk→assistance is extended to sericulture
Silk Board stakeholders for the beneficiary oriented components like plantation with improved
Mulberry varieties, Irrigation, construction of rearing houses, r door to door service agents
for disinfection and input supply, support for improved reeling units like Automatic Reeling
units, support for post yarn facilities for quality silk and fabric production etc.
Social Sector
Healthy States, NITI Aayog

Progressive India
Report
Corporate Social President of India presents National Corporate Social Responsibility Awards→NCSRA has
Responsibility been instituted by the Ministry of Corporate Affairs to recognize outstanding contribution in
the field of Corporate Social Responsibility (CSR)→CSR is the integration of socially
beneficial programs and practices into a corporation’s business model and culture→India is
one of the first countries in the world to make CSR mandatory for companies following an
amendment to the Companies Act, 2013 (Companies Act) in 2014
Maternal mortality A Special Bulletin on Maternal Mortality in India 2015-2017 from the Sample Registration
rate in India System has been released→Key facts:Maternal mortality ratio is measured as the number of
maternal deaths per lakh live births→it varies among the Indian states from a high of 229
per lakh in Assam to a low of 42 in Kerala→across the country, the maternal mortality ratio
has declined from 130 during 2014-2016 to 122 during 2015-17→Assam (229) is followed
by Uttar Pradesh (216), Madhya Pradesh (188), Rajasthan (186), Odisha (168), Bihar (165) and
Chhattisgarh (141)→according to the United Nations’ (UN) Sustainable Development Goals
(SDGs), the global target is to bring down the MMR to fewer than 70 maternal deaths per
100,000 live births by 2030
Patent Prosecution Union Cabinet has approved the proposal for adoption of Patent Prosecution Highway (PPH)
Highway programme by the Indian Patent Office (IPO) under the Controller General of Patents,
programme Designs & Trade Marks, India (CGPDTM) with patent offices of various other interest
countries or regions→PPH will initially commence between Japan Patent Office (JPO) and
Indian Patent Office on pilot basis for a period of three years only→PPH is a set of initiatives
for providing accelerated patent prosecution procedures by sharing information between
some patent offices
Human Published by the United Nations Development Programme (UNDP)→it is a statistical tool
Development used to measure a country’s overall achievement in its social and economic dimensions based
Index(HDI) on the health of people, their level of education attainment and their standard of living→It
is part of the Human Development Report→Other indices that form the part of the 2019
Report are: Inequality-adjusted Human Development Index (IHDI), Gender Development
Index (GDI), Gender Inequality Index (GII) and Multidimensional Poverty Index (MPI)

Latest Edition of Ministry of Statistics and Programme Implementation constituted PLFS under the
Periodic Labour chairmanship of Amitabh Kundu→ unemployment rate (UR) is at its highest in both rural and
Force Survey urban India since 1972→ unemployment rate among youth between 15 and 29 years has
(PLFS) risen sharply since 2011-12→UR in urban areas are higher than those in rural areas→ data
was collected by NSSO from July 2017 to June 2018
Skill development Will provide skilling, thereby enabling the trainee to take bank credit and start his/her own
through Rural Self Micro-enterprise→Launched by Ministry of Rural Development (MoRD) to provide skill
Employment and development under the National Rural Livelihoods Mission (NRLM)
Training Institutes
(RSETI)
New Code on It seeks to define the norms for fixing minimum wages that will be applicable to workers of
Wages organised and unorganised sectors, except government employees and MGNREGA
workers→Code on Wages will amalgamate the Payment of Wages Act, 1936, the Minimum
Wages Act, 1948, the Payment of Bonus Act, 1965, and the Equal Remuneration Act,
1976→as per the Bill, minimum wages will be linked only to factors such as skills and
geographical regions
National Skill It is a not-for-profit public limited company→ incorporated on July 31, 2008 →set up by
Development Ministry of Finance as Public Private Partnership (PPP) model. The Government of India
Corporation through Ministry of Skill Development & Entrepreneurship (MSDE) holds 49% of the share
(NSDC) capital of NSDC→ aims to promote skill development by catalyzing creation of large, quality
and for-profit vocational institutions→ provides funding to enterprises, companies and
organization to build scalable and profitable vocational training initiatives.
Randomised New Economics Nobel laureates – Abhijit Banerjee, Esther Duflo and Michael Kremer –
Controlled Trial are considered to be instrumental in using randomised controlled trials to test the effectiveness
of various policy interventions to alleviate poverty→RCTs allow economists and social science
researchers to isolate the individual impact that a certain factor alone has on the overall
event→For instance, to measure the impact that hiring more teachers can have on children’s
learning, researchers must control for the effect that other factors such as intelligence,
nutrition, climate, economic and social status etc., which may also influence learning
outcomes to various degrees, have on the final event→RCTS promise to overcome this
problem through the use of randomly picked samples
CMIE Report on Centre for Monitoring Indian Economy (CMIE) has released a report on Unemployment in
Joblessness India→Key findings:India’s unemployment rate in October rose to 8.5%, the highest level
since August 2016→Urban unemployment rate at 8.9%, is more than the rural
unemployment rate of 8.3% →Highest unemployment rate in Tripura and Haryana, at more
than 20% →Lowest in Tamil Nadu at 1.1% →Rajasthan saw its unemployment rate double
between September and October 2019
Sustainable Development

Emissions Trading Launched in Surat by Gujarat Government, the Emissions Trading Scheme
Scheme (ETS) (ETS) is a regulatory tool that is aimed at reducing the pollution load in an area
and at the same time minimising the cost of compliance for the industry→ETS is
a market in which the traded commodity is particulate matter emissions→it is also
being described as the world’s first market for trading in particulate matter
emissions
Carbon Pricing A Report of the High-Level Commission on Carbon Pricing and Competitiveness
by Carbon Pricing Leadership Coalition makes a strong case for carbon pricing→it
is an instrument that captures the external costs of greenhouse gas (GHG)
emissions - the costs of emissions that the public pays for, such as damage to crops,
health care costs from heat waves and droughts, and loss of property from flooding
and sea level rise - and ties them to their sources through a price, usually in the
form of a price on the carbon dioxide (CO2) emitted
Government Schemes
Scheme for Skill development of the youth in the textile sector

Capacity Building
in Textile Sector
(SCBTS)-
SAMARTH
Pradhan Mantri Implemented by National Skill Development Corporation→Ministry of Skill Development

Kaushal Vikas and Entrepreneurship→to encourage and promote skill development for the youth→aims to
Yojana (2016 – benefit 10 million youth over the period of four years (2016- 2020)
2020)
India International Launched as a pilot operational in 14 centres in the country→ Ministry of Skill Development
Skill Centres (IISC) and Entrepreneurship→To provide counselling and guidance along with Foreign
Program Employment Support for employment opportunities in the overseas market, information on
the required skill set, minimum wages etc. to the potential emigrants, Skill Testing &
certification aligned with employer standard, Incremental skill training & Pre-Departure
Orientation Training (PDOT) and to focus on emerging opportunities in all regions of the
world
Rashtriya Gokul Funds have been mobilized under RGM for setting up of 21 Gokul Grams as Integrated
Mission Cattle Development Centres→aims to conserve and develop indigenous bovine breeds→
RGM comes under the National Programme for Bovine Breeding and Dairy Development
(NPBBD).
Shyama Prasad Programme, designed to deliver catalytic interventions to rural areas on the threshold of
Mukherji Rurban growth→aims to stimulate local economic development, enhance basic services, and create
Mission (SPMRM) well planned Rurban clusters

National Policy on The policy on Biofuels approved by the Government envisages an indicative target of 20%
Biofuels – 2018 blending of ethanol in petrol and 5% blending of bio-diesel in diesel by 2030→it
categorises biofuels as “Basic Biofuels” viz. First Generation (1G) bioethanol & biodiesel
and “Advanced Biofuels” – Second Generation (2G) ethanol, Municipal Solid Waste (MSW)
to drop-in fuels, Third Generation (3G) biofuels, bio-CNG etc. to enable extension of
appropriate financial and fiscal incentives under each category
Pradhan Mantri 7.23 Crore connections released under the scheme→ aims to provide LPG (liquefied
Ujjwala Yojana petroleum gas) connections to poor households→under the scheme, an adult woman
(PMUY) member of a below poverty line family identified through the Socio-Economic Caste
Census (SECC) is given a deposit-free LPG connection with financial assistance of Rs 1,600
per connection by the Centre→eligible households will be identified in consultation with
state governments and Union territories→implemented by the Ministry of Petroleum and
Natural Gas
Atal Tinkering With a vision to ‘Cultivate one Million children in India as Neoteric Innovators’, Atal
Labs Innovation Mission ATLs in schools across India→objective: to foster curiosity, creativity
and imagination in young minds; and inculcate skills such as design mindset, computational
thinking, adaptive learning etc→AIM will provide grant-in-aid that includes a one-time
establishment cost of Rs. 10 lakh and operational expenses of Rs. 10 lakh for a maximum
period of 5 years to each ATL
Pradhan Mantri Houses sanctioned under PMAY(U) now stand at 83.62 lakhs→
Awas Yojana – Uttar Pradesh tops the list for Sanctioned Houses at 13 Lakhs→it was launched by the
Urban Ministry of Housing and Urban Poverty Alleviation, in mission mode envisions provision
of Housing for All by 2022, when the nation completes 75 years of its Independence.
EQUIP Project Higher Education Department of the Union Ministry of Human Resource Development has
finalized and released a 5-year Vision Plan titled as Education Quality Upgradation and
Inclusion Programme (EQUIP)→it is meant to bridge the gap between policy and
implementation→the project is made to bring transformation in the higher education system in
the upcoming 5 years
National To support MSMEs in improving their competitiveness→Ministry of Micro, Small and

Manufacturing Medium Enterprises (MSMEs) implements Credit Linked Capital Subsidy-Technological
Competitiveness Up-gradation Scheme (CLCS-TUS) to support MSMEs in their technology up-gradation
Programme endeavours.
(NMCP)
Scheme for Trans- Approved by UGC→will provide support to research projects that are socially relevant, locally
disciplinary need-based, nationally important and globally significant→to support research capacity
Research for building as well as basic, applied and transformational action research that can contribute to
India’s Developing national priorities with focus on inclusive human development.
Economy
(STRIDE)
Pradhan Mantri Involves consolidation of Through Routes and Major Rural Links connecting habitations to

Gram Sadak Gramin Agricultural Markets (GrAMs), higher secondary schools and hospitals→proposes
Yojana-lll to consolidate 1,25,000 km road length in the States→will also include Through Routes and
(PMGSY-III) Major Rural Links that connect habitations to Gramin Agricultural Markets (GrAMs), higher
secondary schools and hospitals.
Mahila Kisan Is a sub-component of Deendayal Antyodaya Yojana-National Rural Livelihood Mission

Sashaktikaran (DAY-NRLM)→ objective is to empower women by enhancing their participation in
Pariyojana (MKSP) agriculture and to create sustainable livelihood opportunities for them→funding support to the
tune of up to 60% (90% for North Eastern States) for such projects is provided by GoI.
Pradhan Mantri To provide skilling to one crore people across the country in various sectors including
Kaushal Vikas Agriculture→under Recognition of Prior Learning (RPL) component of PMKVY 2.0, up
Yojana 2.0 skilling of farmers has been made via bridge course training in the job roles namely organic
(PMKVY 2.0) grower, dairy farmer, pulses cultivator etc.
Atal Pension To create a universal social security system for all Indians, especially the poor, the under-
Yojana privileged and the workers in the unorganised sector→for all citizens of India between 18-40
years of age having a savings bank account in a bank or post-office.
Deendayal Ministry of Rural Development→objective of organizing the rural poor women into Self
Antyodaya Yojana Help Groups (SHGs) and continuously nurturing and supporting them to take economic
– National Rural activities till they attain appreciable increase in income over a period of time to improve their
Livelihoods Mission quality of life and come out of abject poverty→aims to ensure that at least one woman
(DAY-NRLM) member from each rural poor household (about 9 crore) is brought into the fold of women
SHGs and their federations within a definite time frame
Trade It replaces a centrally sponsored scheme — Assistance to States for creating Infrastructure for
Infrastructure for the Development and growth of Exports (ASIDE)→ to enhance export competitiveness by
Export Scheme bridging gaps in export infrastructure, creating focused export infrastructure and first-mile and
(TIES) last-mile connectivity→would provide assistance for setting up and up-gradation of
infrastructure projects with overwhelming export linkages like the Border Haats, Land customs
stations, quality testing and certification labs, cold chains, trade promotion centres, dry ports,
export warehousing and packaging, SEZs and ports/airports cargo terminuses→Eligibility: The
Central and State Agencies, including Export Promotion Councils, Commodities Boards, SEZ
Authorities and Apex Trade Bodies recognised under the EXIM policy of Government of
India; are eligible for financial support under this scheme
Pradhan Mantri Assures a minimum of Rs.3,000 monthly pension to all small shopkeepers, retail traders and
Laghu Vyapari self-employed persons after attaining 60 years of age→small shopkeepers, self-employed
Maan-dhan Yojana persons and retail traders aged between 18-40 years and with GST turnover below Rs.1.5 crore
2019 can enrol for pension scheme→ applicants should not be covered under the National Pension
Scheme, Employees’ State Insurance Scheme and the Employees’ Provident Fund or be an
Income Tax assessee
Pradhan Mantri • When? Launched in 2016

Fasal Bima Yojana • Merged schemes include National Agricultural Insurance Scheme (NAIS) and Modified
(PMFBY) National Agricultural Insurance Scheme (MNAIS)
• Aim: To reduce the premium burden on farmers and ensure early settlement of crop
assurance claim for the full insured sum

• Coverage: It covers all food & oilseeds crops and annual commercial/horticultural
crops for which past yield data is available and for which requisite number of Crop
Cutting Experiments (CCEs) are being conducted under General Crop Estimation
Survey (GCES)→Premium: 2% for Kharif crops, 1.5% for Rabi crops and 5% for
commercial and horticultural crops

Current Economy Crux (Prelims) by CA Rahul Kumar IAS Prelims 2020

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June 2019 to March 1. DIADEMY.

COM Economy (Prelims) online

Current Economy Crux (Prelims)

6. Sources used for this compilation are

a. The Hindu & Indian express Newspaper

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Money and Banking

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41. Fugitive Economic Offender

Money and Capital Markets (+NBFC)

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4. Advance Pricing Agreements (APAs)

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13. IMF Quotas

Social Sector, Employment and Poverty

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4. India International Skill Centres (IISC)Program

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Shared Economy • Sharing economy, also known as collaborative consumption or peer-to-peer-based

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Money & Banking

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November→Besides, no charges or merchant discount rate (MDR) will be levied on either

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Mani App • By RBI

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Chakrabarty→The National Bank for Agriculture and Rural Development

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Money & Capital Markets (+NBFC)

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It allows for purchase of high-rated pooled assets from financially-sound non-banking

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therefore, coordination among the two is necessary

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Dearness • Dearness allowance is a cost of living adjustment allowance paid to government

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FDI in Palm oil 100%

Carpet Export It is a non-profit making organization→Setup in 1982 by the Ministry of Textiles→Objective:

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capacity to handle disputes and implement technical standards

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National • Is an autonomous, multipartite, non-profit organization with equal representation from

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Healthy States, NITI Aayog

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Scheme for Skill development of the youth in the textile sector