GST TAX TO BE SUBSUMED UDER GST

GST is the most ambitious and

remarkable indirect tax reform in
India’s post-Independence history.
Its objective is to levy a single
national uniform tax across India on
all goods and services. GST has
replaced a number of Central and
State taxes, made India more of a
national integrated market, and
brought more producers into the tax
net. By improving efficiency, it can
add substantially to growth as well
as government finances.
Implementing a new tax,
encompassing both goods and
services, by the Centre and the
States in a large and complex federal
system, is perhaps unprecedented in
modern global tax history.

GST is a tax on goods and services

However it is to be noted that following taxes are not
with comprehensive and continuous
chain of set-off benefits up to the subsumed into GST:-
retailer level. It is essentially a tax
only on value addition at each stage,
Central Taxes State Taxes
and a supplier at each stage is
permitted to set-off, through a tax Basic Customs Duty State Excise Duty
credit mechanism, the GST paid on
Research and Development cess Stamp Duty
the purchase of goods and services.
Ultimately, the burden of GST is Export Duty Professional Tax
borne by the end-user (i.e. final
consumer) of the commodity/service Anti-dumping Duty Motor Vehicle Tax

In a nutshell, GST is a comprehensive Safeguard Duty

indirect tax levy on manufacture,
sale and consumption of goods as
well as services at the national level.
Principles that were borne in mind while subsuming
GST is an indirect tax for the whole of
various central, state and local levies, under GST
India to make it one unified common
market. GST is designed to give India (i) Taxes or levies to be subsumed should be primarily in
a world class tax system and improve the Nature of indirect taxes.
tax collections. It would end the (ii) Taxes or levies to be subsumed should be part of the
long-standing distortions of Transaction chain.
differential treatment of (iii) The subsuming of taxes should result in Free flow of
manufacturing sector and services tax credit in intra and inter-State levels.
sector. GST will facilitate seamless
(iv) Revenue fairness for both the Union and the States
credit across the entire supply chain
individually would need to be attempted.
and across all States under a
common tax base.
BENEFITS OF GST
The benefits of GST can be summarized as under:

A. For business and industry

 Easy compliance : A robust and comprehensive IT system would be the foundation of
the GST regime in India. Therefore, all tax-payer services such as registrations, returns,
payments etc. would be available to the taxpayers online, which would make
compliance easy and transparent.
 Uniformity of tax rates and structures : GST will ensure that indirect tax rates and
structures are common across the country, thereby increasing certainty and ease of
doing business. In other words, GST would make doing business in the country tax
neutral, irrespective of the choice of place of doing business.
 Removal of cascading : A system of seamless tax credits throughout the value chain,
and across boundaries of states, would ensure that there is minimal cascading of
taxes. This would reduce hidden costs of doing business.
 Improved competitiveness : Reduction in transaction costs of doing business would
eventually lead to an improved competitiveness for the trade and industry.
 Gain to manufactures and exporters : The subsuming of major central and state taxes
in GST, complete and comprehensive set-off of input goods and services and phasing
out of central sales tax (CST) would reduce the cost of locally manufactured goods and
services. This will increase the competitiveness of Indian goods and services in the
international market and gives boost to Indian exports. The uniformity in tax rate and
procedures across the country will also go a long way in reducing the compliance cost.

B. For the consumer

 Single and transparent tax proportionate to the value of
goods and service : Due to multiple indirect taxes being
levied by the central and state, with incomplete or no
input tax credits available at progressive stages of value
addition, the cost of most goods and services in the
country today are laden with many hidden taxes. Under
GST, there would be only one tax from the manufacture
to the consumer, leading to transparency of taxes paid to
the final consumer.
 Relief in overall tax burden : Because of efficiency gains
and prevention of leakages, the overall tax burden on
most commodities will come down, which will benefit
consumers.
Sector-wise Impact of GST

Logistics
In a vast country like India, the logistics sector forms the backbone of the economy. We can
fairly assume that a well organized and mature logistics industry has the potential to leapfrog
the “Make In India” initiative of the Government of India to its desired position.

E-commerce
The e-commerce sector in India has been growing by leaps and bounds. In many ways, GST
will help the e-com sector’s continued growth but the long-term effects will be particularly
interesting because the GST law specifically proposes a Tax Collection at Source (TCS)
mechanism, which e-com companies are not too happy with. The current rate of TCS is at 1%.

Pharma
On the whole, GST is benefiting the pharma and healthcare industries. It will create a level
playing field for generic drug makers, boost medical tourism and simplify the tax structure. If
there is any concern whatsoever, then it relates to the pricing structure (as per latest news).
The pharma sector is hoping for a tax respite as it will make affordable healthcare easier to
access by all.

Telecommunications
In the telecom sector, prices will come down after GST. Manufacturers will save on costs
through efficient management of inventory and by consolidating their warehouses. Handset
manufacturers will find it easier to sell their equipment as GST has negated the need to set
up state-specific entities, and transfer stocks. The will also save up on logistics costs.

Textile
The Indian textile industry provides employment to a large number of skilled and unskilled
workers in the country. It contributes about 10% of the total annual export, and this value is
likely to increase under GST. GST would affect the cotton value chain of the textile industry
which is chosen by most small medium enterprises as it previously attracted zero central
excise duty (under optional route).
Real Estate
The real estate sector is one of the most pivotal sectors of the Indian economy, playing an
important role in employment generation in India. The impact of GST on the real estate sector
cannot be fully assessed as it largely depends on the tax rates. However, the sector will see
substantial benefits from GST implementation, as it has brought to the industry much-
required transparency and accountability.

Agriculture
The agricultural sector is the largest contributing sector the overall Indian GDP. It covers
around 16% of Indian GDP. One of the major issues faced by the agricultural sector is the
transportation of agri-products across state lines all over India. GST will resolve the issue of
transportation.

FMCG
The FMCG sector is experiencing significant savings in logistics and distribution costs as the
GST has eliminated the need for multiple sales depots.

Freelancers
Freelancing in India is still a nascent industry and
the rules and regulations for this chaotic industry
are still up in the air. But with GST, it will become
much easier for freelancers to file their taxes as
they can easily do it online. They are taxed as
service providers, and the new tax structure has
brought about coherence and accountability in
this sector.

Automobiles
The automobile industry in India is a vast business producing a large number of cars annually,
fueled mostly by the huge population of the country. Under the previous tax system, there
were several taxes applicable to this sector like excise, VAT, sales tax, road tax, motor vehicle
tax, registration duty which will be subsumed by GST.

Startups
With increased limits for registration, a DIY compliance model, tax credit on purchases, and a
free flow of goods and services, the GST regime truly augurs well for the Indian startup scene.
Previously, many Indian states had different VAT laws which were confusing for companies
that have a pan-India presence, especially the e-com sector. All of this has changed under
GST.
Comparative Analysis Of GST Before And After
Before GST was implemented, the VAT system was being followed within the country. There
are numerous differences between GST and therefore the previous system starting from the
levies, taxes, exemptions, validations, and more.

Parameter VAT GST

STRUCTURE Under the old taxation system, Under GST, all the central and
the central taxes applicable state taxes are going to be
were custom duty/central subsumed and one tax is going
excise duty, central sales tax on to be levied on all commodities
commodities and services, and services aside from motor
surcharge and cesses. The state spirit, petroleum, gas and high-
taxes included state VAT, WCT, speed diesel.
entertainment tax, luxury tax,
tax on gambling, betting and
lottery, nuisance tax deducted
at source, and surcharge and
cesses.

BASIS OF LEVY Under VAT, taxes are going to
be levied at the place where
goods are manufactured or
sold, or the place at which
services are rendered.
Under GST, taxes are going to
be levied at the place of
consumption, sort of a
destination-based tax.

REGISTRATION Under VAT, the registration is Under GST, there'll be uniform

decentralised under state and e-registration depending upon
central authorities. the PAN of the entity.
VALIDATION Under VAT, the system will Under GST, the validation will
partly validate the returns, and take place on the system, and
full verification is going to be consistency checks will be
subject to assessments by state carried out on input credit
or central authorities. availed, tax payments, and
utilisation.

FILING OF RETURNS
Under the old scenario, service Under GST, the method is
tax and central excise were uniform and therefore the
uniform, but VAT varied from dates for collecting or
state to state. depositing tax and filing returns
are common.

CASCADING EFFECT Under VAT, credit between Under GST, credit is available
service tax and excise duty is on the entire amount of taxes
out there , but there's no set-off up to retailers.
against VAT on excise duty
39TH GST COUNCIL MEETING
The 39th GST Council meeting happened on Saturday, 14th March 2020 at New Delhi. The
Union FM Nirmala Sitharaman chaired this meeting and took decisions on certain crucial
issues under GST.

Highlights of the 39th GST Council Meeting

1. Deferment of the new GST return system and e-invoicing

The implementation of the new GST return system has been postponed to 1stOctober 2020.
Also, the implementation of e-invoicing and the QR code has been deferred to 1st October
2020.

The present return system (GSTR-1, GSTR-2A & GSTR-3B) will be continued until September
2020.

2. Changes in the GST rates

•GST on mobile phones and specified parts was increased from 12% to 18%.This decision was
taken to avoid difficulties due to the inverted duty structure.

•All types of matches have been rationalized to a single GST rate of 12%. Till now, the
handmade ones were taxed at 5% and the rest was taxed at 18%.

•GST on Maintenance, Repair and Overhaul (MRO) service in respect to aircraft was reduced
from 18% to 5% with full ITC.

•All these rate changes will come into effect from 01 April 2020.

3. Interest on delayed payments

Now, the interest for delayed GST payment will be calculated on the net tax liability. This
amendment will apply retrospectively from 1st July 2017.

4. Extension of GSTR-9 and 9C

The GSTR-9 & 9C deadline is extended to 30 June 2020 for FY 2018-19. Also, the turnover limit
will be increased from Rs 2 crore to Rs 5 crore for mandatory annual return filing. Hence, filing
GSTR-9C is optional for the taxpayers having the turnover less than Rs 5 crore.
DIFFERENT SLAB RATE UNDER GST
Impact of GST on Banking Sector
The Banking sector plays an
important role in generating
revenue in our economy. It also
plays an important role in the
financial life of a business.
Although no wealth is created by
banks and Financial Institutions,
it helps in the process of
exchange and distribution of
wealth. Any changes made in this
sector will bring corresponding
changes in the development of
business and industries which are
dependent on financial and non-
financial services provided by
banking sectors.

Effect of GST on Banking Sector

 No more centralized registration
Before GST, banks with pan-India operations could discharge their service tax compliance
through a single centralized registration. However, under GST, such banks will have to register
themselves separately for each state. This puts an additional burden on the banks to comply
with the filing of returns.

 Assessment and Adjudication became difficult

Under GST, the assessment has to be done by the respective state regulators under which the
concerned branch is registered. This means that more than one adjudicating authority will be
involved and there may be different opinions on the same underlying issue. This contraction
can prolong the process of adjudication.

 Actionable Claims
Prior to GST, actionable claims were not included as a service under Service Tax. However,
Under GST actionable claims are included in the definition of supply of goods.
 Place of Supply of Goods and Services
As per section 12(2) of the IGST Act, 2017, in the case of banking and other financial services,
the place of supply shall be the 'location of the recipient of service' on the records of supplier
of services. And if the recipient's location is not available in the records of the supplier, then
the place of supply shall be the location of the supplier.

 Inter-branch GST implications

Prior to GST, banks were not subject to any tax for interstate transactions between two
branches of the same bank. However, under GST, the same is levied on transactions between
two interstate branches of a bank.

 Invoice requirements
As per rule 47 of the CGST Rules, 2017, the banking companies are required to issue tax
invoices to the customers within 45 days from the date of supply of Banking services.
However, Rule 54(2) of the CGST Rules, 2017 prescribes that such tax invoice can be replaced
by any other document in lieu of invoice, including consolidated statement, advice, invoice,
etc generated at the end of the month.

GST Is Charged On All Banking Activities

Prior to GST, services offered by Banking companies were subject to 15% Service Tax.
However, under GST it has now risen to 18%. With the enhanced tax burdens, the final
customers of such Banking companies have to bear the additional charges associated with
Banking services such as:

 Transaction Charges

Transaction charges are the charges which we pay to the bank when we withdraw cash from
an ATM. it was increased to 18% from 15%. With respect to cheque book services, the first 10
cheques will be free of cost in a financial year. Thereafter, 18% taxes will be applied to each
cheque.

 Loans

Under GST, the loans are taxable at 18%. The home loans which were available to the
borrowers for a VAT of 5% for construction materials and 3.5% service tax, are now available
at 18% which will be little more expensive for the borrowers.

 Other services

Banking facilities like locker facilities, tax payment, billing, and shopping etc. which are offered
by the banking sector are taxable for 18% under GST which is 3% higher than the early tax
rates.
Exemptions from GST
Few banking services are exempted by the Central Government they are as follow:

1. Services provided by the Reserve

Bank of India.

2. Service of providing deposits,

loans or advances where the
consideration is in the form of
interest or discount, excluding
interest involved in credit card
services.

3. Service of inter se sale or purchase

of foreign currency amongst
banks or authorized dealers of
foreign exchange, or amongst
banks and such dealers.

4. Service provided by a business facilitator or a business correspondent to a Banking

company or Insurance company for its accounts in a rural area branch.

5. Services provided by a banking company to Basic Saving Bank Deposit under Pradhan
Mantri Jan Dhan Yojana.

6. Services by the acquiring bank to any person for transfer of amount up to Rs. 2,000 in
a single transaction done through credit card, debit card, or other payment card
service.

7. Services under Atal Pension Yojana.

8. Services under any Pension Scheme of State Governments.

9. Services provided by Central Government, State Government or Union Territory for

any insurance for which total premium is paid by the Government.

Impact of GST on Logistics Industry

Logistics is considered to be the backbone of manufacturing and trading activities in the
economy. It has a critical role to play for developing countries like India wherein consumption
is growing and demand is always high. We can fairly assume that a well organized and mature
logistics industry has the potential to leapfrog the “Make In India” initiative of the
Government of India to its desired position.
Current Issues and challenges
Despite being a lower cost service providing country, India has higher logistics cost due to
various issues and challenges faced by the industry. Apart from being entangled in complex
tax structure, the industry is also affected by poor rate of customs efficiency of clearance
processes and procedures thus affecting the international export logistics stratum.
Furthermore, sub-optimal comfort provided by the existing Indian infrastructure combined
with lack of implementation of efficient IT-enabled tracking and tracing mechanisms has
adversely affected the performance of logistics. The current article delineates upon the
complex tax structure issue faced by the logistic industry and the benefits that this industry
would derive upon implementation of GST, thus providing respite to certain extent to the
industry.

How the introduction of Goods and Service Tax (GST) would benefit the
Indian logistic industry?
Goods and service tax is a colligation of multiple taxes levied by both Central (i.e, excise duty,
countervailing duty and service tax) and state (Value-added tax, Octroi and entry tax, luxury
tax, etc) governments when an end-user purchases goods or services. It means same level of
taxation would be charged on a specific product or service across the entire country
irrespective of being manufactured and sold in different states. The planned dual GST model
(central GST and state GST) proposes to replace around 29 state and federal taxes and tariffs
for a single tax at the point of sale. The current combined Centre and State statutory rate for
most goods works out to be 26.5% (Cenvat of 14%, and VAT of 12.5%), whereas post GST
implementation the same is expected to reduce to standard rate of about 18-21% which will
be levied on most goods and all services.
GST on Exports And Import of Goods & Services in India
The government of India introduced the Goods and Services Tax (GST) in 2017 across the
country. It was a move to make the entire taxation process of India more flexible. The impact
of GST has been quite varied on different sectors of the economy. One the crucial sectors that
GST has impacted in the import and exports. Exports and imports are important contributors
towards revenue generation in the country, which is why it is also essential to study the
impact GST has on it.

However, there is a lot of ambiguity among e-Commerce entrepreneurs on the possible

impact of GST on the export of various goods. So, if you’re worried about the same issue,
don’t worry, we’ve got you covered!

Impact on Exports of Goods and Services

As per the GST council, the exports of goods and services has been considered as a zero-rated
supply and so there will be no GST levied on such exports. As per the new GST scheme, the
duty drawback will be provided for the customs duty paid on the goods that have been
imported. The purpose for these imports must be manufacturing.
Similarly, duty drawback will also be provided on the central excise duty. These can be paid
for certain imported tobacco and petroleum products that have been imported as fuel for
captive power generation.
If you are an exporter who deals in zero-rated goods under GST, you will be able to claim a
refund for zero-rated supplies. This will have two options:
If you are an exporter who deals in zero-rated goods under GST, you will be able to claim a
refund for zero-rated supplies. This will have two options:
 In case of the supply of goods or services that are prescribed under bond or Letter of
Undertaking for the safeguard of the payment of integrated tax, refund of the
unutilized input tax credit will be made. In this case, the exporter can file a refund
application on the GST portal or through the GST facilitation center.
 If the exporter is an agency of the United Nation or any embassy as specified in section
55 safeguards of GST may be prescribed. In that case, a refund can be claimed as
specified under section 54 of the CGST Act. In this case, the shipping bill needs to be
provided in order to claim the refund of the IGST paid.
The following documents are needed to claim a refund for exports under GST:
 The copy of the payment of duty
 The Copy of the invoice
 The document to show that the tax burden has not been passed on
 Other documents as prescribed by the government
Of late the influence of GST’s impact has been mixed in the export sector. The export industry
was facing a few problems to due to non-availability of refund on time. To address this issue,
the GST council took the decision to make six-month tax exemption for exporters. Moreover,
the exporters have been exempted from the heavy taxes. With all these measures, it is
expected that the whole process will be streamlined soon.

Of late the influence of GST has not been very positive in the export sector. The export
industry is facing problems to due to non-availability of refund on time. To address this issue,
the GST council took the decision to make six-month tax exemption for exporters. Moreover,
the exporters have been exempted from the heavy taxes. With all these measures, it is
expected that the whole process will be streamlined soon.

Impact on Import of Goods and Services

Under GST Imports are termed as inter-state supply. Hence GST is a purpose-based tax,
Integrated Goods and Services Tax (IGST) is a levy in the state where the imported goods are
obsessive, and imported services are inward bound.

IGST can be voluntary using input tax credit of intermediate goods and services tax (CGST),
state cargo and services tax (SGST), and IGST. The contribution tax credit is the credit that
dealers can avail for fees paid on their purchases, at the time of paying the final price on their
sale.

In the context of CGST and SGST, no cross utilisation of input tax acknowledgement is allowed.
Hence this means that input tax credit of CGST can only for CGST and IGST, and a participation
tax credit of SGST can only to pay for SGST and IGST.

As per the IGST ACT, the position of supply of goods, import into India shall be the site of the
importer. Thus, if an importer, say is situated in Maharashtra, the state tax component of the
integrated tax shall accrue to the state of Maharashtra.

The import of services under GST is taxable if it meets the following conditions:

 When the seller of service does not belong to India.

 In the situation, the beneficiary of service is a part of India.
 Place of supply is in India.
 The recipient and supplier of service are not establishments of distinct persons.
 Services have to pay tax on the current round charge basis concerning importer.
 With esteem of import of online in sequence and database access or retrieval
services (OIDAR) by unregistered, non-taxable recipients, the supplier located
outside India shall be responsible for payment of taxes.
Taxability on Import of Goods and Services in GST

 IGST will have to be when the importer receives the delivery of the imported
goods as compared to that of the domestic products where IGST has to pay every
month.
 CVD charged on the valuation of MRP principle. However, now IGST will include
CVD, and it will be a charge on the transaction value, under the GST regime
 Taxes that paid during the import is now available as a credit under the new law,
under the ‘import and sale’ model which wasn’t available in the pre-GST regime.
 The Government might change the Foreign Trade Policy and Custom Role along
with different types of notifications for exemptions such as EPCG, Duty
Drawback, Advance Authorisation, MEIS, Duty credit scrips, SEIS, etc., to align
with the GST.
 Withdrawal of certain exemptions in GST might affect the FTP schemes and duty
drawback rates. Moreover, the removal of such exceptions will impact pricing:
cost and working capital requirements of importers.

Tax returns in India:

All the importer in India has to file the tax every month under GST. Concerning the previous
law, the importer has required to register returns under state tax law for the purchase of
goods (import of products) and under central tax laws for claiming countervailing duties. In
filing the monthly returns, importers must declare the goods imported in table-5 of the GSTR-
2 form, and services introduced in table-6 of the GSTR-2 way.

Impact of GST on GDP of India

GST Positive Impact of GDP
Now, there is only one tax rate for all which will create a unified market in terms of tax
implementation and the transaction of goods and services will be seamless across the states.

The same will reduce the cost of the transaction. In a survey, it was found that 10-11 types of
taxes levied on the road transport businesses. So the GST will be helpful to reduce
transportation cost by eliminating other taxes.

After GST implementation the export of goods and services will become competitive because
of nill effect of cascading effect of taxes on goods and products. In a research done by NCAER,
it was suggested that GST would be the key revolution in Indian Economy and it could increase
the GDP by 1.0 to 3.0 percent.

GST is more transparent in comparison to the previous law provision so it will generate more
revenue to the Government and will be more effective in reducing corruption at the same
time. Overall GST will improve the tax Compliances.

In a report issued by the Finance Ministry, it was mentioned that Make In India programme
will be more benefited by the GST structure due to the availability of input tax credit on capital
goods.

As the GST will subsume all other taxes, the exemption available for manufacturers in regards
of excise duty will be taken off which will be an addition to Government revenue and it could
result in an increase in GDP.

The GST regime has although a very powerful impact on many things including the GDP also.
The Gross Domestic Product has the tendency to loom on the shoulders of revenue generated
by the economy in a year. Still, a worthwhile point includes that the GST has the capability to
extend the GDP by a total of 2 percent in order to complete the ultimate goal of increasing
the per-capita income of every individual. Also, the GST scheme will certainly improve the
indirect revenues to the government as the tax compliance will be further enhanced and rigid,
extending the tax paying base which will add to the revenue. The increased income of the
government will redirect towards the developmental projects and urban financing creating
an overall implied scenario.

GST Negative Impact on GDP

In a report, DBS bank noted that initially, GST will lead to the rise in inflation rate which will
remain for a year but after that GST will affect positively on the economy.

As we know Real Estate also plays an important role in Indian economy but some expert thinks
that GST will impact the Real Estate business negatively as it will add up the additional 8 to 10
percent to the cost and reduce the demand about 12 percent.

GST is applied in the form of IGST, CGST AND SGST on the Center and State Government, but
some economists say that there is nothing new in the form of GST although these are the new
names of Central Excise, VAT, CST and Service Tax etc.

As every coin has two faces in the same way we tried here to familiarize the things related to
GST with both perspective i.e. positively and negatively in this article. Despite having some
factor which is being expected to affect the Economy adversely there are so many other things
which are expected with a positive impact on GDP.
GST COLLECTIONS FROM FY 2017-18 TO FY 2021-22
(Rs. In crores)

MONTH FY 2017-18 FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22

April - 1,03,459.00 1,13,865.00 32,172.00 1,39,708.00
May - 94,016.00 1,00,289.00 62,151.00 1,02,709.00
June - 95,610.00 99,939.00 90,917.00 92,849.00
July - 96,483.00 1,02,083.00 87,422.00 1,16,393.00
August 95,633.00 93,960.00 98,202.00 86,449.00 1,12,020.00
September 64,064.00 94,442.00 91,916.00 95,480.00 1,17,010.00
October 93,333.00 1,00,710.00 95,379.00 1,02,155.00 1,30,127.00
November 83,780.00 97,637.00 1,03,491.00 1,04,963.00 1,31,526.00
December 84,314.00 94,726.00 1,03,184.00 1,15,174.00 1,29,780.00
January 89,825.00 1,02,503.00 1,10,818.00 1,19,875.00 1,40,986.00
February 85,962.00 97,247.00 1,05,361.00 1,13,143.00 1,33,026.00
March 92,167.00 1,06,577.00 97,590.00 1,23,902.00 1,42,095.00
Grand Total 7,19,078.00 11,77,370.00 12,22,117.00 11,36,803.00 14,88,229.00

Analysis
 In the FY 2018-19, 4 times the GST collection has exceeded 1 lakh crore.
 In the FY 2019-20, 7 times the GST collection has exceeded 1 lakh crore.
 In the FY 2020-21, 6 times the GST collection has exceeded 1 lakh crore.
 In the FY 2021-22, 11 times the GST collection has exceeded 1 lakh crore.

CONCLUSION
The Indian economy has seen a major reform in the form of implementation of GST on 1st
July 2017 which could be proved to be a major land mark in the history of an Indian economy.
I have seen that few of the selected sectoral indices does not show a normal distribution but
also I carried out further research on the base that the data was secondary in nature which I
have collected from their official websites. So it cannot be extended. Further it is also seen
that there is statistically significant difference between different sectoral indices of pre and
post implementation of GST. Therefore, it can be predicted that the implementation of the
GST affected the different sectors of Indian economy. The result of the study seems to be
more effected by financial reforms taken place in the economy. So, GST which has proved to
be major financial reform can be a step towards better economy
MONETARY POLICY
Monetary policy is adopted by
the monetary authority of a
country that controls either the
interest rate payable on very
short-term borrowing or the
money supply. The policy often
targets inflation or interest rate
to ensure price stability and
generate trust in the currency.
The monetary policy in India is
carried out under the authority of
the Reserve Bank of India.
The main objective of monetary
policy is to maintain price
stability while keeping in mind
the objective of growth as price
stability is a necessary
precondition for sustainable
economic growth. In India, the
RBI plays an important role in
controlling inflation through the
consultation process regarding
inflation targeting. The current
inflation-targeting framework in
India is flexible.
Evaluation of recent monetary policy
committee meeting outcomes.
The thirty sixth meeting of the Monetary Policy Committee
(MPC), constituted under section 45ZB of the Reserve Bank
of India Act, 1934, was held during June 6 to 8, 2022. The
MPC reviewed the surveys conducted by the Reserve Bank
to gauge consumer confidence, households’ inflation
expectations, corporate sector performance, credit
conditions, the outlook for the industrial, services and
infrastructure sectors, and the projections of professional
forecasters. The MPC also reviewed in detail the staff’s
macroeconomic projections, and alternative scenarios
around various risks to the outlook.
 Repo rate or key short-term lending rate increased by 50
basis points (bps) to 5.4 % for the third consecutive time in
2022.
 140 bps hike in repo rate since May 2022 to control
inflation.
 Real GDP growth forecast: Q1 at 16.2 %, Q2 at 6.2 %,Q3
at 4.1% and Q4 at 4%
 GDP growth forecast for 2022-23 retained at 7.2%.
 Domestic economic activity to expand.
 Currently, the rupee is devalued by 4.7 % against the US
dollar in fiscal year 2022 till August 4.
 Real GDP growth for Q1: 2023-24 projected at 6.7 per
cent.
 Inflation forecast for: Q2 at 7.1%, Q3 at 6.4%, Q4 at
5.8%, Q1:2023-24 at 5 %
 MPC decided to stay focused on withdrawal of
accommodative stance to observe inflation
 RBI will try maintaining the stability of the rupee
 Devaluation and depreciation of rupee depends more
on the US dollar's growth than the inability of the Indian
economy.
 Foreign exchange reserves of India stays as the fourth
largest internationally
 The forthcoming meeting of the rate-setting panel is
scheduled for September 28-30, 2022.
RBI Measure To Fight COVID-19
Since March 2020, the Reserve Bank of India
(RBI) has taken numerous measures to fight
the COVID-19 at the financial front. These
measures also form part of the Special
Economic Package and the ‘Atmanirbhar
Bharat Abhiyaan’ recently announced by the
Hon’ble Prime Minister of India,
Narendra Modi.

Various developmental and regulatory policies

undertaken by the RBI to address financial
stress caused by COVID-19 include:

 Liquidity Management

 Regulation and Supervision

 Decisions in respect of Financial Markets

LIQUIDITY MANAGEMENT
 Targeted Long-Term Repo Operations (TLTROs): RBI
will conduct auctions of targeted term repos of about INR
1 lakh crore for fresh deployment in investment-grade
corporate bonds, commercial paper, non-convertible
debentures.
 Cash Reserve Ratio: As a one-time measure, RBI has
reduced the cash reserve ratio of all banks by 100 basis
points to 3% of Net Demand and Time Liabilities (NDTL)
which will result in liquidity enhancement of about INR
1.37 lakh cr.
 Marginal Standing Facility: The limit of the banks for
borrowing overnight has been increased from 2% to 3%
into the Statutory Liquidity Ratio (SLR). This will allow
additional liquidity of INR 1.37 lakh cr.
REGULATION AND SUPERVISION
 Moratorium on Term Loans: RBI has
permitted all lending institutions to
allow a moratorium of three months
(later extended to six months) on
payment of instalments in respect of all
term loans outstanding as on March 1,
2020. These institutions include:
o Commercial banks like regional
rural banks, small finance banks
and local area banks
o Co-operative banks and all-India
Financial Institutions
o NBFCs like housing finance companies and micro-finance institutions
 Deferment of Interest on Working Capital Facilities: RBI also permitted all lending
institutions to allow a deferment of three months on payment of interest in respect
of working capital facilities sanctioned in the form of cash credit/overdraft of all such
facilities outstanding as on March 1, 2020.
 Easing of Working Capital Financing: All lending institutions are permitted by RBI to
recalculate drawing power by reducing margins and/ or by reassessing the working
capital cycle for the borrowers in respect of working capital facilities sanctioned in the
form of cash credit/overdraft.
 Support to Real Estate Sector: RBI has permitted an additional time of one year for
the extension of the date for commencement of commercial operations (DCCO) in
respect of all loans provided by NBFCs to the real estate sector.

DECISIONS IN RESPECT OF FINANCIAL

MARKETS
 In recent times, RBI has recognized the growth
of the offshore Indian Rupee (INR) derivative market -
the Non-Deliverable Forward (NDF) market and
decided to remove segmentation between the
onshore and offshore markets.
 RBI has now permitted banks in India to
participate in the NDF market from 1st June 2020
through their branches in India, their foreign branches
or through their International Financial Services
Centre (IFSC) Banking Units (IBUs).
RBI MONETARY POLICY TOOLS

REPO
CRR
RATE

REVERSE
REPO SLR
RATE

IMPACT ON VARIOUS SECTORS

1. Financials:
With low-interest rate levels, the banks have the option to lend at a lower interest rate in
sync with the Repo or to lend at the existing levels.
Suppose the cost of funds decrease due to lower repo rate, and it continued to lend at
previous lending rates then the margins of the banks tend to expand for a few quarters.

Also, in few banks where it lowers the lending rate, more customers are attracted to
borrow from them, thus increasing the Advances or the Loan book. Higher interest rates
impact just the opposite way.
 2. Real estate:
Real Estate is a capital-intensive sector which means that there is a need for a huge
amount of funds if one desires to buy a property.

During times of high-interest rates, being a retail customer, we would definitely tend to
avoid Home Loans to buy a property or land. Thus, the demand for the real estate sector
would be low during these times.
And suppose, there is a low-interest-rate environment then, we won’t hesitate to buy
home loans and pay our EMIs as the installments will below. During the lower interest
rate environment, we can expect better growth in the Real Estate sector.

3. Consumer Discretionary:
These are basically the non-essential items, for example, Cars, bikes, etc. Suppose we are
in a situation where the interest rate is high then we would want to defer from buying a
car at the moment as the EMIs would be high, but a low-interest rate situation would
definitely be a positive for this segment.

So, I hope you all have got an idea as to how the RBI uses the monetary policy to control
the flow of money into the system.

There are a lot of other things which it takes into consideration while making the
decisions. However, that is not the scope of this report.

In this blog, we have known the tools the RBI has and how it uses to control the money in
the economy.

Along with it, how does it affect us both as a borrower and as an investor.

CONCLUSION
Every economy comprises of different sectors with divergent characteristics. These different
sectors respond heterogeneously to identical unanticipated macroeconomic stimuli. Using a
Vector Auto regression model this study finds that the impact of a monetary policy shock at
the sectoral level is heterogeneous with manufacturing being the most responsive. The
sectors such as Manufacturing, Mining and Quarrying, Construction and Trade are the fastest
to respond. The differential sectoral effects depend upon factors such as capital intensity,
interest sensitivity, export-orientation, production planning strategies among others. The
sectors also differ in terms of the most effective channel of monetary transmission. The
interest rate channel has emerged as the most efficient channel of the monetary policy
transmission in most of the sectors followed by the credit channel. Therefore, the
heterogeneous sectoral responses indicate the need for a more sector-specific monetary
policy.
ELECTION
An election is a formal group
decision-making process by which
a population chooses an individual
or multiple individuals to
hold public office.
Elections have been the usual
mechanism by which modern
representative democracy has
operated since the 17th century.
Elections may fill offices in the
legislature, sometimes in the
executive and judiciary, and for
regional and local government.
This process is also used in many
other private and business
organisations, from clubs to
voluntary associations and
corporations.
Elections are held in a variety of
political, organizational, and
corporate settings. Many
countries hold elections to select
people to serve in their
governments, but other types of
organizations hold elections as
well. For example, many
corporations hold elections
among shareholders to select a
board of directors, and these
elections may be mandated by
corporate law.
General elections were held in India in seven phases from
11 April to 19 May 2019 to elect the members of the 17th
Lok Sabha. The Bhartiya Janata Party received 37.36% of
the vote, the highest vote share by a political party since
the 1989 general election, and won 303 seats, further
increasing its substantial majority.
Election or any political event brings anomaly and causes
abnormality in the natural settings of the market. In a liquid
market at any given time, the security price fully reflects all
available information. The stock prices react to the
information of election results and cause short term
volatility. It was found that the highest average return
occurred once the result was announced and subsequently
settled down in a month. High variability was observed in
the week or say seven days period after the election result
announcement. So, the investors should remain cautious
and alert while investing in this time frame. One can
benefit with the application of short-term market strategy
during this period.
 The benchmark BSE Sensex and Nifty50 indices hit
intraday record highs and the Indian rupee strengthened
after the exit polls and on the day the election results were
announced.
 On 20 May 2019, the first phase was started when in exit
polls BJP led NDA got an absolute majority and a lot of
booms in the share market was seen. The Sensex and Nifty
that day had the biggest momentum of one day in the last
10 years.
 On 23rd May, the stock market opens with a benchmark indices. Sensex and
Nifty opening at record highs as the early trend showed:-
- The S&P BSE Sensex surged as 1,014.75 points to hit an all-time high of
40,124.96.
- The Nifty 50 index climbed as much as 303.25 points to hit a record high of
12,041.15 Or the first time on the National Stock Exchange
- Nifty Bank Index crossing 31,000 marks.
- Sector wise all the indices on NSE were trading with solid gains with Nifty
PSU gains followed by the private banks.
- In the broader market, the S&P BSE Midcap index was trading over 1.5 per
cent higher while the S&P BSE Smallcap was up 1.65 per cent up.
- On 23rd May,2019, Asian shares were trading with MSCI's broadset index
of Asia-Pacific shares outside easing 0.01 percent.
- The US stocks ended lower in the overnight trade on the Wall Street. - If
we see commodities, oil prices dropped.
SEASONAL CHANGES
The climate of India consists of a
wide range of weather conditions
across a vast geographic scale and
varied topography. Based on
the Koppen system, India hosts six
major climatic sub types, ranging
from arid deserts in the west,
alpine tundra and glaciers in the
north, and humid tropical regions
supporting rain forests in the
southwest and the island
territories. Many regions have
starkly different microclimates,
making it one of the most
climatically diverse countries in
the world. The country's
meteorological department
follows the international standard
of four seasons with some local
adjustments: winter (December to
February), summer (March to
May), monsoon (rainy) season
(June to September), and a post-
monsoon period (October and
November).
 Winter
 Summer
 Monsoon
 Autumn
MONSOON
Southwest monsoon is perhaps the most important feature
of India’s climate, because it is very critical for Indian
agriculture. Therefore, long-term trends in the southwest
monsoon overlap with economic security.
A recent study by IMD on monsoon variability over a 30-
year period (1989-2018) is a wakeup call. UP, Bihar and
West Bengal are three of five states that have shown a
significant decreasing trend in the southwest monsoon.
These states have a large bearing on India’s agriculture
output.
With around 55% of India’s arable land dependent on
precipitation, the amount of rainfall during the current
monsoon season could sway economic activity in the
agriculture sector and industries linked to it.
The shift in monsoon may entail grave consequences for
India’s economy, food systems and people’s well-being.
Therefore, remedial measures must be taken before it is
too late.
Monsoon & Agriculture
 The Southwest monsoon plays a crucial role in India’s
agriculture and affects the livelihood of a fifth of the
world’s population.
 About 80 per cent of the annual precipitation over India
occurs during the summer period, supplying water to crops
during the prime agricultural season.
 Monsoon friendly crops with a high requirement of
water like sugarcane, jute and paddy can easily be
cultivated during southwest monsoon.
 The agriculture sector in India is both economically and
politically important. The industry accounts for around 14%
of the country’s $2.7 trillion economy and 42% of total
employment.
 Further, about one-third of India’s manufacturing
output which makes up around 18% of the country’s gross
domestic product is linked to turning agricultural products
into food.
 Therefore, too much rainfall or too little or a volatile
monsoon pattern, can damage crops.
Impact of Changing Monsoon
 Depletion of Water Table: In India, a little over 50% of India’s net sown area is under
rainfed farming and a large part of the irrigated area depends on groundwater
extraction through borewells, which needs to be recharged with the groundwater.

 In the event of a poor monsoon, these aquifers may not get adequately
recharged, leading to water crisis.

 Further, according to a NITI Aayog’s report , nearly 21 Indian cities — including

New Delhi, Hyderabad and Chennai — could run out of groundwater by 2020.

 Fiscal Burden: Multiple crop failures may require the government to actively support
farmers. Most likely, it may prompt the government to raise minimum support prices
for all of the current season’s crops to help support farmers’ incomes.

 This will have a diminishing effect on investments into agricultural

investments.

 Impacting Electricity Generation: Monsoon rains can be

harnessed as hydropower, a valuable energy resource.
Hydropower currently provides 25% of India’s
electricity.

 Reservoirs are filled during the southwest

monsoon rains and then the water is gradually
released through dams, turning turbines to
create electricity year-round.

 During years when there is little monsoon

rainfall, the reservoirs are not replenished,
limiting the amount of hydroelectric power
produced during the year.

 Impacting Inflation: Normal monsoon rains keep a check on food inflation due to
availability of food produce. However in a situation of drought, prices soar
significantly.

 Also, if a poor monsoon results in less crop output, the country may need to
import.

 It also impacts as many as a dozen sectors which depend on monsoon either

directly or indirectly.
  Rural Businesses and Industries: FMCG
products, two-wheelers and to some extent four-
wheelers, tractors, agrochemicals, etc. are the worst
sufferers in case of a weak monsoon season.

 Rainfall-dependant rural spending power

decides the demand for the aforementioned segment.
 Besides, higher production of agricultural raw
materials assists companies in dealing with packaged
products. Also, sectors such as fertiliser and irrigation
stand to gain with a good monsoon.

 Construction: Rural housing is a monsoon favoured

sector. Therefore, construction-related industries
such as cement and infrastructure companies have
booming business during good monsoon. While in
case of a failing or bad rainfall hinders customer
purchasing powers leading to lowering stock values
and investor losses.

 The Stock Market: Monsoon is a major macroeconomic

event and is dutifully tracked by investors, the
government, and common citizens, given its substantial
impact on the economy and also its unpredictability. Poor
rainfall forecasts are showcased in the equity market the
following day with dips, while normal rainfall forecasts
show gains in the stock market. The larger the variation
from the average monsoon, the sharper is the stock market
reaction.
Probability forecast for the seasonal rainfall over India: 2022 SW
monsoon season

 MME forecast suggests that

monsoon rainfall during monsoon
season(June-September), 2022
averaged over the country as a whole
is likely to be normal (96-104% of LPA)
 The LPA of the June to September
period rainfall over the country as a
whole for the period 1971-2020 is
87cm.
 Normal to above normal seasonal
rainfall most likely over many areas of
northern peninsula and central India,
along foothills of the Himalayas and
some parts of northwest India.
 Below normal rainfall is likely
over many parts of Northeast India,
some parts of northwest India and
southern parts of the South Peninsula.

 The white shaded areas within

the land area represent climatological
probabilities

The figure illustrates the most likely categories as well as their probabilities. The white
shaded areas represent climatological probabilities. The probabilities were derived using the
MME forecast prepared from a group of coupled climate models having good skill over the
Indian monsoon region. (Tercile categories have equal climatological probabilities, of
33.33% each).

Summary of the Forecast for the 2022 Southwest Monsoon Rainfall

 Southwest monsoon seasonal (June to September) rainfall over the country as a whole
is most likely to be normal (96 to 104 % of Long Period Average (LPA)).
 Quantitatively, the monsoon seasonal (June to September) rainfall is likely to be 99%
of the Long Period Average (LPA) with a model error of ± 5%. The LPA of the season
rainfall over the country as a whole for the period 1971-2020 is 87 cm.
  Currently, La Niña conditions are prevailing over the equatorial Pacific region. As other
climate models forecast, La Niña conditions are likely to continue during monsoon
season.
 At present, neutral IOD conditions prevail over the Indian Ocean and the latest
forecast indicates that neutral IOD conditions would continue till the beginning of
southwest monsoon season. Thereafter, enhanced probability for negative IOD
condition is predicted.
 IMD will issue the updated forecasts for monsoon season rainfall towards end of May
2022. In addition to update for the April forecast, forecasts for monsoon season (June-
September) rainfall for four geographical regions, monsoon core zone and forecast for
the month of June also will be issued.

Correlation between monsoon and Sensex

The India Meteorological Department on Monday predicted rains at 96 per cent of the long
period average. Markets have seldom moved in line with rainfall, shows an analysis of past
years' data. The correlation between the India Meteorological Department’s April predictions
and calendar year returns on market barometer S&P BSE Sensex is -0.34, suggesting that
monsoons have had limited effect on market returns for a given year. A value of one would
indicate perfect positive correlation, which would mean that the two values move perfectly
in sync. A value of -1 would indicate perfect negative correlation. This would mean that one
value increases whenever the other decreases. A value of zero suggests that the two don’t
move together at all.

Monsoon impact on sectors

A good/normal monsoon or a bad/deficient monsoon has a high impact on some sectors in
the stock market of which some sectors are directly dealing in the agriculture market like
seeds, agro-chemical, and fertilizers while some are indirectly benefited from monsoons like
FMCG and auto space. Microfinance companies are affected as deficient/excess rains result
in NPAs, as farmers do not repay loans owing to loss of income. Such events are sometimes
followed by loan waivers announced by the Government which potentially disturbs the credit
discipline of borrowers.

Impact of bad monsoon

The impact of an abnormal monsoon can be tremendous and the damages can cost in
millions. An abnormal monsoon can result in the loss of seasonal employment, shortage of
food and income. If agricultural production goes down in India then the direct impact would
be a decline in the income of people. The economy as a whole and the GDP will get affected.
This factor could lower production of food leading to rise of the prices of essential
commodities.
How traders and investors can benefit from a good monsoon.
There are various reasons why stock market investments should be made during the
monsoons. Here are the top ones that you should certainly consider.

 Enhanced consumer product demand- Monsoons are clear indicators of increased

demand for household items in both rural and urban areas. It has always been
observed that during monsoons, people usually spend higher amounts, particularly in
rural zones where the season implies the earnings season as well. This helps greatly in
enabling companies to sell household products in higher volumes while creating
enhanced demand as well. Stocks of entities working in the FMCG space naturally
perform better in such a scenario.

 Exposure is not very high for overall risks-

Whenever you are investing capital based
on a particular theme for the long haul,
risks linked to the investment will
naturally be diversified greatly, making
these investments suitable for those who
are not looking at bearing higher stock
market risks. In most cases, short term
investments and intraday trading come
with the highest risks which go down
automatically when you purchase quality
stocks for longer durations.

 Chemical companies and fertilizer sectors benefit- Every year during monsoons,
rodents, lizards, insects and other pests also become menaces for farms, crops and
homes alike. Chemical products are required for households while farmers require
insecticides, fertilizers and pesticides for keeping their crops safe from pests and
flourishing throughout the season. The impact is hugely positive for chemical and
fertilizer companies and they usually witness higher sales throughout the monsoons.

 Proper analysis is always beneficial- Whenever an investor attempts to cash in on the

beneficial effect of the monsoon on the Indian stock markets, there is sizable
fundamental analysis and homework that goes into it since this is a theme-based
investment. Proper analysis of companies and sectors that benefit from a good
monsoon should help greatly in lowering risks along with analyzing performance
patterns over the years as well. Availability of sufficient insights and material by way
of research reports is greatly beneficial for investors in this case.

“A little homework is always par for the course while making stock market investments.”
UNEMPLOYMENT
Unemployment, according to
the OECD (Organisation for
Economic Co-operation and
Development), is people above a
specified age (usually 15)] not
being in paid employment or self-
employment but currently
available for work during
the reference period.
Unemployment is measured by
the unemployment rate, which is
the number of people who are
unemployed as a percentage of
the labour force (the total number
of people employed added to
those unemployed).
Unemployment can have many
sources, such as the following:
 new technologies and inventi
ons
 the status of the economy,
which can be influenced by
a recession
 competition caused
by globalization and internati
onal trade policies of
the government
 regulation and market
Employment generation coupled with improving
employability is the priority of the Government.
Accordingly, the Government of India has taken various
steps for generating employment in the country.
The Government of India has announced the following
scheme:
1. Aatmanirbhar Bharat Rojgar Yojana (ABRY)
ABRY has been launched with effect from 1st October,
2020 as part of Atmanirbhar Bharat package 3.0 to
incentivize employers for creation of new employment
along with social security benefits and restoration of loss
of employment during Covid-19 pandemic. This scheme
being implemented through the Employees’ Provident
Fund Organisation (EPFO), seeks to reduce the financial
burden of the employers and encourages them to hire
more workers. The terminal date for registration of
beneficiaries has been extended from 30.06.2021 to
31.03.2022. Benefits have been provided to 51.95 lakh
beneficiaries through 1.35 lakh establishments till
12.03.2022.
2. Pradhan Mantri Mudra Yojana (PMMY)
PMMY is being implemented by the Government for
facilitating selfemployment. Under PMMY, collateral free
loans upto Rs. 10 lakh, are extended to micro/small
business enterprises and to individuals to enable them to
setup or expand their business activities. Upto 11.03.2022,
34.08 crore loans were sanctioned under the scheme.
3. Garib Kalyan Rojgar Abhiyaan (GKRA)

Government had launched the Garib Kalyan Rojgar Abhiyaan (GKRA) of 125 days on 20th June,
2020 to boost employment and livelihood opportunities for returnee migrant workers and
similarly affected persons including youth in rural areas, in 116 selected districts across 6
States of Bihar, Jharkhand, Madhya Pradesh, Odisha, Rajasthan and Uttar Pradesh. The
Abhiyaan has achieved an employment generation of 50.78 crore persondays with a total
expenditure of Rs. 39,293 crore.

4. Skill India Mission

It is implemented by the Ministry of Skill Development and Entrepreneurship with a focus to

provide skilling to one crore people under Short Term Training (STT), Recognition of Prior
Learning (RPL), and Special Project (SP) across the country for four years with an outlay of
Rs. 12,000 crores. Under the scheme, a short-duration skill development training program is
being imparted to all prospective candidates including candidates belonging to BPL in the
country.

SCHEMES INTRODUCED BY INDIAN GOVERNMENT FOR STARTUPS

1. Start-up India

Launched by Prime Minister Narendra Modi in 2016, the scheme falls under the purview of
the Department of Industrial Policy and Promotion. Aims to support Indian entrepreneurs
increating 10 lakh mobile app start-ups. The flagship programme under Start-up India is the
MUDRA loan scheme (Pradhan Mantri Mudra Yojana). This programme offers microfinance
loans at low interest to emerging entrepreneurs from low socioeconomic strata. Funding of
Rs. 20,000 crores have been allotted for this scheme.

2. ATAL Innovation Mission

The government scheme, set up by Niti Aayog, was created to promote an innovative culture
and the development of the spirit of entrepreneurship across India. The scheme aims to
create cooperation between state, central, and local innovation schemes and implement
entrepreneurship spirit from schools to corporates by developing world-class Atal Incubators
(AICs). This would help to address commercial and social entrepreneurship ventures in India.
3. e-Biz Portal

Founded in 2013, this is the first online platform that allows government-to-business (G2B)
communication. e-Biz's portal primary purpose was to create an entrepreneurship friendly
atmosphere in the country. The platform has been developed by Infosys and has launched29
services across 5 states in India. It is a single communication online forum for Indian business
people and investors for conducting transactions, clearances, and activities related to both.

4. Multiplier Grants Scheme (MGS)

MGS was launched under the Department of Electronics and Information Technology (DeitY)
for promoting integrated research and development (R&D) between industry and educational
institutions for developing products and packages. Under this scheme, the government
provides financial assistance at 2x times the amount contributed by the industry, provided
the industry supports R&D of products that get marketed at the institutional level.

MGS encourages and hastens the development of indigenous products/services. Government

grants are available up to Rs. 2 crores per project with project tenure limited to around 2
years. For industrial collaborations, the cost is limited to Rs. 4 crores with a maximum tenure
of 3 years.

5. Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

The government established CGTMSE for providing collateral-free business loans to MSME
and start-ups. The scheme allows business units to get collateral-free loans at a low rate of
interest up to a maximum of Rs. 100 lakhs under a tie-up with SIDBI (Small Industries
Development Bank of India) for promoting new businesses and re-launching existing ones.
The loan is provided mainly for manufacturing companies, either as working capital or term
loan.

6. Software Technology Park (STP)

STP scheme has been established as a 100% export-oriented programme for promoting and
exporting computer software and professional services through communication networks or
physical media. The scheme focuses solely on computer software. 100% Export Oriented
Units (EOU) and Export Processing Zones (EPZ) concepts for forming Science
Parks/Technology Parks are covered under this scheme.
7. Loan For Rooftop Solar Pv Power Projects

The scheme is committed to the development of 40,000 MWp of Grid-Interactive Roof top
Solar PV Plants over the next five years for increasing reliance on non-conventional energy
sources. Such rooftop solar PV plants, with capacities between 1 kW - 500 kW are expected
to be installed in various sectors like residential, commercial, and the like across India. Under
the scheme, a subsidy of 15% is provided to organisations or individual enterprises for such
plants.

8. New-Gen Innovation and Entrepreneurship Development Centre (New-Gen IEDC)

The New-Gen IEDC scheme has been launched by the National Science and Technology
Entrepreneurship Development Board. The scheme aims to instil a spirit of creativity and
entrepreneurship among the youth in India through various methods like counselling,
coaching, and assistance. There is also provision for supporting and encouraging
entrepreneurship.

9. Dairy Processing and Infrastructure Development Fund (DIDF)

DIDF is a fund constituted under NABARD in 2017, wherein milk unions, multi-state milk
cooperatives, state dairy federations, milk-producing enterprises, and NDDB subsidiaries
project's eligibility criteria can avail a loan. The loan component consists of 80% with the
borrower to pay the remaining 20% payment. Interest is charged at 6.5 % p.a. and loan tenure
is decided based on the amount of money borrowed. The loan repayment is guaranteed by
the respective state government, and in case of borrower default, the state government steps
in to contribute the defaulted portion.

Submitted by,
SREEJITH E M
JUNIOR RESEARCH ANALYST
22FMCG30B15