MESSAGE FROM PRINCIPAL

Our Training System has been providing support to field functionaries

in updating knowledge through different channels in form of
Promotion Materials, Online Mock test series, Podcasts, E-learning
and many more. We have already lunched “Union Learnathon : Learn
to Lead (L 2 L)” to supplement the training and development need of
staff Members.
It gives me great pleasure to note that the training system has
collected and compiled the latest Economic Affairs in the name and
style “Latest Economic Affairs at your Fingertips” in digital format.

I congratulate the concerned Faculty Members for coming up with a

handy reference and concise material that will be of immense use not
only for the forthcoming Written Examination but also to Group
Discussion as well as Interview. All are requested to take the
maximum benefits of this Material along with all other materials
under “Union Learnathon : Learn to Lead (L 2 L)” initiative.

With best wishes.

Shri Hrishikesh Mishra

(Principal, Staff College Bengaluru)

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Contents
1.Central Bank Digital Currency .................................................................................................... 4
2 Draft Framework for Cross Border Insolvency .................................................................... 5
3.Zero Defect Zero Effect Scheme ............................................................................................... 6
4.India-US Digital Tax Deal ............................................................................................................. 7
5.RBI Integrated Ombudsman Scheme...................................................................................... 9
6.RBI’s Retail Direct Scheme ........................................................................................................ 10
7.CBIC Guidelines on Blocking Input Tax Credit ................................................................... 11
8.RBI Committee on Asset Reconstruction Companies ...................................................... 11
9.Prompt Corrective Action revised framework..................................................................... 12
10.Sovereign Credit Ratings ......................................................................................................... 13
11.Economic Slowdown in China ................................................................................................. 14
12.Export Credit Guarantee Corporation (ECGC) ................................................................. 14
13.New Bad Bank Structure .......................................................................................................... 15
14.Stablecoins .................................................................................................................................... 16
15.PLI Scheme for Auto & Drone Sector.................................................................................. 17
16.India -Singapore linkage on Digital Payment Systems ................................................ 18
17.IRDAI (Trade Credit Insurance) Guidelines, 2021 ......................................................... 19
18.Account Aggregator System ................................................................................................... 20
19.No Entity Can Store Card Data: RBI ................................................................................... 21
20.National Monetisation Pipeline ............................................................................................... 21
21.EASE 4.0......................................................................................................................................... 23
22. Faceless Assessment Scheme: Income Tax ................................................................... 24
23.Pradhan Mantri Kisan SAMPADA Yojana ............................................................................ 25
24 Sovereign Right to Taxation(Doing Away With Retrospective Taxation) .............. 25
25.E-RUPI: Voucher Based Digital Payment System .......................................................... 25
26.National Consumer Disputes Redressal Commission: .................................................. 26
27.New Framework for Payment Systems Operators ......................................................... 26
28.Sweat Equity Rules: SEBI........................................................................................................ 27
29.New Development Bank ........................................................................................................... 27
30. RoDTEP Scheme......................................................................................................................... 28
31.Small Finance Bank .................................................................................................................... 29
32.Ubharte Sitaare Alternative Investment Fund................................................................. 29
33.Financial Inclusion Index ......................................................................................................... 30

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34.TAPAS Initiative ........................................................................................................................... 31
35.Factoring Regulation (Amendment) Bill, 2021 ................................................................ 31
36.Non-Bank PSPs to Join Centralised Payment System .................................................. 33
37.DICGC Bill, 2021 ......................................................................................................................... 34
38. Stand Up India Scheme .......................................................................................................... 34
39.External Benchmarks Lending Rate ..................................................................................... 35
40.Foreign Card Payment Network Companies Barred: RBI ............................................ 37
41.India’s Covid-19 Emergency Response Package: Phase II ........................................ 37
42.Agriculture Infrastructure Fund............................................................................................. 38
43.Authorised Economic Operators Programme ................................................................... 39
44.Open Network for Digital Commerce .................................................................................. 40
45.Ministry of Cooperation: A New Push to Co-operatives ............................................... 40
46.International MSMEs Day ........................................................................................................ 41
47.Agristack: The New Digital Push in Agriculture .............................................................. 42
48.Toycathon 2021 ........................................................................................................................... 43
49.Biotech-KISAN Programme ..................................................................................................... 43
51.Economic Relief Package after Covid – Second Wave .................................................. 44
52.Amended Technology Up-gradation fund Scheme (ATUFS) ...................................... 45
53.Personal Guarantors Liable for Corporate Debt .............................................................. 46
54. Spot Gold Exchange ................................................................................................................. 46
55.SWAMIH Fund .............................................................................................................................. 47
56.Startup India Seed Fund Scheme……………………………………………………………………47

57.G-Sec Acquisition Programme……………………………………………………………………… .47

58.Economic Survey 2021-22…….…………………………………………………………………………50

59.UnionBudget-2021-22………………………………………………………………………………………58

60.Fifteenth Finance Commission 2021-26………………………………………………………….67

61.Points to remember.…………………………………………………………………………………………70

62.Objective Questions and Answers……………………………………………………………………76

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1.Central Bank Digital Currency

The government of India plans to introduce a Bill on cryptocurrencies in the

current Parliament session that seeks to prohibit all private cryptocurrencies
in India with certain exceptions. With this recent development, the Reserve
Bank of India (RBI) has proposed amendments in the Reserve Bank of India
Act, 1934, which empowers it to launch a Central Bank Digital Currency
(CBDC).

After this amendment the RBI will enhance its scope of the definition of ‘bank
note’ to include currency in digital form.

Brief history of cryptocurrencies:

El Salvador, a small coastal country in Central America, has become the first
in the world to adopt Bitcoin, as legal tender. Britain is also exploring the
possibility of creating a Central Bank Digital Currency (Bitcoin). In 2020,
China started testing its official digital currency which is unofficially called
“Digital Currency Electronic Payment, DC/EP”.In April 2018, RBI banned
banks and other regulated entities from supporting crypto transactions after
digital currencies were used for frauds. In March 2020, the Supreme Court
struck down the ban as unconstitutional.

Why CBDC?

CBDC is a digital form of Fiat Currency (Fiat money is a government-issued

currency that is not backed by a commodity such as gold) which can be
transacted using wallets backed by blockchain technology and is regulated
by the central bank. It is a legal tender issued by a central bank in a digital
form. Though the concept of CBDCs was directly inspired by bitcoin, it is
different from decentralised virtual currencies and crypto currency, which
are not issued by the state and lack the ‘legal tender’ status.

Benefits of Central Bank Digital Currency (CBDC):

The need for a sovereign digital currency arises due to unregulated crypto
currency market which is not regulated by any legal entities and there is a
need of digital currency which is backed by some government regulations.

The Main benefits of CBDC are:

❖ It will reduce dependency on cash, higher seigniorage due to lower

transaction costs, and reduced settlement risk.
❖ It would also possibly lead to a more robust, efficient, trusted,
regulated and legal tender based payments option.

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 ❖ It will help the user to conduct the domestic and foreign transfer
without the help of any third party or bank.
❖ It will also minimize the damage to the public from the usage of private
virtual currencies.
❖ It will replace the physical currency that would reduce the cost of
printing, transporting and storing paper currency and enabling real
time payments without any interbank settlements.
❖ It would also possibly lead to a more robust, efficient, trusted,
regulated and legal tender based payments option.

Challenges:

The idea of launching CBDC is a welcome step but it has some key question
which has to be answered like:

❖ The scope of CBDCs,

❖ The underlying technology.
❖ The validation mechanism and distribution architecture which has
to be used.
❖ Also, legal changes would be necessary as the current provisions
have been made keeping in mind currency in a physical form under
the Reserve Bank of India Act. Consequential amendments would
also be required in the Coinage Act, Foreign Exchange Management
Act (FEMA) and Information Technology Act.
❖ Moreover, the Sudden flight of money from a banks which are
currently under stress due to pandemic and increasing NPA is
another point of discussion.

2 Draft Framework for Cross Border Insolvency

The Ministry of Corporate Affairs (MCA) has published a draft framework for
cross border insolvency proceedings based on the UNCITRAL (United Nations
Commission on International Trade Law) model under the Insolvency and
Bankruptcy Code (IBC). It is proposed to be made applicable for both
corporate debtors as well as personal guarantors to such debtors.

Cross border Insolvency Proceedings: The cross-border insolvency

process pertains to those debtors having assets and creditors overseas. It is
relevant for the resolution of distressed companies with assets and liabilities
across multiple jurisdictions.

A framework for cross border insolvency proceedings allows for the location
of such a company’s foreign assets, the identification of creditors and their

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claims and establishing payment towards claims as well as a process for
coordination between courts in different countries.

Importance

❖ It would enable Indian firms to claim their dues from foreign

companies, while allowing foreign creditors to recover loans from
Indian companies
❖ It will also bring overseas assets of a domestic corporate debtor into
consideration of insolvency resolution in India and will avoid delays in
resolution of stressed assets.
❖ It will help foreign branches of Indian banks to recover their dues in
India
❖ The inclusion of a cross-border insolvency chapter in the IBC would be
a major step forward and would bring the law on par with that of
matured jurisdictions.

Insolvency and Bankruptcy Code

It is a reform enacted in 2016. It amalgamates various laws relating to the

insolvency resolution of business firms.

Insolvency Bankruptcy
It is a situation where individuals orIt is a situation whereby a court of
companies are unable to repay their competent jurisdiction has declared
outstanding debt. a person or other entity insolvent,
having passed appropriate orders
to resolve it and protect the rights
of the creditors. It is a legal
declaration of one’s inability to pay
off debts.
Current Status in IBC: While foreign creditors can make claims against a
domestic company, the IBC currently does not allow for automatic
recognition of any insolvency proceedings in other countries.

3.Zero Defect Zero Effect Scheme

It is the scheme launched in 2016 by the Ministry of MSME, and is an

integrated and comprehensive certification system. The scheme accounts for
productivity, quality, pollution mitigation, energy efficiency, financial status,
human resource and technological depth including design and IPR in both
products and processes.

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Its mission is to develop and implement the ‘ZED’ culture in India based on
the principles of Zero Defect & Zero Effect.

Zero Defect:
❖ The Zero-defect concept is focusing on the customer.
❖ Zero non-conformance or non-compliance.
❖ Zero waste.

Zero Effect:
❖ Zero air pollution, liquid discharge, solid waste.
❖ Zero wastage of natural resources.

According to the recent data, as many as 23,948 Micro, Small and Medium-
sized Enterprises (MSMEs) had registered with intent to adopt the principle
of the Zero Defect Zero Effect Scheme (ZED).

Implementation Agency of the Scheme

The Quality Council of India (QCI) is a non-profit organization registered

under the Societies Registration Act of 1860. It has been appointed as the
National Monitoring & Implementing Unit (NMIU) for implementation of ZED.

ZED Certification\Rating

There are 50 parameters for ZED rating and additional 25 parameters for
ZED Defence rating under ZED Maturity Assessment Mode.The Rating is a
weighted average of the marks obtained on each parameter.

The MSMEs will be assessed & rated on defined enabler & outcome
parameters on operational level indicators and organisational level indicators
at the operational level. Based on the assessment, the MSME will be ranked
as Bronze-Silver-Gold-Diamond-Platinum enterprises.

Objective of the Scheme:

❖ To develop an Ecosystem for Zero Defect Manufacturing in MSMEs.
❖ To promote adaptation of quality tools/systems and energy efficient
manufacturing.
❖ Enable MSMEs for manufacturing of quality products.
❖ To encourage MSMEs to constantly upgrade their quality standards in
products and processes.
❖ To develop professionals in the area of ZED manufacturing and
certification.
❖ To support the ‘Make in India’ campaign.

4.India-US Digital Tax Deal

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India and the United States have agreed for a transitional approach on
equalisation levy or digital tax on e-commerce supplies beginning from 1st
April 2022.India and US has agreed that:

❖ India will continue to impose the levy till March 2024, or till the
implementation of the Pillar 1 of the Organisation for Economic
Cooperation and Development (OECD) agreement on taxing
multinationals and cross-border digital transactions.
❖ The US will terminate the trade tariff actions it had announced in
response to the levy and will not take any further actions.
❖ India and the U.S. will remain in close contact to ensure that there is
a common understanding of the respective commitments and
endeavour to resolve any further differences of views on this matter
through constructive dialogue.

Background

in January 2021, the Office of the United States Trade Representative (USTR)
had said that the Digital services taxes adopted by India, Italy and Turkey
discriminate against US companies.

On 8th October, 2021, 136 countries, including India, agreed to enforce a

minimum corporate tax rate (Global tax Deal) of 15%, as well as an
equitable system of taxing profits of big companies in markets where they
are earned.

The deal requires countries to remove all digital services tax and other similar
unilateral measures. After that, the US, Austria, France, Italy, Spain and the
United Kingdom reached an agreement on a transitional approach to existing
unilateral measures while implementing Pillar one.

Global Tax Deal

It is tailored to address the low effective rates of tax shelled out by some of
the world’s biggest corporations, including Big Tech majors such as Apple,
Alphabet and Facebook. The global minimum tax rate would apply to
overseas profits of multinational firms with USD 868 million in sales globally.
The Global Tax Deal is based on 2 pillars:

Pillar 1 (Minimum tax and subject to tax rules): Governments could still
set whatever local corporate tax rate they want, but if companies pay lower
rates in a particular country, their home governments could “top up” their
taxes to the 15% minimum, eliminating the advantage of shifting profits.

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Pillar 2 (Reallocation of additional share of profit to the market
jurisdictions): Allows countries where revenues are earned to tax 25% of
the largest multinationals’ so-called excess profit – defined as profit in excess
of 10% of revenue.

India’s Tax on Digital Companies

The government had moved an amendment in the Finance Bill 2020-21

imposing a 2% Digital Service Tax (DST) on trade and services by non-
resident e-commerce operators with a turnover of over Rs. 2 crores. It
effectively expanded the scope of equalisation levy which till 2020 is only
applied to digital advertising services.

Earlier, the equalisation levy (at 6%) was introduced in 2016 and imposed
on the revenues generated on business-to-business digital advertisements
and allied services of the resident service provider. The new levy came into
effect from 1st April 2020. E-commerce operators are obligated to pay the
tax at the end of each quarter.

5.RBI Integrated Ombudsman Scheme

The RBI integrated ombudsman scheme will provide redressal of customer

complaints involving deficiency in services rendered by RBI regulated entities
viz. banks, NBFCs (Non-banking Financial Companies) and pre-paid
instrument players if the grievance is not resolved to the satisfaction of the
customers or not replied within a period of 30 days by the regulated entity.

It amalgamates the three ombudsman schemes of RBI:

i. Banking ombudsman scheme of 2006.

ii. Ombudsman scheme for NBFCs of 2018.
iii. Ombudsman scheme of digital transactions of 2019.

It also includes non-scheduled primary co-operative banks with a deposit

size of Rs 50 crore and above. The integrated scheme makes it a “One Nation
One Ombudsman’ approach and jurisdiction neutral. It is expected to ensure
uniformity and streamlined user-friendly mechanisms which will add value
to the scheme and bring customer delight and financial inclusion.

Ombudsman history: The first ombudsman scheme was rolled out in the
1990s. The system was always viewed as an issue by consumers.
Ombudsman is a official who deals with complaints made by ordinary people
against public organizations. This concept of Ombudsman has been taken
from Sweden.

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In India an Ombudsman is appointed to resolve grievances in the following
sectors.
❖ Insurance Ombudsman
❖ Income Tax Ombudsman
❖ Banking Ombudsman
Features of the scheme

❖ The Scheme defines ‘deficiency in service’ as the ground for filing a

complaint, with a specified list of exclusions.
❖ The scheme is jurisdiction neutral and a centralised receipt and
processing centre has been set-up in Chandigarh for initial handling of
complaints in any language.
❖ RBI had created a provision for the use of Artificial Intelligence tools
so that banks and investigating agencies could coordinate in a better
way in the fastest time possible.
❖ The bank customers will be able to file complaints, submit documents,
track status, and give feedback through a single email address.
❖ The regulated entity will not have any right to appeal in cases where
an award is issued by the ombudsman against it for not furnishing
satisfactory and timely information.
❖ Appellate Authority RBI’s Executive Director-in charge of Consumer
Education and Protection Department would be the Appellate Authority
under the integrated scheme.

6.RBI’s Retail Direct Scheme

The Prime Minister of India has launched the Reserve Bank of India (RBI)-
Retail Direct Scheme to open up the Government bond market for the retail
investors which placed India in a list of few countries which are offering such
facilities. This move is aimed at diversifying the government securities
market, which is dominated by institutional investors such as banks,
insurance companies, mutual funds and others.

History

In February 2021, RBI proposed to allow retail investors to open gilt accounts
(It is an account which is used for dealing with treasury bills or government
securities) with the central bank to invest in Government securities (G-secs)
directly. Under the scheme, retail investors (individuals) will have the facility
to open and maintain the ‘Retail Direct Gilt Account’ (RDG Account) with the
RBI.

Significance

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 ❖ It gives small investors class, salaried class, small traders had to invest
directly in the Government bonds/securities without any intervention
of banks or mutual funds managers.
❖ It will make the process of G-sec trading smoother for small investors
therefore it will raise retail participation in G-secs and will improve ease
of access.
❖ This scheme will promote financialization of a vast pool of domestic
savings and could be a game changer in India’s investment market.

7.CBIC Guidelines on Blocking Input Tax Credit

Input Tax Credit-It is the tax that a business pays on a purchase and it can
use to reduce its tax liability when it makes a sale. It means that at the time
of paying tax on output, one can reduce the tax that has already been paid
on inputs and pay the balance amount.

The Central Board of Indirect Taxes and Custom has issued guidelines on
blocking of tax credit by GST (Goods and Services Tax) field officers, saying
that such blocking should be on the basis of ‘material evidence’ and not just
out of ‘suspicion’.

Important Features of guidelines:

The new guidelines laid down some specific circumstances in which the Input
Tax Credit could be blocked by a senior tax officer. These include availment
of credit without any invoice or any valid document, or availing of credit by
purchases on invoices on which GST has not been paid by sellers.

The reasons to block the ITC are to be on the basis of material evidence
available or gathered in relation to fraudulent availment of input tax credit
or ineligible input tax credit availed as per the conditions/ grounds under
sub-rule (1) of Rule 86A.

In case an officer blocks the ITC under due procedure, the taxpayer will be
informed about the action on the GST portal along with details of the officer
who has blocked it.

8.RBI Committee on Asset Reconstruction Companies

A committee Of RBI headed by Sudarshan Sen has recommended some

suggestion to streamline the functioning Of Asset Reconstruction Companies
as the performance of the ARCs has so far remained lacklustre, both in
ensuring recovery and in revival of businesses. The committee has been

11
appointed to examine the issues and recommend measures for enabling
ARCs to meet the growing requirements of the financial sector.

Suggestions

❖ Recognising the need for transparency and uniformity of processes in

sale of stressed assets to ARCs, the Committee recommend the
creation of an online platform for sale of stressed assets.
❖ The scope of Section 5 of the SARFAESI Act may be expanded to allow
ARCs to acquire ‘financial assets’, for the purpose of reconstruction,
not only from banks and ‘financial institutions’ but also from such
entities as may be notified by the RBI.
❖ ARCs are to be allowed to sponsor SEBI registered Alternative
Investment Funds to raise resources for facilitating restructuring of bad
loans purchased by them.
❖ ARCs are to be allowed to sponsor SEBI registered Alternative
Investment Funds to raise resources for facilitating restructuring of bad
loans purchased by them.
❖ Recognising ARCs as a prime vehicle for resolution of stressed assets,
the regulations should allow ARCs to also use the Insolvency and
Bankruptcy Code (IBC) framework for this purpose.
❖ Large loans and loans that have been in default for over two years
should be considered for sale to ARCs by banks. Final approval of the
reserve price should be given by a high-level committee.
In respect of the proposed creation of National Asset Reconstruction
Company Limited (NARCL) by India for cleaning the books of Public Sector
Banks (PSBs), the RBI should ensure fair competition between the NARCL
and private ARCs to promote the objectives of true price discovery through
the market mechanism.

9.Prompt Corrective Action revised framework

The Reserve Bank of India (RBI) has announced a revised Prompt Corrective
Action (PCA) framework. The new provisions will be effective from January,
2022.The PCA framework is supervisory intervention of RBI over Banks at
an appropriate time and ensures effective market discipline.

Revised Framework

❖ Capital, Asset Quality and Capital-To-Risk Weighted Assets Ratio

(CRAR), NPA ratio, Tier-I Leverage Ratio, will be the key areas for
monitoring in the revised framework.

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 ❖ The breach of any risk threshold may result in the invocation of the
PCA. Stressed banks may not be allowed to expand credit/investment
portfolios.
❖ Amendment to Section 45 of the BR Act enables the Reserve Bank to
reconstruct or amalgamate a bank, with or without implementing a
moratorium, with the approval of the Central government.
❖ The RBI, as part of its mandatory and discretionary actions, may also
impose appropriate restrictions on capital expenditure, other than for
technological upgradation within Board approved limits, under the
revised PCA.
❖ Withdrawal of restrictions imposed will be considered if no breaches in
risk thresholds in any of the parameters are observed as per four
continuous quarterly financial statements.

10.Sovereign Credit Ratings

Sovereign Credit rating is an independent assessment of the credit

worthiness of a country or sovereign entity. It can give investors insights
into the level of risk associated with investing in the debt of a particular
country, including any political risk. It is generally obtain to attract Foreign
Direct Investment.

On the request of the country the credit rating agencies assigned credit
rating to it after evaluation of its political and economic environment.

Recently ratings agency Moody’s has changed India’s sovereign rating

outlook to “Stable” from “Negative” and affirmed the country’s rating at
“Baa3”.

What is Credit Rating

A credit rating is a quantified assessment of the creditworthiness of a

borrower in general terms or with respect to a particular debt or financial
obligation. It can be assigned to any entity that seeks to borrow money—an
individual, corporation, state or provincial authority, or sovereign
government.

Rating Agencies

A rating agency is a company that assesses the financial strength of any

company and government entities, especially their ability to meet principal
and interest payments on their debts. Fitch Ratings, Moody’s Investors
Service and Standard & Poor’s (S&P) are the big 3 international credit rating
agencies controlling approximately 95% of global ratings business.

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 In India, there are six credit rating agencies registered under
Securities and Exchange Board of India (SEBI) namely, CRISIL,
ICRA, CARE, SMERA, Fitch India and Brickwork Ratings.

11.Economic Slowdown in China

There are concerns that a slowing Chinese economy could impact the
incipient global recovery and regional economies like India as well. China’s
National Bureau of Statistics has reported that third-quarter Gross Domestic
Product (GDP) growth has slowed to 4.9%.

Reasons for Slowdown in Growth:

Base Effect: It refers to the effect that the choice of a basis of comparison
or reference can have on the result of the comparison between data points.
China is going through a ‘mature’ stage of economic development i.e. an
economy which has witnessed a double-digit growth for two decades is
bound to face a slowdown.

Fuel/ Power Crisis: A surge in coal prices and a resultant electricity

shortage continues to affect factories and units across the country’s.

Exports: Further, India’s buoyant iron ore exports, much of which is headed
to China, could also see an impact if the twin crises in China triggers an
extended slowdown in the Chinese real estate market.

Further, India depends majorly on imports from China including

smartphones, automobile components, telecom equipment, active
pharmaceutical ingredients, and other chemicals. Thus, slowing the Indian
economy will have an impact on India’s consumer market and infrastructure
development.

Investments: Slowing Chinese economy can trigger an investment outflow

from India. If India can expedite the economic reforms, it can become the
next global manufacturing hub.

12.Export Credit Guarantee Corporation (ECGC)

The ECGC Ltd is wholly owned by the Ministry of Commerce and Industry. It
was established to promote exports by providing credit insurance services to
exporters against non-payment risks by the overseas buyers due to
commercial and political reason.

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ECGC is a market leader with around 85% market share in the export credit
insurance market in India and provided support to exports worth Rs 6.02
lakh, or 28% of merchandise exports, in FY21. 97% of the client base of
ECGC pertains to MSMEs (thrust area of the GOI).

The Union Cabinet has approved capital infusion in the Export Credit
Guarantee Corporation (ECGC) and its listing through an initial public
offering. The process of listing ECGC on the stock market is also being
initiated so that it can raise more funds.

Related Terms used in Export:

National Export Insurance Account (NEIA) Scheme: established in

2006 to promote project exports from India that are of strategic and national
importance. It also promotes Medium and Long Term (MLT) / project exports
by extending (partial/full) support to covers issued by ECGC to MLT/project
export.

Trade Infrastructure for Export Scheme (TIES), Market Access Initiatives

(MAI) Scheme and Transport and Marketing Assistance (TMA) schemes to
promote trade infrastructure and marketing.

NIRVIK Scheme: The ECGC has introduced the Export Credit Insurance
Scheme (ECIS) called NIRVIK (Niryat Rin Vikas Yojana) to enhance loan
availability and ease the lending process.

ROSCTL Scheme: Support to the textiles sector was increased by the

remission of Central/ State taxes through the ROSCTL scheme, which has
now been extended till March 2024.

Remission of Duties and Taxes and Exported Products (RoDTEP): It

is a WTO compatible mechanism for reimbursement of taxes/ duties/ levies,
which are currently not being refunded under any other mechanism, at the
central, state and local level.

13.New Bad Bank Structure

The bad bank is an Asset Reconstruction Company (ARC) or an Asset

Management Company (AMC) that takes over the bad loans of commercial
banks, manages them and finally recovers the money over a period of time.
The takeover of bad loans is normally below the book value of the loan and
the bad bank tries to recover as much as possible subsequently.

New Bad Bank Structure

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For resolution of huge NPAs (Non-Performing Assets) in the Indian Banking
sector, the government of India has set up two new entities to acquire
stressed assets from banks and then sell them in the market.

The NARCL-IDRCL structure is the new bad bank structure

NARCL: NARCL has been incorporated under the Companies Act and has
applied to the Reserve Bank of India for a license as an Asset Reconstruction
Company (ARC). It will acquire stressed assets worth about Rs 2 lakh crore
from various commercial banks in different phases. Public Sector Banks
(PSBs) will maintain 51% ownership in NARCL.

DRCL: Another entity, India Debt Resolution Company Ltd (IDRCL), will then
try to sell the stressed assets in the market. PSBs and Public Financial
Institutes (FIs) will hold a maximum of 49% stake in IDRCL. The remaining
51% stake will be with private-sector lenders.

Working of NARCL-IDRCL and Guarantee Offered:

The NARCL will first purchase bad loans from banks. It will pay 15% of the
agreed price in cash and the remaining 85% will be in the form of “Security
Receipts”. When the assets are sold, with the help of IDRCL, the commercial
banks will be paid back the rest. If the bad bank is unable to sell the bad
loan, or has to sell it at a loss, then the government guarantee will be
invoked.

The Union Cabinet approved the Rs 30,600 crore guarantee to back Security
Receipts issued by National Asset Reconstruction Company Limited (NARCL)
for acquiring stressed loan assets. The NARCL is a part of a new Bad bank
structure that was announced in the Budget 2021.

The difference between what the commercial bank was supposed to get and
what the bad bank was able to raise will be paid from the Rs 30,600 crore
that has been provided by the government. This guarantee is extended for
a period of five years.

14.Stablecoins

A stable coin is a type of cryptocurrency that is typically pegged to an existing

government-backed currency. It hold a bundle of assets in reserve, usually
short-term securities such as cash, government debt or commercial paper
and are useful because they allow people to transact more seamlessly in
cryptocurrencies that function as investments, such as Bitcoin. They form a

16
bridge between old-world money and new-world crypto and also they
promise to function like perfectly safe holdings.

The first stablecoin, created in 2014, was Tether. The US is discussing

launching a formal review into whether Tether and other stable coins
threaten financial stability.

Types of stable coins:

Fiat-collateralized Stablecoins: They are collateralized by fiat money,

such as the US dollar, euro or the pound, on a 1:1 ratio.
Examples are: Tether, Gemini Dollar, and TrueSD

Crypto-Collateralized Stablecoins: Crypto-collateralized stablecoins are

more decentralised than their peers and are backed by cryptocurrencies. The
demerit is its price volatility and to address the risk of price volatility, these
stablecoins are over-collateralized.
Example are: Dai.

Non-collateralized stablecoins: These stablecoins do not have any

backing and are decentralized in the true sense and the supply of non-
collateralized stablecoins is governed by algorithms. Example are Basis.

Stablecoins Backed by Other Assets: There are a few stablecoins, which

are backed by a basket of multiple assets (commercial papers, bonds, real
estate, precious metals, etc).

The value of these stablecoins can fluctuate over time subject to movement
in commodity and precious metal prices. Example are Digix Gold, backed by
physical gold.

15.PLI Scheme for Auto & Drone Sector

It is introduced in March 2020, aims to give companies incentives on

incremental sales from products manufactured in domestic units and for
inviting foreign companies to set shop in India. It also aims to encourage
local companies to set up or expand existing manufacturing units and has
also been approved for sectors such as automobiles, pharmaceuticals, IT
hardware including laptops, mobile phones & telecom equipment, white
goods, chemical cells, food processing, Textile Sector etc.

The Union Cabinet has approved Rs. 26,058 crore Production Linked
Incentive (PLI) scheme for auto, auto-components and Drone industries to
enhance India’s manufacturing capabilities .

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The scheme for the sector is part of the overall production-linked incentives
announced for 13 sectors in the Union Budget 2021-22 with an outlay of Rs
1.97 lakh crore. It is a significant milestone in India’s journey towards ‘Atma
Nirbharta’ and will enable the country to join the top order of Auto and Drone
manufacturing nations.

PLI for Auto Sector:

It excludes conventional petrol, diesel and CNG segments (Internal

Combustion Engine) since it has sufficient capacity in India and is
incentivizing only advanced automotive technologies or auto components
whose supply chains are weak, dormant, or non-existing. It is aimed at
boosting new technology and the economy of clean fuels. This scheme along
with the already launched PLI for Advanced Chemistry Cell and Faster
Adoption of Manufacturing of Electric Vehicles (FAME) Scheme will give a big
boost to the manufacture of Electric Vehicles. z It will contribute towards
reducing carbon emissions and oil imports.

PLI for Drone Sector:

It covers a wide variety of drone components, including airframe, propulsion

systems, power systems, batteries, flight control module, ground control
station, communication systems, cameras, sensors, spraying systems,
emergency recovery system, and trackers.

It will encourage entrepreneurs to strive towards building drones,

components, and software for the global market and also open many more
verticals for the utilisation of drones.PLI will help to reduce imports as at
present 90 % of the drones in India are imported.

The government intends to make India into a global drone hub by 2030.

16.India -Singapore linkage on Digital Payment Systems

India and Singapore will link their respective fast digital payment systems -
Unified Payments Interface (UPI) and PayNow - for “instant, low-cost, cross-
border fund transfers”. This linkage is targeted to be operationalised by July
2022.

The Unified Payments Interface (UPI)-PayNow linkage is a significant

milestone in the development of infrastructure for cross-border payments

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between India and Singapore, and closely aligns with the G20’s financial
inclusion priorities of driving faster, cheaper and more transparent cross-
border payments.

It is builds upon the earlier efforts of NPCI International Private Ltd (NIPL)
and Network for Electronic Transfers (NETS, Singapore) to foster cross-
border interoperability of payments using cards and QR codes between India
and Singapore and will anchor trade, travel and remittance flows between
the two countries.

NIPL is the subsidiary of NPCI to popularise domestic payments technologies

such as UPI and RuPay abroad and co-create payment technologies with
other countries.

UPI and Other Indian Payment Systems:

Unified Payments Interface: It is an advanced version of Immediate

Payment Service (IMPS)- round–the-clock funds transfer service to make
cashless payments faster, easier and smoother. It is a system that powers
multiple bank accounts into a single mobile application (of any participating
bank), merging several banking features, seamless fund routing & merchant
payments into one hood.

National Electronic Funds Transfer: NEFT is a nation-wide payment

system facilitating one-to-one funds transfer. Under this Scheme,
individuals, firms and corporates can electronically transfer funds from any
bank branch to any individual, firm or corporate having an account with any
other bank branch in the country participating in the Scheme.

RuPay Card Scheme: The name, derived from the words ‘Rupee and
‘Payment’, It is India’s very own initiative for Debit and Credit Card
payments. The card can also be used for transactions in Singapore, Bhutan,
UAE, Bahrain and Saudi Arabia.

17.IRDAI (Trade Credit Insurance) Guidelines, 2021

Trade Credit Insurance- It protects businesses against the risk of non-

payment for goods and services and usually covers a portfolio of buyers and
indemnifies an agreed percentage of an invoice/invoices that remain unpaid
as a result of protracted default or insolvency.

Trade credit Insurance can be issued to sellers or suppliers of goods or

services, factoring companies as defined in the Factoring Regulation Act,
2011 and banks and financial institutions.

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For banks and financial institutions and factoring companies- it
covers the loss on account of non-receipt of payment from a buyer, due to
commercial or political risks, against the bills and invoices purchased or
discounted.

Benefits of the Move:

It will facilitate general insurance companies to help businesses manage

country risk, open up access to new markets and manage non-payment risk
associated with trade financing portfolios. It will also enable general
insurance companies to offer trade credit insurance with customised covers
to improve businesses for the Micro, Small and Medium Enterprises (MSMEs),
considering the evolving insurance risk needs of these enterprises.

18.Account Aggregator System

The RBI (Reserve Bank of India) in 2016 approved Account Aggregator as a

new class of NBFC (Non-Banking Financial Companies), whose primary
responsibility is to facilitate the transfer of user’s financial data through their
explicit consent. It enables the flow of data between Financial Information
Providers (FIPs) and Financial Information Users (FIUs) in a real time and
data-blind manner (Data flow through AA are encrypted).

The architecture of AA is based on the Data Empowerment and Protection

Architecture (DEPA) framework. It is an architecture that lets users securely
access their data and share the same with third parties. The Reserve Bank
of India on September 2, 2021 launched The ‘Account Aggregators (AA)
system’.

Recently, Eight major banks (SBI, HDFC Bank, ICICI Bank, AXIS Bank, Kotak
Mahindra Bank, IndusInd Bank, Federal Bank, and IDFC First Bank have
joined the AA ecosystem as financial information providers) have joined the
Account Aggregator (AA) network that will enable customers to easily access
and share their financial data.

Benefits of Account Aggregator system:

For Banks: It is an addition to India’s digital infrastructure and will allow

banks to access consented data flows and verified data. This will help banks
reduce transaction costs, which will enable them to offer lower ticket size
loans and more tailored products and services to their customers.

For Customer: The AA framework allows customers to avail various

financial services from a host of providers on a single portal based on a

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consent method, under which the consumers can choose what financial data
to share and with which entity. It permits users to control who gets access
to their data, track and log its movement and reduce the potential risk of
leakage in transit.

Reduce Frauds: Account Aggregator reduces the fraud associated with

physical data by introducing secure digital signatures and end-to-end
encryption for data sharing between the institutions.

19.No Entity Can Store Card Data: RBI

With effect from January 2022, no entity in the card transaction or payment
chain, other than the card issuers and card networks, should store the actual
card data. Any such data stored previously will be removed. RBI has also
extended tokenization of Card-on-File (CoF) by card issuers. It has permitted
card issuers to offer card tokenization services as Token Service Providers
(TSPs) and has given new directions in relation to storage of bank\card data
by entities or other merchants.

Tokenization: Card-on-File:
Tokenisation refers to replacement A CoF transaction is a transaction
of actual card details with a unique where a cardholder has authorised
alternate code called the ‘token’. a merchant to store the
This token is unique for each cardholder’s Mastercard or Visa
combination of card, token payment details then the card
requestor and device. Merchants holder authorises that same
process millions of card merchant to bill the cardholder’s
transactions in a day. stored Mastercard or Visa account.

E-commerce companies and airlines and supermarket chains normally store

card details in their system.

Effects of the decision

Online firms will not be able to store card details and debit recurring
payments. However, the decision will have no impact on the billers added
with bank directly. This move is aimed at increasing customer safety and
improving data security.

20.National Monetisation Pipeline

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The government of India has launched the National Monetisation Pipeline
(NMP for estimates aggregate monetisation potential of Rs 6 lakh crores
through core assets of the Central Government, over a four-year period,
from FY 2022 to FY 2025. The plan is in line with Prime Minister’s strategic
divestment policy, under which the government will retain presence in only
a few identified areas with the rest tapping the private sector. The NMP will
run co-terminus with the Rs 100 lakh crore National Infrastructure Pipeline
(NIP) announced in December 2019.

The NMP aims to unlock value in brownfield projects by engaging the private
sector and transferring to them revenue rights and not ownership in the
projects, and using the funds generated for infrastructure creation across
the country. It has been announced to provide a clear framework for
monetisation and give potential investors a ready list of assets to generate
investment interest.

Objective:

It aims to unlock value in brownfield projects by engaging the private sector,

transferring to them revenue rights and not ownership in the projects, and
using the funds generated for infrastructure creation across the country. The
NMP has been announced to provide a clear framework for monetisation and
give potential investors a ready list of assets to generate investment interest.

Latest Developments:

The NITI Aayog has recommended bringing in policy and regulatory changes
to scale up monetisation instruments like Infrastructure Investment Trusts
(InvITs) and Real Estate Investment Trusts (REITs) as a critical element for
success of the National Monetisation Pipeline (NMP).

Background:

Union Budget 2021-22 has identified monetisation of operating public

infrastructure assets as a key means for sustainable infrastructure financing.
Currently, only assets of central government line ministries and Central
Public Sector Enterprises (CPSEs) in infrastructure sectors have been
included. And the government has stressed that these are brownfield
assets, which have been “de-risked” from execution risks, and therefore
should encourage private investment. Roads, railways and power sector
assets will comprise over 66% of the total estimated value of the assets to
be monetised, with the remaining upcoming sectors including telecom,
mining, aviation, ports, natural gas and petroleum product pipelines,
warehouses and stadiums.

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21.EASE 4.0

The EASE (Enhanced Access and Service Excellence Reform Agenda) was
launched in January 2018 jointly by the government and PSBs.

Various Stages under EASE Reforms Agenda:

EASE 1.0: It showed significant improvement in PSB performance in

resolution of Non-Performing Assets (NPAs) transparently.

EASE 2.0: It was built on the foundation of EASE 1.0 and introduced new
reform Action Points across six themes to make reforms journey irreversible,
strengthen processes and systems, and drive outcomes. The six themes of
EASE 2.0 are:

❖ Responsible Banking;
❖ Customer Responsiveness;
❖ Credit Off-take,
❖ PSBs as UdyamiMitra (SIDBI portal for credit management of MSMEs);
❖ Financial Inclusion & Digitalisation;
❖ Governance and Human Resource (HR).

Ease 3.0: It seeks to enhance ease of banking in all customer experiences,

using technology via:

❖ Dial-a-loan and PSBloansin59 minutes.com.

❖ Partnerships with FinTechs and E-commerce companies,
❖ Tech-enabled agriculture lending,
❖ EASE Banking Outlets etc

Ease 4.0-The Union Finance Minister undertook the annual performance

review of the public sector banks (PSBs) and launched the EASE 4.0 or
Enhanced Access and Service Excellence Reform Agenda.

It is a common reform agenda for PSBs aimed at institutionalising clean and

smart banking.

Clean Banking SMART Banking

Clean Credit Speedy
Leveraging data Multi-channel reach
Ensuring Accountability Accessible and affordable
Action against Defaulter Responsive
Npa recovery Technologically enhanced

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EASE 4.0 commits PSBs to tech-enabled, simplified and collaborative
banking to boster the agenda of customer-centric digital transformation.

Following major themes were proposed under EASE 4.0.

24x7 Banking: The theme of new-age 24x7 banking with resilient

technology has been introduced to ensure uninterrupted availability of
banking services.

Focus on North-East: Banks have also been asked to come up with specific
schemes for the North-East.

Bad Bank: The proposed bad bank is very close to getting a licence. A bad
bank is a bank set up to buy the bad loans and other illiquid holdings of
another financial institution.

Raising Funds Outside the Banking Sector: With changed times, now
industries have the option of raising funds even from outside the banking
sector. Banks themselves are raising funds through various avenues. These
new aspects need to be studied to target credit where it is needed.

Leveraging Fintech Sector: Fintech (Financial Technology), one such

sector that can provide technological help to banks as well as can benefit
from help from the banking sector. Export Promotion: Banks will be urged to
work with state governments to push the ‘one district, one export’ agenda.

22. Faceless Assessment Scheme: Income Tax

Under the faceless assessment system, a taxpayer or an assessee is not

required to visit an I-T department office or meet a department official for
income tax-related businesses. It was launched in 2019 with an objective to
promote an efficient and effective tax administration, minimizing physical
interface, increasing accountability and introduction of team-based
assessments.

In Budget 2021, the Finance Minister has proposed the formation of a

Dispute Resolution Committee (DRC) in order to provide quicker relief to
taxpayers in tax disputes. It will cater to small taxpayers having a taxable
income of up to Rs. 50 lakh and a disputed income of up to Rs. 10 lakhs.

Vivad Se Vishwas Scheme:

The scheme provides for settlement of disputed tax, disputed interest,

disputed penalty or disputed fees in relation to an assessment or

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reassessment order on payment of 100% of the disputed tax and 25% of the
disputed penalty or interest or fee.

23.Pradhan Mantri Kisan SAMPADA Yojana

Ministry of Food Processing industries (MoFPI) had launched the Pradhan

Mantri Formalisation of Micro food processing Enterprises (PM FME) Scheme,
under the Atmanirbhar Bharat Abhiyan. The key sub-segments of the Food
Processing industry in India are Dairy, Fruits & Vegetables, Poultry & Meat
processing, Fisheries, Food retail, etc.

In the year 2017, the government renamed the SAMPADA scheme as

Pradhan Mantri Kisan Sampada Yojana (PMKSY) with an objective to
modernise and expand existing food processing units with a view to
increasing the level of processing. The scheme also aims to supplement
agriculture by creating processing and preservation capacities.

It is a Central Sector Umbrella Scheme.

24 Sovereign Right to Taxation(Doing Away With

Retrospective Taxation)

The Constitution of India gives the government the right to levy taxes on
individuals and organisations, but makes it clear that no one has the right to
levy or charge taxes except by the authority of law. Any tax being charged
has to be backed by a law passed by the legislature or Parliament (Article
265).

The Government of India has introduced The Taxation Laws

(Amendment) Bill, 2021 in the Lok Sabha which seeks to withdraw tax
demands made using a 2012 retrospective legislation to tax the indirect
transfer of Indian assets.

Retrospective Tax-It allows a country to pass a rule on taxing certain

products, items or services and deals and charge companies from a time
behind the date on which the law is passed. Governments use this route to
correct any anomalies in their taxation policies that have, in the past, allowed
companies to take advantage of such loopholes.

25.E-RUPI: Voucher Based Digital Payment System

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It is a cashless and contactless method for digital payment. It is a Quick
Response (QR) code or SMS string-based e-voucher, which is delivered to
the mobile of the users. The users will be able to redeem the voucher without
needing a card, digital payments app, or internet banking access, at the
service provider.

Different from Virtual Currency:

E-RUPI is still backed by the existing Indian rupee as the underlying asset
and specificity of its purpose makes it different to a virtual currency and puts
it closer to a voucher-based payment system.

26.National Consumer Disputes Redressal Commission:

It is a quasi-judicial commission in India which was set up in 1988 under the

Consumer Protection Act of 1986. The commission is headed by a sitting or
retired judge of the Supreme Court of India. The Consumer Protection Act of
1986 provided for a three-tier consumer dispute redressal machinery at the
National (National Consumer Disputes Redressal Commission), State and
District levels.The Consumer Protection Act, 2019 establishes the Central
Consumer Protection Authority (CCPA) whose primary objective will be
to promote, protect and enforce the rights of consumers.

27.New Framework for Payment Systems Operators

The Reserve Bank of India (RBI) has issued a framework for payment and
settlement related activities by payment system operators.This framework
is issued under provisions of Payment and Settlement Systems Act, 2007.Its
objective to put in place minimum standards to manage risks in outsourcing
of payment and settlement related activities including tasks such as
onboarding customers and IT-based services.

Need

There is a potential area of operational risk associated with outsourcing by

payment system operators and participants of authorised payments
systems. India’s tech ecosystem has seen several high profile cyber attacks
such as those at Juspay, Upstox and Mobikwik over the last year targeting
customers’ payments data.

The Payment and Settlement Systems Act, 2007 provides for the
regulation and supervision of payment systems in India and

26
designates the RBI as the authority for that purpose and all related
matters.

28.Sweat Equity Rules: SEBI

The Securities and Exchange Board of India (SEBI) has brought into effect
the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations,
2021 to widened the scope of employees who can be offered stock (equity)
options. The regulators has merged the SEBI (Share Based Employee
Benefits) Regulations, 2014 (SBEB Regulations) and the SEBI (Issue of
Sweat Equity) Regulations, 2002 (Sweat Equity Regulations).

Sweat Equity:

Sweat equity is a non-monetary contribution that the individuals or founders

of a company make towards the company. Cash-strapped start-ups and
business owners typically use sweat equity to fund their companies.

As per Section 2(88) of the Companies Act, 2013 sweat equity shares means
such equity shares as are issued by a company to its directors or employees
at a discount or for consideration, other than cash. It will be issued for
providing the know-how or making available rights in the nature of
intellectual property rights or value additions

The maximum yearly limit of sweat equity shares that can be issued by a
listed company has been prescribed at 15% of the existing paid-up equity
share capital within the overall limit, not exceeding 25% of the paid-up
capital at any time. Further, in case of companies listed on the Innovators
Growth Platform (IGP), the yearly limit will be 15% and overall limit will be
50% of the paid-up capital at any time. It will be applicable for 10 years from
the date of the company’s incorporation.

29.New Development Bank

India proposed that NDB’s (New Development Bank) scope be expanded to

strengthen Social Infrastructure besides promoting industry during BRICS
(Brazil, Russia, India, China and South Africa) meet.

NDB is a multilateral development bank jointly founded by the BRICS

countries at the 6th BRICS Summit in Fortaleza, Brazil in 2014.

27
It was formed to support infrastructure and sustainable development efforts
in BRICS and other underserved, emerging economies for faster
development through innovation and cutting-edge technology.

The main objective of NDB

❖ Fostering development of member countries.

❖ Supporting economic growth.
❖ Promoting competitiveness and facilitating job creation.
❖ Building a knowledge sharing platform among developing countries.

30. RoDTEP Scheme

The RoDTEP scheme would refund to exporters the embedded central, state
and local duties or taxes that were so far not being rebated or refunded and
were, therefore, placing India’s exports at a disadvantage. The rebate under
the scheme would not be available in respect of duties and taxes already
exempted or remitted or credited.

It was started in January 2021 as a replacement for the Merchandise

Export from India Scheme (MEIS), which was not compliant with the rules
of the WTO.

Rates:

The tax refund rates range from 0.5% to 4.3% for various sectors.

The rebate will have to be claimed as a percentage of the Freight on Board

value of exports.

Significance:

Enhance India’s Competitiveness: The reimbursement of taxes such as

duty on power charges, Value-Added Tax on fuel in transportation, Farm
Sector etc. will make Indian products competitive in global markets. It is
expected to significantly impact India’s competitiveness, trade flows and
export numbers over the next 5-10 years.

Par with International Standards: Indian exporters will be able to meet

the international standards for exports as affordable testing and certification
will be made available to exporters within the country instead of relying on
international organizations. z This would increase the economy for the
country and working capital for the enterprise.

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Automated Tax Assessment: Under it, tax assessment is set to become
fully automatic for exporters. Businesses will get access to their refunds for
GST (Goods and Services Tax) via an automatic refund-route.

31.Small Finance Bank

Small Finance Bank are the financial institutions which provide financial
services to the unserved and unbanked region of the country. Registered as
a public limited company under the Companies Act, 2013. the Reserve Bank
of India (RBI) has received applications from two more entities under the
“on-tap” small finance bank licensing guidelines of 2019.

Major Functions

❖ Needs to open at least 25% of its banking outlets in unbanked rural

centres.
❖ Required to extend 75% of its adjusted net bank credit to the Priority
Sector Lending (PSL).
❖ At least 50% of its loan portfolio should constitute loans and advances
of up to Rs. 25 lakhs.
❖ The maximum loan size and investment limit exposure to a single and
group debtor would be restricted to 10% and 15% of its capital funds,
respectively.
❖ They cannot extend large loans.
❖ If the initial shareholding by promoters in the bank is in excess of 40%
of paid-up voting equity capital, it should be brought down to 40%
within a period of 5 years.

Eligibility for Setting up SFBs

❖ Resident individuals/professionals with 10 years of experience in

banking and finance.
❖ The companies and societies owned and controlled by residents.
❖ Existing Non-Banking Finance Companies (NBFCs), Micro Finance
Institutions (MFIs), Local Area Banks (LABs) and payment banks that
are owned and controlled by residents.

32.Ubharte Sitaare Alternative Investment Fund

The Ministry of Finance has launched ‘Ubharte Sitaare’ Alternative

Investment Fund to facilitate debt and equity funding to export-oriented
MSMEs (Micro Small and medium Enterprises). The fund is expected to

29
identify Indian enterprises with potential advantages, but which are currently
underperforming or unable to tap their latent potential to grow.

Alternative Investment Fund

The fund has been set up jointly by Exim Bank and SIDBI (Small Industries
Development Bank of India) which will invest in the fund by way of equity
and equity-like products in export-oriented units, in both manufacturing and
services sectors.

Regulation 2(1)(b) of Securities and Exchange Board of India (Alternative

Investment Funds) Regulations, 2012. Anything alternative to traditional
forms of investments gets categorized as alternative investments It refers 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), which are not presently covered by any
Regulation of SEBI governing fund management nor coming under the direct
regulation of any other sectoral regulators in India. Thus, the definition of
AIFs includes venture Capital Fund, hedge funds, private equity funds,
commodity funds, Debt Funds, infrastructure funds, etc.

33.Financial Inclusion Index

The Reserve Bank of India (RBI) has unveiled the first composite Financial
Inclusion Index (FI-Index). The annual FI-Index for the financial year ended
March 2021 crossed the halfway mark to 53.9, as compared to 43.4 for the
year ended March 2017.The main aim of index is to capture the extent of
financial inclusion across the country. The index has been conceptualised as
a comprehensive index incorporating details of banking, investments,
insurance, postal as well as the pension sector in consultation with the
government and respective sectoral regulators. It will be published annually
in July every year.

Importance of FI Index:

Measures Level of Inclusion: It provides information on the level of

financial inclusion and measures financial services for use in internal policy
making.

Development Indicators: It can be used directly as a composite measure

in development indicators.

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Fulfill the G20 Indicators: It enables fulfilment of G20 Financial Inclusion
Indicators requirements. The G20 indicators assess the state of financial
inclusion and digital financial services, nationally and globally.

Facilitate Researchers: It also facilitates researchers to study the impact

of financial inclusion and other macroeconomic variables.

34.TAPAS Initiative

The Ministry for Social Justice and Empowerment has launched an online
portal TAPAS (Training for Augmenting Productivity and Services). The idea
of TAPAS was conceptualised at a time when exploring the online medium
for work and education had become imperative due to the outbreak of Covid
19 pandemic.

Key Points

❖ It offers various courses in the field of social defence for the capacity
building of stakeholders.
❖ It is an initiative of National Institute of Social Defence (NISD) and is
a standard MOOC (Massive Open Online Course) platform with course
material such as filmed lectures and e-study material.
❖ It also includes discussion forums to support and encourage
interactions among students and course coordinators.
❖ It will provide access to lectures by subject experts, study material and
more, but in a manner that it supplements the physical classroom
without compromising on the quality of teaching.
❖ It can be taken up by anyone who wishes to enhance his or her
knowledge on the topics and there is no fee for joining.
❖ The platform has been made with a quadrant approach, which is: z
Video, Text, Self-Assessment and Discussions.

35.Factoring Regulation (Amendment) Bill, 2021

The parliament has passed the Factoring Regulation (Amendment) Bill, 2021
to bring changes in the legislation aimed at helping the Micro, Small and
Medium Enterprises (MSME) sector. It has incorporated many suggestions
from the UK Sinha Committee.

Key Provisions of the Bill

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Change in the Definitions: It amends the definitions of “receivables”,
“assignment”, and “factoring business” to bring them at par with
international definitions.

Relaxation to NBFCs’ Factoring Threshold-The bill seeks to amend the

Factoring Regulation Act, 2011 to widen the scope of entities which can
engage in factoring business.

TReDS to Register Charges: The Bill states that where trade receivables
are financed through Trade Receivables Discounting System (TReDS), the
details regarding transactions should be filed with the Central Registry by
the concerned TReDS, on behalf of the factor.

RBI to Regulate: It empowers Reserve Bank of India (RBI) to make

regulations for granting registration certificates to a factor, filing of
transaction details with the Central Registry and all other matters.

No time-bound Registration: It removes the 30-day time period for the

factors to register the details of every transaction entered by them. The
registering authority for such transactions is the Central Registry setup under
the Securitisation and Reconstruction of Financial Assets and Enforcement of
Security Interest (SARFAESI) Act, 2002.

Significance:

❖ Allowing non-NBFC factors and other entities to undertake factoring is

expected to increase the supply of funds available to small businesses.
❖ This may result in bringing down the cost of funds and enable greater
access to the credit-starved small businesses, ensuring timely
payments against their receivables.
❖ MSMEs will get the easier liquidity which will help in their operation.
❖ MSMEs are facing difficulty due to delay in receivables and this bill will
help in ensuring smoother working capital cycle and healthier cash
flow.
❖ It will liberalise the restrictive provisions in the Act and at the same
time ensure that a strong regulatory/oversight mechanism is put in
place through the RBI.

UK Sinha Committee: The Reserve Bank had set up an eight-member

expert committee under the leadership of the former chairman of Securities
and Exchange Board of India (SEBI), UK Sinha to review the framework for
the MSME sector, in 2019.It has made recommendations with regard to
amendments in MSME Development Act, strengthening of financial delivery

32
mechanism, improving marketing support, encouraging technology adoption
and strengthening of cluster development support for MSMEs etc.

36.Non-Bank PSPs to Join Centralised Payment System

The Reserve Bank of India (RBI) allowed non-bank Payment System

Providers (PSPs) to participate in Centralised Payment Systems (CPS - RTGS
and NEFT), as direct members. It will be done in a phased manner:

In the first phase, PSPs such as Prepaid Payment Instruments (PPIs), card
networks and White Label ATM (WLA) operators will be allowed access. ATMs
set up, owned and operated by non-banks are called WLAs.

Presently, only banks and select non-banks such as NABARD (National Bank
for Agriculture and Rural Development) and Exim Bank (Export-Import Bank
of India) are allowed access to CPS owned by RBI – NEFT and RTGS.

Separate IFSC to Non-Banks: It means allotment of a separate Indian

Financial System Code (IFSC) to non-banks, opening a current account with
the RBI in its core banking system (e-Kuber) and maintaining a settlement
account with the RBI. will also mean membership of Indian Financial Network
(INFINET) and use of Structured Financial Messaging System (SFMS) to
communicate with CPS.

INFINET is a membership-only Closed User Group (CUG) Network that

comprises the RBI, Member Banks and Financial Institutions.

SFMS is India’s backbone for inter-bank financial messaging & CPS.

Significance:

Minimizing risk of payment ecosystem: Direct access for non-banks to

CPS lowers the overall risk in the payment’s ecosystem.

Reduction in cost of payments: It also brings advantages to non-banks

like reduction in cost of payments, minimising dependence on banks,
reducing the time taken for completing payments.

Mitigating failure or delay in fund execution: Risk of failure or delay in

execution of fund transfers can also be avoided when the transactions are
directly initiated and processed by the non-bank entities.

Increasing efficiency and better risk management: -Non-bank entities shall

transfer funds from their Current Account to RTGS Settlement Account and
vice versa during the operating hours.

33
37.DICGC Bill, 2021

The Union Cabinet has cleared the Deposit Insurance and Credit Guarantee
Corporation (DICGC) Bill, 2021.

Coverage:

❖ The bill will cover 98.3% of depositors and 50.9% of deposit value in
the banking system, way above the global level of 80% and 20-30%,
respectively.
❖ It will cover all types of banks, which also include regional rural banks
and co-operative banks.
❖ It will cover banks already under moratorium and those that could
come under moratorium. z Moratorium is a legally authorized period of
delay in the performance of a legal obligation or the payment of a debt.
❖ Insurance Cover: It will provide funds up to Rs 5 lakh to an account
holder within 90 days in the event of a bank coming under the
moratorium imposed by the Reserve Bank of India (RBI). The Rs 5-
lakh deposit insurance cover was raised from Rs 1 lakh in 2020.

Earlier, account holders had to wait for years till the liquidation or
restructuring of a distressed lender to get their deposits that are insured
against default.

The Damodaran Committee on ‘Customer Services in Banks’ (2011) had

recommended a five-time increase in the cap to Rs. 5 lakh due to rising
income levels and increasing size of individual bank deposits.

Within the first 45 days of the bank being put under moratorium, the DICGC
would collect all information relating to deposit accounts. In the next 45
days, it will review the information and repay depositors within a maximum
of 90 days.

Deposit Insurance and Credit Guarantee Corporation It came into

existence in 1978 after the merger of Deposit Insurance Corporation (DIC)
and Credit Guarantee Corporation of India Ltd. (CGCI) after passing of the
Deposit Insurance and Credit Guarantee Corporation Act, 1961 by the
Parliament. It serves as a deposit insurance and credit guarantee for banks
in India. It is a fully owned subsidiary of the RBI.

38. Stand Up India Scheme

34
It was launched in April 2016 to promote entrepreneurship at the grass-root
level focusing on economic empowerment and job creation to leverage the
institutional credit structure to reach out to the underserved sector of people
such as SCs, STs and Women Entrepreneurs.

The objective of this scheme is to facilitate bank loans between Rs.10 lakh
and Rs.1 crore to at least one SC or ST borrower and at least one-woman
borrower per bank branch of Scheduled Commercial Banks for setting up a
Greenfield enterprise. This enterprise may be in manufacturing, services or
the trading sector.

The Ministry of Finance has extended the Stand-up India Scheme up to the
year 2025

New Changes: The margin money requirement for loans under the Scheme
has been reduced from ‘upto 25%’ to `upto 15%’ and activities allied to
agriculture have been included in the Scheme.

39.External Benchmarks Lending Rate

According to an RBI report on ‘Monetary transmission in India’, the share of

outstanding loans linked to External Benchmarks Lending Rate (EBLR - like
repo rate), increased from as low as 2.4% during September 2019 to 28.5%
during March 2021. This increase in EBLR linked lending will contribute to
significant improvement in monetary policy transmission. However, still
71.5% of outstanding loans are Internal Benchmark Lending Rate (IBLR- like
base rate and MCLR) linked loans, which continues to impede the monetary
policy transmission.

Key Points

Internal Benchmark Lending Rate (IBLR): The Internal Benchmark

Lending Rates are a set of reference lending rates which are calculated after
considering factors like the bank’s current financial overview, deposits and
non-performing assets (NPAs) etc. BPLR, Base rate, MCLR are the examples
of Internal Benchmark Lending Rates.

Benchmark Prime Lending Rate (BPLR): BPLR was used as a benchmark

rate by banks for lending till June 2010. Under it, bank loans were priced on
the actual cost of funds. Under this system, banks were subsidising corporate
loans by charging high interest rates from retail and small and medium
enterprise customers.

35
Base Rate: Loans taken between June 2010 and April 2016 from banks were
on base rate. Base rate is calculated on three parameters — the cost of
funds, unallocated cost of resources and return on net worth.

Marginal Cost of Lending Rate (MCLR): It came into effect in April 2016.
It is a benchmark lending rate for floating-rate loans. This is the minimum
interest rate at which commercial banks can lend. This rate is based on four
components—the marginal cost of funds, negative carry on account of cash
reserve ratio, operating costs and tenor premium.

EBLR and Its Benefits:

To ensure complete transparency and standardization, RBI mandated the

banks to adopt a uniform external benchmark within a loan category,
effective 1st October, 2019.

Unlike MCLR which was internal system for each bank, RBI has offered banks
the options to choose from 4 external benchmarking mechanisms:

❖ The RBI repo rate

❖ The 91-day T-bill yield
❖ The 182-day T-bill yield
❖ Any other benchmark market interest rate as developed by the
Financial Benchmarks India Pvt. Ltd.

(i) T-Bill or Treasury bills are money market instruments issued by the
Government of India as a promissory note with guaranteed repayment at a
later date.

(ii) Financial Benchmarks India Pvt. Ltd was recognised by the Reserve bank
of India as an independent Benchmark administrator on 2nd July 2015

Benefits:

❖ Banks are free to decide the spread over the external benchmark.
❖ However, the interest rate must be reset as per the external
benchmark at least once every three months.
❖ Being an external system, this means any policy rate cut decision will
reach borrowers faster.
❖ The adoption of external benchmarking will make the interest rates
transparent.
❖ The borrower will also know the spread or profit margin for each bank
over the fixed interest rate making loan comparisons easier and more
transparent.

36
40.Foreign Card Payment Network Companies Barred:
RBI

The Reserve Bank of India (RBI) has barred three foreign card payment
network firms - Mastercard, American Express and Diners Club — from taking
new customers on board over the issue of storing data in India. As many as
five private sector banks, including Axis Bank, Yes Bank, and IndusInd Bank,
are to be impacted by the RBI’s decision.

The Personal Data Protection Bill also has provisions pertaining to ‘data
localisation.
Key Points
RBI’s Circular on Data Storage-April 2018: All system providers were
directed to ensure that within six months the entire data to payment systems
operated by them is stored in a system only in India.
They were also required to report compliance to the RBI and submit a board-
approved system audit report conducted by a Computer Emergency
Response Team - India (CERT-IN) empanelled auditor within the timelines
specified.

Reason of Non- Compliance given by Payment Firms:

❖ High Cost: Payment firms like Visa and Mastercard, which currently
store and process Indian transactions outside the country, have said
their systems are centralised and expressed the fear that transferring
the data storage to India will cost them millions of dollars.
❖ Localization Demands from Other Countries: Once it happens in
India, there could be similar demands from other countries, upsetting
their plans.
❖ Lack of Clarity: While the Finance Ministry had suggested some
easing of norms in transferring the data, the RBI has refused to
change, stating that the payment systems need closer monitoring in
the wake of the rising use of digital transactions.

41.India’s Covid-19 Emergency Response Package: Phase

II

The Union Cabinet has approved a Rs. 23,123 crore package to boost
emergency response and healthcare systems. It includes funding for 20,000
additional ICU (intensive care unit) beds and the setting up of paediatric

37
units in all districts, ahead of a potential third wave of Covid-19 in the
country.

Background

Phase I of Package: In March 2020, when the country was faced with the
first wave of the Covid-19 pandemic, the Central Sector Scheme of Rs.
15,000 crores was announced for the “India Covid-19 Emergency Response
and Health Systems Preparedness Package”.

Phase II of Package: The Phase-II of the Package has Central Sector (CS)
and Centrally Sponsored Schemes (CSS) components. It would be
implemented from 1st July 2021 to 31st March 2022.

Purpose

❖ Includes funding for paediatric units in all 736 districts, and the setting
up of 20,000 ICU beds, 20% of which would be “hybrid”, that is, for
adults as well as children.
❖ It is aimed at preventing the problems observed during the second
wave, including lack of transport facilities for oxygen and shortage of
medicines, from happening again
❖ The Centre would provide support to its hospitals, the All India
Institutes of Medical Sciences, and other institutes of national
importance, for repurposing 6,688 beds for Covid-19 management.
❖ Genome sequencing machines would be provided to the National
Centre for Disease Control.

42.Agriculture Infrastructure Fund

The Union Cabinet approved some modifications in the Central Sector

Scheme of Financing Facility under ‘Agriculture Infrastructure Fund’. This
scheme was launched s launched in 2020 as a part of the Rs. 20 lakh crore
stimulus package announced in response to the Covid-19 crisis to provide
medium-long term debt financing facility for investment in viable projects for
postharvest management Infrastructure and community farming assets.

It is extended to 13 years upto 2032-33

Eligible Beneficiaries:

Farmers, Farmer Producer Organizations (FPOs), Primary Agricultural Credit

Society (PACS), Marketing Cooperative Societies, Self Help Groups (SHGs),

38
Joint Liability Groups (JLG), Multipurpose Cooperative Societies, Agri-
entrepreneurs, Start-ups, and Central/State agency or Local Body sponsored
PPP Projects.

Eligibility has been extended to State agencies and Agricultural Produce

Marketing Committees (APMCs), as well as federations of cooperative
organisations, FPOs and SHGs.

Financial Support: Rs. 1 Lakh Crore will be provided by banks and financial
institutions as loans to eligible beneficiaries.

Interest Subvention: Loans will have interest subvention of 3% per annum

up to a limit of Rs. 2 crores. This subvention will be available for a maximum
period of seven years.

CGTMSE Scheme: A credit guarantee coverage will be available for eligible

borrowers from this financing facility under Credit Guarantee Fund Trust for
Micro and Small Enterprises (CGTMSE) scheme for a loan up to Rs. 2 crores.

Management: The fund will be managed and monitored through an online

Management Information System (MIS) platform. It will enable all the
qualified entities to apply for loans under the Fund.

43.Authorised Economic Operators Programme

The Central Board of Indirect Taxes & Customs (CBIC) has inaugurated the
online filing of Authorised Economic Operators (AEO) applications. The web
application is designed to ensure continuous real-time and digital monitoring
of physically filed AEO applications for timely intervention and expedience.

Indian AEO Programme:

❖ The AEO Programme was introduced as a pilot project in 2011.

❖ The security standards detailed in WCO SAFE Framework are the basis
of the Indian AEO programme.
❖ There is a three tier AEO Status for Exporters and Importers. The three
tiers are AEO T1, AEO T2, AEO T3, where AEO T3 is the highest level
of accreditation.

Aim of Indian AEO Programme:

❖ To provide business entities with an internationally recognized
certification.
❖ To recognize business entities as “secure and reliable” trading
partners.

39
 ❖ To incentivize business entities through defined benefits that translate
into savings in time and cost. Secure supply chain from point of export
to import.
❖ Enhanced border clearance.
❖ Reduction in dwell time and related costs.
❖ Customs advice / assistance if trade faces unexpected issues with
Customs of countries.

44.Open Network for Digital Commerce

The Department for Promotion of Industry and Internal Trade (DPIIT) has
issued orders appointing an advisory committee for its Open Network for
Digital Commerce (ONDC) project that is aimed at curbing “digital
monopolies”.

Key Points

❖ The ONDC aims at promoting open networks developed on open-

sourced methodology, using open specifications and open network
protocols, independent on any specific platform.
❖ The project to integrate e-commerce platforms through a network
based on open-source technology has been tasked to the Quality
Council of India.
❖ Implementation of ONDC, which is expected to be on the lines of
Unified Payments Interface (UPI) could bring various operational
aspects put in place by e-commerce platforms to the same level.
❖ Various operational aspects include onboarding of sellers, vendor
discovery, price discovery and product cataloguing etc.
❖ On ONDC, buyers and sellers may transact irrespective of the fact that
they are attached to one specific e-commerce portal.

45.Ministry of Cooperation: A New Push to Co-operatives

A separate ‘Ministry of Co-operation’ has been created by the Central

Government for realizing the vision of ‘Sahkar se Samriddhi’ (Prosperity
through Cooperation) and to give a new push to the cooperative movement.
The Government has showed its deep commitment to community based
developmental partnership.

Significance of Ministry of Cooperation:

40
 ❖ It will provide a separate administrative, legal and policy framework
for strengthening the cooperative movement in the country.
❖ It will help deepen Co-operatives as a true people-based movement
reaching up to the grassroots.
❖ It will work to streamline processes for ‘Ease of doing business’ for co-
operatives and an able development of Multi-State Co-operatives
(MSCS).

46.International MSMEs Day

The United Nations (UN) designated 27th June as Micro, Small and Medium-
sized Enterprises Day through a resolution passed in the UN General
Assembly in April 2017.In May 2017, a program titled ‘Enhancing National
Capacities for Unleashing Full Potentials of MSMEs in Achieving the SDGs in
Developing Countries’ was launched.

Role of MSMEs in Indian Economy:

❖ They are the growth accelerators of the Indian economy, contributing

about 30% of the country’s gross domestic product (GDP).
❖ In terms of exports, they are an integral part of the supply chain and
contribute about 48% of the overall exports.
❖ MSMEs are also playing an important role in employment generation,
as they employ about 110 million people across the country.

Initiatives to Promote MSME Sector

i. The Micro Small and Medium Enterprises Development

(MSMED) Act was notified in 2006 to address policy issues affecting
MSMEs as well as the coverage and investment ceiling of the sector.

ii. Prime Minister’s Employment Generation programme (PMEGP):

It is a credit linked subsidy scheme, for setting up of new micro-
enterprises and to generate employment opportunities in rural as well
as urban areas of the country.

iii. Scheme of Fund for Regeneration of Traditional Industries

(SFURTI): It aims to properly organize the artisans and the traditional
industries into clusters and thus provide financial assistance to make
them competitive in today’s market scenario.

iv. A Scheme for Promoting Innovation, Rural Industry &

Entrepreneurship (ASPIRE): The scheme promotes innovation &

41
 rural entrepreneurship through rural Livelihood Business Incubator
(LBI), Technology Business Incubator (TBI) and Fund of Funds for
start-up creation in the agro-based industry.

v. Interest Subvention Scheme for Incremental Credit to MSMEs:

It was introduced by the Reserve Bank of India wherein relief is
provided upto 2% of interest to all the legal MSMEs on their
outstanding fresh/ incremental term loan/working capital during the
period of its validity.

vi. Credit Guarantee Scheme for Micro and Small Enterprises:

Launched to facilitate easy flow of credit, guarantee cover is provided
for collateral free credit extended to MSMEs.

vii. Micro and Small Enterprises Cluster Development Programme

(MSE-CDP): It aims to enhance the productivity and competitiveness
as well as capacity building of MSEs.

viii. Credit Linked Capital Subsidy and Technology Upgradation

Scheme (CLCS-TUS): CLCSS aims at facilitating technology
upgradation of Micro and Small Enterprises (MSEs) by providing 15%
capital subsidy for purchase of plant & machinery.

ix. CHAMPIONS portal: It aims to assist Indian MSMEs march into the
big league as National and Global CHAMPIONS by solving their
grievances and encouraging, supporting, helping and hand holding
them.

x. MSME Samadhan: It enables them to directly register their cases

about delayed payments by Central
Ministries/Departments/CPSEs/State Governments.

xi. Udyam Registrations Portal: This new portal assists the

government in aggregating the data on the number of MSMEs in the
country.
xii. MSME SAMBANDH: It is a Public Procurement Portal. It was launched
to monitor the implementation of the Public Procurement from MSEs
by Central Public Sector Enterprises

47.Agristack: The New Digital Push in Agriculture

42
The Ministry of Agriculture has signed a Memorandum of Understanding with
Microsoft to run a pilot programme for 100 villages in 6 states which requires
Microsoft to create a ‘Unified Farmer Service Interface’ through its cloud
computing services.

This comprises a major part of the ministry’s plan of creating ‘AgriStack’ (a

collection of technology-based interventions in agriculture), on which
everything else will be built.

Background

AgriStack is a collection of technologies and digital databases that focuses

on farmers and the agricultural sector. It will create a unified platform for
farmers to provide them end to end services across the agriculture food value
chain and is in line with the Centre’s Digital India programme, aimed at
providing a broader push to digitise data in India, from land titles to medical
records.

Under this programme, each farmer will have a unique digital identification
(farmers’ ID) that contains personal details, information about the land they
farm, as well as production and financial details. Each ID will be linked to the
individual’s digital national ID Aadhaar.

48.Toycathon 2021

It was a joint initiative by the Ministry of Education, WCD (Women and Child
Development) Ministry, Ministry of Micro, Small and Medium Enterprises,
Textile Ministry, Ministry of Information and Broadcasting and All India
Council for Technical Education.

It was launched on 5th January 2021 to crowd-source innovative toys and

games idea with the aim to conceptualize innovative toys based on the Indian
value system which will inculcate positive behaviour and good value among
the children.

To promote India as a global toy manufacturing hub (Atmanirbhar Bharat).

49.Biotech-KISAN Programme

It is a pan India scientist-farmer partnership scheme launched in 2017,

following a hub-and spoke model and stimulates entrepreneurship and
innovation in farmers and empowers women farmer. The Ministry of Science
and Technology has issued a Special Call for the North East Region as a part

43
of its Mission Programme “Biotech-Krishi Innovation Science Application
Network (Biotech-KISAN)

The Ministry of Science and Technology has issued a Special Call for the
North East Region as a part of its Mission Programme “Biotech-Krishi
Innovation Science Application Network (Biotech-KISAN).

50.Data Lake

It is NHAI’s portal where videos will be saved to assess the progress made
on the projects. The National Highways Authority of India (NHAI) has made
use of drones mandatory for video recording of the national highway projects
during different stages of development, construction, operation and
maintenance.

NHAI has gone ‘Fully Digital’ with the launch of cloud based and Artificial
Intelligence powered Big Data Analytics platform – Data Lake and Project
Management Software. All project documentation, contractual decisions and
approvals are now done through the portal only

Significance
❖ It will enhance transparency, uniformity and leverage the latest
technology.
❖ NHAI officials can use the videos during the physical inspection of the
projects to check the discrepancies and rectifications made on the
earlier observations.
❖ Since these videos will be permanently stored on the ‘Data Lake’, they
can also be used as evidence during the dispute resolution process
before Arbitral Tribunals and Courts.
❖ Also the mandatory deployment of Network Survey Vehicle (NSV) to
carry out road condition surveys on the National Highways will enhance
the overall quality of the highways.

51.Economic Relief Package after Covid – Second Wave

The Ministry of Finance announced a slew of measures to provide relief to

diverse sectors affected by the second wave of Covid-19 pandemic. It aims
to prepare the health systems for emergency response and provide impetus
for growth and employment

Economic Relief given by GOI from Pandemic:

44
Loan Guarantee Scheme for Covid Affected Sectors: Additional credit
of Rs 1.1 lakh crore will flow to the businesses. This includes Rs 50,000 crore
for the health sector and Rs 60,000 crore for other sectors, including tourism.

Guarantee Coverage: It has been 50% for expansion & 75% for new
projects. For aspirational districts, the guarantee cover of 75% will be
available for both new projects and expansion and Maximum loan admissible
under the scheme is Rs. 100 crore and guarantee duration is up to 3 years.

Emergency Credit Line Guarantee Scheme: Expand the Emergency

Credit Line Guarantee Scheme (ECLGS), launched as part of Atmanirbhar
Bharat Package in May, 2020, by Rs 1.5 lakh crore.

Credit Guarantee Scheme for Micro Finance Institutions: It is a new

scheme which aims to benefit the smallest of the borrowers who are served
by the network of Micro Finance Institutions (MFIs).

Guarantee will be provided to Scheduled Commercial Banks for loans to new

or existing Non-Banking Financial Company (NBFC)-MFIs or MFIs for on
lending upto Rs 1.25 lakh to approximately 25 lakh small borrowers.

Extension of Aatmanirbhar Bharat Rozgar Yojana (ANBRY): It

incentivises employers for creation of new employment, restoration of loss
of employment through Employees’ Provident Fund Organisation (EPFO).

Strengthening Public Health: New Scheme for Children and Paediatric

Care: This scheme is for strengthening public health infrastructure and
human resources with outlay of Rs. 23,220 crore was also announced.

Revival of North Eastern Regional Agricultural Marketing

Corporation: A revival package of Rs 77.45 crore will be provided to North
Eastern Regional Agricultural Marketing Corporation (NERAMAC).

Boost to Export Insurance Cover: It has been decided to infuse equity

in Export Credit Guarantee Corporation (ECGC) over 5 years to boost export
insurance cover by Rs. 88,000 crores.

New streamlined process for PPP Projects and Asset Monetization: A

new policy will be formulated for appraisal and approval of Public-Private
Partnerships (PPP) proposals and monetization of core infrastructure assets,
including through Infrastructure Investment Trusts (InvITs).

52.Amended Technology Up-gradation fund Scheme

(ATUFS)

45
Ministry of Textiles had introduced Technology Upgradation Fund Scheme
(TUFS) in 1999 as a credit linked subsidy scheme intended for modernization
and technology up-gradation of the Indian textile industry. The ongoing
ATUFS was approved in 2016 and implemented through web based iTUFS
platform. Capital Investment Subsidy is provided to benchmarked machinery
installed by the industry after physical verification.

ATUFS was approved for a period from 2015-16 to 2021-22. The scheme is
being administered with a two-stage monitoring mechanism by Technical
Advisory-cum-Monitoring Committee (TAMC) and Inter-Ministerial Steering
Committee (IMSC). ATUFS is implemented through web-based platform,
iTUFS.

53.Personal Guarantors Liable for Corporate Debt

A personal guarantor is a person or an entity that promises payment of

another person’s debt, in case the latter fails to pay it obligations. The
concept of ‘guarantee’ is derived from Section 126 of the Indian Contracts
Act, 1872.

The Supreme Court of India has upheld the Central Government 2019
notification that allows lenders to initiate insolvency proceedings against
personal guarantors. It will allow the lenders to recover their remaining debt
from personal guarantors following the conclusion of the Corporate
Insolvency Resolution Process (CIRP).

Central Government Notification 2019: It brought personal guarantors

to companies facing insolvency proceedings under the purview of the
Insolvency and Bankruptcy Code (IBC).

54. Spot Gold Exchange

The spot exchange is a place where financial instruments, such as

commodities, currencies, and securities, are traded for immediate delivery.
The Securities and Exchange Board of India (SEBI) has proposed a
framework for setting up a spot gold exchange.

Framework of Gold Exchange:

❖ In the first tranche, an entity desirous of delivering gold, locally

manufactured or imported, on the exchange platform would have to
approach a SEBI regulated vault manager and deposit physical gold
meeting quality and quantity parameters with it. Then the vault

46
 manager will issue an EGR (Electronic Gold Receipt), which will be
tradeable on the exchanges, in the second tranche.
❖ A beneficial owner will surrender the EGR to a vault manager and take
delivery of the gold in the third tranche.
❖ A common interface will be developed between vault managers,
depositories, clearing corporations and stock exchanges to enable
seamless execution of the three tranches.
❖ The proposed denominations - reflecting underlying physical gold - of
EGRs are 1 kilogram, 100-gram, 50 gram and subject to conditions,
those can also be even for 5 and 10 gram.
❖ STT (Security Transaction Tax) will be levied on trading of the EGR and
IGST (Integrated Goods and Services Tax) at the time of delivery.

55.SWAMIH Fund

The Government of India’s Special Window for Affordable & Mid-Income

Housing (SWAMIH) completed its first residential project. The residential
project - Rivali Park, located in suburban Mumbai, was the first housing
project in India to have received funding under the SWAMIH Fund.

Background

This is a government backed fund that was set up as a Category-II AIF

(Alternate Investment Fund) debt fund registered with SEBI, launched in
2019.It was formed to complete construction of stalled, RERA-registered
affordable and mid-income category housing projects which are stuck due to
paucity of funds.

The Investment Manager of the Fund is SBICAP Ventures, a wholly-owned

subsidiary of SBI Capital Markets, which in turn is a wholly-owned subsidiary
of the State Bank of India. € The Sponsor of the Fund is the Secretary,
Department of Economic Affairs, Ministry of Finance, on behalf of the
Government of India.

RERA: Real Estate (Regulation and Development) Act (RERA) is an act

passed by the Parliament in 2016 that came into effect fully from 1st May,
2017. z The Act establishes Real Estate Regulatory Authority (RERA) in each
state for regulation of the real estate sector and also acts as an adjudicating
body for speedy dispute resolution.

Aim: It seeks to protect home-buyers as well as help boost investments in

the real estate sector by bringing efficiency and transparency in the sale/
purchase of real estate.

47
Alternative Investment Fund (AIF): Regulation 2(1)(b) of Securities and
Exchange Board of India (SEBI) Regulations (AIFs), 2012 lays down the
definition of AIFs as any fund established or incorporated in India which is a
privately pooled investment vehicle which collects funds from sophisticated
investors, whether Indian or foreign, for investing it in accordance with a
defined investment policy for the benefit of its investors.

56.Startup India Seed Fund Scheme

The Government has launched the Startup India Seed Fund Scheme (SISFS)
to provide financial assistance to Startup for proof of concept, prototype
development, product trials, market entry, and commercialization.

Seed Funding - It typically represents the first official money that a

business venture or enterprise raises. It helps a company to finance its first
steps, including things like market research and product development

Eligibility: A Startup, recognized by DPIIT (Department for Promotion of

Industry and Internal Trade) incorporated not more than 2 years ago at the
time of application. Startups should not have received more than Rs. 10 lakh
of monetary support under any other Central or State Government scheme.

57.G-sec Acquisition Programme 2.0

The G-Sec Acquisition Programme (G-SAP) is basically an unconditional and
a structured Open Market Operation (OMO), of a much larger scale and size.
RBI has called the G-SAP as an OMO with a ‘distinct character’. The word
‘unconditional’ here connotes that RBI has committed upfront that it will buy
G-Secs irrespective of the market sentiment.

Significance

The government will mainly benefit from the G-SAP.

❖ By purchasing G-secs, the RBI infuses money supply into the economy
which in turn keeps the yield down and lower the borrowing cost of the
Government.
❖ The government of India, with its massive borrowing programme (for
example, National infrastructure pipeline project), can now breathe a
sigh of relief as long-term borrowing costs come down.

48
49
Economic Survey 2021-22
Finance Minister Smt. Nirmala Sitharaman tabled the Economic Survey
2020-21 in Parliament on January 29, 2021. The Economic Survey has
projected India’s economy to grow 15·4 per cent at current prices in 2021-
22. At constant prices, GDP is estimated to grow at a record high of 11 per
cent during the year.
Covid-19: Once in a Century ‘Crisis’
It’s on ‘Saving Lives and Livelihoods.’ The Covid-19 pandemic engendered a
once-in-a-century global crisis in 2020—a unique recession where 90 per
cent of countries are expected to experience a contraction in GDP per capita.
The world economy is estimated to contract in 2020 by 4·3 per cent, as per
World Bank, and 3·5 per cent, as per IMF. The crisis World is facing today is
unique in a number of ways:
Firstly, the health crisis induced global recession is in contrast with previous
global recessions which were driven by confluences of a wide range of
factors, including financial crises (the Great Depressions in 1930-32;1982;
1991; 2009), sharp movements in oil prices (1975; 1982), and wars (1914;
1917-21; 1945-46).
Secondly, the pandemic is once in a 150-year event with an unprecedented
impact with all regions in the world projected to experience negative growth
in 2020. It is aptly called the ‘Great Lockdown’.

50
Thirdly, the present crisis is unique as it originated in a pandemic that
required social distancing and limiting of physical interactions. The economy
was gradually unlocked since June 2020 and has experienced a V-shaped
recovery since then.
Inequality and Growth: Conflict or Convergence?
The Economic Survey 2020-21 examined if inequality and growth conflict or
converge in the Indian context. By examining the correlation of inequality
and per-capita income with a range of socio-economic indicators, including
health, education, life expectancy, infant mortality, birth and death rates,
fertility rates, crime, drug usage and mental health.
The Survey highlights that both economic growth—as reflected in the income
per capita at the state level and inequality have similar relationships with
socio-economic indicators.
Healthcare Takes Centre Stage, finally!
Despite improvements in healthcare access and quality (healthcare access
and quality scored at 41·2 in 2016, up from 24·7 in 1990), India continues
to underperform in comparison to other Low and Lower Middle Income
(LMIC) countries. On quality and access of health care, India was ranked
145th out of 180 countries (Global Burden of Disease Study 2016). At 3-4
per cent, the hospitalisation rates in India are among the lowest in the world.

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Telemedicine in India
Impressive growth has been seen in the adoption of telemedicine in India
since the outbreak of the COVID-19 pandemic. This coincided with the
imposition of lockdown in India and the issuance of the Telemedicine Practice
Guidelines 2020 by the Ministry of Health and Family Welfare (MoHFW) on
March 25, 2020. e-Sanjeevani OPD (a patient-to-doctor tele-consultation
system) has recorded almost a million consultations since its launch in April
2020.
Regulatory Forbearance: An Emergency Medicine, Not Staple Diet!
Dirty Dozen: Dirty Dozen are the 12 large firms identified by the RBI that
contributed to 25% of overall NPAs in 2016-17, i.e., Rs 3·45 lakh crore.
These firms are Bhushan Steel, Bhushan Power, Electro steel Steels, JP Infra,
Era Infra, Amtek Auto, ABG Shipyard, Jyoti Structures, Monnet Ispat, Lanco
Infratech, Alok Industries, and Essar Steel. These firms continued to receive
credit during the forbearance window even when their financial condition had
worsened.
Zombie lending: A business group is classified as a zombie if the interest
coverage ratio of the entire group is less than one. Indian banks in close
connivance with Zombie group used the indirect mechanism of lending to a

52
firm of the group with positive interest coverage ratio while discontinued
lending to the other firm of group with negative or very low interest coverage
ratio with the hope of their existing loans getting repaid. However, the firm
of the group diverted funds, so received from the lending institutions, to
other firms of the group with poor track record.
Innovation: Trending Up, but Needs Thrust, especially from the
Private Sector:
India entered the top 50 innovating countries for the first time in 2020 since
the inception of the Global Innovation Index (GII) in 2007, by improving its
rank from 81 in 2015 to 48 in 2020.The Economic Survey 2020-21 examined
India’s innovation performance on various dimensions.

India ranks first in Central and South Asia, and third amongst lower middle-
income group economies.
Among the seven pillars of the GII, India ranks 27th in knowledge and
technology outputs (KTO)-
✓ 31st in market sophistication
✓ 55th in business sophistication
✓ 60th in human capital and research (HCR)
✓ 61st in institutions
✓ 64th in creative output
✓ 75th in infrastructure
Ayushman Bharat's Jan Arogya Yojana (JAY) and Health outcomes

53
PM-JAY, launched in 2018, enhanced health insurance coverage. Across all
the states, the proportion of households with health insurance increased by
54 per cent for the states that implemented PM-JAY. Infant mortality rates
declined during 2015-16 to 2019-20, by 12 per cent for states that did not
adopt PM-JAY and by 20 per cent for the states that adopted it.

The Bare Necessities: The Economic Survey 2020-21 examined the

progress made in providing access to ‘the bare necessities’ by constructing
a Bare Necessities Index (BNI) at the rural, urban and all India level. The
BNI summarises 26 indicators on five dimensions viz water, sanitation,
housing, micro environment, and other facilities. The BNI has been created
for all states for 2012 and 2018 using data from two NSO rounds viz., 69th
and 76th on Drinking Water, Sanitation, Hygiene and Housing Condition in
India.
External Sector: The external sector provided an effective cushion to
growth with India recording a current account surplus of 3·1 per cent of GDP
in the first half of 2020-21, largely supported by strong services exports, and
weak demand leading to a sharper contraction in imports (with merchandise
imports contracting by 39·7%) than exports (with merchandise exports
contracting by 21·2%). Consequently, the Foreign exchange reserves rose
to cover 18 months of imports in December 2020. Global merchandise trade
is expected to contract by 9·2 per cent in 2020.
India is expected to have a Current Account Surplus of 2 per cent of GDP in
FY21, a historic high after 17 years. Iron and Steel is another commodity

54
whose share has increased from 3·0 per cent to 4·4 per cent in the said
period.
During April-October, 2020, net FDI flows recorded an inflow of US $ 27·5
billion, 14·8 per cent higher as compared to first seven months of 2019-20,
an endorsement of India’s status as a preferred investment destination
amongst the global investors.
India registered a trade surplus in the month of June, 2020 after a gap of 18
years.
Monetary Developments During 2020-21
The monetary policy responses during the year 2020-21 were necessitated
by the extraordinary situation prevailing due to COVID-19. Money multiplier,
measured as a ratio of M3/M0 which was mostly increasing from 1980s
onwards up to 2016-17, has however been declining since then.
As on March 31, 2020, the money multiplier was 5·5, slightly. Gross Non-
Performing Advances (GNPA) ratio (i.e., GNPAs as a percentage of Gross
Advances) of Scheduled Commercial Banks decreased from 8.2 per cent at
the end-March 2020 to 7.5 per cent at end-September 2020.

Restructured Standard Advances (RSA) ratio of Scheduled Commercial

Banks (SCBs) increased from 0.36 per cent to 0·41 per cent during the same
period.
Overall, the Stressed Advances ratio of SCBs decreased from 8·6 per cent
at end- March 2020 to 7·9 per cent at end-September 2020.
GNPA ratio of Public Sector Banks (PSBs) decreased from 10·25 per cent
at the end-March 2020 to 9·4 per cent at end-September 2020 and the
Stressed Advances ratios decreased from 10·75 per cent to 9·96 per cent

55
during the same period. Net NPA ratios also declined and stood at 2·1 per
cent for SCBs and 2·85 per cent for PSBs as at end September 2020.
Capital to risk-weighted asset ratio (CRAR) of SCBs increased from 14·7
per cent to 15·8 percent between March 2020 and September 2020 on
account of improvement of CRAR of both Public and Private sector banks.
SCBs’ annualised Return on Assets (RoA) recovered from 0.07 per cent
to 0·64 per cent during first half (H1) of 2020-21, while their annualised
Return on Equity (RoE) recovered from 0·78 per cent to 7·68 per cent
during the same period.
The net profit (profit after tax) for PSBs increased from Rs 25,941 crore
at end-March 2020 to Rs 14,688 crore at end-September 2020. Similarly,
the net profit (profit after tax) for private sector banks increased from Rs
19,113 crore at end-March 2020 to Rs 32,762 crore at end-September 2020.
Overall, for SCBs, the net profit (profit after tax) increased from Rs 11,322
crore at end-March 2020 to Rs 59,426 crore at end-September 2020.

Sustainable Development and Climate Change: The 2030 agenda for

Sustainable Development with 17 Sustainable Development Goals (SDGs)
and 169 associated targets encompasses a comprehensive developmental
agenda integrating social, economic and environmental dimensions. India
has taken several proactive steps at both the national and the sub national
level to mainstream the SDGs into the policies, schemes and programmes of
the Government India’s National Action Plan on Climate Change (NAPCC)
was launched in 2008.

56
It has through 8 National Missions focussed on advancing the country’s
climate change related objectives of adaptation, mitigation and preparedness
on climate risks.
✓ National Solar Mission (NSM)
✓ National Mission for Enhanced Energy Efficiency (NMEEE)
✓ National Mission for Green India (NGI)
✓ National Mission for Sustainable Habitat (NMSH)
✓ National Water Mission (NWM)
✓ National Mission for Sustainable Agriculture (NMSA)
✓ National Mission for Sustaining Himalayan Eco-system (NMSHE)
✓ National Mission on Strategic Knowledge for Climate Change
(NMSKCC)
Agriculture and Food Management:
About 54·6 per cent of the total workforce in the country is still engaged in
agricultural and allied sector activities (Census 2011) which accounts for
approximately 17·8 percent of the country’s Gross Value Added (GVA) for
the year 2019-20 (at current prices).
Under the Pradhan Mantri Garib Kalyan Anna Yojana, 80·96 crore
beneficiaries were provided additional food grains, i.e. above the NFSA
mandated requirements, of 5 kg per person per month free of cost till
November, 2020.
Industry and Infrastructure
As per the latest estimates on Gross Value Added (GVA), the industrial sector
is expected to record a growth of – 9·6 per cent with an overall contribution
in GVA of 25·8 per cent in 2020-21 (FY21).
✓ The share of industry and its components in GVA (at current prices)
declined from 32·5 per cent in 2011-12 to 25·8 per cent in 2020-21.
✓ The eight-core industries that support infrastructure, such as coal,
crude oil, natural gas, refinery products, fertilizers, steel, cement, and
electricity have a total weight of nearly 40 per cent in the IIP.
✓ India is the second-largest producer of crude steel only after China.
India is also the second largest consumer of steel.
✓ Coal accounts for 55 per cent of the country’s energy needs.
✓ India is the sixth-largest exporter of textile and apparel products
after China, Germany, Bangladesh, Vietnam, and Italy.
✓ With 63·86 lakh kms of rural urban roads and national-state highways,
India is next only to the United States of America that has a road
network of 66·45 lakh km.

57
 ✓ Indian Railways (IR) with over 67,580 route kms, is the third largest
network in the world under single management.
✓ The GoI has allowed the private players to operate in the Railways
sector through the PPP mode under the “New India New Railway”
initiative.
✓ Internet and broadband penetrated both in urban and rural area at
a rapid pace. The number of internet subscribers (both broadband and
narrowband put together) stood at 776·45 million at the end of
September-2020.
✓ India is the third-largest energy consumer in the world after USA
and China. With a share of 5·8 per cent of the world’s primary energy
consumption, the Indian energy consumption basket is primarily
nominated by Coal and Crude Oil.
✓ The total installed capacity of electricity has increased from 3,56,100
MW in March-2019 to 3,70,106 MW in March 2020.
✓ Further, the generation capacity increased to 3,73,436 MW in October-
2020 and comprised 2,31,321 MW of thermal, 45,699 MW of hydro,
6,780 MW of nuclear, and 89,636 MW of renewables and others.
✓ India produces as many as 95 minerals which include 4 hydrocarbon
energy minerals (coal, lignite, petroleum & natural gas),5 atomic
minerals (ilmenite, rutile, zircon, uranium, and monazite), 10 metallic,
21 non -metallic, and 55 minor mineral Services.
✓ Services sector’s significance in the Indian economy has been steady,
with the sector now accounting for over 54 per cent of the economy
and almost four fifths of total FDI inflows.
✓ Meanwhile, the shipping turn-around time at ports has almost halved
from 4·67 days in 2010-11 to 2·62 days in 2019-20.
✓ India is home to 38 unicorns, adding a record number of 12 start-ups
to the unicorn list last year. With the ongoing vaccination drive, the
contact intensive service sectors can expect to witness revival.
✓ India improved its position from 12th in 2018 to 9th in 2019 in the list
of the world’s largest FDI recipients according to the latest World
Investment Report 2020 by United Nations Conference on Trade and
Development (UNCTAD).
✓ India ranked 23rd in the world in terms of international tourist arrivals
in 2019.

Social Infrastructure, Employment and Human Development:

The expenditure on social services (education, health and other social
sectors) by Centre and States combined as a proportion of GDP increased
from 6·2 to 8·8 per cent during the period 2014-15 to 2020-21 (BE Industry-

58
wise estimates on workforce shows that the largest, about 21·5 crore
persons are employed in ‘Agriculture’, which is still the largest employer
with 42·5 per cent of workforce.
Next important industry is ‘other services’ where about 6·4 crore persons
(13·8 per cent) were engaged.
'Manufacturing' and ‘Trade, hotel & restaurants’ each employed about
5·9 crore persons with the share of nearly 12·1 per cent and 12·6 per cent
respectively, while ‘Construction’ sector employed about 5·7 crore persons
in 2018-19 with share of 12·1 per cent.
Employed persons have significantly increased in Agriculture, Manufacturing
and Transport storage & communication in 2018-19 from 2017-18.
Among the total employed, about 25 crores are self-employed, 12·2 crore
regular wage/salaried employees and 11·5 crore casual workers.
India has made significant progress in improving its health outcomes over
the last two decades by eliminating Polio, Guinea worm disease, Yaws and
maternal & neonatal Tetanus.
Health indicators shows, Total Fertility Rate (TFR) has reduced sharply from
3·6 in 1991 to 2·2 in 2018.
Maternal Mortality Ratio (MMR) was 113 per 1,00,000 live births for the
period 2016-2018 and Under Five Mortality Rate (U5MR) was 36 per 1000
live births in 2018. But in 2020, it was the COVID-19 pandemic that put to
test the health infrastructure of India.

Union Budget 2021-22

The Union Minister for Finance & Corporate Affairs, Smt Nirmala Sitharaman
presented the Union Budget 2021-22 in Parliament on February 1,2021,which
is the first budget of this new decade and also a digital one in the backdrop
of unprecedented COVID-19 crisis.

59
6 Pillars of the Budget Proposals for 2021-22
Health and Wellbeing: Health and Wellbeing have found sharp focus and
central positioning in the Union Budget 2021-22. It forms the basis of
Atmanirbhar Bharat. There is a steep increase of 137 percentage in the
Budget outlay for Health and Wellbeing. The Budget outlay for Health and
Wellbeing is ` 2,23,846 crore in BE 2021-22 as against this year’s BE of `
94,452 crore, an increase of 137 percentage.
Jal Jeevan Mission (Urban): Universal Coverage of Water Supply and
Swachh Bharat Mission. The Finance Minister announced that the Jal Jeevan
Mission (Urban), will be launched for universal water supply. It will be
implemented over 5 years, with an outlay of Rs 2,87,000 crore. Swachh
Bharat, Swasth Bharat-The Urban Swachh Bharat Mission 2.0 will be
implemented with a total financial allocation of Rs 1,41,678 crore over a
period of 5 years from 2021-2026.
Clean Air: To tackle the burgeoning problem of air pollution, the Finance
Minister proposed to provide an amount of Rs 2,217 crore for 42 urban
centres with a million-plus population in this budget.
Scrapping Policy: A voluntary vehicle scrapping policy forms a crucial part
of the Union Budget 2021-22, to phase out old and unfit vehicles. This will
help in encouraging fuel-efficient, environment friendly vehicles, thereby
reducing vehicular pollution and oil import bill. Vehicles would undergo
fitness tests in automated fitness centres – after 20 years in case of personal
vehicles, and after 15 years in case of commercial vehicles.
PM Aatma Nirbhar Swasth Bharat Yojana: The Finance Minister
announced that a new centrally sponsored scheme, PM Aatma Nirbhar
Swasth Bharat Yojana, will be launched with an outlay of about Rs 64,180
crore over 6 years. This will develop capacities of primary, secondary, and
tertiary care Health Systems, strengthen existing national institutions, and
create new institutions, to cater to detection and cure of new and emerging
diseases. This will be in addition to the National Health Mission.

60
Source: Press Information Bureau (GOI)

Some Imp Points

Infrastructure: The National Infrastructure Pipeline (NIP) which the
Finance Minister announced in December 2019 is the first-of-its-kind, whole-
of-government exercise ever undertaken. The NIP was launched with
6835projects; the project pipeline has now expanded to 7,400 projects.
Around 217 projects worth Rs 1·10 lakh crore under some key infrastructure
Ministries have been completed.
Infrastructure Financing - Development Financial Institution (DFI):
Dwelling on the infrastructure sector, needs long term debt financing. A
professionally managed Development Financial Institution is necessary to act
as a provider, enabler and catalyst for infrastructure financing. Accor- dingly,
a Bill to set up a Development Financing Institutions (DFI) will be introduced.
Government has provided a sum of Rs 20,000 crore to capitalise this
institution and the ambition is to have a lending portfolio of at least Rs 5 lakh
crore for this DFI in three years’ time.
Asset Monetisation: Monetizing operating public Infrastructure: The
National Infrastructure Pipeline (NIP) which the Finance Minister announced
in December2019 is the first-of-its-kind, whole-of-government exercise ever
undertaken. The NIP was launched with 6835 projects; the project pipeline
has now expanded to 7,400 projects. Around 217 projects worth ` 1·10 lakh
crore under some key infrastructure Ministries have been completed.
Roads and Highways Infrastructure: Finance Minister announced that
more than 13,000 km length of roads, at a cost of ` 3·3 lakh crore, has
already been awarded under the ` 5·35 lakh crore Bharatmala Pari-yojana
project of which 3,800 kms have been constructed. By March 2022,
Government would be awarding another 8,500 kms and complete an
additional 11,000 kms of national highway corridors.

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Railway Infrastructure: Indian Railways have prepared a National Rail
Plan for India–2030. The Plan is to create a ‘future ready’ Railway system by
2030. Bringing down the logistic costs for our industry is at the core of our
strategy to enable ‘Make in India’. It is expected that Western Dedicated
Freight Corridor (DFC) and Eastern DFC will be commissioned by June 2022.

Urban Infrastructure: Government will work towards raising the share of

public transport in urban areas through expansion of metro rail network and
augmentation of city bus service. A new scheme will be launched at a cost
of Rs 18,000 crore to support augmentation of public bus transport services.

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Power Infrastructure: The past 6 years have seen a number of reforms
and achievements in the power sector with the addition of 139 Giga Watts
of installed capacity, connecting an additional 2·8 crore households and
addition of 1·41 lakh circuit km of transmission lines.

Ports, Shipping, Waterways: Major Ports will be moving from managing

their operational services on their own to a model where a private partner
will manage it for them. For the purpose the budget proposes to offer more

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than Rs 2,000 crore by Major Ports on Public Private Partnership mode in
FY21-22.
Financial Capital:
The Finance Minister proposed to consolidate the provisions of SEBI Act,
1992, Depositories Act, 1996, Securities Contracts (Regulation) Act, 1956
and Government Securities Act, 2007 into a rationalized single Securities
Markets Code. The Government would support the development of a world
class Fin-Tech hub at the GIFT-IFSC.
Increasing FDI in Insurance Sector:
The Finance Minister proposed to amend the Insurance Act, 1938 to increase
the permissible FDI limit from 49% to 74% and allow foreign ownership and
control with safeguards. Under the new structure, the majority of Directors
on the Board and key management persons would be resident Indians, with
at least 50% of Directors being Independent Directors, and specified
percentage of profits being retained as general reserve.
Disinvestment and Strategic Sale:
In spite of COVID-19, Government has kept working towards strategic
disinvestment. The Finance Minister said a number of transactions namely
BPCL, Air India, Shipping Corporation of India, Container Corporation of
India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam limited among
others would be completed in 2021-22.Other than IDBI Bank, Government
proposes to take up the privatization of two Public Sector Banks and one
General Insurance company in the year 2021-22.
Agriculture—Dwelling on agriculture, the Finance Minister said that the
Government was committed to the welfare of farmers.

The MSP regime has undergone a sea change to assure price that is at least
1·5 times the cost of production across all commodities. been created under
NABARD will be doubled. To provide adequate credit to our farmers,
Government has enhanced the agricultural credit target to 16·5 lakh crore in

64
FY22. Similarly, the allocation to the Rural Infrastructure Development Fund
(RIDF) increased from Rs 30,000 crore to Rs 40,000 crore.
Fisheries: Finance Minister proposed substantial investments in the
development of modern fishing harbours and fish landing centres. To start
with, 5 major fishing harbours: Kochi, Chennai, Visakhapatnam, Paradip, and
Petuaghat – will be developed as hubs of economic activity.
Migrant Workers and Labourers:
Government has launched the One Nation One Ration Card scheme through
which beneficiaries can claim their rations anywhere in the country. One
Nation One Ration Card plan is under implementation by 32 states and UTs,
reaching about 69 crore beneficiaries – that’s a total of 86% beneficiaries
covered.
Reinvigorating Human Capital:
The Finance Minister said that the National Education Policy (NEP) announced
recently has had good reception, while adding that more than 15,000 schools
will be qualitatively strengthened to include all components of the National
Education Policy.
The Finance Minister announced that 100 new Sainik Schools will be set up
in partnership with NGOs/private schools/states. The Finance Minister also
proposed to set up a Higher Education Commission of India, as an umbrella
body having 4 separate vehicles for standard setting, accreditation,
regulation, and funding. For accessible higher education in Ladakh,
Government proposed to set up a Central University in Leh.
Minimum Government, Maximum Governance:
Dwelling on the last of the six pillars of the Budget, the Finance Minister
proposed to take a number of steps to bring reforms in Tribunals in the last
few years for speedy delivery of justice and proposes to take further
measures to rationalise the functioning of Tribunals. Government has
introduced the National Commission for Allied Healthcare Professionals Bill
in Parliament, with a view to ensuring transparent and efficient regulation of
the 56 allied healthcare professions. The forthcoming Census will be the first
digital census in the history of India and for this monumental and milestone-
marking task, Rs 3,768 crore have been allocated in the year 2021-2022.
Fiscal Development:
The Finance Minister said fiscal deficit in RE 2020-21is pegged at 9·5% of
GDP and it has been funded through Government borrowings, multilateral
borrowings, Small Saving Funds and short term borrowings. The Finance
Minister added that the Government would need another Rs 80,000 crore for

65
which it would be approaching the markets in these 2 months. The fiscal
deficit in BE 2021-22 is estimated to be 6·8% of GDP. The gross borrowing
from the market for the next year would be around 12 lakh crores.
Direct Tax Proposals:
✓ The Finance Minister provided relief to senior citizens in filing of income
tax returns, reduced time limit for income tax proceedings, announced
setting up of the Dispute Resolution Committee, faceless ITAT,
relaxation to NRIs, increase in exemption limit from audit and relief for
dividend income.
✓ The Budget seeks to reduce compliance burden on senior citizens who
are of 75 years of age and above. Such senior citizens having only
pension and interest income will be exempted from filing their income
tax return. The paying Bank will deduct the necessary tax on their
income.
✓ The Budget proposes to make dividend payment to REIT/InvIT exempt
from TDS.For Foreign Portfolio Investors, the Budget proposes
deduction of tax on dividend income at lower treaty rate.
✓ The Finance Minister proposed to extend the eligibility period for claim
of additional deduction for interest of Rs 1·5 lakh paid for loan taken
for purchase of an affordable house to 31st March, 2022.
✓ In order to incentivize start ups in the country, The Finance Minister
announced extension in the eligibility for claiming tax holiday for start-
ups by one more year till 31st March, 2022.She also extend the Capital
Gains exemption for investment in start-ups by one more year till 31st
March, 2022.
✓ In serious tax evasion cases, where there is evidence of concealment
of income of Rs 50 lakh or more in a year, the assessment can be
reopened upto 10 years but only after the approval of the Principal
Chief Commissioner.
✓ To Further reduce litigation of small tax payers, the Finance Minister
proposed to constitute a Dispute Resolution Committee. Anyone with
a taxable income upto Rs 50 lakh and disputed income upto Rs 10 lakh
shall be eligible to approach the Committee.
✓ The Finance Minister announced setting up of National Faceless Income
Tax Appellate Tribunal Centre.
✓ The Budget proposes to increase the limit for tax audit for persons who
are undertaking 95 per cent of their transaction digitally from Rs 5
Crore to Rs 10 Crore.

Indirect Tax Proposals:

66
 ✓ The Finance Minister announced withdrawal of a few exemptions on
parts of chargers and sub-parts of mobile phones further some parts
of mobiles will move from “NIL” rate to a moderate 2·5 per cent.
✓ She also announced reducing custom duty uniformly to 7·5 per cent
on semis, flat, and long products of non-alloy and stainless steel. She
also announced exempting duty on steel scrap for a period upto 31st
March,
✓ 2022.
✓ The Finance Minister announced raising duty on solar inverter from 5
per cent to 20 per cent and on solar lanterns from 5 per cent to 15 per
cent.

Source: Press Information Bureau (GOI)

✓ The Budget proposes certain changes to benefit MSMEs which include

increasing duty on steel screws, plastic builder wares and prawn feed.
✓ To benefit farmers, the Finance Minister announced raising custom
duty on cotton, raw silk and silk yarn.
✓ She also announced withdrawing end-use based concessions on
denatured ethyl alcohol.

Fifteenth Finance Commission 2021-26

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The Fifteenth Finance Commission (FC-XV) was constituted by the
President under Article 280 of the Constitution on 27 November, 2017 to
make recommendations for the period 2020-25. The members of the
commission are:
✓ Chairman-Shri N. K. Singh,
✓ Full Time Members-Shri Shaktikanta Das and Prof. Anoop Singh
✓ Part Time members-Dr. Ashok Lahiri, and Dr. Ramesh Chand
✓ Secretary-Mr Arvind Mehta

Shri Ajay Narayan Jha, was later appointed as Member with effect from 1
March, 2019 in place of Shri Shaktikanta Das.

The Fifteenth Finance Commission (XVFC)’s ToR was unique and wide
ranging in many ways. The Commission was asked to re-commend
performance incentives for States in many areas like power sector, adoption
of DBT, solid waste management etc.

Another unique ToR was to recommend funding mechanism for defence and
internal security. Though its original remit was to make recommendations
for the period 2020-21 to 2024-25, The commission had submitted an
Interim Report for 2020-21 on 5 December, 2019 stressing that it was
difficult to make projections for five years when the economy was slowing
down after structural reforms like GST and insolvency code.

Final report with recommendations for 2021-22 to 2025-26 period was

submitted to the President of India on 9 November, 2020.

Vertical Devolution: In order to maintain predictability and stability of

resources, especially during the pandemic XVFC has recommended main -
taining the vertical devolution at 41 percent—the same as in its report for
2020-21. It is at the same level of 42 per cent of the divisible pool as
recommended by FC-XIV.
In XVFC’s assessment, gross tax revenues for 5-year period (2021-26) are
expected to be 135·2 lakh crore States’ share at 41 per cent of divisible pool
comes to 42·2 lakh crore for 2021-26 period.

Horizontal Devolution: On horizontal devolution, while XVFC agreed that

the Census 2011 population data better represents the present need of
States, to be fair to, as well as reward, the States which have done better
on the demographic front, FC has assigned a 12·5 per cent weight to the
demographic performance criterion.
FC has re-introduced tax effort criterion to reward fiscal performance.

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Revenue Deficit Grants: Based on uniform norms of assessing revenues
and expenditure of the States and the Union, FC has recommended total
revenue deficit grants (RDG) of Rs 2,94,514 crore over the award period for
seventeen States.

Local Governments
The total size of the grant to local governments should be Rs 4,36,361 crore
for the period 2021-26. Urban local bodies have been categorised into two
groups, based on population, and different norms have been used for flow of
grants to each, based on their specific needs and aspirations

Health
FC has recommended that health spending by States should be increased to
more than 8 percent of their budget by 2022.The total grants-in-aid support
to the health sector over the award period works out to Rs 1,06,606 crore,
which is 10·3 per cent of the total grants-in-aid recommended by XVFC.

Performance Incentives and Grants: XVFC has recommended grants of

Rs 4,800 crore (Rs 1,200 crore each year) from 2022-23 to 2025-26 for
incentivising the States to enhance educational outcomes.

Defence and Internal Security

Keeping in view the extant strategic requirements for national defence in the
global context, XVFC has, in its re-calibrated the relative shares of Union and
States in gross revenue receipts

Disaster Risk Management: Mitigation Funds should be set up at both the

national and State levels, in line with the provisions of the Disaster
Management Act. For State Disaster Risk Management Fund (SDRMF), XVFC
has recommended the total corpus of Rs 1,60,153 crore for States for
disaster management for the duration of 2021-26, of which the Union’s share
is Rs 1,22,601 crore and States’ share is Rs 37,552 crore.

Fiscal Consolidation: Provided range for fiscal deficit and debt path of both
the Union and States. Additional borrowing room to States based on
performance in power sector reforms.
In view of the uncertainty that prevails at the stage that XVFC have done its
analysis, as well as the contemporary realities and challenges, we recognise
that the FRBM Act needs a major restructuring and recommend that the
time-table for defining and achieving debt sustainability may be examined
by a High-powered Inter-governmental Group.

State Governments may explore formation of independent public debt

management cells which will chart their borrowing programme efficiently.

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Points to Remember

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Q1 Which State retained its top position on the State Food Safety Index
2020-21 among major states in India?
Ans. Gujrat
Q2 Which Maharatna PSU of India won the Global ATD 2021 BEST Award
Ans. Power Grid
Q3 What is India’s rank on the Global Innovation Index 2021?
Ans. 46th rank, Top Spot Switzerland
Q4 The Indian reformer who has been appointed as Sustainable
Development Goals (SDG) Advocate by
Ans. Kailash Satyarthi
Q5 The Kelkar Committee recommended abolition of tax rebates under
Ans. Section 88
Q6 Index of Industrial Production (IIP) is prepared and released
periodically by
Ans. Central Statistics Office
Q7 Which three countries have been admitted as new members of the New
Development Bank (NDB) of the BRICS?
Ans. UAE, Uruguay and Bangladesh
Q8 Who has become the new Controller General of Accounts (CGA)
Ans. Deepak Das
Q9 Which city was declared the first ‘Water Plus’ city in India?
Ans. Indore
Q 10 The Central government launched an online portal TAPAS which stands
for
Ans. Training for Augmenting Productivity and Services
Q 11 Which district emerged on top of the North Eastern Region District SDG
Index and Dashboard 2021–22?
Ans. East Sikkim
Q 12 What is India’s rank on the Global Youth Development Index 2020
Ans. 122
Q 13 What is India’s rank on the 2021 Global Manufacturing Risk Index
Ans. Second rank
Q 14 Who is the author of the book ‘Overdraft: Saving The Indian Saver’
Ans. Urjit patel
Q 15 ‘Sensitive Sector’ as defined by RBI includes
Ans. Capital Market, Real Estate and Commodities
Q 16 ‘Open Market Operation’ is a part of
Ans. Credit Policy
Q 17 SMILE stands for
Ans. Support for Marginalized Individuals for livelihood and Enterprise
Q 18 In India liquid funds are regulated by
Ans. SEBI
Q 19 Where is the headquarters of the Insurance Regulatory and Development
Authority (IRDA)
Ans. Hyderabad
Q 20 India’s first private LNG plant has been launched in
Ans. Nagpur
Q 21 Which neighbouring Country of India recently adopted India’s BHIM UPI

71
Ans. Bhutan
Q 22 Which city in India became the first one to have city-wide safe drinking
tap water for 24 hours?
Ans. Puri in Odisha
Q 23 In Indian economy, agriculture belongs to
Ans. Primary Sector
Q 24 A pact to develop the 679-megawatt Lower Arun Hydropower project has
been signed between
Ans. India and Nepal
Q 25 Which Indian industrialist has been named the top philanthropist of the
world over the last 100 years
Ans. Jamsetji Nusserwanji Tata
Q 26 Which two cities were declared joint winners of the Smart Cities Award
2020?
Ans. Indore and Surat
Q 27 India’s first payments bank was launched by
Ans. Airtel
Q 28 ‘Life Insurance Corporation of India’ came into existence in
Ans. 1956
Q 29 Who took over as the President of CII for 2021-22
Ans. T.V. Narendran
Q 30 What is India’s rank on the IMD World Competitiveness Index 2021
Ans. 43 Rank
Q 31 What is India’s rank on the 17 Sustainable Development Goals (SDGs)
adopted as a part of the 2030 UN agenda?
Ans. 117
Q 32 Which country became the first country in the world to adopt
cryptocurrency ‘Bitcoin’ as its legal tender?
Ans. El Salvador
Q 33 Who has been named CEO of proposed NARCL or better known as ‘Bad
Bank
Ans. Padmakumar Madhavan Nair
Q 34 RBI constituted an advisory group to assist the second Regulatory Review
Authority (RRA 2.0). The advisory group will be headed by
Ans. S. Janaki Raman of SBI
Q 35 The Indian Rupee was made fully convertible on current account in
Ans. 1994
Q 36 The regulating body of mutual funds in India is
Ans. SEBI
Q 37 Who took charge as the deputy governor of RBI
Ans. T. Rabi Sankar
Q 38 Total size of the Atmanirbhar Bharat Abhiyan is about
Ans. 10 per cent of India’s GDP
Q 39 In India, currency notes issues system is based on
Ans. Minimum reserve system
Q 40 The Cental Government in May 2021 gave its approval for strategic
disinvestment along with transfer of management control in
Ans. IDBI Bank Ltd.
Q 41 Statutory Liquidity Ratio (SLR) in India is determined and maintained by

72
Ans. RBI
Q 42 Who has assumed charge as Chairman & MD of SIDBI
Ans. Siva Subramanian Raman
Q 43 Which railway zone has become first fully electrified railway zone in India
Ans. West Central Zone
Q 44 Indian Railways completes arch of world’s highest rail bridge being built
over
Ans. The Chenab River
Q 45 RBI hiked maximum balance limit for an individual customer in a
payment bank from 01 lakh to
Ans. 2 lakh
Q 46 The Central government launched ‘Anamaya’ which is a
Ans. Tribal Health Collaborative
Q 47 What is India’s rank on WEF’s Global Energy Transition Index, 2021?
Ans. 87
Q 48 What kind of tax is GST in India?
Ans. Indirect Tax
Q 49 What is the tertiary sector of economic development
Ans. Service sector
Q 50 Forward Markets Commission is a financial regulator of
Ans. Commodity Future markets
Q 51 Liquidity approach is also known as the
Ans. Radcliffe approach
Q 52 RBI constituted a 5-member panel for evaluating applications for
universal as well as small finance banks. The Panel will be chaired by
Ans. Shyamala Gopinath
Q 53 Who has been appointed as the Chief Statistician of India
Ans. G.P Samanta
Q 54 Which five-year plan in India is also referred to as P.C Mahalnobis Plan?
Ans. Second Five Year Plan
Q 55 National Institute of Rural Development and Panchayati Raj is located in
Ans. Hyderabad
Q 56 The difference between ‘Gross Value Added’ and ‘Net Value Added’ is
Ans. Consumption of fixed capital
Q 57 The Reverse Repo operations by the RBI are meant to
Ans. Inject liquidity in the system
Q 58 Loans provided by banks to farmers, small traders come under the
category of
Ans. Priority Sector Lending
Q 59 What is India’s rank on the International Intellectual Property Index
2020?
Ans. 40th rank
Q 60 Which is the first state in India to come up with Ethanol policy?
Ans. Bihar
Q 61 Increase in net RBI credit for Central government represents
Ans. Monetised deficit
Q 62 The main objective behind establishment of SIDBI was to
Ans. Finance Small Scale Industries

73
Q 63 Which State retained its position as the most innovative major state on
the second India Innovation Index?
Ans. Karnataka
Q 64 In India, business in stock markets and other securities markets is
regulated by
Ans. SEBI
Q 65 RBI constituted an expert panel to explore consolidation measures for
Urban Cooperative Banks headed
Ans. N.S. Viswanathan
Q 66 Who has become the new Director-General of Inter-national Solar
Alliance (ISA)?
Ans. Ajay Mathur
Q 67 Which State has become the first Indian state to present a paperless
budget?
Ans. Uttar Pradesh
Q 68 Who has become the first Woman Director-General of WTO?
Ans. Ngozi Okonjo-Iweala
Q 69 Bonds not carrying any interest are called
Ans. Zero Coupon Bonds
Q 70 Economic Survey in India is published by
Ans. Union Ministry of Finance
Q 71 An instrument of qualitative credit control is called
Ans. Credit rationing
Q 72 Inflation with depreciation is called
Ans. Stagflation
Q 73 IIP stands for
Ans. Index of Industrial Production
Q 74 Who assumed charge as the new President of ASSOCHAM?
Ans. Vineet Agarwal
Q 75 Backward bending supply curve belongs to
Ans. Labour Market
Q 76 ‘YONO’ banking app is associated with
Ans. SBI
Q 77 Committee on decontrolling the prices of petrol and diesel was headed
by
Ans. Kirit S. Parekh
Q 78 NABARD was established on the recommendation of
Ans. Shivaraman Committee
Q 79 ‘Surplus budget’ is recommended during
Ans. Economic depression
Q 80 Statutory Liquidity Ratio (SLR) is determined and maintained by
Ans. RBI
Q 81 Who has been appointed the first Chairperson of the Reserve Bank
Innovation Hub
Ans. Senapathy (KRIS) Gopalakrishnan
Q 82 Which organisation got the UN Population Award 2020 in the organisation
category?
Ans. Help Age India

74
Q 83 What is the maximum age of joining National Pension System under NPS-
Private Sector in India?
Ans. 65 years
Q 84 The largest source of national income in India is
Ans. Service Sector
Q 85 PFRDA was launched by the Indian government as
Ans. A Pension Regulator
Q 87 Second nationalisation of commercial banks in India took place on
Ans. April 6, 1980
Q 88 A share buyback instituted by a company has no effect on
Ans. Net Profit Margin
Q 89 Which city was declared the first ‘Water Plus’ city in India?
Ans. Indore
Q 90 GDP deflator is a type of
Ans. Price Index
Q 91 State Bank of India was formerly known as
Ans. Imperial Bank of India
Q 92 What is India’s rank on the Global Innovation Index 2021
Ans. 46
Q 93 The major aim of devaluation is to
Ans. Encourage Exports
Q 94 The regulatory body of Telecom sector in India is
Ans. TRAI (Telecom Regulatory Authority of India)
Q 95 Who has been elected as the President of the Editors Guild of India
Ans. Seema Mustafa
Q 96 What is the new and revised base year of the Consumer Price Index for
Industrial Workers (CPI-IW)?
Ans. 2016
Q 97 Who were honoured with the Nobel Prize in Economics, originally referred
to as the Sveriges Riksban k Prize for 2020
Ans. Paul Milgrom and Robert Wilson
Q 98 SEBI was established in
Ans. 1988
Q 99 The process of budget making after re-evaluating every item of
expenditure in every financial year is called
Ans. Zero based budgeting
Q The new chairman of the National Institute of Public Finance and Policy
100 (NIPFP) ?
Ans. Former RBI Governor Urjit Patel

75
Question Answers on Latest Economics Affairs:
Q1 Consider the following statements about the performance of the public
sector banks in India
I Public Sector banks have reported a profit of Rs 31,817 crore in FY 2020-
21 as compared to a loss of Rs 26,016 crore in FY 2019-20
II FY 2020-21 is the first year when Public Sector Banks have reported
profit after five years of losses.
III Total gross non-performing assets of Public Sector Banks stood at Rs
6·16 lakh crore as of March 2021 a reduction of Rs 62,000 crore from
March 2020 levels.

Correct code is:

A ONLY I
B ONLY I AND II
C Only III
D Only II and III
E All I, II,III

Q2 Which of the following statements is/are correct about the Public Sector
Banks (PSBs) in India?
I Nearly 72% of financial transactions happening at PSBs are now
happening through digital channels
II PSBs are now offering services across call centres, Internet banking, and
Mobile banking in 14 regional languages such as Telugu, Marathi,
Kannada, Tamil, Malayalam, Gujarati, Bengali, Odia, Kashmiri, Konkani,
Hindi, Punjabi, Assamese for the ease of customers
III For continual improvement in coverage under financial inclusion
initiatives, there was a 13% growth in transactions provided by Bank
Mitras in rural areas and 50% growth in enrolments in Micro personal
accident insurance in Q4 FY 21 compared to Q4 FY 20.

Correct code is:

A Only III
B Only I and II
C Only II
D All I,II,III
E None of the above

Q3 The International Monetary Fund (IMF) has increased its allocation of

Special Drawing Rights (SDR) to India to………on August 23,2021.

76
A 12·57 billion SDR
B 13.05 billion SDR
C 13.69 billion SDR
D 14.21 billion SDR
E 14.96 billion SDR

Q4 India’s Foreign Exchange Reserves rose to all time high at US $ 642·453

billion in the week ended September 1, 2021. The increase is attributed
to:
A High Foreign Direct Investment inflow
B Appreciation of external value of Indian currency
C Allocation of 12·57 billion Special Drawing Rights to India’s quota by the
IMF
D Sale of gold reserves by the RBI
E All of the above

Q5 The credit deposit (CD) ratio of the Indian banking industry in the
fortnight ending August 13,2021 was 69·92. Which of the following
statements is correct in this regard?
A This means that for every Rs 100 worth of deposits, the banking system
has lent Rs 69·92
B This means that for every Rs 69·92 worth of deposits, the banking
system has lent Rs 100
C The Indian Banking system has enough liquidity at its hand
D The Banks are not able to lend the liquid money they have with them
E This may impact the profitability of the banks, if the situation does not
improve soon

Q6 Which of the following statements are correct about banking?

I Under norms, for every Rs 100 worth of net demand and time liability,
a loose proxy for deposits, banks keep Rs 4 with the Reserve Bank of
India (RBI) as cash reserve ratio, on which they don’t earn any interest
II Under norms, for every Rs 100 worth of net demand and time liability,
a loose proxy for deposits at least Rs 18 needs to be invested in
government bonds.
III A bank can lend as much as Rs 78 out of a Rs 100 deposit.
IV Bank has to borrow from the market using capital if it wants to lend
more.

Correct code is:

A Only I
B Only I and II
C Only III @ IV

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D Only I,II,III
E All the above

Q7 Big 4’ is often used in India for top four

A Auditing firms
B Public Sector Undertaking companies
C Credit Rating Agencies
D Development Banks
E Commercial Banks

Q8 India’s rank in Global Innovation Index 2021 is

A 46th
B 47th
C 48th
D 49th
E 50th

Q9 Which of the following taxes in India is also known as the ‘Google Tax’?
A Import Duty
B Equalisation Levy
C Securities Transaction Tax
D Anti-dumping Duty
E None of the above

Q 10 Which of the following statements is incorrect about National Asset

Reconstruction Company Ltd. (NARCL)?
A NARCL has been established as a ‘Bad Bank’
B Public Sector Banks will have 51 per cent stake in it
C Central government has proposed Rs 30600 crore back-stop as
guarantee to NARCL
D NARCL has been established as a registered society under the Societies
Act
E Government guarantee can be invoked to cover the shortfall between
the amount realized from the underlying assets and the face-value of
the securities receipts issued for it

Q 11 Consider the following statements in relation to India Debt Resolution

Company Ltd. And choose the correct code given below—
I It will function as the asset management company
II t will be a service company operational entity that will manage the assets
and employ market professionals and turnaround experts
III Public sector banks and public financial institutions will hold a maximum
of 49 per cent stake in it.

78
 Correct codes are
A Only I
B Only II
C Only III
D All of the above
E None of the above

Q 12 Which of the following statements are correct about PRIME MINISTER’s

Citizen Assistance and Relief in Emergency Situation Fund (PM-CARES)
A PM-CARES Fund is a charitable trust under the law
B Trust’s fund is not a fund of the Government of India
C Its amount does not go in the Consolidated Fund of India
D All of the above
E None of above statements

Q 13 Who has emerged as the world’s top ‘emerging Ecosystem’ for start-ups
in terms of performance, funding, experience and talent in the Global
Start-ups Ecosystem Ranking 2021?
A NCR Delhi
B Bengaluru
C Mumbai
D Hyderabad
E Chennai

Q 14 Which of the following statements are correct about RBI’s report on

Deposits with Scheduled Commercial Banks March 2021?
I Bank deposits grew 11·9 per cent year-on-year during 2020-21
compared to 8·8 per cent in 2019-20.
II Share of private sector banks in total bank deposits continued to rise at
the cost of public sector banks and stood at 30·5 per cent (29·5 per cent
a year ago)
III Three major states Maharashtra, UP and Karnataka held one-third of
total household sector's outstanding deposits and over 40 per cent of its
incremental deposits during 2020-21.
IV Among institutional categories, the household sector held 64·1 per cent
share in total deposits.

Correct codes are

A Only I and II
B Only I, II, III
C Only I and IV
D Only I

79
E All of the above

Q 15 Prime Minister Narendra Modi on October 1, 2021 launched Swachh

Bharat Mission-Urban 2·0 and AMRUT 2·0, which is designed to make all
the cities
I ‘Garbage Free’
II ‘Water Secure'
III ‘Pollution Free’

Correct code is
A Only I
B Only II
C Only I and II
D All I, II and III
E Only III

Q 16 The Reserve Bank’s Regulatory Sandbox (RS) has introduced the following
cohorts on
I ‘Retail Payments’
II ‘Cross Border Payments’
III ‘MSME Lending
IV ‘Prevention and Mitigation of financial frauds

Correct codes are-

A Only I and II
B Only I and III
C All I, II, III and IV
D Only II and III
E Only I, II and III

Q 17 Consider the following statement and choose correct code:

I Immediate Payment Service (IMPS) offers instant domestic funds transfer
facility 24x7 through various channels.
II The per-transaction limit of IMPS transaction has been increased from Rs
2 lakh to Rs 5 lakh.
III These changes are effective from April 1, 2021

Correct code are-

A Only I
B Only II
C Only III
D Only I and II
E All of the above

80
Q 18 Consider the RBI following code given below:
I The RBI had made the National Automated Clearing House (NACH)
available on all days effective August 1, 2021
II NACH, a bulk payment system, is used for one-to-many credit transfers
such as payment of dividend, interest, salary and pension.
III The NACH system supports financial inclusion through its Aadhar Payment
Bridge (APB) variant, enabling the Government and Government agencies
to implement Direct Benefit (DBT) schemes Transfers like MNREGA, Social
Security Pension, Old age pension, LPG subsidy, etc

Correct code are-

A Only I
B Only II
C Only III
D All of the above
E Only I AND II

Q 19 Which of the following statements is not correct regarding Monetary Policy

Committee (MPC) decisions in Bi-monthly review of Monetary Policy on
October 8, 2021?
A The RBI kept the key interest rates unchanged
B The RBI held the growth projections intact at 9·5% for the
FY 2021-22
C The MPC voted unanimously to maintain status quo with regard to the
policy repo rate
D The Reverse Repo Rate reduced to 3·00 per cent from 3·35 per cent
E The MPC voted by a majority of 5 to 1 to retain the accommodative policy
stance

Q 20 Immediate Payment Service (IMPS) transaction daily limit increased

from……. on October 8,2021.
A Rs 2 lakh to Rs 4 lakh
B Rs 2 lakh to Rs 5 lakh
C Rs 2 lakh to Rs 6 lakh
D Rs 2 lakh to Rs 7 lakh
E Rs 2 lakh to Rs 10 lakh

Q 21 Which of the following is/are India’s ‘crypto unicorn’

I Coin Switch Kuber
II CoinDCX
III Andreessen Horowitz
IV Coinbase venture

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 Correct code is:
A Only I and II
B Only I, II and III
C Only II, III and IV
D Only I, III and IV
E All I, II, III and IV

Q 22 What percentage of Foreign Direct Investment is allowed through

automatic route in telecommunication sector
A 26%
B 49%
C 51%
D 74%
E 100%

Q 23 Finance Ministry has notified rules to implement the new law burying
retrospective taxation. The rules have certain specified conditions for the
companies to avail the advantage of the law
I Companies concerned will irrevocably withdraw, discontinue and not
pursue any law suits, arbitration, conciliation or mediation either in India
or abroad.
II Companies have to with draw proceedings to enforce or pursue
attachment in respect of any award against the Republic and/or all Indian
affiliates
III An interested company will Have to submit the undertaking in form 1
within 45 days from the date of commencement of the rules (October 1,
2021)

Correct code are-

A Only I
B Only II
C Only I and II
D All of the above
E Only III

Q 24 Securities and Exchange Board of India (SEBI) on September 28,2021

approved
I A framework for setting up a gold exchange
II A framework for setting up a social stock exchange.
III Introduction of silver exchange traded funds in line with the existing
regulatory mechanism for gold exchange traded funds

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 Correct code are-
A Only I
B Only II
C Only I and II
D All of the above
E Only III

Q 25 Which of the following statements is incorrect about ‘Unity Small Finance

Bank’
A The Reserve Bank of India (RBI) has issued a Small Finance Bank (SFB)
licence to the consortium of Centrum Financial Services Limited
(Centrum), the small business lending arm of the Centrum Group and
Resilient Innovations Private Limited (BharatPe)
B The Proposed Bank will work, as ‘Unity Small Finance Bank
C A new bank licence for Small Finance Bank has been issued after a gap of
nearly six years
D (A), (B) and (C)
E (A) and (B)

Q 26 The term of office of the government nominee in Monetary Policy

Committee is—
A 1 Year
B 2 Year
C 3 Year
D 4 Year
E 5 Year

Q 27 Repo Rate, a key component of the monetary policy, is determined by the

A Reserve Bank of India
B Monetary Policy Committee
C Monetary Policy Committee to achieve the inflation target
D Governor of the RBI
E None of the above

Q 28 Which of the following banks have not joined the online platform for
trading of corporate loans in the secondary market Called the Secondary
Loan Market Association (SLMA) ?
A State Bank of India & Punjab National Bank
B ICICI Bank & HDFC Bank
C Bank of Baroda and Canara Bank
D Standard Chartered Bank & AXIS bank
E YES Bank & Punjab and Sindh Bank

83
Q 29 Which of the following statements is/are correct about e-RUPI?
I e-RUPI is a digital voucher which a beneficiary gets on his phone in the
form of an SMS or QR code
II It is a prepaid voucher, which a beneficiary can go and redeem it at any
centre that accepts it.
III e-RUPI is a onetime contactless, cashless voucher-based mode of
payment.
IV e-RUPI does not require the beneficiary to have a bank account.

Correct codes are-

A Only I and II
B Only I and III
C Only I and IV
D Only I, II and IV
E All of the above

Q 30 E-RUPI has been developed by

A National Payments Corporation of India (NPCI)
B Department of Financial Services
C Ministry of Health & Family Welfare and National Health Authority
D All (A), (B), (C)
E Only(A) and (B)

Q 31 Which of the following statements are correct about National Monetisation

Pipeline Scheme announced by the Finance Minister on August 23, 2021?
I The government will monetise assets worth Rs 6,00,000 crore between
2021-22 and 2024-25.
II The government will not sell off any assets, but only utilise them in a
better manner.
III The National Monetisation Pipeline Scheme will only include brownfield
assets owned by the government and will not include land assets of the
government.
IV Assets being given out under the National Monetisation Pipeline will still
be owned by the government, and will be returned to the government
after a period of time.

Correct Codes are-

A Only I and II
B Only I, II and III
C Only II, III and IV
D All of the above
E Only IV

84
Q 32 RBI’s N.S. Viswanathan committee submitted its report in August 2021 on
A Credit flow to Micro, Small & Medium Enterprises sector
B Financial Inclusion
C Creating an umbrella organization for Urban Co-operative Banks
D Reforms in consortium financing of corporate loans of more than Rs 100
crore
E Converting Payments banks into universal banks

Q 33 What is the size of National Monetisation Pipeline Scheme that was

announced by the Finance Minister on August 23,2021?
A Rs 4·0 lakh crore
B Rs 5·0 lakh crore
C Rs 6·0 lakh crore
D Rs 7·0 lakh crore
E Rs 8·0 lakh crore

Q 34 Who has the power to declare a person as ‘fugitive economic offender’?

A A special Court, designated under the Prevention of Money
Laundering Act
B Reserve Bank of India
C Court of district and Session Judge
D High Court
E Supreme Court of India

Q 35 Ubharte Sitaare Programme’ is an initiative of—

A EXIM Bank of India
B MUDRA Bank
C Small Industries Development Bank of India
D State Bank of India
E Agricultural and Processed Food Products Export Development Authority

Answer
1-E 2-D 3-A 4-C 5-B 6-E 7-A
8-A 9-B 10-D 11-D 12-D 13-C 14-E
15-D 16-C 17-D 18-D 19-D 20-B 21-A
22-E 23-D 24-D 25-D 26-D 27-C 28-E
29-E 30-D 31-D 32-C 33-C 34-A 35-A

85
86